On the Iraqi Oil Deal

Byline: | Category: Iraq | Posted at: Thursday, 26 June 2008

BAGHDAD – I’m bewildered by the criticism I’ve been hearing about a recent agreement between the Iraqi government and four multi-national oil companies. What I find especially surprising is the suggestion by some members of Congress that the United States demand that the deal be scrapped-particularly as the criticism has been levied by some who have complained the loudest that it is time for Iraq’s government to take control of its own political process. Taking control includes, presumably, making decisions that we might disagree with.

Not that this a decision that I find particularly disagreeable. Let’s face it, even the most transparent and efficient government—which Iraq’s certainly isn’t yet—is ill-suited to the task of running a business like, well, a business. Contracting out the extracting of Iraq’s natural resources to someone whose job that is, in exchange for a healthy cut of the profits, seems to me to be a good deal for everyone involved. It certainly offers the hope of being able to increase oil production sooner than has apparently been possible under bureaucratic control.

It has been more than five years since the removal of the previous regime, and a couple years since the Iraqi government assumed control, and it is only in just the last couple months that the level of Iraqi oil production now matches pre-war levels. The delay is largely due to the fact that there hasn’t been an efficient organization to take charge of making necessary repairs and managing the flow of petroleum. Delaying further, especially in light of record oil prices, is an opportunity cost to this struggling economy on the order of billions of dollars a month.

The decision was met here by barely a yawn. The only opinion I’ve heard from anyone on the matter was about the fact that the agreement preceded the still pending Iraqi oil legislation, which will determine how the oil revenue is to be spent. On that point, I can understand how some American legislators could be perplexed by the concept of actually waiting until they had revenues in hand before agreeing to spend them. Personally, I find the Iraqi sequence quite refreshing.

What I find especially disturbing is the implication that the Iraqi oil agreement “proves” the claim that this was always a war for oil–never mind the fact, that if it were, this would have happened five years ago. Why I object to the charge, aside from the fact that it is demonstrably not true, is that it feeds an enemy talking point. If you haven’t noticed, the security situation in Iraq has improved significantly. While there are still pockets of resistance, Al Qaeda in Iraq is a shell of what it once was. In order to regain some level of popular support, AQI would like nothing more than to tell Iraqis that all along this war was waged so that the occupying infidels could exploit Iraq for oil. That they might now be able to quote senior members of America’s own government to reinforce their point while American soldiers are still in harm’s way is simply disgusting.

Whether this decision was for better or worse doesn’t matter. It was an Iraqi decision to be made, and it was the Iraqis who made it. For Congress to demand now that it be reversed would simply feed yet another enemy talking point: that the Iraqi government is just Washington’s puppet.

Major Bob Krumm is currently assigned as an analyst to Multi-National Corps-Iraq. His opinions are his alone and do not necessarily reflect those of MNC-I or the Department of Defense.

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2 Responses to “On the Iraqi Oil Deal”

  1. David M Says:

    The Thunder Run has linked to this post in the blog post From the Front: 07/02/2008 News and Personal dispatches from the front and the home front.

  2. Jon Crisp Says:

    Bob,
    Great analysis! Stay safe…and keep up the great job.