10.3  |  Reconstruction: oil, commercial interests, debt relief, asylum and stabilisation policy

394.  The Annotated Agenda reported that the Treasury proposed:

• a single external account for Iraqi oil and other revenue, managed by the

Iraqi Minister of Finance reporting to a Board of Ministers, operating “within

a framework established by a future UNSCR [resolution] which ensures

transparency and accountability”;

• disbursements solely for the purpose of financing the Iraqi budget; and

• continuing external audit by the IAMB, reporting to the Board of Ministers.

395.  Such an arrangement might be seen in Iraq as a constraint on sovereignty, but

conversely many Iraqis might welcome arrangements which enhanced transparency

and restricted the ability of transitional Ministers to mismanage oil revenues. The US

supported the idea of a modified DFI.

396.  The AHMGIR agreed that the UK should press for the establishment of transparent

and accountable arrangements for the management of oil and other Iraqi revenues

through the transition period.211

397.  Sir Jon Cunliffe told the Inquiry that while the US and the CPA were “very resistant

to external monitoring and external accountability” undertaken by the IAMB:

“When the Iraqi Government itself arrived, I think both Occupying Powers decided

there was joint interest in having transparency, accountability and control [over oil

revenues] and, indeed, I think that the US were with us in pushing for the interim

Iraqi Government to take on the DFI with all of its monitoring machinery.”212

398.  The 12 March meeting of the Iraq Strategy Group was advised that rising oil prices

meant that Iraq could fund its “recurrent costs”.213

399.  The British Embassy Baghdad reported on 14 March that CPA proposals to

improve governance and accounting standards within the Ministry of Oil “faced

resistance”.214 It might be difficult to overcome “vested interests” inside and beyond

the Ministry in the short time left before transition.

400.  Mr Benn called on Ambassador Bremer in Baghdad on 22 March.215 Mr Benn

reported to Mr Blair that he had encouraged Ambassador Bremer to promote

transparency in the use of oil revenues after transition.

401.  Mr Jim Drummond, DFID Director Iraq, who had accompanied Mr Benn on the

visit, reported to DFID colleagues only that Mr Benn and Ambassador Bremer had

agreed on the principle of transparency, and that Ambassador Bremer had said that

211 Minutes, 1 March 2004, Ad Hoc Group on Iraq Rehabilitation meeting.

212 Public hearing, 9 July 2010, pages 38 and 39.

213 Minutes, 12 March 2004, Iraq Strategy Group meeting.

214 Telegram 88 IraqRep to FCO London, 14 March 2004, ‘Iraq Economy: Update’.

215 Letter Benn to Blair, 24 March 2004, [untitled].

431