headquarters of the operations of afghanistan was a soviet built a base, kandahar arab world, a lot of the bases we operate in the south are soviet bases operate along the same roads and san logistical networks the soviets used. we face a lot of the very same tactics against the forces and called police the soviets faced in the 1980's. ied said in bush placed in the same places. a lot of the leaders of the insurgency facing today and they are truly dangerous commanders. the guys that kind controlled large attacks involving 100 or 200 insurgents. serious commanders. those are people who cut their teeth fighting the soviet army during the 1980's rprise in yesterday's

throne speech kicks off a great debate. well, this was federal budget day, and that meant plenty of talk about debt and deficit and what the government's planning to do

with billions of your dollars. in all, more than $280 billion. whether that's too much or too little depends on who you ask. well, we have plenty of answers tonight beginning with our senior correspondent terry milewski who is in ottawa. terry? >> reporter: well, peter, the key to cooking up a budget in a minority parliament is to think goldilocks, make it not too hot, not too cold, but just right to divide the opposition and stay in power. by that measure, it's mission accomplished for stephen harper and his finance minister jim flaherty. they have cooked up a cautious, stay the course budget which did not provoke the opposition to vote them down. yes, they will get tough on the deficit, but no, not yet. >> the hon. jim flaherty: we are in the middle of the largest federal investment in infrastructure in over 60 years. >> reporter: and the gusher of stimulus money will keep on

flowing, billions of it, $3.2 billion in personal income tax relief. another $4 billion for higher employment insurance benefits and training plus $7.7 billion in infrastructure spending, roads and bridges. all of that under the existing stimulus plan. but then the bad news. in the end, the deficit monster must be slain. >> the hon. jim flaherty: in three years' time, the deficit will be cut by two-thirds. shortly after that, the deficit will be eliminated. >> eporter: the tories cheered that, but the details show a lot more red ink. this year, the deficit will be almost $54 billion, and it will still be $49 billion next year, but then the stimulus taps will be turned off, cutting the deficit to $27 billion and then with growth and some luck, the minister says it will drop to just $1.8 billion by the year 2015. getting there means five years of spending restraints. the government says it will

shave $17.6 billion off the cost of government over that period. 2.5 billion will come from a conservative favourite, the defense budget. another 4.4 billion will come from foreign aid. again, that's over five years. and 6.8 billion less will be spent running government departments. >> the hon. jim flaherty: we have to make some tough decisions including national defense and the international aid envelope and the cost of running the entire government of canada. >> reporter: still, the minister's deficit target depends on his assumptions for growth, and some economists say they're too rosy. >> interview: it basically assumes through economic assumptions that the economy will simply grow its way out of the deficit, and that's never happened in canada. it's never happened in any advanced economy. >> reporter: others say the government got it right giving canadians some pain but not too much. >> interview: they're trying to change the channel, to say, okay, we had all that spending, it was necessary.

now we have a fiscal problem. we do have to restrain spending. we're going to do it over a long period of time, not a short period of time. however, what we don't have room for is great big new spending or great big new tax cuts. >> reporter: of course, the political verdict rests not with the economists but with the opposition. this is a minority government, after all, and michael ignatieff badly burned last year by his threat to force an election said no, he got it right. >> the hon. michael ignatieff: we can't support this budget, and so we're going to be voting against it in the house but not in sufficient numbers to bring an election on. canadians don't want an election. >> reporter: the bloc quebecois and the n.d.p. don't like the budget. >> the hon. jack layton: well, this is a budget that has completely left behind the victims of the recession. it does nothing for the unemployed. >> reporter: but without the liberals, the n.d.p. and the bloc cannot force an election, so the government seems set to survive and put its budget

into action. then the question will be, will the economy really grow as predicted because if not, those declining deficit numbers could look very different, peter. >> peter: all right, terry, thanks very much. let's bring in our senior business correspondent, amanda lang now, because as terry mentions, it's all about economic assumption and what may happen in the future. what are you hearing tonight? >> amanda: the finance minister will say he bases it on a group of private economists' contensensus, but i talked to many today and they think they're very rosy projections for economic growth. if they're wrong, it will be hard to slay the deficit. five years out, it brings you to the suggestion that if you want to accurately say when you can cut the deficit, do it in three years or two years or four. pick a smaller number when you know what you're working with. >> peter: even with the five years, he's forecasting a balanced budget. >> amanda: in fact, when you look at what they're doing,

freezing spending for government departments at 1 and a half percent, that's a lot of money. several analyses today said they may not be able to do that. you're talking about government spending in the tens of billions. one and a half percent is a lot of money. can they find it is the other question? >> peter: don't go away. got more for you in a moment. now, let's see, what will our next part be? the finance minister had some tough choices to make about unemployment. many canadians are feeling the pain about this recession, looking for work and tonight looking for hope. the cbc's chris brown is here with that part of the budget story. chris? >> reporter: peter, there's not much new money in this budget, but the modest amount there is in part is going in to what the harper government calls jobs for tomorrow. maybe some day, the small vancouver startup will be bigger than ford motors, but for now, they're happy just to take ford's cars and convert

them to electricity. the federal budget with more than $200 million for new research and development could make that easier. >> interview: small growing companies just don't have the resource and the connections often to bring in the talent. >> reporter: entrepreneur michael volcker takes good ideas and turns them into profitable businesses. >> interview: i think this will attract people who are looking for new opportunities, especially with high-growth companies, people that are willing to take a little bit of a risk, relocate from a region like silicon valley and join a company, for example, here in vancouver that looks very promising and encouraging. >> reporter: among the new measures, ottawa will offer any recent ph.d. graduate a fellowship of up to $70,000 to pursue research. >> interview: that will keep good young talent here in canada, and that's important. >> reporter: there's also a big chunk of money for some big ticket federal research projects including $126 million for the particle physics lab at u.b.c. and $400

million for new satellite technology. >> interview: they're laying the framework for longer term productivity growth, but i think they're going to do so in a very modest way. >> reporter: what about people with decidedly old economy jobs, people like auto workers bob and haley gilmore? >> interview: i was hoping to see something like i know it's a long shot but some semblance of another autopac or something to try to hold on to jobs that we already have. >> reporter: their ford plant near london, ontario closes next year, so e.i. will soon be their safety net. there's not much new in the budget on that. >> interview: i just hope for e.i. extension and maybe they were talking about not taxing when you get a buyout. >> reporter: it may not be much comfort to the gilmores, but many work force experts e the unemployment rate is on the way down, so existing programs may be fine as they are. >> interview: partly because of economic recovery but also because the labour force is going to be growing much less quickly because we're getting older as a population. >> reporter: and so the concern among people who are out of work now may be that

this budget is not focused on them and instead is aimed at creating much higher end jobs much further down the road. peter? >> peter: all right, chris, thanks very much. chris brown in vancouver. okay, jobs, jobs, jobs. with there jobs in this budget? >> amanda: well, you know, there was something that everybody was talking about today in the business community that could create jobs, and so i want to get to it. it sounds really dull, but it's pretty interesting. there's a tariff, a tax on equipment that businesses buy from outside the country. it's being removed altogether. we're the only g-7 country to do this, and business says it is going to create jobs, it's going to allow them to invest, and so in manufacturing especially, a really beleaguered part of our economy, this actually could be quite a kick start. it's going to cost the be quite a kick start. it's going to cost the government a ( ♪ ) >> peter: well, it's been a busy day for the minister of finance, so we're glad that

jim flaherty has taken the time tonight to talk to us. minister is just outside the house of commons in the lobby there. minister, i've heard a lot of monday morning quarterbacks in the last couple of hours as is the norm here trying to analyze what you've done. if you just go by those who are saying the nicest things, they're saying you had a modest budget, and they were glad of that because they're not so sure about what's going to happen in the near future, and they're wondering how confident you are that we have seen the worst of the recession. >> the hon. jim flaherty: relatively confident, and that's certainly the view of the economists from the major financial institutions with whom i meet and whose advice we take. we use the average of their predictions for economic growth. peter, we're using very modest estimates, like 2.6%, 2.7% economic growth. this is very modest economic growth, particularly since the canadian economy grew at 5% in

the last quarter of 2009. >> peter: you know, perhaps the other end of the spectrum, some of whom are your supporters say you didn't go fast enough in going after spending, you could have gone deeper faster. why didn't you? >> the hon. jim flaherty: because i am still worried about the fragility of our economy. i'm worried about some of the events we're seeing in europe, in greece. i'm worried about some of the assets in the european banks. i'm worried about the state of the u.s. economy. we're in much better shape in canada. we were paying down debt before the recession came. the recession came from outside. we did the big economic action plan, the big stimulus, and we certainly believe we have to finish off the plan in the next year to preserve and protect jobs in canada. but then we have to rein in the growth of spending so we can get back to a balanced budget, which we can do with modest growth in the medium term, but we had to make three or four very big and very serious decisions in this budget so that the reining in will happen as we go out two,

three, four years. >> peter: you know, some of those who remain worried worry about interest rates, and they look at some of those european examples. are you worried about where interest rates could go? we know what you've already decided on the housing situation, but how concerned are you about interest rates and that they could go up and soon? >> the hon. jim flaherty: well, i think it's reasonable to assume that interest rates are going to go up because they can't go lower and that that will have some effect over time on mortgage interest rates, which is why we acted quite recently with respect to mortgage insurance. but having said that, we have very sound fiscal fundamentals in canada. we weren't running deficits when the big recession came. the u.s. was, the u.k. was, all of our competitors, in fact, were not in very good fiscal shape, very difficult for them to budget their way out of the situation they're in. canada's in much better shape. our deficit is temporary if we take the right steps over the

medium term, we can manage it and eliminate it by about 2014-2015. >> peter: i was surprised and some others have been too that one of the big goals here was to eliminate the deficit, was to show a balanced budget, but you've forecast out five, six years, and you don't quite get there. close, $1.5 billion. like you were unable to stand there tonight and say, you know, we've got a plan that will eliminate the deficit. why didn't you go that extra $1.5 billion? >> the hon. jim flaherty: well, because, you know for the last two months, peter, we've been working very hard on basically looking at proposals and saying no to them. this is the smallest spending budget in the last, oh, in more than ten years federally, and, you know, so we've been doing a lot of that. when we worked out the numbers and made the major restraint of spending decisions with respect to foreign aid, with respect to d.n.d., with respect to the federal public service and with the tax loopholes we fixed in this budget, that's where the numbers took us, to that number of a deficit of about

