Iraq's Oil Industry
Iraq's release of its full statistics for oil production in August 2010, illustrates the continuing decline of its oil industry since the end of 2009. In August, total output stood at 55.4 million barrels, compared to 61.3 million barrels in December, 2009. Consequently, government revenue from petroleum has dropped, with earnings at $3.9 billion in August compared to $4.4 billion only half a year earlier.
The reality of these trends lies in stark contrast to announcements from Iraqi officials that followed the completion of the second round of petroleum bids, which resulted in ten contracts being signed with foreign companies such as the Russian firm Lukoil and Royal Dutch Shell. The Oil Minister Hussein al-Shahristani had claimed that Iraq could boost production capacity from the current level of approximately 2.5 million bpd (barrels per day) to around 12 million bpd in six years, rivaling Saudi Arabia's capacity of 12.5 million bpd. Similarly, Prime Minister Nouri al-Maliki has affirmed that additional revenues generated by increased oil production would not only help to pay off Iraq's foreign debts of roughly $120 billion, but also solve problems of reconstruction.
It is extremely unlikely, however, that Iraq will meet these targets for expansion of the petroleum industry. Current trends aside, the World Bank estimates that $1 billion in investment is required just to maintain present production levels because of the outdated and damaged infrastructure such as ports and pipelines, among others. Meanwhile, a boost to 5 million bpd will cost $30 billion over the next eight years. By contrast, Saudi Arabia's production capacity is the result of 75 years of development worth hundreds of billions of dollars, without the problems of three decades of warfare and sanctions, or a corrupt and inefficient bureaucracy from which Iraq suffers.
Further, where Saudi Arabia ranks 13th out of 183 countries in the World Bank's 2010 "Ease of Doing Business Index," Iraq stands at 153rd (a drop of three places from the 2009 index). The reasons for such a large difference include the fact that Iraq's economy is still largely centralized and state-managed -- a legacy of what Daniel Pipes describes as the "Stalinist nightmare of Saddam Hussein"-- as well as the general lack of security and stability in the country caused by an Al-Qaeda insurgency of around 2000 members as well as the ongoing political stalemate.
These are all big obstacles to attracting the investment needed to develop the oil industry, despite the contracts signed with international firms: the Organization for Economic Cooperation and Development (OECD) gave Iraq the worst score of seven (on a scale from zero to seven) on its credit risk classification system. Likewise, a July survey of 300 business executives by the Economist Intelligence unit in July found that 64% believed that Iraq was too dangerous to invest in right now.
It is not surprising that certain analysts considered the various pronouncements from Iraq's politicians mere rhetoric -- perfectly understandable as the second round of bidding was relatively successful in terms of the number of deals agreed to. The government therefore saw the event as a sign of Iraq's return to a prominent position in the world's oil-market after 30 years of war and sanctions. After all, the first oil-bidding round in June 2009, which was broadcast live on Iraqi television and began with 22 companies placing bids, turned out to be an almost complete failure as only one deal, with a consortium from British Petroleum (BP) and China's CNPC, was agreed to.
This lack of success arose from the fact that the Iraqi government was thinking far more in terms of profits for the state, rather than on creating workable business deals that foreign firms could accept.
While it is to be expected that foreign firms will be able to increase petroleum production and repair damaged equipment and infrastructure in the coming years, Iraq's political elite might do well to think about toning down their unrealistically high ambitions for the nation's oil industry, and make it a priority to move the country away from sole dependence on petroleum revenues, which presently account for 70% of GDP and 90% of government income.
The best way to go about this would be to diversify Iraq's economy by gradually liberalizing the predominantly centralized, command infrastructure. Such a policy might entail reducing the number of permits required to build on a given site: at present, 14 permits are required to build anything in the country, on average, and take 215 days to complete.
Streamlining this bureaucracy would not only allow reconstruction efforts to proceed more swiftly and mitigate Iraq's housing crisis, but also reduce corruption by introducing more transparency into the system. It would be a shame if Iraq fell victim to the oil curse that afflicts many of its neighbors: the sooner dependency on oil revenues is reduced, the better for the country's future.
Aymenn Jawad Al-Tamimi is an intern at the Middle East Forum and a student at Brasenose College, Oxford University.
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by Soeren Kern
"There is no territory more occupied than the body of a Palestinian woman, or a strip... severed by the violent imposition of the superstitions of Allah and the followers of Mohammed. We had better not even mention the situation of Palestinian homosexuals. This selective outrage by top progressives when it involves Israel is indeed anti-Semitism." — Alberto Moyano, Spanish newspaper editor.
"It is possible legitimately to criticize Israel. But it smells fishy when all of the blame is attributed to Israel, without even mentioning the small detail that a terrorist and jihadist group that rules Gaza has infringed on every conceivable humanitarian principle, by using civilians as human shields, and launching missiles from apartment blocks, while their leaders are living comfortable in Qatar, guests of a sheik." — Ángel Mas, Spanish analyst.
There has been virtually no public outcry whatsoever in Spain over the deaths of more than 160,000 people during three years of fighting in Syria; the decimation of ancient Christian communities at the hands of Islamists in Iraq; the kidnapping of 300 girls by Islamists in Nigeria; or the downing of a civilian passenger plane in Ukraine.
"The most anti-Semitic people are supposedly the most educated and well-informed." — Spanish Ministry of Foreign Affairs report on anti-Semitism in Spain.
by Alan M. Dershowitz
by Khaled Abu Toameh
There is growing concern in Ramallah, Cairo, Riyadh and Dubai that the U.S. Administration is working to prevent the collapse of Hamas.
"The Americans mistakenly think that moderate political Islam, which is represented by the Muslim Brotherhood, will be able to combat radical Islam. The Americans are trying to bring the Muslim Brotherhood back to the region." — Palestinian official, Ramallah.
The Iranians, with whom the U.S. is now negotiating on nuclear weapons -- amid fears in the Middle East that the U.S. will capitulate to Tehran's demands if it has not effectively capitulated to them already -- have now joined Qatar and Turkey in opposing any attempt to confiscate Hamas's weapons.
The Paris conference was actually a spit in the face to the anti-Hamas forces in the Arab world. By failing to invite the Palestinian Authority to the conference, Kerry indicated that he does not see any role for Abbas and his loyalists in a post-Hamas Gaza Strip.
by Amir Taheri
According to Küntzel, German leaders have at least two other reasons for helping Iran defy the United States. The first is German resentment of defeat in the Second World War followed by foreign occupation, led by the US. The second reason is that Iran is one of the few, if not the only country, where Germans have never been looked at as "war criminals" because of Hitler.
by Malcolm Lowe
Go to Nazareth and you can easily find the mini-mosque. It displays a large poster of Koran quotations denigrating Christianity and urging Christians to convert to Islam.
Overlooked is a fundamental difference between the two regimes. Israel is a state governed by the rule of law. The Palestinian Authority, like most other states in the region, is a personal dictatorship. Arafat started the fashion of simply disregarding the laws.
What is needed in Israel is a central policy unit with the brief of developing long-term policies both to integrate Israeli Christians and to engage with the great variety of Christians in foreign countries.