FREE GEOPOLITICAL NEWSLETTER

 

iran

For current reports go to EASY FINDER

IRAQ


 

 

REPUBLICAN REFERENCE

Area (sq.km)
437,072

Population
24,001,816 (July 2002 est.)

Capital
Baghdad

Currency
Iraqi dinar (IQD)

President

 

Background:
Formerly part of the Ottoman Empire, Iraq became an independent kingdom in 1932. A "republic" was proclaimed in 1958, but in actuality a series of military strongmen have ruled the country since then, the latest being SADDAM Hussein. Territorial disputes with Iran led to an inconclusive and costly eight-year war (1980-88). In August 1990 Iraq seized Kuwait, but was expelled by US-led, UN coalition forces during the Gulf War of January-February 1991. Following Kuwait's liberation, the UN Security Council (UNSC) required Iraq to scrap all weapons of mass destruction and long-range missiles and to allow UN verification inspections. Continued Iraqi non-compliance with UNSC resolutions during the past 12 years resulted in the US-led invasion of Iraq in March 2003 and the ouster of the SADDAM Hussein regime. Coalition forces remain in Iraq, helping to restore degraded infrastructure and facilitating the establishment of a freely elected government.

International
During the first three months of military occupation, despite the appointment of General Jay Garner at the head of the Office of Reconstruction and Humanitarian Affairs and then of Paul Bremer to supervise the political transition and reconstruction efforts, little has been achieved in terms of either maintaining security for the civilian population or re-establishing vital supplies. As Iraqi households were rapidly running out of food, the second half of May proved especially critical in this regard. Nonetheless, behind the curtain an intense debate is taking place with regard to the issue of reconstruction and on the exploitation of Iraqi oil reserves. The expectation is that US companies will take the lion's share of both reconstruction contracts and exploitation rights, but both the Russians and the French claim the validity of existing contracts and the payment of outstanding debts. How this will be settled is unclear yet. Some officials in the Bush administration invited the creditors to waive Iraq's debts to help the reconstruction, but given the huge windfall expected once Iraqi oil production restarts in earnest, such position never had many chances of being accepted. Russia, France and Germany have indicated that will not forgive the debts, but only reschedule the repayments, which could also be capped at a certain percentage of Iraq's oil revenues. Overall, Iraq's debts, including war reparations, are estimated to amount to US$350-US$400 billion. 
With the approval of the US-sponsored resolution at the Security Council, during June international bickering around Iraq subsided, without disappearing altogether. There were unconfirmed reports that the Bush Administration has issued instructions to keep French companies out of the reconstruction business. However, most of the attention was focused in June on Russia, whose government officials repeatedly stated that they have been assured that there would be no discrimination against Russian companies in the reconstruction. Despite that, acting Iraqi oil minister Ghadbhan cancelled a maxi-contract with Lukoil, which threatened retaliation. Moreover, the fate of Iraqi foreign debt, owed mainly to Russia, France and Germany, is still not clear. At the beginning of June Paul Bremer called for more generosity by creditors, saying that the moratorium on service repayments, which they have offered, is not enough. During September the efforts of the US Department of State to involve more countries in its Iraq campaign yielded very little results, despite the support of a growing number of top brass. The Pentagon and vice-president Cheney are known to be contrary to the involvement of other countries and will not be too displeased by this lack of developments, but President Bush appears increasingly worried that Iraq might still be a bleeding wound by the time the campaign for next year's US presidential elections gets under way. For this reason, he requested in September US$66 billion for Iraq, significantly more than expected. The key countries targeted by the Department of State, namely India, Pakistan, Turkey, Germany and Russia, are all asking for rewards that have so far been judged excessive by the Bush administration. The positive development in September was that after much vocal protest, the Arab countries started cooperating openly with the Iraqi Governing Council and the newly appointed government. Not only did the Arab League let Iraq take part in its meetings, but Iraq got back its seat within OPEC. Now that an Iraqi interim government is in place, the IMF and the World Bank will be keener to start lending money.
During October the Bush administration relaunched on a large scale it efforts to pacify Iraq. On the one hand it created the so-called "Iraq stabilization group", on the other it succeeded in pushing through the Security Council of the UN a new resolution. The Iraq stabilization group reduced the influence of the Pentagon and in particular of Mr. Rumsfeld over the decision-making on Iraq, a development which in the view of many should contribute to make things better. The new resolution assured that the US will not be permanently stationed in Iraq and that the multinational force will leave once Iraqi rule is re-established.