$1.8 billion. i wasn't going to force the numbers. that's what it is, but a deficit of $1.8 billion out five years on a budget of $295 billion at that time is a relatively small deficit, and i tell you, canada will look so good compared to the rest of the developed world that i'm comfortable with that. >> peter: let me ask you the one question that those who weren't listening to the budget today have been asking: what would you do about the national anthem? >> the hon. jim flaherty: you know, i was singing it so much the couple of days i had in vancouver, i just think it's fabulous. you know, it was originally written in french, so maybe we should look at the original words and do something. but, you know, it's just a happy time in canada. i'm totally satisfied with the singing of the national anthem everywhere. >> peter: okay, we'll leave it at that. minister, thanks for your time tonight. >> the hon. jim flaherty: thank you, peter. >> peter: all right, let's get the budget take now from canada's most-watched political panel.

allan is in toronto tonight, chantal and andrew are in ottawa. i'm not sure if he was suggesting we should all sing it all in french. be interesting if that is what he was saying. >> controversial proposal. >> peter: yes. >> go right ahead. >> peter: yes, exactly. it's hard to take too much out of the words of a finance minister on budget day, they're so on message track and you can't get them off it, but i was struck a little bit by how many things that jim flaherty said himself that could go wrong to throw everything out the window that he announced today. i mean, what did you make of that? was he being frank or giving himself a possibility of an out on all this? >> well, you asked him some pretty frank questions, and that is the problem. we don't all turn into pumpkins if we run a deficit one year, two years, but multiple years, that's the problem. the danger is if you assume the best, if you run an economic docket where everything has to work out fine, then you are leaving yourself exposed the longer

you take to reduce that deficit. if you reduce in three years, you know, the reason that's better is you're less exposed to uncertainty. you're less exposed to the risk of a spike in interest rate or a flaring up of the financial crisis or another recession. by leaving it it to five, six years, we're not only mounting up debts, we're leaving ourselves at much more risk of that kind of unexpected event. >> peter: chantal, you and andrew were both in that lockup and you had briefings from finance department officials. are they anxious? are they worried about where things are headed right now? >> well, what struck me about jim flaherty and what he was worried about is a number of the things that he's still worried about and that canada is still worried about have to do with the recession not being over, and i think he was giving you a rationale for continuing to spend this year, for not curtailing cutting the stimulus package because that is what is actually happening. we're easing into austerity. we're not doing it this year.

if you look at only this budget, we're still so-called fighting the deficit, and i think that there are actually so many factors out there that are answered and that what the deficit numbers tell us today basically is the preference of the government to do it by cutting the size of the government rather than by addressing transfers or cutting taxes. but i don't think that psychologically or economically we are actually in deficit fighting mode, and we won't be for a year. >> peter: allan? >> well, kind of the same. you only have to read the business pages to know you should be concerned about thee things. above and beyond that, what he's trying to establish is that the balance that they have attempted to strike in this particular budget by focusing longer term on deficit reduction but more immediately on stimulus is consistent with the realities of the world we're living in. i mean, we did a poll just the other day and we said, what should be the government's top priority, stimulating the competent or reducing the deficit? and the population was 50/50.

in some respects by doing neither in any kind of technically aggressive way, they're striking exactly the kind of balance the population is looking for short term. >> peter: andrew, is this the balance the population is looking for? >> maybe, but the premise is a false one. the notion that what's keeping the recession at bay is the government building a bunch of hockey rinks is ridiculous. if government spending was the answer, greece would be not in the trouble it's in now. they would all be having multiple cottages or something. they'd be in great shape. >> peter: are we greece or could we be? >> monetary policy was bringing interest rates down, flooding the market with liquidity. the recovery began long before the shovels started hitting the ground. this was a political decision to run deficits, not an economical one. he's using the excuse because they don't want to antagonize the opposition. these are political decisions, not economic ones. >> it's not only the opposition they would antagonize. there is something to be said about whether you agree the

government going for a stimulus package or not, which is another issue. that was last year's discussion. it was a two-year plan. it it involves municipalities, it involves provinces. so if you're going to stop and say, gee, we made a mistake last year and we're going to veer course and go somewhere else this year, i don't think that's politically credible, and it's not only the opposition, it's the image of the government basically telling canadians we goofed and we wasted billions of dollars last year on a false problem. that was never going to happen today. >> peter: do you want to settle this one, allan? >> no, far be it for me to wade in on this kind of controversy. i think on the politics, though, it is quite clever because i mean, if you look substantively, this is a government that set out in the throne speech the top two priorities were job growth and balanced budgets. the deficit's going to be exactly the same this year as last. unemployment, in fact, is even a little higher. clearly, you know, not satisfying any of those particular objectives in the short term. anything they're purporting to

do that's going to be substantive is beyond that, probably in another election kind of frame. but because they have an opposition that has no appetite really to take them on seriously, they have the luxury of waiting three, six, seven months in order to say the real issue is who's going to deal with this terrible deficit problem, which clearly is much stronger terrain for the conservatives than something like who's going to make the economy start growing. >> peter: i want to get to the raw politics of what we witnessed today. we saw very quickly the n.d.p. and the bloc come out of the gate as expected to say they would not vote for this budget, which left us with the normal situation as we've seen in the last few years, the liberals having to make the final decision, and we witnessed as michael ignatieff said he didn't like the budget, there was lots he found wrong with t, but he wasn't going to allow the government to be defeated over that. perhaps no surprise, but what does it say about the state of the landscape, andrew? >> well, it says he doesn't want an election and he's

right not to. i thought he handled it as well as he possibly could. the only problem, they should have done this a year and a half or two years ago. the only problem the liberals got was getting into the game of will you or won't you bring down the government. what he said today is that's not the question. the question is i'm going to build a credible alternate government, a government in waiting. it's not about bringing the government down. i think he did the right thing. i think a week from now, this budget will be forgotten. it's such a limp document itself, and the opposition response was pretty muted. >> peter: in defense of the media, this was the same guy who six months ago said he was going to bring the government down. so the question had to be asked. i guess what i'm getting at is was the answer one that's sellable for him, ignatieff, at this point, chantal? >> well, two points. the first one is a bit glib, but this is a party that has been spending months saying that parliament is shut down, and on the first big day after the parliament returns, the leader of the opposition says some of his m.p.s are going to

go missing in action on a crucial vote. there is a disconnect there. the second point is yes, it's probably the only credible position that mr. ignatieff could have taken to date, but it does beg the question that the official opposition's task beyond criticizing the government is to be an alternative to the government, and if not now and if the liberals are not ready now with something that is an alternative vision, then when? >> peter: allan? >> i think mr. ignatieff is doing exactly the right thing. we saw in the press scrum today, it was absolutely, you know,... he's in a far stronger position trying to pretend he is an alternative government in the waiting than some craven politician seeking his own political ambition. i think he's doing the right thing. i agree with andrew also is we

make a lot about, you know, whether different events, you know, advantage or disadvantage. i don't think this budget is going to have any effect short term whatsoever. the real issue is now, you know, how the different players, you know, deal with the hands that they have right now and how they play things out in the next kind of three to six months. >> peter: all right, well, let's talk about what will get played out in those three to six months. if andrew is right and the budget is not the discussion point a week from now and allan is right that ignatieff did the right thing, then what are they going to be talking about? chantal, what are the issues that parliament is going to go after? >> well, there are some issues that we know the opposition will bring back to the fore, but i also believe that in the throne speech yesterday, there were a number of issues that are future government policies that will come to the fore and tell communication telecommunication and a number of issues are of interest to consumers. we will also see the new

dynamics of mr. harper having control of the second house, the senate, and what that means for government legislation and how the government tries to move its agenda forward. so i think we're going to see probably a full range of discussion, plus the liberals are having this thinkers conference, so that is bound to generate some discussion on issues. i think we will do maybe a bit less of the, you know, when are we having an election thing. but i have to tell you over the past 48 hours, i found being around ottawa and liberal m.p.s that our perception of improvement of mr. ignatieff is not widely shared at this point in his caucus. >> peter: and they're watching every poll, well, depending on which one you want to believe, it's good or bad. >> and they are nervous nellies. >> peter: andrew, you get the last word tonight. >> i think the government's left them a bit of an opening by having such a thin budget that for the opposition to go back now on hammering them on abuse of power and arrogance, on things like the afghan detainees, refusing to release

the documents, prorogation, if the government had been really meat and potatoes with the budget, the opposition would have been in peril with looking obsessed with constitutional things and not bread and butter issues, and now they look more open to go after them on that. >> the conservatives have the best of all worlds. everyone is talking about the deficit, which is their strong suit, and they didn't have to cut everything. on the other hand, i think they have left a flank open on foreign investment, and i expect the liberals are going to start focusing on that in the coming months. >> peter: it's got to be the first time andrew's ever left 10 seconds. >> how generous. >> that's because he had m me minister is

here to give evidence to the iraq inquiry. this hearing takes place in the month leading up to a general election. from the time we began our work last july we have been at pains to provide the absolute impartiality to have iraq inquiry. we've had to remain outside party politics and we have asked the political parties to respect that position and we repeat that request today. it was for that reason my colleagues and i originally decided that we should ask to see the prime minister, the foreign secretary and the development secretary after the general election.

