Thread: Archive Latest News - Think Tank - 01/01/08 - 14/04/08

Iraq to mark fifth anniversary of US invasion
Analysts reflect on - human as well as material - cost of Iraq war five years after US bombed Baghdad.

Iraq will on Thursday mark the fifth anniversary of the US-led invasion that toppled president Saddam Hussein, and plunged a nation of 26 million people into chaos and bloodshed.

On March 20, 2003, US warplanes dropped the first bombs on Baghdad to announce an invasion that would within three weeks topple Saddam's regime and leave US forces in charge of a people resentful and rebellious against their occupation.

Five years on, Iraqis are in a state of civil war and US forces face daily attacks from insurgents.

As the conflict enters its sixth year, peace activists are planning hundreds of protests around the world.

"The war was based on lies. One million Iraqis have died, five million have been made refugees, tens of thousands of US soldiers and marines have been killed or wounded," said protest leader Brian Becker of the ANSWER Coalition.

Even US commander General David Petraeus admits that the country has made insuffienct progress towards national reconciliation.

"Scoring a military victory is easy, but a political victory is more difficult to achieve," said Mustapha Alani, director of security studies at the Dubai-based Gulf Research Centre.

He said Washington had dismantled Saddam's regime and was now "unable to put it back together".

The day-to-day reality on the ground is grim.

The war has killed more than 4,000 US and allied soldiers and hundreds of thousands of Iraqi civilians -- between 104,000 and 223,000 died between March 2003 and June 2006 alone, according to the World Health Organisation.

The International Committee of the Red Cross, in its latest report, said the plight of millions of Iraqis who still have little or no access to clean water, sanitation or health care was the "most critical in the world".

On Tuesday, at a national unity conference Shiite Prime Minister Nuri al-Maliki boasted that Iraq's sectarian civil war was over, but political bickering continues to undermine the work of his coalition government.

The economy, the main concern of Iraqis after security, is also a wreck. Unemployment is running at between 25 and 50 percent of the workforce, according to government figures.

Oil exports are the country's main money-earner.

Iraqi officials say production is at 2.9 million barrels a day, but oil analysts believe it is really around 2.2 million.

Public services like water and electricity have yet to be fully restored, despite billions of dollars having been spent on often badly managed reconstruction projects.

Iraq's parliament has been paralysed by competition between parties driven by sectarian conflicts, as the US-designed parliament was divided according to sectarian lines.

Last year the US embassy in Baghdad documented a high level of corruption at all levels of government, and questioned the Maliki administration's willingness to crack down on crooked practices.

An unusual charge from Washington which critics say is deeply involved – if not in control – of the corruption in Iraq.

The war is estimated to have already cost Washington more than 400 billion dollars -- making it the most expensive conflict in history.
And what have American taxpayer got for their money?

Critics say that while the American taxpayer carried the burden of the Iraq war cost, US oil companies (and the American politicians affiliated with them) were the greatest beneficiaries of the invasion (if we exclude the US arms industry).

US credibility in the Middle East has been eroded; the influence of Iran, Washington's enemy, has grown; and the price of oil has spiked to record levels, with catastrophic repercussions on the global economy.

Iraq to mark fifth anniversary of US invasion | Iraq Updates

Iraqi Central Bank's auction and ISX sessions cancelled on Thursday

Sessions of Iraqi Central Bank's daily auction and Iraq's Stock Exchange (ISX) were cancelled on Thursday as they coincided with a religious holiday.

Muslims in Iraq celebrated on Thursday the birth anniversary of Prophet Mohammed leading the government to announce it a public holiday.

The Iraqi Central Bank runs a daily auction from Sunday to Thursday while Iraq's Stock Exchange runs three sessions a week on Sundays, Tuesdays and Thursdays.

Aswat Aliraq

Britain to delay withdrawal from Iraq

Daily Telegraph British Newspaper reported on Wednesday, Britain will delay its planned withdrawal of around 1,500 soldiers from Iraq until the end of this year. Britain currently has approximately 4,100 soldiers in Iraq in Basra air base.

