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News, 02-09/04/03 (2) RAPE OF IRAQ (2) * Battle for Basra "more or less over" * Suicide at the walls of Baghdad * Four die as Iraqi rocket hits command post * Bomber crew kills nine in 'The Big One'. But was Saddam Hussein among them? DIVIDING THE SPOILS * Oil's well that ends well * U.S., Allies Clash Over Plan to Use Iraqi Oil Profits for Rebuilding * Postwar Iraq would need more than oil funds, experts say * Lead role suggested for oil majors in post-war Iraq * Exiles call for Iraq to let in oil companies * What companies are where in the Iraqi oil sector * U.N. Releases $863M in Iraq-Kuwait Funds RAPE OF IRAQ (2) http://english.aljazeera.net/topics/article.asp?cu_no=1&item_no=2079&version =1&template_id=277&parent_id=258 * Battle for Basra "more or less over" aljazeera.net, 7th April British forces backed by tanks and helicopter gunships walked unopposed into the centre of Iraq's second city Basra on Monday declaring the battle "more or less over". "We are covering all the areas of Basra, including the old city. There are soldiers and armoured vehicles inside (the old city) right now," Lieutenant Colonel Hugh Blackman of the 7th Armoured Brigade told reporters. The British have been making regular incursions into Basra over the past few days but it was the first time they had been able to move into the narrow streets of the Old Town. A British paratrooper walks through Baghdad Street in the old city of BasraBut British Air Marshal Brian Burridge said they were still expecting some resistance from what he described as a "hard core" of Baath Party members. "The 3rd Battalion of the Parachute Regiment are in the process now of sweeping the old town which is a myriad of narrow streets and winding alleys and this has to be done on foot," he told reporters at Central Command headquarters in Qatar. But officers on the ground said they were confident the bulk of resistance had been subdued in a raid on Sunday. "This is more than we could have hoped for. We took part in the raid yesterday and today it's a completely different city," said Major Chris Brannigan of the Royal Scots Dragoon Guards, manning a tank at an intersection on the main road, Baghdad Street. Not a shot was fired as men, women and children came out onto the road, some to greet the new occupiers and others simply to stand and watch. The city had been virtually under siege since the American-British war to oust Iraqi President Saddam Hussein began 19 days ago. But British troops finally launched an all-out assault on Sunday when battalions of tanks pushed right into the heart of town and surrounded the local headquarters of the Baath Party. Basra descended into chaotic scenes of lawlessness on Monday. On the city's outskirts, youths used a breach in control to loot, carting off in wheelbarrows and trailers anything they could -- office equipment, furniture and household appliances. "There are thieves coming from everywhere," said Ahmed Abdul Muttalib, a Basra resident. "They think there is no government and they are taking whatever they can." Burridge said looting was almost "an inevitability" but pledged to bring it under control. "We will try to maintain a sense of law and order," Burridge told reporters at Central Command headquarters in Qatar. "Before the troops arrived in Iraq it was 100 percent safe. The government was strong and stopped people from stealing. But now these people could kill me to take my car," naval engineer Mohammed told AFP. The offices of the oil ministry, the national electricity company, the central bank and other official bodies, badly damaged in bombings, were invaded by armies of thieves. On the ground, Lieutenant Colonel Hugh Blackman of Britain's 7th Armoured Brigade acknowledged that occupying armies had a responsibility to guarantee safety and protection of the civilian population. Contact had been made with authorities in Basra to "create a local government" that would allow normal life to resume, Blackman said. Colonel Hugh Blackman of the Scots Dragoon Guards plays with a local boy in Basra Saddam's presidential palace in the city was seized by marine commandos in a morning raid. The British also seized control of Basra university which had been used as a base by government followers to launch attacks. Rocket-propelled grenades and Kalashnikovs littered the ground around the bodies of 12 militiamen who were dressed in a combination of civilian and military clothing, an AFP correspondent witnessed. Jaled Yusuf, a taxi driver, said these men put up a rightful resistance, but suffered a shameful defeat. And the fault, he said, belonged to people like him who did not "join them in their bravery." "All Iraqis should take up arms. True, our country isn't united and it's not stable. But in the future, we should all fight together against foreign oppressors should there be a reason," he said gesturing toward the British Challenger tanks working their way through Basra. One of those joining in the celebrations, Qusay Rawah, said the downfall of Saddam's government in Basra was a day "we had prayed for". But Jelil, a resident of the Old Town, denied there was any cause for celebration. "The people in Basra feel defeated," he told AFP. "Sure, we certainly hated Saddam, but we also hate the British and Americans." Another man near the entrance to the city despaired that "everything is ruined. "Baghdad is falling; Basra is falling. The Iraqis no longer have a government," he said. "What will happen now we have no government?" asked 47-year-old Majid Abas. "Will we get water and medical supplies? We are poor, we have nothing." British Defence Secretary Geoff Hoon said British troops who had moved into Basra were there "to stay". At his London press conference, Hoon said there was strong evidence that senior aide to the Iraqi president, Ali Hasan al-Majid -- known as "Chemical Ali" for allegedly ordering a gas attack that killed about 5,000 Kurds in 1988 -- had been killed in a US-British air strike in Basra. --- Al Jazeera with agency inputs http://atimes.com/atimes/Middle_East/ED08Ak06.html * Suicide at the walls of Baghdad by Pepe Escobar Asia Times, 8th April [Pepe Escobar reckons its all over bar the shouting. But he is reluctant to admit the possibility that Saddam might come to a humiliating end: 'Saddam may never be found. The fighting spirit of the roughly 500,000 Iraqis who form the elite of the regime and depend on its survival remains. Saddam may opt to deliver audio rallying cries, reminiscent of calls by Osama bin Laden, from the Iraqi ether ... He knows that his victory would be not to capitulate.'] AMMAN - In more ways than one, we're back to the Middle Ages. In Medieval wars, the desert was an abandoned battlefield and the cities were fortified castles (like today's Basra and Baghdad). Even if the 3rd Infantry Division and the 5th Corps secure the symbols of Saddam Hussein's regime, the Iraqi guerrilla war - or the Palestinization of Iraq - will not fade away, with the civilian population taken as hostage. This presents the resistance with a stark problem: how, and for how long, can you stop Abrams M1A1 tanks and Bradley fighting vehicles armed with only Kalashnikovs and small rocket launchers? It was just an "armored raid" - according to the Pentagon. Under an incredibly thick haze, a mix of dark clouds from oilfield trenches, sandstorm after-effects and smoke from battles, 70 American tanks and 40 armored vehicles have ripped through the heart of western Baghdad, reaching the west bank of the Tigris. Smoke was everywhere, the sound of ground fire everywhere. On