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News, 24/9-1/10/03 (2) STATE OF THE ADMINISTRATION * New CPA appointments announced * U.S. transfers authority over Al-Najaf to Spanish * Iraqi Interim Government takes seat at the OPEC table * No democracy is possible without security * Governing Council President said to be challenging U.S. plan in Iraq * Al-Hashimi: Baathist who survived the purge * Iraqi council has growing pains * Houston Exec Gets Top Iraq Energy Post * [Dismissal of Shi'i dean of Baghdad University] HERALDS OF FREE ENTERPRISE * Friends of the family * Influx of goods, cash puts Iraqis in buying mood * [Large quantities of Iraqi counterfeit bills found] * Will the US Privatize Iraq? Should It? * World Bank/IMF meetings focus on Iraq * Free markets are the key to rebuilding Iraq * International oil companies step up development talks * Washington Insiders' New Firm Consults on Contracts in Iraq STATE OF THE ADMINISTRATION * NEW CPA APPOINTMENTS ANNOUNCED RFE/RL IRAQ REPORT, Vol. 6, No. 40, 25 September 2003 The Coalition Provisional Authority (CPA) in Iraq has announced two new economic and industrial appointments. George Wolfe has been appointed director of economic development, according to an 18 September press release posted on the CPA website (http://www.cpa-iraq.org). Wolfe, who has served as deputy director, was to take over from Peter McPherson on 24 September. Wolfe previously served as deputy general counsel for the U.S. Treasury Department and as a private-sector adviser to the U.S. trade representative under President George W. Bush. He is a lawyer by training and is expected to serve in his new position until 1 November, when Marek Belka, a former deputy prime minister of Poland, will succeed him. Meanwhile, the CPA appointed Robert McKee as the senior oil adviser to the Iraqi Oil Ministry, Reuters reported on 22 September. McKee formerly served as executive vice president of ConocoPhillips. He replaces Philip Carroll, who will return to "private life," Reuters quoted a U.S. administration statement as saying. (Kathleen Ridolfo) * U.S. TRANSFERS AUTHORITY OVER AL-NAJAF TO SPANISH RFE/RL IRAQ REPORT, Vol. 6, No. 40, 25 September 2003 U.S. Marines officially transferred control over the central Iraqi city of Al-Najaf to the Spanish Plus Ultra Brigade on 23 September, dpa reported. Spanish commander General Alfredo Cardona said that while his multinational force's primary duty is to provide security, troops would also assist with rebuilding infrastructure, according to dpa. The 1,000-strong force of Spanish, Honduran, and Salvadoran troops in Al-Najaf operates under a Polish-led division that assumed responsibility for a south-central Iraqi sector at the beginning of September. The U.S. Marines were originally due to hand over power in late August, but that move was delayed following the assassination of Ayatollah Muhammad Baqir al-Hakim on 29 August outside the Imam Ali Mosque in that city (see "RFE/RL Iraq Report," 5 September 2003). Some 900 Marines had been stationed in Al-Najaf. (Kathleen Ridolfo) * IRAQI INTERIM GOVERNMENT TAKES SEAT AT THE OPEC TABLE RFE/RL IRAQ REPORT, Vol. 6, No. 40, 25 September 2003 The Iraqi interim government took its seat at the table of ministers representing the Organization of the Petroleum Exporting Countries (OPEC) in Vienna on 24 September as a "full member," international media reported. OPEC member states had been divided for several weeks over whether to allow the interim Iraqi government to attend its sessions, and if so in what capacity. But OPEC President Abdullah bin Hamad al-Attiyah confirmed to AFP following a late-night meeting on 23 September that Iraqi interim Oil Minister Ibrahim Bahr al-Ulum would represent his country with full membership status, the news agency reported on 24 September. Venezuela was reportedly among the staunchest opponents of the decision. The most surprising decision by oil ministers at the 24 September meeting was to slash oil production by 900,000 barrels a day beginning on 1 November. The decision however, would not impact Iraqi production for the time being since Iraq will not be subject to production quotas until its oil industry is working at full capacity, OPEC President Abdullah al-Attiyah said on 24 September, nytimes.com reported. Some oil analysts speculated that the OPEC decision was politically motivated. "This was a message to Washington: 'You can send a delegation to OPEC, but we control the oil price,'" Mehdi Varzi, a private energy consultant in London, told the daily. Meanwhile, interim Iraqi Oil Minister Bahr al-Ulum dispelled any rumors that Iraq might leave the cartel, telling reporters at the twice-yearly meeting in Vienna: "Iraq is a founder member of OPEC.... It will stay and remain a member of OPEC. Iraq should play an active role in achieving the objectives of this organization, with full cooperation with its members." Bahr al-Ulum added that Iraq seeks to produce 3.5 million to 4 million barrels a day by the end of 2005, and as much as 6 million barrels by the end of the decade. Iraq is currently producing around 1.8 million barrels per day. Iraq's appearance at the OPEC table is the first since the 1991 Gulf War. (Kathleen Ridolfo) http://www.iht.com/articles/111119.html * NO DEMOCRACY IS POSSIBLE WITHOUT SECURITY by Noah Feldman International Herald Tribune, from New York Times, 25th September NEW YORK: Many Americans, not to mention its European allies, may be shaking their heads over President George W. Bush's defiant speech at the United Nations on Tuesday. With the coalition forces under daily attack and billions being spent to rebuild Iraq, shouldn't Bush have been more conciliatory in an effort to get other countries to send troops? Actually, Bush was right to refuse a rushed transfer of sovereignty to an interim Iraqi government as the price to pay for greater international participation in the postwar effort. The reconstruction of Iraq is a two-track process: one track for security, one for politics. The problems on the security track will not be overcome simply by bringing in more soldiers, American or otherwise. Meanwhile, the political track has been going much better than critics admit - but it could be derailed if the coalition fails to help Iraqis achieve security before turning things over to an Iraqi government that can actually rule the country. To depart from the present course probably wouldn't help - and it could do real harm. First, security. Instability in Iraq is not as broad-based as many fear. Essentially all of Iraq's Shiite Muslims and Kurds, who between them make up 80 percent of the population, were happy to see Saddam Hussein go and have made it clear that they want the coalition to remain long enough to prevent the Baath party from re-emerging. Thus the main internal threat comes from Sunni Arabs, who have long held power despite being only about 15 percent of the population. Yet even if many of these Sunnis want the coalition out, only a few seem so far to be willing to take up arms - otherwise we would be seeing thousands of incidents each week rather than a handful. Perhaps the greatest concern is the possibility that some attacks have been initiated by terrorists controlled by Iran or Al Qaeda who have infiltrated Iraq's essentially unguarded borders. Still, the answer to this threat isn't bringing in foreign troops or putting more Americans on the ground, but creating an effective Iraqi security force - fast. Only Iraqi police officers and soldiers, knowledgeable about local conditions and populations, and with access to high quality local intelligence, stand a chance of breaking Sunni resistance cells and identifying foreign agents. The call by Democrats (and, lately, many Republicans) to internationalize the coalition forces is well taken in terms of saving money and patching up diplomatic relations. But Indian and French troops would have no better luck combating terrorists than the Americans. As for French and German suggestions that America speeds up the transfer of sovereignty to an Iraqi interim government, it would be just as unlikely to aid security. The violence is not coming from people who would be sympathetic to any such interim government. Worse, unless the police and military have been truly reconstituted, an interim body would be a travesty of a sovereign government. Actual control is the indispensable hallmark of sovereignty. Nothing could be worse for the future of democracy in Iraq than the creation of a puppet government unable to keep the peace. To see the path to a legitimate, functional