One goal the neoconservatives – including some in the Bush Admin – had for post-invasion Iraq was the privatization of Iraq’s state-owned oil industry, as a way of breaking the power of OPEC. The thinking was, competition between multiple private companies would drive up production and drive down the price of oil, and other OPEC nations such as Saudi Arabia and Iran would be forced to increase their own production to remain competitive. But it now appears – in a story broken by journalist Greg Palast for the BBC – that a combination of State Department “pragmatists” and U.S. oil executives have managed to block the sell-off scheme. They want a new state oil company instead. (One reason for this is to defuse Iraqi resentment over privatization plans, which has provoked insurgents into targeting oil facilities and pipelines.) Both of these competing plans, by the way, were in the works long before the invasion started. See http://www.gregpalast.com/detail.cfm?artid=417&row=0;http://www.gregpalast.com/printerfriendly.cfm?artid=419. (See also Palast’s article, “OPEC on the March: Why Iraq Still Sells Its Oil a la Cartel,” in Harper’s Magazine, April 2005 – not available online to non-subscribers, unfortunately.)
Issues for debate:
Are the neocons right on this point? Would privatizing the oil in a major oil-producing country weaken OPEC’s power, increase production and drive down oil prices?
Are discontented Iraqis correct in believing that the above would not be the best thing for Iraq?
How is this likely to play out in the end? Is there any chance, at this point, that the neocons will succeed in their privatization scheme?
Assuming all goes as planned, and the new Iraqi National Assembly succeeds in drafting a new constitution and the voters approve it, resulting in the establishment of a permanent government next year, what is that government’s oil policy likely to be?
Under the above scenario, what happens if the new government’s oil policy is at odds with the Bush Administration’s?
Sure wouldn’t. The recent surge in prices is caused by rising demand worldwide, and anyone who thinks they can break the power of OPEC from the supply side is delusional.
Saudi Arabia is past peak now, and the remaining countries in the Middle East are approaching that point as well. While we don’t get precise statistics, it seems clear that Saudi Arabia (and by extension probably the others) simply can’t pump any more at this point, so there’s no way to force them to pump more.
As to whether discontent Iraqis are right to be upset or not, that’s a meaningless question. Currently oil wealth in Saudi Arabia, the UAE, and others pours into the hands of a ruling elite of oligarchs propped up by the various countries that are buying the oil. If a privatization scheme did actually manage to get a consistent flow of oil out of Iraq (unlikely in my opinion) the wealth would presumably flow to a different ruling elite, with the same amount going to the country’s people.
Methinks that if the situation in Iraq stabilized enough that oil could actually be pumped for profit, and if the administration was still trying to get Iraqi oil fields into the hands of the American and European oil companies, and if a faction in the Iraqi government tried to start of government takeover, and if the takeover couldn’t be stopped by means within the new Iraqi Constitution, then probably the leaders of the takeover faction would start turing up dead. But that’s just speculation, of course.
Yes, modestly. However, those neoconservatives who did argue for this (and not all did) are incorrect that it is something which should be done now. Such a large decision belongs to the Iraqi people through their democratically-elected government.
No. However, it is their call if they can acquire enough power in the government.
It’s not their call.
Too early to tell. I think a complete privitization is unlikely, if only because governments don’t like to release power. There may be a hybrid solution – selling minority or even majority stakes, privitizating some fields but not others, etc.
Too bad for the Bush administration. That’s the risk of spreading democracy – sometimes those damn voters vote for governments who don’t do what you want. It’s totally worth it.
You understand that, but I have my doubts as to whether Bush does.
That’s one aspect of it. For another, see Palast’s article linked in the OP:
Also, don’t forget the Bush Admin promised that the oil profits would be used to rebuild postwar Iraq – which is much likelier to actually happen if those profits are in state rather than private hands (whether Iraqi or American).