Economy
The Iraqi economy has been steadily declining since at least 1991 and by 1999 was estimated to have fallen by 75%. Of course the latest war and the current virtual paralysis of economic activities have made the situation worsen further. The fact that the state used to control so much of the economy makes the political chaos all the more important in terms of negative impact. About 45% of the Iraqi workforce is directly employed by the state. Such schemes as the distribution of dollars to state employees by the occupation authorities are not much more than palliatives. The production of oil almost stopped during the war and is not expected to restart for at least another month and probably longer. The oil fields have been subjected to extensive looting and it will take time and money to repair them. Efforts to repair oil extraction and transport facilities began to produce results only during June, causing acute shortages of oil to hit the Iraqi internal market, to the point that officials in the oil industry stated the need to start importing oil from abroad. There were fears that petrol shortages would cause unrest and contribute to complicate the political situation. However, the oil industry has been paid much greater attention than the rest of the economy and by June the US administration and the Iraqi officials working for it could claim at least some relative successes. The main achievement was the restart of oil exports through Turkey on 22 June. By the end of June production had reached 800,000 barrels a day, up from 310,000 barrels a month earlier. In the first half of August exports averaged 545,000 bpd, up from the 385,000 bpd of July but still well below the 800,000 target. About two-thirds of the northern production are being pumped back into the ground because the pipeline does not work and there are no storage facilities. In September overall production reached 1.6 million bpd, up from 1.35 million bpd in August, or about 70-75% of pre-war levels, with exports reaching 900,000 bpd, which again is short of the original expectations. Some analysts, however, expected more rapid improvements in 2004. Because developing the southern fields should be rather quick, given the presence of infrastructures in place and the low-level technology required, the increase in production is expected to continue even beyond the capacity levels of before the war. Saudi Arabia has already declared its intention to reopen the Iraqi pipeline that runs through its territory. On the other hand, in the present political conditions, maintaining some semblance of a state in Iraq will be much more expensive to the US than it was to Saddam Hussein and even if the US$150 million that Iraq was earning every week from oil at the end of September were multiplied by three or four, it would still be far from enough. As a result, the budget for 2004, which is expected to range between US$13-14 billion, will still largely be funded through foreign aid. 
It has now been accepted that sufficient electricity production is not going to be reestablished in the short term and efforts are being made to start importing electricity from neighboring countries. Iran has already signed a contract, while Turkey seems to be about to sign a second one and Syria is negotiating another. The hopes that the northern oil fields would have given their contribution were quashed after they were sabotaged just a couple of days after their reopening. More guards are being recruited to help guarding the pipelines, but they might not be enough. Some experts say that to bring production to the 3.5 million bpd which was the original target will take as much as US$30 billion, which might not be easy to gather. Western oil companies are reported to have told the Bush administration that they are not going to make large investments in Iraq for the foreseeable future. Production is mostly concentrated in the North, where the disruption and looting caused by the war has been less severe. By mid-July, the Iraqi oil industry was still struggling to reach the targets set for June, as sabotage of the pipelines and administrative confusion prevent the full exploitation of this potential. Iraq has only been able to export oil stored in Turkey and in Iraq itself, while freshly pumped oil is being absorbed by internal consumption and smuggling. Even according to the most optimistic estimates, oil exports will not be able to contribute to Iraq's recovery before the end of 2004. The first budget was presented in August and covers the remainder of 2003. By far the single largest sector will be social expenditure, at US$1.35 billion. The budget is based on assumed oil rents of US$3.45 billion, which are expected to contribute 88% of all revenues. This in turn, is based on the expectation that oil production will reach 2.8 million barrels per day by March 2004, which is not unrealistic.
