By IRWIN ARIEFF
UNITED NATIONS, May 20 (Reuters) - Billionaire investor and philanthropist George Soros said on Tuesday he was setting up a watchdog group to guard against any abuses in how the United States manages Iraq's oil resources while it occupies Baghdad.
Soros, at a news conference at U.N. headquarters, also said he hoped Iraq would not repay all its foreign debt stemming from Saddam Hussein's years in power, in order -- he said -- to discourage the practice of lending money to dictators.
"I personally would favor not paying in full the debts incurred by the Saddam Hussein regime," Soros said. "I think that would send a very healthy signal to the financial markets and others that extending credit to dictatorships is not without risk."
Citing reports that a handful of U.S. corporations were winning huge reconstruction contracts from Washington without competitive bidding, Soros said many people around the world feared the United States might abuse its authority while it and close ally Britain occupied post-war Iraq.
"It is very much in the interest of the United States to allay these fears, and we want to help," he said.
A U.S.-drafted resolution pending in the U.N. Security Council would give the United States and Britain wide-ranging powers to run Iraq and control its oil industry until a permanent government was set up, a process that could take years.
Soros -- an outspoken critic of President George W. Bush's doctrine justifying a preemptive war against any country the United States deems a threat, as occurred in Iraq -- said he planned to set up a watchdog group because the draft resolution failed to provide sufficient safeguards.
He called on the Security Council's 14 other member-nations to press for changes in the draft that would give the United Nations a greater role in monitoring Iraq's oil exploitation during the occupation, and he encouraged the United States to fully disclose all it was doing with Iraq's oil resources.
But U.S. Ambassador John Negroponte later told reporters the resolution required no additional safeguards.
The draft, he noted, would create an International Advisory and Monitoring Board, composed of representatives of the United Nations, the International Monetary Fund, the Arab Fund for Social and Economic Development and the World Bank.
"So I don't think that there need be any concern about the transparent manner in which these funds will be dealt with," Negroponte said.
The United States is pressing for a vote on Thursday on the resolution, which would establish a development fund within the Iraqi central bank to administer Iraq's oil revenues.
All proceeds from oil sales would go into the development fund until an "internationally recognized" Iraqi government was set up. The monies would then be "disbursed at the direction" of the United States and Britain, in consultation with an Iraqi interim administration that has yet to be set up.
The resolution would shield Iraq's oil revenues and the development fund from lawsuits, except in the case of an ecological disaster such as an oil-spill. This is the usual practice for a fund administered by the United Nations but not one over which the world body has no power.