U.S. Seizes Billions in Iraqi Assets;
Funds Slated for Rebuilding Costs
By BOB DAVIS
Staff Reporter of THE WALL STREET JOURNAL
WASHINGTON -- The U.S. seized $1.74 billion in Iraqi assets held in U.S. bank branches and pressured foreign nations to do the same or face a cut-off of access to the U.S. financial system.
The Bush administration said it plans to use about $1.44 billion of the confiscated funds to help rebuild Iraq, and estimated that there were billions of dollars in Iraqi assets outside the U.S. that could seized and used for the same purpose. The remaining $300 million in Iraqi funds in the U.S. would be reserved for suits by U.S. citizens who claim they have been brutalized by Iraqi regime, such as those who were held as so-called human shields during the Gulf War of 1991.
Estimates of the cost of rebuilding Iraq range from about $10 billion a year to as much as $60 billion, so the funds won't pay for a substantial amount of the bill. The U.S. is also counting on using some of Iraq's oil revenue of about $20 billion annually to pay for the reconstruction bill.
But the effort represents a significant departure in U.S. financial policy toward hostile nations. The U.S. has long frozen funds of nations such as Iraq, Libya and Cuba. But this is only the second time since World War II that the U.S. has actually confiscated any of those assets.
The last time, in 1996, the U.S. grabbed Cuban assets to pay off claims by pilots shot down near Cuba by the Castro government. That was seen as one-time event, and was authorized by specific legislation.
Confiscating Iraqi assets, however, signals the start of a much broader policy, sanctioned by the U.S. Patriot Act, which was passed after the September 11, 2001 terrorist attacks. The Patriot Act's confiscation authority is broad-based, and not limited to a single country or act. Treasury Secretary John Snow is using other provisions of the act to press foreign nations to freeze Iraqi assets and seize them too (See related article). If those nations fail to comply, the U.S. can essentially block banks from those nations from doing business in the U.S.
"We are directing a worldwide hunt for the blood money that Saddam Hussein and his associates have stolen from the Iraqi people," said Mr. Snow. He said he would be telephoning foreign government officials and financial institutions to make an effort similar to the U.S.
The Treasury said that eight nations had frozen a total of about $600 million in Iraqi assets outside the U.S., including $400 million in Britain, $85 million in the Bahamas, $20 million in Cayman Islands and $14 million in Japan. None of those nations have confiscated the Iraqi assets.
But the U.S. believes there are billions more in Iraqi funds that hasn't yet been identified, from sales of smuggled oil, kickbacks from oil buyers involved in United Nations- sanctioned oil sales, and from smuggled cigarettes.
With regards to the $1.7 billion in Iraqi assets held domestically, some of the funds are held in U.S. branches of banks headquartered in France and Germany, whose political leaders vehemently object to the U.S. attack on Iraq. A Treasury official said banks that object to the U.S. confiscation can sue to block the action
Funds Slated for Rebuilding Costs
By BOB DAVIS
Staff Reporter of THE WALL STREET JOURNAL
WASHINGTON -- The U.S. seized $1.74 billion in Iraqi assets held in U.S. bank branches and pressured foreign nations to do the same or face a cut-off of access to the U.S. financial system.
The Bush administration said it plans to use about $1.44 billion of the confiscated funds to help rebuild Iraq, and estimated that there were billions of dollars in Iraqi assets outside the U.S. that could seized and used for the same purpose. The remaining $300 million in Iraqi funds in the U.S. would be reserved for suits by U.S. citizens who claim they have been brutalized by Iraqi regime, such as those who were held as so-called human shields during the Gulf War of 1991.
Estimates of the cost of rebuilding Iraq range from about $10 billion a year to as much as $60 billion, so the funds won't pay for a substantial amount of the bill. The U.S. is also counting on using some of Iraq's oil revenue of about $20 billion annually to pay for the reconstruction bill.
But the effort represents a significant departure in U.S. financial policy toward hostile nations. The U.S. has long frozen funds of nations such as Iraq, Libya and Cuba. But this is only the second time since World War II that the U.S. has actually confiscated any of those assets.
The last time, in 1996, the U.S. grabbed Cuban assets to pay off claims by pilots shot down near Cuba by the Castro government. That was seen as one-time event, and was authorized by specific legislation.
Confiscating Iraqi assets, however, signals the start of a much broader policy, sanctioned by the U.S. Patriot Act, which was passed after the September 11, 2001 terrorist attacks. The Patriot Act's confiscation authority is broad-based, and not limited to a single country or act. Treasury Secretary John Snow is using other provisions of the act to press foreign nations to freeze Iraqi assets and seize them too (See related article). If those nations fail to comply, the U.S. can essentially block banks from those nations from doing business in the U.S.
"We are directing a worldwide hunt for the blood money that Saddam Hussein and his associates have stolen from the Iraqi people," said Mr. Snow. He said he would be telephoning foreign government officials and financial institutions to make an effort similar to the U.S.
The Treasury said that eight nations had frozen a total of about $600 million in Iraqi assets outside the U.S., including $400 million in Britain, $85 million in the Bahamas, $20 million in Cayman Islands and $14 million in Japan. None of those nations have confiscated the Iraqi assets.
But the U.S. believes there are billions more in Iraqi funds that hasn't yet been identified, from sales of smuggled oil, kickbacks from oil buyers involved in United Nations- sanctioned oil sales, and from smuggled cigarettes.
With regards to the $1.7 billion in Iraqi assets held domestically, some of the funds are held in U.S. branches of banks headquartered in France and Germany, whose political leaders vehemently object to the U.S. attack on Iraq. A Treasury official said banks that object to the U.S. confiscation can sue to block the action