Towards the end of September a set of economic reforms was announced, including the freedom for foreign investors to buy Iraqi companies, except in the oil industry, but including banks. Foreign investors will be free to transfer their earnings abroad. The central bank will become independent, while a new, modest tax rate of 15% will be imposed on both individuals and companies. The custom rate will be just 5%, except for food and medicine which will be exempt. Earlier expectations that oil revenue would have been enough to fund the reconstruction are now giving way to concern that American taxpayers might have to pay at least part of the bill. Paul Bremer, the boss of the CPA, for the first time in August hinted that reconstruction could cost as much as US$100 billion. US$13 billion should be needed for the electrical grid and another US$16 billion for the water system. For the next year, the UN estimates a need for US$20 billion as a bare minimum and Iraqi revenues are not expected to exceed US$15 billion at best. The US$5 billion gap should be covered by donors. Inevitably, the US will have to contribute more money than it expected. The oil industry rehabilitation plan approved by the CPA and oil ministry already calls for the US to contribute US$1 billion, which had not been budgeted before the war. The Bush administration budgeted just US$2.4 billion, which moreover it is unable to spend because of the widespread insecurity. Only about US$250 million have been spent so far. 
The Iraqi power supply system appears to be a major problem for the American occupiers. Damaged by previous wars and lack of maintenance, the CPA has not been able to restore it in such a way to bring energy supply back to pre-war levels. Worse still, it seems resigned to not being able to do so. The building of new power stations is likely to take years and in the meanwhile the insufficient power supply will greatly hamper the economic recovery. Most of the telephone network is also in need of repair, while banks remain closed. Although trade businesses are reopening, many of them are reported to be on the verge of bankruptcy. The dinar, however, recovered from its low of 4,000 to a dollar during the war, to stabilise in June at 1,400. At least something has been done to help the moribund Iraqi agriculture. Production of grain is expected to be half that of 1990 this year and the distribution network has collapsed. The UN are launching the largest food aid program in the world to help the Iraqis, with a budget of US$1.3 billion. More importantly, the World Food Program will buy this year's harvest from Iraqi farmers, helping them to earn enough to sow the land for the coming year. 
One issue which is being raised is currency reform. At present there are three currencies in circulation, the dollar, the Iraqi dinar and the Northern Iraqi dinar. With inflation running at an estimated 70% a year, the need is felt for creating a single currency which would make it easier to stabilise money supply and fight inflation. 
The CPA claims that imports of medicines have increased sevenfold, that 1,000 schools have been rebuilt and that the irrigation ditches in southern Iraq are being cleaned up, but Iraqis are more concerned by the continuing lack of electricity and sometimes water. At present the CPA estimates that there is a 30% shortfall in electricity production. Just to meet demand investments of about US$2 billion will be needed.
Although the conditions of living of most Iraqis were finally showing some signs of improvement in October, the Food and Agricultural Organisation (FAO) and the World Food Program (WFP) claim that 13 million Iraqis still need food assistance. Chronic malnutrition of millions of people is reported. 
A typical paradox of the current situation in Iraq is the fact that thousands of workers are being imported from India and Bangladesh to work within the US military bases, while the unemployment rate among Iraqis has now reached an estimated 50-60%. Security reasons are cited as the reason for this choice, but this explanation was not enough to prevent massive demonstrations of unemployed Iraqis in front of American bases. About 500,000 of those who are employed work in inefficient or very inefficient state-controlled enterprises, while another 1,000,000 work in the state bureaucracy, which gives an idea of the size of the problem. The privatisation plan of the new government, sponsored by the Americans, would in the short term have a very heavy social impact. The World Bank estimates that in 2003 the Iraqi economy will shrink by 22%, after having lost 21% in 2002 and 12% in 2001. The average income is now estimated at between US$450 and US$610, down from US$3,600 in 1980. State food subsidies are worth about US$2 billion and it is expected that in 2004 US$10.6 billion of US$12 billion worth of oil revenue will be spent in salaries and subsidies. Just US$1.4 billion will be spent on reconstruction, even that assuming oil prices do not fall below the target level, cutting the expected oil revenue. The fact that state salaries have been increased up to 40-fold might have helped gain some popularity, but did not help the reconstruction effort. The lack of institutional capability will limit reconstruction expenditure to no more than US$5 billion in 2004 and US$8-9 billion in subsequent years, according to the World Bank, whatever the international community will decide to contribute. By October, reconstruction had barely started and even the telephone network is only 50% active even in Baghdad.

