10.3 |
Reconstruction: oil, commercial interests, debt relief, asylum and
stabilisation policy
to its neighbours,
and an end to Iraqi support for international terrorism), and how
those
priorities
might be achieved.
60.
The paper
stated that the UK had a “fundamental interest in a stable
region
providing
secure supplies of oil to world markets”, but did not otherwise
consider energy
security or
oil.
61.
The Cabinet
Office circulated the final version of the DTI’s Emergency Plan to
deal
with
international oil supply disruption resulting from military action
in Iraq to members
of the
AHGI on 17 October.27
62.
The DTI
assessed that:
•
the return
of weapons inspectors and limited UN-sanctioned strikes against
Iraq
would have
very little impact on UK fuel supplies;
•
a
UN-sanctioned invasion of Iraq could result in some disruption to
international
oil supply,
possibly leading to a “token” release of oil stocks by the
International
Energy
Agency (IEA), but there would be no impact on UK fuel supplies
beyond
some price
volatility; and
•
some
worst-case scenarios, including a unilateral US invasion, could
have a
serious
impact on oil markets leading to significant increases in UK fuel
prices.
63.
The DTI stated
that it would monitor any potential or actual oil supply
disruption.
64.
On 22 October,
Mr Jon Cunliffe, Treasury Managing Director for
Macroeconomic
Policy and
International Finance, sent Mr Brown a paper on the impact on
the Treasury’s
objectives
of a war in Iraq.28
65.
The Treasury
paper identified nine risks to the Treasury’s objectives and
assessed
the
likelihood and impact of each in four scenarios: no war; a short
war; a protracted
war; and a
war involving WMD. The nine risks were:
•
substantial
rise in public spending;
•
lower
growth, higher inflation and unemployment;
•
negative
productivity shock;
•
public
finances less sound;
•
inflation
deviates from target;
•
loss of
insurance capacity/risk of insurance failures;
•
more
International Monetary Fund (IMF) lending leading to higher UK
gross
debt;
•
revival of
popular pressure for lower fuel taxes; and
27
Minute Dodd
to Members of the Ad Hoc Group on Iraq, 17 October 2002,
[untitled], attaching Paper DTI,
October
2002, ‘International Oil Supply disruption – Emergency
Plan’.
28
Minute
Cunliffe to Chancellor, 22 October 2002, ‘Iraqi War: Risks to
Treasury Objectives’ attaching Paper
Treasury,
[undated], ‘Impact of a War on Treasury Business’.
383