Quoting unnamed government sources, the newspaper said that the decision was made because of an increased level of rocket attacks.
A Defense Ministry spokeswoman, speaking to AFP, said: "We do plan for a withdrawal, but when and timings of which will be down totally to the commanders on the ground."

Britain to delay withdrawal from Iraq | Iraq News | Alsumaria Iraqi Satellite TV Network

Iraq Presidency to reconsider Provincial Law

The Presidency Council has decided to retract objection on non-affiliated provinces law. A statement issued by the Presidency endowment affirmed that the draft law will be passed to Justice Ministry to be published in the official gazette. The Presidency Council agreed unanimously to cooperate with the Parliament’s Presidency committee, parliamentarian blocs, ministerial council, governors and provincial councils at the right time in consent with concerned parties over necessary amendments on the provincial law which would be passed to Parliament after ratification.

Iraq Presidency to reconsider provincial law | Iraq News | Alsumaria Iraqi Satellite TV Network

Al Maliki to merge Awakenings in Iraq Forces

While marking the birth anniversary of Prophet Mohammed, in Al Aazamiya District, Prime Minister Nuri Al Maliki pledged to merge Awakening councils in Al Aazamiya into security institutions. In a speech delivered in Imam Abu Hanifa Al Naaman mosque, Al Maliki said the government will work on easing hindrances and opening all closed institutions before Iraqis who have faced challenges fiercely. Al Maliki’s statements came in line with demands of head of Sunni endowment Sheikh Ahmad Abdul Ghafour Al Samirrai who called to merge eligible members of Awakening Councils with army and police ranks to be part of security and military institutions.

Al Maliki to merge Awakenings in Iraq Forces | Iraq News | Alsumaria Iraqi Satellite TV Network

Update......

New Iraq deals 'to spur output'

The Iraqi government is expected to pay as much as $2.5 billion to five top oil companies to increase the country's oil output by nearly a quarter, a government adviser said yesterday.

Baghdad is close to signing technical support contracts with BP, Royal Dutch Shell, Exxon Mobil, Chevron and Total that would add 500,000 barrels per day (bpd) to current production of 2.27m bpd.

Iraq's prime minister energy adviser Thamir Ghadhban said he expects the contracts to be signed by early next month.

The two-year contracts could be extended for an extra year.

"There is a rough estimate that it could cost about $400 to $500m per field," he said.

"So a total could be up to between $2bn and $2.5bn over two years that should be paid by the government to companies." Ghadhban said Iraqi representatives met with company officials last week in Amman, Jordan, to discuss final details of the contracts, including whether payment would be by cash or by oil.

"As far as we are concerned, everything is positive and it's a matter of time for the minister of oil and oil companies to finalise and shake hands," he said.

Shell is negotiating for the northern Kirkuk oilfield and is also in talks, along with BHP Billiton, for the development of the Maysan fields.

BP also has its eyes on Iraq's southern Rumaila field, while Exxon wants the contract for the Zubair oil field in Basra.

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Baghdad: Economic Boom Town?

The most obvious accomplishment of the U.S. troop surge in Iraq has been a sharp decrease in violence. But the surge has led to other benefits as well -- including a big upswing in the Iraqi economy.

Last year at this time, Baghdad was one of the most dangerous cities in the world. Although it's still not completely safe, the Iraqi capital is earning a new reputation as an economic boom town.

Additional U.S. troops have brought a level of security and prosperity that seemed unthinkable not long ago. Less violence has allowed merchants to reopen their businesses and shoppers to flood the streets. It's also encouraged an entrepreneurial spirit.

A family-owned juice bar has opened three Baghdad branches in the past year alone. The owners hope to soon take their business nationwide.

"When it's safe outside, business is better," the owner of Mesh-Mesha juice bar said.

