Guiding Principles for U.S. Post-Conflict Policy in Iraq
By: Frank G. Wisner, Jr., Edward P. Djerejian
cfr.org
[ This seems somewhat familiar. I will clip this part relevant to past arguments I've had elsewhere. I would cross reference this article with the Langewiesche Atlantic article about US troops in Bosnia, Peace is Hell theatlantic.com . Somehow, I don't think things will work out anywhere near as simply as the war architects would have it. ]
THE LURE OF IRAQI OIL: REALITIES AND CONSTRAINTS
There has been a great deal of wishful thinking about Iraqi oil, including
a widespread belief that oil revenues will help defray war
costs and the expense of rebuilding the Iraqi state and economy.
Notwithstanding the value of Iraq’s vast oil reserves, there are severe
limits on them both as a source of funding for post-conflict
reconstruction efforts and as the key driver of future economic development.
Put simply, we do not anticipate a bonanza.
The U.S. approach should be guided by four principles:
• Iraqis maintain control of their own oil sector;
• a significant portion of early proceeds is spent on the rehabilitation
of the oil industry;
• there should be a level playing field for all international players
to participate in future repair, development, and exploration
efforts; and
• any proceeds are fairly shared by all of Iraq’s citizens. If depoliticized,
the UN oil-for-food distribution mechanism is a
useful starting point for distributing oil revenues throughout
the country.
It is important to stress that Iraqis have the capability to manage
the future direction of their oil industry. A heavy American
hand will only convince them, and the rest of the world, that the
operation against Iraq was undertaken for imperialist, rather than
disarmament, reasons. It is in America’s interest to discourage such
misperceptions.While Iraqi technocrats are likely to be attracted
to American technology and assistance, the United States
should be prepared that negotiations with future Iraqi representatives
on foreign participation will be prolonged and hard-fought.
In addition, Iraq’s highly experienced, nationalistic oil executives
will be motivated by Iraqi national interests and are unlikely to agree
to one-sided terms that transfer effective control of Iraq’s oil
reserves to foreigners.
How quickly Iraq’s oil production capacity of between 2.6 and
2.8 million barrels per day (bpd) can be increased depends on several
variables, such as the political environment that develops
after the war and the price of oil. U.S. policy should be informed
by a realistic assessment of how Iraq will attract the estimated $30
billion to $40 billion in new investment it needs to rehabilitate active
wells and to develop new fields.
Iraq’s oil industry is unlikely to be able to immediately deliver
recovery in oil production and, depending on damage sustained
during hostilities, may find its ability to export oil reduced.
It is in dire straits with existing production levels declining at a
rate of 100,000 bpd annually. Significant technical challenges
exist to stanching the decline and eventually increasing production.
Returning to Iraq’s pre-1990 levels of 3.5 million bpd will requireX
massive repairs and reconstruction of major export facilities, costing
several billions of dollars and taking months, if not years.
Service contractors are likely to secure most initial oil-sector
contracts. The best-case projections of 6 million bpd will take
several years to achieve and depend on a multitude of factors, including
ongoing international oil-market conditions.
Any damage done to the industry during conflict will have to
be addressed immediately in order to ensure that oil revenues continue
to flow back to the Iraqi people. American military planners
must be well briefed on Iraq’s oil infrastructure, in order to avoid
inadvertently harming Iraq’s recovery.
Finally, the legality of post-sanctions contracts awarded in
recent years will have to be evaluated. Prolonged legal conflicts over
contracts could delay the development of important fields in Iraq
and hamper a new government’s ability to expand production. It
may be advisable to pre-establish a legitimate (preferably UNmandated)
legal framework for vetting pre-hostility exploration
agreements.
THE BURDEN OF ECONOMIC RECOVERY
Leaving aside immediate humanitarian needs, experts estimate that
reconstruction will cost between $25 billion and $100 billion.
Repairing existing oil-export installations will require $5 billion,
and restoring Iraq’s electrical-power infrastructure to its pre-1990
capacity could cost $20 billion. Given that Iraq’s annual oil revenues
are currently in the neighborhood of $10 billion, significant
financial support will have to be generated by neighboring states,
multilateral institutions, and Western partners.
The scale of Iraq’s problems makes it essential that the administration
move to swiftly integrate development planning by the
UN Development Programme and the World Bank with its plans
for immediate humanitarian assistance. Mindful that the new Iraqi
regime could be crippled by its foreign debt of upwards of $60 billion,
the administration should seek to lighten that burden by convening
the earliest possible meetings of Iraq’s creditors in the
London and Paris Clubs. Likewise, the United States should
encourage delays in making reparations payments and repayment
of other debts, including those owed to Russia and other major
debt holders. |
