The Report of the Iraq Inquiry

550. An annex to the main paper described “problem areas”, including:

• no broad agreement on the extent of political and economic centralism versus

devolution, including in relation to energy sector development and revenue

sharing; and

• the Iraqi Government’s reliance on oil revenues (which comprised more than

90 percent of revenues). A protracted period of low oil prices could even affect

the Government’s ability to fund operational expenditure.

551. On 9 February, Mr Brown’s Assistant Private Secretary told the Private Secretaries

to Mr Miliband and Lord Mandelson, the Business, Enterprise and Regulatory Reform

Secretary, that Mr Brown had endorsed the strategy.312

552. Sir Mark Lyall Grant, FCO Political Director, told the Inquiry that the strategy

reflected the strategic importance of Iraq to the UK:

“There is no doubt in my mind that Iraq is a very important strategic country for

the United Kingdom … and that, therefore, we should have a long-term strategic

relationship with Iraq …

“The reason I say that on Iraq is because Iraq is a country which sits on the dividing

line between Persia and the Arab world. It sits on the dividing line between Sunni

and Shia communities. It is a neighbour of Turkey, and, therefore, could be a

neighbour of the European Union, if Turkey joins the European Union. It has got

massive oil and gas reserves. We therefore have a very strong strategic interest

in Iraq being a successful, prosperous, stable country, and in being an ally of the

United Kingdom.”313

553. Sir Mark said that it was not possible to strictly prioritise the UK’s political,

commercial and socio-economic interests in Iraq, in terms of their importance to the

UK.314 What was “essential” from the UK’s perspective was that Iraq remained a single

state with secure borders, with a functioning Government that could exert full security

control of the country and a functioning economy.

Oil production (m bpd)315

Oil revenue from exports

(US$bn)316

1989 2002 2003 2004 2005 2006 2007 2008 2009

2.90 2.02 1.31 2.01 1.88 2.00 2.09 2.38 2.39

––

5.1 17.2 23.3 31.9 38.3 61.2 39.2

312 Letter Catsaras to Hickey & Abel, 9 February 2009, ‘Iraq Strategy’.

313 Public hearing, 20 January 2010, pages 21-22.

314 Public hearing, 20 January 2010, page 26.

315 US Energy Information Administration website. Iraq Crude Oil Production by Year.

316 Brookings Center for Middle East Policy, Iraq Index, Comparison of Oil Revenue from Exports, 2003-2012.

456