Thread: Iraq/Dinar News. 09/05 to 01/14/07

Originally Posted by Hope Full

If I remember right this was moved up un expectedly to the 17

Interesting, please dig out article.

Great article

Middle East Economic Survey



VOL. XLIX

No 42

16-Oct-2006



Liberalization Strategy For Iraq's Oil-Hostage Economy: Alternative To Oil Power Dominance And Neo-Liberal Subordinate Economic Policy (Part 1/2)



By Sabri Zire Al-Saadi



This article was written for MEES by economic advisor Sabri Zire Al-Saadi, a UN former employee who held senior economic posts in Iraq. Email: [email protected]. Part 2 will be published next week.



The Politics And Economics Of Oil Policy

In normal circumstances, federalism and decentralization of the political decision-making processes in Iraq would substantially increase people-participation and improve democratic practices. Encouraging foreign investment would also help to attract new technology and improve the efficiency of the national economy and competitiveness of domestic industries. The intended hydrocarbons resources law to regulate the production and investment in the extraction, manufacturing, and distribution of crude oil and natural gas is important to revive the promising oil industry. However, neither federalism nor the “new” investment and hydrocarbon laws will be viable without the prior establishment of a unified long-term economic strategy where oil wealth constitutes a strategic factor. Indeed, efficient utilization of oil revenues guided by suitable economic strategy and policies would not only improve living standards but equally important reduce sectarian conflict and encourage political stability. If the self-interest demands of the federal government(s) in oil wealth remain without national economic criteria for its utilization, Iraq’s disintegration as a single-sovereign state may become a reality.



The multiplicity of factors behind the prevailing acute economic crisis raises fundamental, difficult, and controversial questions on the viability of post-war economic strategy and policies. Assessment of Iraq’s experience reveals that its long-term economic strategy should be designed to achieve two interrelated sets of objectives: first, the transformation of the oil-rentier economy into a competitive market economy; and secondly, an increase in economic growth and the alleviation of unemployment and poverty, and an improvement in standards (public education and health services). Significantly, Iraq’s past and recent experience showed that government expenditures, especially investment in infrastructure, financed by oil revenues have been the engine of economic growth and constituted the most effective instrument of the macroeconomic policies. Unfortunately, the present policies perpetuate the deep-rooted vicious circle of “the state’s high dependence on oil revenues and the Iraqi economy’s high dependence on the state”. In this respect, the program for infrastructure development and government fiscal and monetary policies should play a crucial role in shaping oil policy – not the other way round.



It is not surprising that the post-war reconstruction efforts relating to infrastructure and basic public services and the fiscal policy, as well as the FXR, have the same base and similar implications as those of the former oppressive regime, though with different decision-making players and beneficiaries. Until the role of the indigenous private sector substantially increases, Iraq’s reality will be different from that of developed countries where tight fiscal and monetary policies and the dominant culture of less regulations and less taxes are sufficient to ensure the decisive economic role of the private sector. Moreover, the envisaged new formal economic strategy and policies as well as the establishment of IDRC for the reconstruction of infrastructure would also neutralize the oil power in domestic politics and reduce the widespread corruption.



Irrelevance Policies Of Neo-Liberal Economics

The main purpose of this paper is to highlight that the Iraqi economy is rapidly entrapped in a chronic high dependence on oil revenues. If this continues, the country will suffer grave long-term economic, social, and political consequences. The adopted macroeconomic policies that have neglected the economic efficiency criteria in oil production as well as in the allocation of oil revenues among government expenditures and imports were behind the existing strong dive. Indeed, the performance of these policies has been disappointing. In particular, the economic stability, the proclaimed prime success of these policies, has been artificially manipulated only by the abundance of oil revenues1. Also, the availability of foreign currency reserves that maintain a predetermined exchange rate of ID/$ and the ability to finance rising imports has nothing to do with the effect of the government’s fiscal policy and the independence of CBI monetary policies or the results of the free flow of foreign trade and capital.2 In Iraq, expanding indigenous non-oil production capacities and improving the competitiveness of industries and agriculture can not be realized by a tight fiscal policy and independent monetary policy which is unnecessarily constrained by the (fixed) exchange rate of ID/$ and the US interest rate.


Equally important, the economic efficiency of crude oil production should be strictly observed to protect the environment and the rights of future generations.



Moreover, the FXR must be established so as to reflect more adequately the efficiency price of oil production which would minimize the value difference between the economic-rent (world market prices) and efficiency price (shadow price) that is determined by the required oil revenues (production) for national development. If gradually put into practice, this conceptual proposition, ie to adjust the FXR in accordance with the (excess) level of oil production, would also serve the mutual long-term interests of both crude oil consumers and Iraq3.