Internal
Although the Baath state has been thoroughly defeated, the US-British military occupation is spread rather thinly throughout the territory, mainly because of security concerns. The CPA is becoming somewhat more efficient now, but the start was quite disastrous. The decision to privilege military personnel over civilian reconstruction specialists has proved particularly ill advised. Although a decrease in the looting activity was reported as the end of June approached, patrolling by American troops remained limited, both due to the insufficient number of troops available and to the unwillingness to risk even modest casualties. The about 30,000 Iraqi policemen taken back into service were not enough. Even the announced formation of a small Iraqi army to guard the country's borders will have no short-term impact, as will the formation of a 6,500-strong militia. Washington sources increasingly acknowledge that the Iraqi post-war plans were based on expectations which completely failed to materialise. It is reckoned that it will not be possible to reduce the level of troops committed to Iraq for several months to come at least, a fact that is pushing Pentagon expenditure in Iraq to around US$4 billion a month, roughly twice as much as it had been forecast. Some sources even claim that Bremer already asked for 50,000 more troops, to help secure the country. It is generally accepted that with current troop levels and given American wariness to risk losses, maintaining security throughout Iraq will not be possible. This left much room of action for several militias that have sprung up, mainly composed of Shiite Islamist militants, but also of neighbourhood associations which are trying to maintain security locally. Northern Iraq, of course, remains under the control of the Kurdish militias, as it has been for many years now. Following the attacks to the UN compound and the Jordanian embassy and a number of US civilians killed, plus the attacks to the pipelines and the US military, security became more than ever the primary concern of the US occupation administration during August. Unable to increase the level of US troops for reasons of internal policy and also because of objective overstretching of available resources, the Bush administration tried hard to convince more countries to send additional contingents, with little success.
There are several factors that are feeding the political instability. First of all is the fact that most parties and factions based in Iraq oppose to various degrees the military occupation. Also, there is tension between exile groups which are coming back to Iraq with the support of the US, and indigenous groups, which feel they are being overtaken by newcomers who know little of the reality of Iraq. Last, but no less important, is the fact that the internal opposition is by no means united. The centre stage in the first few weeks after the fall of Saddam's regime has been taken by Shiite religious groups, which moved quickly to occupy as much ground as possible. However, there are strong currents of secularism in Iraqi society and tensions might arise soon, especially if the Shiite parties tried to monopolise the political scene. At present, however, the competition is mainly among Islamic groups which claim to represent the Shiite community, a situation which has already led to clashes and even the killing of Abd al-Majid al-Khoi, a moderate Shiite leader. 
After more than two months of occupation, the political situation actually appeared to be worsening by the end of June. The US managed to alienate virtually all Iraqi Arab political forces, including the exiles whom they brought back to the country, by postponing the establishment of a proper Iraqi interim administration until after the political elections, which in turn are not expected before a year.
In the areas inhabited by Sunni Arabs, there appears to be starting a guerrilla insurgency, which could develop in a serious annoyance for the US occupiers. 
The political groups rooted among the Shiite majority have so far adopted a cautious approach. Despite not hiding their distaste of the Americans, they have refrained from armed opposition and are focusing on consolidating their hold on the population. In the short term, Shiite parties and their Iranian patrons have no interest in an open confrontation, but the potential threat to American interests will remain. Disappointed by the bickering and ineffective exile parties, the Americans appear to be turning to others in order to find some interlocutors. In particular there is a clear effort to establish links with the tribal chieftains, hoping that this could allow the maintenance of order without committing troops. The tribal chieftains are building up their militias, in a situation that could soon resemble the power-sharing deal with the warlords in Afghanistan. On the other hand, plans to rely on selected former Baathist officials are proving more difficult to implement that initially foreseen. Not only the majority of the population rejects these officials, but few have accepted to serve under the conditions imposed by the US, which include a clear and unequivocal rejection of the Baathist ideology. The presence of an armed opposition to the American occupation and the fact that several Baath leaders are still at large clearly represent a powerful disincentive for former Baathists to join the Americans, not least because of fears of assassination. 
By July the CPA had decided to take another path and it established the Interim Governing Council (IGC), made up of 25 Iraqis of different backgrounds. The establishment of the council itself can be seen as a concession from Paul Bremer, the head of the CPA. The potential contributors to the planned international fund to rebuild Iraq stated clearly that they would not even agree to meet until an interim government composed of Iraqis was in place. The IGC has the power to nominate ministry heads and form commissions to recommend policies concerning the reform of the Iraqi state. Even the composition of the IGC shows that Americans are moderating their earlier ambitions to reshape Iraq in their own image. Although pro-US Iraqi returnees from exile are still over-represented in the IGC, compared to what seems to be their actual following among the population, anti-US factions are fairly well represented too, including seven Islamists and a Communist. During August the Iraqi Governing Council (IGC) that they have established is slowly winning some support. The UN recognised it and although the Arab countries mostly refused do so, most Arab neighbours are accepting to deal with it on an provisory basis. 
Together with the government which was subsequently established, the Iraqi governing council seem to be achieving some degree of support among the population, which is eager to see the reconstruction start. However, in order to legitimise themselves they are beginning to collide with US interests in Iraq. The possible future deployment of Turkish troops represented in October the first instance of a clash between the occupation authorities and the ruling Iraqi body.

