[Senate Prints 108-31]
[From the U.S. Government Publishing Office]
108th Congress S. Prt.
COMMITTEE PRINT
1st Session 108-31
_______________________________________________________________________
IRAQ: MEETING THE CHALLENGE,
SHARING THE BURDEN,
STAYING THE COURSE
__________
A Trip Report to Members
of the
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
Richard G. Lugar, Chairman
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COMMITTEE ON FOREIGN RELATIONS
RICHARD G. LUGAR, Indiana, Chairman
CHUCK HAGEL, Nebraska JOSEPH R. BIDEN, Jr., Delaware
LINCOLN CHAFEE, Rhode Island PAUL S. SARBANES, Maryland
GEORGE ALLEN, Virginia CHRISTOPHER J. DODD, Connecticut
SAM BROWNBACK, Kansas JOHN F. KERRY, Massachusetts
MICHAEL B. ENZI, Wyoming RUSSELL D. FEINGOLD, Wisconsin
GEORGE V. VOINOVICH, Ohio BARBARA BOXER, California
LAMAR ALEXANDER, Tennessee BILL NELSON, Florida
NORM COLEMAN, Minnesota JOHN D. ROCKEFELLER IV, West
JOHN E. SUNUNU, New Hampshire Virginia
JON S. CORZINE, New Jersey
Kenneth A. Myers, Jr., Staff Director
Antony J. Blinken, Democratic Staff Director
(ii)
C O N T E N T S
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Page
Key Findings..................................................... 1
Priorities and Recommendations................................... 2
Political Attitudes and Expectations............................. 2
Establish Security and Law and Order............................. 3
Deliver Essential Public Services................................ 4
Get the Message Out.............................................. 5
The Political Transition......................................... 6
A Vacuum in Authority........................................ 6
The Governing Council........................................ 7
Drafting a New Constitution.................................. 8
Perceptions of Political Parties............................. 9
De-Ba'athification........................................... 9
Supporting the Development of a Democratic Culture........... 9
The Iraqi Shi'a.................................................. 10
Status of Women.................................................. 11
The Economy, Budgets, and Oil.................................... 11
No Oil Bonanza............................................... 12
A Shoestring Budget in the Red............................... 12
Donors Conference............................................ 13
Debtor Nation................................................ 13
Developing a Social Safety Net............................... 13
Generating Employment........................................ 14
Internationalize the Transition.................................. 15
Iraq in a Wider Context.......................................... 15
Conclusion: Staying the Course................................... 16
Annexes
Coalition Provisional Authority (CPA) Organizational Chart....... 17
Proposed International Police Task Force Composition............. 19
Members of the Iraqi Governing Council........................... 20
CPA Order on the De-Ba'athification of Iraqi Society............. 21
Interim Budget for Iraq, July-December 2003, Summary............. 22
Text of United Nations Security Council Resolution 1483.......... 26
Speech by Ambassador L. Paul Bremer III, National Press Club,
July 23, 2003.................................................. 34
Further Reading.................................................. 44
Map of Iraq...................................................... 45
LETTER OF TRANSMITTAL
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United States Senate,
Committee on Foreign Relations,
Washington, DC, July 30, 2003.
Richard G. Lugar, Chairman
Joseph R. Biden, Jr., Ranking Minority Member
Dear Senator Lugar and Senator Biden:
At the request of Senator Biden and Senator Hagel we
returned to Iraq on June 25, two days after the visit of the
Committee delegation led by Chairman Lugar to Baghdad. For the
following nine days, until July 3, we held a series of meetings
with a wide range of Iraqi professionals, prominent business
leaders, academics, students, artists, journalists, religious
leaders, politicians, and other elements of the new Iraqi civil
society. In addition, we met Coalition Provisional Authority
(CPA) officials, American military personnel, and United
Nations officials.
Prior to leaving Baghdad, we presented some of our
preliminary findings to Ambassador L. Paul Bremer III, the
Administrator of the Coalition Provisional Authority, and Mr.
Sergio Vieira de Mello, the Special Representative of United
Nations Secretary General Kofi Annan.
The interviews and meetings were conducted in Baghdad,
except for one day spent in Najaf. For all but three of our
meetings with Iraqis, we were not escorted by CPA or coalition
military personnel and made our own arrangements for
accommodations and travel.
The conclusions and recommendations in this report are our
own, and do not necessarily reflect the views of the Committee
on Foreign Relations or its Members.
Sincerely,
Puneet Talwar
Professional Staff Member
Foreign Relations Committee Andrew Parasiliti
Foreign Policy Advisor
Office of Senator Hagel
IRAQ: MEETING THE CHALLENGE, SHARING THE BURDEN, STAYING THE COURSE
----------
KEY FINDINGS
The United States faces an enormous challenge in managing
the transition to stability and democracy in Iraq. The next few
months are critical to our success. Despite a swift and
effective military campaign, and the impressive performance of
our armed forces during both the war and the present post-war
stabilization phase, the American government and people may not
have been prepared for the costs and commitment of rebuilding
Iraq.
The scope of this task cannot be overstated. It will
require significant resources--human and financial--and
sustained U.S. involvement over many years. The United States
cannot and should not bear this burden alone. Instead, we must
more actively seek international assistance and participation
from our allies, the United Nations, and NATO in re-building
Iraq.
We found a precarious situation on the ground which could,
if not urgently addressed, pose significant threats for
American troops, as well as U.S. national security interests in
the Middle East and beyond. Restoring law and order and rapidly
improving the delivery of essential public services is
intimately linked to improving security for US forces and to
overall U.S. objectives in Iraq and throughout the Middle East.
The transition to stability, let alone democracy, will be
difficult and success is not assured. Iraq does not have a
tradition of democracy. That is not to say that Iraqis are
neither capable nor worthy of democracy. They are. But history
counts. Iraq has suffered 35 years of brutal dictatorship, 3
wars, and over a decade of international sanctions. The
infrastructure is devastated. Democracy will take time and will
depend on the long-term development of political institutions
which did not exist under the Ba'ath regime. The near-term
prospects for economic growth, a key driver of political
progress, are not promising. Furthermore, despite Iraq's vast
oil reserves, it is unlikely that there will be an oil windfall
in Iraq for several years.
Creating a stable and representative Iraq, at peace with
its neighbors, is critical to the success of U.S. policy toward
Iraq and the Middle East. America must stay the course. At the
same time, our policies and expectations in Iraq and the region
should be tempered with a clear-eyed realism about the risks
and costs associated with this effort.
PRIORITIES AND RECOMMENDATIONS
The U.S. Government should emphasize the following as
urgent, inter-connected priorities:
Security: Deploy sufficient forces to subdue Iraqi
resistance and continue the hunt for former leaders of
the regime, especially Saddam Hussein.
Law and Order: Must be established in Baghdad and
throughout Iraq. The U.S. should intensify its efforts
to recruit and retrain Iraqi police officers, and
immediately seek international assistance for this
process.
Re-establish Services: In Baghdad and throughout
Iraq as soon as possible. Especially electricity and
telecommunications.
Get the Message Out: Through the establishment of
world class radio and TV broadcasting, support for
independent media, and possibly the opening of local
public information centers where Iraqis can more
readily access CPA officials.
Generate Employment: For the estimated 60% of the
working age population that is unemployed.
Share the Burden: By seeking a broader role for the
United Nations, the North Atlantic Treaty Organization,
and our Arab allies to allow other countries to
contribute troops and funds for stabilizing and
rebuilding Iraq.
POLITICAL ATTITUDES AND EXPECTATIONS
Most Iraqis we interviewed were thankful to the United
States for removing Saddam Hussein's regime from power; hopeful
of a new relationship with the United States; and supportive of
U.S. troops staying until Iraq is stabilized. Yet Iraqis remain
a proud people. Gratitude over the removal of Saddam mixes with
a strong strain of nationalism. Military occupation elicits
complex reactions, and Iraqis, citing their long history of
civilization, believe that they are capable of running their
own affairs.
The United States is dealing with a huge expectations gap
in Iraq. Following our rapid military success, Iraqis expected
that the United States could dramatically improve almost
overnight living conditions that had declined precipitously for
more than a decade. Iraqis today are preoccupied with the
economy, personal security, and the absence of services. Most
of them told us that current conditions in Baghdad since the
liberation have made life harder than it was even under the
regime of Saddam Hussein. They also expressed uncertainty and
fear that the present situation in Baghdad and throughout Iraq
would not get better. A failure to improve conditions in Iraq
would contribute to greater resentment of the CPA, undermine
the Iraqi Governing Council, and increase risks to coalition
forces.
An independent public opinion survey of 1,090 Baghdad
residents by the Iraq Center for Research and Strategic Studies
(ICRSS) conducted on June 19, 2003, reinforced many of our own
observations. According to the poll, while only 17% of those
surveyed wanted coalition forces to leave immediately, 74%
described the current security situation as bad; 74% described
the economy as bad; and 94% said that efforts to rebuild key
sectors of the economy had so far failed.
ESTABLISH SECURITY AND LAW AND ORDER
Establishing security and law and order are the most
pressing priorities for the transition in Iraq.
American and coalition forces have so far done a heroic
job, and at great risk, to root out the remnants of Saddam's
regime, guerrillas, and terrorists who have no place in the new
Iraq. But the United States cannot continue to shoulder most of
this burden alone. America must reach out for military support
from our allies, preferably our NATO allies, to grant greater
legitimacy to our security role in Iraq.
Re-establishing a police force in Iraq is a separate and
equally urgent priority. Coalition forces are not trained to
police Iraq, although they have done precisely that during the
transition. Policing must be done by Iraqis, but rebuilding
Iraq's police force is a big job, and here, too, we cannot do
it alone. The absence of law and order for Iraqis must be
immediately addressed. Baghdad has experienced an unprecedented
crime wave since Iraq's liberation--reports of carjackings,
armed robberies, murders, and rape are rampant. The problem has
been exacerbated by the widespread availability of arms and the
mass release of prisoners--including many hardened criminals--
by Saddam Hussein in the run up to the war.
The CPA's Iraq Police Assessment team would like to
immediately enlist over 5,000 international police forces to
train and patrol with Iraqi police,\1\ but as of early July
commitments from other countries were scant and only a handful
of personnel had arrived. Fully training a competent and
professional force of 73,000 Iraqis, which could effectively
police the entire country, will take more than 5 years,
according to the CPA's Iraq Police Assessment Team. In the
interim, law and order can only be restored by a combination of
international police forces, military police, and coalition
troops working with a rough-and-ready force of Iraqis even as a
more professional force is being trained in parallel.
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\1\ ``Police Development Plan, Iraq Police Assessment &
Recommendations,'' Iraq Police Assessment Team, Coalition Provisional
Authority. (See Annexes, page 19.)
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Ambassador Bremer has made providing security his most
immediate priority for Iraq. By the end of September, the CPA
and the Iraqi Governing Council plan to recruit and train the
first battalion of the new Iraqi army, and eight battalions for
an Iraqi civil defense corps, and open a new police academy.\2\
These efforts should be supported with the urgency and
resources required for the task. They also should be augmented
by an aggressive diplomatic strategy to recruit international
police forces, which can assist in this effort.
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\2\ Ambassador L. Paul Bremer III, Speech to the National Press
Club, Washington, DC, 23 July 2003. (See Annexes, pages 34-43.)
