Reconstruction in Iraq

(7:30 a.m. EDT)

QUESTION: Joining us, Alan Larson, State Department Under Secretary of State for Economic Affairs. Good morning, sir. Thanks for being with us.

UNDER SECRETARY LARSON: Good morning.

QUESTION: I think it's becoming clear now that there wasn't much -- there wasn't enough, perhaps, in the news media about how difficult this reconstruction process was going to be. There isn't even an economy there, a working economy there, is there?

UNDER SECRETARY LARSON: I think there is the beginning of a working economy. Unlike many post-conflict situations, this is a country that has an oil sector that can contribute a lot of money to the future reconstruction. It's also a country that has some skilled people working in the oil sector and in other sectors. So I think there's more to work with here than in some other cases.

QUESTION: Well, who is going to run the oil sector? Where are the revenues going to go? Who's going to handle them? Who will they be accountable to? A lot of questions.

UNDER SECRETARY LARSON: Well, there are a lot of questions, and certainly, as you indicated, we're at the early stage here. What we need to do, and I think we're making good progress in the oil sector, is making sure that the infrastructure that's in place is maintained. There was very little damage, which is a very good news story. Now we're working hard to make sure that that oil production and processing and transportation infrastructure can become more operational as quickly as possible.

QUESTION: I started to read yesterday that John Snow was encouraging an Iraqi currency. I thought they were going to use the U.S. dollar over there as their new currency.

UNDER SECRETARY LARSON: Well, what we're doing in the very short run is that we are paying some of the workers, like dock workers, and I think as time goes on, paying some of the other government workers, and even some of the workers in the oil sector, in U.S. dollars. And that's not a decision about a future currency; that's just, you know, taking an operational first step to make sure that people are getting paid.

Over time, there will need to be Iraqi decisions made about what sort of currency arrangement they need, and we're going to want to work very hard to help them and to facilitate any decision they make.

QUESTION: How long is this process going to take, do you think?

UNDER SECRETARY LARSON: Well, it will take time because this is not just reconstruction from a war, it's not even reconstruction from sanctions; this is the renewal of a country that was oppressed for over 20 years by a completely kleptocratic elite. And so what we are trying to do with other partners in the international community is help these people reclaim their country, reclaim the future, and rebuild a functioning economy and a fair political society.

QUESTION: Now, you mentioned the sanctions. I'm glad you mentioned that. How do we deal with this issue? The UN, right now, is not being entirely cooperative, but maybe ultimately they will be. But those sanctions give the UN a very strong grip on the Iraqi oil resources.

UNDER SECRETARY LARSON: The purpose of the sanctions was to make sure that Saddam Hussein didn't use oil revenue to finance the acquisition of weapons of mass destruction. That purpose no longer exists.

QUESTION: Right.

UNDER SECRETARY LARSON: And so it's very clear that the sanctions should be lifted.

QUESTION: Right. But what if they're not?

UNDER SECRETARY LARSON: Well, they will be. I think --

QUESTION: But what if they're not?

UNDER SECRETARY LARSON: First of all, let me just quickly explain that we've got about a month here where the United States will be working with other partners in New York on the Security Council to get those sanctions lifted, and I am absolutely confident that we will do that because I'm absolutely confident that all of the major countries in the world want to be part of helping the Iraqi people reclaim their future. So I think it's really inconceivable that we won't be able to find a way to move forward.

But I'll tell you this. We will move forward and make sure that we are helping Iraq and its people build the future that they've been denied over the last 23 years.

QUESTION: All right. So, if the sanctions are lifted, who, then, controls the Iraqi oil? BP-Amoco? Exxon-Mobil?

UNDER SECRETARY LARSON: Right now, there is a infrastructure in Iraq that they have managed to do a pretty good job of maintaining. What we would like to do in the short run is help assemble an Iraqi management team that could help make the operational decisions on a day-to-day basis to have that production facility up and running and exports continuing. We'd like to assemble a team of some of the best and the brightest Iraqis and non-Iraqis who could provide advice.

I think the big decisions about the future of the Iraqi oil industry are ones that need to be made later by an elected Iraqi government.

QUESTION: So -- and let me interrupt you because we are running out of time, and I'm glad that you raised that point as well. So, debate goes on. Should the Iraqi oil industry be privatized? Should it be distributed in some sort of shared distribution to its citizens? Should it be government-owned? That's a decision you think should be left to the Iraqis; the U.S. won't make that decision?

UNDER SECRETARY LARSON: It should be. You know, I certainly am of the view, having looked at all industries around the world, that having a large role for private foreign investment and having a competition, having the best technology available, is a very sensible way to go. But this should be a decision that the Iraqis make.

QUESTION: Okay. Now, as we try to rebuild, most people, I think, would agree there are a number of things you absolutely must have. One is some kind of physical security, then the second is some kind of legal security, and you also have to have some kind of currency and working banking system. Those are really the essentials. How long before we get there?

UNDER SECRETARY LARSON: I can't give you a timeline, but I can tell you that it is a very top priority. We are sending over, as one of the persons to work with General Garner, Peter McPherson, who used to be the Deputy Treasury Secretary and the head of the U.S. Agency for International Development. One of his main tasks will be to work with Iraqis in setting up a functioning banking system, establishing a system of commercial law and respect for private property, so that you can get a functioning market economy going.

QUESTION: All right, sir. Thank you very much. We appreciate your time.

UNDER SECRETARY LARSON: Thank you.