The Report of the Iraq Inquiry

• Iraqi oil business should be handled in as transparent and even-handed a

manner as possible.

229.  The US and UK also agreed that all decisions on the development of the Iraqi oil

industry (such as privatisation and the exploration of new fields) should be deferred until

a new Iraqi Government was in place.

230.  The FCO advised that the US was considering setting up a trust fund for oil and

other revenues. Whatever the arrangement:

“… the key point is that decisions on using the funds should not be taken by the

Coalition. Until the Iraqi interim authority has the capacity to operate a budget, the

UN Secretary-General (or the UN Special Co-ordinator) should continue to decide

on spending priorities, as he will do under the amended OFF arrangements.”

231.  The FCO also advised that Iraq’s oil revenues would not cover the cost of

reconstruction, particularly in the short term. The cost of reconstruction needed to be

shared with other countries.

232.  The UK Treasury received a paper from the US Treasury on 26 March, proposing

the creation of two Trust Funds:

• one to hold donor funds, to be administered by the World Bank; and

• one – the Iraqi Economic Recovery Fund (IERF) – to hold oil revenues and

unfrozen Iraqi assets. The IMF would manage and invest the IERF’s assets, but

the “CPA/IIA” [Coalition Provisional Authority/Iraq Interim Authority] would have

sole authority over how IERF funds were spent.121

233.  Mr Blair and President Bush met at Camp David on 26 and 27 March.122 At dinner

on the first evening, Mr Blair told President Bush that he did not want his visit to Camp

David to focus primarily on a resolution to deal with post-conflict Iraq. The question

about what sort of resolution was needed for the administration and reconstruction of

Iraq should be parked.

234.  Mr Rycroft sent Mr Blair a UK Treasury paper considering the US Treasury’s

proposal to establish two Trust Funds on 31 March.123

121 Paper Treasury, 28 March 2003, ‘International Oversight of Iraqi Reconstruction’ attaching Fax US

official to Cunliffe, 26 March 2003, [untitled].

122 Letter Manning to McDonald, 28 March 2003, Prime Minister’s Meeting with President Bush at Camp

David: Dinner on 26 March’.

123 Minute Rycroft to Blair, 31 March 2003, ‘Iraq: Reconstruction’ attaching Paper Treasury, 28 March 2003,

‘International Oversight of Iraqi Reconstruction’.

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