The Report
of the Iraq Inquiry
806.
The official
expanded upon the rationale for debt rescheduling:
“In
post-war Iraq, the UK would be entitled to pursue repayment of US$1
–
US$2 billion
bilateral debts … However, if all creditors did the same and
were
successful,
Iraq’s ability to fund its own reconstruction would be
severely
compromised.
This would lead to a fiscal financing gap for Iraq, probably
filled
largely by
bilateral financing. In such a situation, the UK might be under
pressure
to make
a big contribution … The other advantage to rescheduling is that
we
suspect
that most of the debt is owed to probable non-combatant
countries
(e.g. France,
Russia), with debt relief thus providing a neat way of burden
sharing.
The other
strong argument for debt relief is that, without it, multilateral
lending is
likely to
prove very difficult.”
807.
The Treasury
told the Inquiry that Mr Brown did not comment on the
submission.489
808.
Mr John
Dodds, Head of the Treasury’s Defence, Diplomacy and
Intelligence
Team,
advised Mr Brown on 19 February that the UK’s Export Credit
Guarantee
Department
(ECGD) had already made a 96 percent provision in relation to
Iraq.490
809.
On 6 March,
Mr Blair chaired a meeting on post-conflict issues with
Mr Brown
and other
Ministers (see Section 6.5).491
At the
meeting, Mr Brown said that the burden
of
reconstructing Iraq should not be borne by just the US and the UK;
other countries
(and the
EU) should contribute. In the long
term, Iraq’s oil should fund the country’s
reconstruction.
Mr Brown was particularly concerned that UK funds should not
be used
to repay
Iraq’s debts.
810.
Mr Blair
concluded that Mr Brown should draw up “a funding plan,
including
securing
funding from wider international sources, in particular the IFIs
[international
financial
institutions]”.
811.
The FCO sent a
number of background papers to No.10 in advance of the
16 March
Azores Summit, including a revised version of the UK’s ‘A Vision
for Iraq and
the Iraqi
People’.492
The revised
version of the ‘Vision’ reflected a number of changes
from the
version developed in October 2002, including “Seeking a fair and
sustainable
solution to
Iraq’s debt problems” in place of “Negotiating generous debt
rescheduling”.
812.
The
Vision for
Iraq and the Iraqi People issued by
Mr Blair, President Bush and
Spanish
Prime Minister José María Aznar at the Azores Summit did not
mention debt.493
489
Email
Treasury [junior official] to Iraq Inquiry [junior official], 26
February 2010, [untitled].
490
Minute
Dodds to Chancellor, 19 February 2003, ‘Iraq – “Aftermath” – UK
Role’ attaching Paper
Treasury,
19 February 2003, ‘Iraq Conflict – Public Expenditure
Impact’.
491
Letter
Cannon to Owen, 7 March 2003. ‘Iraq: Post-Conflict
Issues’.
492
Letter Owen
to Rycroft, 15 March 2003, ‘Azores Summit’ attaching Paper FCO,
[undated], ‘A Vision
for Iraq
and the Iraqi people’.
493
Statement
of the Atlantic Summit, 16 March 2003, A Vision
for Iraq and the Iraqi People.
494