Iraqi Oil: Blessing or Curse?

The disposition of Iraq’s oil reserves, among the largest and most coveted in the world, has been the unspoken agenda item in the debate over why the United States conquered Iraq and is a key element in a post-occupation Iraq? As discussed in What After Iraq?, Iraqioil is plentiful, it is cheap (at $1.00-1.50 barrel) to extract, and it is some of the “sweetest” (low sulphur content) oil in the world. Everyone wants it? Who will get it? And will Iraq benefit greatly from its exploitation?

The United States clearly Iraqi oil, although it rarely admits that oil had anything with invading Iraq, a questionable position. American oil companies, and Iraqi “entrepreneurs” like Achmed Chalabi, have been active in  trying to gain American access to oil rights after the war is over, and they are not alone in this desire. Whether a new Iraqi government will grant concessions to American oil companies (a questionable prospect, since, according to a recent Mother Jones article be Joshua Kurlantzick, only about 10 percent is now controlled this way) is a matter of policy concern for the United States. Setting aside the American motive to control Iraqi energy and turn a profit, the stated reason is that oil revenues will help stabilize Iraq.  But is hat true? Is oil a blessing or a curse?

In the ramp-up to the war, the Bush administration painted a rosy picture of the role oil would play. When asked how the United States would pay for the post-war rehabilitation of Iraq, it was explained that Iraqi oil revenues would provide the cash, thereby obviating the need for American investment (this was part of the fanciful projection that the entire war would cost the American taxpayer no more than $50 billion). Oops!

The real crux of the matter is the role oil will play in post-occupation Iraq . The optimistic answer is that it will provide revenue that can be distributed and thus help underpin Iraqi prosperity and stability: oil as a blessing. But is that really the likely outcome?

Two recent articles cast doubt on this proposition. Both take New York Times correspondent Thomas L. Friedman’s critique of the oil rich, yet corrupt “petrolist” states as a benchmark. Using states like Venezuela and Russia as “models,” Friedman argues that oil revenue corrupts, and to paraphrase Edmund Burke, absolute oil dependency corrupts absolutely.

Michael L. Ross lays the case out starkly in the May/June 2008 edition of Foreign Affairs. In “Blood Barrels, he states that “oil wealth often wreaks havoc on a country’s economy and politics, makes it easier for insurgents to fund their rebellions, and aggravates ethnic grievances.” Sound like Iraq? Ross argues this havoc triggers “conflict in tghree ways. First, it can cause economic instability. Second, oil wealth often helps support insurgencies. Third, oil wealth encourages separatism.” How do you spell “Kurdistan?” Kurlantzick adds that “many oil -richcountries have become increasingly authoritarian and corrupt.” Iraq, of course, already ranks among the world’s most corrupt regimes on Transparency International’s Corruption Perceptions Index. Is oil a curse?

No one is projecting that the road to Iraqi freedom will be other than a bumpy one, regardless of when the United States disengages. But almost everyone assumes, at least implicitly, that oil will lubricate that transition and make it easier. Should we rethink that assumption.

Sources:

Kurlantzick, Joshua. “Put a Tyrant in Your Tank.” Mother Jones 33, 3 (May/June 2008), 38-42, 88-89. (http://www.motherjones.com/news/feature/2008/05/put-a-tyrant-in-your-tank.html)

Ross, Michael L. “Blood Barrels: Why Oil Wealth Fuels Conflict.” Foreign Affairs 87, 3 (May/June 2008), 2-8. 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: