Iraq Reconstruction

[system]

So you nicely side step the fact you have, as is typical, been wrong, to get into spin.

*Originally posted by december *
Thanks for the New York Times cite, Collounsbury. I repeat my contention that they are using negative spin, while the Telegraph is resorting to positive spin. Of course, the Times also has a lot of useful information.

The NYT was making a value judgement, the headline in the Telegraph reports a number, they are not exactely comparable. Now, of course you see the value judgement as spin since you seem to see the world through the eyes of spindom and ideology, however the characterization, negative as it was, strikes me as an accurate one.

Compare the Times’s headline with the first sentence in the article:

Headline: OPEC Unfazed by Prospects for Renewed Flow of Iraqi Oil

First Sentence: After several false starts, Iraq seems poised to resume a steady flow of oil exports starting in August

Yes, after several false starts, pure fact that.

The headline is negative: It suggests that OPEC isn’t impressed with the renewed flow of Iraqi oil.

What it says is that OPEC is taking no action, it is unfazed. That is a fact, there is no OPEC reaction to the prospect, as of yet uncertain, of a return to the market by Iraq. Your painfull overreading doesn’t say much about the title, a lot about your increasingly desperate attempts to find silver linings in re Iraq.
I see nothing enlightening in your painfully strained “analysis” afterward.

I question this sentence:IANAOA, but I had understood that oil is a world market and the pricing reflects an expectation of future supply and demand. Under those circumstances, I don’t see why the timing of Iraqi oil reaching the United States will prevent a price drop.

The timing would prevent a price drop if the expectation is that demand will increase to offset the increased supply.

We have two unknown variables here, in this judgement. Supply and Demand. Both will be influenced by a number of sub variables. In the case of supply (S) there are a number of suppliers (S1-Sx). Iraq is but one of those suppliers, call it S(i). The behavior of the suppliers (Sx) is a function of anticipated world demand (Dx) based on anticipated level of economic activity and exogenous events, e.g. weather which influences both economic activity and consumption in areas like heating.

The article indicates that their analysis seems to be (that is S[opec]) that increase demand typically seen in the cold months will offset the S(i) available at that point. They are then either betting on (i) a cold winter or more likely (ii) that increase in global supply S(x) by S9i) will be trivial.

The rest of your analysis is just painfully strained and actually stupid.

As for OPEC, they are a cartel. Like any producer cartel they want to see price maximization for a long term. OPEC behaviour since the late 1980s has been consistent with price management rather than utter price maximization. They no longer have the pricing power they did in the 1970s, so obsessing about that is just silly.

Greedy is nothing but a scare word - capitalism is “greedy” but that doesn’t tell us very much.

[Sam_Stone]

Well, it looks like the U.S. military is finally learning to adapt to the situation a little better.

[url=http://www.msnbc.com/news/945286.asp]MSNBC** reports a shift in U.S. tactics with the population:

Alarmed at attacks by angry relatives, U.S. Army officers in Fallujah did something unusual for the American military but common in rural Iraq. In an effort to ease the desire for revenge, they delivered formal apologies to local tribal sheiks and paid blood money for every dead and injured person deemed not to be a combatant.

The compensation payments — $1,500 for a death and $500 for an injury — are regarded by Fallujah’s political, tribal and religious leaders as one of several bold strategies employed by U.S. commanders here over the past few weeks to appease a city brimming with discontent. Officers have ordered soldiers to knock on doors before conducting most residential searches. They have also permitted the mayor to field a 75-member armed militia and doled out nearly $2 million on municipal improvements instead of waiting for private American contractors to arrive.
In the most significant concession, the commanders have pulled soldiers out of every fixed location in the city, including the police station and city hall, leaving a police force run by Iraqis to man checkpoints and guard key installations.

Sounds like the right moves to me. I’m sure you could argue that it’s too little, too late, but one thing you have to give the administration - they’re showing a willingness to adapt. Maybe in a pig-headed fashion, but so far the reconstruction plan in Iraq has changed in major ways, and all for the better, at least three or four times now. Pulling out Gardner and putting in Bremer, backing off the ‘democracy now’ plan, yanking the INC out of the position of power they were trying to set up (other than Chalabi on the council), and now a major shift in military tactics to recognize the culture.

