The US is holding hostage some $50bn (£25bn) 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.

US negotiators are using the existence of $20bn in outstanding court judgments against Iraq in the US, to pressure their Iraqi counterparts into accepting the terms of the military deal, details of which were reported for the first time in this newspaper yesterday.

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 cost to Iraq of this happening would be the immediate loss of $20bn. The US is able to threaten Iraq with the loss of 40 per cent of its foreign exchange reserves because Iraq's independence is still limited by the legacy of UN sanctions and restrictions imposed on Iraq since Saddam Hussein invaded Kuwait in the 1990s. This means that Iraq is still considered a threat to international security and stability under Chapter Seven of the UN charter. The US negotiators say the price of Iraq escaping Chapter Seven is to sign up to a new "strategic alliance" with the United States.

As Brecht or Trotsky would say, this is global gangsterism, pure and simple. It is also important to recall that the security agreement, an agreement that would establish permanent American control over Iraq, is just one piece of a larger puzzle. The US is also aggressively pushing the Iraqi government to agree to the privatization of the Iraqi oil industry on terms favorable to transnational oil companies, a proposal vehemently opposed by many Iraqis, including the oil workers union and Moqtada al-Sadr.

Just a couple of weeks ago, Congress passed a bill authorizing continued funding for the war that additionally provided for withdrawing reconstruction funds unless the Iraqi government agreed to the privatization proposal. With the end of the Bush presidency just over the horizon, the endgame , or, more accurately, the conclusion of this stage of the conflict, is now visible. With UN authorization for the occupation of Iraq about to lapse, Bush intends to internationally legitimize by treaty the right of the US to permanently station troops there for any purpose, including offensive military operations outside the country, and the transfer of control over Iraq's most value resource, oil, to foreign investors.

As the recent congressional vote on funding for the war makes clear, don't expect any significant Democratic opposition. Indeed, if Bush succeeds, Democrats may well believe that he will have done them a great favor by taking much of the question of how to deal with Iraq off the table. An incoming President Obama could claim that the Iraqis have voluntarily agreed to a continued US military presence through treaty, leaving him with the relatively minor determination as to the number of troops to be stationed there. Unlike Bush, and probably McCain, Obama would permit the Iraqi government to play act as if it governs independent of the dictates of the US State Department and Pentagon.

There is only one credible reason to condemn violent Iraqi resistance to the US occupation in these circumstances: pacifism. I respect people who attempt to conduct their lives according to the principles of this philosophy, but I must suggest that they have an obligation to the people of Iraq to explain how they can extricate themselves from US dominion non-violently. Oh, by the way, did I mention that a soldier who allegedly ordered the destruction of photographic evidence of the Haditha massacre was found not guilty yesterday? Prosecutors have already declined to bring murder charges against against the killers, relying upon the lesser offense of voluntary manslaughter, and the prospect of any convictions appears increasingly unlikely.

Labels: American Empire, Haditha, Iraqi Deaths, Iraqi Resistance, Neoliberalism, Occupation of Iraq