on january 19, the prime minister wrote he was preparing to give evidence whenever the committee saw fit. we discussed this letter and concluded that in the interest of fairness, we should offer the prime minister, the foreign minister to chance to give evidence before and all three have taken up this offer. we'll see the foreign secretary on monday morning. we have a very serious task before us to establish the u.k.'s involvement in iraq between 2001 and 2009 and to learn the lessons for future british governments facing similar circumstances. we can only accomplish that task successfully if we are seen to be fair, impartial and apolitical and we are determined to do so. we recognize that witnesses -- of their recollection of events and we cross check what we

hear. i will remind all witnesses they will be asked to sign a transcript that the testimony they give is truthful, fair and accurate. prime minister, you have been a senior member of the cabinet since 1997 and prime minister since june 2007. it has been borne in on this inquiry from the outside that the coalition's decision to take military action led directly or most often indirectly to the loss of lives of many people. service men and women in the national forces, the iraqi forces and many civilians, men, women and children in iraq. still, more have been affected by those losses and by other consequences of the action. given all that experience, i should like to ask right at the outset whether you believe the

decision to take military action in march 2003 was indeed right? >> it was the right decision and it was for the right reasons but i do want at the outset to pay my respects to all the soldiers and members of our armed forces who served with great courage and distinction in iraq, for the loss of life and the sacrifices that they have made and my thoughts are with the families.@ go to war.

i believe we made the right decision for the right reasons because the international community had for years asked saddam hussein to abide by international law and the obligations that he had accepted. 14 resolutions were passed by the united nations and at the end of the day it was impossible to persuade him that he should abide by international law. my feeling was and still is that we cannot have an international community that still works if we have terrorists who are breaking these rules or in this case, aggressor states that refuse to obey the laws of the international community. i do think we have lessons to

learn however, i think in three areas, i would like to discuss with you and i hope that you will take onboard the questions and the answers that come from these issues. the first is that we have been fighting two wars and it is essential that we have the proper structures of decision making and of course as time has gone on, both tony blair and i have changed the structures of decision making in the government and i think the second thing is we won the battle within almost seven days but it has taken seven years to win the peace in iraq and i think we are developing the concept of a just peace and how we can actually manage conflicts like this -- in this case, the iraqi people and the third thing we have learned and i would like to discuss it with you. there will be interventions in the future and international cooperation has got to be far  greater than it was.

global problems require better global institutions and i would particularly draw attention to the importance in all of this of the relationship between europe and america, something that i'm determined to build up and to continue to make stronger in the future. >> thank you, mr. brown. we would like to begin, if we may by discussing your role as a senior member of the cabinet. we would propose then to come to the specific issues, your responsibilities as chancellor and then your role as prime minister after june, 2007. first your role as a senior member of the cabinet. >> prime minister, as the chairman said, i want to discuss your role as the senior member of the cabinet in the period up to march 2003. but before that, i would like to get a better understanding in your views about iraq because by 2005, the government had been in power for four

years and had taken the action that iraq -- after 9/11 -- in afghanistan and what conclusions did you draw about the role of force in supporting the policy objectives? >> i think we had no alternative but to intervene in situations where there were two risks to the post cold war world. the first, the action of terrorism and the second is the action of rogue state or in the case of iraq, aggressive states and? the world community is going to mean anything in terms of our ability to hear and our ability to deliver peace then we have to be prepared to take international action. it is of course, far better, if all countries are united in the action that is going to be taken but it has been necessary to take action in situations where either through terrorism we have been at risk in our owe

country or aggressive states, the region in this case, iraq, the region of iraq, has been a risk swell. -- risk as well. >> mr. blair -- on march 18, 2003. that they were the link between terrorism and weapons of mass destruction, which constituted what he said a fundamental assault on our way of life and that -- regimes the w.m.d. extreme terrorist groups with the possibility of the two coming together rented what he called a real -- represented a real and present danger. he made similar points in january to the inquiry. did you see a real and present danger of this kind coming from iraq in 2003? >> i think we're dealing with this post cold war world. after the end of the cold war,

and the expectation that we would have peace and that the instabilities that existed because of the cold war were over, we found that there were a number of states and then we found that there were a number of non-state terrorists that were preparing to cause huge instability around the world. we will be seen as a post cold war era where you had terrorism like iraq and the relation to iran and kuwait. in my view, the world community is just find in taking action where international obligations in this case accepted by iraq at the enof the kuwait-iraq war will not be -- and if you are going to have international law and international community then you need to be absolutely sure that the world community can constrain and impose rules

and regulations that allow us to live in a peaceful world. so i'm not making a distinction between the two problems. these are two problems however that lead to -- >> i understand that. what i really want to establish is whether you saw this as a real and present danger in march 2003. >> the evidence that wd,e intel on a number of occasions during the course of 2002 and early 2003. and in addition to my discussions in the cabinet and in addition to my discussions with tony blair himself, i was given information by the intelligence services which led me to believe that iraq was a threat that had to be dealt with by the actions of the international community. of course, at all points, we

wish the diplomatic road to be successful. throughout 2002 and early 2003, we were hopeful that the diplomatic route and the 1441 of the united nations would bring iraq to a sense that they had to cooperate and they had to disclose as well dismantle what weapons they had but the information that we had was information given us by the intelligence authorities. >> so you would agree with mr. straw, who i think told the inquiry that military action stood -- whether iraq posed a threat by reasons of weapons of mass destruction. would you agree with that? >> my thesis is this. persistently iraq had been asked by the international community to disclose and dismantle weapons that every country who signed that united nations resolution believed that they had and that we had a responsibility to ensure that

international law was upheld and the international community would mean very little if we could not in the case of a country that was in fact a serial violator of international law, we would have no sense that the political will would be there for future interventions which may be necessary if we could not show that we could come together to deal with the problem of iraq, but of course what we wanted was a diplomatic route to succeed and right up to that last minute and that last weekend many of us were hopeful that that diplomatic route could succeed. >> your concern mainly was about the breach of the resolutions. >> yes, my view has always been throughout this episode that the sanctions and then the no flight zones and then the tightening of sanctions and then of course the deand in iraq disclose to the

international community what it had and what it was doing. this was all about the implementation of a new international set of rules that were necessary in a post cold war world. that we had already seen how much instability could be caused by individual states that were either failed states of r or rogue states. that we have essentially failed in are you wanda to take action when it was necessary. we have triled hard in the balkans to take action but it was hard. it was our responsibility to make sure that the international order could work for the future. >> can i move to specifically about your role as a senior member of the cabinet. we understand from early

evidence that mr. blair discussed iraq frequently with you in private conversations. is that correct? >> yes, we had formal meetings of the cabinet. >> i'm coming to that but i'm talking about private conversation. >> i was going to say in addition to these formal meetings with the cabinet, i talked with mr. blair frequently. we're dealing with the economic issues and the reforms of the health service and issues including dealing with the euro and inquiring to how we would approach the euro but i would talk about iraq and about the process of diplomatic negotiations. >> so you would say you were in the loop from 2002 to -- >> yeah, i think we have to understand foreign affairs, that i've understood since i became prime minister is quite

different from the conduct of domestic policy and there has been a whole debate over many, many years. what you've got now is a unique situation where in the past 50 years ago, prime ministers and foreign secretaries would operate through ambassadors and memos and you've got instant contact between the prime minister and the american president and instant contact between foreign secretary and the secretary of state. that is true of france and germany and our relationships with them. foreign policy is essentially the prime minister and the foreign secretary and the defense secretary involved directly with their numbers in every country and they are in a position to report to you and report to the cabinet about what is actually happening on a day-to-day, sometimes hour-to-hour basis and sometimes the intermediaries of the past there is a huge issue about how -- how individuals

