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Lord Redesdale: My Lords, the noble Baroness, Lady Symons, will be glad to hear that I shall not raise the issue of weapons trailers this evening. I would rather deal with the social and economic consequences referred to in the title of this debate.

The success of the occupation is linked to the welfare of the people of Iraq. That will be the yardstick against which history will judge us. It would be wrong not to
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start by praising the professionalism of our troops operating in the south and their achievements in establishing a generally high degree of peace and normality there. The problems in the north and the increasing brutality suffered by the Iraqi security forces and civilians as a result of the insurgency will cause deep scars in Iraqi society. That, combined with the fact that there is no accurate overview of the total civilian death toll—a point raised by the noble Baroness, Lady Turner—will ultimately threaten the stability and probably viability of any future Iraqi sovereign state.

However, it would be wrong to concentrate entirely on the negative without recognising the achievements of the elections held on 30 January. I wish to join other noble Lords in wishing every success to the new Iraqi Government in their task of rebuilding their nation, starting with their being sworn into their new parliament today.

The noble Baroness, Lady Symons, assured us in April last year, in response to the Question of my noble friend Lord Wallace, that while executing our duties as occupying powers our relationship with the United States had,

Moreover, in the same speech the noble Baroness highlighted the success that British companies had experienced in becoming involved in,

The noble Baroness's comments support the Government's claim that we were deeply involved in the functioning of the CPA and were not dominated by the United States Administration. Therefore, as well as taking a share of the praise for what has gone on in Iraq, our decision makers must also shoulder some of any blame that arises.

The administration of post-war Iraq was carried out by the Coalition Provisional Authority. Reviews of its financial dealings have not been encouraging. The International Advisory and Monitoring Board was set up to oversee and audit the Development Fund for Iraq established by United Nations Security Council Resolution 1483. After it came into existence it had four major concerns that the CPA failed to address up to the handover to the interim government at the end of June 2004. These were the absence of oil metering; the use of barter transactions for certain oil sales; the failure of the CPA to give the International Advisory and Monitoring Board access to its review of the controls in place on the State Oil Marketing Organisation and the use of non-competitive bidding measures for some contracts paid for through the Development Fund for Iraq.

The absence of oil metering is contrary to normal practice for an oil exporting nation. Put simply, it makes it impossible to find out definitively how much oil is being extracted and to say where that oil goes. This is an especially serious problem in an unstable, post-conflict Iraq where there was evidence of significant quantities of
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oil and petro-chemical products being smuggled out of the country. The IAMB noted in a press release in July of last year that,

The CPA had failed to tackle even this fundamental problem during its life span.

The DFI is a cash fund. In bartering oil, by definition cash is not received in return. Thus a contribution to the DFI was not made as required by United Nations Security Council Resolution 1483. Moreover, the barter system made it difficult for the IAMB to establish whether the Iraqi people were getting good value from the trade. As early as February 2004 the CPA commissioned a review of controls in the State Oil Marketing Organisation in Iraq to assess what was happening in the oil industry. Despite the review being largely complete by May of that year, as late as July the IAMB had,

Thus it was necessary for it to focus its own audits on this area due to an apparent lack of co-operation from our coalition.

The fourth concern is at least as serious as the others and sadly a matter in which the CPA had a degree of choice. The sole source system ensured that there was no competitive bidding process for the majority of contracts handed out in the immediate aftermath of the war. This problem was compounded by the fact that many of the subsequent agreements were drawn up as cost-plus contracts. These involve companies being reimbursed whatever they spend plus a percentage guaranteed profit. This situation is far from ideal from a point of view of securing value for money for the Iraqi people. The IAMB was concerned about this state of affairs along with a number of NGOs.

Halliburton is one of the companies discharging some of these contracts. Its record of delivering value for money has been criticised in a number of areas a number of times. As recently as Monday, a leaked copy of a Defence Contract Audit Agency's report has once again criticised Halliburton. The report contains a number of queries among them a bill of $27.5 million for transporting $82,000 worth of propane.

