It’s not what Americans nor Iraqis want to hear: US forces may be remaining after the scheduled troop pull-out of approximately 46,000 by year’s end.
Admiral Mike Mullen, Chairman of the Joint Chiefs of Staff, commented that “clear gaps” still remain in the governing infrastructure and defense systems of Iraq while the White House has offered 10,000 troops to stay beyond the December 31st deadline.
The unending American presence in Iraq could help stabilize this area of the region amidst toppling governments and frequent protests. But would that mean that the US is supporting a government over the people? This fine line is a dangerous one and yet one that the US must walk.
The Iraq war began in 2003 following then President Bush’s assertion that weapons of mass destruction were being stockpiled by tyrannical then-leader Saddam Hussein. Hussein was tried, convicted of crimes against humanity and hanged in 2006.
The initial reason for the American invasion was shaky at best and no weapons of mass destruction have been found.
In place of the tyrannical ex-leader, divisions have cropped up along Shi’ite – Sunni lines as well as along ethnic lines, including the creation of the sovereign state of Kurdistan within Iraq.
Iraq was established as a federal state led by a transitional government. Chief of State President Jalal Talabani sits on the three-member Transitional Presidency Council elected by legislature. Prime Minister Nuri al-Maliki serves as Head of the Government over a unicameral 325-seat Council of Representatives.
Amongst the devastation of this nearly decade-long war along with sanctions which preceeded American ground presence, this oil revenue dependent economy was ravaged.
Iraq’s borders contain vast untapped reserves of oil with the fourth largest proven reserves in the world (more than 143 billion barrels), and natural gas coupled with infrastructure damaged by decades of war and sanctions.
However, the country is slowly picking up the pieces, including increasing oil exports to Jordan this week following the third attack of the Arab Gas Pipeline. Iraqi oil is a power-generating alternative to normally gas-fired generators.
Despite exports restarting, domestic infrastructure is in poor condition.
Protests seen this year are not a new phenomenon in Iraq. Last summer, citizens spoke out against chronic power shortages.
The latest bout of protests caused the government of Iraq to offer subsidies in the form of 1,000 MW to all citizens, irrespective of their ability to pay. This short-term solution will not solve the 5,000 MW daily shortage and will, in fact, worsen the long term problem.
In 2009, Iraq was the world’s 12th largest oil producer, with an economy heavily dependent on oil and petroleum products – using oil to meet 94% of its total energy needs in 2009.
It has a poorly-diversified economy and oil revenues constituted two-thirds of its Gross Domestic Product (GDP) in 2009.
Since the US invasion of Iraq in 2003, governance has been unstable and regionally subjective.
The energy sector is state-controlled and lagging far behind production capacity due to the devastation of the war compounding the lack of development and modernization in 1990s.
Currently, Iraq’s energy sector is undergoing an exciting and critical time of development.
Proper public administration is needed to nurture the sector into both the public and private realms. Already, the first and largest private gas company, Dana Gas - an Emirati company, has established a presence both in Iraq and the region.
Iraqi administrators are taking notes from several other countries including India and South Korea as it aims to develop a healthy and sustainable energy sector.
While the Hydrocarbons Law has been stalled in the Council of Ministers since 2008, there has been activity in Iraq’s energy sectors.
In Kurdistan, an autonomous federal state of Iraq, the Kurdistan Regional Government (KRG) passed its own hydrocarbons law in 2007.
Upstream (E&P) and sharing agreements have been negotiated with several international companies including Angola’s Sonogal, Russia’s Gazprom, Korea’s Kogas, Malaysia’s Petronas, and Turkey’s TPAO, amongst others.
Kurdistan even began exporting oil on its own, ceasing for four months in 2009 only to be challenged by the federal government in Baghdad demanding exports be funneled through its State Oil Marketing Organization (SOMO), “Iraq’s exporting arm.”
Full development of Iraq’s oil fields hinges on the passage of the federal law and an improvement in infrastructure quality. Meanwhile, the Ministry of Oil has signed 12 long-term contracts to develop 14 fields.
In an effort to aid infrastructure improvement, despite ending direct involvement in Iraq’s oil and gas sectors in 2008, the US promised $2.05 billion in 2010.
It is prudent to note the uneven distribution of natural resources throughout Iraq’s sectarian-demographic lines.
As in most nations today, the majority of Iraq’s natural gas consumption is used for power generation.
However, its oil and gas industry demands over 10 percent of such power alone, causing shortages across the country.
Security concerns and insurgent attacks threaten Iraq’s recovery in a weak economy 90 percent dependent on hydrocarbon revenues. Separate attacks in February 2011 damaged a pipeline and refinery north of Baghdad, interrupting the already low volume of production.
The North Refinery production unit, one of several in Baiji, a city north of Baghdad, was hit by a terrorist attack in April 2011, killing 4 and shutting down production Located in the former Al- Qaeda stronghold, the refinery produces about 150,000 barrels of oil per day.
Consumers in Iraq face constant and unexpected electricity outages due to poor infrastructure and governance, notably the prevailing presence of subsidies.
While the country is very much still developing, certain subsidies can actually stimulate growth across the country. However, poor management of this economic tool – as is seen throughout the rest of the region – may prove to be ultimately detrimental to the society.
Iraq’s focus has predominately been towards rebuilding access to traditional fossil fuels and such refining capacities. However, there has been some activity in the area of renewable technology such as using solar panels to light street lamps or provide off-grid electricity to rural towns.
The overwhelming cost of renewable energy has set a high barrier of entry for those wishing to implement it on a wider scale. Subsidies here are an example of a positive use – lowering the barrier for long-term growth and benefits.
While the nation is rebuilding, projects are appearing all over the country, mainly focusing on repairing, building and maintaining oil & gas infrastructure. In the government, the Council of Ministers is busy delineating roles amongst various ministries and organizations, including the Kurdish Regional Government.
There is no doubt that Iraq will see an abundance of energy activity in the future. To ensure this, American troops must leave and let the Iraqi people govern themselves.
A free market must be established in Iraq to encourage continued foreign investment and rebuild not only its critical energy sector but its entire system of governance.
(Mary E. Stonaker is an independent scholar, most recently with the Middle East Institute, National University of Singapore. She can be reached at email@example.com)