There’s still hope for this. BTW, I hope you’ll recall that all during the run-up to the war I repeated that my main worry was reconstruction. I kept saying that, as a free-market quasi-libertarian, I had grave doubts about central plans to reconstruct entire countries. That’s one reason why you and I are closer to being on the same page about this. But to me, the flexibility shown by the authority in Iraq is a good sign, because I don’t believe in rigid central planning.

[december]

Snopes has confirmed that this letter is “true” in the sense that it really was written by Eric Rydbom, an Army engineer stationed in Iraq. Rydbom says the news we watch on TV is exaggerated, sensationalized and selective.

Just 45 days [after war was declared over], in a partnership between the Army, the Iraqi people and some private companies, there are now 3200 megawatts (Mw) of power being produced daily, 1/3 of the total national potential of 8000 Mw. Downed power lines (big stuff, 400 Kilovolt (Kv) and 132 Kv) are being repaired and are about 70 percent complete.

…In central Iraq between Baghdad and Mosul, home of the 4th Infantry Division, water treatment was spotty at best. …We are slowly but surely solving that. Contracts for repairs to facilities that are only 50 percent or less operational are being let, chemicals are being delivered, although we don’t have the metering problem solved yet ( … but again, it’s only been 45 days).

…The Refinery at Bayji is [operating] at 75 percent of capacity producing gasoline. The crude pipeline between Kirkuk (Oil Central) and Bayji will be repaired by tomorrow (2 June). LPG, what all Iraqis use to cook and heat with, is at 103 percent of normal production and we, the U.S. Army, are ensuring it is being distributed fairly to all Iraqis.

You have to remember that only three months ago, all these things were used by the Saddam regime as weapons against the population to keep them in line. If your town misbehaved, gasoline shipments stopped, LPG pipelines and trucks stopped, water was turned off, power was turned off.

…All LPG goes to the Iraqi people everywhere. Water is being purified as best it can be, but at least its running all the time to everyone.

There is no Christian way to say this, but [the thugs who shoot at us] must be eliminated and we are doing so with all the efficiency we can muster. Our troops are shot at literally everyday by small arms and Rocket Propelled Grenades (RPGs). We respond. One hundred percent of the time, the Ba’ath party guys come out with the short end of the stick.

[system]

*Originally posted by Sam Stone *
Well, it looks like the U.S. military is finally learning to adapt to the situation a little better.

[url=http://www.msnbc.com/news/945286.asp]MSNBC** reports a shift in U.S. tactics with the population:
Sounds like the right moves to me.

Indeed it does sound right. Why it took so long, I don’t know.

I’m sure you could argue that it’s too little, too late, but one thing you have to give the administration - they’re showing a willingness to adapt.

No, that is not one thing I would give the Bush Administration, the willingness to adapt so far has been slow and grudging, and never seems to put enough force into it.

I still await serious effort in financing.

Maybe in a pig-headed fashion, but so far the reconstruction plan in Iraq has changed in major ways, and all for the better, at least three or four times now. Pulling out Gardner and putting in Bremer, backing off the ‘democracy now’ plan, yanking the INC out of the position of power they were trying to set up (other than Chalabi on the council), and now a major shift in military tactics to recognize the culture.

In my considered opinion, while you make valid points, the people in Washington have not fully understood how far off base their conceptions are – or they do not want to, and every allowance on change comes slowly, painfully and with caveats.

At this rate we’ll be in January 2004 before we get proper financing for the effort, and recall Sam, I’ve been saying car bombs in the Spring if we do not get real movement soon.

There’s still hope for this. BTW, I hope you’ll recall that all during the run-up to the war I repeated that my main worry was reconstruction. I kept saying that, as a free-market quasi-libertarian, I had grave doubts about central plans to reconstruct entire countries. That’s one reason why you and I are closer to being on the same page about this. But to me, the flexibility shown by the authority in Iraq is a good sign, because I don’t believe in rigid central planning. ]

There is far too much ideology still going into this.

First, internationalizing this effort is a refrain you hear from everyone now. Everyone. Except of course the core Ideologues who conceived of this mostrous waste of resources. They seem to want to keep pretending Iraqi oil money is going to cover it all. Well, anyone who knows the numbers knows that’s a sad fantasy, at best, an outright untruth at worst.

