Centre for Research on Globalisation
Centre de recherche sur la mondialisation

Executive Order 13303, “Protecting the Development Fund for Iraq.”

Looting Iraq by Executive Order

by  Stephen Kerr

www.globalresearch.ca 27 October 2003

The URL of this article is: http://globalresearch.ca/articles/KER310A.html

George W. Bush is a thief.

On May 22, 2003 President Bush issued Executive Order 13303, “Protecting the Development Fund for Iraq.” This order invoked the “National Emergency Act” to effectively seize Iraqi oil and oil revenues, ostensibly to ensure they are spent on “Iraqi reconstruction.”

But that’s not the way this Order has been used, or the funds spent.

“I hereby order…any attachment, judgement, decree, lien, execution, garnishment, or other judicial process is prohibited, and shall be deemed null and void, with respect to the following: a) the Development Fund for Iraq, and b) all Iraqi petroleum and petroleum products…” reads the kernel of Bush’s decree.

EO 13303 has a singular purpose, now made transparent by recent events – protecting US crony capitalists. It holds The Development Fund for Iraq and US oil corporations above the law by rendering any claim or lawsuit brought against them to be “null and void.” Whoever controls the Fund can do anything they want with the money, such as put it in their pocket.

The Development Fund for Iraq was created by UN Resolution 1483 on May 22, the same day as Bush issued his Executive Order. The Fund replaced the UN controlled Oil for Food Programme which used 95% of Iraqi oil revenues to purchase food and medicine, while 5% went to pay war reparations to Kuwait. The programme barely kept Iraqis from starving during the US and UK backed UN sanctions. The new Fund is under the control of the US puppet Iraqi government the “Coalition Provisional Authority,” headed by Paul Bremer, who answers to George Bush. The Fund’s money is not even kept in Iraq, but in the Federal Reserve Bank of New York, though the Fund is on the books of the Iraqi Central Bank.

On May 28 2003 $1 billion dollars of assets were transferred to the Fund from the Oil for Food Programme. About $5 billion has gone to the fund so far. That money has been looted. According to a report by Christian Aid in the UK, over $4 billion is missing.

What money that is accounted for now lines the pockets of Halliburton.

On October 17th, and the US Army Corps of Engineers reported that to date $600 million from the Development Fund has been paid out to Halliburton – for “importing gasoline into Iraq.” This is a direct violation of Resolution 1483, which demands that “the fund shall be used in a transparent manner to meet the humanitarian needs of the Iraqi people.”

It’s also the modern equivalent of shipping coal to Newcastle.

No doubt, Iraqis need gasoline. But Iraq is sitting on half the oil in the Middle East. In what can only be described as a crime, UN sanctions and two Anglo-American wars have rendered Iraq a net importer of oil. This disaster for Iraqis and foreign policy embarrassment for the United States is merely another profit making opportunity in Iraqi “reconstruction,” for Halliburton which has inflated its prices accordingly.

Halliburton charges $1.59 per gallon for gasoline imported from Turkey into Iraq, whereas the going market rate in the Persian Gulf is 76 cents per gallon, plus about 25 cents for transport according to US Congressmen Henry Waxman and John Dingell, who have written to the Director of the Office of Management and Budget to complain. The Congressmen also contacted Iraq’s state owned oil company, which confirmed it paid between 90 and 98 cents per gallon for imported gasoline.

But charging market rates for Persian Gulf gasoline would not be good for Halliburton, which adds from 2% to 7% to the price for itself. 2% of 96 cents is 1.92 cents a gallon for Halliburton. 7% of $1.59 is 8.11 cents per gallon for Halliburton. The profit must be added to the cost of the gasoline, as Halliburton’s contract is “cost plus” profit; the profit to be calculated “depending on performance.”

Executive Order 13303 protects Halliburton’s war profiteering, as intended, by perverting the language and spirit of UN Security Council Resolution 1483, intended to protect Iraq’s assets. Here’s how.

