Columns / Discourse / January 11, 2012

World Politics Corner: Iraq’s oily problem

Domestically, in the United States and Iraq, there have been mixed emotions about the final withdrawal of U.S. troops from Iraq. After almost a decade, soldiers are allowed to return home to their families, and Iraq must now shoulder the burden of policing its streets. According to U.S. President Barack Obama, the U.S. is leaving behind “a sovereign, stable and self-reliant Iraq, with a representative government that was elected by its people.”

What he failed to mention in his speech at Fort Bragg, N.C., was the lack of economic independence Iraq would receive.

The answer, if anyone in the U.S. is willing to ask, is none. All major and minor Iraqi oil fields have been divvyed up between large U.S. and British oil companies. There are only five Iraqi companies. Unsurprisingly, the Iraqi companies are drilling in the two smallest oil fields and the two largest, while the three middle-sized fields, as well as the two largest ones, are being dominated by foreign companies.

Iraq has the second largest oil reserve in the world, the first belonging to Saudi Arabia. Yet 12 out of the 18 drill sites currently operating in Iraq are foreign-owned. While most countries that are economically in Iraq have one drill, Malaysia and China each have two and the U.S. has three.

As for oil production, Iraq has been exporting oil to the U.S., 448,000 barrels per day (bpd) to be precise. That makes the U.S. Iraq’s number one consumer. Over all, Iraq produces three million barrels per day and hopes to increase it to 3.3 million bpd by 2013.

Eventually they’d like to go as far as 12 million bpd by 2017, most of it going to, you guessed it, the U.S. If Iraq is already giving about 15 percent of its oil production to the U.S., chances are it will just increase over time. If that is unconvincing, guess who Iraq’s biggest customer was during the UN’s oil-for-food program under Saddam Hussein? And guess who was lobbying for Iraq to be able to produce more oil back then?

Numbers don’t explain it all. The companies have been lobbying in Iraq for the “Iraq Oil Law,” which would move oil production to private business rather than the nationalized status it has now. This is something only 12 percent of the world’s oil producers agree to, precisely because it is beneficial to the corporations, not the countries.

How likely is this to pass? I can’t say. But, an interesting question to put out into the ethos is: if the U.S. is Iraq’s largest consumer of oil, and the lobbyists in Iraq are mostly U.S. companies, what if the U.S. pressures Iraq into passing the legislation by (covertly, maybe) threatening to stop buying Iraqi oil? Iraq would then be cornered into it.

A counter argument may be, “Why would the U.S. stop buying oil, when oil is highly needed?” Well, let’s say Iraq decided not to sell oil to the U.S. No skin off our backs. The U.S. will just get more from Saudi Arabia, Canada, Russia, Venezuela, Mexico, or wherever. Why do I think this is the likely outcome of an Iraqi “refusal of service”? Because Saddam temporarily stopped selling oil to the U.S. in protest of Israeli excursions into the West Bank. The U.S. got oil from Russia to make up for what they would have bought from Iraq, and Iraq ended up losing a lot of money.

A last tidbit to put this into perspective: Saudi Arabia sells 20 percent of its oil to the U.S., but Aramco is a Saudi-owned company and has the monopoly of Saudi oil fields. Iraq is not anywhere close to that model.

Real independence seems far off for Iraq when the only resource it can exploit is not dominated by themselves.

Rana Tahir
Rana Tahir is a political columnist for The Knox Student, primarily covering international issues. She will graduate in June 2013 with degrees in political science and creative writing, after which she will attend the University of Denver's publishing institute.


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