Corruption from all sides has been a serious problem in Iraq. The International Crisis Group report notes that the problem is apparently so bad that,

Dr Reinoud Leenders, the author of the report, in an interview with the BBC's "File on 4" expressed fears that due to the way in which the difficult circumstances in Iraq were being handled,

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This is a sentiment echoed by Transparency International in its annual report which has called for urgent action.

There is also in evidence "a lax attitude" (as described by Dr Leenders) to the financial wealth and property of the Iraqi people. There is anecdotal evidence of money in the early stages of the war being captured and then handed out to US commanders without it being counted or even logged in any way. The Ba'athist regime members' ill gotten private wealth is still in large part unaccounted for. The thriving trade in stolen medicines and medical equipment at the central Ghazil market in Baghdad is further testament to failings in the procurement and rationing systems put in place after the war.

The figures appearing in our media suggest that around 40 per cent of the total moneys of the Development Fund for Iraq have gone missing—a figure equal to about $8.8 billion. This is money that belongs to the Iraqi people and was supposed to be used for their benefit. One could suggest that the quality of the CPA's economic stewardship of the Iraqi people's wealth is at least partially to blame for this loss.

As I said before, we have received reassurances from the Minister that British decision makers were listened to and contributed to the running of the CPA. Therefore, those decision makers, we must now conclude, should share some of the responsibility for the apparent mismanagement which has cost the Iraqi people a significant portion of their wealth during the period when we took over the running of their country. In this respect it could be argued that we have in part failed in our duty of care which we implicitly took on when making a "moral case" for the war in Iraq.

Topically, this week the Commission for Africa's report—I know that many noble Lords have read that report which comprises only a small document—highlighted the need for corruption and poor governance to be addressed. These are intertwined issues on which the developed world is often only too happy to lecture the developing world. While accepting the need for changes to tackle this problem in Africa, what has occurred in post-conflict Iraq would suggest that perhaps we in the developed world do not have our own house entirely in order in this respect.

The Earl of Sandwich: My Lords, we must all be grateful to the noble Lord, Lord Garden, for giving us this timely opportunity on the very day that the new Iraqi Assembly meets.

I begin by paying tribute to the late Margaret Hassan of Care International. She personified the common humanity of all who have been caught up in this conflict. Her commitment and gentle advocacy over many years enriched the lives of Iraqis and enlarged our understanding of their problems. Margaret may have been an innocent victim of terrorism but Care International was, until last year's tragedy, a key player in Iraq's reconstruction. It
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occupied that dangerous no-man's land between humanitarian and military terrain. Many NGOs and church organisations have to live and work in that space every day in countries such as Iraq, Israel, Palestine and Afghanistan. The question is not only whether our Government, where it has jurisdiction or influence, is doing enough to protect aid workers, but also whether it will respect their independence during the period of reconstruction.

My knowledge of NGOs in Iraq is chiefly through my work with Care International, Save the Children and Christian Aid, all of which have suffered losses or setbacks in Iraq and Afghanistan during past year alone. I hear a very muted story from them of limited post-conflict achievements as the country stumbles to its feet. As others have said, information is very hard to come by.

But as the Iraqis seek a more stable government and breathe life into their previous institutions, the confusion between humanitarian and military objectives appears as strong as ever. From time to time, the US military has invited NGOs to a series of workshops in Amman, in line with their commitment to rebuild civil society in Iraq. However, it is not clear whether the US has understood the position of NGOs. It is also questionable whether the military are qualified to run such workshops at all. Is the US still attempting to assume an international role in the absence of a United Nations team in Iraq? If so, it will be widely misunderstood. However, we must recognise that with more than 1,500 causalities, the US army is not yet in peacetime mode.

Some UK-based aid agencies feel very strongly that NGOs have to work independently alongside local communities, often through community-based organisations and in co-operation with government. They should not in any circumstances be identified with official bodies, secular or military. All this is set out in UN guidelines under General Assembly resolution 46/182:

and led to the creation of the Department of Humanitarian Affairs, now called OCHA.