In ending sanctions against Iraq, UN 1483 established the Development Fund, determining that “all proceeds from such sales (of Iraqi petroleum) shall be deposited into the Development Fund for Iraq…” as per section 20. But Iraq is the world’s largest debtor, “with total claims against it at US$383 billion. At 1200% of GDP, this makes Iraq 12 times more indebted than Argentina,” according to Toronto based Probe International. With this fact in mind, Section 15 of UN 1483 calls upon the Paris Club of Creditors to “seek a solution to Iraq’s sovereign debt problems.”

Section 22 of UN 1483 is written to protect the Development Fund against the potential claims of Iraq’s international creditors, in order to allow the proceeds from Iraq’s oil production to be used for “reconstruction.” Setting aside the merits of the plan, (Iraq is a net oil importer) a reading of the language in section 22 sets out terms remarkably similar to Presidential Executive Order 13303, with some crucial differences.

From UN 1483 section 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 para 15, (The Security Council) further decides that until December 31, 2007…petroleum, petroleum products and natural gas originating in Iraq shall be immune, until title passes to the original purchaser, from legal proceedings against them and not be subject to any form of attachment, garnishment or execution…”

UN 1483 section 22 also confers upon the Development Fund for Iraq “privileges and immunities equivalent to those enjoyed by the United Nations,” with one crucial exception. “…the above privileges and immunities shall not apply with respect to any legal proceeding in which recourse to such proceeds is necessary to satisfy liability for damages assessed in connection with an ecological accident, including an oil spill…” The intent is clearly to protect Iraq’s oil revenues from seizure against its debts to allow for reconstruction to take place, with a nod to preserving what’s left of Iraq’s war ruined ecology.

But the powers conferred to the Fund under the Resolution are being abused by the President of the United States and his puppet government in Iraq to protect profiteering US corporations tied to the Bush White House.

Unlike the UN Resolution, EO 13303 contains no exception holding the Development Fund or US corporations accountable for ecological catastrophes in the Iraqi oil industry, and those occur daily, as often as the pipelines are blown up. Rather the Order confers upon US oil corporations blanket protections greater than those granted to the Development Fund under UN 1438. The Order is a licence to pollute, profit and pillage.

In addition to protecting “all Iraqi petroleum and petroleum products, and interests therein” from lawsuits, EO 13303 goes much further. It protects “all proceeds, obligations, or any financial instruments of any nature whatsoever (emphasis mine) arising from or related to the sale and marketing,” of those petroleum products. Further, 13303 protects “interests therein, in which any foreign country or any national has any interest, that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of United States persons.” Section 3, a) and b) defines a “person” as either an individual or a corporation.

Thus corporate profits, “all proceeds” and activities “of any nature whatsoever” of US oil corporations in Iraq are protected from the US Courts.

EO 13303 also protects the Development Fund for Iraq from any penalties which a court might apply, such as a “lien” or a “garnishment,” “unless licensed or authorized pursuant to this order” presumably by the President of the United States.

Bush has transformed powers intended to protect the world’s poorest country from the predations of its creditors into a blunt legal instrument protecting a top Republican campaign contributor in which his Vice President Dick Cheney is heavily invested. There are another 4 billion skeletons in this closet, but Washington and its Iraqi satrapy are working overtime make sure we never get to open that door.

The Development Fund for Iraq is supposed to be monitored by something called The International Advisory and Monitoring Board (IAMB) “composed of representatives of the UN Secretary General, the International Bank for Reconstruction and Development, the IMF, and the Arab Fund for Economic and Social Development,” as per UN Resolution 1483. But this body does not yet exist, because the American government wants an auditor shaped like a paper tiger. Paul Bremer is fighting potential board members for the right of the American occupation government to vet IAMB audits of the Development Fund.

Stephen James Kerr is an investigative journalist in Toronto, and the co-host of Newspeak on CIUT 89.5 FM www.ciut.fm He may be contacted at [email protected] .  © Copyright S Kerr 2003  For fair use only/ pour usage équitable seulement .