Forecast 2004

International
The ambition of the Pentagon to establish permanent military bases in the country appears in doubt, after President Bush accepted in November that power should be transferred to the Iraqis as quickly as possible and that foreign troops should be withdrawn. However, even if the Bush Administration stuck to this decision, US and other troops would remain in Iraq in large numbers for years to come, although likely with a reduced profile. Iranians, Syrians and other countries of the region will therefore not be able to relax and assume that the worst threat for them is over. They will likely to maintain an active presence in Iraqi politics. Even if the Bush Administration is no longer so keen on a long-term presence in Iraq, it is too late for a disengagement which would not look like a defeat. 

Economic
Assuming that Iraq will be condoned most of its debts, in 2004 the most immediate task for the government will still be restarting the economy, given the lack of success during 2003. Plans of wide-ranging economic and structural reforms will only be possible to implement if security improves, which does not look likely in the short term. The banking sector, which is considered to be completely unsuitable for a "liberal" economy, remains at the top of the priorities. The transition from a state-controlled economy to a relatively free-market one will be characterised by all the problems that have been met in (for example) Eastern Europe, with the additional drawback of a post-war situation and (possibly) continuing political turmoil, but with the advantage of a rapidly growing oil revenue. The Iraqi agriculture, on the other hand, might recover quickly, as much of its decline was due to the sanctions and the difficulty to maintain the level of inputs such as fertilizer and seeds. As far as the oil sector is concerned, there was talk to expand production to as much as 6.5 millions in the near future, although this will be subject to which level of investment will be achieved and how quickly. In any case, despite the limited damage caused by the war to the oil production facilities, the acting oil minister, Ghamir Ghadhban did not expect production to reach pre-war levels (2.5-3 million barrels a day) until well into 2004. Since domestic needs stand at about 550,000 barrels, the surplus for export will be enough to keep the government running, but not to start reconstruction on a massive scale. Looting and sabotage activity will be much less of a problem in 2004, but the original expectation, that oil revenues would have contributed almost all of the US$41 billion required for the reconstruction within the first two years of occupation, has now been completely abandoned. Apart from claims that the reconstruction will cost much more than US$41 billion, over 2004 oil revenues are not likely to exceed by much the US$13 billion of 2002. Moreover, due to damage to the oil fields, the price of Iraqi oil is now going to be lower than it used to be, because of higher sulphur content. On this basis, it is estimated that oil revenue will probably not exceed US$15 billion in 2004.