Iraqi government one must consider the remarkable and unexpected progress being made on the political track. Since the fall of Saddam's regime in May, the Iraqis participating in organized politics have shown a maturity and unity of purpose that prewar critics would scarcely have credited. The two most important Kurdish parties, the Kurdistan Democratic Party and the Patriotic Union of Kurdistan, have subordinated their historical rivalry and have acted in concert, casting a steadying light over the rest of the political scene and often taking the lead in coordinating policy among the Iraqi Governing Council. Far from insisting on secession and Kurdish independence, as many in the region expected, the Kurdish leaders are sticking to the vision of a federal Iraq, and urging their sometimes impatient community not to falter when they are so close to achieving long-awaited freedom from autocratic Arab rule. More important to the future of democracy in Muslim Iraq, the senior Shiite religious leaders, and the political parties loosely associated with them, have consistently eschewed divisive rhetoric in favor of calls for Sunni-Shiite unity. Most have repeatedly asserted their desire for democratic government respectful of Islamic values, rather than government by mullahs on the failed Iranian model. As a result, they have been largely successful in marginalizing younger radicals like the rejectionist Moktada al-Sadr. When Sadr organized an anti coalition protest in the holy city of Najaf in July, he was forced to bus in supporters from Baghdad, three dusty hours away. (Wisely, the coalition has declined to arrest Sadr; his hopes for a living martyrdom denied, he increasingly looks more like a small-time annoyance than the catalyst of a popular movement.) The emergence of democratic attitudes among religiously committed Shiites was underscored on Saturday in Detroit when Ibrahim Jafari, leader of the Islamist Dawa Party and the most recent Iraqi Governing Council member to hold its rotating presidency, addressed the second annual Iraqi-American Conference. The largely Christian audience of Iraqi-Americans spent the morning worrying about the dangers of a constitution declaring Islam the official religion of Iraq, but then treated Jafari to a standing ovation after he made the case for a pluralistic, tolerant Iraq in which all citizens - Muslim and non-Muslim, men and women - would have full rights of citizenship. The same proud insistence on the compatibility of Islamic values and a democratic Iraq was sounded last week in Bahrain by 40 Iraqi Shiites at a program on constitutional values sponsored by the American Bar Association. Skeptical of arguments for a strong separation of religion and state, these representatives nonetheless took as a given that a country as religiously diverse as Iraq must ensure religious freedom - mandated, they said, by the Quran - and equality for all citizens. The next step is for the Iraqi Governing Council's constitutional preparatory committee to complete its canvass of the country and to propose a system for naming representatives to an Iraqi constitutional convention. The committee needs to find a workable solution - short of a general election, which would be logistically impossible right now - to choose a legitimate representative body. It is considering several proposals, including a national "yes or no" referendum on a complete slate nominated by the council. The details need to be worked out, but there is no question that a solution will be reached and that the constitutional convention, once named, will draft a constitution for ratification by the Iraqi people. It is difficult to imagine elections being held under a new constitution before next fall. The constitutional convention will have to resolve complex questions of the boundaries of the provinces in a federal Iraq, as well as finding the right form of government to manage Iraq's distinctive ethno-religious mix. But the French and Germans should take note: getting quick but wrong answers to these questions would be much worse than taking some time to get the right answers. And, of course, even a flawless electoral system would be useless if the elected government were unable to keep the peace and the lights on. That is why solving the security problems - by rebuilding the Iraqi police and army - must for now be the coalition's highest priority. It will cost a great deal of money, and create a risk that the reconstituted Iraqi armed forces might some day make their own grab for power - something the military has done repeatedly in Iraq's history. But this gamble must be taken, because if the security situation is not brought under control, it could destroy the political track. If the Iraqis, with international help, can keep the peace, they will achieve democracy. Otherwise, America's pragmatic and moral duty to help Iraq become a free nation will be almost impossible to fulfill. Noah Feldman, author of "After Jihad: America and the Struggle for Islamic Democracy," is professor of law at New York University and was a constitutional adviser to the Iraqi Governing Council. * GOVERNING COUNCIL PRESIDENT SAID TO BE CHALLENGING U.S. PLAN IN IRAQ RFE/RL IRAQ REPORT, Vol. 6, No. 40, 25 September 2003 Iraqi Governing Council President for September Ahmad Chalabi is reportedly seeking new alternatives to the U.S.-led administration in Iraq, much to the consternation of U.S. officials, nytimes.com reported on 23 September. Chalabi has reportedly sent his representatives to France and Germany to discuss those countries' proposals for a new UN mandate over Iraq that would transfer Iraq's administration to Iraqi leaders. Chalabi, who is in New York to attend the UN General Assembly meeting on 23 September, has reportedly disturbed U.S. officials, who have repeatedly warned him and other Governing Council members to avoid a confrontation with U.S. administrator Bremer. One Chalabi aide told the daily that such a confrontation might be imminent, saying, "We don't want to come out in the open and pick a fight with Bremer...but the sovereignty issue is coming to a head, and it is pretty clear that a breach is coming pretty soon between the Governing Council and Bremer." Another aide told nytimes.com, "We are going to find a place where we can pick a fight." Meanwhile, ft.com reported that some Governing Council members are either at odds with Chalabi's plans, or are unaware of them. The website quoted council member Adnan Pachachi's spokesman Sa'd Abd al-Razzaq as saying: "We are all very enthusiastic for Iraq to get its sovereignty. But...it is difficult to do it now, before a constitution and elections." Iraqi National Accord head and Governing Council member Iyad Allawi went a step further, saying that the council was not seeking full sovereignty at this stage, but wanted more control over Iraq's budget and security forces. Asked about a timetable for sovereignty, Allawi said, "I don't think anyone could produce an accurate timetable because so much will be dictated by events and capabilities." (Kathleen Ridolfo) http://english.aljazeera.net/Articles/News/ArabWorld/Hashimi+Baathist+who+su rvived+the+purge.htm * AL-HASHIMI: BAATHIST WHO SURVIVED THE PURGE Aljazeera, 26th September Aqila al-Hashimi, the assassinated member of Iraq's US-installed administration, was an accomplished technocrat who moved easily from Saddam Hussein's regime to the US occupation. She was one of three women on the Governing Council set up in July, a foreign policy expert who played a major role in efforts by the fledgling Iraqi leadership to assert itself on the domestic and world scene. With a bachelor's degree in law and a doctorate in French literature, al-Hashimi shunned the veil and became a women's rights advocate while also a passionate champion of her battered country. A career diplomat and Shia Muslim, she found political favour both in Saddam Hussein's government and under the US occupation. A one-time member of Saddam's Baath party and protégé of former deputy prime minister Tariq Aziz, the self-proclaimed technocrat handled relations with international organisations under the old regime. As the United States began its massive military build-up prior to the 20 March invasion, al Hashimi was firmly on the side of Saddam, actively drumming up international support aimed at thwarting Washington's designs on Iraq. At a press conference of the Non-Aligned Movement in Kuala Lumpur in February, she famously declared, "The defence of Iraq is now the defence of the civilised world." Governing Council chairmanBut