The Report
of the Iraq Inquiry
168.
On 8 March,
the US Army Corps of Engineers (USACE) awarded a contract for
the
repair of
Iraq’s oil infrastructure, worth up to US$7bn, to the US
engineering company
Kellogg,
Brown and Root (KBR).87
Hard
Lessons reported
that the contract was the
single
largest reconstruction contract in Iraq and the largest known
sole-source contract
in US
history.
169.
Mr Mike
O’Brien, FCO Minister of State, visited Washington on 13 March
to
discuss
post-conflict issues with US interlocutors.88
170.
A senior
official from the NSC briefed Mr O’Brien on US plans for the
oil sector.89
The British
Embassy Washington reported that the NSC was expecting Saddam
Hussein
to inflict
“massive damage” on Iraq’s oil infrastructure; contracts had been
let to US
companies
to control the damage.
171.
The NSC
official advised that a small, US, senior management team for
the
oil sector
had been assembled. Its first task would be to assess
reconstruction and
investment
needs. The team would need to be headed by an Iraqi.
172.
The official
said that the NSC agreed on the need for a UN role in
ensuring
transparency,
but thought that the UN was not able to run the oil sector. That
would be
a job
for the oil sector management team, “reporting first and foremost
to the Coalition”.
173.
The official
also advised that the NSC agreed with much of the UK’s oil
policy
paper, but
identified three points of disagreement:
•
The US did
not think it was sensible to commit to restoring pre-invasion
levels of
production,
when the Coalition could not know what damage would be
inflicted
on the oil
infrastructure.
•
The US
foresaw legal problems in either the Coalition or the interim
Iraqi
administration
letting new oil development contracts (which would be
long-term
commitments)
during the “transitional phase”. Depending on the situation
on
the ground,
it might make more sense to suspend the existing six or seven
oil
development
contracts, with a view to them being renegotiated in due course
by
a sovereign
Iraqi Government.
•
The US
thought it was unrealistic to envisage private finance emerging
early on.
174.
The Inquiry
has not seen the version of the oil policy paper passed to the
US.
175.
Dr Rice
gave Sir David Manning an account of White House thinking on
the
handling of
Iraqi oil on 13 March.90
The OFF
programme should be left in place,
and phased
out when there was an Iraqi entity ready to take control of oil
revenues.
87
Bowen SW
Jr. Hard
Lessons: The Iraq Reconstruction Experience. U.S.
Government Printing
Office,
2009.
88
Telegram
341 Washington to FCO London, 13 March 2003, ‘Iraq Day After:
Mr O’Brien’s Visit’.
89
Letter
Gooderham to Chilcott, 13 March 2003, Iraq: Day After: The Oil
Sector’.
90
Minute
Cannon to Owen, 14 March 2003, ‘Iraq: Iraqi Oil
Post-Conflict’.
400