The sense of optimism in the streets is reflected in the Baghdad stock exchange. Share prices have gone up more than 20 percent over the past year, and 94 companies are traded now, up from just 15 in 2004. Real estate has also gone up at least 12 percent.

And Iraq's vast oil reserves are providing another big financial lift. Iraqis are looking to produce up to 2.2 million barrels per day in this time of record oil prices.

"The potential is jaw-dropping. The country could produce Saudi levels of production," said Robert Powell with the Economist Intelligence Unit.

Experts predict the Iraqi economy will expand by as much as seven percent in 2008. But those gains depend on violence staying down. A few recent bombings in Baghdad show that Iraq isn't out of the woods just yet in its war against terrorism.

"As long as there are successes on the level of the political process, in national reconciliation and in the economy, such successes will certainly provoke people who are against any development in this country," Husham al-Sadr said.

Oil revenues have Iraq headed toward a huge budget surplus. Meanwhile, the U.S. Is facing record budget deficits, partly due to the rebuilding of Iraq.

The U.S. has spent some $45 billion dollars in Iraq -- and some lawmakers say its time for the newly prosperous Iraqis to start paying more of their own costs.

Baghdad: Economic Boom Town? - World - CBN News

US Company to Help Expand Iraqi Refinery

Iraq's Oil Ministry has signed a contract with the Colorado Industrial Construction Services Co. to help expand a refinery in Najaf, south of Baghdad, an official said Wednesday.

The $85 million contract is designed to increase the refinery's current capacity of 20,000 barrels of oil per day by roughly 10,000 barrels per day, a senior ministry official said.

"We are expecting the work to be done in one year or one year and a half," the official told The Associated Press, speaking on condition of anonymity because of a lack of authorization to release the information.

The Colorado-based company did not respond to telephone calls seeking confirmation.

The refinery, about 100 miles south of Baghdad, was constructed in October 2006 to help meet increasing needs in central Iraq for petroleum products, including kerosene.

The U.S. company will build a third production unit, the official said.

Last week, the oil ministry inaugurated a second production unit at the facility and pledged more refineries would be built across the country, including in Nasiriyah and Karbala, two other cities in the predominantly Shiite south.

Together the new refineries will be able to refine more than 450,000 barrels daily, it said.

Iraq has the world's third-largest known crude oil reserves, with an estimated 115 billion barrels, but it suffers acute shortages in petroleum products as most infrastructure has been damaged or destroyed after years of U.N. sanctions and then five years of war.

Iraq's three main oil refineries are running at roughly half the 700,000 barrels daily capacity they maintained before the U.S.-led invasion on March 20, 2003.

The shortfall has forced Iraq to turn to imports from neighboring Iran, Kuwait and Turkey.

The country has been forced to import about 8,000 tons each day, or about 60,000 barrels, according to figures released last month by the State Oil Marketing Organization.

Insurgents frequently attack pipelines, hoping to rob the government of oil revenue.

The Associated Press: US Company to Help Expand Iraqi Refinery

Forbidden fields: Oil groups circle the prize of Iraq’s vast reserves

Royal Dutch Shell has been quietly working with Iraq’s oil ministry over the past two years, advising it on how to increase the production of two oilfields. Under an agreement struck after the 2003 invasion, no one from the company, Europe’s largest oil group, has set foot in the troubled country; instead, monthly face-to-face meetings with the oil ministry have been held in Amman, the Jordanian capital, and weekly contact has been maintained by video-link.

The Shell-financed project – and the attention showered on Baghdad – appears to be paying off: Shell is now negotiating a technical support agreement in which it will be compensated for helping upgrade production of producing fields. The oil company will again set up a team outside Iraq, helping, among other things, to bring new equipment into the country and training Iraqis in its use.

Shell is one of several inter­national oil companies – including BP and the US groups ExxonMobil and Chevron – that have been tapping into Iraq’s oil industry by remote control.

