Leading article: Iraq wrestles back control of its own destiny

Oil has the potential to unite the country – but also to divide it

Share
Related Topics

A bizarre reality television show was aired in Iraq yesterday: a live auction of contracts to develop six of the country's giant oil fields. This unusually public process was a testament to the suspicion that infuses the politics of oil in Iraq.

Any foreign involvement in Iraq's oil fields is domestically contentious. Saddam Hussein's nationalisation of the sector three decades ago is one of his few popular legacies. Historic attempts by western interests to appropriate the Middle East's energy reserves remain a toxic memory. The auction process was televised to assuage fears of a new national betrayal.

The terms of the new contracts are, in fact, rather unfavourable to foreign oil companies. The Oil minister, Hussain Shahristani, has been driving a hard bargain. It is estimated that, under the 20-year contracts, and based on a $50 price of a barrel of oil, the Iraqi government would get $1.7trn and oil firms just $16bn. But many Iraqi politicians still oppose the auctions, accusing Mr Shahristani of bypassing parliament in the awarding of the contracts.

So will oil bring Iraq together, or divide it? In theory, it ought to be the former. Iraq has the third-largest proven reserves in the world. And there is plenty of room to expand production. The financial proceeds of exporting this energy could be a foundation for future prosperity, even with the oil price presently significantly lower than it was a year ago. But we must also be prepared for the possibility that oil will be the fuel for further political and sectarian discord.

The Kurdish regional government in the north of the country has begun awarding oil development licences to foreign firms without Baghdad's consent, arousing fears of their separatist intent. And there are also suspicions that the Kurds are preparing to annex the rich oil fields around Kirkuk.

Such suspicions are being exacerbated by uncertainty over domestic security. American troops pulled out of US cities yesterday, a move greeted by street celebrations in Baghdad. But it remains unclear whether the Iraqi security services will be able to fill the resulting power vacuum. The fanatical insurgents who have killed so many Iraqis in the past six years have not disappeared. There has been a spike in the numbers of bombings targeted at civilians in recent weeks. Al-Qa'ida seems determined to restart the bloody sectarian conflict of 2005-7.

This is an acutely sensitive time for Iraq. The government needs those oil revenues to hold the country together. The Prime Minister, Nouri al-Maliki has squared many opponents by handing out well-paid government jobs. Without a rapid increase in oil revenues, the rising budget deficit could create a fiscal crisis and this fragile political settlement could shatter.

A recent report by Iraq's anti-corruption committee described staggering levels of official embezzlement. But Mr Maliki is too weak to clamp down on those engaged in graft, reinforcing the desperate need to keep official revenues buoyant. Yet only one oil reconstruction contract was awarded yesterday, with no bids received to develop the Mansouria gas field.

There are genuine reasons to be hopeful as Iraq wrestles back control of its own destiny. There will be future energy contract auctions, and January's largely peaceful provincial elections are a sign that, despite the gargantuan corruption, democracy is putting down roots. But given Iraq's traumatic history, any hopes must be tempered by extreme caution.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Recruitment Genius: Junior Web Designer - Client Liaison

£6 per hour: Recruitment Genius: This is an exciting opportunity to join a gro...

Recruitment Genius: Service Delivery Manager

Negotiable: Recruitment Genius: A Service Delivery Manager is required to join...

Recruitment Genius: Massage Therapist / Sports Therapist

£12000 - £24000 per annum: Recruitment Genius: A opportunity has arisen for a ...

Ashdown Group: Practice Accountant - Bournemouth - £38,000

£32000 - £38000 per annum: Ashdown Group: A successful accountancy practice in...

Day In a Page

Read Next
 

Etch, a Sketch

Jane Merrick
 

Something wrong with the Conservative Party’s game plan

John Rentoul
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor
How to make your own Easter egg: Willie Harcourt-Cooze shares his chocolate recipes

How to make your own Easter egg

Willie Harcourt-Cooze talks about his love affair with 'cacao' - and creates an Easter egg especially for The Independent on Sunday
Bill Granger recipes: Our chef declares barbecue season open with his twist on a tradtional Easter Sunday lamb lunch

Bill Granger's twist on Easter Sunday lunch

Next weekend, our chef plans to return to his Aussie roots by firing up the barbecue
Joe Marler: 'It's the way I think the game should be played'

Joe Marler: 'It's the way I think the game should be played'

The England prop relives the highs and lows of last Saturday's remarkable afternoon of Six Nations rugby
Cricket World Cup 2015: Has the success of the tournament spelt the end for Test matches?

Cricket World Cup 2015

Has the success of the tournament spelt the end for Test matches?
The Last Word: Justin Gatlin knows the price of everything, the value of nothing

Michael Calvin's Last Word

Justin Gatlin knows the price of everything, the value of nothing