Iraq’s vital oilfields: but will the wealth that flows from them be well spent?
There is an Iraqi poem that begins: “They say that politics is an art form/But our politics are slaughter and terrorism.” When Iraq went to the polls on 7th March, for its second full parliamentary election since the 2003 invasion, the politics involved were far from artistic. But an optimist might find cautious reason to think it has moved beyond its lowest moments.
That these elections would happen at all was never guaranteed. They were postponed for months after electoral laws stalled on how to deal with the disputed city of Kirkuk—which sits on plenty of oil, and is claimed by the northern Kurds. The run-up was marred not just by violence, but also by a witch-hunt that disqualified hundreds of candidates for alleged links to Saddam’s Baathist regime. In the days after the vote, partial results dripped out amid malfunctioning screens, long delays and crowds of angry journalists at the electoral commission’s office in Baghdad. Claims of fraud from all sides were given some credence by leaked official reports of widespread (if unsystematic) irregularities.
But despite the messiness, and a bomb in Baghdad that killed at least 38 on election day, 62 per cent of the population turned out—almost the same as Britain in 2005—sparking a tight race between the incumbent Nouri al-Maliki and his State of Law Coalition, and his predecessor Ayad Allawi’s Iraqiya list, whose campaign preached secularism. Neither ever looked likely to win the 51 per cent of seats required for a majority, so the long process of coalition formation was well underway even as the votes were being counted.
Iraqis often say they are disillusioned with politics, and cynical of a democracy they see as a priority primarily for the occupying force. Since 2005, they note, the government has failed to provide reliable electricity or water, and they still live in a country Transparency International dubs the world’s fourth most corrupt. Al-Maliki had won some legitimacy for improvements in security; gains undermined in the past six months with a series of spectacular bombings on high-profile targets in Baghdad.
But the high voter turnout, braving danger and disorganisation, while courageous, does not mean that the whole nation is pinning its hopes on a democratic future. Given the choice between organised security and democracy, many Iraqis, exhausted and bereaved, would choose the former.
For the Obama administration, however, the elections were symbolically very important. The rhetoric of democracy is so central to US policy that leaving Iraq democratic is arguably as important as leaving it safe when it comes to justifying troop withdrawals. Indeed, Obama’s promise to bring troops home hinges on the success of these elections: the commanding general, Ray Odierno, says plans for a 50,000 troop reduction by the end of August depends on the post-election situation. And although the US military has officially withdrawn from the cities, its soldiers still operate checkpoints with Arab and Kurdish forces in those areas disputed between Arab and Kurdish Iraqis, and will continue to do so at least until a new government is formed.
The country is certainly no longer the blood-spattered civil warzone seen during 2005’s election, but hundreds of Iraqis still die violently every month—making talk of a “postwar” government premature. But given that electoral success (widely trumpeted by US officials) should see the beginning of the end of America’s presence, many will view a new administration as, at least post-occupation. Either way, problems await whoever emerges victorious.
Provided security holds, oil is the vital factor shaping this new state. Iraq has the world’s third-largest proven reserves, and in the last year its oil minister has negotiated ferociously to sign ten lucrative international deals. Five years from now Iraq could be out-pumping Saudi Arabia; even the most cautious economists predict huge wealth will pour into the state-controlled oil sector. If well managed, this alone could end widespread malnutrition and cut unemployment, which stands at 18 per cent at least. Such wealth will also give Iraq strength as it re-establishes itself in a neighbourhood where Saudi Arabia, Iran and Syria could all prey on its weaknesses.
But disadvantages will also flow from this wealth, not least if economics entrenches a top-down political system, and an industrial base still worryingly reminiscent of the Baathist era. Oil provides 95 per cent of Iraq’s income, while employing 2 per cent of its people. This ratio is unlikely to change significantly in the future. Worse, as international investment flows back, the influx of foreign currency will cause the exchange rate to rise, in turn making it cheaper to import goods than to produce them domestically. The Iraqi agricultural and commercial sector, never strong, will suffer, potentially creating a single-industry country.
The worry is that the government will solve its unemployment problems by creating ministries and state enterprises, packed with hundreds of thousands of non-jobs. Even now analysts think the country’s Saddam-era state enterprises have between two and four times as many employees as they need. A citizen in Basra told me last year that the city’s oil ministry even had trouble cramming in all the desks to its offices, as it tried to employ as many people as possible. Elsewhere, signs of subsidised ways of life already abound, for example the widespread (corrupt) food distribution system.
Is this outcome so bad? Perhaps not, given the alternatives. The worst-case scenario, in this oil-rich country with sky-high corruption and violent tendencies, might be the Angolan model, with starving, fighting people and politicians building palaces. The free enterprise vision the departing Americans seek to sell certainly lacks credibility to Iraqis, after all that has happened. And when Iraq’s lawmakers call for the repeal of economic reforms installed by the Coalition Provisional Authority, which removed all trade controls and placed a flat tariff on imports, they gain immediate support—not surprising, given that most things the CPA touched turned to carnage. Ultimately, many Iraqis see a government job, a strong state and good security as an appealing compromise after years of war.
The same poem, by Abbas Chichan, goes on: “They sold this country in an auction/‘Load it up, take it away, put it on the bill!’/And it was not their fathers’ property, which they wouldn’t have sold/All the ones who came were foreigners.” Now, slowly, the foreigners will leave Iraq, and those left behind will take the country forward, if not quite along the same path the departing Americans might prefer.
