The War Over The Peace A fierce fight for a new Iraq is taking place in ... Washington
By Bill Powell

(FORTUNE Magazine) – The images are of a historical piece, strung across time and geography by enduring, elemental emotions. When the statues of megalomaniacs tumble--think of Feliks Dzherzhinsky in front of KGB headquarters in Moscow--it comes with a combustible mix of joy and anger, both deeply rooted. So it was in Baghdad on April 9. You could see it even in the face of a small boy on that day: As older men dragged Saddam's huge bronze head, snapped off at the neck, through the streets around Firdos Square in the city center, the boy repeatedly smacked its face with the soles of two shoes, smiling gleefully as he took his vengeance.

That boy's future is now ours, at least for a time. The U.S. and Britain and the small coalition of the willing, having gone a long way toward winning a war that was highly unpopular in much of the rest of the world, will soon preside over the peace. It is simply a truism, and not disrespectful to those who fell in this conflict, to say that the peace is more important than the war. The country in which that boy grows up, what becomes of it years after he whomped so happily on the dictator's image, will in no small measure reflect what the U.S. does now.

That is, to say the least, a daunting task. Two things about the peace are clear. It is deeply unsettled, even dangerous, and it is upon us, even though the war's mopping-up operations continue. After that, it gets very complicated. Retired Lt. Gen. Jay Garner and a team of nearly 250 Americans sit in Kuwait, waiting for the country to be secure enough to begin their work. The sooner they can start the better, but the nature of the conflict--with parts of the country in the south largely peaceful but sporadic fighting elsewhere--hasn't yet made that possible. As the civilian administrators of occupied Iraq, they will be responsible for everything from organizing humanitarian assistance to setting up a new police force to running Iraq's lifeline--its huge, if dilapidated, oil industry. They, together with the yet to be named interim authority composed of Iraqis, are supposed to stabilize the country and eventually oversee a historic democratic election. Deputy secretary of defense Paul Wolfowitz said it would take at least six months or so before the interim authority can handle running the country. Iraqi exiles who have worked closely with Washington in planning for the postwar era say, perhaps overly optimistically, that an election could then follow in a year and a half to two years.

That, anyway, is the plan on paper. And while it is true that Garner and company have detailed plans at hand covering myriad areas that need to be attended to quickly--the administration has made more progress in many of those areas than it often gets credit for--the Bushies, rather late in the day, are still fighting about a lot of big stuff. In part, despite all the early "cakewalk" talk, that is because Saddam's collapse came sooner than most people in the administration believed it would. But mainly it's because the same people who have been arguing about Iraq before and during the conflict are still arguing. In effect, it's Colin Powell's more cautious and inclusive State Department vs. Donald Rumsfeld's go-it-alone, my-way-or-the-highway Department of Defense.

The tension crosses a range of issues, two of which are critical: How large a part should Iraqi exiles have in the interim and beyond (in comparison with those who have suffered long and hard under Saddam)? And what role should the UN play in Iraq's future? One man, Ahmed Chalabi, has come to symbolize the fight within the U.S. government about the place of Iraqi expatriates in post-Saddam Iraq. Chalabi heads the Iraqi National Congress, the opposition group that has worked for years from abroad for Saddam's overthrow. The University of Chicago--trained mathematician turned banker turned political leader in exile returned to his native southern Iraq on April 7 for the first time since 1958. He insists he has no desire for political office in his native country, but few believe it. Chalabi befriended Bush administration hawks like Wolfowitz before they were in office. They like and trust him, believe he is able, and don't see why he shouldn't take part in Iraq's political future. The State Department and the Central Intelligence Agency, by contrast, don't like him and don't trust him. State released a disapproving audit of the INC's use of U.S. government funds, and the agency has hinted that in the '90s there were questions about what happened to some of its own money after it went to Chalabi's group (a story his allies call a baseless smear). So touchy are both State and Defense about Chalabi that when the Defense Department flew him into Iraq, the State Department was not even aware of it.