the ground, Iraqi-side, there was visibly no effective structure, no command and control. The scenario fits the American battle plan: to slice Baghdad into small pockets and then take them one by one. The eastern banks of the Tigris are still firmly in the regime's hands. But the marines could spring up from the southeast at any moment. On a clock, Baghdad is encircled from five o'clock to twelve. The non-encircled twelve-to-five accounts basically for the northeast - where Saddam City, the huge Shi'ite suburb, lies: the Americans still hope an uprising in Saddam City will be the coup de grace against Saddam's regime. At the crucial hours when the American task force was carrying its mission "to remove whatever vestiges of government are still left" - according to Central Command in Qatar - Mohamed Saeed al-Sahaf, the gutsy, flamboyant Iraqi information minister, member of the cabinet and privileged target of said mission strolled to the roof of the Palestine Hotel, near Tahir square, where many Western and Asian cameras are positioned, his guns blazing, to deliver in Arabic what may rank as the most startling monologue of the whole war. While American tanks were parked roughly a kilometer away from the minister between the imposing memorial crossed swords of the national parade ground - where a giant statue of Saddam Hussein was duly bulldozed - Sahaf said that there were "no American columns in the city of Baghdad". He said that the Americans were surrounded. He said that the nonexistent columns were "slaughtered". "They are beginning to commit suicide at the walls of Baghdad." He smiled as he was saying, "We fed them hell." Over the sound of distant gunfire, he broke into a grin when he said, "Those invaders, their tombs will be here in Iraq." American soldiers, meanwhile, were saying that "today is the symbol of victory". They said that they were in the al-Rashid hotel - where in the entrance lies a marble portrait of George Bush senior, so patrons can step on him on their way in or out. The marines said that they were in the information and foreign ministries - but, as was later discovered, had not taken over the buildings, still defended by the Republican Guards. Both sides of the war, on both sides of the Tigris, will fatefully meet sooner or later. Iraqi resistance may be blocking the bridges over the Tigris - and American tanks already cannot cross two damaged bridges into southeast Baghdad. But how long can the resistance go? Echoes from Baghdad tell of a ghost town since Sunday. Iraqi exiles confirm the fears of the civilian population of house-to-house fighting. There are no phones, no water and no electricity. Families don't seem to know what to do except to stay home. This may finally be the endgame. American soldiers are raiding the heart of Baghdad. The British are in almost full control of Basra. Chemical Ali - the man who ordered the gassing of Kurds in Halabja - is allegedly dead. Mosul is being severely bombed. What are Saddam's options in trying to prolong a military battle that the whole planet knows he has already lost? Saddam the pedestrian, his stunning, unprecedented walkabout on Saturday in the streets of Baghdad may have been a smashing coup in the propaganda war - but this does not mean that the regime is in control. Saddam is calling his seemingly invisible troops to organize attacks any time, anywhere, to defend Baghdad. Anybody in any circumstances should join the closest military unit - not necessarily his own regiment. These are significant signs that there seems to be no coordination whatsoever. But after his stroll on Saturday, Saddam will be back in a bunker for good, and one may be certain that he still expects to find a way out. His implacable indifference to civilian suffering is legendary. He is counting on more and more "collateral damage". Humanitarian agencies are desperate - warning of an impending disaster in Baghdad. Saddam may never be found. The fighting spirit of the roughly 500,000 Iraqis who form the elite of the regime and depend on its survival remains. Saddam may opt to deliver audio rallying cries, reminiscent of calls by Osama bin Laden, from the Iraqi ether. He can try to manipulate world public opinion against Iraqi civilian casualties. He is likely thinking that the Americans can raid Baghdad at will. He knows that his victory would be not to capitulate. And he hopes that as far as Arab popular opinion - and most of the world's 1.3 billion Muslims - is concerned, he has already won. http://www.guardian.co.uk/international/story/0,3604,931996,00.html * FOUR DIE AS IRAQI ROCKET HITS COMMAND POST by Stuart Millar, Dan Plesch and Giles Tremlett in Madrid The Guardian , 8th April Iraqi fighters yesterday demonstrated their continued ability to inflict serious damage on advancing American forces by mounting a devastating rocket attack from behind coalition lines on a US brigade headquarters south of Baghdad. As the US 3rd infantry's 2nd brigade was mounting its high-profile incursion into the heart of the capital, at least two of its soldiers and two journalists were killed when the brigade's tactical operations centre on the city's southern outskirts was hit by a single rocket. One of the dead journalists was identified last night as Julio Anguita Parrado, 31, a New York correspondent for the Spanish newspaper El Mundo. The identity of the other journalist had not been revealed but the German news channel n-tv was reporting last night that he was German. The death toll may rise further. A further 15 people were wounded, two of whom remained in a critical condition last night. CNN said it had been told by Pentagon sources that six soldiers initially listed as missing after the attack may have been killed. US commanders said the rocket appeared to have been fired not from inside Baghdad but from the south, indicating that Iraqi units are still operating behind US lines. Lt Col Peter Bayer said 17 military vehicles had been destroyed by the rocket which had left a "sizeable crater". He added: "We had a team of doctors and medics right there, which was the good news. They saved a lot of lives." Military analysts warned that unless the Iraqis had scored a lucky hit, the attack challenged coalition claims that the forces defending Baghdad had been reduced to a rabble that was incapable of mounting coherent and effective resistance. It provided a graphic lesson for coalition commanders that Iraqi forces loyal to Saddam still had the capability to detect a key US command post, to communicate that information to a unit and to launch a missile with enough accuracy to cause so much devastation. According to CNN correspondent Walter Rodgers, embedded with the 3rd Infantry's 7th Cavalry regiment, the communications centre consisted of drawn-up Bradley fighting vehicles and Abrams tanks and was the key command post for the main unit involved in fighting in Baghdad. The vulnerability of coalition forces to guerrilla attacks was made clear during the opening phase of the war, when Iraqi fighters inflicted heavy losses and slowed the push north towards Baghdad by repeatedly attacking the flanks and rear of US and British columns. Mr Parrado, the second El Mundo correspondent to have been killed in a war zone in little over a year, had been covering the 3rd Infantry's advance on Baghdad since the start of the war. Because he was based in the US, like many of the foreign correspondents embedded with the US army, he was able to do their training courses for journalists. He had used his second surname as a byline so as not to be confused with his father, Julio Anguita, who