Clarity And Commitment To New Economic Strategy And Policies

The current crucial transition of political and economic governance may be decisive in leading Iraq either to success or failure as a promising democratic and economic model in the Middle East. The existing acute economic problems, the destruction of infrastructure, the political mess since the December 2005 elections, and the difficulties of forming the new legitimate elected government without commitment to a unified economic strategy and policies are clear evidence of this. Either way, domestic and foreign political inference would be tremendous. Continuing terrorism and political instability, the obvious failure of the neo-liberal economic policies of CPA, USAID, WB, IMF, and US-advocated policies over the last three-and-a-half years, highlight the urgent need for a new economic strategy.



The new economic initiative must consider the distinctive features of the economy as well as Iraq’s long-standing objectives: increasing economic growth and employment; accelerating economic diversification; and infrastructure reconstruction. In policy terms, Iraq's economic governance requires effective fiscal and monetary policies that must be consistent and integrated with public investment which, it is assumed, will be carried out by the proposed IDRC4. Also, private indigenous and foreign investment should be promoted through economic reforms covering the banking system, financial services and privatization. The long-term aim must be to free Iraq’s oil-hostage economy and establish an efficient market economy.



Our definition of the Iraqi rentier economy focuses on its high reliance on the economic rent generated by the exploitation of natural oil wealth. The guidance criteria for determining the dependence degree are: the contribution of oil sector to GDP is more than the total contribution of the industrial and agriculture sectors; oil revenues finance public investment which constitutes more than 50% of national investment; oil revenues finance more than 50% of the government current expenditure (ordinary annual budget); and oil exports (foreign currency) constitutes more than 70% of total exports5. The ultimate success criteria are: non-oil sectors should contribute at least 80% to GDP and to government current expenditures; and non-oil exports should be at least 70% of total exports. The private sector should contribute more than 70% to GDP.



The state’s commitment to this economic strategy is a pre-condition for the success of capacity building of public institutions and the private sector. Such a firm and clear commitment would also constitute an important yardstick against corruption.



Economic Growth, Diversification, And Market Efficiency

In Iraq, increasing domestic non-oil investment (saving) and non-oil exports has been established as the main requirement for higher economic growth and employment6. Also, neither domestic savings nor foreign currency constitutes a binding constraint on growth and restricts the construction of infrastructure as experienced by most developing countries. Since the early 1960s, a strategy for economic growth and diversification aimed at reducing state dependence on oil revenues for public finance and imports has been advocated, but it was general, crude and not successfully implemented7. However, given Iraq’s new liberal political system and the need for economic reforms for sustaining the role of the indigenous private sector and encouraging inflow of foreign investment, an elaborate and modified version of this strategy should be prepared, and the economic role of the state institutionalized. In this strategy, public investment in infrastructure projects must be given first priority, and clear institutional efficiency criteria established for the allocation of oil revenues and public investment8.



Since the fall of Saddam’s regime, many economic advisors, professionals and researchers have had the privilege and liberty to analyze, evaluate, and suggest economic policies for Iraq. However, their policies have failed in practice and added more confusion to the vague economic tasks of the government institutions – prescribing such remedy statements as improving the macroeconomic conditions based on solid private micro foundation and equating economic liberalization to economic growth. The policies advocated by the foreign consultants and international agencies, coupled with the state’s economic mismanagement, have contributed to the current failure. Consequently, the post-war optimism of increasing income and employment, and improving living standards, as well as the high expectations of national investors and the business community, have quickly diminished.



In most stable countries, attention by investors and business communities, politicians, and professional economists is focused on monitoring and analyzing stock market indicators, interest rates, foreign exchange rates, inflation indices, flow of foreign capital, and trade balance. The dominant economic policy theme is how to improve the market efficiency and increase investment. In Iraq, the business community, traders, contractors and politicians are particularly interested in increasing oil revenues (production), ie government expenditures9. For the ordinary Iraqi citizens, however, unemployment, poverty, lack of public education and health services, high inflation, and shortage of basic public utilities and essential products are their daily concern. Given the low level of private saving, consumption, and non-oil production and exports, Iraq is bound to rely heavily on oil revenues at this stage.



