The Report
of the Iraq Inquiry
258.
The IPU/FCO
paper reported that the oil price had fallen by US$8 a
barrel
since early
March, and had stabilised in the “mid-twenties”. Iraq’s oilfields
had been
undamaged
by the fighting, although a few wells had been sabotaged. Those
fires were
now all
extinguished. There had been some looting and damage to pipelines
and oil
refineries.
There was a growing shortage of gas (for power stations), fuel and
cooking
gas,
particularly in the South.
259.
The IPU/FCO
also reported that within the Security Council, oil remained
a
contentious
issue; Council members had different motivations. The UK and
US
were keen
to get Iraqi oil flowing again as soon as possible “to meet
humanitarian/
reconstruction
needs”. France and Russia wanted to protect the interests of
their
companies
that had existing contracts under the OFF programme.
260.
The UK was
proposing a three-phase approach to dealing with Iraqi oil and
the
OFF
programme:
•
To extend
resolution 1472 to 3 June (the end of the current OFF
programme
phase), and
possibly extend the OFF programme itself beyond 3
June.
If the OFF
programme continued “for any length of time”, the UN
Secretary-
General
would need enhanced powers to sell Iraqi oil and buy the full range
of
humanitarian
supplies.
•
To pass
control of Iraqi oil and gas revenues to a “credible
interim
administration”
once one had been established, subject to certain
checks:
“The checks
would be those necessary to assure us (the UK) that oil and
oil
revenues
were protected against major mismanagement, corruption and
national
bias, lack
of transparency or other unfairness in the awarding of
contracts.”
•
Those
checks would have to be acceptable to the Security Council. They
might
comprise
oversight of contracts by a representative of the UN
Secretary-General
or a
committee of IFI representatives. Oversight by the Coalition would
not be
politically
acceptable or achievable in the Security Council.
•
To hand
over full control over oil and oil revenues to a democratically
elected
Iraqi
Government.
261.
The IPU/FCO
advised that the UK had stressed to the US its legal concerns
on
the limits
to the authority of Occupying Powers to export oil outside the OFF
programme
while
sanctions were in place, and to alter Iraqi oil policy or to carry
out any structural
reorganisation
of the Iraqi oil industry. The US was “well aware” of the UK’s
concerns.
262.
The UK and the
US agreed that all strategic decisions on the development
of
the oil
industry should be left to a “representative Iraqi government” and
that, in the
meantime,
all oil business should be handled in as transparent a manner as
possible.
The UK and
the US also shared “a general concern” to avoid the centralisation
of oil
revenues in
the hands of a minority, and to help limit their corrosive effect
on political life.
412