was the former leader of Spain's communist-led United Left coalition. http://news.independent.co.uk/world/middle_east/story.jsp?story=395414 * Bomber crew kills nine in 'The Big One'. But was Saddam Hussein among them? by Patrick Cockburn in Arbil, northern Iraq The Independent, 9th April [Patrick Cockburn on this and other attempts to kill President Hussein] His air traffic controller was clear as could be about the importance of the mission. As the pilot of the B-1 bomber swooped low, the controller told him: "This is the big one." The long-range bomber's four crewmen moved swiftly, triple checking their co- ordinates. They were already in the skies over Baghdad. Twelve minutes after the emergency order, they dropped four satellite-guided 2,000lb earth penetrating bombs on a house in Baghdad's Mansur district. They left a huge smoking crater where the al-Zaa restaurant used to stand, and at least nine civilians dead. But their quarry, British intelligence sources signalled last night, may have escaped again: Saddam Hussein, they suggested, is thought to have left the restaurant minutes before the bombs homed in. Yesterday's was a mournful scene in Mansur, close to an old racecourse where trainers used to walk their horses. Rescue workers dug through the rubble frantically to recover bodies. The Iraqi authorities say at least nine people, including a child, were killed and four wounded. At least four houses were flattened. It is clear from pictures of the damage that nobody in the wrecked building, who may have been innocent civilians, could have survived Monday's deep penetrating bombing. Yesterday, the doubts over whether President Saddam was dead or alive were putting world financial markets on edge. The picture was indeed confused, although there was one certainty: he was losing control. Pentagon officials said they might not know for days. Establishing whether he escaped or sent a double to the meeting may rest on DNA sampling, they indicated. "It's possible we may never be able to determine exactly who was present without some detailed forensic work," admitted Brigadier General Vince Brooks at Central Command in Qatar. The British were more confident. Al Lockwood, the main British spokesman, said: "We're fairly certain and we have good source reports saying he has been killed." In war, though, little is certain, and that line was changing later as more intelligence came in. The Iraqis, predictably, have denied that any of their leaders has been killed. The newspaper of the Iraqi Patriotic Union of Kurdistan claimed that President Saddam and his sons, Uday and Qusay, have gone into hiding in Saddam's birthplace and power base of Tikrit. Either way, America clearly believes it has a source close to the Iraqi leadership who can provide information on the whereabouts of the leader. Forty-five minutes before the strike, commanders in the Gulf had received a tip from the CIA. For the second time in three weeks, one of its moles in Baghdad had passed on what it believed was credible intelligence on where the President and his aides were meeting. A failed attempt to assassinate President Saddam at the beginning of the war three weeks ago in a missile attack on a complex in the southern suburbs of Baghdad was also prompted by a CIA tip from an individual thought to be in the dictator's entourage. The CIA has been trying for years to penetrate President Saddam's tight inner circle of security made up of men from his tribe and clan. He has always taken elaborate precautions to avoid assassination by travelling in inconspicuous vehicles and at the last moment moving into a suburban house. He seldom uses bunkers, whose position he assumes are well known to the Americans. He has been a hunted man before. In 1959, he escaped from Baghdad after attempting to kill President Abd al-Qarim Qassim and swam the Tigris fully dressed to escape. In the 1991 Gulf War, although it was illegal for the United States to take part in assassinating foreign leaders, it tried to hit bunkers where it suspected he might be. More than 400 people, mostly women and children, were killed in the Amariya shelter which the US Air Force thought was used by Iraqi officials. The only time the Americans came close to hitting him was apparently by accident when they bombed a convoy on the Basra road as his car happened to be passing. This time, the attempted assassinations are the result of far longer consideration. For more than a year the CIA has been trying to recruit an agent at the regime's heart and it clearly believes it has succeeded. One source said: "They came close on 20 February. They got the place right but the timing wrong, though Saddam was near by when the missiles hit." The Mansur district is in the heart of Baghdad. It is often referred to as fashionable, but its shops and cafés are only a shade less tattered than the rest of the city. But it does contain a number of embassies, including the Russian and the Jordanian. Many members of the elite live there and it it is the site of the Hunting Club, founded by President Saddam himself in the late 1960s after he and his fellow Baathists found themselves blackballed from other establishments. Mansur was also the site where gunmen tried and nearly succeeded in killing President Saddam's elder son, Uday, in 1996. In a a carefully organised ambush, he was hit by eight bullets and was probably only saved because his would-be killers thought he would be driving his car and not sitting in the passenger seat. [.....] DIVIDING THE SPOILS http://www.timesonline.co.uk/article/0,,630-630456,00.html * Oil's well that ends well by Anatole Kaletsky The Times, 2nd April [Anatole Kaletsky argues that the war will not cause any great financial upsets bcause the production of oil is now assured, through the capture of the Southern fields (he is surely wrong at the time of writing when he says the Kirkuk firld is secured). That being the case 'As far as the world economy and financial markets are concerned, this war is already over.' He goes on to argue - rightly in my view - that war in general is good for business.] WHATEVER one may think about the morality of the Iraq war, about the military planning or about the Bush Administration's competence, honesty and motives, the first ten days of combat have made at least one thing clear. As far as the world economy and financial markets are concerned, this war is already over. The manic depressive speculators and dealers who pushed Wall Street to its biggest gain in 20 years two weeks ago and then took most of it back last week have not, of course, yet grasped this. Wall Street still swings by a hundred points every time a missile hits an Iraqi bazaar, some troops are blown up by a car bomb or a rumour kills Saddam Hussein and then resurrects him. Such mood swings reflect only transient emotions. The harsh, unsentimental reality is that financial markets know nothing of morality, care little about body counts and less about civilian suffering. Financial markets think only of profits and economic prospects - and the threat to the global economy from the war has diminished almost to vanishing point in the past ten days, regardless of what may or may not be happening on the streets of Baghdad. To understand what I mean it is sufficient to glance at the map on the right. This shows the main oilfields, pipelines and pumping stations of Iraq. As is evident, the great bulk of Iraq's oil assets are in the southeast and north, around Basra and Kirkuk. Indeed, the four great oilfields of the Basra region - Rumaila, West Qurna, Majnoon and Nahr Umar - account for