§ 5. Mr. Andrew Turner (Isle of Wight)
If she will make a statement on the proportion of reconstruction costs in Iraq that will be met by the use of Iraqi oil revenues. 
§ The Secretary of State for International Development (Clare Short)
The Iraqi economy is in very poor shape and most people are dependent on handouts provided through the oil-for-food programme. Some 16 million people are completely dependent on handouts and are not economically active. The programme spends $10 billion each year and is funded by the sale of Iraqi oil. The immediate challenge is to get the oil-for-food programme up and running again. Thereafter, a UN-mandated transitional Government will need to agree an economic reform programme, which will need to address the problems of debt, reparations, building a modern economy and modernising the oil industry.
§ Mr. Turner
I thank the right hon. Lady for her reply, which I notice did not answer my question. Is she aware that the Foreign Secretary said last Tuesday:we shall propose…that every single cent and penny of those oil revenues—[HON. MEMBERS: "Reading."]—of course I am, I am quoting—are … used for the benefit of the Iraqi people … when that happens, the costs of reconstruction to the rest of the world will be remarkably insignificant"—[Official Report, 18 March 2003; Vol. 401, c. 899.]?277 If the costs will be insignificant, why are we having such trouble agreeing with our European colleagues how much they will contribute?
§ Clare Short
I am sorry that the hon. Gentleman did not listen to my answer. Iraqi oil is sold under the oil-for-food programme and every scrap of money that comes from legitimate sales goes into a UN trust fund to purchase food and medical supplies and to patch up water supplies and so on to keep everyone fed. The basic programme for looking after the people of Iraq is funded by their oil. We need to keep that running and modernise their economy so that the oil industry is better and their economy can grow. The oil sector will make Iraq a wealthy country, but there will have to be reform. The first stage is to fund humanitarian aid. Once the reforms are in place, the economy will be strengthened and will grow. The money goes through a trust fund.
§ Mr. Shaun Woodward (St. Helens, South)
What progress is being made in the awarding of contracts for reconstruction in Iraq? Given the United States' policy of tying its aid, can the Secretary of State assure us that the awarding of the contracts will be fair and, as the money will come from the oil trust fund, in the long-term interests of the people of Iraq?
§ Clare Short
I understand public concern about that, but people should not be too worried. So far, USAID has awarded contracts involving aid money to US companies to deal with the immediate humanitarian crises. That is bad practice. The UK is untied and we always fund the most efficient provider, which is usually better for the region. However, such provision of contracts has no implications for the future reconstruction of Iraq. That will require a UN mandate to put an interim Iraqi Government in place, followed by work carried out by the International Monetary Fund and World Bank. Reform will be transparent and any contracts will be properly awarded.
§ Dr. Jenny Tonge (Richmond Park)
Donald Rumsfeld said that American dollars will not be used for the reconstruction of Iraq. If $400 billion is needed for the task, if the USA wants total control of the process and if donors such as France and Germany will not contribute unless there is a new UN resolution, does the right hon. Lady think that the Prime Minister will be successful this time in persuading George Bush to go down the UN route?
§ Clare Short
The Prime Minister reached an agreement with President Bush in the Azores that there would be a UN mandate for reconstruction, which is also an absolute legal requirement. It is clear from the advice of our Attorney-General on 1441 and previous resolutions that our armed forces are in Iraq as an occupying power with humanitarian responsibilities and duties to keep order and the civil administration running. They do not, however, have the authority to reorganise institutions or establish a new Government. That requires a UN mandate. The UK is clear about that and I am hopeful that, as everything settles down, the international community will unite around that so 278 that everyone is involved, including the IMF and World Bank, in providing proper help for Iraq to reconstruct itself.
§ Mrs. Anne Campbell (Cambridge)
Does my right hon. Friend agree that there is a need to build international bridges following the Iraq conflict? Does she also agree that getting a UN resolution and using the UN to distribute contracts for post-war reconstruction is the best way to go about that?
§ Clare Short
I agree entirely with my hon. Friend. As I have said, I think that the way in which we approached the crisis, allowing international division to be so deep, was deeply unfortunate. But we are where we are, and we need to get the world back together, for the sake of Iraq and the middle east, to drive forward the peace process in Palestine, and for the sake of world order in these troubled times. That is a very urgent priority that everyone should attend to. A UN resolution on Iraq could be part of the healing process. First, we need a resolution to keep the oil-for-food programme running, as 16 million Iraqis are dependent on it. Work on that is going on, and much of it is led by Kofi Annan. We are hopeful that there will be a resolution within days. Thereafter, we need agreement on a UN resolution to bring into being a legitimate Iraqi transitional Government—we are working on that too. That is supremely important; I fundamentally agree with my hon. Friend.
§ Mrs. Caroline Spelman (Meriden)
Yesterday, the Secretary of State restated the urgent need for a new UN resolution on the oil-for-food programme. Has her Department any idea how long it will be before the suspension of the programme results in serious food shortages in Iraq? When does she expect a new resolution to be tabled at the United Nations—are we talking about a matter of days or weeks?
§ Clare Short
We are talking about a matter of days—it is looking more hopeful. It may have to be a two-stage resolution, and I agree with the hon. Lady that it is supremely important. As for needs in the meantime, under the oil-for-food programme, a couple of months' supplies were distributed across the country as the crisis developed, so in the short term food is not the problem—it is water and other supplies. As we know, at Basra, there has been damage to a cable. People cannot live without water—in a very short period they will get diarrhoea and cholera, and that is the danger in Basra. I am happy to say that the International Committee of the Red Cross is now in the power plant working on reconstruction, and it and UNICEF are tanking water to the people of Basra. There is danger in the short term, but I think that we will get that resolution very soon.
§ Mrs. Spelman
On 18 March, the Secretary of State staled confidently in a letter thatthe Prime Minister has persuaded President Bush that there must be a new UN resolution creating a UN mandate for the reconstruction of Iraq.279 However, can she tell the House what success she has had in persuading the leaders of France, Germany and Russia of the need for a new UN resolution on reconstruction?
§ Clare Short
The hon. Lady is right. There was agreement in the Azores on a UN resolution. The question now is about the detailed content of that resolution, which is of course crucial to legality and international co-operation, as I have previously explained. Talks are going on—I have been involved in some of them, but I will not give all the details here—to bring together France, Russia and Germany, and I am hopeful that we will make progress. However, the hon. Lady is absolutely right—there is a lot of hurt and division, and we have got to heal it to look after Iraq, the middle east and the world.