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DELIVER ESSENTIAL PUBLIC SERVICES
As temperatures approach 120 degrees during the summer,
Baghdad and other areas continue to have inadequate supplies of
electricity and water. It is critical that the CPA be given the
necessary resources and the authority to deploy them as it sees
fit to increase the supply of electricity. Ambassador Bremer
has estimated that rebuilding Iraq's electricity sector could
cost as much as $13 billion.\3\ The CPA budget for July-
December 2003 provides only $294 million for ``electrical
improvements.'' (See Annexes, pages 22-25.)
---------------------------------------------------------------------------
\3\ Ambassador L. Paul Bremer III, Speech to the National Press
Club, Washington, DC, 23 July 2003. (See Annexes, pages 34-43.) One CPA
official said the costs could reach $3.5 billion per year over 6 years,
or $21 billion. Interview with CPA official, July 2, 2003.
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There is a large gap between supply and demand in the Iraqi
electricity sector, a condition that pre-dates Iraq's
liberation. Current demand for electricity in Iraq is estimated
to be approximately 6,000-7,000 megawatts (MW) nationwide and
approximately 2000-2200 MW for Baghdad.\4\ The pre-war total
electricity generation for Iraq was estimated at 4000 MW, a 33%
shortfall in supply. The electricity situation in the months
following Iraq's liberation was worse than it was prior to the
war--as of July 14, generation nationwide was 3200 MW for Iraq
and 1150 MW for Baghdad.\5\ Reaching the pre-war generation
level of 4000 MW is expected to take until the end of
September.
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\4\ Interview with CPA official, July 2, 2003.
\5\ Interview with CPA official, July 2, 2003 and a telephone
follow-up, July 14, 2003.
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One CPA official said that contracting delays, sabotage,
looting, and security risks to key personnel have combined to
keep electricity supplies insufficient in Baghdad and other
locations. The destruction of a single transmission tower in
late June caused electricity generation in Baghdad to fall to
zero for four days. It took one week of intensive effort to
restore the previous level of power generation. In the
meantime, the prolonged absence of power halted water supplies
and led to a two week disruption in gasoline production.
The same official cited contracting delays as being
partially responsible for preventing increases in the supply in
electricity. He described the difficulty in obtaining $25,000
for repairs in the first month after the fall of Baghdad.
According to him, of more than $200 million allocated for
electricity out of a $680 million contract awarded to the
Bechtel Corporation, Bechtel had spent only $1 million at the
time of the interview.\6\ This has forced the CPA to tap into
Iraqi assets under its control to make essential repairs.
---------------------------------------------------------------------------
\6\ Interview with CPA official, July 2, 2003 and a telephone
follow-up, July 14, 2003.
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In addition to the costs associated with rebuilding Iraq's
electricity sector, Ambassador Bremer has cited UN estimates
that re-establishing a potable water supply and service could
cost $16 billion over 4 years.
GET THE MESSAGE OUT
There has been a failure to communicate effectively with
the Iraqi people. Many Iraqis we spoke with mocked the poor
quality of 4-hour a day television broadcasts from the CPA,
which, in any case, they could only see during the infrequent
periods when power was on. Likewise, those Iraqis we
interviewed did not listen to CPA radio broadcasts.
The lack of effective communication with the Iraqi people
has increased their distance from the CPA and has heightened
the sense of a vacuum in authority. Most of the Iraqis we spoke
with were unclear about the intentions, programs, and policies
of the CPA.
The absence of accurate information also has led to
widespread rumors and conspiracy theories. Iranian broadcasts--
TV and radio--and Arab satellite television including Al-
Jazeera have filled the void. They were available for more
hours during the day and their programming was of better
quality. Neither of these sources is noted for its sympathetic
portrayal of the United States.
CPA officials should take four specific steps to address
the communications gap:
(1) Immediately make available high-quality broadcasts on
TV and radio throughout Iraq. Such programming should
acknowledge the problems Iraqis are facing, indicate what the
CPA is doing to fix them, and offer a timeline for their
resolution. The USG should call upon the expertise of private
broadcasters in the U.S. and the Broadcasting Board of
Governors for guidance in this process.
The CPA is taking a number of steps to expand its radio and
television programming for Iraqis. Because of the problems with
electricity in Baghdad and throughout Iraq, many Iraqis would
likely turn to radio, which, unlike television, can be heard in
cars and powered by batteries. The CPA is planning to re-
transmit Radio Sawa and the Iraqi service of RFE-RL from towers
inside Iraq, as well as expanding Iraq Media Network (IMN)
radio coverage inside the country.
(2) Since the USG is attempting to build democracy in Iraq,
the CPA should support a C-SPAN type service where public
interest programming and grassroots political activity,
including the town and neighborhood council meetings under
USAID's Iraq Local Government Project, can be transmitted
throughout Iraq to develop and encourage civic awareness,
responsibility, and activism.
(3) Support indigenous, independent Iraqi media--through
regulatory reform, journalism training, and perhaps making
available subsidized equipment and financing facilities. The
growth of a strong, independent media will improve the
prospects for the eventual development of democracy in Iraq.
(4) Consider the establishment of public information
centers in Baghdad and throughout the country where Iraqis can
more readily access CPA officials, gather information on CPA
efforts, and identify opportunities for participating in the
reconstruction of their country.
THE POLITICAL TRANSITION
A Vacuum in Authority
The CPA began its work facing a daunting and unexpected
reality: there was no functioning national government in Iraq.
The destruction and looting of most government ministries and
office buildings in Baghdad, the dissolution of the Iraqi armed
forces and most of the Iraqi police force, the breakdown in
security throughout the capital after the liberation, as well
as the effect of over three decades of dictatorship and over a
decade of sanctions on Iraqi society, provided a sobering
starting point for the coalition's efforts to facilitate a
political transition.
Baghdad is the key to the success of our efforts. It
remains the nation's political and cultural capital, and the
most representative city in terms of Iraq's demographic
diversity, with roughly 20% of the country's population. It is
home to the most influential professional, business, and
opinion leaders. In short, the national political transition
will depend upon our success in stabilizing Baghdad.
The transition to stability, let alone democracy, is not
assured. Iraqis must have a functioning national government and
a clear constitutional process for democracy to have a chance
to take root.\7\ The absence of dictatorship does not
necessarily foreshadow a democratic transition. Building
democratic institutions will take time, patience,
determination, and resources.
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\7\ Also see Thomas Carothers, ``It's Too Soon For Democracy,'' The
Washington Post, July 20, 2003.
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The Governing Council
The Iraqi Governing Council, appointed by Ambassador L.
Paul Bremer III, the top American administrator in Iraq, met
for the first time on July 13, 2003. The Council's 25 members
include a mix of former exiles, tribal and religious leaders,
women and representatives from Iraq's main communities--Arab
Shi'a and Sunni, Kurds, Turkmen, and Christian. (See Annexes,
page 20.) Although Ambassador Bremer reserves the final call on
all decisions, the Council will have the authority to appoint
and supervise ministers, send diplomats abroad, establish a
process for writing a new Iraqi constitution, and set fiscal
and budget policy, among other responsibilities.
The Council's fortunes will be directly correlated with the
success or failure of the CPA to provide basic government
services, re-establish security, and develop the economy. The
Council, on its own, will not ``deflect'' any resentment or
frustration away from the CPA by Iraqis about their situation
as some American officials have suggested. If there is
appreciable improvement in the lives of ordinary Iraqis, the
Council, and the CPA, will gain legitimacy. If conditions
stagnate or worsen, the Council will be perceived by Iraqis as
lackeys of the CPA. Both will bear the brunt of their
frustration.
It is critical to communicate to Iraqis that the Governing
Council is only a ``first step in establishing an interim
government'' and that it is directly linked to the
constitutional process, which will lead eventually to national
elections.\8\ Without effective communication Iraqis may reach
incorrect conclusions about the authority, independence, and
tenure of the Governing Council.
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\8\ L. Paul Bremer III, ``The Road Ahead in Iraq--and How to
Navigate it,'' The New York Times, July 13, 2003.
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The national political process must also be connected in
the minds of Iraqis with the important work of the CPA, through
the USAID Iraq Local Government Project, to establish interim
city councils and municipal governments with limited powers as
the ground-up building blocks of democracy in Iraq.\9\
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\9\ We attended meetings of the Interim Advisory Council for the
Al-Rasheed district in Baghdad on June 23, 2003 (with CODEL Lugar-
Biden-Hagel) and for the Ath-Thawrah district on July 2, 2003.
Drafting a New Constitution
The development of an Iraqi Constitution will contribute to
the cohesion and legitimacy of a new Iraqi government. It will
establish the governing principles of Iraq, formalize key
political compromises among major constituencies, and create
institutional arrangements that hopefully will govern Iraq for
years to come. Critical issues will be settled by the
Constitution--Will the country be a federation? If so, with how
many constituent parts? What powers will be held by the central
government? What, if any, checks and balances will be put in
place between the executive, legislative, and judicial
functions of government? Will religion play any formal role in
public life? Will the fundamental rights of all Iraqis be
protected?
The Constitutional process should be seen as legitimate by
Iraqis. Some may seek to question, hinder or obstruct this
process. The mode of selection for the Constitutional Council
has already become a point of contention, with Grand Ayatollah
Ali Sistani--a powerful voice in the Shi'a community--issuing a
Fatwa calling for Council members to be elected. During the
Constitutional process the Iraqi Governing Council and the CPA
must communicate clearly to the Iraqi people the link between
the development of a Constitution and the process of building
political institutions and democracy for all Iraqis. \10\
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\10\ See L. Paul Bremer III, ``The Road Ahead in Iraq--and How to
Navigate it,'' The New York Times, July 13, 2003.
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Perceptions of Political Parties
The CPA should refrain, for now, from being seen as
favoring any specific personalities or parties. In her classic
study of British foreign policy in the Middle East, Elizabeth
Monroe noted ``the confirmed optimism that caused British
statesmen to underrate the unpopularity to which they exposed
rulers whom they supported and advised.'' \11\ The ICRSS survey
found that only 15.1% of Iraqis polled in Baghdad said that the
political parties in Iraq represent their interests.
Approximately 63% of those surveyed preferred a technocratic
government, rather than one based upon political parties.
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\11\ Elizabeth Monroe, Britain's Moment in the Middle East, 1914-
1971 (Baltimore, MD: Johns Hopkins University Press, 1981), p. 21.
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Our interviews in the capital confirmed the low regard that
many had for several of the political parties, including some
represented in the Governing Council. We found a range of
opinion on the form of government Iraqis would like to see,
with some strongly supporting the mixing of religion and
politics (particularly in the Shi'a community), others favoring
strict secularism, and some expressing curiosity about the
establishment of a constitutional monarchy.
Iraqis we spoke with understood that it will likely take
time for the development of a democratic political culture. In
the interim, most want a government of technocrats who can
restore essential services, security, and a sense of Iraqi
independence in governance during the transition.
De-Ba'athification
While most Iraqis we interviewed expressed support for the
principle of de-Ba'athification of Iraqi society, there was
confusion and concern that orders by the CPA to remove
Ba'athists from government would adversely affect relatively
lower-ranking members of the party who may have joined purely
for career advancement, not out of ideological conviction. The
CPA should clearly state to Iraqis the scope and intention of
its orders in this area. (See Annexes, page 21.)