that work far more closely together. the better the relationships, the better the connect of the foreign policies. >> i understand. mr. blair told us there were lots of ad hoc meetings and he described a constant misdirection among the government on the key issues. were you part of that? >> i was talking from the defense secretary from june 2002 about what would be necessary in case we failed in our diplomatic -- >> from what time 2002? >> from about june 2002. what we would have to do, i think you will find that the correspondence between the defense secretary and the treasury, that we were discussing what if our diplomatic efforts failed, what would we do and what would be

the nature of our military engagement and i said immediately to the prime minister that the military options that were under discussion, there should be no sense that there was a financial restraint that prevented us from doing what was best for the military. i think the treasury did a paper in june about these very issues. i was then advised i think to talk to mr. blair. i told him that i would not -- this was right at the beginning. i would not try to rule out any military option on the grounsd of cost. quite the opposite. he should feel free and it was the right action to discuss the military option that was best for our country and the one that would yield the best results and we understood that some options were more expensive than others and we should accept the option that was right for the country. >> when did you support the

u.s. invasion for iraq? >> the decision was made by the cabinet. >> when did you become aware? >> at the last minute in march. right up until the last minute. i was hopeful, as i think the whole country were that we would reach a diplomatic resolution of these issues. >> that was a decision to go to war. but i'm talking about -- on u.k. support for therbrbú@ úrbrá

delay. it was for me a hope right up to the last minute that a diplomatic action could work. i think in putting our case to other countries and the united nations, they should not be faulted because they tried everything in their power to avoid a war and i think you will see when i spoke to the cabinet on the meet, the day before the parliamentary board, i was very clear that we have had to exhaust all dip maic avenues before we could conclude that it was in evidenceable or impossible to avoid a decision about war. these diplomatic avenues consider tried right up to the last minute. >> in the wake of 9/11 and the change of approach of the u.s. administration in 2002, mr.

blair said that there were whole -- of discussion about sanctions and a very structured debate about the review policy of government strategic options. now you were not at the meeting that took place on april 2 at crawford. for craufed on april 2. -- crawford on april 2. were you part of this review that took place? >> well, clearly when sanctions were being examined, the treasury and the foreign office would be involved because the implementation of those sanctions depends on the treasury's ability to do certain things as it does the foreign office but we were coming to a position where sanctions were being accepted by saddam hussein. he was finding ways around them. >> i know that. my point really is were you involved in discussions about

-- and were you part of these discussions about -- considered in the early part of 2002? >> i was not at any meetings prior to the prime minister's visit to crawford but i would know about the discussions about sanctions. if sanctions were to be changed, the treasury would be involved and i would be involved in taking skgses. >> you will be kept informed by the officials in the treasury? >> yes, we would cobt continue to monitor what's happening with sanctions. it was obviously our policy in reaction to iraq. the conclusion that we had reluctantly to draw was that sanction were not being effective in the way that we had wanted and were inflicting damage of the iraqi people and at the same time causing the greatest of concern to the ruler of iraq. >> has the situation evolved

2002, 2003. were you and other senior members on the policy? >> of course. we had reports that you will see regularly in the cabinet about the diplomatic course that was being taken and of course a lot of the discussions, the cabinet was being kept in touch about what was happening. i cannot see an argument that the cabinet was not informed. we were informed fully. they were essentially focused on the diplomacy and the problems as well as the opportunities that came from that diplomatic process. >> were you informed with number so's exchanges with the white house and did you see mr. blair's letters to the president? >> no, i would not expect to see private letters between mr.

blair and president bush. >> the conversations he was having, the private conversations. >> i would be discussing with him all the other issues we were dealing with and he would keep me up to date as he did with the diplomatic route. at the same time as i'm making it clear to you from june 2002, we at the treasury had to start making preparations in case there was a possibility of war. in june, we looked to the defense secretary with a number of options. we said finance was no barrier to discussing and concluding on the best options. in september we wrote a paper about the reconstruction of iraq and looked at the problems that had to be dealt with if there was to be reconstruction had we ended up in a war that we had not solved. i think we did some very important work in estimating what the cost of the war would be and i think we got it -- i

think our first estimate was $2.5 billion by 2006 and then it was $4 billion. i think we were right. >> ki just go back to your point -- can i just go back to your point about the cabinet meeting. mr. blair told us there were some 24 cabinet meetings. was the discussion substantive? was it an assessment of the risks or was it just information? >> i think at the meeting they are getting a report from each of the crares where there are issues that have got to be reported. in the case of iraq, everybody was trying to get a diplomatic solution. the discussions of the cabinet were how we could push forward on diplomatic processes so we could get a diplomatic solution to prevent war.

what was being reported to the cabinet on most occasions, what were the difficulties and successes of our diplomatic efforts to persuade the rest of europe and other countries in putting pressure on iraq or pressure in some cases of discussions with some of the other arab states. that was the main i think recorded in the cabinet -- at that time. we were anxious to avoid war. we had to prepare for it and are doing it in ways that were suggested. the cabinet was suggesting how we can do more to move forward on a diplomatic route. >> my understanding is that was of course a diplomatic route backed by military threat and the information that the preparations and the meeting at crawford, the options that you discussed but were these properly explored in the

cabinet? were contingency plans being made? talks about the military operation. was there proper discussion at these 24 cabinet meetings? >> i was aware because of the discussion i was having with the department of defense about the various military options that were being looked at. in fact, as you probable know from the evidence that you have received, one set of military options would have led us to -- if war had to happen, would have led us into one part of iraq. eventually the decision was to move into another part of iraq and we became responsible for the basra area. that was not the original plan and that changed over a period of time. i was involved in discussions about making sure that sufficient resources were available to do that and i've always said the resources would be available but i would say the most general discussions that we had were generally the discussions were about the diplomatic effort but in

different committees obviously, the prime minister was talking to the foreign secretary and the defense secretary about the options. i was not involved in these discussions but i was aware of the discussions because of the role the treasury had to play. >> you received, i know all in written briefings about the polls and planning. what issues did the officials raise with you? >> first of all, the cost and we looked at different estimates of what intervention would cost depending on the options that were decided on and my view was that it had to be the best military option and we had to support the military decision that was made an not rule out any option on financial grounds. the second thing we looked at was the reconstruction of iraq and we how that that there would be world economy

implications, for example. the oil price spiked $10 higher and that was an effect of the initial part of the war. we had foreseen that but we also had to look at reconstruction. i was determined, i may say, it is one of my regrets that i wasn't able to be more successful in pushing americans further on this issue was that the planning for reconstruction was essential just at the same time as the planning for war if the diplomatic avenue failed and we were working on reconstruction and what might be done. what i've called earlier, the search for a just peace. we were looking at that early on. we had a paper in september. we discussed a number of options when it came to march, we had a special -- >> this is discussion within the -- officials. >> discussion with the treasury and officials but also discussion about how the international institutions could be brought in. >> did you discuss those concerns raised with the prime

minister? with the cabinet? >> of course. we had a meeting with the cabinet at the beginning of march. >> march -- >> 2003. where we discussed the construction issue. i offered a paper that was to be sent to americans about the issues of reconstruction that was to be dealt with if there was to be military action. we were determined to understand how we could get the international institutions involved in reconstruction. we didn't see that it was possible for britain and america. there were some 40 countries available in the original -- but we didn't see how it was possible without the international monetary fund, the world bank and the united nations in the end being involved in reconstruction to get finance that we thought would be $45 billion for reconstruction. we were focused on this issue of reconstruction and, as i say, i wish that it had been possible to follow that through much more quickly in the

aftermath of the first few days of the battle. >> what you're telling me, it seems to me that you have very comprehensive submissions from officials and you were fully appraised of these issues. how can you be sure what what was represented to the cabinet by your colleagues, how were you able to influence your colleagues about this issue? >> i think we had a meeting of the cabinet at the beginning of march in which we discussed -- the cabinet committee, we discussed these issues of reconstruction. tony blair asked know prepare a paper that he then sent. >> what about the options? because there was a question, -- involved in south of iraq, the cost of that? >> i have already made it clear, the military option, to be one that was best for the

military, the treasury would not in any way interfere and suggest that there were cost grounds for choosing one option against another. that was not our job. the treasury was there to advise on how we could deal with the financial issues that were roles from the military decisions and the political decisions that were made. so there was no time from june when the treasury said this is a better military option because it is cheaper or lest costly at every point, i made it clear that we would support whatever option the military decided upon with the prime minister and the cabinet there would be no financial -- what was to be done. >> we've been told by some cabinet members that they had -- on intelligence. did you receive such briefings? >> i asked to be briefed. >> when was that? >> i've got the dates of the

meetings for you. march 4, 2002. very early. december 9, december 13. february 24. i had five meetings with the intelligence. i was briefed on the evidence and information that they had and it was -- these were very full briefings. >> and you were convinced that w.m.d. was a real threat? >> it was evidence that was known to many countries. not just our country about the weaponry that the iraqi government held. and of course, at that time, there was a greater certainty amongst the intelligence community that this weaponry was there. i think we have learned that intelligence can give us insights into what's happening but we've got to be more sure as people have recognized about the nature of intelligence that we were sing from certain people. >> thank you.

