Funding the War

[Paul_A]

No doubt there will be serious short term and budget account problems (and 
as others have said there will have to be short term borrowing).  But 
surely (and sadly) the overall answer is: in the medium term they plan on 
using Iraqi oil through mechanisms similar to those already established by 
the Security Council.

It is little known but currently a large percent (I recall it was initially 
40%) of the money from Iraqi oil permitted to be sold is given by the 
Security Council to other governments as reparations for '91, and for the 
current Security Council operations.  Neither the validity of these claims 
nor the "priority" of them over the humanitarian needs of the Iraqi people 
is reviewed by a Court or even by the U.N. Secretariat.  The Security 
Council assigns the funding streams themselves (and sometimes, to 
themselves).  Needless to say this has been fairly big money (billions, but 
not the tens of billions to come).

Of course one can imagine that various mechanisms and formulas will have to 
be devised (and whether it will be nominally under the Security Council or 
not remains to be seen).  Medium term (2-3 year) costs of occupation and 
repairs would be financed from the receipts from the "privatization" of the 
oil fields, but presumably this should require some sort of Iraqi civilian 
authority to make the sale.  In the short run it seems there will be a 
Military Governor who will give out contracts such as for quick repairs to 
the oil fields and these might be covered by the oil companies in return 
for a share of proceeds until the sale.  Presumably the Military Governor 
will then formally sell the oil for the first year (through contracts to 
the oil companies) - or maybe just give out leases for individual oil 
fields - and then divy up the proceeds among the civilian and U.S. military 
needs.  Directly reimbursing the U.S. for the previous military costs of 
the war itself will be seen as audacious but ... the principles of 
reparations are already in force.  In fact if they stretch out the 
reimbursements long enough much will come from the sale of the oil fields 
to U.S. companies.

I hope this doesn't sound too cold.  There ARE Geneva Conventions against 
the use of natural resources by an occupying force but ...

Paul A.

At 07:35 AM 3/3/2003 -0800, you wrote:
>Can someone shed some light on how the administration is planning to pay
>for this Iraqi invasion?  I understand that the Federal Employees Thrift
>Saving Plan trust has about $44 billion in assets, and I saw that Bush
>was looking to loot the ESF to pay Turkey off, but where is the rest of
>the doe-rey-me going to come from?
>
>...are the boy on the hill going to approve the printing of more fiat?