about two thirds of Iraq's oil production of 3.5 million barrels a day. The giant Kirkuk oilfield, the first to be developed in the Middle East and, 80 years later, still one of the most productive, provides about half the remaining output. This leaves less than 15 per cent of Iraq's oil output coming from the other fields dotted around the centre of the country, including the large, but relatively underdeveloped, production area in east Baghdad. It so happens that the areas around Basra and Kirkuk are the parts of Iraq already in the hands of the American and British, along with their Kurdish allies in the north. While the cities themselves have yet to be "liberated" (or "invaded", depending on your point of view), their rural hinterlands - and specifically the oilfields - appear to be firmly under allied control. Given a few more weeks, it seems almost certain that these areas will be totally pacified, that oil fires will be extinguished and pumping stations repaired. Millions of barrels of the "black gold", which is the lifeblood of the world economy, will then flow again through the pipelines to Turkey and the deep-sea port of Umm Qasr. Once Iraq's production is restored to its pre-war level and once, more importantly, the presence of US troops secures the flow of oil for the year or two ahead, the business community and the global financial markets can essentially forget about the war in Iraq. Multitudes of civilians may die in the bombing, thousands of US troops may fall in a battle for Baghdad (although neither of these tragedies is likely, to judge by the conduct of the war so far); but once the oil supply is secured, there will be no logical reason why such disasters should have any more impact on the world economy than did the massacres of civilians in Bosnia, Rwanda or Cambodia or the military setbacks America suffered in the 1980s in El Salvador or in the 1960s and 1970s in Vietnam. In a nutshell, my argument is simple. The only reason why Iraq ever mattered to the world economy was oil. This oil has now been secured. Hence Iraq can be relegated, as far as the markets and the world economy are concerned, to Chamberlain's infamous status of "a far away country of which we know little". At this point, many of the readers who have been patient enough to bear with me so far, will probably have thrown down this paper in disgust. Opponents of the war will be appalled by my cynical materialism, which seems to ignore human suffering on the grounds that massacres do not "move the markets". People who support America will be equally incensed at my implication that this war is not about disarmament or security, but about oil. And even the readers who accept that a journalist should sometimes distinguish between reality and moral judgments, will probably deride the Panglossian view I present above. Surely, they will say, a world economy already on the brink of recession, won't simply be able to shrug off the psychological effects of a protracted war. For the readers who have been tolerant enough to stick with me so far, let me answer each of these complaints. On the first two points about morality and motivations, I can simply repeat the argument I offered in this newspaper last Thursday. I support this war because it offers a chance to transform the lives of millions of oppressed Iraqis, provided it is prosecuted by America with care, patience and skill. I also believe that the Bush Administration started this war for several dishonest motives, one of which was linked to oil. These two attitudes may seem in contradiction but they are actually quite consistent - provided you accept the utilitarian view that actions should be judged by their consequences, not their intentions. In my view, the dubious motives behind the Bush Administration's warmongering matter much less than the potentially benign consequences of freeing 20 million people from the hell of Saddam Hussein's Iraq. That balance, of course, will partly depend on the allies' ability to avoid civilian casualties. That, in turn, probably means the war will progress less quickly than the world had been led to expect by the "chicken hawks" in Washington - Donald Rumsfeld, Paul Wolfowitz and Dick Cheney, whose sole interest until two weeks ago was to tempt American public opinion into what they marketed as a quick and painless exercise in high-tech military surgery. But if the conflict does prove unexpectedly slow and painful, won't this automatically discredit the main economic argument I presented above? Won't a protracted war inevitably trigger a collapse of the world economy and financial markets? I don't think so, provided I am right about the allies' ability to restore and maintain the flow of Iraqi oil. Consider the channels through which the war might influence the world economy. Apart from raising the oil price, the war has caused economic damage in three ways. It has hit consumption. It has discouraged business investment. And it has stifled hopes of recovery in global stock markets. Suppose the first of these detriments - the high oil price - were removed. What would happen to the others? Most analysts assume that consumption and investment will automatically go on falling as long as the fighting continues and allied troops keep being killed. Only a clear US victory, followed by peace and stability in the Middle East, would restore consumer and business confidence. This may seem plausible enough, but there is actually no evidence to support this view. Far from depressing economies, wars have always been associated with strong economic growth - partly because the direct effects of military spending have created employment and investment, but also because consumers have continued to spend money in times of war. The patterns of consumption might change - for example, Amercians may spend less in the next year on foreign travel - but there is little reason to suppose that war will encourage more saving and less spending. Industrial investment, in turn, is likely to follow consumption and government spending, rather than being governed by emotional reactions to bloodshed in foreign lands. If anything, the sense of danger tends to shorten people's time horizons and encourage them to spend quickly on immediate gratification, rather than setting savings aside for long-term investment. Turning to stock markets, the greatest fear among investors today is a Japanese-style deflation. But if there is one sure remedy for falling prices, it is war. Every war in history, going all the way back to the Egyptians (and indeed the Babylonians) has pushed prices up, not down. It is hard to see why Iraq should be the first exception, especially since it is being financed entirely through deficits spending, combined with tax cuts and the most expansionary policy seen in the US to date. This was certainly the pattern during the Vietnam War, which coincided with the fastest economic growth in US history from 1964 to 1968, when both consumption and industrial investment advaced at a record pace. This growth tailed off dramatically as the war wound down from 1970 onwards. The Korean War also triggered a boom in American (and global) output from 1950 to 1953, followed by a deep, though brief, recession following the ceasefire in July 1953. Why should this pattern not be repeated in the year ahead? The obvious answer, has been the oil price. Not only have soaring oil prices imposed a tax increase on businesses and consumers. The financial markets have been well aware of the history of past oil price shocks - each of the past four global recessions has been preceded by an