>> prime minister, i wonder if i could just pick up one vital detail from your conversation, which is that in march of 2002, the cabinet's office produced an options paper, a streamic review of the -- strategic dv and how we dealt with them.

a no-fly zone had been an issue of course. there were options available to us. it was only when we became clear that we had to look at specific options. >> the treasury role was your role, as a very, very senior member of the cabinet. here was the government looking at the fundamental question of whether you continue the movement. people were pushing for regime change there. the government was looking at this choice. isn't it curious that you were not actually shown the paper? >> i think i knew what was happening at the type. i don't think i needed to see every paper that was about this. by june i was very much involved in looking at the financial aspects. >> moving forward by then. ok. i would just like to form a clear understanding of the situation that the cabinet faced in march of 2003 as it

came to the point of decision and perhaps in a few minutes move on to the conflict itself and its aftermath. you have talked about the need to exhaust the opportunities for diplomacy in trying to make peace. were you convinced that we had exhausted all possibilities for a solution via the u.n. and through diplomacy by the middle of march 2003? >> yes, i'm afraid we had to draw that conclusion. i think members of the cabinet when presented with the information and the evidence drew that conclusion as well with one exception. i think that we have tried very hard on the diplomatic route. we have reached a situation where everybody agreed in november that there was an issue with iraq that the weapons had to be disclosed, that disclosure had to come and

there was a final opportunity to do something about it. this had not happened in the intervening period. we have therefore reluctantly to come to the conclusion that there was first of all little chance the that saddam hussein would take the action that was necessary. unfortunately the countries that had signed for one, including syrian countries, like that, that we couldn't find an agreement about the nature of the action that was to be taken. >> we were still in a situation in which the u.n. inspectors were reporting they were getting some cooperation from iraq and they wanted more time to pursue their inspections and many members of the united nations agreed with them. so shouldn't we have given them more time? >> but it was also obvious, i'm afraid that some countries were making it clear that they would not support action under any circumstances.

whether we had begin them more time at that stage, of course it would have been far better if we had begin them more time. countries that signed 1441 were prepared to reach a decision at some point and that was not the information that was available to us as we made our cabinet decision. >> i would like to come back to that in a minute. on march 17 the cabinet decided that time had run out. is there a contradiction there? >> no, because i think people did want to exhaust the diplomatic process to the full but by that weekend, it was clear to us that there was a number of countries that supported the original resolution that under no circumstances would agree to military action, even though people thought that was the only route ahead as saddam hussein continued to defy the united nations. so it was the conclusion that arose from other countries now

saying that even if there was more time for the inspectors, they would not support action. >> you refered to iraq as an aggressive state and clearly iraq had been an aggressive state. had an appalling record of aggression under all of its neighbors under saddam hussein, but at the time we're talking about in march of 2003, was there actually a current threat of aggression by iraq? >> i think all the evidence that people had in november, let's say, before we come to the march resolution, that all the rest of the world agreed that there were problems that had to be addressed by iraq if they were to be a member of the international community and they felt they had a final opportunity to deal with issues where he had not been honest with the international community and had nozz disclosed or dismantled any of

his weapons. from november to march, the issue is not it seems to me that the rest of the world did not agree that there was disclosure problem or disposal problems. the question was whether people would be prepared to follow the rules of the international community that where someone consistently and persistently is a serial violator over the rules of the international committee, action has got to be taken. >> iraq had been in breach of these rules for many years and many resolutionses as you pointed out and the international community responded to that through a range of measures. you responded through sanctions and no-fly zones. my question was was there a threat of aggression from iraq that required us to take this military action? >> the diplomatic route appeared to the cabinet to have reached a conclusion where we could not see the possibility

of saddam hussein abiding by the rules of the international community. i come back to my original argument. for me the issue was we're in a post cold war world. we're dealing with instabilities that exist in different parts of the world. if the international community cannot -- then we are sending a message to other potential states and aggressors that they are free to do as they will. for me the issue was are we as an international community prepared to follow through the logic of our position and when the diplomatic route has failed then we have either got to show ourselves unable to take action because we can't agree or we have to be prepared to take the action if necessary for me it goes back to we as an international community where you have rogue states and failed states and obviously non-state actors who are terrorists. if we cannot find a way of dealing with these problems then the world will be a very

unsafe place in the future. this was a test of how the international community would deal with problems in the post cold war world. >> it was that reason rather than the threat of aggression that convinced you? >> i've always taken the view that if we can build a strong international community where people abide by the rules that are set, and if we can not do so, then we are sending a message to other states and countries that they are free to do as they plfment >> this is a message that other states will have heeded because of the action in iraq? >> this is one of the issues. one of the lessons i learned from iraq and i think it is the less often the whole of the world has really got to come to terms with. the international institutions for global corporation on these matters is not strong enough. one of the problems in iraq was that closeness of working was

not seen, american-europe -- working together closely with the americans. if we are going to build an international community where people will feel safer from the threat of terrorism and failed states or rogue states then we have to have an international system of governance which people feel that will take action when those people who break the rules are -- >> yeah. from the answers that you gave -- would i be right in understanding that you were briefed on the terms in which mr. blair had pledged the u.k. support to president bush in the first half of 2002? >> i believe right up to the last moment, we in britain were trying to get a diplomatic solution.

i'm not sure i accept the premise. >> given by a number of people, mr. blair himself. you said you didn't see the correspondence between mr. blair and mr. bush. but you understood the gist of what he was saying to mr. bush in terms of pledging our support? >> we had to make the diplomatic process work or there was a danger that we would be at war with iraq. our effort right to the last minute were to try to make a diplomatic solution work and even in that last weekend where i talked in detail to tony blair and was working very closely with him, we were trying to see whether we could get some of the countries who had indicated they would support no action under any circumstances to change their position. i would say that the decision was made only after the diplomatic course was fully

exhausted. >> because we have heard from a number of witnesses, we have told the white house privately in the first half of 2002 that we couldn't make the diplomatic -- what was obviously the preferred route for us and them, couldn't get a peaceful resolution to this issue, that we would stand with them in taking firmer action. r well, we had to prepare for war, as i said, because from june, we were in the -- the treasury and i was looking at options that were available. i still insist to you that at every point in that year, our first priority was to get a diplomatic -- >> that was clear. the prime minister of the day had told you effectively what he told president bush? >> we knew that the options available to us included going to war. we knew also, however, that the best chance of peace and the

international community working to best effect was a diplomatic -- and i still hold to the position that i think you're trying to move me from. the final decision -- >> some yes or no answers to what he told you or president bush. >> the final degrees decision was made in the end by the cabinet after the diplomatic option was sexausted. i kept in regular touch with tony blair. i also knew that he and i were trying to make sure that the diplomatic option was the one to be used and successful and until it was exhausted there was no decision about going to war. >> you haven't told -- what he said to president bush? >> i had regular conversations with tony blair and we talked about these issues. i don't have copies of these letters and you wouldn't expect me to. >> in these exchanges between

himself and president bush's staff, he had emphasized that there were a number of points that the british wanted to establish before any possible conflict took place with iraq. he put great emphasis, as we have heard in evidence on the u.n. route on building a coalition of international support, public opinion and our own countries and proper preparation including preparation for the aftermath and not least on achieving substantive progress in the middle east peace process. and i assume that you would be fully aware and supportive of those points? >> yeah, we discussed the middle east peace process particularly because we felt that progress could be made. the treasury at that stage and i were working on an economics plan for the middle east where we could underpin the political -- with -- where we could offer the palestinians the chance of

greater pros parity if violence was abated and we were really learning the lessons that we had learned in other parts of the world, including northern ireland if we could reduce the incentive incentive to violence by making sure that people were more prosperous we might have a better chance that the process was working. >> why hadened we succeeded in achieving more -- on the peace middle east process by march, 2003? >> i dealt with friends in israel and the palestinian authorities and the progress of peace making in the middle east is one where it is very difficult to get both sides to do the same thing at once and

it is an experience of small steps forward and sometimes steps backwards and of course, the splits within the palestinian organizations have made it more difficult and the changes in israeli politicians obviously mean that you often have to start again. have to start again. >> we have heard from other

and persuading the palestinians -- a viability -- economically viable palestinian state and in all the times i've been involved in this, vary between wondering whether you can proceed inch by inch or whether you have got to bring things to a head as has happened in some instances over the last 20 years and trying to work for a solution that is all encome passing. people were looking for a solution that was all encompassing. >> we're still in the same position today where we're trying to get small advances that would allow people to have confidence and negotiations on the bigs issues. >> you said as prime minister in october, 2007, that in the house of commons that you were convinced after you made a visit to the region that progress in iraq cannot be fully achieved without progress on the israeli-palestinian

issues. doesn't this imply that we should have continued to contain iraq while trying to achieve more progress beforehand on the middle east peace process? >> i don't think so. there is a debate about this. obviously you as a committee will be wanting to enter into that debate. look. in the middle east, when i talk to palestinian and israeli people they all know that the settlement is likely to involve. jerusalem and a land exchange and an agreement about the palestinian refugees. it is how they get to this final settlement that is the issue and how we can move them along when there are so many difficulties enroute and every time we try to move forward, there is something that happens to that makes it more difficult to do so. more recently it has been the