that tune changed with the political realities, heralded by Saddam's downfall with the arrival of coalition forces in April. Sensing which way the political wind was blowing, she changed sides. Consequently, Al-Hashimi was one of the few Baathists to survive the purge and was named to the Governing Council in July, serving on the follow-up committee running the interim foreign ministry. Al-Hashimi led Iraq's team to a reconstruction conference in New York in June and was due to take part in the current round of UN talks on Iraq's future when she was cut down by gunmen who attacked her convoy near her Baghdad home. Other people on the June team included UN diplomat Sergio Vieira de Mello, who was killed in a truck bomb attack on the UN headquarters in the Iraqi capital on 19 August. On arrival at UN headquarters in New York, Hashimi declared "Iraq is back" and later added, "This is a declaration of the reintegration of Iraq into the international community." Governing Council chairman Ahmad Chalabi said his colleague was a "courageous Iraqi patriot" who was not deterred by threats to her life. Al-Hashimi had faced repeated threats, but had continued to carry out her duties in the run up to her next UN visit, Chalabi said. "This delegation, despite the intention of the terrorists, will be at the UN General Assembly to represent Iraq and deliver Iraq's message of peace, democracy and human rights," he added in a statement. A tribute also came from Paul Bremer, Washington's top man in Iraq, who described Hashimi as "a colleague and respected member" of the Governing Council. "This senseless attack is not just against the person of Aqila al-Hashimi. It is an attack against the people of Iraq and against the common goals we share for the establishment of a fully democratic government," he said. France's deputy foreign ministry spokeswoman Cecile Pozzo di Borgo honoured al Hashimi's "strong, captivating and courageous personality" and her "demanding vision for the future of her country". Britain's prime minister, Tony Blair, whose own political future may depend on the situation in Iraq, also expressed his dismay. "I am shocked and saddened by the death of Doctor al-Hashimi. My sympathies go out to her family and friends," said Blair, who met her in July. The Cairo-based Arab League condemned the killing of al-Hashimi as counter to the interests of Iraq. "We can only reject the policy of assassination which destabilises Iraq," Arab league spokesman Hisham Yusuf said. Yusuf stressed the "need for the Iraqi people to preserve its national unity in this critical period," adding that "the divisions do not serve the interests of the Iraqi people." http://www.jordantimes.com/Fri/news/news11.htm * IRAQI COUNCIL HAS GROWING PAINS Jordan Times, 26th September BAGHDAD (AFP) — With confusion over its economic policy, controversy surrounding new media rules and uncertainty over when US forces will cede power, Iraq's interim government is struggling to find its feet. The 25-member Governing Council picked by the Americans in July has been trying hard to assert itself at home and abroad, but appears to have stumbled over some tricky issues in recent days. Most striking has been a series of statements and counterstatements on investment policy since the interim finance minister announced Sunday that Iraq would allow 100 per cent foreign ownership in all sectors except oil. The announcement, contained in a package of reforms released by the US delegation to a meeting of the International Monetary Fund/World Bank in Dubai, immediately sparked criticism in Iraqi business circles. A statement issued Wednesday in the name of the full Governing Council backed off the measure, saying it "was not precise" and required further study to come up with a version guaranteeing "the rights of the Iraqi people." That statement provoked a furious response from members of a council delegation attending the IMF/World Bank sessions where Finance Minister Kamel Al Kilani made his original announcement. "The Iraqi Governing Council fully supports its finance minister's remarks in Dubai on the investment reforms programme," said Adel Abdul Mahdi, the head of the delegation. A new statement issued by the council in Baghdad on Thursday did little to clear away the confusion, saying Kilani's statements conformed to the foreign investment law and the council was in agreement. It said the council "vigorously supports Iraqi commercial activities" and "is seriously examining additional means to support and bolster Iraqi commercial and employment activities." But there was no precise mention of foreign ownership provisions. Nor were any Iraqi officials in Baghad eager to comment on where the flurry of statements left investment policy. Planning Minister Mahdi Al Hafez said in Dubai he was going over the statement issued in Baghdad. "We saw what was published in newspapers, we are studying it, we have no comment to make," he said. The Governing Council also found itself in hot water among the foreign media here after issuing new reporting rules Tuesday warning against coverage that could incite violence or comfort supporters of Saddam Hussein. Journalists such as Robert Fisk, Middle East correspondent for the Independent in London, dismissed the guidelines as heavy-handed and ill-conceived. "The sewage is still coming out of the man-hole covers, there are still only 15 hours of electricity a day and the Governing Council roars like a lion — against journalists!" Fisk said. Drew Brown from Knight Ridder newspapers said it was "entirely bizarre" to have an interim leadership talking about freedom and democracy when their first concrete step was "to muzzle the press." In its first action against the media, the council moved to sanction the Arab satellite television stations Al Jazeera and Al Arabiya for allegedly encouraging anti-US violence. But again, the process was not smooth. The council first said the Baghdad offices of the two broadcasters would be closed temporarily. But after consultations with US legal aides, it barred the stations from covering government activities for two weeks. Behind this is a clear difference of opinion between the Iraqis and Washington over how fast the occupying forces should restore self-rule. http://www.truthout.org/docs_03/printer_092403C.shtml * HOUSTON EXEC GETS TOP IRAQ ENERGY POST by David Ivanovich Houston Chronicle, 23rd September 2003 WASHINGTON -- Houston's Robert E. McKee III, a former ConocoPhillips executive, has been appointed the new senior adviser to the Iraqi Oil Ministry. He will replace Philip J. Carroll, the one-time head of Shell Oil Co. who has overseen the often tumultuous effort to jump-start Iraq's oil sector for less than five months. His selection as the Bush administration's energy czar in Iraq already is drawing fire from Capitol Hill because of his ties to the prime contractor in the Iraqi oil fields, Houston-based Halliburton Co. He's the chairman of a venture partitioned by the giant Houston oil well service and engineering firm. The Coalition Provisional Authority, in a brief statement released from Baghdad Monday, said McKee would take over as senior adviser next month. He will report to L. Paul Bremer, the civil administrator of occupied Iraq, and serve as the liaison with Iraq's newly reconstituted oil companies. The statement did not say why Carroll was leaving, except to note he would "return to private life." Carroll could not be reached for immediate comment, but his wife, Charlene, reached by telephone in Houston, said Carroll had decided "it was time to hand it over to somebody else." McKee also could not be reached for comment, despite repeated attempts. Robin West, chairman of PFC Energy, a Washington-based energy consultancy, said the change in leadership is nothing more than a normal rotation out of Iraq, similar to the departure of Peter McPherson as the Provisional Authority's director of economic development. Carroll, West said, "tried to do his best ... to bring order from chaos, but there were forces there beyond his control -- or anybody else's frankly." McKee's appointment, however, comes as Iraq is still struggling to boost much-needed oil exports and meet basic domestic needs like gasoline and cooking oil. Iraq has been able to ship only about 1 million barrels a day from its southern terminal, the London-based Centre for Global Energy Studies noted in a report. That's a far cry from the export levels Bush administration officials had hoped to see by this time. But Iraq's oil workers have been forced to reinject the bulk of the crude