oil shock and every time the oil price has risen above $35, a recession has followed. Now that the allies have secured Iraq's oilfields, that is at least one horror the world should be able to avoid. http://www.washingtonpost.com/ac2/wp-dyn/A15368-2003Apr2?language=printerU.S . * U.S., Allies Clash Over Plan to Use Iraqi Oil Profits for Rebuilding by Colum Lynch and Peter Behr Washington Post, 3rd April [Question if 'the U.S. has the legal power under international law to seize and sell Iraq's oil absent a new Security Council resolution' ... "It is extremely doubtful any reputable oil company will purchase oil without clear title." But some industry officials said oil companies might be willing to buy Iraq oil if purchases were guaranteed by the United States.' The emphasis is of course on using the oil for the benefit of the Iraqi people. For example by paying off the debts the Iraqi people owe to Kuwait under the UN Compensation Scam? Former Shell Oil Co. chief executive Philip J. Carroll is tipped to be the man in charge of Iraqi oil] UNITED NATIONS, April 2 -- The Defense Department is pressing ahead with plans to temporarily manage Iraq's oil industry after the war and to use the proceeds to rebuild the country, creating a conflict with U.S. allies in Europe and the Middle East, according to diplomats and industry experts. The White House maintains that Iraq's oil revenue is essential to financing the country's postwar reconstruction. The administration intends to install a senior American oil executive to oversee Iraq's exploration and production. Iraqi experts now outside the country would be recruited to handle future oil sales. Industry sources said former Shell Oil Co. chief executive Philip J. Carroll is the leading candidate to direct production. But the postwar oil strategy is clouded by legal questions about the right of the United States to manage Iraq's oil fields. Administration officials are searching for a legal basis to justify the U.S. plan. If the war succeeds, the United States may claim a legal right as an occupying power to sell the oil for the benefit of Iraq, people close to the situation said. U.N. and British officials said the United States lacks the legal authority to begin exporting oil even on an interim basis without a new Security Council mandate. Iraq's oil sales before the war were controlled by the United Nations under its oil-for-food program. "We're moving into a legal realm that is not clear," said Jan Randolph, head of economic forecasting at the World Markets Research Center in London. "The impression we're getting is that because the Americans are largely bearing the [war] costs, they will want to determine what happens next." David L. Goldwyn, president of Goldwyn International Strategies, said: "I don't believe that the U.S. has the legal power under international law to seize and sell Iraq's oil absent a new Security Council resolution." Goldwyn, who was assistant secretary of energy in the Clinton administration, added: "It is extremely doubtful any reputable oil company will purchase oil without clear title." But some industry officials said oil companies might be willing to buy Iraq oil if purchases were guaranteed by the United States. Firefighters are battling blazes at two wells in Iraq's southern Rumaila oil fields, but more than 500 wells are believed to be undamaged. Some production could begin within a month, if war conditions permit and legal issues are resolved, some industry experts estimate. Iraq's major northern field around Kirkuk is still controlled by Iraqi forces. A resumption of Iraq oil exports would have little effect on oil prices if Saudi Arabia were to curtail its output to stabilize prices. Crude oil for May delivery fell $1.22, or 4.1 percent, to $28.56 a barrel today on the New York Mercantile Exchange. Russia, France, Germany and other key Security Council members are seeking to preserve U.N. management of the Iraqi oil industry. The Security Council president, Adolfo Aguilar Zinser of Mexico, told reporters today that the 15-nation council has voiced its commitment to the principle that "Iraq's oil belongs to the Iraqis" in intensive daily discussions on the fate of Iraq's oil industry. "The council must make an effort to preserve . . . Iraq's sovereignty over its oil," he said. Iraq was exporting as much as 2 million barrels of oil a day before the conflict, about 3 percent of the world's supply. Production from the southern fields was cut off by the war, but some Iraqi oil still flows through a pipeline to Turkey. That oil has not been sold because of the uncertain legal situation. The Bush administration insists that all Iraqi oil revenue will be used to benefit the Iraqi people. "Iraq is a wealthy nation," said White House spokesman Ari Fleischer. "Unlike Afghanistan, for example, Iraq will have a huge financial base from within upon which to draw. And that's because of their oil wealth." U.N. Secretary General Kofi Annan suspended Iraqi oil exports on the eve of the military campaign. The Security Council decision Friday to use $13 billion in Iraqi oil revenue to finance relief efforts over the next six weeks has yet to be implemented because of red tape, and only a fraction is expected to provide immediate relief. Seeking to prevent another acrimonious political battle in the council, Britain has begun pressing the Bush administration to organize a meeting of Iraqi representatives to make decisions on the fate of the country's oil industry. U.N. control over Iraqi oil is firmly rooted in the sanctions imposed after the 1991 Gulf War, a British official said. "All these questions about the Iraqi oil industry are totally academic until the sanctions are suspended, and the sanctions are not going to be suspended at the request of Donald Rumsfeld," the official said. "There is a temptation to say why should we be subtle after we weren't supported in the Security Council. We certainly hope people will resist that temptation." But industry sources say the administration fears that U.N. debates would block reconstruction funding from oil sales. "It has reached out to a very wide spectrum of oil experts over three months and given a lot of thought to what they would do. They've come up with a structure," said one industry executive close to the situation. Carroll, the former Shell executive, who retired last year as chief executive of Fluor Corp., would report to retired Army lieutenant general Jay M. Garner, named by the Pentagon to direct postwar reconstruction as head of a new Office of Reconstruction and Humanitarian Assistance. Fluor, an engineering and construction firm, is one of the companies bidding for reconstruction contracts. Carroll declined to comment today. "If it's correct, it's a splendid choice," said Thomas F. "Mack" McLarty III, the Clinton White House chief of staff who is now president of Kissinger McLarty & Associates. "I think he's particularly well suited. He's thoroughly knowledgeable in the industry. He's had a proven record of success." Iraq is authorized to export oil to buy food, medicine and other humanitarian goods under the oil-for-food program. The program fed more than 80 percent of the Iraqi population before the current war. The U.N. action to move humanitarian aid to Iraq is behind schedule, increasing pressure on the United States and Britain to shoulder the financial burden of providing food and medicine. The prospect of the United States asserting control over Iraq's oil industry has hardened foreign opposition to Washington's postwar plans. Russia, which signed large oil development contracts