BW: Iraq after Saddam

Business Week:: Winning the peace would be far more difficult than winning the war, with a support effort that could require years -- and billions of dollars

As U.S. forces converge on the Persian Gulf from land, sea, and air, opponents of the American drive to oust Iraqi strongman Saddam Hussein are growing resigned to the inevitable: Sometime in the next few weeks, President George W. Bush is likely to order a devastating strike on Iraq. Given the sorry state of the Iraqi military, few think Saddam can resist the onslaught for long. That means U.S. occupation forces could soon be landlords, running a needy, faction-ridden nation of 24 million and trying to revive an economy that sanctions, corruption, and bad management have bled for more than a decade.

Is the Administration -- currently preoccupied by maneuvering to gain U.N. support for an invasion -- ready for the morning after in Iraq? Doubts are rising in Washington and foreign capitals. Skeptics wonder if Bush's planners fully appreciate the seething swamp they are about to wade into -- a worry that is understandable given Iraq's history of tribal and religious rivalry and its sputtering, Stalinist economy. Says Joseph R. Biden (D-Del.), ranking Democrat on the Senate Foreign Relations Committee: "People have no notion of what we are about to undertake" by trying to plant the seed of democracy in Iraq's barren sands.

Nor does anyone have a clear idea of the costs or time frame involved. Iraq's Baathist institutions, built around idolatry of Saddam, need massive overhaul. Everything from hospitals to water systems will require rebuilding -- which is one reason why estimates for reconstruction start at $15 billion to $20 billion a year and head skyward for a U.S.-led effort that is likely to last four years or more. And the tab could soar if Saddam succeeds in laying waste to much of Iraq.

"BEHIND THE CURVE." Officials from multilateral agencies and representatives of private relief organizations warn that they see little detailed planning yet for a humanitarian crisis that could befall Iraqi civilians. And many foreign governments, which the White House would normally be lobbying to pony up for a postwar donor coalition, are too busy trying to thwart Bush's war plans to commit. "I'm not ready to talk about what happens after," says German politician Wolfgang Schauble, a leader of the opposition Christian Democratic Union. "I still hope it will be possible to disarm Iraq without a war."

The outfit in charge of coordinating rebuilding and relief plans is the new Pentagon Office of Reconstruction & Humanitarian Assistance. But the unit only opened on Jan. 20. Why so late? Pentagon and State Dept. officials lost months as they bickered over how much of a role to give Iraqi dissidents in running a liberated nation. The outcome, to the dismay of the exiles, is not much, at first. The upshot: Bush's postwar planners have gotten "way, way behind the curve," says Indiana Republican Richard G. Lugar, chairman of the Senate Foreign Relations Committee.

Details of the Administration's postwar blueprint are classified. Still, outlines are starting to emerge. The initial phase of a postwar program -- which could range from three months to two years and beyond -- calls for General Tommy R. Franks, head of the U.S. Central Command, to govern by military fiat. That's essential in a climate in which rival groups would be jockeying for power and digging out from the rubble would be the order of the day. The Agency for International Development has a six-month plan aimed at coping with everything from water purification to emergency electricity generation and food distribution.

MILITARY RULE. While Franks will call the shots, the U.S. wants to avoid the perception that he's running a Western caliphate. So he will quickly appoint an Iraqi National Council, encompassing a fractious band of expats, Northern Kurds, Shiites, Sunnis, and a cacophony of clans and tribes.

Infighting has already begun. Exiles based in London gripe that Franks may keep too many Baathist loyalists in place. Members of the Kurdish opposition fume that the U.S., in pursuit of Turkish bases, has cut a deal with Ankara to limit Kurdish influence. And many of the opposition forces believe military rule "constitutes a betrayal" of their interests, says Rosemary Hollis, a Mideast specialist at London's Royal Institute of International Affairs.

Much of the jockeying involves fears that the U.S. will turn to those within the country, rather than the exiled opposition groups, for new leaders. The CIA is now searching for local "assets," including sympathetic military officers. But no one knows if there's an Iraqi Hamid Karzai, the charismatic pol the U.S. recruited to run postwar Afghanistan. Notes Thomas A. Carothers of the Carnegie Endowment for International Peace: "You can't transform basic political pathologies very easily, even through occupation."

DOMINATION OR LIBERATION? As a leadership cadre develops, critical work on a democratic foundation will begin. Options include creation of a new judicial council to revise Baghdad's despotic legal structure. And a constitutional commission will try to craft a new governing framework aimed at giving the average Iraqi a degree of freedom virtually unknown in this insular nation: the right to vote, voice dissent, and form political parties.

If all goes well, the U.S. will move to a second phase in which more decisions are ceded to Iraqi bureaucrats. Unlike Afghanistan, Iraq has a large pool of technocrats, though clearly, the U.S. will have to purge Saddam loyalists from their ranks. If Americans come to be viewed as Western crusaders intent on domination rather than liberation, this could be trickier than envisioned.

The Army will get some help from the State Dept., which has been working on postwar options since last March. According to Marc Grossman, Under Secretary for Political Affairs, State is mapping out rebuilding steps in 17 key areas, from overhauling Iraq's banking system to improving health and education. The department's justice-system working group has drafted a 600-page document -- in Arabic -- outlining reform of the nation's legal code.

RUSSIA'S ROLE. Eventually -- no one has a firm time frame -- a third phase would begin: U.S. military rule would give way to a new Iraq governed by a new Constitution. That reflects Defense Secretary Donald H. Rumsfeld's insistence that we "don't want to stay a day longer than necessary." By this time, presumably, Iraqis will have elected new leaders and a legislature. What form the new government would take is hard to predict.

The Bush team has begun consultations on a transfer of power. Talks have been initiated with Britain and, despite its resistance to the war, Russia. Both have long ties to Iraq. "The discussion is not very advanced," says Mikhail V. Margelov, a Russian parliamentarian and confidant of President Vladimir V. Putin. "Unfortunately, our American partners do not know what they want as a final point."

Another key issue is Iraq's vast trove of oil. U.S. officials want to use some of those petro-dinars for reconstruction. But they're still weighing plans for organizing a postwar oil industry. Options include calling on the U.N., the European Union, or the Arab League to assist -- in part, to avoid charges that U.S. troops have seized the oil bounty.

WHO GETS WHAT? But crucial decisions loom: Should Iraq's nationalized fields be turned over to private developers -- at the risk of creating a new class of corrupt oligarchs? And when it comes to the immediate task of modernization, will war foe France be frozen out, leaving the lion's share to U.S. and British companies? Some U.S. officials argue that "you can't be in on the landing if you aren't in on the takeoff."

With so many questions swirling, no wonder foreign-policy experts