production from the country's huge northern field of Kirkuk back into the ground, because a critical pipeline to Turkey has been shut down by repeated acts of sabotage. On Sunday, Iraq produced 1.9 million barrels of oil, a record since the war, Bremer told a Senate panel. But he warned: "There will be bad days ahead. The saboteurs ... know how to attack ... where it hurts." The chief responsibility of the senior oil adviser is to oversee the reestablishment of a functioning energy sector, purged of Baathist Party elements. In a largely symbolic move to emphasize that transfer of power, Ibrahim Bahr al-Uloum, Iraq's newly appointed oil minister, will confer this week with other representatives from the Organization of Petroleum Exporting Countries in Vienna, Austria. McKee's appointment already is coming under scrutiny because of his role as chairman of Houston-based Enventure Global Technology, an oil-field joint venture owned by Shell and Halliburton. Halliburton's role in Iraq has been highly controversial, since the Corps of Engineers chose the firm once headed by Vice President Dick Cheney for the job of repairing Iraq's energy infrastructure without seeking bids from competing companies. "The administration continues to create the impression that the fox is in charge of the hen house," said Rep. Henry Waxman of California, ranking Democrat on the House Government Reform Committee and a persistent critic of the Halliburton contract. "Given Mr. McKee's close relationship with Halliburton, he's an odd choice to hold them accountable for the billions of dollars they are charging American taxpayers." Officials from both ConocoPhillips and Enventure declined to discuss McKee's appointment Monday. McKee, a native of Wyoming, earned a bachelor's degree in petroleum engineering from the Colorado School of Mines and a master's in industrial management from the Massachusetts Institute of Technology. In 1967, he joined what was the Conoco in New Orleans and, over the next 36 years, worked his way up the ranks of the Houston-based oil giant. In 1992, he was named executive vice president, responsible for the company's oil and gas exploration and production business, a position he would hold for a decade. He retired in April, leaving what had become ConocoPhillips a wealthy man. McKee ranked second in the Houston Chronicle's latest list of 100 highest-paid executives, taking home $26.2 million in total compensation last year. As the senior oil adviser, McKee will be responsible for both establishing energy policy for Iraq's new oil industry as well as operating a large petroleum operation, West noted. McKee is viewed as more of an operations man. McKee also serves as co-chair of the volunteer committee for Super Bowl XXXVIII, to be played in Houston next year. http://www.nytimes.com/2003/09/28/international/worldspecial/28IRAQ.html?fta =y * [DISMISSAL OF SHI'I DEAN OF BAGHDAD UNIVERSITY] by IAN FISHER New York Times, 28th September A protest in Baghdad at the Ministry of Higher Education today involving hundreds of students from the University of Baghdad briefly turned violent, although no one was hurt. Nearly 200 students, gathered outside the ministry this morning to protest the replacement of Sami Abdul Mahdi, who was elected university dean after the Iraqi president, Saddam Hussein, was toppled this spring. The protest turned to chaos just after 10 a.m., when a sport utility vehicle carrying Ziad Abdul Razzaq, the new education minister, arrived at the ministry's gates and was surrounded by students. Guards at the ministry fired dozens of warning shots into the air. No protesters were injured, and Mr. Razzaq entered the ministry unharmed. After several tense minutes, the protest continued, and the Iraqi police and American soldiers eventually arrived. The protest reflected the simmering political concerns of many Shiite Muslims, who make up a majority of Iraqis. They were largely disenfranchised under Mr. Hussein and are eager to gain power. Mr. Hussein and most of his top officials were Sunni Muslims, the dominant Muslim sect worldwide but a minority in Iraq. Last week, Mr. Razzaq, a Sunni, fired Mr. Mahdi, a Shiite. The protesters, most of them Shiite, said he was removed in favor of a new dean who had been a member of Mr. Hussein's Baathist Party. Sadrq al-Qasi, a former university employee, said Mr. Mahdi should not have been dismissed. "This man came according to democratic experience," Mr. Qasi said. "He should stay." [.....] HERALDS OF FREE ENTERPRISE http://www.guardian.co.uk/elsewhere/journalist/story/0,7792,1048204,00.html * FRIENDS OF THE FAMILY by Brian Whitaker The Guardian, 24th September Fancy your chances making a fast buck from the reconstruction of Iraq? Well, you'll need to invest in a bullet-proof vest for starters, and then make some well-connected business contacts on the ground. That's where the Iraqi International Law Group can help. Indeed, judging by the blurb on their website, they are the only firm worth consulting if you want to strike it rich in Iraq. "At IILG, our task is to provide foreign enterprise with the information and tools it needs to enter the emerging Iraq and to succeed," the website says. "Our clients number among the largest corporations and institutions on the planet. They have chosen IILG to provide them with real-time, on the ground intelligence they cannot get from inexperienced local firms or from overburdened coalition and local government officials." As for its mission, the firm explains: "The lawyers and professionals of IILG have dared to take the lead in bringing private sector investment and experience to the new Iraq. "Our task is to provide a 'last mile' connection between foreign capital, initiative, technology, experience and know-how and the organisations, enterprises, institutions and entrepreneurs in Iraq eager to rebuild this ancient and war-torn country, to catalyse and ignite the realisation of the new Iraq's huge economic potential." IILG says it was established in the wake of the "recent coalition victory" in Iraq and is proud to be the first international law firm based inside the country. "Many firms outside the country purport to counsel companies about doing business in Iraq," it continues. "The simple fact is: you cannot adequately advise about Iraq unless you are here day in and day out, working closely with officials at the CPA [Coalition Provisional Authority], the newly constituted governing council and the few functioning civilian ministries [oil, labour and social welfare, etc]." As for business contacts inside Iraq, IILG boasts that it people act "as international counsellors to the Iraq-Baghdad Chamber of Commerce, with some 300,000 members country-wide, and to the Federation of Iraqi Industrialists, representing thousands of indigenous factory owners. Amid all this boasting about its lucrative connections, IILG is surprisingly modest about the family connections of its founder, Salem Chalabi. The website doesn't mention that he is a nephew of Ahmed Chalabi, who just happens to be the leader of the US-backed Iraqi National Congress (INC), a member of the governing council and current president of Iraq. Uncle Ahmed, a former banker in Jordan, fled the country in 1989 before he could be arrested in connection with a $200 million financial scandal. He was later tried in his absence and sentenced by a Jordanian court to 22 years in prison on 31 charges of embezzlement, theft, misuse of depositor funds and currency speculation. But has never looked back. Despite being detested by the State Department and the CIA, Ahmed Chalabi found strong support in the Pentagon and US Congress, which generously provided funds in support of his opposition to Saddam Hussein through the INC. One of Ahmed Chalabi's staunchest supporters in Washington is Douglas Feith, a former lawyer who is currently third in the Pentagon pecking order. The pair worked closely together in the run-up to war, with Chalabi providing "intelligence" about Iraqi weapons of mass destruction (much of which proved to be wrong) and boasting that he had a secret network inside Iraq which could be harnessed to help run the country once the US invaded. In the event, the network did not materialise and consequently, Feith and Chalabi share a large part of the blame for the present mess. Feith, meanwhile, has close links to the Israeli Likud party and the country's prime minister, Ariel Sharon. He was one of the authors of the famous Clean Break document, published in 1996, which proposed overthrowing Saddam Hussein as the first step towards reshaping