with Saddam Hussein's government, is seeking a guarantee that it will continue to have a say in the United Nations on how Iraqi oil revenue is spent. France also is determined to protect its interests in development of Iraq's oil reserves. "The Russians will have a problem," said one administration official. "They would like to see us pay for everything from the U.S. Treasury. But the reality is we are going to have to tap into the oil revenues for the reconstruction." Robert E. Ebel, energy program director at the Center for Strategic and International Studies in Washington, said: "The French have a position to protect in Iraq and so do the Russians. They want to be sure they're not shunted aside. If we do too much of that people will say it really was about oil." Staff writer Kenneth Bredemeier contributed to this report from Washington. Behr reported from Washington. http://www.detnews.com/2003/nation/0304/04/nation-128284.htm * Postwar Iraq would need more than oil funds, experts say by Warren Vieth Detroit News, from Los Angeles Times, 4th April [[Dean Baker, co-director of the liberal Center for Economic and Policy Research in Washington, and Bathsheba Crocker, director of the Post-War Reconstruction Project at the centrist Center for Strategic & International Studies, argues that Iraq's economic condition is disastrous and will require 'an international aid and debt relief program as ambitious as the Marshall Plan'. As for oil, 'the more oil Iraq produces to try to pump up its earnings, the more likely it becomes that prices will fall, leaving it no better off than before', which reminds us of the problems that led President Hussein to invade Kuwait in the first place] WASHINGTON -- To hear some Bush administration officials tell it, the reconstruction of Iraq will largely pay for itself, thanks to a postwar gusher of petroleum revenue. "The one thing that is certain is Iraq is a wealthy nation," said White House press secretary Ari Fleischer. A look at the national balance sheet tells a different story. Iraq will emerge from the war a financial shambles, many economists say, with a debt load bigger than that of Argentina, a cash flow crunch rivaling those of Third World countries, a mountain of unresolved compensation claims, a shaky currency, high unemployment, galloping inflation and a crumbling infrastructure expected to sustain more damage before the shooting stops. And the more oil Iraq produces to try to pump up its earnings, the more likely it becomes that prices will fall, leaving it no better off than before. "Clearly, it's a basket case," said Dean Baker, co-director of the liberal Center for Economic and Policy Research in Washington. "Once you start talking about it, you see what an impossible situation it is. I don't think the Bush administration is anxious to have that conversation." Bathsheba Crocker, director of the Post-War Reconstruction Project at the centrist Center for Strategic & International Studies, said Iraq's oil money is not the panacea many Bush officials seem to think it is. "It's unreasonable to think that oil is going to finance all of the needs of the country," Crocker said. "All told, there's just not enough money to go around." Baker and Crocker are among a small but vocal contingent of nongovernment economists and foreign policy analysts who say it's time for America to stop pretending that life in Iraq after the war will resemble something out of "The Beverly Hillbillies." The reality, they say, will look more like Chapter 11. In their view, the only satisfactory solution is an international aid and debt relief program as ambitious as the Marshall Plan that helped Europe recover from the ravages of World War II. "Unless debt and reparations are dealt with properly, Iraq is basically bankrupt," said Rubar Sandi, an Iraqi-American investment banker who is pressing administration officials to embrace a major debt relief initiative. "I know they might not like what I'm saying," said Sandi, whose Washington-based Corporate Bank Business Group has investments in several developing countries. "But I am a businessman, and it's simple mathematics." Although the debt write-offs would be spread far and wide, some of the biggest hits would be taken by countries such as Russia and France, which supplied Saddam Hussein with military gear and other goods before the 1991 Persian Gulf War and have been staunch opponents of the current conflict. Even then, experts say Iraq's oil revenue would probably fall short of what is needed to pay for postwar reconstruction, and much of the immediate shortfall would wind up being financed by U.S. Treasury bonds. So far, the administration seems not to have noticed. Deputy Defense Secretary Paul Wolfowitz testified recently that Iraq would be able to pick up much of the tab for postwar rebuilding. Office of Management and Budget Director Mitchell Daniels Jr. asserted that oil and gas revenues and confiscated Iraqi assets would provide "abundant" resources for reconstruction. Some members of Congress agree. "I don't think it makes sense to ask U.S. taxpayers to pay the full cost of rebuilding Iraq when the Iraqi state has plenty of resources to do so itself," said Sen. Byron Dorgan, D-N.D., who introduced a resolution Thursday calling for the use of oil proceeds to finance the rebuilding effort. However, Bush administration officials have declined to make specific estimates of the long term costs of rebuilding Iraq. Without question, Iraq possesses assets any country would covet. It sits atop the world's second-biggest pool of proven oil reserves, some 112 billion barrels, as well as huge deposits of natural gas and petroleum yet to be discovered. But wealth in the ground does not necessarily translate into money in the bank, at least not immediately. Iraq's oil infrastructure has deteriorated badly during Saddam's reign, and most experts say it would take up to two years and $5 billion to restore production to its pre-Persian Gulf War level. Estimates of Iraq's potential oil earnings during the first year or two after the war range from about $15 billion to $20 billion, depending on price and production assumptions. >From that income, at least $11 billion would be needed initially for routine government spending on state employees' salaries, public health, safety, education, agriculture and welfare programs and the like, according to Sandi. That would leave $4 billion to $9 billion to finance postwar repairs, infrastructure development, humanitarian assistance, debt payments, claim settlements and war reparations. And that's where the numbers stop making sense. Estimates of Iraq's reconstruction needs start at about $25 billion and run as high as $100 billion. The Council on Foreign Relations predicts that reconstruction will consume about $20 billion a year for several years. Iraq's external debt -- loans it has taken out from foreign countries and international creditors -- totals at least $60 billion and as much as $130 billion. Sandi, who has contacted a number of governments to discuss Iraq's financial situation, said his best estimate is about $115 billion. At 10 percent interest, as low a rate as indebted countries can expect to pay, Iraq's interest payments alone could cost more than $10 billion a year. Iraq also faces thousands of compensation claims totaling more than $200 billion. Nearly $100 billion is being sought by Iran as a result of the eight-year war instigated by Saddam. As well, many claims were filed by Kuwaiti interests in connection with the 1990 invasion that triggered the Gulf War. The United Nations, which is arbitrating