So, how do you get internationalization – and I mean real internationalization, not “Coalition of the Willing (and brother can you spare a million on the side)” internationalization. People with skills and resources. Above all resources.

You get it by getting off the high horse and admitting, well, things ain’t what we thought, and okay we’ll cede a bit of power against a million here and there, and if you throw in troops, a whole chunk more. Because others don’t want to die for American mistakes.

Look over the Pentagon’s report, it’s there in hedgy advising. So what is the response on this from the Admin?

To date, resounding silence.

I grow sick and frustrated, insofar as it strikes me some people in Washington are throwing the CPA-I into a bearpit because their ideology requires it, not because of a rational, even headed analysis.

[sailor]

Officers have ordered soldiers to knock on doors before conducting most residential searches.

And then kill the people inside anyway like happened a few days ago when they killed five people in a house where there was some suspicion Saddam Hussein might be? Kill everybody in case it is Saddam Hussein and then apologise. God forbid Saddam Hussein would be caught alive and had to be brought to trial.

They have also permitted the mayor to field a 75-member armed militia . . . In the most significant concession, the commanders have pulled soldiers out of every fixed location in the city, including the police station and city hall, leaving a police force run by Iraqis to man checkpoints and guard key installations.

In other words: the commanders recognise they do not have the capacity to police and control their areas without taking losses which are mounting.

Sounds like the right moves to me. I’m sure you could argue that it’s too little, too late, but one thing you have to give the administration - they’re showing a willingness to adapt.

This is rich. So, when the Administration recognises in fact that its critics were right all along, that means they are “willing to adapt”.

Maybe in a pig-headed fashion, but so far the reconstruction plan in Iraq has changed in major ways, and all for the better, at least three or four times now.

That’s a good one too. The situation is a mess but it has improved steadily. How bad was it to begin with then? I am reminded of the skit where you see the face of a guy who is musing to himself: Today marks 30 years I have been working for this company. Yes, I remember it well because after three years I had my first promotion. Then after six years I was propmoted again (he continues to recall one promotion after another , many promotions. At the end the camera pulls back and we see the guy is a ditch digger. Where the hell did he start if after countless promotions he is a ditch digger?)

[system]

*Originally posted by december *
**Snopes has confirmed that this letter is “true” in the sense that it really was written by Eric Rydbom, an Army engineer stationed in Iraq. Rydbom says the news we watch on TV is exaggerated, sensationalized and selective. **

December, beat your sad little “liberal media bias” drum elsewhere unless you have some substantive to add to the issue of reconstruction.

[Sam_Stone]

I have several reservations about internationalizing this. I worry that the U.N. will turn Iraq into a political football. I worry that the pull and tug of politics between many countries will turn the reconstruction into an incoherent mess. The U.N.'s record is spotty at best, and with a politically explosive area like the middle east, there are a lot of ways that it could turn out badly.

I might be more amenable to NATO becoming involved - but it seems to me the problem now is that the international community doesn’t want to become involved in a big way, and does not have the resources.

The number bandied around is 250,000 soldiers. WHO is going to supply them? France seems busy. Germany doesn’t seem interested. Britain is already there. Canada could supply a couple of thousand troops at most. Do you want Russians there? Do the Iraqis want the French and Russians there, given their close relationship to Saddam’s regime?

“International support” is a nice sounding idea, but when it comes right down to it, I see a lot of potential pitfalls, and I’m not sure it’s even possible.

What are your thoughts? Who could provide troops in that kind of quantity. Turkey? Would that be acceptable to the Kurds? (I think the U.S. is already mulling over major Turkish assistance).

[Eolbo]

One of the obvious candidates to supply troops is India, a nation with much experience in peacekeeping. It was hoped India would provide circa 17,000 troops but she has declined without UN endorsement as did all the major European nations.

Its time George Bush swallowed his pride and unbuckled Kofi Annan’s pants.

[system]

*Originally posted by Sam Stone *
I have several reservations about internationalizing this. I worry that the U.N. will turn Iraq into a political football.

Fair enough, however Afghanistan, however underfunded the efforts, has not become a political football.

It all depends on how it is done. US Sec Coun. can help devise a framework that is workable.