Israel's "strategic environment" in the Middle East. Feith has also argued that Jewish settlements on occupied Palestinian land are lawful - contrary to the overwhelming majority of legal opinion around the world - and has latterly been promoting the idea of supplying Iraqi oil to Israel via a pipeline. Until recently, Ahmed Chalabi's nephew, Salem, was a peripheral figure in the political machinations over Iraq. The only information about him given on the IILG website is that he "formerly" worked for Clifford Chance, a firm of London solicitors. Oddly, Clifford Chance denied yesterday that he had left their firm. Rather they said he is still employed by them but is currently on sabbatical. Shortly before the war, Salem Chalabi took part in a conference on bringing democracy to Iraq and pushed for a post-war truth and reconciliation commission on the South African model. Later, during the invasion, the Pentagon sought to appoint him as adviser to the ministry of justice, working in Jay Garner's ill-fated project to take over the administration of Iraq. Salem's dynamic new law firm is currently operating from suites 1632-1634 of Baghdad's Palestine Hotel. This, according to the website, is a temporary arrangement "while we renovate and restore our permanent office building in the centrally situated Harthiyya district". Although none of the "largest corporations and institutions on the planet" have yet identified themselves as Salem Chalabi's clients, IILG appears to be part of a carefully-constructed network aimed at channelling business into Iraq. Interestingly, the firm's website is not registered in Salem Chalabi's name but in the name of Marc Zell, whose address is given as Suite 716, 1800 K Street, Washington. That is the address of the Washington office of Zell, Goldberg &Co, which claims to be "one of Israel's fastest-growing business-oriented law firms", and the related FANDZ International Law Group. The unusual name "FANDZ" was concocted from "F and Z", the Z being Marc Zell and the F beingDouglas Feith. The two men were law partners until 2001, when Feith took up his Pentagon post as undersecretary of defence for policy. According to Salem Chalabi, quoted in the National Journal on September 13, Mr Zell is IILG's "marketing consultant" and has been contacting US law firms in Washington and New York to ask if they have clients interested in doing business in Iraq. This ties in with a recent announcement by Zell, Goldberg & Co that it has set up a "task force" dealing with issues and opportunities relating to the "recently ended" war in Iraq. One of its activities, the announcement said, was to assist US companies "in their relations with the United States government in connection with Iraqi reconstruction projects as prime contractors and consultants". At the time, Zell Goldberg & Co made no mention of a connection with Salem Chalabi or IILG in Iraq, but said it was working in the US with the Federal Market Group. This organisation - whose website is adorned with a "God bless America" logo - specialises in helping companies to win US government contracts and claims a 90 per cent success rate. With friends like these, it will not be surprising to find Salem Chalabi moving out of the Palestine Hotel and into his newly restored headquarters in Harthiyya district sooner than expected. http://www.usatoday.com/news/world/iraq/2003-09-24-iraq-economy-usat_x.htm * INFLUX OF GOODS, CASH PUTS IRAQIS IN BUYING MOOD by Glen C. Carey USA Today, 25th September BAGHDAD — When Massoud Mazouri learned that the U.S.-led coalition had ousted Saddam Hussein from power on April 9, he hurried to Baghdad from his home in northern Iraq to set up an electronics business. Now the 28-year-old Kurdish merchant is selling televisions and satellite receivers at a brisk pace to gadget-starved shoppers. It's among the first signs that Iraq's larger economy is coming to life. Iraq's new finance minister, Kamil Mubdir al-Gailani, announced sweeping economic changes this week that will allow foreign ownership of companies in every industry except oil and other natural resources. The 25-member Iraqi Governing Council hopes that Iraq's 24 million people will be an attractive market and workforce for global businesses willing to invest in the country. But merchants such as Mazouri already are cashing in. Television sets, refrigerators and boxes of satellite receivers are stacked 10 feet high on the sidewalks of Baghdad's shopping districts. Shoppers who have waited for years to be able to spend their hoarded dollars are out in force. "When I started in late April, I was receiving one container of DiStar goods per month," Mazouri says. "Now, I am getting five to six containers." Each container holds about 270 television sets or 3,800 satellite receiver units. He says he is grossing $20,000 a day. "All the sales are done in cash." There was plenty of pent-up demand. Sanctions imposed by the United Nations after Iraq invaded Kuwait in 1990 kept a lot of goods out of the country. Before that, an eight-year war with Iran drained the life from Iraq's economy. For nearly 20 years, there was little to buy. And during three decades of rule by Saddam's Baath Party, virtually all companies were state-owned or state-controlled. In 2001, Iraq's gross domestic product was $27.9 billion, compared with $47.6 billion in 1980. Since the collapse of Saddam's regime, police Officer Gailan Wahoudi, 31, has bought a new television, a refrigerator and an air conditioner. "It is a new freedom I never had before," he says. The buying spree has been helped by the suspension of customs duties, import taxes, licensing fees and similar surcharges for most goods entering and leaving the country. The U.S.-led coalition's order on June 7 that suspended such charges has made Iraq a virtual free-trade zone at least until the end of the year. The coalition authorities had little choice: Iraq lost its ability to adequately control its borders when Saddam's government collapsed. Immigration and customs controls are only now being restored. For consumers, the bottom line is lower prices. A Samsung air conditioner that sold for $1,200 before the war is now half that price. The Iraqi Planning Ministry reports that home appliance prices are down 41% from their prewar prices; electronics are down 38%. At Iraq's border with Jordan, trucks laden with used cars are lined up next to tractor-trailers piled high with boxes of televisions and other electronics. Merchandise also is being shipped in from Dubai in the United Arab Emirates through the southern Iraqi port of Umm Qasr. Compact Opel automobiles are selling fast at the al-Safeer car dealership, says owner Hamid al-Najar, 34. A used one can be bought for $3,000. "If we have 10 in stock, they are sold the same day," he says. "People are paying cash only." The car is popular because it's relatively cheap and won't attract thieves like more expensive models. But imported BMWs, Mercedeses, Volkswagens and Japanese-made cars also are on display in the lot of al Najar's dealership. Under Saddam, only senior government employees, leaders of his ruling Baath Party and a few wealthy businessmen had enough money for anything but the essentials. Low-level government employees were cash-starved. The U.S.-led provisional authority has increased salaries twice for government workers, spreading disposable income around. It is paying $150 million per month for salaries from $1.7 billion in Iraqi assets seized by the U.S. government at the time of the 1991 Gulf War, a coalition official says. Louay Rasheed, 46, director of the Ministry of Planning's trade statistics department, says he made the equivalent of $15 a month before the war and now earns $400 a month. Hassan al-Dinwani, 53, owner of al-Yussir Trading Shops in Baghdad's Karada neighborhood, says one of his new customers was a policeman. "This was a surprise to me," he says. In the past, officers couldn't buy goods at his shop because their salaries were too low. Iraqi police Lt. Raad Rasheed says his salary is now the equivalent of $275 a month, up from $25 before the war. "My family is happy," he says. "I am also more focused on my job because I no longer have to worry about money." http://www.thestate.com/mld/thestate/news/world/6852693.htm * [LARGE QUANTITIES OF IRAQI COUNTERFEIT BILLS FOUND] by BILL GLAUBER AND E.A. TORRIERO Chicago Tribune, 25th September [.....] In a development with implications that could further shake a crippled economy, Iraqi police and U.S. troops Wednesday displayed a haul of $10 million worth of counterfeit Iraqi