Oil revenues are indispensable to run the state’s functions and finance the construction of infrastructure, but most importantly such reliance raises the old question; ie how to transfer Iraq’s rentier economy to an efficient competitive market economy? To achieve this, the ultimate objectives of the new economic strategy should include: increasing economic growth based on non-oil industrial and agriculture production; increasing employment and rehabilitation of manpower; alleviation of poverty through promotion of income-generating small projects; provision of public education and health services; and the establishment of basic industries such as petrochemical, electricity and water, as well as the physical infrastructure. The viability and requirements of these objectives have been partially tested, though under non-democratic and oppressive political regimes, through the period 1953-80, and they are not fundamentally inconsistent with private business interests. In fact, such a strategy provides excellent investment opportunities for the private sector. But if the indigenous private sector is not ready to utilize them, fully or partially, the government should take the initiative to finance them from oil revenues. Accordingly, the government’s oil production, fiscal, and monetary policies are confined to consider public investment as the most essential element of the aggregate (effective) demand. Therefore, the government’s macroeconomic policies have to play an active role in influencing the investment priorities in order to bring about the desired structural changes: increasing the contribution of non-oil sectors and the indigenous private sector to GDP and public finance.
Liberalization Strategy For Iraq's Oil-Hostage Economy: Alternative To Oil Power Dominance And Neo-Liberal Subordinate Economic Policy (Part 1/2)

In short, r/v the facker!

The U.S. Takeover of Iraqi Oil

By Joshua Holland, AlterNet. Posted October 17, 2006.


With 140,000 U.S. troops on the ground, the largest U.S. embassy in the world sequestered in Baghdad's fortified "Green Zone" and an economy designed by a consulting firm in McLean, Virginia, post-invasion Iraq was well on its way to being a bonanza for foreign investors.

But Big Oil had their sights set on a specific arrangement -- the lucrative Production Sharing Agreements that lock in multinationals' control over energy resources for long terms and are virtually unheard of in countries as rich in easily-accessible oil as Iraq.

The occupation authorities would have to steer an ostensibly sovereign government to the outcome they desired and they'd have to overcome any resistance they encountered from the fiercely independent and understandably wary Iraqis along the way. Finally, they'd have to make sure that the Anglo-American firms were well positioned to win the lion's share of the choicest contracts.

Dealing with the most likely points of opposition began almost immediately. While the Oil Ministry, famously, was one of the few structures the invading forces protected from looters in the first days of the war, the bureaucracy's human assets weren't so lucky. With a stroke of the pen, Coalition Provisional Authority boss L. Paul Bremer fired hundreds of ministry personnel, ostensibly as part of the program of "de-Baathification." But, as Antonia Juhasz, author of The Bush Agenda, told me, "it wasn't an indication that they were a party to Saddam Hussein's crimes … they were fired because they could have stood in the way of the economic transformation." Some fraction were certainly hard-core Baathists, but they were all veterans of the country's oil sector; they knew the industry, they knew what the norms in neighboring countries were and they had no loyalty to the occupation forces. Some had to go.

That was true at the top as well. Serving as oil minister in the Iraqi Interim Government was Thamir Ghadbhan, a British-trained technocrat who at one time had been Chief of Planning under Saddam Hussein and was widely respected for his political independence and his opposition to the previous regime (Saddam had ended up imprisoning him at Abu Ghraib). Despite working closely with American advisors, Ghadbhan was replaced with Ibrahim Bahr al-Uloum, a close associate of Ahmed Chalabi, the exile favored by some war planners to run the country as a kindler and gentler -- but no doubt just as corrupt -- version of Saddam Hussein.

According to Greg Muttit, an analyst with the British oil watchdog Platform, Uloum at first seemed to be a malleable figure. He told the Financial Times that he personally favored PSAs and would give priority to U.S. oil companies, "and European companies, probably."

But Uloum would later publicly protest the elimination of fuel subsidies, a key provision of the country's economic restructuring, saying, "This decision will not serve the benefit of the government and the people. This decision brings an extra burden on the shoulders of citizens." He was, as the Associated Press reported, given "a forced vacation." In the end it would turn out to be a permanent one; Chalabi, who was Deputy Prime Minister at the time, took over the job himself (supposedly as "acting" Minister for 30 days, but his term would last a year). Chalabi had no previous experience in the oil biz, but was a reliable, pro-Western figure with little in the way of nationalist zeal to get in the way of being a good lap-dog. As leader of the Iraqi National Congress, he had said he favored the creation of a U.S.-led consortium to develop Iraq's oil fields. "American companies will have a big shot at Iraqi oil," Chalabi told the Washington Post in 2002.

According to Alexander Cockburn, Chalabi also orchestrated the ouster of Mohammed Jibouri, executive director of the state's oil marketing agency, who had offended the Swiss giant Glencore by telling its executives that they couldn't trade Iraqi oil after their extensive dealings with Saddam Hussein.