Supporting the Development of a Democratic Culture
The forces in Iraq that are the best organized to mobilize
followers are the Kurdish parties, former Ba'athists, and
religious groups. The democratic orientation of the latter two
is highly suspect. What is missing in Iraq is a strong
democratic, secular center that has a grassroots mobilizing
capacity. The CPA should intensify its efforts to develop
mechanisms, direct or indirect, to make democracy training and
other resources available for the development of democratic
institutions, including political parties, independent media,
the rule of law, and, particularly, non-governmental
organizations.
A related threat to the development of a democratic ethos
in Iraq comes from certain religious quarters, where democracy
and freedom are being equated with ``Western cultural and moral
decadence.'' It will be critical to get the message across that
democracy can take many forms, and that the American or Western
models are not the only ones available. Iraqis must feel that
their form of democracy is authentic and consistent with their
traditions.
THE IRAQI SHI'A
The Shi'a of Iraq comprise approximately 60% of the
population, but have long been denied a commensurate role in
the political leadership of their country. It would be a
mistake, however, to see the Shi'a as a monolithic political
block. Opinions among Iraq's Shi'a population span the breadth
of the political spectrum.
Shi'ite religious communities are among the best organized
in Iraq. Iraq is the home to two of the holiest cities in
Shi'ism--Najaf and Karbala--and there is a great deal of
political and social activism associated with Iraqi Shi'a
religious institutions.
Within the Shi'a community, there is an intense competition
underway involving groups such as the Supreme Council for the
Islamic Revolution in Iraq (SCIRI) which was based in Tehran
for many years, the Da'wa Party--which appears to have a strong
grassroots presence, and the followers of Muqtada Sadr--the son
of a well-known Shi'a figure assassinated by the regime of
Saddam Hussein. The first two have representation on the
Governing Council, while the latter has announced plans to
create a rival council and an ``Islamic Army.'' Attempting to
stay above the fray, but still highly influential, are senior
religious figures such as Grand Ayatollahs Ali Sistani and Syed
al-Hakim.
The clerics we met in Najaf emphasized to us that their
allegiance is to Iraq, not Iran. At the same time, Najafi
clerics appear to support involving religion in public life in
some way. The parameters of Shi'a politics in Iraq are still
evolving and it is not clear which, if any, group will emerge
as the dominant voice and what specific relationship will be
advocated between religion and government.
Despite widespread happiness among Iraqi Shi'a over the
demise of Saddam Hussein's regime, there is little trust of
American intentions in Iraq. Many Shi'a activists retain bitter
memories of President George H.W. Bush's encouragement and then
abandonment of the 1991 intifada in Iraq which resulted in tens
of thousands of deaths.
Winning over Iraq's Shi'a, and all Iraqis, will depend upon
the establishment of an Iraqi government that has legitimacy
among all its citizens and is capable of providing security and
services.
STATUS OF WOMEN
Most Iraqi women we encountered indicated that they have
seen their personal freedom decline in the aftermath of the war
for two reasons: (1) The collapse of law and order; (2) The
growing strength and influence of religious groups.
Many women, including professionals, indicated that they
have been forced to stay indoors because of the general state
of lawlessness and rampant reports of abductions and rapes.
Rape in a traditional society such as Iraq is a taboo subject.
It often results in adverse consequences for the victim,
frequently involving her murder by family members to
``preserve'' the family's honor.
Many women also related accounts of harassment and
intimidation over their dress and behavior by newly assertive
religious groups.
The CPA should take the following steps:
(1) Improve law and order--women will be the greatest
beneficiaries. Police, including female officers,
should be trained to meet the needs of rape victims.
Legal reform will be needed to stiffen penalties for
harming victims of rape, including ``honor killings.''
(2) Support non-profit groups assisting victims of
rape and other violence against women.
(3) Publicize efforts to address the issue of rape to
help remove the stigma suffered by victims.
(4) Continue to ensure the participation of women in
the political process.
Vigilance on issues relevant to women will need to be
heightened to ensure that the liberation of Iraq does not
paradoxically lead to a decline in the standing of women in
society.
THE ECONOMY, BUDGETS, AND OIL
The Iraqi economy is but a shadow of its former self. It
has been ruined from 35 years of mismanagement and corruption
under the Ba'ath regime; three wars since 1980; 12 years of
international sanctions; and the looting, vandalism, and
economic collapse that followed Iraq's liberation on April 9,
2003. In 2000, the UN estimated that Iraq's gross domestic
product per capita had fallen to between $500 and $700,\12\
which would rank it near countries such as Yemen, Bhutan, and
Angola.\13\ Since the establishment of the UN oil-for-food
program in December 1996, 60% of Iraq's population has relied
upon oil-for-food program to meet its most essential needs. The
private sector was operating at a fraction of capacity.
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\12\ The Reconstruction of Iraq. A Preliminary Background Briefing
Paper, prepared by the UN Development Group, June 23, 2003.
\13\ The World Bank, World Development Indicators for 2000 and
2001.
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No Oil Bonanza
Although Iraqi's oil reserves are estimated to be the
second largest in the world, Iraq's economy and infrastructure
is in dire straits. There is no oil windfall on the horizon.
Oil revenues for July-December 2003, based on estimated
exports of 1.5 million barrels per day by December, are
expected to be only $3.455 billion. Iraq's oil exports and
revenues are projected to be only 2 million barrels per day and
$14 billion, respectively, for 2004.\14\ To achieve those
results, Iraq's oil infrastructure will require $2.5 billion in
investment by December 2004.\15\ The July-December 2003 Iraqi
budget includes $825 million for rebuilding Iraq's oil
infrastructure through the Restoration of Iraqi Oil Program.
(See Annexes, pages 22-25.)
---------------------------------------------------------------------------
\14\ Iraq exported 1.7 mil b/d of oil in 2002. Testimony of Hon.
Alan P. Larson, Under Secretary of State for Economic, Business and
Agricultural Affairs, before the Senate Foreign Relations Committee,
June 4, 2003.
\15\ Phil Carroll, CPA Senior Adviser to Iraq's Ministry of Oil,
Baghdad, June 23, 2003.
---------------------------------------------------------------------------
An expansion of Iraq's oil exports beyond these levels
cannot be considered in a vacuum. Such a decision would
probably require an increase in international demand for oil
and further investments in Iraq's oil infrastructure. Under
Secretary of State Alan Larson said in testimony before the
Senate Foreign Relations Committee that, ``Any significant
expansion of baseline oil product capacity would need to be
accommodated by increased demand in the international
marketplace and in my view would most likely be privately
financed.'' \16\ The Independent Task Force of the Council on
Foreign Relations on ``Iraq: The Day After'' estimated that
restoring production to its peak of 3.5 million b/d would
require an investment of $5-7 billion over 2 years.\17\
---------------------------------------------------------------------------
\16\ Testimony of Hon. Alan P. Larson, Under Secretary of State for
Economic, Business and Agricultural Affairs, before the Senate Foreign
Relations Committee, June 4, 2003.
\17\ Iraq: The Day After, Report of an Independent Task Force
Sponsored by the Council on Foreign Relations, 2003, p. 35.
---------------------------------------------------------------------------
A Shoestring Budget in the Red
The interim budget for Iraq for July-December 2003 prepared
by the CPA and Iraq's Ministries of Finance and Planning
projects a total expenditure of close to $6.1 billion and a
deficit of $2.2 billion. (See Annexes, pages 22-25.) The
deficit will be funded from ``committed financial assets,
without the need for borrowing.'' The budget, while
appropriately conservative in some respects, does not make the
dramatic investments that may be urgently needed to bring about
immediate improvement in the lives of ordinary Iraqis.
Ambassador Bremer has so far predicted a deficit of almost $4
billion for FY 2004.\18\
---------------------------------------------------------------------------
\18\ Ambassador Paul L. Bremer III, National Press Club,
Washington, DC, 23 July 2003. (See Annexes, pages 34-43.)
---------------------------------------------------------------------------
Donors Conference
At present, a donors conference under the auspices of the
United Nations is planned for Fall 2003. Critical to the
success of this conference will be an assessment to be
completed by the World Bank and International Monetary Fund. An
initial study prepared by the United Nations for a preliminary
donors meeting in June supports our conclusion that the need
for assistance in a range of sectors will be extraordinary.\19\
Given the need to immediately improve conditions on the ground,
the United States will not have the luxury of waiting to
increase spending until after the donors conference and the
inevitable delays in actual delivery of pledges.
---------------------------------------------------------------------------
\19\ The Reconstruction of Iraq. A Preliminary Background Briefing
Paper, prepared by the UN Development Group, June 23, 2003.
---------------------------------------------------------------------------
Debtor Nation
Iraq's economy could be handicapped by substantial
international debt and compensation claims. Iraq's
international debt is estimated at between $80-120 billion, and
unpaid claims against Iraq through the UN Compensation
Commission total $116.4 billion. Past and present Iraqi
creditors face the prospect of dealing with a heavily indebted
country. Iraq's economic prospects will dim even further if
Iraq is forced to meet its present obligations without
substantial relief. To have any chance of success in reviving
the Iraqi economy, America must work with Iraqi creditors--
through the UN, the Paris Club, the World Bank, the IMF, and
other relevant international financial institutions--to relieve
Iraq of most of this potentially huge financial burden.
Developing a Social Safety Net
Iraq will require a major overhaul and restructuring of its
social services. For example, under the Ba'ath regime the
Ministry of Labor and Social Affairs was the primary provider
of social services and benefits to pensioners, women, children
and refugees. The Ministry, with 3800 employees throughout Iraq
(1300 in Baghdad) previously served approximately 100,000 Iraqi
citizens in a country where the World Food Program estimates
that 4.6 million (or one in every five people) in the center
and south of the country live in chronic poverty, defined as
the frequent inability to meet basic needs.\20\
---------------------------------------------------------------------------
\20\ The Reconstruction of Iraq. A Preliminary Background Briefing
Paper, The UN Development Group, June 23, 2003.
---------------------------------------------------------------------------
In other words, an effective social safety net will have to
be built almost from scratch to reach all Iraqis in need as
well as to provide assistance to those who will be displaced
from their jobs in a difficult transition. This will require an
enormous increase in funding and place huge demands on the
Ministry. Yet the Ministry's total projected expenditures for
the July-December 2003 budget are only $6.4 million. In
addition, its buildings and grounds in Baghdad remain in a
generally unusable condition for the foreseeable months because
of extensive damage from the war and subsequent vandalism.
Generating Employment
Unemployment in Iraq is estimated to be over 60 percent.
Business leaders and independent economists assert that the
employment situation has deteriorated considerably in the
aftermath of the war. The unwieldy public sector, including
state-owned enterprises, provided some social stability through
employment, but contributed little to the overall productivity
of the economy.
The decision by the CPA to abolish the Iraqi army added to
an already acute unemployment situation. Many Iraqis we
interviewed expressed bitterness and confusion over what they
perceived as the singling out of the Iraqi Army, noting that
for the most part the Army did not fight advancing American
forces. An additional disenfranchised, unemployed 300,000
former soldiers may not only contribute to the country's
political, economic, and social difficulties, but also pose a
security risk for U.S. troops. The CPA should be commended for
deciding to pay stipends to nearly all former members of the
Iraqi military, but this has not addressed the issue of their
employment.
