Excerpted from:
http://www.merip.org/mer/mer224/224_mohamedi_alkadiri.html
Middle East Report 224
Washington Makes Its Case for War,
by Fareed Mohamedi and Raad Alkadiri
<snip>
Treasure Trove
But a key -- if much overlooked -- aspect of the pro-war worldview is
oil and its centrality to the economies of many Middle Eastern states.
Iraqs oil potential is regarded by the neo-conservatives as a powerful
weapon to be wielded in their crusade to reshape the political
environment in the Middle East, affecting not just relations between
oil-producing countries of the region and the United States, but the
very nature of those countries themselves.
With proven reserves of over 110 billion barrels, Iraq's treasure trove
of oil is second only to Saudi Arabias, and this figure may
underestimate Iraqs production potential. For much of its modern
history, political and commercial obstacles have conspired to hamper
exploration and development in the country. Only during part of the
1950s and part of the 1970s was there any systematic focus on these
activities. Consequently, there is optimism in the oil industry that
considerable reserves await discovery.
Even if no more reserves were to be discovered, Iraq still has huge
production potential once UN sanctions are lifted. Of the over 70
fields that have been discovered so far, only around 20 percent have
actually been developed, and many of the remaining fields -- eight of
which contain over one billion barrels of reserves -- harbor oil that
would be cheap and easy to operate. Much will depend on the speed and
volume of inward investment into the industry, but in the mid-1990s,
the Ministry of Oil published a blueprint for developing the industry
after sanctions. The plan, which Iraq estimated would cost $30
billion, anticipated increasing production capacity from the present
three million barrels per day to six million within seven years of the
UN embargo being lifted. Other experts have offered even more
optimistic visions of Iraqs future production potential, citing
eventual figures of eight or even ten million barrels per day.(4)
While these latter figures seem exaggerated, an Iraq unrestrained by
sanctions could have a large impact on the oil markets and on existing
supply networks. Neo-conservatives in the administration are looking
to take advantage of precisely this potential to push their agenda.
Iraq would serve their purpose on a number of levels. Firstly, the
growth in Iraqi oil production could further diminish the need for a
strategic partnership with Saudi Arabia. Oil supply security has long
underpinned the US-Saudi relationship, but the value of this
relationship has been called into question of late, particularly since
September 11. A US-allied government in Baghdad with something
approaching the Kingdoms production capacity would offer a legitimate
long-term strategic supply alternative, leaving the administration
room to pursue its broader political agenda without compromise.
Moreover, a US-allied Iraq could work with Russia and other emerging
oil producers in the Caspian and West Africa to undercut the power of
OPEC and its influence over oil prices, on the assumption that a
US-backed Iraq would first leave the organization. At the very least,
Iraq could pursue an unrestrained production strategy that undermined
the organizations price manipulation from within.
The impact of rising Iraqi oil production on OPEC and oil prices is a
second and equally important benefit of regime change for
neo-conservatives. Rapid growth in Iraqi capacity, at a time when
global demand is growing slowly, while non-OPEC supply continues to
rise and OPEC capacity continues to grow will leave the organizations
members, particularly in the Persian Gulf, facing a range of equally
unpalatable choices. OPEC can either cut back its production in order
to keep prices at their present levels, or -- as is more likely --
member states can fight with Iraq, non-OPEC states and each other to
secure increased market share as supplies increase. Either way, the
financial impact on OPEC budgets will be severe, putting the Gulf
states -- which rely primarily on oil revenues to fund their budgets
-- under considerable economic strain. Neo-conservatives hope that
this pressure, combined with the political fallout of regime change in
Iraq, will be sufficient to force either fundamental reform of the
Gulf regimes, or their removal by disgruntled populations as the
regimes find themselves incapable of delivering on the social contract
that underpins their fragile legitimacy.
<snip>
4 See, for example, Fadhil Chalabi, "Iraq and the Future of World
Oil," Middle East Policy 8/4 (October 2000).
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