Political
The Iraqi government and Governing Council appear to have some potential to gain support from the population, but only if a minimum of stability can be guaranteed and the reconstruction started. The occupying coalition forces are increasingly opting for the rapid rebuilding of Iraqi armed forces, which are expected to take over most of the security tasks during 2004. However, the effectiveness and reliability of these forces remain to be established. By the end of 2004 they are expected to number 200,000, but so far their contribution to the campaign against the guerrillas and the terrorists has been modest. 
In order to gain some popularity the Iraqi government will have to confront the occupation forces on a number of issues, which will make the coexistence of the two more difficult. Complex political negotiations will be required to determine the future of the Iraqi state, both in terms of coalition governments and in terms of institutional reconstruction. 

 « Top  

Update No: 007 - (01/12/03)

Changes in US policy: how deep?
The continuing deterioration of the security situation finally led in November to the apparent American decision to accelerate the handover of sovereignty to the Iraqis. There are also indications that the US might be willing to accept to bring its troops under international control, according to a statement of Javier Solana, European Union foreign policy chief. According to some sources, however, the US and their British allies still plan to maintain 6 military bases in Iraq and do not seem to be intending to discuss the issue with the future Iraqi sovereign government, a fact which casts some doubts on the character of that sovereignty. Similarly, access to the Iraqi oil industry appears still likely to be denied to countries which do not support US policies in Iraq. The door is still closed to Russian companies, for example, although they might be able to get a modest slice of the cake if they can arrange joint ventures with US companies. 
The US are also increasingly keen to enlist the cooperation of other countries, in order to share the burden of occupation and also for political reasons. Their success, however, has been limited, and even some of the few countries which appeared intending to send troops, like South Korea and Japan, seem now inclined to scale down their commitment. 
Various projects of restructuring the pro-occupation Iraqi authorities are being circulated, including a plan to expand the Governing Council to 100 members from the present 24, making it more representative in the process. Another plan calls for the creation of a smaller 10 member body within the council. Plans to recreate an Iraqi Army have also popped up, but on the whole this multiplication of plans and options only confirms that the occupation authorities do not have a good grasp of the situation. 

Some good news on the reconstruction front
On the reconstruction front, the news was relatively good in November, as at the international donors conference in Madrid pledges of aid were higher than what the pessimists had forecast, with US$18.5 billion on top of the US$20 billion already pledged by the US, although only US$6 billion of this is in grants. In the US too the threat that the Senate would convert part of the US$20 billion in a loan was averted by President Bush's veto. These pledges still have to be converted in actual disbursements and in any case are not enough to fulfil the needs, but at least the situation is not as bad as it could be. On the debt repayment front, progress has been slower, although now the creditor countries accept that a rescheduling is inevitable. The Bush administration and international financial organizations prefer to talk in terms of debt relief and cancellation, although the latter are somewhat less generous than the US government and ask for a writing-off of a 66-80% of the debt, depending on the institution. 
For the time being, in the attempt to ease social tensions, the government is drafting plans to create jobs, such as one involving public-private partnerships to build residential complexes and employ 250,000 people. At the same time there are plans to pay out unemployment subsidies at the rate of US$700 million a month, which would represent a major part of the state budget. 

Oil industry does better than expected
The most significant progress is being achieved in the oil industry. After a slow start, the situation is now improving rapidly in the southern region, where looting has been contained and rehabilitation has been proceeding fast. The impact on production was such that crude exports are expected to reach 1.7 million bpd already in December, which is the maximum export capacity given the current facilities. New export routes in neighboring countries are being explored. Interestingly, at the same time the Iraqi Oil Ministry only managed to stockpile half of the 500 million litres of kerosene needed for the winter.
By next year it is likely that production will recover the pre-war level (2.5 million bpd) and the Iraqi Oil Marketing Organisation revised its forecast upwards in November, stating that 2 million bpd will be exported daily by March 2004. At present 300,000 bpd are still being injected back into the ground, because they cannot be used. Still, the rapid recovery is about to end and major investments will soon be needed. The International Energy Agency released estimates in November that at least US$5 billion will be needed to bring production capacity to 4 million bpd. 