I worry that the pull and tug of politics between many countries will turn the reconstruction into an incoherent mess.

It already is an incoherent mess, so that would hardly have any novelty value.

Again, structure is the determinant. Done well, spreading the burden works. Done stupidly, it does not.

The U.N.'s record is spotty at best, and with a politically explosive area like the middle east, there are a lot of ways that it could turn out badly.

The US record is also spotty at best in this area, so this strikes me as a non-objection.

I might be more amenable to NATO becoming involved - but it seems to me the problem now is that the international community doesn’t want to become involved in a big way, and does not have the resources.

NATO is a seperate issue to UN, it is first not a development organization. They are only relevant to the Security question, and the security question although important is not the sole issue. Indeed, as I have consistently argued, money is the central issue - security will in part flow from Iraqis having money in the pocket, money not from an underground or gun running or banditry or countless other destabilizing but now prime activities, money from constructive value adding work.

Further to that, the NATO heavy hitters have clearly indicated that they do not come w/o UN. So there you go.

The number bandied around is 250,000 soldiers. WHO is going to supply them? France seems busy. Germany doesn’t seem interested.

France and Germany both could send units and it is reported in at least the European press they’d be willing to in an internationalized situation. The French indeed expressed - in a rather more adult position that the Bush Admin - the opinion that it is not in their interest to see an American failure in Iraq. Of course they are not going to put their hand in the bear trap without some quid pro quo, and the Administration’s (well DoD mostly) childish and short sighted behaviour vis-a-vis France in April and May did not help things.

Britain is already there. Canada could supply a couple of thousand troops at most. Do you want Russians there?

In NATO-UN context GB and others can perhaps send more troops, Russians might well be fine in some regions, where they can show their faces. I wouldn’t desire Russian troops in hot zones of course.

Do the Iraqis want the French and Russians there, given their close relationship to Saddam’s regime?

Contrary to your suppositions Sam, I have never ever heard an Iraqi, pro or anti Sadaam express an opinion regarding the French and Russians about their relationships with Sadaam. That’s purely in your fevered imagination and part of the ridiculous claptrap the Conservo-Pundits pimp.

Indeed, the French ‘standing up’ to the Americans made France wildly popular for showing some balls, unlike the craven Arab leaders.

“International support” is a nice sounding idea, but when it comes right down to it, I see a lot of potential pitfalls, and I’m not sure it’s even possible.

Everything has pitfalls. The key is doing things right. Now this Administration doesn’t have much of a record of that, but hope springs eternal.

As for the possible, well again, that depends on major climb downs by the Admin. It’s probably not going to happen because they are blinkered ideologues rather than pragmatic realists, but again, hope does spring eternal.

What are your thoughts? Who could provide troops in that kind of quantity. Turkey? Would that be acceptable to the Kurds? (I think the U.S. is already mulling over major Turkish assistance).

No, the Turks are hated, absolutely hated by everybody. In any case, the Turks rightly want to be bribed a goodly sum, in part to cover costs, in part to get back for their public humiliation back in the spring. Again short sighted peevishness on the part of the DoD raises the cost of doing business. Bloody unprofessional fools.

[system]

Further to the issue two pieces of news highlighting the situation:

(a) U.S. to Fund Polish-Led Peacekeeping Force Costs Expected to Be More Than $200 Million See Washington Post
http://www.washingtonpost.com/wp-dyn/articles/A59512-2003Jul28.html

(b) Baker Will Not Join Iraq Reconstruction
http://www.washingtonpost.com/wp-dyn/articles/A59081-2003Jul28.html
The last is somewhat of a disappointment, but I do note for the record that Powell’s spokesman used a Monty Python reference, which automatically endears him to me.

[sailor]

Opposition to Polish intervention is growing steadily in Poland as they see how things are developing in Iraq.