bills seized in recent days during the biggest counterfeit ring bust in Iraq's history. The bills were stacked in five piles nearly 6 feet tall and also stuffed into eight trash bags. Counterfeit printing plates and sheets were also seized. Local police said the recovery of 20 billion Iraqi dinar bills in small denominations could be the tip of the iceberg of counterfeit currency flowing through Iraq. Next month the country is due to introduce new currency and abandon the old bills, which bear the picture of deposed President Saddam Hussein. "Half the money here may be counterfeit," said Iraqi police Col. Safa Adeen Mahdi Salih. "The Central Bank will never accept the forged money. I'm sure the average person will be frustrated by this." Police seized the counterfeit cash in three local print shops after a sting operation. They said they acted on a tip that a man was printing counterfeit bills and looking for the new currency. They lured the alleged counterfeiter to the Iraqi National Bank with a promise to take $5,000 worth of old bills and give him new ones. "We busted him at the bank," said Sgt. 1st Class John Marshall of the U.S. Army 812th Military Police Company. Late last Thursday and into the next morning, authorities acted on information from the alleged counterfeiter and raided two printing plants in Baghdad to seize the bulk of the fake notes. Four nights later, they raided a third print shop. All were in stationery shops in Baghdad. In all, six suspects were taken into custody. A law enforcement source said the counterfeit operation began before the U.S. invasion of Iraq and continued throughout the war. Loyalists to Saddam's regime received ink, paper and printing plates to conduct the operation, with the counterfeit cash used to pay for weapons, the source said. Police said that when they receive an order from a local court, the counterfeit cash will be burned. http://www.lewrockwell.com/rockwell/privatize-iraq.html * WILL THE US PRIVATIZE IRAQ? SHOULD IT? by Llewellyn H. Rockwell, Jr. www.lewrockwell.com, 25th September Iraqi Finance Minister Kamel al-Kilani has announced his intention to undertake economic reforms "to build a free and open market economy in Iraq." The reforms include permitting foreigners to invest and own firms in the Iraqi communication, banking, and industrial sectors; lowering tariffs to 5%, and capping tax rates for individuals and companies at 15%. Iraqi industries that are owned by the state will be sold to private firms. The idea of oil-industry privatization has been ruled out because the US wants to avoid criticism that this was the whole reason for the invasion. Also, first reports suggested that former Russian prime minister Yegor Gaidar, mastermind behind Russian economic reform of the 1990s, would lead the team in advising the US occupational government in Iraq. Gaidar later denied the whole thing. "We should keep our advice to ourselves," said Gaidar as he returned from Baghdad. "The formation of economic policy is ultimately the task of the Iraqi authorities." The US should be as wise. With the announcement of these reforms, we are supposed to imagine the future of Iraq as a big democratic Hong Kong, with bustling businesses everywhere, with an international flavor, where taxes are low and property is secure and commerce is the watchword above all else. Utopia! And what a contrast to today, where no one is safe under a US military dictatorship. And just think: the US will shepherd the whole transition. If you believe this, the US has a bridge in Baghdad to sell you. There are very few details available about the plan, but we do have history to inform us. The US has so far not allowed anything resembling a laissez-faire commercial atmosphere to take root after the bombing and killing campaign that began last spring. Foreign cell phone companies that have come to the country to set up shop have been kicked out. Would-be commercial air services have been refused. The interests of merchants have not been protected during the upheavals. Not even the billions and billions of dollars in contract money, looted from the American taxpayer to be given away to firms reconstructing what the US destroyed in Iraq, have been sent out for competitive bids. The contracts were awarded to Halliburton and Bechtel, of course, so that the government and its friends can win before, during, and after the war. Even now, the US admits that "US Government contracts...continue to be the leading business opportunities in Iraq. It's hardly surprising that proposed privatization would be widely interpreted as a complete sell-off of the country - like a criminal gang holding a yard sale of all its holdings. It could discredit the whole idea of free enterprise in Iraq. Let's take a step back and examine the idea of "privatization" itself. For a decade or two, this word has been batted around policy circles. In theory, it is a great idea to sell off or give away property owned and operated by government, so that it can be in private hands and so that property titles can be made exchangeable on an open market. The failure of socialism has shown that without ownership and exchange, waste and deterioration will prevail at the expense of efficiency and development. With private ownership and exchange come rational valuation, technological improvement, and service to the public. By all means, privatize the whole world. And yet, once an idea, no matter how good, gets in the hands of the political elite, it becomes liable to abuse and even reversals of meaning. For years, the federal government has conflated the idea of privatization with contracting out, and they are very different things. Under privatization, the property ends up in the market and the owners can do with it what they want, including selling it or shutting it down. The usual standards of profit and loss apply. Under contracting out, the government determines whether the good or service is necessary, and pays a private company to build or provide it. There is no profit and loss test. The continuum of corruption extends from there. Under one bogus approach, state agencies are permitted to raise the price of their monopoly products, allowing the government to loot the people ever more. Or the government can sell off or give away property to its friends to do with what they want. In Russia, this process created a "mafia" that is still ruling the country, prosecuting its enemies when they get power, or avoiding prosecution when they don't have power. Partial privatizations can lead to disaster, as when banks are backed by government and the property sold to them thereby becomes socialized once again (as happened in the Czech Republic). Another phony form allows "competition" among state institutions, as when "public school choice" is fobbed off on the population as a form of market reform. What kind of privatization will take place in Iraq? You would have to be absurdly naïve to believe the Hong-Kong model. Just as one example: the plan says it is privatizing the government's central bank by creating an "independent" central bank. Now, if you look at the Federal Reserve, "independence" is not the first word that comes to mind. Its board is appointed by the president and it enjoys complete monopoly privileges as granted by the US Congress. True, it doesn't serve the government exclusively; it also has the banking industry to think about. But if the Fed is the model for privatized industry, we can look at privatization in Iraq as nothing more than a cover for US control. In Iraq, the US authority is caught between two conflicting goals. On the one hand, it desperately wants to escape the criticism that it has wrecked the country. Even today, even in the most developed areas, most people don't have clean water or reliable electricity or phone service. Iraqi authorities are saying that it will take two years to fully restore electricity, but this is just another way of saying that it can't be done under the present circumstances of unrelenting violence and chaos. The US would like to see the country approach normalcy if only to dampen fevered criticism from all over the world that has discredited the whole military operation. The only way to do this is by permitting (not "creating") a market economy to flourish. On the other hand, the US authority wants to maintain total political control. To this end, it has voided elections, hand-picked a puppet government that it still can't entirely manage, and has insisted on dictating the reconstruction process at every level. Here's the trouble: the only real path