December 24, 2003


No Debt for Iraq's Oil




Former U.S. Secretary of State James Baker will be wading deeperand deeper into a minefield as he continues his mission to negotiatecooperation from current and former allies in Europe in alleviatingthe crushing debt left by Saddam Hussein. Nowhere are the obstaclesand hidden traps more treacherous than in France, where PresidentJacques Chirac used to boast of his "personal friendship" with SaddamHussein.

France is by no means Iraq's largest creditor. Accounts ofSaddam's total debt to the French taxpayer, French arms contractors,and French construction firms vary between $3 billion to $10 billion-- a wide spread and a significant amount, but nothing compared tothe estimated $100 billion Saddam owed his Arab allies in the Gulffor their support during the 1980-1988 war against AyatollahKhomeini's Iran.

But the French have made it abundantly clear that they intend toexact a high price for their "cooperation" in joining anyinternational effort to help the Iraqi people rebuild their country,after 35 years of depredations by Saddam and his Baath Party.

Contrary to silly claims made by several candidates seeking theDemocratic Party nomination for president in the U.S., PresidentChirac and Foreign Minister Dominique de Villepin are not holdingtheir breath in anticipation of winning reconstruction contracts paidfor by the U.S. taxpayer. Even they are not so cynical as to believetheir own wounded protests of having been "left out" of this phase ofpostwar reconstruction. After all, no self-respecting Frenchgovernment would open up French "cooperation" contracts in Africa,which are paid for with French taxpayer money, to fair, open andcompetitive bids by American contractors.

What Messrs. Chirac and de Villepin want is far more significantand, for the people of Iraq, far more dangerous. They want Iraq'soil, and they have France's oil and industrial lobby cheering themon.

After all, wasn't this supposed to be a "war for oil?" That's whatthe predominantly left-wing press in much of Europe proclaimed withgreat indignation. But that press got the story wrong. As U.S.Defense Secretary Donald Rumsfeld remarked famously, the U.S.government happens to see oil as a commodity to be traded on an openmarket, not a private reserve that can be controlled by a fewoligarchs. "Countries that have oil sell their oil and it reallydoesn't matter to whom they sell it. If they say no to one customer,that customer will simply go to another supplier," he told Le Figaroearlier this year.

But that is not the view from Paris. Almost as soon as the gunswent silent after the first Gulf war in 1991, French oil giants TotalSA and Elf Aquitaine -- which have now merged -- sought a competitiveadvantage over foreign competitors in Iraq by negotiating exclusiveproduction-sharing contracts. These were intended to give them astranglehold on Iraq's future oil production for decades to come.

The first of two massive deals was announced in June 1994 bythen-Iraqi Oil Minister Safa al-Habobi. His name was connected tonumerous procurement schemes in the 1980s in association with theMinistry of Industry and Military Industrialization, which supervisedSaddam's chemical, biological, and missile and nuclear weaponsprograms. Speaking in Vienna back then, al-Habobi confirmed that hisgovernment was awarding Total SA rights to the future production ofthe vast Nahr Umar oil field in southern Iraq, and that Elf was wellplaced to be awarded similar terms in the equally vast Majnoon oilfields on the border with Iran.

Those two deals would have been worth an estimated $100 billionover a seven-year period, and were conditioned on the lifting of U.N.sanctions on Iraq. Simply put, analyst Gerald Hillman told me, theFrench were saying: "We will help you get the sanctions lifted, andwhen we do that, you give us this."

Mr. Chirac is too shrewd to have raised the issue with Mr. Bakerduring their first meeting in Paris on Dec. 16. As Mr. Baker himselfdeclared after the meeting, "The French and the U.S. government wantto reduce the debt burden on Iraq so that its people can enjoyfreedom and prosperity."

That is indeed a noble cause, and one to which Messrs. Chirac andde Villepin should subscribe on its merits. Until now, their poutingabout "internationalizing" post-liberation Iraq sounds like sourgrapes, accompanied with veiled threats that France could seek toenforce prewar contracts concluded with Saddam through internationalarbitration courts, as Russia has done.

Instead of reaching out for the spoils of a war they did notfight, now would be a good time for Messrs. Chirac and Villepin tomake a gesture toward the Iraqi people by offering to free them fromSaddam's debt. Such a gesture would be welcome. It would also betheir first.

Mr. Timmerman is author of "Preachers of Hate:Islam and the War on America," and a senior writer for Insightmagazine.