NGOs need protection in an emergency, but they seek military support only as a last resort and when there is no civilian alternative, for example, for aid convoys. These firm principles are upheld by leading bodies such as the UN Inter-Agency Standing Committee, the ICRC and the NGOs' own Steering Committee for Humanitarian Response.

What is the UK doing to implement these principles? There are some parallels with Afghanistan, where there are also blurred lines in the shape of the provincial reconstruction teams. The only answer that I have had from the Government is the reassurance that, whatever the US is doing, the UK-led teams are working well. That is not good enough. We are in a coalition. If the PRT in Mazar, for example, is regarded as a successful model, how has it influenced the US, German and other PRTs now within the NATO family? We are not told.
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CIMIC is the US programme dealing with civil-military co-operation in Iraq. I ask the Minister whether the Government would consider it appropriate for the British Army to be running civil society capacity-building workshops as the US military is doing through the Iraqi assistance centres? How will the FCO and DfID—perhaps through the new post-conflict reconstruction unit—be able to make a clear distinction between the work of the Army and the non-governmental organisations?

NGOs are a very broad church. This is where it would be interesting to debate further with the noble Lord, Lord Giddens, about what democracy means. Some NGOs are in the forefront of Iraq's reconstruction. They are actually small businesses, subcontracted to larger aid bodies such as USAID and DfID. Millions of pounds are being channelled through NGOs by DfID alone. The noble Baroness would call them "privatised". The recent reconstruction conference in Tikrit was facilitated by the US army and was partly designed to help smaller Iraqi organisations gain information and advice in order to develop their own economic strategies.

In the provision of essential services, NGOs are too often required to do the work of government in order to get things done. Again, there are parallels in Afghanistan. Iraq may be a post-conflict country, but it is certainly not a developing country. It has a tradition of strong central services. Through a Christian Aid partner, I heard last week of a case in the south, which I am sure is quite typical, where the local water directorate is unable to reconnect village water supplies because there are no instructions from Baghdad. So the NGO has had to do it. I therefore applaud the objective, in DfID's February update, of encouraging NGOs to lobby to make local government responsive to people's needs, but that is much easier said than done.

While politicians jockey for position today, there is tension between the new ministries, which are anxious to regain patronage and authority, and the old local ethnic and regional elites, which we know are there and have been there all the time, but which were stifled by Saddam Hussein's central control.

Meanwhile, other non-governmental organisations are active in fields closer to politics—sometimes with UK support—in civic education and in asserting civil and human rights in Iraq. The rights of women is one example. NGOs were very closely involved in the recent elections, often at considerable risk. Some are monitoring the conditions of detainees, as was mentioned by the noble Baroness, Lady Turner, and the policies of the occupying powers, including, as the noble Lord, Lord Redesdale, mentioned, accounting for the missing billions of reconstruction funds.

We all agree in general with the noble Lord, Lord Giddens, that some form of democracy is alive and well in Iraq, despite all the obstacles, but what is democracy? Iraqi NGOs being involved in writing the new constitution was a genuine step forward that was welcomed by many Iraqi democrats as a contrast to the bludgeoning of Kurdish, Shia and Sunni leaders that still threatens national unity. The Assembly meeting
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today could easily become the talking shop of the powerful tomorrow. It is important that the smaller organisations, NGOs and others, like the political minorities within the triumvirate, are involved in the rebuilding of Iraq from the very beginning.

Equally, in the pressure to spend reconstruction funds and to achieve early results, these organisations must not be forced by the occupying powers to become a substitute for government. The reconstruction of roads and services is one thing but, after the suffering of the past, the rebuilding of civil society organisations and their accountability will be a slow process that should not be accelerated by the natural desire of the occupying coalition forces to complete their task and go home.

In closing, I hope that the Minister will deny reports that she may be leaving her present responsibilities. If she did make that decision, this debate would not be the same.

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