problems in gaza that have prevented us from doing it. >> that wasn't the point i was making. let's come back to the cabinet meeting. as you have emphasized. the meeting of march 17, 2003. that was the moment when you and other members of the cabinet, except of course the late robin cook, who resigned, accepted shared responsibility for the decision to go to war with iraq and if you look back from that point, do you feel that there should have been a cabinet committee set up before the conflict happened? one was set up immediately afterwards to deal with this but people like you should have been represented on i think -- if i'm right in interpreting your answers, you haven't actually been to mr. blair's ad hoc meetings on the subject

that he told us about. you were not at his meeting in april 2002, which was an important one and on july 23 2002 which was an important one. yet the cabinet now had to make this very big decision over whether or not to go to war. shouldn't you have been cut in earlier? >> the chancellor has never been on this these committees. i don't think it happened previously. >> on what cabinets in the past? >> when it came to the war cabinet being constituted, the chancellor was, as i understand its previously, the chancellors under previous governments had not been a part of that. >> you are widely seen as one of the most influential members of the cabinet and the most likely successor to the prime minister. >> i did not feel at any point that i lacked the information that was necessary. that i was denied information that was required. but my role in this, was not to

second guess military decisions or options. my role in this was not to interfere in what were very important diplomatic negotiations. that was what the prime minister and the foreign secretary and the defense secretary were involved in. my role in this was first of all, to make sure that the funding was there for what we had to do and we did make sure that that happened and secondly, as a cabinet member in the discussions that took lace, that is what i did. on the monday before the tuesday before the house of commons, i spoke of the cabinet and made my position clear. >> you said in your opening remarks that one of the points from which we needed to draw lessons is that we needed proper structures of decision making. >> that's right. >> looking back at the situation in the year and a half before we went to war with iraq, did we have the proper

structures of decision making? shouldn't we have had a cabinet committee since it existed in many previous governments but didn't interfere with business but reviewed the strategy and diplomacy and preparations. shouldn't we have had a committee to do that before the conflict rather than just set one up afterwards? >> i think we did learn lessons. i think after the butler inquiry, tony blair set forth a more formal way of decision making. i have taken this further in the position that i hold now. we have a national security committee that includes in attendance all the intelligence chiefs, the chiefs of defense as well as the senior ministers and it will meet regularly to discuss issues related to afghanistan and iraq. it is underpinned by senior officials meeting prior to that and junior officials meeting prior to that. the foreign secretary and the

defense secretary and the international secretary have to meet before these meeting about the relationship between these departments and as i said right at the beginning that we are learning rightly so when you are facing two wars, the structure of decision making has to change and you have to involve in that decision making all the security and defense chiefs in a very direct way and formal way and you have also got to involve all the senior politicians who are involved in this. and that is the structured decision making that i think is necessary for a world where we have an interventionist stance related to difficult problems where we are part of an international community trying to resolve these problems. we have to have that formal process of decision making. i agree with you, we have learned lessons from the procedures. as a result of what he learned and iver made further changes

which i think are the right things to do. as a committee has worked well and allows on equal terms all people who contribute to that discussion should contribute to that discussion to make the contribution so this is a reform of the machinery of government that i think has already been made and if we have to learn further lessons. >> very important point for us as an inquiry trying to learn lessons from this. in the absence of the structures that you have set up and mr. blair set up after the butler report, was it the situation on march 17, 2003, that the cabinet in particular, the most senior members of the cabinet was adequately briefed and informed and aware of all the different aspects of the question in order to share a

responsibility? >> i was. >> you were? >> there was nowhere where i had a sense that i had inadequate information. obviously the intelligence information has had to be reassessed as a result of what we had learned. certainly on my part, i was fully engaged in the discussions that had taken place that weekend before the cabinet meeting but equally i was involved in the financial decisions that involved also being aware of all the military options that we had to consider so i would stress that as far as both my relationship with the prime minister and with the information, i was fully in line with what was being done. >> on the intelligence, which you mentioned, robin cook, of course, had raised concerns about the way the intelligence was being interpreted. he had actually challenged this.

were you aware of the time of his concerns that he discussed -- did he discuss them with you? . . .

at that time ahead full briefings from the intelligence services. i was given information deemed plausible at the time. >> bill was a statement that was from before we learned the intelligence was faulty. he challenged whether it was correct in the house of commons and he kept a distance himself with no accountability. >> i think we knew that there were objections because he felt the sanctions, the non-military road, should be pursued. i think the question of the intelligence emerged more after the investigation took place into what happened that led the intelligence services to complete certain things. intelligence is a guide, but it cannot be the only thing by

which you make decisions. >> from the five briefings that you had from the papers that you read and received, like other members of cabinet, were you convinced that the threat from what was being reported, the iraqi programs of weapons of mass destruction, was growing? >> there were more basic facts. the major issue was a breach of the international community's laws and the decisions was something that was unacceptable. as far as the intelligence was concerned, we'd soak the information that was given by the intelligence services, but the more basic question was whether you could continue into a new world would circumstances where one country was determined to stand out against the international community no matter what happens.

>> i think the chairman wants to call a coffee break. i would like to come back afterwards to go into other aspects of the question that affected the cabinet on the 17th of march. >> thank you. >> please do not leave the room unless you live the suit. it will take quite a long time to gatx in. we -- to g , and other things for

making the decision. >> were you and other cabinet minister is aware that the attorney general's position had been very different to early february of 2003? >> i was not aware in any detail of this. i was not involved in discussions with the attorney general. i was not involved in meetings with the attorney general at all. we have this straightforward issue. we were sitting down as a cabinet to discuss the merits of taking action once the diplomatic avenues had been

exhausted, unfortunately. we had to have a straightforward advice from the attorney general, was a lawful or not. his advice was unequivocal, in the cabinet meeting. but at that time you had not seen the formal written advice that he presented to the prime minister on the seventh of march? >> no, ssary part of the discussion about the decision of war, but you have to

look get the political and the other case that had to be examined in the light of the failure of diplomacy of united nations. >> you and other cabinet members accepted the course with a fine secretary and the prime minister -- except for the foreign secretary and the prime minister. that you were opposed to the position he took in the cabinet. up to the 11th of february, you were not aware of this and you were unaware of the foreign office's advice, you do not agree with the position of the foreign secretary? >> i think there may have been some -- - -- some press coverage. the question was whether this was lawful or not. the attorney general gave

unequivocal advice to the cabinet. i have heard him give his evidence to the committee. he had a straightforward question to ask. not a simple question, but straightforward. was it lawful or not. he gave an unequivocal answer. >> the cabinet needed to know whether this was based on a robust position or slightly controversial one? >> historians will look back on this carefully and decide what happened and what was said between people at different times and what was the first and second and third draft. we are cabinetmaking the decision. did the attorney general have a position on this that was unequivocal. his position was unequivocal besides the u.n. resolution that led us to believe that saddam

hussein's failed to comply with international law. he cited one that had the importance of the final opportunity for saddam st.hussein. it laid the basis, but it was not the sufficient reason in itself for us making the decision if you had known his decision was equivocal 10 days before, would it have changed your view? but i don't think it would have. unless he was prepared to say that his unequivocal advice was that this was not lawful, then the other arguments that i thought were important played, which was the obligation to the international community, the failure to honor them, the failure to discharge the spirit of the resolutions, particularly 1441. i knew there was a debate about

whether that resolution should lead to a further decision or discussion. i knew that was an issue. it seemed the attorney general's advice was unequivocal. >> we get to the decision itself. you say the attorney general has advised th -- the cabinet has been advised of the diplomatic route being at an end. only the prime minister and the foreign secretary had been fully involved in the approach at this stage, and the foreign secretary. for example, they had been aware of the terms of the prime minister's correspondence with the president and the foreign secretary had seen earlier advice from the attorney general. but the cabinet has to share in the responsibility of the decision. we cannot achieve all the things we wanted on the middle east peace process, in terms of u.n. support, in terms of

international support, and so on. do you think that this cabinet in which only two members were fully 100% in the picture and you were more in the picture than those not as close as you to the prime minister, was able to take a genuinely collective decision or was it being asked is essentially to endorse and a process that had been taken by your predecessor at a time when the die was? already was >> i believe we were already making the right decision for the right cause. i believe i had sufficient information before me to make a judgment. of course i was not trying to do the job of the foreign secretary or trying to second-guess something that had happened at other meetings. i was looking at the issue on its merits. eide was looking at the merits of our case. equally at the same time we have learned about how we do these

things in the future. it was important to me that the matter went to parliament. the matter would to a debate in the house of commons. the vote in the house of commons was absolutely overwhelmingly in favor of taking action that was necessary. i believe in the future it will be important that a government puts the matter to the house of commons as a matter that the house of commons is brought even before any country goes to war. i think we have learned that we need parliamentary engagement in this. i want a change in the constitution where parliament will be brought up on the issues of peace and war. >> two of your colleagues that were around the table, the former development secretary and the events are a secretary gave evidence to the inquiry. they've told us of concerns they had. mr. straw said it was the most

typical decision he faced in his life and one of the most divided questions of his political lifetime. it was a difficult decision for him. was this a decision that you had any personal reservations about? >> nobody wants to go to war. nobody wants to see innocent people die. nobody wants to see your forces put at risk of their lives. nobody would want to make this decision accept in the most grave of circumstances where you were assured you were doing the right thing. i have said i think it was the right decision, made for the right reasons. i think the issues that arise in the construction and what happens afterwards are issues that i want to learn an important lesson from and we are learning important lessons for the future. but the decision to take the action we did was the right decision and it was made for the right reasons. >> you spoke of the importance

