UN official - Occupier can't award oil contracts

UNITED NATIONS -- A U.S.-run administration in Iraq will not have the authority under international law to award American companies major contracts to modernize and run Iraq's vast oil industry, a senior U.N. official said Thursday.

Under the Geneva Conventions, an occupying power can only deal with day-to-day administrative operations unless the U.N. Security Council decides otherwise, said Mark Malloch Brown, administrator of the United Nations Development Program.

"Until there is a new Security Council resolution, you are only as the occupying power able to deal with day-to-day administrative decisions," Malloch Brown said. An occupier cannot change the constitution or make long-term legal commitments -- such as the kind of 10- to 20-year contracts and concessions that oil developers need, he said.

Debate on future

The future of Iraq's oil -- which is the world's second largest reserve -- has become a subject of increasing debate.

The U.S. Defense Department has selected a former oil executive to oversee the revival of Iraq's oil industry, and U.S. oil companies are reportedly lining up for lucrative contracts.

Philip Carroll, who was president and chief executive of the U.S. arm of the London-based Royal Dutch/Shell Group until 1998 told the Houston Chronicle Thursday that he had been asked to restore oil production and create new production capacity if needed.

Secretary of State Colin Powell said Thursday that the United States -- not the United Nations -- must have the lead role in Iraq's postwar reconstruction.

Senior U.S. officials have said they expect revenue from Iraqi oil to cover much of the cost of postwar reconstruction. Iraq's oil, however, is currently sold under the U.N. oil-for-food program, which is controlled by the Security Council.

Any change to divert money to reconstruction or reward U.S. companies would almost certainly face stiff opposition from France, Russia, Germany and China, which opposed the U.S. resolution seeking authorization from the Security Council for war.

Malloch Brown said he believes that "the overwhelming consensus of the international community" is that the best way to get from occupation to self-government in Iraq is through U.N. management and a U.N.-brokered political process.

The French, Germans and even the British, America's closest ally, agree that an occupation of Iraq "is going to create huge problems" and therefore a broader U.N. role is needed, Malloch Brown said.

Malloch Brown questioned the wisdom in installing an American ministerial team in Iraq, with U.S. advisers and foreign companies, rather than relying on Iraq's highly trained bureaucracy and talent pool.

A Security Council resolution on Iraq's administration is the only way "so that new investors feel that their claims are not going to be the subject of dispute in courts for the next 10 or 20 years."