An emerging, although still fragile, civil society was another source of potential trouble. Iraqi trade unions were a thorn in the side of the CPA -- shutting down the port of Khor az-Zubayr in protest of a rip-off deal with the Danish shipping giant Maersk, halting oil production in the South to demand the re-hire of laid-off Iraqi workers and kicking Halliburton subsidiary Kellogg Brown and Root out of their refineries. Perhaps it's not a coincidence, then, that the only significant law that Paul Bremer left on the books from the Hussein era was a prohibition against organizing public-sector workers; Raed Jarrar, an Iraqi analyst with the NGO Global Exchange told me "the unions are basically illegal -- they're having a lot of legal problems."

Of course, none of that guaranteed that the Iraqis would stay on the preferred path, especially after the election of an ostensibly sovereign government.

That's where the most common -- almost ubiquitous -- tool of neocolonialism, debt, came into play. In this case, massive, crushing debt run up by a dictator who treated himself and his cronies to palaces and imported luxuries, spent lavishly on weapons for Iraq's war with Iran -- fought in part on behalf of the U.S. -- and owed billions of dollars in reparations for invading Kuwait in 1990.

To put Iraq's foreign debt in perspective, if the country's economy were the size of the United States', then its obligations in 2004, proportionally, would have equaled around $55 trillion dollars, according to IMF figures (and that doesn't include reparations from the first Gulf War).

Clearly, that amount of debt was unsustainable, and the Bush administration launched a full-court press to get creditor nations to forgive at least part of the new government's debt burden. Former Secretary of State James Baker, long the Bush family's "fixer," was dispatched on a tour of the world's capitals to cut deals on behalf of the Iraqis.

The administration adopted the language of debt relief activists to frame their pitch, surprising many in the NGO community. Bush, and Baker, called it "odious" debt that had financed the whims of a brutal dictator and was used contrary to the interests of the Iraqi population. Under international law, "odious" debt, in theory at least, doesn't need to be forgiven; it's written off as a dictator's illicit gains. As one might expect, wealthy creditor nations have long resisted the concept.

Debt relief activists Basav Sen and Hope Chu wrote that the move "seemed inexplicable at first." But it soon became clear that Iraq's debt relief program was, in fact, a way of locking in Iraq's radical new economy.

The largest chunk of debt, $120 billion, was owed to the Paris Club, a group of 19 industrialized nations. Baker negotiated a deal whereby the Paris Club would forgive 80 percent of Iraq's debt, but the catch -- and it was a big one -- was that Iraq had to agree to an economic "reform" package administered by the International Monetary Fund, an institution dominated by the wealthiest countries and infamous across the developing world for its painful and unpopular Structural Adjustment Programs.

The debt would be written off in stages; 30 percent would be cancelled outright, another 30 percent when an elected Iraqi government accepted an IMF structural reform agreement and a final 20 percent after the IMF had monitored its implementation for three years. This made the IMF a powerful watchdog over the country's new economy, despite the fact that the institution's own share of the country's outstanding debt was less than 1 percent of the total.

Among a number of provisions in the IMF agreement, along with privatizing state-run companies (which resulted in the lay-offs of an estimated 145,000 Iraqis), slashing government pensions and phasing out the subsidies on food and fuel that many Iraqis depended on, was a commitment to develop Iraq's oil in partnership with the private sector. Then-Finance Minister Adel Abdul Mehdi said, none too happily, that the deal would be "very promising to the American investors and to American enterprise, certainly to oil companies." The Iraqi National Assembly released a statement saying, "the Paris Club has no right to make decisions and impose IMF conditions on Iraq," and called it "a new crime committed by the creditors who financed Saddam's oppression." And Zaid Al-Ali, an international lawyer who works with the NGO Jubilee Iraq, said it was "a perfect illustration of how the industrialized world has used debt as a tool to force developing nations to surrender sovereignty over their economies."

The IMF agreement was announced in December of 2005, along with a new $685 million dollar IMF loan that was to be used, in part, to increase Iraq's oil output. The announcement came a month after Iraqis went to the polls to vote for their first government under the new Constitution. The timing, according to the Washington Post, was meant to spare Iraqi "politicians from voters' wrath." That was a wise idea; immediately following the agreement's signing gas prices skyrocketed and Iraqis rioted.

The icing on the cake is that the deal James Baker negotiated with the Paris Club refers to Iraq as an "exceptional situation"; no precedent was set that would allow other highly indebted countries saddled with odious debt from their own past dictators to claim similar relief.

The December deadline the Iraqi government is expected to meet for the completion of its final Oil Law is a "benchmark" in the IMF agreement.

In an investigation for The Nation, Naomi Klein discovered that Baker had pursued his mission with an eye-popping conflict of interest. Klein learned that a consortium that included the Carlyle Group, of which Baker is believed to have a $180 million stake, had contracted with Kuwait to make sure that it was paid the money it was owed by Iraq. When Baker met with the Kuwaiti Emir to beg forgiveness for Iraq's odious debt, he had a direct interest in making sure he didn't get it.