of the house of commons vote. and your own influence in securing support for what was a controversial decision in the house of commons on the 18th of march, was have been important. were you happy with the way the question was presented to the house of commons by your predecessor in his speech on that day? >> yes, but were in a position where the cabinet's had made its recommendation. i think in the future the house of commons will have the right to make the final decision. that is what i'm trying to achieve. it was clearly a vote that was made after the recommendation of the cabinet, which was sufficient in itself for us to make the decision to go to war. it would have been better that parliament retains the right to make a final decision. >> you have stressed this

morning the importance to you of maintaining international order and international institutions in the world that we now live in. but we were in a situation -- you as a cabinet were in a situation of having to go to the house of commons and ask them to support something for which we had not gotten, the support of the u.n. security council. would it not have been much better if we had been able to prolong the diplomacy until such time as we had received support of the security council, thereby strengthening international institutions? >> if there had been any chance that the security council would have been prepared to come to a decision based on its merits within a few weeks' time, i would have supported that. but the countries have made it clear that irrespective of the merits, they were determined not to enforce the will of the international community. >> which countries? >> a number of countries made it clear that irrespective of what

the results of the investigation work, that the resolution that said they were prepared -- that although the resolution had said they would consider this, they would be prepared to act. france and germany were making that clear as well as other countries. >> you are referring to france when you refer to the security council? >> president should iraq was willing to support the military action. -- not prepared to support military action. he could give no indication there would be a time that he could support military action. >> after he made that statement, did not the french government to immediately contact number 10, the foreign office and the british embassy in paris, to say that the british government was not interpreting his statements accurately? gravette may have happen> tt

i'm not aware. there was very little chance that the diplomatic route could lead to success. i think you have to understand that we are at the beginning of a new phase of a world community. we are opposed cold war phase where tensions between russia and america are not the paradigm within which people see what they should do as individual states around world. there's a danger in this time that certain countries, a rogue states, would be prepared to take action that hurt the international community and disobey the laws of the international community. this was a test of whether the international community could hold together. unfortunately, we could not bring all countries all. if the international community had been decided that after 14

resolutions and after a huge attempt at diplomacy and after trying sanctions but not succeeded with sanctions, it was time to give up on this, then i think we would be sending a message to every potential dictator around the world that they were free to do with a wanted. it is an important message to learn that nothing was going to be perfect in a situation where we were in the midst of creating the institutions and practices of a new world. it was perhaps inevitable that some countries would not feel part of that process for the time being. but relationships between france, germany, britain, and america are stronger than ever. that shows the determination of all countries working together to create international community that requires international law and rules be observed. >> at this precise time you're talking about, the u.n. inspectors were saying to give us more time. the french government was saying

to the chilean president, we need more time before we come to this decision. they were not saying that we would never do it. why did we have to take the decision? >> you have to make a judgment. but it was not because of the americans saying we are going to take military action? >> it is a matter of judgment. >> the american military? >> i am talking about the decisions we made, not the ones other countries made. if the matter was whether after 14 resolutions failed, having united international community, after saddam refused to comply, the diplomatic channels had been exhausted. as to whether you took the action in november you were prepared to take, we were prepared to take the action.

i justified the decision on the basis of our judgment, that the diplomatic route had become exhausted. other people can take different judgments, but this was the judgment of the british cabinet at the time. >> mr. strawe told us that the fund policy objective of regime change would be improper and unlawful. mr. blair perhaps in contrast to that told in his speech in texas in 2002, talking not just of iraq but in more general terms, if necessary, the actions should be military and if necessary, unjustified, there should be an involvement of regime change. he said to this inquiry that saddam had threatened the region and the world and in the circumstances it was better to deal with the threat, to remove him from office. does that imply that the

british government ended up by allying with the american interpretation of international rules, and revival argument that the attorney general presented to the cabinet and the american objective of regime change, which had always been their position underrbrb ),irbrb >> i got back to the argument about defying the will of the international community.

>> labeouf the question of weapons of mass destruction? >> the intention of the action was to force iraq to abide by the interpretations of the international community about its obligations. is really geared to comply aaron's disclose and dismantle was seen as the reason for removing him from office. >> looking ahead, not back at what happened in the cabinet, but rather to a lesson to be learned for the future, that there was a risk exposure for the ministers, themselves and for the crown service, military and civil, in the event that

some jurisdiction or in some process it could be found that the decision was not lawful. is there a plane constitutional doctrine that's as it is or is not sufficient, then there's that elements within it. i'm thinking about future situation where the risk exposure of crown servants and crown ministers may be involved. >> i knew at that stage that they had issued clear guidance as to what the position was. i was satisfied that they were satisfied that they got the information necessary. as far as the future, our desire to be more transparent in the way we make decisions has to be balanced by the needs of national security. but it is important that we do

everything in our power, if we are putting these issues to parliament, not simply taking executive decisions without parliament, then we have to provide greater information. that was one of the lessons will be learned, that parliament was making a final decision, it would ask for greater information. i think this is one of the lessons we can learn i do say . i do say that everything mr blair did during that time, he did properly. i was fully informed on what i needed to make the decisions i made. >> thank you. >> now to the aftermath of the military action. in january of this year you said in a press conference that the mistake in the war was not to do

the reconstruction and plant it in a way that was necessary so that iraq could recover quickly after their leader fell. what rent wrong with the planning for the aftermath? >> this will be debated for many years. i hope your inquiry can make recommendations on how to deal with it in the future. if the i'll deal situthe ideal e that there could be an international group with immediate plans for recovery in the country. if, for example, in zimbabwe. and it's true in the balkans, where reconstruction must take place. one of the lessons to learn is there are going to be intervention is necessary in the future for humanitarian or other reasons, that you will have failed states, you will have conflict within states that will break down. you will have states that need

to change. we should have in place, as we have now in britain -- we put a thousand people ready to help in reconstruction immediately if there is a need for it. we should have a united nations or some international agency responsible for security and reconstruction. we need civilian support so we can do all the things necessary when a broken state has to be rebuilt. that is the first lesson i learned. i always thought ever since june that reconstruction would be a problem from 2002 onward. in my first meeting, i said that we have to plan properly for that. but we could not persuade the americans to take a priority it deserved. the course of action in iraq has been that we only gave to the iraqization, iraq's security forces, iraq police, iraq

economic and political development. that was the basis on which we construction could take place. that was what a just peace involved. we only came to that later and not shortly after the invasion. i regret this. i cannot take personal responsibility for everything that went wrong. i did a paper to the americans just before the war was declared that said these things had to be planned for. and that we needed international organizations to be involved. >> we have anticipated that the united nations would do exactly as you said. you have a lot of experience and organizations like the world bank. but we were not able to do that because we could not get the support of the united nations. you can have an international agency, but if you don't have the legitimacy that allows it to operate, then you are stuck. that was the situation we found ourselves in. >> but the united nations came

in after a resolution in may. it is true to say that the postwar planning -- because we now know that you cannot win the peace simply by military action. you need to engage the people of iraq or any other country. you need to give them the chance of political empowerment at some stage. if you need to have strong security forces. and you need economic development. people have debose stake in the future these things were not the central part of the initial reconstruction plan, but they became that way. lessons we've learned in iraq are being applied in afghanistan in the policy we are

pursuing now. i hope the committee will begin to draw some of the lessons we've learned in iraq and say that they are more relevant of other situations as well as iraq. >> i think there will be a lot more to explore. you say that from june of 2002 onwards, you were pressing for thought to be given to this question. but the british government's own planning for the aftermath really did not get into gear until february of 2003. why did we take so long doing this? >> i think the committee will have a paper that we did in september. >> we set up direct lending unit on the 11th of february of 2003 or so. >> this was originally, we wanted this to be an international effort, so we wanted to involve the united nations, imf, world bank as quickly as possible. that was affected by of what was

happening in diplomatic negotiations as to try to find a way forward. we had a meeting i believe on march 9 of ministers to discuss reconstruction. i was asked as a result of that -- >> that is very late. >> that was a result of the paper is being done. the meeting on march 9. i was asked at that meeting to a paper that we set to the americans after that meeting about some of the things we thought had to be done for reconstruction. >> why do you think the cabinet had not paid more attention to the aftermath planning at an earlier stage? >> i think because we were more confident than you may look at it now, that the diplomatic process would have more success. clearly we were preparing for military options. clearly we had also to prepare for reconstruction. work that was done in america and and worked in britain was not done as much as it should have been done in parallel. >> there was a great deal of

planning done for the aftermath by the state department, but that was not drawn upon when the department of defense became involved. >> there was a different decision being made about the past for reconstruction. obviously, are planning was based on more international involvement by other partners and secondly on the issues that i have raised, that we have learned more about in recent years, that you have to get to the iraqi people on your side. this is what general petraeus learned when -- from the work he did in 2006 and 2007, that you have to have economic projects that allow people to feel they have a stake in the future, and you have to get the security and armed forces of iraq in such a way that they can be responsible for security, and that involves non-corrupt

police. we have applied this in bo asara. we have learned a lesson there that are applicable to afghanistan and other countries. this new world has to have some international organization that is responsible not just for peacekeeping and not just humanitarian aid, but for stabilization and reconstruction. >> you can onlit would only offp where there is consensus, cooperation. >> the united nations was prepared to come =iin, in the end. the united nations mission led to a tragedy in baghdad and there was with a drawl that

mission. the world bank mission personnel, imf had to be withdrawn. we had treasury people there working in very difficult circumstances, bravely organizing the new currency of iraq, organizing the new financial budgeting system of iraq from an organizing part of the construction. we were directly involved in these things. >> we and the americans were not joining up effectively during the planning stages. a lot of warning signals came back from washington to london in the early months of 2003 expressing great concern about the american lack of planning for the aftermath and what brought us to the defense department. we heard this from earlier witnesses. shouldn't we, given a large commitment we were making to this operation, military commitment, have been able to exercise more influence over the americans, to make sure the aftermath planning was done properly?

