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24 Mar 2003 : Column 44—continued

Glenda Jackson (Hampstead and Highgate): Can the Secretary of State clarify the position in Basra? I know that water and electricity have been restored to 40 per cent. of the population, but my understanding is that 60 per cent. have been without both for almost five days. Are the Red Cross or the Red Crescent in Basra now, attempting to restore these supplies, or will they have to wait until the bombardment of Basra has finished?

Clare Short: I am happy to tell my hon. Friend that the situation is much better than she fears. By Sunday, 40 per cent. had been restored, and the Red Crescent is still working. It is a wonderful organisation that operates around the world in some of the most conflict-prone places. It is honoured by the international community, so it can often get co-operation, but its staff do take risks. It brought the emergency to international attention, and it has been working to put things right. I will find out how far we have got today, but on Sunday the figure was 40 per cent.

Mr. John Redwood (Wokingham): Can the Secretary of State tell us what was reckless about the Government's strategy towards Iraq at the time of her famous interview, but no longer reckless two days' later? Was that a case of her being reckless with her own career, perhaps, rather than a comment on the state of the Government's policy?

Clare Short: All of that is a matter of record, but perhaps the right hon. Gentleman has not had time to look at it.

Mr. Barry Gardiner (Brent, North): Is my right hon. Friend aware of the work in this country of Iraqi

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professionals—many of whom are now British citizens—such as Emad al-Ebadi, a constituent of mine, in forming the Iraqi reconstruction group? Will she undertake that officials in her Department will meet that group, so that professionals in this country with Iraqi backgrounds can be involved in reconstruction work in Iraq post-conflict?

Clare Short: Certainly, but my officials are working enormously hard and I want to protect their time; however, I am sure that we can facilitate such a meeting. There was a parallel in Afghanistan. Of course, in countries that are so misgoverned, skilled and educated people tend to leave. They are an enormous resource for the country concerned if they can get back quickly to help with reconstruction. In the case of Afghanistan, through the International Organisation for Migration—a UN body—we quickly arranged for professionals in the diaspora to be able to go back for, say, a short time. I think that we could look to doing something else in Iraq, but let me be clear about the commercial phase. There is hardly an economy in Iraq: it is a handout economy built on oil reserves, so it will need reconstructing. Of course, everyone with abilities must engage and help, and we will facilitate Iraqi engagement. However, all contracts will be transparently and properly let. There will be no misuse of any influence on the part of the UK or, I am sure, of the US. The IMF and the World Bank will be crucial to this reconstruction, and they would not permit it.

Dr. Vincent Cable (Twickenham): Since relief and reconstruction depend on oil revenue, will the Secretary of State say who will own and operate the newly liberated oilfields, and what will happen to the several billion dollars in oil revenue that is currently sitting in accounts in the Kuwait compensation fund?

Clare Short: The first stage will be to get the oil-for-food programme up and running. As the hon. Gentleman knows, Iraqi state-owned companies—which are kept running by some very capable engineers—export the oil that is currently producing the $10 billion a year that is used to bring in supplies under the programme. I would imagine that some of that leaks out into the purchasing of military equipment, and so on. The programme will be run, under the authority of the Secretary-General of the UN, by Benon Sevan—an enormously impressive man who has kept that programme running for some time, and who knows how it works.

So stage one is simply to keep the handouts going; then, there will have to be the reform phase. After we have secured the UN reconstruction resolution, the IMF and the World Bank will look at economic reform. The entire currency needs reforming, as do the Ministry of Finance and the various regulations. Expert advice will have to be sought on the oil sector, which relies on very old technology and needs new investment, but that will be properly done later. Stage one is to keep the oil-for-food programme running; the next is to introduce the reform agenda, rebuild a modern economy and give proper consideration to how the oil industry should be reorganised.

Mr. Shaun Woodward (St. Helens, South): Given the importance of healing divisions in the international

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community, and the likely importance and scale of reconstruction—it will probably be as big as the Marshall plan after the second world war—will the Secretary of State comment on reports in US newspapers this weekend that only US corporations are being invited to bid for the first round of contracts for reconstruction?

Clare Short: There is confusion on this question, I am happy to say. Many countries, the US included, tie their aid. We got rid of that, because otherwise everything has to be sourced back to the donor country, which creates costs and inefficiencies. Our money goes into the system and the best possible and most efficient way of deploying it is used. The US ties its aid, and USAID has a big budget and has given contracts to several US companies to help to provide US supplies in the emergency humanitarian phase. I do not like tying aid, but that is what is happening in that case and not the granting of contracts more broadly, such as for the restructuring of the oil industry, which the US would not have the authority to do—I am happy to say.

I forgot to respond to the hon. Member for Twickenham (Dr. Cable) on the important question of reparations. Iraq has high levels of debt and significant reparation bills related to Iran and Kuwait. That will all have to be restructured or Iraq would be in the same position as Germany at the end of the first world war, with such a massive burden that the country could not grow. That is an important issue, and we will have to prepare for it.

Mr. Stephen O'Brien (Eddisbury): The Secretary of State will be aware that it is the duty of the House—especially Opposition Members—to assess the confidence that we can have in her plans for contingencies in humanitarian aid and reconstruction in Iraq. Against the background of the Government's record of failure on contingency planning for foot and mouth, the continuing concerns about civil contingency planning in this country and the ambivalence she has displayed in the past week, can she improve the confidence of the House in the plans that she has for contingencies in Iraq by publishing them in detail in the coming week?

Clare Short: The hon. Gentleman should know, because he takes some interest in such matters, that the international community sees my Department as the most effective development organisation in the world. He knows me well enough—I hope that he does—to know that if I say that we have been making preparations, that is the truth. The UK cannot do it alone and we will have to mobilise the whole international system to do its job properly, but the hon. Gentleman can have full confidence that the contingency plans are in place. We have also provided a response to the Select Committee's report and that will be publicly available. I can assure him that my Department is the best development organisation in the international system, and it will be so in this crisis as much as in previous ones.

Mike Gapes (Ilford, South): Will the Secretary of State say more about the role of international oil companies in relation to the oil-for-food programme?

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Will she clarify the position, in a democratic and liberated Iraq, of those companies that have cosy concessions from Saddam's regime—especially the French company, TotalFinaElf, and the Russian company, Lukoil? Will they receive benefits from their support for that dictator, or will they be punished?

Clare Short: I have tried to make the point that step one will be to get the oil-for-food programme running. I am not an expert on the Iraqi oil industry, but I understand that it is mostly state owned. There will be contracts for export in place, and I see the point that my hon. Friend makes. However, my focus, and that of the UN, on getting oil-for-food running will mean carrying on with existing arrangements for a time, just to keep people supplied. Then the system will need restructuring, because it is old-fashioned and badly run, with old technology. Benon Sevan says that the Iraqis who keep such old technology running are wonderful engineers. The International Monetary Fund and the World Bank will be involved and we will need a proper, transparent process for any arrangements for reorganisation, modernisation and reform of the Iraqi oil industry.

Mrs. Cheryl Gillan (Chesham and Amersham): As we are talking about future reconstruction needs, may I press the Secretary of State on an urgent problem? As of two hours ago, the Red Cross had not yet received a response from either the US or Iraq to its request to interview prisoners of war. What is she doing to ensure that the coalition sends an immediate and positive response to the Red Cross to give it access to prisoners of war, even if we cannot get the reciprocal agreement from Saddam Hussein?

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