Another major creditor was Saudi Arabia. The Carlyle Group has extensive business dealings with the kingdom, and Baker's law firm, Baker Botts, was representing the monarchy in a suit brought by the families of the victims of 9/11.

The most recent IMF report (PDF) shows how successfully he failed: "While most Paris Club official creditors have now signed bilateral agreements, progress has been slow in resolving non-Paris Club official claims, especially those of Gulf countries," it says. It's likely that Iraq, a country occupied for over three years, devastated by 12 years of sanctions and with a per capita GDP of $3,400, will end up paying reparations to Kuwait, a prosperous state with a per capita GDP of over $19,000, for the five months Saddam occupied his neighbor in late 1990 and early 1991.

Iraq will still face a mountain of debt even if it meets all the "benchmarks" required of it -- the IMF expects the country's debt service to equal five percent of its economic output in 2011 and warns that even a minor price shock in the oil market "would require significant borrowing from the international markets to close the financing gaps."

"Sovereign" debt is transferable between governments; if a new strong-man arises or Iraq becomes a loose federation, the debt will remain on the books and defaulting on it, while a possibility, has serious long-term consequences.

All of this is about bringing different forms of pressure onto Iraq's nascent government, not controlling it, and that's an important distinction. A neocolonial power respects a country's sovereign laws, as long as it has significant input in writing them. Before and since the "handover" to Iraq's government, the Green Zone has been over-run with "advisors" from Big Oil. Aram Roston wrote: "it's clear that there is not just the one Iraqi Oil Ministry but a parallel 'shadow' ministry run by American advisers."

Immediately after the invasion, Phillip Carroll, a former Chief Executive with Royal Dutch-Shell, and a 15-member "board of advisors" were appointed to oversee Iraq's oil industry during the transition period. According to the Guardian , the group's chief executive "would represent Iraq at meetings of Opec." Carroll had been working with the Pentagon for months before the invasion -- even while the administration was still insisting that it sought a peaceful resolution to the Iraq crisis -- "developing contingency plans for Iraq's oil sector in the event of war." According to the Houston Chronicle, "He assumed his work was completed, he said, until Defense Secretary Donald Rumsfeld called him shortly after the U.S.-led invasion began and offered him the oil adviser's job." Carroll, in addition to running Shell Oil in the U.S., was a former CEO of the Fluor Corporation, a well-connected oil services firm with extensive projects in Saudi Arabia and Kuwait and at least $1.6 billion in contracts for Iraq's reconstruction. He was joined by Gary Vogler, a former executive with ExxonMobile, in Iraq's Office of Reconstruction and Humanitarian Assistance.

After spending six months in the post, Carroll was replaced by Robert McKee, a former ConocoPhillips executive. According to the Houston Chronicle, "His selection as the Bush administration's energy czar in Iraq" drew fire from Congressional Democrats "because of his ties to the prime contractor in the Iraqi oil fields, Houston-based Halliburton Co. He's the chairman of a venture partitioned by the … firm."

The administration selected ChevronTexaco Vice President Norm Szydlowski to serve as a liaison between the Coalition Provisional Authority and the Iraqi Oil Ministry. Now the CEO of the appropriately named Colonial Pipeline company, he continues to work with the Iraq Energy Roundtable, a project of the U.S. Trade and Development Agency that recently sponsored a meeting to "bring together oil and gas sector leaders in the US with key decision makers from the Iraq Ministry of Oil."

Terry Adams and Bob Morgan of BP, and Mike Stinson of ConocoPhillips would also serve as advisors during the transition.

After the CPA handed over the reigns to Iraq's interim government, the embassy's "shadow" oil ministry continued to work closely with the Iraqis to shape future oil policy. Platform's Greg Muttit wrote that "senior oil advisers--now based within the Iraq Reconstruction Management Office (IRMO) in the U.S. Embassy ... included executives from ChevronTexaco and Unocal." After the handover, a senior US official said: "We're still here. We'll be paying a lot of attention and we'll have a lot of influence. We're going to have the world's largest diplomatic mission with a significant amount of political weight."

The majors have also engaged in good, old-fashioned lobbying. In 2004, Shell advertised for an Iraqi lobbyist with good contacts among Iraq's emerging elites. The firm sought "A person of Iraqi extraction with strong family connections and an insight into the network of families of significance within Iraq." According to Platform, just weeks after the invasion, in a meeting with oil company execs and Australian Foreign Minister Alexander Downer in London, Former British Foreign Secretary Sir Malcolm Rifkind promised to personally lobby Dick Cheney for contracts on behalf of several firms, including Shell.

