The Report
of the Iraq Inquiry
126.
The US and UK
disagreed on who should control Iraqi oil revenues during
the
Occupation.
The UK’s position, as set out in a briefing for Mr Blair in March
2003, was
that:
“The UN or
the Iraqis, not the Coalition, should manage oil
revenues.”38
127.
Resolution
1483, which was adopted on 22 May 2003, reflected the US
position
that the
Occupying Powers (the US and UK) should manage oil
revenues.
128.
During the
Occupation, the CPA excluded the UK (and British nationals
working
in the CPA)
from discussions on oil policy and rejected offers of a UK oil
policy expert.
Sir Jeremy
Greenstock told the Inquiry that, in his view, “the Americans had
no intention
to take
over and own the oil sector … I think they just felt it was such an
important area
that they
would run it themselves”.39
129.
In October
2003, against that background, the UK adopted a new approach
of
engaging
directly with Iraqi ministers and officials.
130.
The main
objectives of UK policy during and after the transition to a
sovereign Iraqi
Government
were:
•
the
introduction of measures to improve governance and transparency in
the oil
sector and
in the collection and disbursement of oil revenues, including
through
the
Extractive Industries Transparency Initiative (EITI);
•
the
creation of a public sector national oil company;
•
the
promotion of foreign direct investment (FDI), which the UK believed
to be
the only
realistic source of the funding needed to develop Iraq’s oil fields
and
facilities
and raise production. Such investment could also produce
substantial
business
for UK companies. The UK adopted an increasingly cautious
position
on the
potential role of the private sector in Iraq’s oil sector,
including FDI, over
the period
covered by the Inquiry; and
•
with
respect to the proposed Hydrocarbons Law, for the federal
Iraqi
Government
to have responsibility for signing new oil exploration and
production
contracts
and for regulating the sector. The UK’s underlying concern was
to
preserve
the integrity of the Iraqi State.
131.
There is no
evidence that the UK significantly influenced Iraqi policy in
relation to
oil. A
junior FCO official reported in September 2006 that the Iraqi
Government cared
more about
what international oil companies thought.
38
Letter Owen
to Rycroft, 25 March 2003, ‘Prime Minister’s Visit to Washington:
Iraq: UN Security Council
Resolution
on Phase IV’ attaching Paper IPU, 25 March 2003, ‘Iraq: Phase IV:
Authorising UNSCR’.
39
Public
hearing, 15 December 2009, pages 103‑104.
548