But now, five years after the invasion, the oil groups are hoping to take their involvement in the country to a new level. Baghdad, desperate to increase oil production yet starved of investment, is starting to dangle what the companies have been after all along: a chance to develop and later explore what may be the world’s most promising untapped oil reserves. Indeed, as the companies gear up for technical support agreements, they are also registering to pre-qualify for the first bidding round of oil development contracts that are to be offered by Baghdad.

“The [initial projects] were done to work with the Iraqis, get a feeling for fields and build relationships and knowledge,” says one oil executive, speaking of the assistance projects provided so far.

With parts of the global oil industry threatened with nationalisation and much of the Middle East still closed to foreign ownership of reserves, access to Iraq, with the world’s third-largest oil reserves, has long been viewed as a huge prize. Although no decision has yet been made in Baghdad over the nature of the development or the eventual exploration contracts that will be on offer, Iraq could prove one of the rare countries in the region where companies will be allowed to claim reserves as their own. “This is the big frontier,” says Raad Alkadiri, a senior director at Washington-based PFC Energy.

According to the oil ministry, only 27 out of 80 discovered fields are producing in Iraq, the result of decades of under-investment. A report by Wood Mackenzie, the consultancy, meanwhile says the scale of Iraq’s remaining oil resources surpasses allother countries in the Middle East, including Saudi Arabia, and its high-quality reservoirs ensure that production costs would be very low.

But Iraq is also a dangerous frontier. Companies invited to invest in its oil industry – and satisfy Baghdad’s plans at least to double oil production from the current 2.5m barrels a day – will be walking into a political, security and legislative minefield. Their involvement threatens to exacerbate the sectarian tensions that have torn the country apart since the US-led invasion.

International oil companies acknowledge that security, although better over the past year, will still need to improve significantly before workers are dispatched to Iraq. The weakness of the central government and its patchy control over the southern part of the country, home to 80 per cent of proved oil reserves, will also be taken into account. Perhaps most important, however, is that they could be entering a country with deep political fissures and lingering anger at foreign intervention, without clear legislation allowing for foreign participation.

Despite American pressure and government desperation, a law to regulate foreign access to the oil industry has languished in the Iraqi parliament, a victim of sectarian disputes, particularly between the Kurds and Arabs. Frustrated by the delays, and virtually giving up on a successful outcome, the oil ministry has now invited oil companies to pre-qualify for development of existing fields and says a cabinet decision will be enough to legitimise foreign participation. Later bidding rounds are envisaged for exploration contracts.

Officially, companies say they will insist on having new legislation in place before investing the billions of dollars that would be needed for development and exploration. Yet the absence of a law is not preventing them from embarking on negotiations.

“The companies are positioning themselves; they’re playing the game and the oil ministry is trying to create a game for them to play,” says Mr Alkadiri. “Of course you can hit a whole set of problems and the companies are aware of that and they will factor it in. But [outside Iraq] there are no such reserves in an un­explored territory.”

Adding to the complications is uncertainty over who has the rights to sign contracts in Iraq. The Kurdish regional government, based in Irbil, claims that the constitution gives it power over its own resources within the borders of Kurdistan, while the government in Baghdad rejects this claim completely. It insists it has the sole constitutional authority to dispose of Iraq’s oil resources.

A further difficulty is that oil is unevenly distributed throughout the ethnic regions of Iraq, with resources concentrated in the Shia south of the country and the Kurdish north. The minority Sunni Arabs, who formerly controlled the levers of power under Saddam Hussein, can boast few oil reserves in their ethnic areas. Their priority in negotiating in the new Iraq has been to ensure they receive their fair share of oil revenues.

But the competing expectations of Iraq’s communities have never been confronted head on, and were sidestepped by the framers of the constitution, agreed in 2005, by means of ambiguous language.

FT.com / In depth - Forbidden fields: Oil groups circle the prize of Iraq?s vast reserves

Continued......

Specifically, the constitution’s article 112 says the “federal government, with the producing governorates and regional governments” should manage oil and gas, but only from “present” fields. The document’s Article 115, meanwhile, declares that “all powers not stipulated in the exclusive powers of the federal government” belong to local or regional authorities.

