IRAQ - The Energy Base.

Before a US-led war which began on March 20, 2003 local time and brought about the collapse of Saddam Hussein's Baath Arab Socialist regime on April 9, the energy base of Iraq had been destroyed during the 1991 Gulf war and partly rebuilt with second-hand equipment and inadequate spare parts.

Duration of the US-led military presence in Iraq will depend on implementation of a Masterplan prepared by the US Department of State's Agency for International Development (USAID). This presence represents a "coalition of the willing", which is growing by the day as the US intends to re-order the United Nations to the detriment of the losing states.

The Masterplan was issued on Feb. 19, 2003 by USAID's Bureau for Asia and the Near East, with inputs from various parts of the DoS, the White House and the office of Vice President Dick Cheney, and other pillars of the Bush administration. It is an 11-page document which, together with appendices added as the real war has ended much earlier than anticipated, outlines the way Iraq should look like when world TV screens show a US-led transitional administration leaving the country. In other worlds, when the map of the Muslim world should begin to change, starting with Iraq and the Arab region (see OMT & Gas Market Trends of this week).

The importance of these appendices, including those being added by the Pentagon as the Americans are learning more about the Iraqis and their country, supersede the Masterplan. The Masterplan says the US-led team administering Iraq should end its work within 18 months from the day the war's end is officially declared by Washington. But the 18-month period was set on the basis of estimates made in late 2002 and early 2003, and the realities on the ground could either shorten or lengthen the transition. It is these appendices, which are top secret, that will set the duration of the US-led military presence in Iraq. The Masterplan, not a secret, was partly discussed in Baghdad on April 24 by the temporary US administrator of Iraq, Jay Garner, and members of his team which included experts from Britain, Australia, Japan, and other states of the US-led coalition. That was a conference attended by well-dressed Iraqi engineers, doctors, educators, intellectuals, bureaucrats, etc. It was followed by a press briefing in which participants included representatives of the most important news media in the world - as well as the Arab media which had become confused since the fall of Saddam's main statue on April 9.

What shocked un-elected Muslim rulers and Islamic militant leaders the most was the way Garner, a retired American general, and key members of his team were open about anything concerning the future of Iraq. Iraq was to become a prosperous and democratic federation, or confederation, with its devolution to be somewhat similar to that of Germany. Iraq's petroleum and other natural resources are to be for all its people. Everything that belongs to the Iraqi people is to be managed in the same transparent way as the US or Germany does.

The Masterplan's immediate priorities - to be executed at top speed along with the priority of democratisation and devolution of powers - are: water and sanitation, public health, humanitarian seaports and airports, food distribution, and emergency electricity. Garner told the Baghdad conference the relevant ministries, along with that for petroleum, will be up and running as from May 3. His Western and Arab critics said Garner was "dreaming", as the ministries in Baghdad with the exception of that for petroleum were destroyed or burnt by Iraqi looters. But the aides of Garner, who within months in 1991 built up a prosperous federal democracy in Iraq's Kurdistan, said on April 25 the critics had no idea who this retired US general was and what he was capable of doing to the Iraqis.

When he visited Kurdistan on April 22-23, Garner was received as a hero by so many men and women, boys and girls, that took TV viewers by surprise. It is very interesting to know who Jay Garner really is. For years he has been close to Secretary of Defence Donald Rumsfeld, who put the retired general in charge of the US-led transition for Iraq. It is interesting to note that the name of the US-led war against Saddam's regime was, and will remain for a long time, Operation Iraqi Freedom.

At this point, it is important to note that there is a power struggle in Washington between the DoS and the Department of Defence (DoD). This is reflected on the ground in Iraq, where US-led decision making is done by the Pentagon's Office of Reconstruction and Humanitarian Assistance (ORHA) under Garner. For the Iraqi projects in the transitional phase, the powers of USAID are balanced by those of the US Army Corps of Engineers (USACE).

Even US contractors bidding for projects in Iraq get confused because, occasionally, USAID and USACE issue tenders for the same job and their specifications are different. But George Bush Sr, the silent father of President George Bush Jr, likes to keep the power struggle going to make sure USAID and USACE compete in favour of the Iraqis. Bush Sr is said to "worship" Secretary of State Colin Powell, who was the military boss during the father's presidency when a US-led the war in early 1991 liberated Kuwait from Saddam's forces.