Meanwhile, major oil firms were positioning themselves so that they'd have the best contacts in the new government. According to the Associated Press, "The world's three biggest integrated oil companies" -- BP, ExxonMobil and Royal Dutch/Shell -- "struck cooperation or training deals with Iraq" in 2005. "It's a way to maintain contact and get the oil officials to know about them," former Iraqi Oil Minister Issam Chalabi told the AP. And it seems to have worked; in May, Iraq's current Oil Minister, Husayn al-Shahristani, said that one of his top priorities would be to finalize an oil law and sign contracts with "the largest companies."

Washington has its hands all over the drafting of that law. Early on, in 2003, USAID commissioned BearingPoint, Inc. -- the new name for the scandal-plagued Arthur Anderson Consulting -- to submit recommendations for the development of Iraq's oil sector. BearingPoint was the firm that designed the country's economic transformation under a previous USAID contract, so it was no surprise that its report reinforced the preference for PSAs that "everybody [kept] coming back to" during meetings of the State Department's "Future of Iraq Project."

In February, just months after the Iraqis elected their first constitutional government, USAID sent a BearingPoint advisor to provide the Iraqi Oil Ministry "legal and regulatory advice in drafting the framework of petroleum and other energy-related legislation, including foreign investment." According to Muttit, the Iraqi Parliament had not yet seen a draft of the oil law as of July, but by that time it had already been reviewed and commented on by U.S. Energy Secretary Sam Bodman, who also arranged for Iraq's Oil Minister "to meet with nine major oil companies - including Shell, BP, ExxonMobil, ChevronTexaco and ConocoPhillips - for them to comment on the draft."

All of these points of pressure are only what we can see in the light of day. There is certainly much more occurring under the table. Raed Jarrar told me that he "was personally familiar with the kind of intimidation that can be brought by both the U.S. military and civilian" personnel, and that he would be shocked if "multiple millions of dollars in bribes" were not changing hands. The IMF noted in its latest report (PDF) that "corruption related to the production and distribution of refined fuel products was rampant." Last March, 450 Oil Ministry Employees were fired for suspected corruption, and Mohammed al-Abudi, the Oil Ministry's Director General for Drilling, said that "administrative corruption" was pervasive. "The robberies and thefts are taking place on a daily basis on all levels", he said, "committed by low-level government employees and by high officials in leadership positions of the Iraqi state." The same day that the UN legitimized the occupation, George Bush signed Executive Order 13303 providing full legal immunity to all U.S. oil companies doing business in Iraq in order to facilitate the country's "orderly reconstruction."

Yet, despite a five-year effort, Big Oil still sits on the sidelines, wary of the disorder and violence that's plagued the country. Ironically, it appears that China may well receive the first deal in post-Saddam Iraq (although it's one negotiated with Hussein's government before the war). The Kurdish autonomous region has signed three PSAs -- none with the majors -- although there is some dispute about their validity (and, at this writing, there are reports that the Kurds are in negotiations with Royal Dutch-Shell and BP, among others).

At this point, the situation is very fluid. Last week, Iraqis were shocked when a controversial measure that might lead to the country's effective break-up was passed in the Parliament by one vote. The major Sunni parties and Muqtada al Sadr's ministers boycotted the session in outrage. Muddying the waters further is a heated debate about whether a somewhat ambiguous provision in the Iraqi constitution already gives provincial governments the right to hold onto oil revenues rather than send them to the central government. The results of all of these debates will have an enormous impact on Iraq's chances to build an autonomous and potentially prosperous country down the road.

It's possible that the administration and its partners, expecting to be greeted with open arms by the Iraqi people, badly overplayed their hand. Iraq's new government is faced with what may prove to be an insurmountable crisis of legitimacy based largely on the fact that it's seen as collaborating with American forces. Overwhelming majorities of Iraqis of every sect believe the U.S. is an occupier, not a liberator, and are convinced that it intends to stay in Iraq permanently. Raed Jarrar put it this way: "If, today, you were to go in front of Parliament and ask: 'who is opposed to demanding a timetable for the Americans to withdrawal?' nobody would dare raise their hand. The debate is about how soon you set it." The passage of a sweetheart oil law that puts long-term control of the country's oil wealth in the hands of Western firms would validate Iraqis' fears of a permanent U.S. presence and could prove to be a tipping point. It's also possible Iraq's government won't make it to December; at this writing, rumors of a "palace coup" are swirling around Baghdad, according to Iraqi lawmakers.

