I'v been suspcious that the Iraq war was all about oil. Now the real maneuvering begins. Oil produces 95 per cent of the Iraq's revenue. There is now a disastrous decline in oil production in the south of Iraq. Starvation has only been averted by a rationing system at a cost of $6 billion a year. New oil contracts keep the country solvent and deteriorating into chaos are being criticised inside Iraq as a sell-out to the big oil companies. Looks like Big Oil will get a strangle hold on Iraqi politics just like they have in the US.
Sunday, 21 June 2009
It is only now, six years after the American invasion, that the battle for the control of Iraqi oil production is moving to the centre of politics in Baghdad. On 29 and 30 June, the Iraqi government will award contracts under which international oil companies will take a central role in producing crude oil from Iraq's six super-giant oilfields over the next 20 to 25 years. By coincidence, 30 June is also the date on which the last American troops will be leaving Iraqi cities. On the very day that Iraq regains greater physical authority over its territory, it is ceding a measure of control over the oilfields on which the future of the country entirely depends.
The government made a serious miscalculation last year. It believed the oil price would stay around the $140-a-barrel mark. It raised government salaries and hired more employees – who now total at least two million, double the level under Saddam Hussein. Some 600,000 people work in the army, the police and the security apparatus. Expensive contracts were signed for the supply of electric plants and aircraft.
Iraqis and non-Iraqis alike have come to think of crises in Iraq in terms of people slaughtering each other. This has been the pattern over the past six years. But Iraqis are now waking up to the fact that they face a different type of crisis, one that will profoundly affect their future. Aside from oil, Iraq exports very little apart from dates. Most of the crude is pumped out of super-giant oilfields such as Kirkuk and Bai Hassan in the north and Zubair, Rumaila, Missan and Qurna in the south. It is their output which is now in disastrous decline.
The government feels it has no choice but to give up a measure of control over its one asset in return for expertise and investment – though this situation is partly of its own making. The economy is a barely floating wreck. It has suffered from 30 years of war, sanctions and occupation. For six years the US and successive Iraqi governments have talked about reconstruction, but they have done little. I long ago developed a simple test for propaganda claims about reconstruction: I climb on the roof of my hotel in the Jadriyah district of Baghdad and study the skyline to see if any cranes are visible. To this day there are almost none – aside from a few rusting ones where Saddam was building a giant mosque, and, until recently, a cluster where the US was erecting a giant new embassy.
Oil rush: Scramble for Iraq's wealth
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