After all, the contracts which either USAID or USACE are awarding to US companies are being paid for in full by the US Treasury. This is coming from a $7 bn US budget allocated for the first phase of Iraq's socio-economic reconstruction (see OMT). French, Russian or German companies - angered by the anti-war behaviour of their governments before March 20 - should not complain if USAID and/or USACE only award the main contracts to American companies, since Uncle Sam is paying.

Nor should American companies complain if USAID and/or USACE award main contracts to specific US firms without proper tender. This is because there are only few US companies able to carry out jobs specified by USACE and/or USAID. For example, USACE's DoD chose Kellogg Brown & Root (a unit of Halliburton of which Cheney was the CEO until he ran for vice president in 2000) in March to be in charge of Iraq's upstream oil sector for two reasons of strategic importance to Washington: its engineers now based in Iraq have worked closely with USACE in America as well as abroad for years, and Halliburton units have been working in Iraq's upstream sector since the 1990s under contracts worth about $73m. Houston-based KBR had begun working with the DoD since January on a contingency plan to fight oil well fires and evaluate and repair Iraq's oil infrastructure.

Likewise, American companies cannot complain much as the DoS has chosen Bechtel for the $680m contract, which is the key to reconstruction that will be worth more than $100 bn in projects. This is because Bechtel had worked in Iraq since late 1983 and many of its engineers now based in Iraq were once working with the CIA. This is apart from the fact that several members of the Bush administration and key figures in the ruling Republican Party - including former Secretary of State George Shultz who was behind the Washington Committee for the Liberation of Iraq - have been important executives in Bechtel for many years (see who's who among Iraq's decision makers in the forthcoming APS Review No. 20).

These two companies have been chosen mainly because their areas of work in Iraq are and, for a long time, will remain very dangerous. The American administration, with Bush Sr working behind the scenes on behalf of his son, wants to make sure Operation Iraqi Freedom will win the peace in this vital part of the Arab world. So many news media are in Iraq showing the world "everything" that Washington cannot afford to lose the peace.

So while President Jacques Chirac of France is shouting "foul play" as a result of what is happening between Washington and Baghdad - he has only himself to blame for his failed 1999 policy of turning Europe into a superpower against the US - and his Russian counterpart Vladimir Putin is fuming at the loss of Iraqi oil, these leaders should understand by now why Bush Jr cannot afford to lose the peace in Iraq. They should also know why Bush Jr wants to re-order the UN and change its old charter, why India and Japan will be among America's main partners in the democratisation and socio-economic reconstruction of Iraq. They already know why the US wants NATO, not the UN, to assume the peace-keeping role in Iraq.

There are many lessons to be drawn from what is really happening between Washington and Baghdad, from the reasons why a US failure in Iraq will mean an end to Pax Americana, and from the reasons why Beijing, Moscow and Paris are no longer fit to be Washington's "equal partners" at the head of the UN. Even Britain's Prime Minister and Labour Party leader Tony Blair may, at some point, be compelled to learn a few lessons from the Iraqi experience if this is to turn sour. He should not be surprised if, for any reason, Washington were to force him to choose between his job and the EU.

Yet even Bush Sr and his silent associates should look carefully into the future of the Iraq project. For example, if Iraq's petroleum resources are not properly placed in the service of all its people, Operation Iraqi Freedom will fail (see proposal for ownership of these resources by the Iraqi people in Gas Market Trends of this week).

Peace in Iraq and one between the Palestinians and Israel have become inter-dependent. The Americans have been surprised to see so many Islamic militants in Iraq emerge shouting "death to America" every Friday. If the US fails in Iraq and if Washington allows the deadlock in the Palestinian-Israeli peace process to continue for too long, Pax Americana will fail. The whole world will lose as a result.

The brains behind the US strategy against Saddam's regime, which has proved to be the worst dictatorship in the modern world, are most probably the very best one can find. But they should know that if the Palestinians and Israel fail to find real peace - which means if the Arabs fail to push Arafat out of the way, and if world Jewry fails to find in Israel someone the Arabs can trust - these brains will have proved to be a serious miscalculation. Never mind about the consequences for mankind.