What is clear is that the future of Iraq ultimately hinges to a great degree on the outcome of a complex game of chess -- only part of which is out in the open -- that's playing out right now, and oil is at the center of it. It's equally clear that there's a yawning disconnect between Iraqis' and Americans' views of the situation. Erik Leaver, a senior analyst at the Institute for Policy Studies in Washington, told me that wrangling over the distribution of Iraq's oil wealth is "definitely causing problems on the ground" but the entire topic is taboo in polite DC circles. "Nobody in Washington wants to talk about it," he said. "They don't want to sound like freaks talking about blood for oil." At the same time, a recent poll asked Iraqis what they believed was the main reason for the invasion and 76% gave "to control Iraqi oil" as their first choice.

Joshua Holland is an AlterNet staff writer.
AlterNet: War on Iraq: The U.S. Takeover of Iraqi Oil

Iraqis, Government outlining future
The new Iraqi government has taken several steps in recent days and weeks to move the country toward peace and prosperity, a senior U.S. military officer said last week.

Army Maj. Gen. William Caldwell, a spokesman for Multinational Force Iraq, described some of these initiatives to reporters at a Baghdad news conference.

For example, the Iraqi government's Council of Representatives passed a "Region's Law" on Oct. 11. The law that focuses on an equable distribution of wealth and political power among Iraq's multifaceted citizenry, Caldwell said. It also outlines procedures provinces would use in forming political regions as the result of voter referendums.

"This is a great beginning to addressing the worries of many Iraqis on fair distribution of wealth and political power," Caldwell said.

The Council of Representatives also passed an investment law on Oct. 10. "This law will provide a legal and regulatory framework for companies - foreign companies - interested in investing in Iraq," Caldwell explained. "The Iraqi government is also drafting a hydrocarbon law to ensure fair and equitable distribution of the natures of this country's future oil revenues."

In September, the Council of Representatives passed a law designed to thwart the black-marketing of gasoline and other fuels, Caldwell said. The new law also will bolster fuel supplies and cut corruption by opening up the country's energy sector to private investment. Regulations pursuant to the new law are being developed and should be in place by the end of this year, Caldwell said.

Additionally, Iraqi and Turkish diplomats agreed Oct. 4 to resolve a three-year-old dispute over payments for fuel imports, Caldwell said. The funds involved in the dispute amounted to some $200 million.

Resolution of the Turkish-Iraqi dispute "was desperately needed to help open trade and alleviate Iraq's fuel shortage," Caldwell said.

In September, Iraq produced an average of 2.4 million barrels of oil per day, Caldwell noted. This rate surpasses the daily production goal of 2.2 million barrels of oil for the past six consecutive months. Through September, Iraqi oil sales revenues have exceeded projected estimates by about $1.5 billion, he said.

The Iraqi government also is working to reduce a national unemployment rate that's now estimated to be 30 percent, Caldwell said. To support that effort, the government is assembling funding for an employment program that would train and employ 100,000 young men for two years.

All of these initiatives "are critical to Iraq's future," Caldwell said, noting that establishing security and raising the standard of living for Iraq's citizens are closely related.

"As we have stated, if you want prosperity, you must have security," Caldwell emphasized. "And, if you want security, you must have unity. We know this, and (Iraqi Prime Minister Nouri al-Maliki) knows this."

Source: Multi-National Force-Iraq
Iraqis, Government outlining future

Originally Posted by Adster

In short, r/v the facker!

I couldn't have said it better!

IRAQ: Corruption and poor security stem flow of investment
17 October 2006 (IRIN)

The eleventh and last in a series of IRIN stories examining the obstacles Iraq faces in implementing its government's plan to reconcile different sections of Iraqi society. Click on the following link for an overview of the series: "); NewWindow.document.write("IRINnews"); NewWindow.document.write("

Of the US $65 billion pledged to Iraq for aid and redevelopment since March 2003, only $20.5 billion has been spent on that purpose, according to the government. Some $35 billion has still not been disbursed to Iraq by donors while billions have been lost to corruption and billions redirected to security.

"About 15 percent of the total money invested in the country by the US government and other donors for reconstruction projects is missing without explanation. Each day the international debt of Iraq will increase because of corruption," said Judge Radhi al-Radhi, head of the Commission on Public Integrity, which is tackling corruption.

He said around $4.5 billion has been pilfered from state coffers.

Decisions about how and where the money is spent in Iraq are sensitive and complex. Any request for funds is drafted by the Prime Minister's office and then must be approved by parliament. A commission of government officials, US officials and other organisations' and donor representatives have to check each request.

Nonetheless, some $1 billion is said to have been stolen by Iraqi defence ministry officials, according to a report in 2005 presented by Stuart Bowen, director of the US Office of the Special Inspector General for Iraq Reconstruction.