Many Iraqis, including a field commander with the United
States military, spoke to us of the critical need for
employment generation through a massive program of public works
akin to the efforts of the U.S. government during the Great
Depression.
The CPA should invest in labor intensive construction
projects that would have the dual benefit of creating jobs and
boosting the private sector. As a related matter, commanders in
the field should be provided with additional resources to use
at their discretion for short-term projects that increase
employment in specific locations.
The question of restructuring the public sector and
dismantling state-owned enterprises will have to be addressed
in due course. Given the deteriorating conditions on the
ground, this issue should not be solely analyzed in economic
terms. The social, political and, ultimately, security
consequences of exacerbating the unemployment problem should be
considered as well.
Finally, we recommend that Iraq be considered for
preferential, if not duty-free, access to Western markets,
including the U.S. and EU, to generate economic activity and
employment.
INTERNATIONALIZE THE TRANSITION
The United States needs its allies, as well as the UN and
NATO, to spread the military and financial burden of
stabilizing and rebuilding Iraq and to help legitimize the
transition to representative government.
The Bush Administration should seek a broader role for the
UN, including an additional Security Council resolution if
necessary, to facilitate the engagement of its agencies and its
member states.
The UN has special expertise that can help facilitate
Iraq's reconstruction. It can help conduct a census, which will
provide critical information that is currently lacking. It is
willing to offer support to an Iraqi body that will draft a new
Constitution. It can help prepare the groundwork for elections
by registering voters and presenting alternatives to Iraqis in
choosing an electoral system. Furthermore, it can help to grant
legitimacy in the area of transitional justice and the
monitoring of human rights. In the critical area of rebuilding
Iraq's economy, the UN can facilitate the work of the IMF and
World Bank and offer an avenue for donors to channel
assistance.
Iraqis have mixed views of the UN largely because of the
devastating effect of sanctions imposed by the UN Security
Council for over 12 years. Nevertheless, the UN is seen by some
powerful individuals and groups in Iraq as a neutral
organization that can help to legitimize the political
transition. For instance, Grand Ayatollah Ali Sistani, among
the most influential voices within the Shi'a community, has
kept his distance from CPA officials, but he has met with
Secretary General Annan's Special Representative Sergio Vieira
de Mello.
The U.S. should also intensify discussions with NATO allies
about what role the organization can play in helping to
stabilize the security situation in Iraq and relieve the burden
on U.S. and coalition forces.
IRAQ IN A WIDER CONTEXT
America's policies toward Iraq should be placed in a wider
regional context. They cannot be considered in isolation of the
Israeli-Palestinian conflict; Turkey's concerns and interests
about northern Iraq; disputes regarding the Iraq-Kuwait border;
and Iran's relations with both Iraq and the United States.
While Southern Iraq will likely not become a satrapy of Iran,
Washington and Tehran would be well-served by arriving at an
understanding over their respective interests in Iraq to reduce
the risk of unintended friction.
The United States, working with the United Nations and its
regional allies, must seize the opportunity for a comprehensive
approach to regional security in the Middle East. Given the
number of ongoing and potential conflicts, the countries of the
Middle East should be encouraged to follow the example of other
regions that have established formal security mechanisms--
whether it is the Organization for Security and Cooperation in
Europe or the ASEAN Regional Forum in the Asia-Pacific region.
Such models offer guidance on modes of reducing tension and
increasing transparency, predictability, and confidence. The
United States has a direct interest in encouraging the
development of such a regional security mechanism in the Middle
East as part of a long-term strategy to preserve our victory in
Iraq and to transform the entire region from what it is today
into a peaceful, prosperous, and eventually democratic expanse.
CONCLUSION: STAYING THE COURSE
The end of Saddam Hussein's regime represents a new
beginning, and an historic opportunity, for Iraqis, Americans,
the Middle East, and the world. A stable and democratic Iraq
could be a model for democratic change in the Middle East. The
opportunities are enormous, but so are the risks. The United
States must be prepared for a sustained commitment that could
take many years. The CPA must be given sufficient resources,
mandate, and assistance to get the job done.
The United States cannot and should not take on this
challenge alone. We also cannot defer the tough decisions. Time
is not our friend. The stakes are too high. The only viable
``exit strategy'' is American and international success in
working with Iraqis to support a process that leads to a
stable, and over the longer-term, democratic transition for
Iraq. But it won't come easy, it won't come fast, and it won't
come cheap.
ANNEXES
Members of the Iraqi Governing Council*
Ahmed Shya'a al-Barak, Coordinator for Human Rights Association
of Babel
Naseer al-Chaderchi, National Democratic Party
Abdel-Aziz al-Hakim, a leader of the Supreme Council for the
Islamic Revolution in Iraq
Aquila al-Hashimi, diplomat and foreign affairs advisor
Raja Habib al-Khuzaai, maternity hospital director in Diwaniyah
Iyad Allawi, leader of the Iraqi National Accord
Abdel-Karim Mahoud al-Mohammedawi, member of Iraqi political
group Hezbollah in Amara
Mouwafak al-Rabii, Medical doctor and human rights activist
Mohammed Bahr al-Uloum, Ayatollah from Najaf
Ghazi Mashal Ajil al-Yawer, northern tribal chief
Dara Noor Alzin, formerly imprisoned judge
Salaheddine Bahaaeddin, Secretary General of the Kurdistan
Islamic Union
Massoud Barzani, leader of the Kurdistan Democratic Party
Sondul Chapouk, Leader of Iraqi Women's Association from Kirkuk
Ahmad Chalabi, founder of the Iraqi National Congress
Mohsen Abdel Hamid, Secretary General of the Iraqi Islamic
Party
Ibrahim al-Jaafari, Spokesperson for Dawa Islamic Party
Younadem Kana, Secretary General of the Democratic Assyrian
Movement
Wael Abdul Latif, Governor of Basra
Samir Shakir Mahmoud, Writer from Haditha
Hamid Majid Moussa, Secretary of the Iraqi Communist Party
Abdel-Zahraa Othman, Leader of the Islamic Dawa Movement in
Basra
Mahmoud Othman, Independent
Adnan Pachachi, former foreign minister, 1965-1967
Jalal Talabani, head of the Patriotic Union of Kurdistan
*Source: Associated Press, 7/13/03.
Order of the Administrator of the Coalition Provisional Authority
DE-BAATHIFICATION OF IRAQI SOCIETY--MAY 16, 2003
On April 16, 2003 the Coalition Provisional Authority
disestablished the Baath Party of Iraq. This order implements
that declaration by eliminating the party's structures and
removing its leadership from positions of authority and
responsibility in Iraqi society. By this means, the Coalition
Provisional Authority will ensure that representative
government in Iraq is not threatened by Baathist elements
returning to power and that those in positions of authority in
the future are acceptable to the people of Iraq.
Full members of the Baath Party holding the ranks of `Udw
Qutriyya (Regional Command Member), `Udw Far` (Branch Member),
`Udw Shu'bah (Section Member), and `Udw Firqah (Group Member)
(together, ``Senior Party Members'') are hereby removed from
their positions and banned from future employment in the public
sector. These Senior Party Members shall be evaluated for
criminal conduct or threat to the security of the Coalition.
Those suspected of criminal conduct shall be investigated and,
if deemed a threat to security or a flight risk, detained or
placed under house arrest.
Individuals holding positions in the top three layers of
management in every national government ministry, affiliated
corporations and other government institutions (e.g.,
universities and hospitals) shall be interviewed for possible
affiliation with the Baath Party, and subject to investigation
for criminal conduct and risk to security. Any such persons
determined to be full members of the Baath Party shall be
removed from their employment. This includes those holding the
more junior ranks of `Udw (Member) and `Udw `Amil (Active
Member), as well as those determined to be Senior Party
Members.
Displays in government buildings or public spaces of the
image or likeness of Saddam Hussein or other readily
identifiable members of the former regime or of symbols of the
Baath Party or the former regime are hereby prohibited.
Rewards shall be made available for information leading to
the capture of senior members of the Baath party and
individuals complicit in the crimes of the former regime.
The Administrator of the Coalition Provisional Authority or
his designees may grant exceptions to the above guidance on a
case-by-case basis.
By order of:
L. Paul Bremer, III
Administrator, Coalition Provisional Authority
------
REPUBLIC OF IRAQ
BUDGET REVENUES AND EXPENSES--JULY-DECEMBER 2003
Budget Summary
Ministry of Finance, Ministry of Planning, Coalition Provisional
Authority
Interim Budget for the period July to December 2003
This interim budget provides authority for the commitment
and expenditure of money by the Interim Government of Iraq for
the period July to December 2003. It sets the groundwork for
the preparation and authorization of the budget for 2004.
It was prepared using the existing systems, forms and
formats that have traditionally been used in Iraqi budgets.
Each Iraqi Ministry and Kurd region prepared a budget with
their Coalition Senior Advisor. That budget was discussed with
the Coalition Finance Advisor. The proposed Budget was then
reviewed by appropriate officials from the Iraqi Finance and
Planning Ministries, briefed to AID and UN representatives and
approved by the CPA Program Review Board.
The Budget balance for July to December 2003 shows a
deficit of around $US2.2 billion. This will be funded from
committed financial assets, without the need for borrowing.
Budget Summary
------------------------------------------------------------------------
($USm)
------------------------------------------------------------------------
Expenditures
Operating 2,002.1
Capital 352.7
Reconstruction 256.8
Other Expenditures 3,488.0
Total 6,099.6
Revenues
Oil revenues 3,455.0
Fees, charges and taxes 59.1
Returns from State Owned Enterprises 373.6
Total 3,887.7
------------
Budget Balance (Deficit) -2,211.9
------------------------------------------------------------------------
The Budget ensures fiscal discipline in the use of
budgetary resources in order to rebuild the confidence
necessary for the international donor and investment community
to support the country's efforts.
Oil revenues totaling around $3.4 billion are fully
committed to programs that benefit the Iraqi people.
Major priorities addressed include the reconstruction and
restoration of essential facilities and services such as water,
electricity, education and health care to meet the basic needs
of the Iraqi people; restoring and revitalizing the banking
system, productive enterprises, agriculture and trade to
reintegrate Iraq into the world economy.