Bush himself, in his April 7 press conference with Tony Blair, tried to clear the poisonous air on the subject. "I hear a lot of talk about how we're going to impose this leader or that leader. Forget it. From day one we have said the Iraqi people are plenty capable of running their own country ... and that's precisely what's going to happen." But there are Iraqis and there are Iraqis. Chalabi clearly remains a favorite of Rumsfeld as well as Vice President Dick Cheney. It's not just the State Department and the CIA that view him--and other outsiders like him--skeptically. Rubar Sandi, an Iraqi-American businessman who has worked closely with the administration formulating economic plans for postwar Iraq, says that ideally expatriates, Chalabi included, should provide expertise and advice where needed. But he says they shouldn't seek to become political players, in large part because they are likely to be viewed as U.S. stooges. That would certainly be the State Department's view, but whether it's the Defense Department's--or Ahmed Chalabi's--is doubtful.

Who should run post-Saddam Iraq--and whether anyone the Americans appointed would have any political credibility once elections come--isn't the only issue that's unsettled at a moment when those decisions should already have been made. The inevitable disputes about what function the UN should have are already front and center. Administration officials, from Bush on down, have said that the UN would play a critical but--and this is the important part--secondary role to the U.S. and Britain. They have had great fun tossing transatlantic spitballs at the French, where Jacques Chirac, however delusionally, said the "United Nations alone" should run postwar Iraq. (Bush's press secretary Ari Fleischer sneered in response, "You wish [they] would think about the Iraqi people.")

Needless to say, a Jacques Chirac--led UN isn't going to come rolling into Baghdad to take the U.S.'s place anytime soon. Nor will the UN be relegated to handing out pennies collected in a Unicef drive. The reality is going to be a lot more complicated than that, and it's going to require everyone on the Security Council to try to act like grownups, in a hurry.

Consider the near-term future of Iraqi oil. Beyond restoring order and providing emergency aid, nothing is more important to achieving a semblance of stability in Iraq than getting the country's oil to market. Before the war, Iraq was allowed to export oil under the UN's oil-for-food program, through which Iraq exported oil and used the revenue to pay for food, imported under contracts already signed. At least 50% of the Iraqi people were fed via this arrangement. The UN believes the program should resume as soon as Iraq's oil can start shipping again--which should be in about two months, according to the U.S. Army Corps of Engineers.

Foreign firms have contracted with the UN to supply that food, and they also believe the program should therefore be continued at least in the short run. But the program comes up for its 45-day renewal next month, and the Bush administration has not made up its mind how to handle it. "There have been talks, but there is no agreement," says Walid Khadduri, editor of the Middle Eastern Economic Survey, a respected newsletter. "The fact is, as it now stands, Iraqi oil is under Security Council resolutions," and the administration, not surprisingly, doesn't like it. "There has to be a compromise on this; otherwise everyone will lose," Khadduri says--first and foremost the people of Iraq. But "the two sides are very far apart on how to handle this," he says.

No one wants to keep oil-for-food in place for long. The question is when it should end. But even after it goes by the wayside, huge issues confront the administration and the UN as to where the petro dollars should go. The U.S. has repeated the mantra that Iraqi oil will go to benefit the Iraqi people. That's all well and good, but it raises a lot of questions that need to be answered now. Among them: What will become of the claims against Iraq, adjudicated by the UN, for damages done during the invasion of Kuwait? Roughly $250 billion in claims are still outstanding against Iraq from that conflict alone. Then there are the billions owed to the Russians for loans made mostly during the Soviet era. Iraqi oil produces $20 billion to $25 billion a year in revenue, and the administration has said in any case that that oil money is going to stay in Iraq. The U.S. is going to have to sit down with countries that did not support the war and grind through this issue. And again, the sooner that can be sorted out, the better, but it requires, among other things, that the U.S. and the French stifle the verbal sparring.

Hard issues for sure, but the peace depends on them. No matter how well the war went, the peace is what will determine whether this effort--and the blood spilled in its pursuit--was worthwhile. Much of the world may have been shocked and awed by just how brutally efficient the U.S. military performed over the past month, but the marker the administration really wants to lay down in Iraq is that we will now help rebuild it, politically and economically. There won't be reporters "embedded" to cover that, no riveting images of firefights and statues tumbling down beamed for everyone to watch. But the world's leaders, particularly those in the Middle East, will be watching oh-so-closely. And so will that little boy who ecstatically pounded away at Saddam's visage when it finally came crashing down.

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