Also, the situation is Afghanistan is nowhere near what some would like us to believe.

http://news.bbc.co.uk/2/hi/south_asia/3105511.stm

Warlords backed by the United States are creating a climate of fear in Afghanistan, an international human rights group has said. In a new report, Human Rights Watch says the US-led coalition’s support for warlords in Afghanistan is destabilising the country and could threaten next year’s elections. Human Rights Watch also highlights abuses carried out by army and police, some of them working to senior ministers in President Hamid Karzai’s government. The report come a day after a provincial governor called on US-led coalition forces to mount military operations to target resurgent Taleban forces.
. . . . .
Human Rights Watch’s Brad Adams said the warlords had “hijacked” the country outside Kabul. “Human rights abuses in Afghanistan are being committed by gunmen and warlords who were propelled into power by the United States and its coalition partners after the Taleban fell in 2001,” he said. “The United States and the United Kingdom in particular need to decide whether they are with President Karzai and other reformers in Kabul or with the warlords.”

A spokesman for Mr Karzai said the government was doing all it could to cut down on human rights abuses but said it was “a gigantic task”. Among the police and army abuses described in the report are kidnappings, burglaries, rapes and extortions. The group also says political activists and journalists are being harassed, arrested and threatened with death by security officials. The abuses are being carried out by police working under senior officials, including cabinet ministers and provincial governors, the report claims.

In some parts of the country, the atmosphere of intimidation means that women are not leaving their homes and girls are not going to school. The continued threat of Taleban forces is also causing concern in some areas. Six Afghan policemen were killed in an ambush by suspected Taleban and al-Qaeda fighters in the Helmand Province on Sunday

[system]

Further to issues of reconstruction, and illustrative of the kinds of discussions I have (that is in the real world, among people w/o political angles on this) is this BBC article on conditions for business, fro a Brit perspective.

I offer it as an additional antidote for the december spin campaign.

Firms face risky Iraq business
http://news.bbc.co.uk/2/hi/middle_east/3056035.stm

BTW Sailor, can you direct me to commentary on the Poles?

[system]

Damn meant also to include this NYT article on the situation in re flights in.

Airlines Interest in Baghdad

Airlines Coveting Baghdad, If Airport Can Be Made Safe (Published 2003)

[London_Calling]

Capitalism is a beautiful and predictable thing:

*"Poland, which has sent troops to support the US-led forces in Iraq, has acknowledged its “ultimate objective” is to acquire supplies of Iraqi oil.
The Polish Foreign Minister, Wlodzimierz Cimoszewicz, said his country had never disguised the fact that it sought direct access to the oilfields.

He was speaking as a group of Polish firms signed a deal with a subsidiary of US Vice President Dick Cheney’s former company, Halliburton. *"
I’m sure theses market mechanisms (writ global) must make the Vice-President’s heart sing with validation.

[system]

Well, then they have gotten a truly bad deal. Truly bad.

Suckers.

[London_Calling]

Indeed, and the Polish national sponsors (Old Europe, sorry, the EU) might not be amused . . .

I wonder if Bush will be calling this the Coalition of the Drilling ?

[adamant]

*Originally posted by Collounsbury *
**So you nicely side step the fact you have, as is typical, been wrong, to get into spin.

The NYT was making a value judgement, the headline in the Telegraph reports a number, they are not exactely comparable. Now, of course you see the value judgement as spin since you seem to see the world through the eyes of spindom and ideology, however the characterization, negative as it was, strikes me as an accurate one.

Yes, after several false starts, pure fact that.

What it says is that OPEC is taking no action, it is unfazed. That is a fact, there is no OPEC reaction to the prospect, as of yet uncertain, of a return to the market by Iraq. Your painfull overreading doesn’t say much about the title, a lot about your increasingly desperate attempts to find silver linings in re Iraq.
I see nothing enlightening in your painfully strained “analysis” afterward.

The timing would prevent a price drop if the expectation is that demand will increase to offset the increased supply.

We have two unknown variables here, in this judgement. Supply and Demand. Both will be influenced by a number of sub variables. In the case of supply (S) there are a number of suppliers (S1-Sx). Iraq is but one of those suppliers, call it S(i). The behavior of the suppliers (Sx) is a function of anticipated world demand (Dx) based on anticipated level of economic activity and exogenous events, e.g. weather which influences both economic activity and consumption in areas like heating.

The article indicates that their analysis seems to be (that is S[opec]) that increase demand typically seen in the cold months will offset the S(i) available at that point. They are then either betting on (i) a cold winter or more likely (ii) that increase in global supply S(x) by S9i) will be trivial.

The rest of your analysis is just painfully strained and actually stupid.