a portion of the claims, is already deducting about $4 billion a year from Iraq's oil revenue to pay claimants. In addition, Russia, France, China and several other countries have signed contracts with Iraq totaling about $60 billion. Russia, in particular, is insisting that a new Iraqi government must honor those deals. A number of economists say the only practical solution is for creditor countries and commercial lenders to write off a substantial portion of the debt, perhaps as much as 80 percent, and to allow a moratorium on all payments and reparations for the first five years or so following the war. The United States and other members of the Paris Club creditor group did that for Yugoslavia following the war in Kosovo in 2001. "There's a very good argument for a massive restructuring or writing off of debt," said CSIS' Crocker. "The international community has certainly done that in the past." The United States may be reluctant to take the lead on debt relief. Not only would it focus attention on the substantial costs associated with the war effort, it would require asking Russia, France, Saudi Arabia and other war skeptics to swallow a disproportionately large share of the debt forgiveness. "It's going to be hard for them to say, ãOK, Iraq, you don't have to pay your debts,' especially when they're insisting that everyone else has to pay all their debts all of the time," said Baker, the CEPR economist. http://english.aljazeera.net/topics/article.asp?cu_no=1&item_no=1881&version =1&template_id=277&parent_id=258 * Lead role suggested for oil majors in post-war Iraq aljazeera.net, 6th April [Talks between Iraqi opposition leaders in exile and senior US officials, 'held under the auspices of the oil and energy working group of the State Department's future of Iraq project'. There is a reference to 'Baghdad's archaic oil industry' but no reference to the condions under which 'Baghdad's archaic oil industry' had to operate for the past twelve (indeed the past twenty five) years] Iraqi opposition leaders in exiles meeting with senior US officials in London have agreed on international oil companies taking a lead role in kick-starting the beleaguered country's oil industry after the war. The talks on Saturday were held under the auspices of the oil and energy working group of the State Department's future of Iraq project, run by Thomas S. Warrick, special advisor to the US Assistant Secretary of State for Near Eastern Affairs. Iraqi opposition delegates said they believed that talks with foreign oil majors on long-term projects could start quickly. Iraq has an estimated 112 billion barrels of proven oil reserves, making it the second largest potential producer after Saudi Arabia. Members of the British Household Cavalry pitch camp for the night next to their Scimitar tank as oil wells are seen burning in Southern Iraq Foreign investment deals, in particular production-sharing agreements (PSAs), would be brokered between six months and two years, said Dara Attar, an oil consultant representing some opposition groups at the meeting. Dr. Valerie Marcel, a senior research fellow at the Royal Institute of International Affairs, said this figure was highly optimistic. "An occupation could take six months to two years and oil companies won't want to invest during the US occupation," she said. During an occupation oil companies will be unsure of the Iraq's stability, a key factor for long-term investment. PSAs, which last from 15 to 20 years, are likely to be brokered no less than three years down the road, said Marcel, an expert on the politics of oil in the Middle East. Instead, companies are likely to opt for "buy-back" contracts, which are short term licenses to explore, ranging from one to three years. Short-term rehabilitation of southern Iraqi oil fields are already underway. There was a clear agreement among delegates in favor of PSAs to attract oil kingpins. Production-sharing agreements combine different companies to explore and exploit fields. The oil industry prefers these deals because they guaranty a healthy profit margin, even at low world oil prices. Long-term contracts are expected to see US companies ExxonMobil, ChevronTexaco and ConocoPhilipps compete with Anglo-Dutch Shell, Britain's BP, TotalFinaElf of France and Russia's Lukoil along with some Chinese state companies. Experts at the meeting estimated $5 billion was needed to rehabilitate Baghdad's archaic oil industry to reach an output of 3.5 million barrels per day (bpd), nearly a million barrels more than existing capacity. Delegates advised Baghdad to remain a member of the Organization of the Petroleum Exporting Countries (OPEC) but without limits on production. "It would be in the mutual interest of Iraq and OPEC," said Marcel. It is important for Baghdad to remain among the ranks of the oil cartel but Iraq cannot be restrained in its oil production in order to rebuild the country crippled by over a decade of United Nations imposed sanctions and now war. There are fears in OPEC of a showdown on quotas, undermining the Riyadh-led strategy of production restrictions aimed at supporting prices of $25 a barrel. The London meeting did not reveal the names of those who might run Iraq's oil industry in the short term. But Phillip Carrol, the former head of Shell in the United States, has been billed as a candidate to oversee oil policy along with Iraqi economist Mohammad-Ali Zainy as his number two. Zainy, a senior energy economist and analyst at the London-based Center for Global Energy Studies, served in the Iraqi Oil Ministry for 14 years. http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c =StoryFT&cid=1048313517488&p=1012571727179 * Exiles call for Iraq to let in oil companies by Carola Hoyos, Energy correspondent Financial Times, 7th April [At 'the fourth round of talks this weekend between Iraqi oil experts, international consultants and the US State Department ... many in the group favoured production-sharing agreements (PSA) with oil companies ... For years, big oil companies have been fighting for such agreements without success in countries such as Kuwait and Saudi Arabia.'] Leading exiled Iraqi oil experts on Sunday said the country should be opened to international oil companies as quickly as possible after the war. The move could spell a windfall for big oil companies such as ExxonMobil, Royal Dutch/Shell, BP and TotalFinaElf and oil service companies such as Halliburton and Schlumbeger and would strain the Opec oil cartel's attempt to keep oil prices high. The fourth round of talks this weekend between Iraqi oil experts, international consultants and the US State Department, concluded with a statement saying: "There is urgent need to inject modern technology, management, and organisation into the sector to develop and upgrade production." It added: "The country should establish a conducive business environment to attract investment of oil and gas resources." Some participants said many in the group favoured production-sharing agreements (PSA) with oil companies. The recommendation is expected to be made to any interim authority following the overthrow of Saddam Hussein and to any subsequent Iraqi government. Dara Attar, who backs the two main Kurdish groups, the Patriotic Union of Kurdistan (PUK) and the Kurdistan Democratic party (KDP), was one of the 15 delegates at the meeting. He said: "Everybody keeps coming back to PSAs." Production-sharing deals allow oil companies a favourable profit margin and, unlike royalty schemes, insulate them from losses incurred when the oil price drops. For years, big oil companies have