>> late in the year i went across to the states. >> i'm talking about before the invasion. >> i made it clear to the u.s. i felt they had to take more seriously the issues of the construction. for the first period, regarding the military campaign succeeding. it did. so the issue of reconstruction became more immediate than three people expected to be. we have started planning for this in the treasury, but we had to start convincing colleagues in other governments. >> your planning, did that look at likely scenarios that might arise after conflict in iraq, including surging tourism, instability, having to deal with very damaged infrastructure, the need for peacekeeping forces to keep a lid on the ethnic and religious tensions and so on?

>> a lot of these matters were for the foreign office to look at more than we did. we were looking at economic issues that could arise, like jobs, utilities, the currency. we completely remodeled the iraqi currency. >> you were looking at these things. the problems which arose in the aftermath, could they have been mitigated if the coalition had been much better prepared to get into action on the issues you mentioned right at the beginning? and if it had the broader economic support that we did not to get until after the second resolution was passed in the middle of may by the united nations? >> yes. it was not -- their only two or three or four or five countries. by the month of may, the united

nations came into play. the u.n. was part of the reconstruction program. we needed the imf and the world bank. what we have concluded in the treasury with that we would need all these organizations to be involved for the reconstruction to be successful. >> at what point did it become obvious to you before the conflict that is planning was defective? >> i don't think that we were fully awarerbrb

happens, that it was only sufficient if we had reconstructed. a just peace must involve that there's a right of the citizens to participate in the political system established as quickly as possible. >> once you have achieved law and order. >> reconstruction goes hand in hand. >> it was also decided that we would take the responsibility for four provinces in the southeast of iraq in addition to others. were you involved in the decision that we should take on this responsibility? >> this was a big decision. basically, we were taking greater responsibility for one area. basara was 2 billion people -- 2 million people. that became the center of our problems and we were eventually able to zeev success in putting

that city into a position where it could govern itself. >> do you remember when the decision was made that we would take that on? >> the first decision was when the military decision was that instead of our troops going into the north, troops were going into the south. that was a decision taken on military advice. that was a change that was made to our plans. the second decision was how we would organize iraq after the military success. i cannot recall exactly when we given the responsibility for basara. i know for us that involve economic, social, and political measures, including economic development. >> this was discussed in march, i cannot recall whether you work at the meetings. there were discussions about taking charge of that town and

what would be required for the funding. >> there was a war cabinet. the marks the ninth meeting -- march 9 meeting. >> yes. once the invasion had happened, we were in a position as occupying power, we began to have to deal with some very serious problems of insurgency within iraq, a big security problem that got worse and worse. do you consider the problems that the british and americans did encounter as occupying powers were principally caused by external interference and a al qaeda, external influence by iran and al qaeda? >> there was external interference. >> was the principal cause? >> two things happening at once. you have an attempt from iran

and outside a to make their mark in iraq. you also have the sunni insurgency. you also have tensions between the suunnis and sheias. >> could we have anticipated these problems? >> we could not have anticipated all the problems subsequent to the invasion. one of the lessons we have learned, we will apply in the future, that you have to move quickly to giving the iraqi people a sense that they have greater control of the situation. it is true that we were dealing with the iraqi army that had existed under saddam and politicians and bureaucrats who had worked under him. we have learned that unless you can quickly involve the people

of a country in a sense that they are about to get more control over their country, then you become very quickly an army of occupation rather than an army of liberation. we never wanted to be an army of occupation. >> finally, before i hand over to the chair, the cabinet mechanisms, you have referred to the ad hoc ministerial meeting that began to happen from the 19th of march and met almost daily until the 10th of april. that was an ad hoc ministerial meeting, effectively a war cabinet, i believe you intended it. the believe that served a useful purpose and function well? >> , yes, or cabinet met on problems daily. i attended a large number of these meetings, but it was also happening at a time of the budget and i attended other international meetings. if it was a useful function and it allowed the different

departments and agencies to report on what they were doing. and so we had greater coordination as a result. >> the second committee was set up, which was the ad hoc a ministerial meeting on iraqi ministers. it began beating on the 10th of april and through the 10th of august -- it began to meet on the 10th of april. was that an effective ministerial group that we've not had before? >> i cannot give you specific information about the success of that particular venture, but it was a necessary means by which we dealt with some of the problems that arose. we have learned a fuller lesson about the need to inform governments to be organized for a situation where you are at war. in this case, a war with two countries. with afghanistan and iraq. so you need structures of decision making. >> as jessup or, you did not go

to the meetings of the ministerial committee on rehabilitation? >> the treasury has two ministers. if there were matters affecting that, it would probably before that she secretary to be at that meeting. i believe he was present. but he went on the eighth of may. previous meetings you had, patricia hewett, the attorney general. i wonder why the treasury was not attending on an official level there at the meeting? >> malick, we would want to attend. >> thank you. i w -- normally, we would want to attend. >> thank you. >> just to begin with, you told us already this morning, mr. brown, that the cost of

potential united kingdom involvement, you told us was $2.5 billion, not to be seen as a constraint whether to act or not. how far was the potential impact on the party finances and particularly concerning the that you could share or something the treasury needed to contain within itself? >> we were setting aside money for this endeavor, so we made an original estimate of the cost would be 2.5 billion by 2006 because are planning to go through them. having revised our estimate, then it was 4 billion through 2006. the eventual additional cost of the normal budget by 2006 was just over $4 billion. that was an accurate assessment that was made. in november i reported to the house of commons that we had a

special reserve. that was 1 billion pounds. that was for a year. i was reporting a year of special reserve. in april when i did the budget, i reported it was 3 billion to take us through the next period of time. we spent a billion a year of additional money on iraq for most of these years. in total, iraq has cost the treasury something in the order of 8 billion pounds. 2 billion pounds for urgent operation requirements. the total cost is 8 billion that we have found over these years to pay for the effort we have made in iraq. on top of and also rising defense budget. >> i would like to return to the special reserve. first, picking up the point you made earlier this morning that you were not going to advise your colleagues that the financial consideration should

determine either the scale of our military contribution or whether we should make it, if diplomacy failed. your secretary told us pretty much the same, that the treasury was not in the business of advising ministers to support one intervention over another. on the grounds of the cost. on the other hand, the scale of the u.k. commitment, with the minimal engagement, whether it's a counter military invention or a major land contribution, the difference was very great. was the concern about the broader economic consequences for the u.k., the potential one, something that you needed to get a grip on and understand and estimates in contributing to the eventual decision? >> yes, we had a paper in july or june where we looked at the

cost of the various options that were being put forward by the ministry of defence. i think in that paper it said i should speak with the prime minister about that. i made it clear to the prime minister that no option should be ruled out on the grounds that it was too costly, that we had to choose what the right military option was, the right option for our security. if we were to be in a position where if diplomacy failed, that he should know that the treasury would make an allowance for whatever option was chosen. then in september we did a paper or it could of been october, we did a paper on the overall effects of a potential war with iraq. we said the oil price was likely to go up 10%. we thought the world economy would suffer a greater degree of volatility as a result. we looked at all the issues that would arise if a situation where

iraq was not supplying oil to the world and at the same time there was instability in the region. we concluded that the cost of reconstruction would be something in order of 45 billion, so we worked on the construction as well, and took the view that had to be shared as much as possible with the international community. if that is why we want to the imf and world bank involved. these were the preparations we made. the first public announcement of setting aside money was in november posted previous reports from setting aside 1 billion. by that time i had already made available to the defense secretary of 500 million pounds for corporations, which included the purpose of necessary equipment in case we were to be at war. i think it came in groups of 200, 200, and 100. we set aside for training. and then every application made by the ministers of defense

subsequently, i made it clear that every application that was made for equipment and every application made for resources necessary for the conduct of the campaign in iraq had to be met by the treasury. we created a system that was fast moving so that we could make sure the ministry of defense had the equipment they need it as quickly as possible. >> i will like to return in a moment to the operational requirements and how it worked. just before that, did the assessment of the financial impact globally as well as nationally of potential military action, did that clarifies itself sufficiently before the march period when it became likely military action would take place? >> yes, i think so. i think we do

what was likely to happen. the oil prices did go up by 10%. it is reassuring to note that our cost of the engagement was accurate -- reassuring to know . i think we were proven to be righ