US Issues Threat re: Iraq’s $50bn Foreign Reserves

The US is holding hostage some $50 billion of Iraq's money in the Federal Reserve Bank of New York to pressure the Iraqi government into signing an agreement seen by many Iraqis as prolonging the US occupation indefinitely, according to information leaked to The Independent.

Iraq's foreign reserves are currently protected by a presidential order giving them immunity from judicial attachment but the US side in the talks has suggested that if the UN mandate, under which the money is held, lapses and is not replaced by the new agreement, then Iraq's funds would lose this immunity. The threat by the American side underlines the personal commitment of President George Bush to pushing the new pact through by 31 July.

Iraqi critics of the agreement say that it means Iraq will be a client state in which the US will keep more than 50 military bases. American forces will be able to carry out arrests of Iraqi citizens and conduct military campaigns without consultation with the Iraqi government. American soldiers and contractors will enjoy legal immunity.

The US had previously denied it wanted permanent bases in Iraq, but American negotiators argue that so long as there is an Iraqi perimeter fence, even if it is manned by only one Iraqi soldier, around a US installation, then Iraq and not the US is in charge. The US has security agreements with many countries, but none are occupied by 151,000 US soldiers as is Iraq.

[Excerpt of an article by Patrick Cockburn, The Independent]