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Excerpt: Still, the prospect of privatizing Iraq's oil remained of great interest to U.S. oil companies, according to Robert Ebel, from the influential Washington-based Center for Strategic and International Studies (CSIS).Ebel, former vice-president of a Dallas-based oil exploration company, retains close ties to the industry. In an interview in his Washington office, Ebel said it was up to Iraq to make its own decisions, but he made clear that U.S. oil companies would prefer Iraq abandon its nationalization."We'd rather not work with national oil companies," Ebel said bluntly, noting that the major oil companies are prepared to invest the $35 to $40 billion to develop Iraq's reserves in the coming years. "We're looking for places to invest around the world. You know, along comes Iraq, and I think a lot of oil companies would be disappointed if Iraq were to say 'we're going to do it ourselves' " Nestled into the heart of the area of heaviest oil concentration in the world is Iraq, overflowing with low-hanging fruit. No permafrost, no deep water. Just giant pools of oil, right beneath the warm ground. This is fruit sagging so low, as it were, that it practically touches the ground under the weight of its ripeness. Not only does Iraq have vast quantities of easily accessible oil, but its oil is almost untouched. "Think of Iraq as virgin territory ....This is bigger than anything Exxon is involved in currently .... It is the superstar of the future," says Gheit, "That's why Iraq becomes the most sought-after real estate on the face of the earth." Gheit just smiles at the notion that oil wasn't a factor in the U.S.invasion of Iraq. He compares Iraq to Russia, which also has large undeveloped oil reserves. But Russia has nuclear weapons. "We can't just go over and ... occupy (Russian) oil fields," says Gheit. "It's a different ballgame." Iraq, however, was defenceless, utterly lacking, ironically, in weapons of mass destruction. And its location, nestled in between Saudi Arabia and Iran, made it an ideal place for an ongoing military presence, from which the U.S. would be able to control the entire Gulf region.Gheitsmiles again: "Think of Iraq as a military base with a very large oil reserve underneath .... You can't ask for better than that."
An Iraqi oil refinery Iraq has the world’s second largest proven oil reserves. According to oil industry experts, new exploration will probably raise Iraq’s reserves to 2-300 billion barrels of high-grade crude, extraordinarily cheap to produce, leading to a gold-rush of profits for international oil firms in the post-Saddam era. The four giant firms located in the US and the UK have been keen to get back into Iraq, from which they were excluded with the nationalization of 1972. They face companies from France, Russia, China, Japan and elsewhere, who already have major concessions. But in the post-war setting, with Washington running the show, the US-UK companies expect eventually to overcome their rivals and gain the most lucrative oil deals that will be worth hundreds of billions, even trillions of dollars in profits in the coming decades. Seeking Iraq's Oil Prize Government May Allow Foreign Petroleum
Firms to Invest ( January 26, 2005) History Will Show US Lusted After Oil (December 26,
2004) Irish Company Hit by Iraqi Report (December 16, 2004)
By Eric Laursen - In These Times - May 28, 2003 The Bush administration’s neoliberal blueprint for the
post-Saddam state But the bigger picture of Washington’s Iraqi dreams is forming more gradually. The most important element to date is a document titled “Moving the Iraqi Economy from Recovery to Sustainable Growth,” revealed by the Wall Street Journal in early May. Created by the Treasury Department and the U.S. Agency for International Development (USAID) as a blueprint for prospective contractors, it lays out a series of steps the administration wants to achieve over the next year in Iraq, steps that will launch the country as a test case for exporting the neoliberal economic model to the Middle East. Key goals include privatizing state-owned assets, including oil, creating a “world-class [stock] exchange,” and instituting a consumption tax and a new Iraqi currency. A USAID spokesperson says the document is not a definitive statement of Washington’s intentions, and that not everything it describes will actually take place. But the scenario it lays out, added to other moves the Bush administration is known to be making, indicate that the path ahead for Iraq will probably look much like the force-fed economic transformations that devastated many ex-Communist states in the ’90s. Overseeing the reconstruction of Iraq’s financial system is Peter McPherson, head of USAID under Ronald Reagan. USAID has enthusiastically pushed privatization and marketization in countries as disparate as Kazakhstan, Hungary, Poland and Macedonia, often collaborating with the World Bank, which the White House is now also prodding to play a big role in Iraq. The Bank, in turn, has been the driving force behind structural adjustment programs, which are comprised of selling off state-owned enterprises and turning public services into for-profit businesses, often owned by foreign contractors, in scores of countries around the globe. The blueprint is remarkably similar in almost every case. Here’s how it’s supposed to work. State-owned enterprises, especially those controlling demonstrably valuable natural resources, are sold off, or their shares distributed to the public. This is supposed to provide capital to be sold on local stock and bond markets. To kick-start the markets, state-sponsored retirement systems are converted into individual accounts, in a way similar to U.S. citizens’ 401(k) plans, to which workers contribute