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Tuesday July 8, 3:38 PM EDT By Mona Megalli BAGHDAD, July 8 (Reuters) - U.S. civilian administrator Paul Bremer said on Tuesday Iraq should consider privatising its state-owned sectors and allowing foreign investment in its oil industry before a permanent sovereign government takes over. Bremer said that a soon-to-be-appointed governing council of Iraqis needed to give clear backing to the entry of foreign capital to reassure private investors. "Privatisation is obviously something we have been giving a lot of thought to," Bremer told reporters. "When we sit down with the governing council...it is going to be on the table." Bremer said although he has the authority to change Iraq's legal code, in place since the toppling of Saddam Hussein in April, foreign investors need some assurance any legal changes could survive once an elected Iraqi government takes over. "The governing council will be able to make statements that could be seen as more binding and the trick will be to figure out how we do this," Bremer said. "Everybody knows we cannot wait until there is an elected government here to start economic reform." Bremer said Iraqis should consider developing their oil resources rapidly with foreign investment but did not specify if it had to be privatised or what terms should be used. A plan under study to securitise oil revenues, or use future oil revenues to back spending on reconstruction, would also have to be put before the governing council, he said. COUNCIL APPROVAL NEEDED "We the coalition, would not undertake anything like that without the governing council agreeing, because you are effectively mortgaging the future income that belongs to the Iraqi people," Bremer said. The Iraqi council, made up of 25-30 appointed Iraqi politicians, will also have to consider foreign investment in the telecommunications sector and the tendering of licences to operate a wireless telephone system. He said his administration would recommend the tendering of three licences to build a mobile telephone network in the north, center and south of the country. Bremer did not say which system the network should use -- the GSM system used in Europe or a U.S.-based system not found in other countries in the region. Iraq should consider foreign investment because it will not be able to generate enough revenue to balance its budget for the next 18 months, he said. A budget just approved by Bremer for the second half of 2003 assumes oil production will rise to 1 million barrels per day by the end of the summer and to 1.5 million bpd by the end of the year, Bremer said. Bremer's aides said oil would generate $3.5 billion of the budget's $3.88 billion in revenues and assumed an oil price of $20 per barrel. Bremer said the $6 billion budget would have a deficit of around $2 billion which it would cover by drawing down on its capital resources that include $1.7 billion in seized assets held by the United States, money seized in Iraq as well as funds found in the central bank. Iraq is also aiming to reach oil output of 2.5 to 3 million bpd by the end of 2004, something that could be achieved with about $1-$1.5 billion spent to repair sabotage and damage to its ailing oil system. Bremer said his administration was considering many options to increase security for the country's oil network, including the use of tribal leaders to patrol their territories. ©2003 Reuters Limited. http://tinyurl.com/gcqx _______________________________________________ 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 email@example.com All postings are archived on CASI's website: http://www.casi.org.uk