An explosive legal obstacle, currently ignored, lurks beneath the surface of the Iraq war debate–international law likely to ensnare and possibly crumple the American conqueror’s grandiose plans to transform the nation it now occupies. Despite what many people, including many Washington officials, seem to believe, the US government is prohibited from simply seizing Iraqi oil revenues and spending the money however it chooses. Indeed, the US occupying force cannot remove the country’s judges and suspend Iraq’s domestic laws. Nor may it create massive unemployment by firing police, civil servants or military troops. On the contrary, an occupying force is required to maintain civil order and humanitarian necessities, to protect private property and public assets as well as individual rights. In fact, international law is designed to prevent an occupying nation from transforming a defeated society into its own likeness.

The obstacle is the Fourth Geneva Convention of 1949, which codified in greater detail the principles of “occupation law” first framed by the Hague Convention of 1907–rules of warfare meant to prevent a military power from plundering a defeated nation or reordering the country (as Hitler repeatedly did) to conform to the conqueror’s ideology and economics. The conventions were ratified by the United States long ago. Furthermore, both the United States and Britain have accepted their designation as “occupying powers” in Iraq.

Bush may think he can safely blow off international law, as he has before, but once Iraqis have re-established a sovereign government they will be free to sue the US government for damages and reparations. They may also sue Halliburton, the oil companies or any other businesses acting as contract agents for the Coalition Provisional Authority. At a minimum, Americans are likely to discover that the war costs do not end once the troops are home. This venture could morph into multibillion-dollar lawsuits that go on for many years. The International Court of Justice dealt with claims from the 1979 Iranian takeover of the US Embassy for many years; they are still in dispute before the Iran-United States Claims Tribunal in The Hague. “Occupation law imposes high performance standards on an occupying military power, and liability can arise quickly,” David Scheffer, Bill Clinton’s former ambassador for war crimes, has warned.

Scheffer, now a visiting law professor at Georgetown University, is almost alone in sounding the alarm (his forthcoming paper will appear in the American Journal of International Law) about what he calls “the liability trap.” And there is little precedent in modern times for the mess he foresees.

Scheffer says that if the United States and Britain had obtained a specific resolution from the United Nations beforehand, spelling out the concrete purposes and justifications for the action, the two would have been relieved of their legal vulnerability. Of course, if the United States had waited for such a resolution, there probably wouldn’t have been an invasion. And Americans at large might have been less enthusiastic for war if they had understood the full terms of what they were getting into. In any case, the “liability trap” may help explain much that has seemed mysterious. Back in the spring, major oil companies expressed great reluctance about moving into the Iraqi oilfields, claiming they worried about the safety of their personnel. What they may have really been worried about was their potential legal liability. In May George W. Bush issued an executive order declaring that oil companies and other contractors would be immune to any legal actions. Scheffer thinks this edict may have comforted nervous executives, but it gives them no protection against international liabilities.

In the Geneva treaty language, restoring Iraq’s industrial production is acceptable, and the revenue may be used to sustain current activities of the economy, but harvesting and spending revenues for other, unrelated projects, especially to advance US strategic objectives, is suspect. “Oil could come back as a very big issue, depending on how long the occupation lasts,” says Scheffer.

Oddly enough, the same issue produced an official legal memorandum from the State Department more than twenty-five years ago during the Ford Administration, when Israel was preparing to develop new oilfields in the occupied Palestinian territory of Sinai and the Gulf of Suez. The US government warned Israel that “an occupant’s rights under international law do not include the right to develop a new oil field, to use the oil resources of occupied territory for the general benefit of the home economy or to grant oil concessions.”

If the future government of Iraq does not wish to sue, then groups of citizens might still become plaintiffs. They could be joined by the foreign creditors who lent billions to Iraq in Saddam’s time–including French and Russian interests. “The issue may be: Has the authority properly distributed Iraqi assets that were seized?” Scheffer asks. “If you were Russia or any other large creditor nation, there might be a basis for a very careful accounting of whether money that could have paid off debts was used for other purposes.” This may help explain why foreign governments are so reluctant to make cash contributions to Iraqi rebuilding and, when they do, insist on depositing their money in separate funds, where it will not be commingled with the Iraqi funds managed by Americans. No one wishes to commingle with the potential liabilities.

These legal distinctions also make the recent US Congressional debates seem absurdly out of touch. Some members wanted to rebuild Iraq with Iraqi oil money and argued that Americans should send $10 billion as loans, not grants. But no government exists in Iraq, none that could legally contract for a loan on behalf of the Iraqi nation. In the end, the loan idea, which was opposed by the White House, was scotched.

The United States created a trap for itself in Iraq. Now it has to find a way out.