to fund their retirements. A consumption-based rather than income-based tax system is supposed to encourage workers to spend less and save more, further fueling capital markets. And a stable currency—or, better yet, a “dollarized” system in which U.S. currency becomes the coin of the realm—serves to reassure foreign investors that they can play, too, without significant risk to the value of their holdings. Unfortunately, this idealized “virtuous cycle” has seldom come to pass. In Chile, longtime poster child for pension privatization, financial vendors’ marketing costs, passed on to workers in the form of ballooning management fees, have drastically shrunk pension returns. In 1999, working off a plan that USAID, the Asian Development Bank, and the World Bank funded and helped draft, Kazakhstan required all workers to put 10 percent of their salaries into one of 13 privately managed investment funds. Privatization of the biggest publicly owned companies jump-started the market, and the project received a great deal of laudatory press. But it didn’t last. Both the privatizations and the pension conversion were rushed into place before the country had the infrastructure or investor sophistication to support them. Net result: Salaried Kazakh workers’ retirement savings have shrunk severely. The dream of a funded pension system that nurtures the local economy and grows alongside it has turned out to be just that. Indications are that Iraq will follow much the same path. The World Bank has a close relationship with the Adam Smith Institute, a London-based, free-market think tank that recently published a paper advocating the privatization of Iraqi industry and the replacement of Iraq’s state-guaranteed retirement system with private pension funds. The Heritage Foundation, an influential American neoconservative think tank, is calling for Washington to administer a “comprehensive economic reform” of Iraq that includes preparing “state assets, including industries, utilities, transportation, ports and airports, pipelines, and the energy sector, for privatization.” That recommendation is closely echoed in the Treasury-USAID blueprint document, which schedules the next year for a propaganda offensive to persuade the Iraqi people that privatization is in their best interest, then the following three years for shifting the assets. The blueprint calls for all this to begin by July. The short timetable has some longtime observers worrying that Iraq will suffer from another problem that has plagued privatization projects in developing countries: a headlong rush to get it all done fast. “There’s a political imperative to dismantle the centrally planned state, and they’re more concerned with that than with setting up proper regulatory structures,” says Bea Edwards of Public Services International, the international trade union federation. “Regulation takes a long time. You have to make sure the people you put in charge are credible and ethical. But there just isn’t time to vet them, and it’s not the priority.” With tensions rising in the Middle East and the Bush administration eager to furnish Iraq as a shining new example of the “Washington consensus,” the race is on. http://www.globalpolicy.org/security/issues/iraq/after/2003/0528privatizing.htm
WASHINGTON (Reuters) - The US civil administration in Iraq intends early next year to unveil a blueprint for privatizing Iraq's state-owned businesses in a quest to create a thriving capitalist economy, an official said on Wednesday. Thomas Foley, director of private-sector development for the US-led Coalition Provisional Authority in Iraq, was bullish about getting Iraq's economy back on its feet, but said it was important that corruption be stamped out in Iraqi business. In a conference call with reporters at the Pentagon, Foley said he hoped to present to the US-appointed Iraqi Governing Council within about five to seven months a proposal on privatizing state-owned businesses. He said he would propose the creation of an Iraqi privatization agency to handle the process of making state-owned companies private. Foley said his plan would involve about 150 of the 200 state-owned enterprises in Iraq and exclude the oil industry, electricity assets and financial institutions such as state-owned banks and insurance companies. Businesses in Foley's portfolio include cement companies, fertilizer operations, a phosphate mining operation, sulphur mining and extraction businesses, pharmaceutical companies, an airline and automobile tire makers.
Mr Kilani said liberalisation of foreign investment, the banking sector, taxes and tariffs would "significantly advance efforts to build a free and open market economy in Iraq". We should play a role and spend a lot of money there, but we shouldn't dominate. Bill Clinton "We should play a role and spend a lot of money there, but we shouldn't dominate," Mr Clinton said. But US Treasury Secretary John Snow rejected the suggestion that US had dominated the drafting of the reforms, saying they were the "proposals, ideas, and concepts of the Governing Council".
The changes - set to be implemented in the next few weeks - will allow foreign banks to buy Iraqi financial institutions, while the central bank itself will become independent. Foreigners will be able to take over businesses and industries that were previously state-controlled. 'Oil' The most lucrative part of the Iraqi economy - oil - is not included in the reforms. Natural resources are exempt from the changes, excluding current outside participation in Iraq's oil reserves. There is widespread belief in the Arab world that the US military action in Iraq earlier this year was motivated by a desire to control Iraq's substantial oil reserves. Other measures announced:
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