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Who Controls The Oil In Iraq? - 2003-05-01

An independent research organization says the Bush administration’s promise - that Iraq’s oil belongs to the Iraqi people - may soon be put to the test. Worldwatch Institute says reintegrating Iraq into the world oil market will likely face some problems.

Worldwatch says efforts to use oil revenues to rebuild Iraq could be “derailed by internal or external struggles” to control that oil.

It says history bears out – what it calls – “a sad geopolitical fact. Of the dozen major exporters of oil, only Norway has a stable and representative political system.” It says, “Everywhere else, the concentrated, easily extracted wealth that oil provides has led to dictatorships, corruption and continued poverty for most citizens.”

Worldwatch researcher Michael Renner says one example of this is Nigeria, which was ruled by military dictators for many years after independence.

He says, "Those dictatorships had put in place a system whereby the communities in particular in the area where most of the oil is being produced in the Niger Delta got very, very little of the economic benefit of producing and selling that oil. On the other hand they really suffered the consequences in terms of environmental destruction, social disruption, the military repression that was quite heavy and actually still is in some ways. The sequence of military governments but also the major international oil companies that really had very little interest in seeing to it that the oil would actually benefit the local population."

He says, “The needs of the Iraqi people are enormous” and a process must be found to make sure oil revenues benefit them.

Another obstacle facing the Bush administration, he says, is the awarding of contracts to foreign oil companies during a transition period. Iraq had contracts with Russia, France and China prior to UN sanctions being imposed after the first Gulf War.

He says, "The question, of course now, is will those kinds of contracts be upheld by the new government once it comes into place – whether that be a transition government or a government that follows that transition period. At the same time, it’s quite clear that other companies that were left out in the cold in the 1990’s are interested in getting some kind of access, some kind of share of the pie. That relates primarily to US but also some British companies."

Mr. Renner says another outstanding issue is that control of the oil may actually rest with the United Nations. He says earlier Security Council resolutions placed sanctions on Iraq and “channeled all oil revenues into the oil for food program.” The United States has called for an immediate lifting of those sanctions. Worldwatch says one way to deal with the issue is for the United Nations to establish “a highly respected, international board that supervises Iraq’s oil exports.” It says its members could include “eminent persons from Iraq and other parts of the world – and be empowered to oversee the awarding of oil contracts.”

It says without a “strong and transparent oil economy,” Iraq could “follow the history of other oil exporting nations where oil wealth has actually blocked economic and political advancement for most citizens.”