Key Initiatives of This Budget Include
------------------------------------------------------------------------
($US
millions)
------------------------------------------------------------------------
``Special programs'' and ``transfers'' redirected to $900
Iraqi people
Electrical improvements $294
Subsidies to state owned enterprises reduced by: $269
Reconstruction $257
Security and Justice improvements $233
Defense funding $225
Public Health improvements $211
Communications improvements $150
Water and Sewerage improvements $73
------------------------------------------------------------------------
Table 1: Net Budget Position
------------------------------------------------------------------------
($USm)
------------------------------------------------------------------------
Revenues 3,887.7
Expenditures 6,099.6
------------
Budget Balance (Deficit) -2,211.9
------------------------------------------------------------------------
Table 2: Budget Financing
------------------------------------------------------------------------
($USm)
------------------------------------------------------------------------
Vested Assets 1,700.0
Seized Assets 795.0
Development Fund for Iraq 1,192.0
Iraq Relief (appropriated) 2,475.0
Natural Resource Risk Remediation Fund 489.0
less spending before 1 July 200 31,248.0
------------
Net Positionas at 1 July 2003 5,403.0
less:
Budget Deficit 2,211.9
Central bank currency support 2,100.0
------------
Net Position as at 31 December 2003 1,091.1
------------------------------------------------------------------------
Table 3: Expenditures by Organization
------------------------------------------------------------------------
Operational Capital
Organization Expenditure Expenditure Total
($USm) ($USm) ($USm)
------------------------------------------------------------------------
Ministry of Agriculture 9.4 10.0 19.4
Baghdad Mayoralty 12.1 4.3 16.4
Board of Supreme Audit 0.4 0.0 0.4
Central Organization of Standards 0.0 0.0 0.0
Ministry of Culture 1.2 61.6 62.8
Ministry of Defense 45.0 120.0 165.0
Ministry of Education 9.7 0.0 9.7
Electricity Commission 24.0 77.6 101.6
Ministry of Foreign Affairs 23.5 0.0 23.5
Ministry of Finance 199.4 1.2 200.6
Ministry of Health 210.6 1.0 211.6
Ministry of Higher Education and 32.8 4.0 36.8
Scientific Research
Ministry of Housing & 6.0 32.6 38.6
Construction
Ministry of Industry & Minerals 209.1 0.3 209.4
Ministry of the Interior 2.4 20.5 22.9
Ministry of Irrigation 2.7 30.5 33.2
Ministry of Labor and Social 6.4 0.0 6.4
Affairs
Ministry of Justice (excluding 5.8 25.7 31.5
Prisons)
Ministry of Justice (Prisons) 6.3 21.9 28.1
Ministry of Oil 0.0 0.0 0.0
Ministry of Planning 4.6 0.0 4.6
Ministry of Municipalities and 20.8 52.0 72.8
Local Authorities
Ministry of Religious Affairs 0.7 3.2 3.9
Iraq Science and Technology 11.8 1.6 13.4
Commission
Ministry of Trade 4.0 0.0 4.0
Ministry of Transportation and 10.8 138.7 149.6
Communication
Youth Commission 2.6 2.8 5.4
--------------------------------------
Total Organization Expenditures 862.1 609.5 1,471.6
(excl salaries)
Total Salaries and Pensions 1,140.0
------------
Total Organization Expenditures 2,611.6
------------------------------------------------------------------------
Table 4: Operating Expenses by Input
------------------------------------------------------------------------
($USm)
------------------------------------------------------------------------
Service Requirements 133.9
Goods Requirements 221.9
Assets Maintenance 46.5
Operating capital 48.2
Transferred Expenditures (plus SOE support) 234.5
Foreign Obligations (Kuwait war reparations) 177.0
Special Programs 0.1
------------
Total Operating Expenses by Input 862.1
------------------------------------------------------------------------
Table 5: Significant Proposed Expenditures
------------------------------------------------------------------------
($USm)
------------------------------------------------------------------------
Food social safety net 1,350.0
Restoration of Iraqi Oil (RIO) Program 825.0
Net Kurd Budget Support 300.0
Electricity restructuring 192.0
Police 150.0
LPG and Gas 135.0
Currency Reprinting 100.0
Construction Fund 100.0
Military De-Mobilization 60.0
Regional Commanders 6.0
U.S. Government Department and Agency Support 35.0
Program Review Board 35.0
``Oil for food'' program -200.0
USAID programs
Bechtel 400.0
------------
Total Additional Expenditures 3,488.0
------------
Total Expenditures 6,099.6
------------------------------------------------------------------------
Table 6: Revenues
------------------------------------------------------------------------
($USm)
------------------------------------------------------------------------
Oil revenues 3,455.0
Transfers from State Enterprises 373.6
Taxes, Fees and Charges 59.1
------------
Total Revenues 3,887.7
------------------------------------------------------------------------
United Nations Security Council Resolution 1483 (2003)
ADOPTED BY THE SECURITY COUNCIL AT ITS 4761ST MEETING, ON 22 MAY 2003
The Security Council,
Recalling all its previous relevant resolutions,
Reaffirming the sovereignty and territorial integrity of
Iraq,
Reaffirming also the importance of the disarmament of Iraqi
weapons of mass destruction and of eventual confirmation of the
disarmament of Iraq,Stressing the right of the Iraqi people
freely to determine their own political future and control
their own natural resources, welcoming the commitment of all
parties concerned to support the creation of an environment in
which they may do so as soon as possible, and expressing
resolve that the day when Iraqis govern themselves must come
quickly,
Encouraging efforts by the people of Iraq to form a
representative government based on the rule of law that affords
equal rights and justice to all Iraqi citizens without regard
to ethnicity, religion, or gender, and, in this connection,
recalls resolution 1325 (2000) of 31 October 2000,
Welcoming the first steps of the Iraqi people in this
regard, and noting in this connection the 15 April 2003
Nasiriyah statement and the 28 April 2003 Baghdad statement,
Resolved that the United Nations should play a vital role
in humanitarian relief, the reconstruction of Iraq, and the
restoration and establishment of national and local
institutions for representative governance,
Noting the statement of 12 April 2003 by the Ministers of
Finance and Central Bank Governors of the Group of Seven
Industrialized Nations in which the members recognized the need
for a multilateral effort to help rebuild and develop Iraq and
for the need for assistance from the International Monetary
Fund and the World Bank in these efforts,
Welcoming also the resumption of humanitarian assistance
and the continuing efforts of the Secretary-General and the
specialized agencies to provide food and medicine to the people
of Iraq,
Welcoming the appointment by the Secretary-General of his
Special Adviser on Iraq,
Affirming the need for accountability for crimes and
atrocities committed by the previous Iraqi regime,
Stressing the need for respect for the archaeological,
historical, cultural, and religious heritage of Iraq, and for
the continued protection of archaeological, historical,
cultural, and religious sites, museums, libraries, and
monuments,
Noting the letter of 8 May 2003 from the Permanent
Representatives of the United States of America and the United
Kingdom of Great Britain and Northern Ireland to the President
of the Security Council (S/2003/538) and recognizing the
specific authorities, responsibilities, and obligations under
applicable international law of these states as occupying
powers under unified command (the ``Authority''),
Noting further that other States that are not occupying
powers are working now or in the future may work under the
Authority,
Welcoming further the willingness of Member States to
contribute to stability and security in Iraq by contributing
personnel, equipment, and other resources under the Authority,
Concerned that many Kuwaitis and Third-State Nationals
still are not accounted for since 2 August 1990,
Determining that the situation in Iraq, although improved,
continues to constitute a threat to international peace and
security,
Acting under Chapter VII of the Charter of the United
Nations,
1. Appeals to Member States and concerned organizations to
assist the people of Iraq in their efforts to reform their
institutions and rebuild their country, and to contribute to
conditions of stability and security in Iraq in accordance with
this resolution;
2. Calls upon all Member States in a position to do so to
respond immediately to the humanitarian appeals of the United
Nations and other international organizations for Iraq and to
help meet the humanitarian and other needs of the Iraqi people
by providing food, medical supplies, and resources necessary
for reconstruction and rehabilitation of Iraq's economic
infrastructure;
3. Appeals to Member States to deny safe haven to those
members of the previous Iraqi regime who are alleged to be
responsible for crimes and atrocities and to support actions to
bring them to justice;
4. Calls upon the Authority, consistent with the Charter of
the United Nations and other relevant international law, to
promote the welfare of the Iraqi people through the effective
administration of the territory, including in particular
working towards the restoration of conditions of security and
stability and the creation of conditions in which the Iraqi
people can freely determine their own political future;
5. Calls upon all concerned to comply fully with their
obligations under international law including in particular the
Geneva Conventions of 1949 and the Hague Regulations of 1907;
6. Calls upon the Authority and relevant organizations and
individuals to continue efforts to locate, identify, and
repatriate all Kuwaiti and Third-State Nationals or the remains
of those present in Iraq on or after 2 August 1990, as well as
the Kuwaiti archives, that the previous Iraqi regime failed to
undertake, and, in this regard, directs the High-Level
Coordinator, in consultation with the International Committee
of the Red Cross and the Tripartite Commission and with the
appropriate support of the people of Iraq and in coordination
with the Authority, to take steps to fulfil his mandate with
respect to the fate of Kuwaiti and Third-State National missing
persons and property;
7. Decides that all Member States shall take appropriate
steps to facilitate the safe return to Iraqi institutions of
Iraqi cultural property and other items of archaeological,
historical, cultural, rare scientific, and religious importance
illegally removed from the Iraq National Museum, the National
Library, and other locations in Iraq since the adoption of
resolution 661 (1990) of 6 August 1990, including by
establishing a prohibition on trade in or transfer of such
items and items with respect to which reasonable suspicion
exists that they have been illegally removed, and calls upon
the United Nations Educational, Scientific, and Cultural
Organization, Interpol, and other international organizations,
as appropriate, to assist in the implementation of this
paragraph;
8. Requests the Secretary-General to appoint a Special
Representative for Iraq whose independent responsibilities
shall involve reporting regularly to the Council on his
activities under this resolution, coordinating activities of
the United Nations in post-conflict processes in Iraq,
coordinating among United Nations and international agencies
engaged in humanitarian assistance and reconstruction
activities in Iraq, and, in coordination with the Authority,
assisting the people of Iraq through:
(a) coordinating humanitarian and reconstruction
assistance by United Nations agencies and between
United Nations agencies and non-governmental
organizations;
(b) promoting the safe, orderly, and voluntary return
of refugees and displaced persons;
(c) working intensively with the Authority, the
people of Iraq, and others concerned to advance efforts
to restore and establish national and local
institutions for representative governance, including
by working together to facilitate a process leading to
an internationally recognized, representative
government of Iraq;
(d) facilitating the reconstruction of key
infrastructure, in cooperation with other international
organizations;
(e) promoting economic reconstruction and the
conditions for sustainable development, including
through coordination with national and regional
organizations, as appropriate, civil society, donors,
and the international financial institutions;
(f) encouraging international efforts to contribute
to basic civilianadministration functions;
(g) promoting the protection of human rights;
(h) encouraging international efforts to rebuild the
capacity of the Iraqi civilian police force; and
(i) encouraging international efforts to promote
legal and judicial reform;
9. Supports the formation, by the people of Iraq with the
help of the Authority and working with the Special
Representative, of an Iraqi interim administration as a
transitional administration run by Iraqis, until an
internationally recognized, representative government is
established by the people of Iraq and assumes the
responsibilities of the Authority;
10. Decides that, with the exception of prohibitions
related to the sale or supply to Iraq of arms and related
materiel other than those arms and related materiel required by
the Authority to serve the purposes of this and other related
resolutions, all prohibitions related to trade with Iraq and
the provision of financial or economic resources to Iraq
established by resolution 661 (1990) and subsequent relevant
resolutions, including resolution 778 (1992) of 2 October 1992,
shall no longer apply;
11. Reaffirms that Iraq must meet its disarmament
obligations, encourages the United Kingdom of Great Britain and
Northern Ireland and the United States of America to keep the
Council informed of their activities in this regard, and
underlines the intention of the Council to revisit the mandates
of the United Nations Monitoring, Verification, and Inspection