 « Top  

ENERGY

Iraq may raise planned 1st half 2004 oil exports beyond 1.7m b/d

Iraq could export more than its initial plan of 1.7 million barrels a day (b/d) of Basra Light crude oil in the first half of next year if production advances on schedule, a senior oil official said on Thursday 21st November, insideiraq website reported. 
The Oil Ministry plans to raise current production of around 2 million b/d to 2.8 million b/d by April, this could translate into exports of around 2 million b/d in the first quarter of 2004, the State Oil Marketing Organization, or SOMO, official said by phone from Baghdad. 
"1.7 (million b/d) is our opening gambit," said the official. "If the production people give the green light, we may extend current term contracts or sign up new customers." 
SOMO expects average November exports of 1.5 million b/d, rising to 1.65 million b/d in December, he said. 
Baghdad will meet projected rises in crude oil exports via its domestic terminals. 
Southern Iraq's Basra oil terminal, through which all of Iraq's current crude oil exports flow, may be able to export as much as 1.8 million b/d. "But it still needs to be tested at that level," said the official. 
If necessary, SOMO can also open the Khor al-Amaya oil terminal, located near Basra oil terminal on the Persian Gulf, which would free up an extra 700,000- 800,000 b/d of export capacity, the official said. 
In the longer term, Iraq is planning to use neighbouring countries to boost and diversify its export options. 
In talks with his Kuwaiti counterpart Wednesday, Iraqi Oil Minister Ibrahim Bahr al-Uloum suggested his country use Kuwaiti export terminals to ease export bottlenecks. 
A new Iraqi-Kuwaiti oil committee will meet to discuss this suggestion in detail, along with other options for bilateral oil-sector cooperation, sometime after Eid (Nov. 25), a holiday that marks the end of the holy Muslim month of Ramadan. 
But Kuwaiti officials question the scheme's practicability. "We have very little spare export capacity," said a senior Kuwaiti oil source, who declined to divulge exact numbers. "Also, if we take on a second grade (of crude oil), you reduce exports, which is a detrimental impact." 
While Iraq's southern offshore terminals have extra export capacity, they have yet to be tested, and the Iraq-Turkey 700,000 barrel-a-day northern crude-oil pipeline remains closed after damage caused by sabotage, making other export options of crucial importance to Iraq. 
Other options for boosting export capacity are the reopening of a 1.65 million b/d Iraqi-Saudi pipeline, which Saudi officials have said has fallen into bad repair, energy swaps with Iran and the Iraqi-Syrian pipeline. 
On arriving in Kuwait Tuesday, Bahr al-Uloum said he hadn't discussed the pipeline with his Saudi counterpart and he didn't visit Iran on his regional tour.

 « Top  

CUSTOMISED REPORTS

 

INVESTMENT BACKGROUND REPORTS 

Our analysts and editorial staff have many years experience in analysing and reporting events in these nations. This knowledge is available in the form of geopolitical and/or economic country reports on any individual or grouping of countries. Such reports may be bespoke to the specification of clients or by access to one of our existing specialised reports. 
 
For further information email:
reports@newnations.com

Considering an investment or a trip to any newnation? First order our Investment Pack which will give you by e-mail the last three monthly newnation reports and the complete worldaudit democracy check for the low price of U$12. The print-out would be a good companion to take with you. Having read it, you might even decide not to go!
 
To order please click here:
Investment background report

 

« Top

« Back

 


 
Published by 
International Industrial Information Ltd.
PO Box 12 Monmouth 
United Kingdom NP25 3UW 
Fax: UK +44 (0)1600 890774
enquiries@newnations.com