been fighting for such agreements without success in countries such as Kuwait and Saudi Arabia. Iraq is expected to need investment of about $5bn (?4.7bn, £3.2bn) to rehabilitate its oil infrastructure, damaged by three wars and 12 years of sanctions, and up to another $35bn to help boost its current production of 2.5m barrels a day to 6m-7m barrels a day. Iraqi exiles and the US State Department have agreed that Iraq should remain a member of Opec but be exempt from quota restrictions. But the idea is likely to be met with some resistance, especially once Iraq increases its exports past the level it achieved before the Iran-Iraq war. A boost of Iraq's production to more than 3.5m b/d would push its allocation above that of Iran and cause difficulties with other Opec members unwilling to sacrifice market share. Most experts expect Iraq to take several years to reach that point and say much will depend on the speed at which Iraq's interim administration gives way to a more permanent structure, which would be able to sign long-term agreements with oil companies. Much also depends on who leads Iraq after Mr Hussein, a decision that is far from having been made. The administration of US President George W. Bush has begun to pick international oil company executives, including Philip Carroll, a former US executive of Shell, to help guide Iraq's oil industry. http://www.haveeru.com.mv/english/ * WHAT COMPANIES ARE WHERE IN THE IRAQI OIL SECTOR [List of companies that have contracts with the Iraqi government or who were in negotiations. These are the companies that would have invested in Iraqi oil once sanctions were lifted (how they must have regretted their countries' idiotic insistence on abiding by Security Council resolutions). Note that France has no definite signed contracts. The countries that do have contracts are China, Russia, Vietnam, Romania and Syria] CAIRO, April 7 (AFP) - The removal of President Saddam Hussein from power will most likely reshuffle foreign participation in Iraq's oil sector which has been so far off limit to US companies. Iraq's oil production costs are amongst the lowest in the world, making it a highly attractive oil prospect for foreign investment. Following is the current state of oil contracts involving foreign participation, compiled from past announcements and specialised publications. (The fields below are known structures that are either producing below capacity, in need of repair or not developed at all. The drilling and repair works were authorised by the United Nations as they were financed by the "oil for food" program. Production-sharing agreements (PSAs) and production and development contracts (DPCs) involve foreign investment and are therefore subject to the lifting of the UN sanctions imposed 12 years ago.) - Al Ahdab field, in southern Iraq. PSA signed with China's CNPC in 1997. - Amara, in the south. DPC signed with PetroVietnam in 2002. - Bai Hassan, in the north. Russia's Tatneft and Zarubezhneft have drilling contracts. - East Baghdad, in the center. Several international oil companies said to have expressed interest in developing capacity. - Gharraf, in the south. Turkey's TPAO seen as main contender. - Halfaya, in the south. Australia' BHP competing with CNPC, a South Korean consortium, India's ONGC and Italy's ENI. - Kifl, south of center. Tunisia's ETAP expressed interest. - Kirkuk, in the north. Tatneft, Zarubezhneft, TPAO and Romania's Petrom have drilling contracts. - Luhais and the nearby field of Subba, in the south. Russia' TNK and Machinoimport, Sweden's Lundin and CNPC expressed interest. - Majnoon, in the south. PSA initialed in 1998 with France's TotalFinaElf, not signed. - Nahr bin Umar, in the south. PSA initialed in 1998 with TotalFinaElf in 1998, but not signed. Zarubezhneft expressed interest. - Nasiriyah, in the south. ENI and Spain's Repsol expressed interest. - North and South Rumaila fields, in the south. Russia's Tatneft, Zarubezhneft and Lukoil contracted for repair work. - Nur, in the south. DPC signed in 2001 with the Syrian Petroleum Company (SPC). - Ratawi, in the south. Shell (British-Dutch) seen as leading contender. Opposition includes Malaysia's Petronas and Canada's Nexen. - Saddam, in the north. Tatneft and Zarubezhneft have drilling contracts. - Tuba, in the south. Consortium made up by Algeria's Sonatrach and India's ONGC and Reliance companies competing against Indonesia's Pertamina. - West Qurna, in the south. Iraq scrapped in December 2002 a PSA signed in 1997 with a Lukoil-led Russian consortium. The Russian government has protested and Lukoil is maintaining its rights on the field. According to the US Energy Information Administration, only 15 of Iraq's 73 discovered fields have been developed, because of wars and sanctions. Beside developing oil fields, Iraq has invited foreign investment in nine exploration blocks in the western desert, stretching from the border with Kuwait to that with Jordan that could add another 100 billion barrels to its proven 112 billion barrels of crude reserves. Three blocks were awarded, to ONGC in 2000, to Pertamina in 2002, and to Russia's Stroitransgas, in early 2003. http://www.newsday.com/news/nationworld/world/wire/sns-ap-war-iraq compensation,0,2820790.story?coll=sns%2Dap%2Dworld%2Dheadlines * U.N. Releases $863M in Iraq-Kuwait Funds Newsday, 8th April [The United Nations Compensation Committee chooses just this moment to remind us of its existence. But now that there is a possibility that the third of Iraq's oil income that goes on compensation is going to be stolen from the US not from Mr Hussein, will international law prove itself yet again to be ... responsive to circumstances?] GENEVA (AP): The United Nations panel overseeing compensation to the victims of Iraq's 1990 invasion of Kuwait released more than $863 million Tuesday, with the majority going to claimants in Kuwait. The U.N. Compensation Commission, which distributes funds received from the Security Council-supervised oil-for-food program, said it was handing over the installment to 27 governments and two international organizations for distribution to 370 claimants already approved by the panel. The amount set aside for Kuwait in the periodic payment is $738 million, of which more than half is for the government and the rest for individuals and corporations. The list also includes $23 million for British companies, $20 million for the Israeli government, and $18 million for individuals and businesses in Turkey. None of the individuals or companies was identified. The payments bring to $17.5 billion the total the commission has so far released to companies, governments and individuals who suffered losses from the 1990 invasion of Kuwait. Awards totaling $43.7 billion have been approved for payment when the money is available. The commission receives 25 percent of the revenue Iraq earns through the sale of oil permitted by the Security Council under an exception to U.N. sanctions. Iraq is allowed to use the rest for humanitarian goods for Iraqis suffering under sanctions. Although no oil is currently being shipped under the program, the commission has money in reserve from sales made in the past few months. The commission is made up of representatives of the 15 U.N. Security Council members. _______________________________________________ Sent via the discussion list of the Campaign Against Sanctions on Iraq. To unsubscribe, visit http://lists.casi.org.uk/mailman/listinfo/casi-discuss To contact the list manager, email casi-discuss-admin@lists.casi.org.uk All postings are archived on CASI's website: http://www.casi.org.uk