Commission and the International Atomic Energy Agency as set
forth in resolutions 687 (1991) of 3 April 1991, 1284 (1999) of
17 December 1999, and 1441 (2002) of 8 November 2002;
12. Notes the establishment of a Development Fund for Iraq
to be held by the Central Bank of Iraq and to be audited by
independent public accountants approved by the International
Advisory and Monitoring Board of the Development Fund for Iraq
and looks forward to the early meeting of that International
Advisory and Monitoring Board, whose members shall include duly
qualified representatives of the Secretary-General, of the
Managing Director of the International Monetary Fund, of the
Director-General of the Arab Fund for Social and Economic
Development, and of the President of the World Bank;
13. Notes further that the funds in the Development Fund
for Iraq shall be disbursed at the direction of the Authority,
in consultation with the Iraqi interim administration, for the
purposes set out in paragraph 14 below;
14. Underlines that the Development Fund for Iraq shall be
used in a transparent manner to meet the humanitarian needs of
the Iraqi people, for the economic reconstruction and repair of
Iraq's infrastructure, for the continued disarmament of Iraq,
and for the costs of Iraqi civilian administration, and for
other purposes benefiting the people of Iraq;
15. Calls upon the international financial institutions to
assist the people of Iraq in the reconstruction and development
of their economy and to facilitate assistance by the broader
donor community, and welcomes the readiness of creditors,
including those of the Paris Club, to seek a solution to Iraq's
sovereign debt problems;
16. Requests also that the Secretary-General, in
coordination with the Authority, continue the exercise of his
responsibilities under Security Council resolution 1472 (2003)
of 28 March 2003 and 1476 (2003) of 24 April 2003, for a period
of six months following the adoption of this resolution, and
terminate within this time period, in the most cost effective
manner, the ongoing operations of the ``Oil-for-Food''
Programme (the ``Programme''), both at headquarters level and
in the field, transferring responsibility for the
administration of any remaining activity under the Programme to
the Authority, including by taking the following necessary
measures:
(a) to facilitate as soon as possible the shipment
and authenticated delivery of priority civilian goods
as identified by the Secretary-General and
representatives designated by him, in coordination with
the Authority and the Iraqi interim administration,
under approved and funded contracts previously
concluded by the previous Government of Iraq, for the
humanitarian relief of the people of Iraq, including,
as necessary, negotiating adjustments in the terms or
conditions of these contracts and respective letters of
credit as set forth in paragraph 4 (d) of resolution
1472 (2003);
(b) to review, in light of changed circumstances, in
coordination with the Authority and the Iraqi interim
administration, the relative utility of each approved
and funded contract with a view to determining whether
such contracts contain items required to meet the needs
of the people of Iraq both now and during
reconstruction, and to postpone action on those
contracts determined to be of questionable utility and
the respective letters of credit until an
internationally recognized, representative government
of Iraq is in a position to make its own determination
as to whether such contracts shall be fulfilled;
(c) to provide the Security Council within 21 days
following the adoption of this resolution, for the
Security Council's review and consideration, an
estimated operating budget based on funds already set
aside in the account established pursuant to paragraph
8 (d) of resolution 986 (1995) of 14 April 1995,
identifying:
(i) all known and projected costs to the
United Nations required to ensure the continued
functioning of the activities associated with
implementation of the present resolution,
including operating and administrative expenses
associated with the relevant United Nations
agencies and programmes responsible for the
implementation of the Programme both at
Headquarters and in the field;
(ii) all known and projected costs associated
with termination of the Programme;
(iii) all known and projected costs
associated with restoring Government of Iraq
funds that were provided by Member States to
the Secretary-General as requested in paragraph
1 of resolution 778 (1992); and
(iv) all known and projected costs associated
with the Special Representative and the
qualified representative of the Secretary-
General identified to serve on the
International Advisory and Monitoring Board,
for the six month time period defined above,
following which these costs shall be borne by
the United Nations;
(d) to consolidate into a single fund the accounts
established pursuant to paragraphs 8 (a) and 8 (b) of
resolution 986 (1995);
(e) to fulfil all remaining obligations related to
the termination of the Programme, including
negotiating, in the most cost effective manner, any
necessary settlement payments, which shall be made from
the escrow accounts established pursuant to paragraphs
8 (a) and 8 (b) of resolution 986 (1995), with those
parties that previously have entered into contractual
obligations with the Secretary-General under the
Programme, and to determine, in coordination with the
Authority and the Iraqi interim administration, the
future status of contracts undertaken by the United
Nations and related United Nations agencies under the
accounts established pursuant to paragraphs 8 (b) and 8
(d) of resolution 986 (1995);
(f) to provide the Security Council, 30 days prior to
the termination of the Programme, with a comprehensive
strategy developed in close coordination with the
Authority and the Iraqi interim administration that
would lead to the delivery of all relevant
documentation and the transfer of all operational
responsibility of the Programme to the Authority;
17. Requests further that the Secretary-General transfer as
soon as possible to the Development Fund for Iraq 1 billion
United States dollars from unencumbered funds in the accounts
established pursuant to paragraphs 8 (a) and 8 (b) of
resolution 986 (1995), restore Government of Iraq funds that
were provided by Member States to the Secretary-General as
requested in paragraph 1 of resolution 778 (1992), and decides
that, after deducting all relevant United Nations expenses
associated with the shipment of authorized contracts and costs
to the Programme outlined in paragraph 16 (c) above, including
residual obligations, all surplus funds in the escrow accounts
established pursuant to paragraphs 8 (a), 8 (b), 8 (d), and 8
(f) of resolution 986 (1995) shall be transferred at the
earliest possible time to the Development Fund for Iraq;
18. Decides to terminate effective on the adoption of this
resolution the functions related to the observation and
monitoring activities undertaken by the Secretary-General under
the Programme, including the monitoring of the export of
petroleum and petroleum products from Iraq;
19. Decides to terminate the Committee established pursuant
to paragraph 6 of resolution 661 (1990) at the conclusion of
the six month period called for in paragraph 16 above and
further decides that the Committee shall identify individuals
and entities referred to in paragraph 23 below;
20. Decides that all export sales of petroleum, petroleum
products, and natural gas from Iraq following the date of the
adoption of this resolution shall be made consistent with
prevailing international market best practices, to be audited
by independent public accountants reporting to the
International Advisory and Monitoring Board referred to in
paragraph 12 above in order to ensure transparency, and decides
further that, except as provided in paragraph 21 below, all
proceeds from such sales shall be deposited into the
Development Fund for Iraq until such time as an internationally
recognized, representative government of Iraq is properly
constituted;
21. Decides further that 5 per cent of the proceeds
referred to in paragraph 20 above shall be deposited into the
Compensation Fund established in accordance with resolution 687
(1991) and subsequent relevant resolutions and that, unless an
internationally recognized, representative government of Iraq
and the Governing Council of the United Nations Compensation
Commission, in the exercise of its authority over methods of
ensuring that payments are made into the Compensation Fund,
decide otherwise, this requirement shall be binding on a
properly constituted, internationally recognized,
representative government of Iraq and any successor thereto;
22. Noting the relevance of the establishment of an
internationally recognized, representative government of Iraq
and the desirability of prompt completion of the restructuring
of Iraq's debt as referred to in paragraph 15 above, further
decides that, until December 31, 2007, unless the Council
decides otherwise, petroleum, petroleum products, and natural
gas originating in Iraq shall be immune, until title passes to
the initial purchaser from legal proceedings against them and
not be subject to any form of attachment, garnishment, or
execution, and that all States shall take any steps that may be
necessary under their respective domestic legal systems to
assure this protection, and that proceeds and obligations
arising from sales thereof, as well as the Development Fund for
Iraq, shall enjoy privileges and immunities equivalent to those
enjoyed by the United Nations except that the above-mentioned
privileges and immunities will not apply with respect to any
legal proceeding in which recourse to such proceeds or
obligations is necessary to satisfy liability for damages
assessed in connection with an ecological accident, including
an oil spill, that occurs after the date of adoption of this
resolution;
23. Decides that all Member States in which there are:
(a) funds or other financial assets or economic
resources of the previous Government of Iraq or its
state bodies, corporations, or agencies, located
outside Iraq as of the date of this resolution, or
(b) funds or other financial assets or economic
resources that have been removed from Iraq, or
acquired, by Saddam Hussein or other senior officials
of the former Iraqi regime and their immediate family
members, including entities owned or controlled,
directly or indirectly, by them or by persons acting on
their behalf or at their direction,
shall freeze without delay those funds or other financial
assets or economic resources and, unless these funds or other
financial assets or economic resources are themselves the
subject of a prior judicial, administrative, or arbitral lien
or judgement, immediately shall cause their transfer to the
Development Fund for Iraq, it being understood that, unless
otherwise addressed, claims made by private individuals or non-
government entities on those transferred funds or other
financial assets may be presented to the internationally
recognized, representative government of Iraq; and decides
further that all such funds or other financial assets or
economic resources shall enjoy the same privileges, immunities,
and protections as provided under paragraph 22;
24. Requests the Secretary-General to report to the Council
at regular intervals on the work of the Special Representative
with respect to the implementation of this resolution and on
the work of the International Advisory and Monitoring Board and
encourages the United Kingdom of Great Britain and Northern
Ireland and the United States of America to inform the Council
at regular intervals of their efforts under this resolution;
25. Decides to review the implementation of this resolution
within twelve months of adoption and to consider further steps
that might be necessary;
26. Calls upon Member States and international and regional
organizations to contribute to the implementation of this
resolution;
27. Decides to remain seized of this matter.
[Administrator L. Paul Bremer Delivers Remarks at National Press Club--
Washington, DC--July 23, 2003]
AMBASSADOR L. PAUL BREMER, COALITION PROVISIONAL AUTHORITY
Thank you very much, Tammy, and thank you for inviting me
back to this forum. I addressed it before when I was last in
government as ambassador at large for counterterrorism.
I had my staff working very hard working on my speech, and
I was told that the speech is actually an hour long but I'm
only allowed to speak for half an hour. So I'm going to read
every other page, and I'll let you guys fill in the blanks.
These have been a great couple of weeks for the people of
Iraq, for the coalition's reconstruction efforts and for the
American armed forces. Let me give you a snapshot of the last
couple of weeks.
This month, students across Iraq are taking their final
exams, with all of the country's universities now reopened.
Over 90 percent of Iraq's public schools have reopened too.
Right now, all of Iraq's hospitals and 95 percent of its
health clinics are open and providing services to Iraqi
citizens.
Ten days ago, Iraq's governing council was formed,
launching the country on a path to democracy.
This followed the formation of the Baghdad city council,
which I was pleased to participate in, which adds Baghdad to
the list of all major Iraqi cities now that have city councils.
And by the way, over 85 percent of the towns in Iraq now
have town councils. From north to south in Iraq, democracy is
on the march.
And just yesterday, celebratory gunfire lit up Baghdad as
Iraqis rejoiced at the news of the deaths of Uday and Qusay
Hussein.
Yesterday's success, like so many of our successes during
this reconstruction, is yet another sterling example of
American Armed Forces at their finest. They are on the front
lines of securing freedom for the Iraqi people, and ensuring
that Iraq no longer poses a threat to the world or to America.
Let me say that I've noticed that in press coverage here in
the United States in recent weeks has tended to portray our
soldiers in Iraq as victims, rather than as the heroes they
are.