As for OPEC, they are a cartel. Like any producer cartel they want to see price maximization for a long term. OPEC behaviour since the late 1980s has been consistent with price management rather than utter price maximization. They no longer have the pricing power they did in the 1970s, so obsessing about that is just silly.

Greedy is nothing but a scare word - capitalism is “greedy” but that doesn’t tell us very much. **

I agree with most of your post - but the statement " They no longer have the pricing power they did in the 1970’s" implies a false statement that OPEC has less ability to set price now - meaning less ability to set supply - and that is wrong. In the 1970’s OPEC first started up and there was a tremendous oil shock - but there was not a real shortage (more of a logistic shortage that was remedied over the next few years). Back then the percentage of oil production cabability of OPEC compared to world cabability was less than 50%. It took a little while (and there was a severe over-reaction mostly due to a percieved shortage compared to a real shortage) but world production soon overcame the OPEC reductions forcing the price of oil much lower for a long while.

Now, every month that goes by, OPEC nations have a larger percentage of the available remaing oil production capacity - ie they have more and more “pricing” power due to the fact that they control more and more percentage wise of the remaining easily produced oil. Taken together, non-OPEC oil has passed the production peak and is in decline. OPEC oil is still below peak (but getting closer) and so they can up production at will to lower price or slow production to raise the price - always keeping track of demand and being careful not to raise the price too quickly and cause a big world wide economic disaster that would lower demand.

So, in terms of oil, OPEC has more power today then they did in the 1970’s as any reductions in their production causes a real shortage for the world.

The US also imports more oil (as a percentage) every year as US production peaked in the 70’s.

What happens when world production peaks (and soon after OPEC nations peak) is going to be problematic as demand continues to increase but the supply will soon be decreasing.

Oil will be a lot more than $30 a barrel and all other commodities will go up due to the large reliance on shipping and worldwide production (ie - moving raw goods to one place for manufacture - then the parts to another place to assemble - then shipping the finished product to another place to sell).

The Middle East will be more important every day and continue to be important to the whole world’s oil supply for many years.

[London_Calling]

** adamant ** - I’m not sure how you managed a post on OPEC and world-wide oil production without mentioning Russia, but you deserve . . .something.

Actually, I don’t understand how OPEC can have “more power today than in the 1970’s” when the world’s bigest exporter (Russia) isn’t a member (and won’t be) and is desperate to sell as much as possible *and *the nation most likely to exceed Russia’s export levels in the medium term (Iraq) will only become a member of OPEC over the dead bodies of . . . .well, quite a few US troops. OPEC membership is most certainly not in the Administrations plan for the ‘independent’ (sic) Iraq , IMHO.

Indeed OPEC output (compared with non-OPEC) continues to fall, year on year.

• part of the original basket of Iraqi goodies included a higher percentage on non-OPEC oil, IMHO (and I wrote in this forum here last year)

[december]

*Originally posted by London_Calling *
**I wonder if Bush will be calling this the Coalition of the Drilling ? **

Well done, LC

[system]

*Originally posted by adamant *
I agree with most of your post - but the statement " They no longer have the pricing power they did in the 1970’s" implies a false statement that OPEC has less ability to set price now - meaning less ability to set supply - and that is wrong.

What?

Don’t be absurd.

They indeed have less ability to set supply now.

First, there are more non-OPEC producers than in the 1970s, with more non-OPEC regions under exploration. The threat of new market entry is now well understood and the reactions of consumers to longer term price pressures also very evident.

None of this was evident in the 1970s, and that lack of knowledge gave them pricing power.

Further to that, unlike in the 1970s, virtually all the OPEC producers, and indeed all the major producers are fairly heavily indebted and require a certain constancy in price and production. Again, unlike in the 1970s, they face domestic constraints in regards to acceptable levels of income, and that over a long term.

Your analysis in that regard is off target.

I do agree that OPEC is likely to accumulate a certain degree of market power, however again unlike in the 1970s, they are very aware of the longer term consequences of exercising supply side market power.

I also note that while established non-OPEC producers are hitting their peak, new exploration continues and we have hints of important off shore Africa finds that might be developed. Of course this is a matter of pricing as well, however OPEC is not what it was in the 1970s.