to lasting reconstruction is through radical liberalization. But liberalization means loss of political control. So the US faces a choice in Iraq. Does it want reconstruction or hegemony? The attempt to have both - which is all we've seen so far - has not and cannot work. This dilemma is not unlike that which Gorbachev faced in Russia in the 80s. He knew that liberalization was the key to ending the grinding Soviet poverty, but he also worried that liberalization might lead to the collapse of the regime. He tried to liberalize while beefing up party control, but eventually it didn't work. The whole system came unraveled, and he eventually had to let the Soviet empire go. The US will have to do the same. In fact, the US as an occupying foreign military power is in an even worse position than Gorbachev, who at least was a Russian who rose up through the ranks. As a final observation on this Iraq privatization proposal: there is more than enough privatization to accomplish right here at home. For Heaven's sake, why in the age of mass blogging and instant private delivery of everything does the government still believe only it can deliver mail? And why, instead of privatization in the US, is the Bush administration going in the opposite direction: increasing government control over medicine, education, and trade? Let Bush increase private control and reduce government at home before he pretends to do it abroad. The biggest-spending and biggest war-mongering administration since LBJ has a credibility problem when it claims to bring free markets and the rule of law to anyone. There is a sense in which Iraq needs to be privatized. The US government needs to leave the country. This is "shock therapy" that most Iraqis and most people in the world would welcome. September 25, 2003 Llewellyn H. Rockwell, Jr. [send him mail] is president of the Ludwig von Mises Institute in Auburn, Alabama, and editor of LewRockwell.com. * WORLD BANK/IMF MEETINGS FOCUS ON IRAQ RFE/RL IRAQ REPORT, Vol. 6, No. 40, 25 September 2003 The reconstruction of Iraq was a major focus of the World Bank and International Monetary Fund (IMF)'s annual meeting in Dubai this week where senior Iraqi officials have lobbied hard for international support ahead of next month's international donors' conference for Iraq. IMF head Horst Koehler told a press conference on 24 September that the international community must work together towards that rebuilding. "I think the most important thing...is that the leaders of the world now really set aside their disputes over Iraq and for a consensus so that the international community can unite and the World Bank and IMF and others can go to Iraq and work together and work with the Iraqi people," Koehler said. World Bank President James Wolfensohn, meanwhile, told reporters that he would meet with Iraqi officials in Dubai on 24 September to discuss a draft estimate of costs for the reconstruction efforts. Wolfensohn declined to tell reporters what that estimate was, but said U.S.-published estimates ranging from $50 billion-$70 billion were "in the ball park," Reuters reported. He said that the estimates would be completed in early October. According to ft.com, U.S. administrator in Iraq Bremer said that the World Bank estimate will cost $60 billion-$70 billion over the next for to five years, the website reported on 23 September. Iraqi interim Planning Minister Mahdi al-Hafiz reportedly told the World Bank and IMF in Dubai that the cost for rebuilding Iraq might be as high as $100 billion for the 2004-07 period, ITAR-TASS reported on 24 September. (Kathleen Ridolfo) http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c =StoryFT&cid=1059480182161&p=1012571727172 * FREE MARKETS ARE THE KEY TO REBUILDING IRAQ by Amity Shlaes Financial Times, 29th September So now we learn that Europe does not want to throw more than a few hundred million euros into the pot for a Marshall Plan for Iraq. This is being presented by a huffy American press as a nasty shock. After all, the reconstruction plan is a familiar one: first comes the rescue money, as in Germany of old, then the economic miracle and then democratic stability. Europeans, more than anyone, know the value of such an agenda. But here is a question: does Iraq really need European money? Aid is important, but Iraq will have its own aid: oil aid. If Iraq is to become another Germany and not a Libya, it needs to write laws and establish institutions that make it an inviting place for capital. That at least is what happened in Germany, where an unknown - the economist Ludwig Erhard - worked with the Allies to create a classically liberal programme after the second world war. Erhard then promoted the plan like crazy over the radio. At times, there were tensions between occupied and occupier; but in the end the result was strong: wage and price controls and high taxes were all swept away. In the long run, Erhard's liberal vision and his laws mattered more than Washington's cash; gross domestic product trebled in a decade. Seen in this context, the big news about Iraq is not the discussion about aid but Iraq's recent progress in generating free market leadership and free market legislation. Iraq already has an emerging visionary. He is Ahmad Chalabi, the academic and banker who in recent years has moved from the humiliating edges of exile back to Baghdad and, this month, to the rotating presidency of Iraq's governing council. Mr Chalabi studied at Massachusetts Institute of Technology and the University of Chicago and, like many Chicago products, he is obsessed with the economy. He notes that a mere 2 per cent of all the globe's foreign direct investment goes to the Middle East. He wants to create an Iraqi economy that will increase the region's share of the pie. The Chalabi dream, which he will be discussing with various members of the US senate this week, is a liberal independent state. The Chalabi nightmare is a sort of bad version of Afghanistan under President Hamid Karzai - an international caretaker semi-state where government is about policing borders and negotiating among ethnic power blocs rather than boosting GDP. For Iraq, he told me over dinner, "we need an Adenauer and an Erhard, not a Karzai". Another piece of good news is that now Iraq also has a plan: four-part economic legislation passed this month by the governing council and approved by Paul Bremer, the US envoy. The plan is incomplete and flawed. Still, it is refreshingly liberal by Middle Eastern standards. Here are its components. First the bad news: a "reconstruction surcharge" on goods and capital that cross into Iraq. This is not liberal. And it will deter investment. Next comes a new banking law, which allows foreign banks to create branches or subsidiaries in Iraq. The law also allows up to six foreign banks to purchase local banks and to purchase them direct - JP Morgan Chase, Citigroup and HSBC have expressed interest. Tax is next. The governing council has introduced a tax schedule that tops out at 15 per cent for both companies and individuals. Such low rates will put Iraq on a par with Hong Kong and flat-tax-land Russia. They contrast favourably with the onerous regimes of some neighbours. (Saudi Arabia's corporate rate is 30 per cent, despite its oil riches. Why?) Last comes a new property law that allows foreigners to buy and trade property in Iraq without partners. This is much better than what goes on in much of the rest of the Middle East, or, say, the water torture of mandatory joint ventures that China historically imposed on foreign investors. The same law guarantees the right to repatriate capital. But the property law has an exception: Iraqi oil itself, which is for Iraqis alone. The form of that ownership may be decided later, by an elected government. This property law embodies Iraq's biggest contradiction. On the one hand, the new property rights are crucial, for when ownership rights are clear, trade flourishes. Even in the past months, as the bullets have flown, several international companies have responded to a tender offer to deliver cell phones to 25m Iraqis. In its way, the plan is a gamble that trade can drag Iraq out of terror. On the other hand, there is the oil. Here the form of ownership is crucial. Putting the oil into a trust for the people may yield yet another socialised petro-state - the sort that is responsible for the low foreign direct investment in the first place. Selling or distributing oil share vouchers to Iraqi nationals could also be dangerous, if one ethnic group ended up with controlling shares. The best step is