I have visited virtually all of the American units in the
entire country of Iraq, and I want to tell you I am a first-
hand witness to the professionalism, dedication and courage
that these young men and women are showing every day in Iraq.
And let me be clear, they are truly heroes, and we owe them an
enormous debt of gratitude.
Yesterday's mission was also a statement and a restatement
of the partnership that has emerged between the Iraqi people
and the coalition.
As in so many other areas of our reconstruction effort,
this success can be attributed to an Iraqi citizen stepping
forward. This is consistent with the trend we started noticing
several weeks ago, of Iraqis coming forward to our police, or
to their police, or to our tactical units and giving us
information about Baathists and other evil-doers.
Iraqis all across the country are taking their future into
their own hands, and this, too, is worthy of celebration.
Today, we have three challenges in Iraq: securing the
country, setting the economy on a path to prosperity and
building the foundations of a sovereign democratic government.
And in all three areas--security, the economy and
governance--we have a plan. It is a plan with clear benchmarks
for the next 60 and 120 days. It is a plan that will guide our
work and our mission in Iraq. And I have discussed this plan
with the president and the National Security Council, and I
presented it in my meetings with Congress yesterday.
In developing the plan, we considered the historic context
in order truly to understand the challenges that lie ahead for
us.
Much has been written about the liberation of Iraq, and
that is certainly proper. It is a remarkable event in the
history of human freedom. Never before in warfare have so many
people been freed with so few casualties in such a short time
with so little damage done to the country or to its people.
Unfortunately the damage to the Iraq people had already been
done before we got there.
The Saddam regime did untold damage to country's citizens,
to its economy, to its infrastructure and to its relations with
the rest of the world. And that affected every single Iraqi,
not just the thousands or perhaps millions who have been killed
and tortured under Saddam. The scars in Iraq run very deep.
The secret police, the thugs, the informers, the torture
chambers--they may have gone. But the people of Iraq will be
coping with the horrors of the mass graves and the individual
and family tragedies for years to come. Since I've arrived in
Iraq, I have met literally thousands of Iraqis. And I can tell
you that every single one of them has had his or her family
affected one way or the other by Saddam's cruelty.
Repairing the damage inflicted by Saddam--a material, human
and psychological damage--is a huge task, a task which we will
only succeed at if we have a real partnership between the
coalition, the international community and the Iraqi people.
Our challenge is even greater, for it was not just the
Iraqi army that disappeared in the face of a dancing coalition
forces, the entire Iraqi government and all of its agencies and
all of its reach into Iraqi society also collapsed. The Iraqi
people went from a life in a police state with a controlled,
highly structured society to no social or political structure
at all in only three weeks.
Make some historic comparisons. The citizens of the Soviet
Union had a decade or more to adjust to a new reality. And
while the evil empire that collapsed in 1989 was evil till its
last days, the difference between the country that Stalin ruled
and the country that Gorbachev ruled was vast. Under Gorbachev
alone, through perestroika and glasnost, citizens of the former
Soviet Union had the opportunity to begin to think about and to
experiment with limited openness.
There was no comparable period of transition in Iraq. The
Iraqi people went from the dark night of tyranny to the
daylight of freedom in a historic blink of the eye.
And for most Iraqis, there is no memory of a liberalized
economy or even limited freedoms to call back upon. Compare
that to the experience in Germany in 1945. Hitler of course was
a monster, and his reign was a dreadful and tragic period in
German history. But let's remember that Hitler was in power
only one-third as long as Saddam Hussein. And the fact is that
when the Third Reich was wiped out and the German people began
to pick up the pieces to rebuild, they retained a living memory
of a period in which Germany had a functioning democracy. There
is not such legacy for Iraqis.
So the challenge in rebuilding Iraq is unique and very
difficult and unlike anything we've seen in the last century.
We have a three-stage strategy to deal with this challenge,
and I want to talk about each of those three.
The most immediate priority is providing security.
We have already made considerable progress. When I first
arrived in Baghdad in early May, it was a city on fire,
literally. There was no traffic in the streets except for
military vehicles of the coalition. There were no shops open. I
slept at night in those days with ear plugs in my ears, because
otherwise I was kept awake by the gunfire that went on
constantly every night. Looting was a real problem and ongoing.
That has all changed. The streets in Baghdad, in Basra, in
Mosul, in Tikrit, in Kirkuk, in An Nasiriyah, in Diwaniyah, in
Al Kut, in Ar Ramadi and Al-Fallujah, the streets are bustling
with business, traffic, commerce. From the vegetable markets to
the satellite dish shops, stores are open and merchants are no
longer in fear of widespread looting.
The endless nighttime gunfire is virtually non-existent
except, of course, last night when it was a sign of joy.
The north of Iraq is peaceful. The Shia heartland running
from just south of Baghdad down to the Kuwaiti border is quiet.
This is not a country in chaos, as it is sometimes portrayed.
Today in Iraq our forces face no strategic threat. The
attacks against our brave uniformed men and women are
concentrated in a small geographic triangle north and west of
Baghdad where our troops never fought. In this area, we never
fought and defeated the two Republican Guard divisions that
were there. They simply faded away.
And it's no coincidence that this area of greatest activity
against our forces was a traditional center of political
support by Saddam. It's also where he put many elements of the
military industrial complex with their Baathist civil servants.
Eighty-one percent of the attacks since June 1st have been
in this small area. Here we face a stubborn resistance made up
of former regime loyalists, criminals and some non-Iraqi
terrorists.
Operations by our military forces currently underway in
this so- called Sunni Triangle are making headway in reducing
these threats, and I'm confident we will impose our will here
as we have elsewhere in Iraq.
We typically follow up these military operations with
quick-action development projects such as rebuilding schools,
repairing hospitals or restoring waste sewage.
To date we have implemented several thousand such projects
all across Iraq. We recognize the importance of having both a
carrot and a stick.
Additional steps that will be taken over the next 60 days
to improve security include, first, recruiting and training the
first battalion of the new Iraqi army. Recruitment commenced
this weekend. And I'm told in conversations with Baghdad this
morning that there were mobs of people volunteering to join the
new Iraqi army. It will be a volunteer force, not a conscripted
force.
Secondly, we will raise eight battalions of the new Iraqi
civil defense corps in the next 60 days. We will open the new
police academy, which is even now recruiting for police. We
will re-establish the border guard. We will start trials before
the central criminal court, which I established a month ago,
and we will start judge-training seminars.
But we need to be realistic. There will be bumps in the
road. Total security is not possible. Continued success on our
overall reconstruction plan will probably be met by bitter-
enders who target our successes.
If you look at some of the most disruptive and symbolic
attacks in recent weeks, it turns out that what they do is
attack our success stories. I'll give you three examples.
On July 6, in the early afternoon, a young infantry man
providing security to our people at the Baghdad University was
mortally wounded in an assassination. This tragic event,
however, could not obscure the reality that all 22 universities
in Baghdad have been open since late May. The universities have
begun reconstruction with the assistance of coalition forces
and our authority. The vast majority of undergraduates
throughout Iraq, something like 90 percent, are now completing
their final exams, and therefore bringing to conclusion--to a
successful conclusion--the school year.
On July 5, a bomb exploded killing several Iraqis at a
ceremony marking their graduation from a police training course
in Al-Fallujah. This, too, was an attack on our success,
demonstrating the attackers opposition to the efforts of Iraqis
to bring safety and security to their own streets, and showing
the same disdain for their own people that Saddam showed for 35
years.
Just this past weekend there was a fatal attack on a U.S.
soldier guarding a bank. Today, over 72 percent of the banks in
Iraq are open. In Baghdad all customers and depositors are
being served. If their branch is closed, another branch is
covering for them. Banks have been a success for the coalition
and the Iraqi people, and that's why this young infantry man
was targeted.
And as we have more successes across the board, we should
be prepared for more desperate attacks against our forces and
the Iraqi people, but we will not be deterred.
The second element of our strategy is working with Iraqis
to put their country on the right economic path.
The immediate situation is daunting, but it could have been
much worse. And it's important to remember what did not happen.
We did not have a humanitarian crisis. There was no refugee
crisis. Early operations by the coalition prevented attacks or
destruction of the oil infrastructure and production has
already resumed. In fact, we are exporting oil.
There was no great collateral damage.
Still, much work remains to be done, including the
restoration of basic services, without which no economic plan
can succeed. Our focus is now on providing those basic
essential services to the Iraqi people: power, water, health
care.
One of the first obstacles the coalition encountered in
restoring basic services was a dilapidated infrastructure. It
would be very hard to overstate a chronic under-investment in
Iraq's infrastructure over the past 30 years. In almost every
sector, from oil to electricity to sewage, the technology and
machinery date back to the 1950s and the 1960s while the Saddam
regime diverted billions into militarization and its own
pockets.
The Iraqi engineers were somehow able to keep these systems
going, a fine tribute to their extraordinary skill and
ingenuity. But there is a limit. In the area of electrical
power, for example, shows the challenges we face across the
country.
The current demand in Iraq for electric power is about
6,000 megawatts. The total available power in Iraq before the
war is 4,000 megawatts. So even when we have restored the full
availability of power as it was before the war--something we
intend to do in the next 60 days--there will be a shortfall of
roughly one-third in terms of power availability.
This has always been the case, for example, throughout the
country.
And in Baghdad, Saddam basically protected the Baghdad
power by shipping power in from other parts of the country and
starving other cities. For example, Baghdad got about 18 hours
of power before the war, but Basra in the south, part of the
Shia heartland and as part of Saddam's effort at repression,
they got 10 to 12 hours a day.
Saddam withheld electricity and other essential services as
part of his political oppression and manipulation.
The chronic under-investment in infrastructure means that
our infrastructure is fragile, brittle and lacks redundancy. So
it is extremely susceptible to the kinds of attacks of
political sabotage we've seen against the power industry and
against the oil infrastructure in the past month.
Our engineers estimate that it will take as much as $13
billion to rebuild and meet foreseeable power demands. The
United Nations estimates that we will have to spend $16 billion
over the next four years just on water, in getting decent water
to the population. These numbers are indicative of the kinds of
money that is going to have to be spent just to get Iraq to
normal standards in this economy.
Another example is health care. In the 1990s, Saddam
Hussein cut health care by 90 percent, 90 percent. Last year,
in the entire year of 2002, Iraq spent $13 million on health
care for a population of 25 million, about 50 cents per person.
The budget that I just approved three weeks ago will increase
that to $211 million in this six months alone, an increase in
health care spending of 3,500 percent over what Saddam spent
last year.
Now we in this area, as in security, have a plan for what
to do in the next 60 days. I'll just cite a few examples.
First, we're going to get power back to prewar levels.
Second, we're going to rehabilitate over 1,000 schools
throughout the country, and I might add, provide 1.3 million
children with starter kits through an aid program.
We will restore health care to 95 to 100 percent of prewar
levels--and of course, that won't be enough, we're going to
have to do much more in the years ahead. And we are going to
distribute revised textbooks throughout, which remove the
Baathist's ideology that has been woven throughout the
textbooks and curricula over the last 30 years.
But simply rebuilding government buildings or repairing
power lines will not be enough to bring about sustainable
growth. That growth will require a fundamental transformation
from three decades of economic mismanagement and neglect and a
Stalinist-industrial structure.