The KRG has taken this to mean that the federal government has the conditional right to manage fields currently producing, but that a regional government such as itself has the power to manage exploration and the production from newly discovered fields. To exploit this loophole, the KRG has passed its own oil law, which allows it to sign contracts with foreign oil companies. It has signed such agreements with several (smaller) groups from Norway, Turkey, Austria, South Korea and other countries in the face of Baghdad’s objections.

“In the Kurdistan region, there is a constitution and there is a law. We have two instruments that we can rely upon: the law and the constitution are a pair, and they’re consistent and in harmony with each other in our case,” says Ashti Hawrami, KRG oil minister.

Baghdad, however, has declared the KRG contracts ­illegal, blacklisting companies that deal with the Kurdistan region and, more recently, ­cancelling export deals with South Korean and Austrian groups that signed exploration deals with the KRG. This has kept bigger companies away from the north.

The Kurds’ assertive attitude has heightened the Sunni Arabs’ attachment to strong central control over the country’s regions and their inclination towards economic nationalism. Their political leaders have pressed for the constitution to be rewritten to strengthen the federal government and reduce the powers of the KRG.

With no agreement on the constitution, the hydrocarbons legislation – which would set terms for foreign oil companies along with an agreement on the sharing of oil revenues locally – was controversial from the start. After months of wrangling, the Iraqi cabinet in February 2007 came to an agreement on a draft framework that did not include revenue-sharing legislation. Even that has not been passed by parliament.

Moreover, as talks over the oil law have dragged on, opposition to the production-sharing agreements (PSAs) favoured by western oil companies, once relatively muted, has grown among the majority Shia as well – underlining a resurgence in nationalism as much as a reaction to Kurdish unilateralism.

According to Hussein Shahristani, the oil minister, the cabinet’s approval of a draft hydrocarbons law last year made no reference to PSAs, and what his ministry will offer companies are “model contracts” that would attempt to balance investors’ expectations of financial return against domestic political concerns, not least the determination of Iraqis to maintain ownership and control of oil wealth. Kurdish officials, however, say the contracts envisaged by Baghdad are PSAs in all but name.

“What’s happening is that various parties are jostling for position now rather than reaching agreement on the oil legislation,” says Yahia Said, Iraq expert and Middle East director at Revenue Watch, a project at the London School of Economics. “The KRG is trying to move with as many facts on the ground as possible and the federal government is trying to show that it’s in control.”


Apotential flashpoint for the oil dispute between Kurds and Arabs is in the oil field of Kirkuk, the city that Kurds claim as part of their region but whose status is to be settled by a long-delayed referendum.

It is to minimise the risk of such confrontation that the US has put enormous pressure on Iraq’s politicians to agree the hydrocarbons legislation. Judging it a crucial element for Iraqi stability, the Bush administration listed the oil law as one of the benchmarks the Baghdad government was expected to achieve as the US military surge helped to reduce violence over the past year. Even with the likelihood of an oil law approval fading, US officials continue to insist that it is essential for signing oil contracts with foreign groups.

For international oil companies, the hope is that as the negotiations proceed over the next year, Iraq’s political and legislative landscape will gain more clarity. Iraqi experts, however, warn that the oil law may be dead and Baghdad’s only choice, ironically, will be to fall back on legislation from the Saddam Hussein era. Although meant to protect the nationalised status of the industry, the legislation did not stop the previous regime from negotiating specific contracts with foreign companies, which were then agreed by the rubber-stamp parliament.

“The ministry might be able to get away with [contracts] by leaning on Saddam-era regulations. Saddam negotiated contracts that were not PSAs [the oil companies’ preferred arrangement] but with Iraq the only remaining major resource in the world, companies will have to have some investment there,” says Tariq Shafiq, a former director of Iraq’s national oil ­company.

FT.com / In depth - Forbidden fields: Oil groups circle the prize of Iraq?s vast reserves