to open the oil business to all non-government bidders. This, however, the governing council, including Mr Chalabi, hesitates to do, since it looks like a sell-out to colonialism. In other words, commodity wealth still curses Iraq, making the challenge of reviving the country harder than that of restoring damaged Germany in its day. But the curse is not insurmountable. The Iraq government can always rewrite the property law. In any case, these early steps acknowledge an Erhardian truth. When it comes to new states, what matter most are leaders and law, not aid. http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c =StoryFT&cid=1059480182733&p=1012571727172 * INTERNATIONAL OIL COMPANIES STEP UP DEVELOPMENT TALKS by Carola Hoyos in London Financial Times, 29th September International oil companies are stepping up discussions over the development of Iraqi oil fields under Ibrahim Mohammed Bahar al-Uloum, the country's new oil minister, and Robert McKee, the US's newly-appointed lead adviser on oil matters there. The US this month appointed Mr McKee, a former executive of ConocoPhillips, the US oil company, to take over from Philip Carroll as the US's most senior oil official for Iraq. The move came just after Mr Bahar al-Uloum took up his post. Several European oil companies have begun to study Iraq's fields. These include Total of France, which had discussed a deal for the Majnoon Bin Umar fields, and Italy's Eni, which before the fall of Saddam Hussein had eyed the Nassiryah field together with Repsol of Spain. Royal Dutch/Shell has shown interest in the Ratawi field and sent out for commission a study on the opportunities in Iraq. David O'Reilly, head of ChevronTexaco, the second largest US energy group, said in a recent interview with the FT that he expected much more dialogue between Iraq and the international oil companies in the coming months. Pertamina, Indonesia's state oil company, has said it will begin to explore for oil south of Baghdad in October, investing $24m (€21m, £14.5m) over three years into one of the few deals signed under Mr Hussein that was ratified and remains valid, according to Iraqi oil officials. Senior representatives of Iraq's oil sector are expected to outline the opportunities of rehabilitating Iraq's petroleum sector at a meeting in Geneva in late October. http://www.nytimes.com/2003/09/30/politics/30LOBB.html * WASHINGTON INSIDERS' NEW FIRM CONSULTS ON CONTRACTS IN IRAQ by DOUGLAS JEHL New York Times, 30th September WASHINGTON, Sept. 29 — A group of businessmen linked by their close ties to President Bush, his family and his administration have set up a consulting firm to advise companies that want to do business in Iraq, including those seeking pieces of taxpayer-financed reconstruction projects. Advertisement The firm, New Bridge Strategies, is headed by Joe M. Allbaugh, Mr. Bush's campaign manager in 2000 and the director of the Federal Emergency Management Agency until March. Other directors include Edward M. Rogers Jr., vice chairman, and Lanny Griffith, lobbyists who were assistants to the first President George Bush and now have close ties to the White House. At a time when the administration seeks Congressional approval for $20.3 billion to rebuild Iraq, part of an $87 billion package for military and other spending in Iraq and Afghanistan, the company's Web site, www.newbridgestrategies.com, says, "The opportunities evolving in Iraq today are of such an unprecedented nature and scope that no other existing firm has the necessary skills and experience to be effective both in Washington, D.C., and on the ground in Iraq." The site calls attention to the links between the company's directors and the two Bush administrations by noting, for example, that Mr. Allbaugh, the chairman, was "chief of staff to then-Gov. Bush of Texas and was the national campaign manager for the Bush-Cheney 2000 presidential campaign." The president of the company, John Howland, said in a telephone interview that it did not intend to seek any United States government contracts itself, but might be a middleman to advise other companies that seek taxpayer-financed business. The main focus, Mr. Howland said, would be to advise companies that seek opportunities in the private sector in Iraq, including licenses to market products there. The existence of the company was first reported in The Hill, a Congressional newspaper. Mr. Howland said the company was not trying to promote its political connections. He said that although Mr. Allbaugh, for example, had spent most of his career "in the political arena, there's a lot of cross-pollination between that world and the one that exists in Iraq today." As part of the administration's postwar work in Iraq, the government has awarded hundreds of millions of dollars in contracts to American businesses. Those contracts, some without competitive bidding, have included more than $500 million to support troops and extinguish oil field fires for Kellogg, Brown & Root, a subsidiary of Halliburton, which Vice President Dick Cheney led from 1995 until 2000. Of the $3.9 billion a month that the administration is spending on military operations in Iraq, up to one-third may go to contractors who provide food, housing and other services, some military budget experts said. A spokesman for the Pentagon said today that the military could not provide an estimate of the breakdown. Administration officials, including L. Paul Bremer III, the top American official in Iraq, have said all future contracts will be issued only as a result of competitive bidding. Already, the Web site for the Coalition Provisional Authority, http://cpa-iraq.org/, lists 36 recent solicitations, including those for contractors who might sell new AK-47 assault rifles, nine millimeter ammunition and other goods for new army and security forces. New Bridge Strategies was established in May and recently began full-fledged operations, including opening an office in Iraq, its officials said. They added that a decision by the Governing Council of Iraq to allow foreign companies to establish 100 percent ownership of businesses in Iraq, an unusual arrangement in the Mideast, had added to the attractiveness of the market. Mr. Howland is a principal of Crest Investment in Houston and was president of American Rice, once a major exporter to Iraq. Richard Burt, ambassador to Germany in the Reagan administration and a former assistant secretary of state, and Lord Powell, a member of the British House of Lords and an important military and foreign-policy adviser to Prime Minister Margaret Thatcher, are among the 10 principals. Mr. Allbaugh, the chairman, spent most of his career in Texas politics before Mr. Bush appointed him to head the federal disaster agency. Mr. Allbaugh, who now heads his own consulting firm here, did not return calls to his office today. Mr. Rogers, the vice chairman who was a deputy assistant to the first President Bush and an executive assistant to the White House chief of staff, is also vice chairman of Barbour Griffith & Rogers, one of the best-connected Republican lobbying firms in the capital. Mr. Rogers founded it in 1991 with Haley Barbour, who became chairman of the Republican National Committee and is now running for governor of Mississippi. Shortly after leaving the White House, Mr. Rogers was publicly rebuked by the first President Bush after he signed a $600,000 contract to represent a Saudi, Sheik Kamal Adham, who was a main figure under scrutiny in a case that involved the Bank of Commerce and Credit International. Mr. Rogers canceled his contract to represent the sheik, former head of Saudi intelligence. Mr. Griffith, a director of the new company, is chief operating officer of Barbour Griffith & Rogers, which he joined in 1993. He was special assistant for intergovernmental affairs to the first President Bush and later worked under him as an assistant secretary of education. Until November, Mr. Rogers's wife, Edwina, was associate director of the National Economic Council at the White House. Reached by telephone today, Mr. Rogers said he did not want to speak for the record and referred a reporter to Mr. Howland. The company Web site says the company was "created specifically with the aim of assisting clients to evaluate and take advantage of business opportunities in the Middle East following the conclusion of the U.S.-led war in Iraq." _______________________________________________ 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 firstname.lastname@example.org All postings are archived on CASI's website: http://www.casi.org.uk