The US administration has also been plagued with accusations of misspent money. In February 2006, Robert Stein, who held a senior position in the Coalition Provisional Authority, admitted to stealing more than $2 million in goods and cash, as well as taking bribes in return for contracts.

In charge of overseeing infrastructure funds in south-central Iraq in 2003 and 2004, Stein now faces a maximum sentence of 30 years in prison.

In addition to reconstruction money lost to corruption, at least $3 billion has been redirected to security because of the continuing insurgency and sectarian violence. This does not include separate funds invested in fighting terrorism, such as the $5 billion Iraqi Security Forces Fund.

"The money used in security issues was used in training local security forces, [and buying] equipment, armaments, concrete barriers, bullet-proof cars, bodyguards for senior officials and other requirements. This cannot be neglected. Security has to keep going more than any reconstruction, as it is the base of development," said Ahmed Marouf, budget officer and Ministry of Planning assessor.

Donors holding back

Of the $20.5 billion that was spent as intended, $14.5 billion was spent on reconstructing buildings and infrastructure, $3.5 billion was spent on humanitarian aid and emergency relief, and $2.5 billion was spent on elections, Marouf said.

Despite the billions spent across the country, many Iraqis say that they have seen little improvement.

Donors continue to withhold the rest of the money pledged until the Iraqi government establishes procedures to stop corruption and find qualified people to dispense funds.

At the International Donors' Conference for Iraq, held in October 2003 in Madrid, 73 countries and 20 international organisations pledged a total of $32 billion in aid for the reconstruction of Iraq, including $21 billion from the US alone. Of those pledges, nearly half has not yet been disbursed to Iraq.

The money goes into the Iraq Relief and Reconstruction Fund. The US Agency for International Development is the main partner and administrator of those rebuilding projects.

Separately, the US has also allocated $19.6 billion to the Development Fund for Iraq for investments in governance. Of that, $10.5 billion has still not been disbursed.

Other sources pledged an additional $13.6 billion in assistance. The World Bank and the International Monetary Fund pledged $5.5 billion in lending programs, of which they have given $1.8 billion so far.

The remaining investments were from 37 bilateral donors who pledged $8 billion collectively. The main donors - Japan, the United Kingdom, the European Commission and Canada - have so far disbursed $2.5 billion.

"Many other projects have been developed so far with international NGOs and with the addition of government support of millions of dollars that have come from the country's oil revenue," said Marouf.

Oil revenue

Iraq's main source of revenue has traditionally been from oil. During former president Saddam Hussein's rule, revenue from oil represented about 90 percent of the total economy.

However, security problems and constant attacks on oil pipelines by insurgents have seriously hampered the extraction and distribution of oil.

"Each pipe attacked means millions of dollars lost a day, which directly will reduce funding for investments on Iraq's reconstruction," Marouf said.

Nearly 650 attacks on Iraq's oil infrastructure were reported from June 2003 to June 2006, causing a massive loss of revenue from oil exports at a time when international prices have been high. The cost of repairing all three years of damage to the nation's primary source of income totals more than $13 billion.

"This money alone would be enough to repair and build hundreds of schools and hospitals countrywide, but has been lost because insecurity is so common in our country," said Professor Salah Abdu, an economist at Baghdad University.

Originally Posted by pipshurricane

Address of the Central Bank of Iraq are:

CENTRAL BANK OF IRAQ


Address: PO Box 64, Rashid Street, Baghdad, Iraq

Telephone: 8865171-3

Fax: 8166321, 8166514

E-mail: [email protected]

Governor: Sinan Al Shibibi

Iraq

Address of P.O. Box 5670, Sadoon Street, Baghdad,. Iraq. are not a Bank but:

the IRAQI STATE EXPORT ORGANIZATION, P.O. Box 5670, Sadoon Street, Baghdad,. Iraq. IRAQI STATE IMPORT ORGANISATION (a.k.a. IRAQI STATE ORGANISATION OF ...

Maybe could be referring to these banks on al-Sadoon Street and "al" got lost in translation....??? just tossing ideas out there...

Names and Addresses of the Iraq State Banks

Credit Bank Of Iraq take transactions in Iraqi Dinar Baghdad / Alsadoon /Alelwia Building

Babylon Bank take transactions in Iraqi Dinar Baghdad / Alsadoon street / District 101/ St.No. 91 / Building No. 91/ on 91/on the other side of Ministry of Agriculture

Gulf Commercial Bank Baghdad /Alsadoon street / St. No. 102 /District 9 / Building No.95

Is there a reason the CBI web site is down????? Can anyone else get to it.....It just may be me.....

This has been discussed for at least 10 pages

It is a dns server problem