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Update No: 091 - (26/10/10)

Malikiís campaign continues
Malikiís efforts to be reappointed Prime-minister continued in October and he now seems increasingly close to success. He appears to have obtained Iranís support for his staying in power. Thanks to the Iranians, the Sadrists have agreed to support Maliki in exchange for substantial concessions. The Syrians and the Lebanese Hizbollah also contributed to shape a deal between Maliki and As-Sadr. Malikiís remaining problem is hostility among the Arab neighbours of Iraq for any coalition which excludes Iraqiya, the coalition led by Allawi. Maliki has embarked on a diplomatic tour de force to gain regional support, asking Arab governments to put pressure on the leadership of Iraqiya in favour of forming a coalition with Maliki. Maliki is reportedly ready to grant economic rewards to some of Iraqís neighbours in exchange for support in coalition making. The support of the Turkish government is also being sought in order to facilitate the deal. Such rewards might include favourable pricing in oil supplies, among else. Other bits also have to come into place before Maliki can succeed. The Supreme Islamic Iraq Council, allied to the Sadrists, has not yet backed Malikiís nomination to Prime Minister, although given their closeness to Iran few doubt that they will at the right moment. In the meanwhile however the Council is negotiating with Allawi, who still hopes to convince the Kurds as well to join him.

The Sunni conundrum
The issue of the participation of Sunni Arab participation into the government receives an additional sense of urgency due to a wave of defections from the Sons of Iraq militias, estimated in a few thousands of fighters. It is believe that a number may even have been recruited back in Al-Qaida, which reportedly is offering financially attractive deals to regain some support. As mentioned already, Iranian brokering also allowed Maliki to improve relations with the Syrians, a fact which could help negotiations with Iraqiya. Allawi and many within Iraqiya are not keen to serve in a government dominated by Maliki and by pro-Iranian elements, but within the coalition some elements are more inclined towards a compromise. Allawi spoke out against Iranian influence particularly loudly in recent weeks, but his accusations fall on deaf ears as Washington does not want to get involved in Iraqi politics too much again. In Iraqi, many Sunnis but also many Shiites still do not like Maliki because of the power he managed to accumulate in the army and security services as Prime Minister; they fear he could eventually emerge as a new dictator. Malikiís attempt to manipulate the electoral results by retrospectively banning candidates also left a bad impression.

Bragging about oil
The Iraqi government revised its estimated reserves of oil upwards to 143.1 billion barrels, a 24% increase. The revision has symbolic value, as Iraq ends up having bigger oil reserves than Iran, but also a practical impact as Iraq will now try to get the new reserves certified by OPEC and then at some point request a greater production quota from the Organization. Iraq will once again be subjected to OPEC quotas (it is exempt now). It is also a marketing point, to remind the world of how much oil is there in Iraq only waiting to be exploited. Iran in any case immediately revised its own reserves to 150 billion barrels, once again placing itself above Iraq. The Iraqi government also claims that it will bring oil production to 12 million bpd, but few believe this is realistic at all. The last round of auction for gas contracts is not being very successful; the three fields are supposed to be delivering gas for Iraqís internal consumption and foreign companies are not very interested, because of the lack of a clear plan to develop the internal gas market and of the need to build all the infrastructure from scratch.

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