There is an Iraqi poem that begins: “They say that politics is an art form/But our politics are slaughter and terrorism.” When Iraq went to the polls on 7th March, for its second full parliamentary election since the 2003 invasion, the politics involved were far from artistic. But an optimist might find cautious reason to think it has moved beyond its lowest moments.
That these elections would happen at all was never guaranteed. They were postponed for months after electoral laws stalled on how to deal with the disputed city of Kirkuk—which sits on plenty of oil, and is claimed by the northern Kurds. The run-up was marred not just by violence, but also by a witch-hunt that disqualified hundreds of candidates for alleged links to Saddam’s Baathist regime. In the days after the vote, partial results dripped out amid malfunctioning screens, long delays and crowds of angry journalists at the electoral commission’s office in Baghdad. Claims of fraud from all sides were given some credence by leaked official reports of widespread (if unsystematic) irregularities.
But despite the messiness, and a bomb in Baghdad that killed at least 38 on election day, 62 per cent of the population turned out—almost the same as Britain in 2005—sparking a tight race between the incumbent Nouri al-Maliki and his State of Law Coalition, and his predecessor Ayad Allawi’s Iraqiya list, whose campaign preached secularism. Neither ever looked likely to win the 51 per cent of seats required for a majority, so the long process of coalition formation was well underway even as the votes were being counted.
Iraqis often say they are disillusioned with politics, and cynical of a democracy they see as a priority primarily for the occupying force. Since 2005, they note, the government has failed to provide reliable electricity or water, and they still live in a country Transparency International dubs the world’s fourth most corrupt. Al-Maliki had won some legitimacy for improvements in security; gains undermined in the past six months with a series of spectacular bombings on high-profile targets in Baghdad.
But the high voter turnout, braving danger and disorganisation, while courageous, does not mean that the whole nation is pinning its hopes on a democratic future. Given the choice between organised security and democracy, many Iraqis, exhausted and bereaved, would choose the former.
For the Obama administration, however, the elections were symbolically very important. The rhetoric of democracy is so central to US policy that leaving Iraq democratic is arguably as important as leaving it safe when it comes to justifying troop withdrawals. Indeed, Obama’s promise to bring troops home hinges on the success of these elections: the commanding general, Ray Odierno, says plans for a 50,000 troop reduction by the end of August depends on the post-election situation. And although the US military has officially withdrawn from the cities, its soldiers still operate checkpoints with Arab and Kurdish forces in those areas disputed between Arab and Kurdish Iraqis, and will continue to do so at least until a new government is formed.
The country is certainly no longer the blood-spattered civil warzone seen during 2005’s election, but hundreds of Iraqis still die violently every month—making talk of a “postwar” government premature. But given that electoral success (widely trumpeted by US officials) should see the beginning of the end of America’s presence, many will view a new administration as, at least post-occupation. Either way, problems await whoever emerges victorious.
Provided security holds, oil is the vital factor shaping this new state. Iraq has the world’s third-largest proven reserves, and in the last year its oil minister has negotiated ferociously to sign ten lucrative international deals. Five years from now Iraq could be out-pumping Saudi Arabia; even the most cautious economists predict huge wealth will pour into the state-controlled oil sector. If well managed, this alone could end widespread malnutrition and cut unemployment, which stands at 18 per cent at least. Such wealth will also give Iraq strength as it re-establishes itself in a neighbourhood where Saudi Arabia, Iran and Syria could all prey on its weaknesses.
But disadvantages will also flow from this wealth, not least if economics entrenches a top-down political system, and an industrial base still worryingly reminiscent of the Baathist era. Oil provides 95 per cent of Iraq’s income, while employing 2 per cent of its people. This ratio is unlikely to change significantly in the future. Worse, as international investment flows back, the influx of foreign currency will cause the exchange rate to rise, in turn making it cheaper to import goods than to produce them domestically. The Iraqi agricultural and commercial sector, never strong, will suffer, potentially creating a single-industry country.
The worry is that the government will solve its unemployment problems by creating ministries and state enterprises, packed with hundreds of thousands of non-jobs. Even now analysts think the country’s Saddam-era state enterprises have between two and four times as many employees as they need. A citizen in Basra told me last year that the city’s oil ministry even had trouble cramming in all the desks to its offices, as it tried to employ as many people as possible. Elsewhere, signs of subsidised ways of life already abound, for example the widespread (corrupt) food distribution system.
Is this outcome so bad? Perhaps not, given the alternatives. The worst-case scenario, in this oil-rich country with sky-high corruption and violent tendencies, might be the Angolan model, with starving, fighting people and politicians building palaces. The free enterprise vision the departing Americans seek to sell certainly lacks credibility to Iraqis, after all that has happened. And when Iraq’s lawmakers call for the repeal of economic reforms installed by the Coalition Provisional Authority, which removed all trade controls and placed a flat tariff on imports, they gain immediate support—not surprising, given that most things the CPA touched turned to carnage. Ultimately, many Iraqis see a government job, a strong state and good security as an appealing compromise after years of war.
The same poem, by Abbas Chichan, goes on: “They sold this country in an auction/‘Load it up, take it away, put it on the bill!’/And it was not their fathers’ property, which they wouldn’t have sold/All the ones who came were foreigners.” Now, slowly, the foreigners will leave Iraq, and those left behind will take the country forward, if not quite along the same path the departing Americans might prefer.
