Oil rush: Scramble for Iraq's wealth

Critics said the war was all about the nation's lucrative fuel industry. Are they now being proved right? Patrick Cockburn reports from Baghdad
http://www.independent.co.uk/news/world/middle-east/oil-rush-scramble-for-iraqs-wealth-1711570.html

For many Iraqis, the reason the US invaded their country in 2003 was to get control of their oil. I never believed this at the time. I thought that the US overthrew Saddam Hussein and occupied Iraq primarily because it wanted to reassert its power after 9/11 and believed the war in Iraq would be easily won.

It is only now, six years after the American invasion, that the battle for the control of Iraqi oil production is moving to the centre of politics in Baghdad. On 29 and 30 June, the Iraqi government will award contracts under which international oil companies will take a central role in producing crude oil from Iraq's six super-giant oilfields over the next 20 to 25 years. By coincidence, 30 June is also the date on which the last American troops will be leaving Iraqi cities. On the very day that Iraq regains greater physical authority over its territory, it is ceding a measure of control over the oilfields on which the future of the country entirely depends.

The contracts have been heavily criticised inside Iraq as a sell-out to the big oil companies, which are desperate to get back into Iraq – oil was nationalised here in 1972, and Iraq and Iran are the only two places in the world where immense quantities of oil might still be discovered. Several of those criticising the contracts work in the Iraqi oil industry. "The service contracts will put the Iraqi economy in chains and shackle its independence for the next 20 years," said Fayad al-Nema, head of the state-owned South Oil Company, which produces 80 per cent of Iraq's crude. "They squander Iraq's reserves."

The government made a serious miscalculation last year. It believed the oil price would stay around the $140-a-barrel mark. It raised government salaries and hired more employees – who now total at least two million, double the level under Saddam Hussein. Some 600,000 people work in the army, the police and the security apparatus. Expensive contracts were signed for the supply of electric plants and aircraft.

(snip)
Only the rationing system has kept many Iraqis from starvation in recent years, and this alone costs $6bn annually. The government cannot afford to see its oil revenues go down, which explains why it is ignoring criticism of the new oil contracts. The US may not have invaded Iraq in order to control its oil reserves, but a consequence of the invasion has been to bring back the international oil companies.