Even before the war joblessness was high and public
infrastructure was in a shambles. Instead of serving as the
front-line source of credit for would-be entrepreneurs, the
banking system acted primarily as a fiscal agent for an all-
powerful state. The central bank, for example, nearly rubber-
stamped a policy of printing money to finance deficits with the
predictable inflationary results. For the last year for which
statistics are available, the Iraqi government figures show
that in 2001 inflation was--get this--115,000 percent.
State-owned enterprises lived off of government subsidies
that allowed them to destroy value rather than create it. The
coalition's task in this economic field is therefore two-fold.
First, we have had to stabilize the current economic situation
by continuing the payment of public-sector salaries and by
launching a range of construction in infrastructure projects to
create jobs. The payment of salaries helped avoid the
humanitarian and refugee crisis that many had predicted, and
construction and infrastructure proposals will be important in
supporting the economy in the coming months.
But no one believes that sustained economic growth can come
from individual construction projects or job-creating programs.
Yet the creation of jobs remains a continuing concern of
economic policy. Unemployment, according to the Iraqi
government figures, was more than 50 percent before the war.
And unemployment may rise even higher in the months ahead as
other economic reforms are implemented.
We are injecting almost $200 million a month into the
economy through the payment of salaries, pensions and emergency
payments. But with our development projects, we will also
provide thousands, tens of thousands, of jobs in the next 60
days ahead.
The longer-term component of our economic program is
crafting policies that will lead to long-term growth. During
the past month and over the next 60 days, many policies for
growth have been or will be established.
One of the most important concerns: Iraqi's currency.
Iraq lacks what many economies and countries take for
granted, which is a usable currency with enough denominations
to facilitate trade.
In central and southern parts of Iraq there is circulating
only one denomination, the so-called Saddam dinar, which is in
only two notes. A 250 dinar note which is worth about 17 cents.
And a second denomination which has a face value of 10,000
dinar, but which trades in the market for much less because of
fear that this note may have been stolen or counterfeited.
Meanwhile in the north in the autonomous Kurdish region,
Iraqis have been forced to use the pre-Gulf War dinars that are
now wearing out literally, physically wearing out after more
than a decade of use.
On July 7, we announced that all of Iraq's bank notes would
be exchanged for new bank notes beginning on October 15. Iraq,
for the first time in a decade, will have a unified currency of
which the entire nation can be proud. And over the next 60
days, we will work hard to prepare the Iraqi economy for the
October 15 launch of the new bank notes.
The coalition is also helping re-open banks that have been
closed during the war or by subsequent looting. By next week
all of Baghdad's customers at the two large state banks will be
able to conduct bank businesses either at their own branch or
at a nearby branch. At most of those branches, customers will
be able to cash checks drawn on that branch. Doesn't sound like
much in America, but in Iraq it's an important step to
returning to a payment system and moving the country away from
a purely cash economy.
Eventually, foreign bank know-how will be needed for Iraq
to prosper, and this can be achieved by giving management
contracts to foreign banks for these two large state banks.
This is an issue we will address also in the next 60 days.
Obviously at the heart of any country's banking system is
the central bank. On July 7, along with the announcement about
the bank note conversion, the coalition announced that the
Central Bank of Iraq, henceforth will be made independent of
the Ministry of Finance. In the next several weeks we'll work
with the governing council to put in place a full bank
operation and regulatory law. Making the Central Bank
independent will prevent future governments from ordering the
Central Bank to print money to cover deficits.
An important step in building monetary credibility is also
to impose fiscal discipline.
We recently completed an emergency budget for the second
half of 2003 that incorporates transparency and discipline, two
things that have never been available to previous Iraqi
budgets. In the coming months, we will execute this budget,
putting procedures and safeguards in place to ensure that the
money is spent where it is intended.
Because of Iraq's tremendous needs for infrastructure and
other expenses related to the transition, the budget calls for
spending that is higher than our revenues. But the deficit will
not be covered by printing new money, as it would have been
under the old regime. The deficit will be filled this time by
allocating money from seized and vested Iraqi assets. These
assets belong to the Iraqi people, and I am required and will
spend them in ways that are beneficial to the Iraqi people.
It is going to take time and a great deal of outside
assistance to transform and bring steady growth to the economy
of Iraq. The legacy of Saddam hangs like a black cloud over
every aspect of the lives of the Iraqi people. And that black
cloud extends also over the economic future.
Because of the criminal misuse of the wealth that belongs
to the Iraqi and the decades long neglect that he imposed on
the economy, Iraq is not the rich country it should be today.
Indeed, it will be a poor country for some years to come.
In addition to finalizing the 2003 budget, we have just
completed initial budget projections for 2004. Our initial
assessment is that we will run a deficit next year of almost $4
billion. As oil production returns to pre-war levels, we expect
the budget to escape from deficits after 2004. But even so,
Iraq's near-term needs will require considerable assistance
from the United States, its coalition partners and the
international community.
We will need additional help from the international
community, specifically in the early debt renegotiation,
resulting in a substantial reduction in the real value of
Iraq's debt.
On that note, I've heard in recent days about, quote, ``the
possibility,'' unquote, of internationalization of our
reconstruction effort.
We could of course and would welcome additional support.
But it is already the case that there is an international
effort in reconstruction.
The steps we are taking in the financial and budgetary
fronts over the next 60 to 120 days and beyond are intended to
help Iraq complete the transition that many other countries
around the world attempted in the last decade, moving from a
centrally-planned economy, dominated by value-destroying,
state-owned enterprises to a free market. As in many socialist
economies, Iraq's state-owned enterprises hobbled economic
growth. And because they didn't face the discipline of the
market, they destroyed value rather than creating it.
We have imposed hard budget constraints on these SOEs now,
and we are evaluating all of the state-owned enterprises to see
which ones should be closed immediately. The adjustments to
state-owned enterprises cannot be done in isolation. There
needs to be a well-financed, well-functioning safety net in
place so that workers who lose their jobs will not be left
behind. So we will continue providing food to all of Iraq's
people and have greatly increased spending on health care as I
mentioned.
A central lesson from the past transitions is that
employment growth is most likely to come from new and small-
sized enterprises. All of our policies are cast with the idea
of growing those firms in mind.
For example, we are now reviewing business regulations and
licensing rules to ensure a streamlined process for creating
new businesses. We are making sure that Iraq has a functioning
commercial code and honest judges to enforce it. We want to
have a well-functioning property rights regime which have been
seen all across the world to be important and fundamental
building blocks to economic growth. And opening Iraq to the
rest of the world promises to pay big dividends to the Iraqi
people.
Finally, we have a strategy for dealing with political
development. History teaches us that economic freedom and
political freedom go hand-in-hand.
One cannot survive, let alone flourish, without the other.
Our plan is predicated on the fact that the coalition's job
will not be complete until there is a sovereign democratic
government in Iraq.
Saddam Hussein's Iraq was a totalitarian state in the
truest sense of the word. I can't emphasize that enough.
Saddam, his sons, and other henchmen, and his Baathist
ideology, subjected every element of society, top to bottom, to
total control.
It was truly a totalitarian system. It permeated every
sphere of everyday life for every Iraqi, including women's
associations, professional guilds, and other associations.
Uday, for example, was particularly active in abusing
officials throughout the sports world, down even to the
municipal sports federations and National Olympic Committee.
This makes our goal all the more challenging. When I
arrived in Iraq in May, I said that by mid-July we would meet
our first critical milestone, the formation of a broadly
representative interim council with real powers and
responsibilities.
Well, last week, on July 13th, which is pretty much the
middle of July, we executed according to plan with the
formation of the Iraqi governing council.
That governing council, for the first time in Iraq's
history, brings together a balanced, representative group of
political leaders from across the country.
It represents the diversity of Iraq, whether they are Shia
or Sunni, Arab or Kurd, Baghdadi or Basrawi, man or woman, all
Iraqis will see themselves represented in this council.
And the council will be involved in all significant
decisions in the months ahead. It will name the new ministers
to lead Iraq's ministries, and its members will be able to
represent Iraq internationally.
Just yesterday, a delegation from this group presented
itself to the United Nations Security Council. The governing
council will determine the budget for next year, and another
one of its first jobs will be to launch the constitutional
process.
The governing council is the first of three steps toward a
sovereign, democratic Iraqi government. Now that it is
established, we can look for the second step, which is the
convening of a constitutional conference and the adoption of a
new Iraqi constitution, written by the Iraqis and for the
Iraqis, not by any foreigners, and certainly not by any
American.
Once the new constitution has been adopted by the Iraqi
people, and that'll be the second stage of our political plan,
we can move to the third stage, the election of a free and
democratic Iraqi government. That will be an accomplishment of
which all Americans can be proud.
Over the next 60 days, we'll focus intensely on support for
a constitutional conference, support for new interim ministers
in the ministries, and the establishment of a regulatory and
licensing framework in which an independent media can flourish.
These are only the latest signs of progress to Iraqi democracy.
Two weeks ago, the 37 members of the Baghdad City Council
met to mark the transition of the capital to democratic rule.
Today, for the first time in history, all major cities and 85
percent of the towns have municipal councils. Iraqis are more
and more now taking responsibility for the management of their
own affairs through local councils. More than 150 new
newspapers have been started since liberation. Iraqis are
speaking out and demonstrating with a vigor borne of 35 years
of imposed silence. This is not yet full democracy, but freedom
is on the march north and south.
Finally, our planning is maturing rapidly. With the
agreement and help of our uniformed colleagues, we are now
preparing the first combined civil-military plan for Iraq. The
plan begins with the president's vision for Iraq, and it's a
good place to wind up this speech.
The president's vision for Iraq is to build a sovereign,
free, unified and democratic Iraq at peace with its neighbors
and with the world. We have made a lot of progress moving
toward that vision, and we have a plan for the next 60, 120
days and beyond that makes further progress toward those goals.
In all our primary areas, security, economy, governance, we
will continue to work closely with the Iraqi people.
As President Bush said this morning in the White House Rose
Garden, ``They are our greatest allies, the Iraqi people.''
They have been a great source of inspiration to me. They have
an unflappable sense of optimism and professionalism. Their
dignity, their work ethic and national pride combine with
President Bush's vision for Iraq has convinced me that the
Iraqi people's best days are yet truly to come.
Thank you very much.
Further Reading
----------
1. ``Baghdad: A Race Against the Clock,'' International
Crisis Group, June 11, 2003.
2. ``Iraq's Post-Conflict Reconstruction: A Field Review
and Recommendations,'' by the Iraq Reconstruction Assessment
Mission of the Center for Strategic and International Studies,
July 17, 2003.
3. ``A New Voice in the Middle East: A Provisional Needs
Assessment for the Iraqi Media,'' Baltic Media Center, Index on
Censorship, Institute for War & Peace Reporting, International
Media Support, May-June 2003.
4. ``Climate of Fear: Sexual Violence and Abduction of
Women and Girls in Baghdad'' Human Rights Watch, July 2003.
5. ``NDI Assessment Mission to Iraq,'' National Democratic
Institute for International Affairs, June 23 to July 6, 2003.
6. ``Preparing for War, Stumbling to Peace,'' Mark Fineman,
Robin Wright, and Doyle McManus, Los Angeles Times, July 18,
2003.
7. ``U.S. Lacked Plan B in Iraq,'' Jonathan Landay and
Warren Strobel, Philadelphia Inquirer, July 13, 2003.