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Oil, oil everywhere, and not a drop…

…for the benefit of ordinary Iraqis.  That has been the situation since well before the fall of Saddam Hussein.   Moqtada al Sadr is reported (I read it in Juan Cole, who got it from Al Hayat) to be reviving the idea the Americans pushed in 2003/4 of distributing oil revenues to Iraqi citizens.  Though I have yet to hear Sarah Palin mention that she and every member of her family usually gets between $600 and $1500 in “rebate” (or should we call them welfare?) payments per year, the Alaskan system is widely praised. It makes citizens into shareholders in a $28 billion oil and gas fund and removes that money from what would otherwise likely be government control (which is the case, for example, in Texas, “fed” up as its governor claims to be).

This raises the interesting issue of the role of oil in the future of Iraq, in particular the future of national reconciliation.  Iraq has oodles of oil, possibly more in reserves than Saudi Arabia.  Most of that oil is in the Shia-populated south, where production costs are extremely low, but some of it is in the center (including near Baghdad) and in Kurdistan in the north.  Little of it is in Sunni-majority areas, which may however contain substantial gas reserves (exploration contracts have only recently been signed).

Current Iraqi production is around 2.4 barrels/day, marginally below the peak in Saddam Hussein’s time of 2.8 million barrels/day but increasing rapidly with the signature of 12 international contracts for oil field development.  If the contractual terms are fulfilled, Iraqi production would increase to 12 million barrels per day in 2017.  This would be a huge increase, likely the largest increase anywhere in the world in those years, as many fields (especially the cheaper producing ones) are in decline.

As a relatively low-cost, high-volume, high-reserve producer, Iraq would then have an interest in relatively moderate oil prices and maintaining higher volumes of exports.  Since the U.S. has been unwilling to constrain its own oil consumption in any serious way, and therefore needs oil production to be maximized worldwide, this will make Iraq a key player in world oil markets from the American perspective and a possible long-term partner, in somewhat the same way that Saudi Arabia has been.

It will also make Iraq fabulously wealthy.  Even the current $90+ oil is pouring revenue into Iraq’s coffers at substantially above the rate on which its current budget was calculated (virtually all government revenue in Iraq comes from oil at this point).  Oil at $100 per barrel or more in the future, with Iraqi production doubling, tripling, quadrupling and even eventually quintupling, is an extraordinary windfall. Even if production remains below 5 or 6 million barrels/day, Iraq will have mountains of cash.  And of course there is the possibility that prices might rise, rather than staying at $100 or less.

There are two politically sensitive issues attached to this magnificent growth in oil revenue (there are many other technical constraints that I won’t discuss):  how does Iraq get the oil to the international market?  what does Iraq do with the revenue?

Today most Iraqi oil goes out through Basra, where current infrastructure is limited to something like 2 million barrels/day, then through the Gulf and out to the Indian Ocean through the strait of Hormuz, a route exposed to Iran’s growing military capacity.  Some of the oil goes north to Turkey from Kurdistan. If Iraq is going to become an important and moderate partner in the international oil market, it is important that it enhance export capacity not subject to Iranian pressure.  This means settling current disputes with Kurdistan over oil production and exports and building new pipelines to the north and west, providing alternatives to the Gulf and more direct (and cheaper) access to Turkey and European markets.

What Iraq does with the oil revenue is also vitally important.  Already today the Kurdish leadership is hesitating to align itself with popular opinion in Kurdistan, which favors independence, at least in part because the 17 per cent share of Iraq’s total oil revenue (minus “sovereign expenses”) that Kurdistan gets today is likely a much better deal than the 100 per cent of its own oil revenue Kurdistan might get if it were independent (not to mention the many perils and costs of an attempt at independence).  Likewise, those Iraqi provinces that lack significant oil resources, like Sunni-majority Anbar in the west, are gratified to get their fair share of the oil revenue (which constitutionally goes to the provinces primarily in accordance with population). This has been an important factor in bringing Sunnis back into the political process.

So oil is already a cohesive political force in Iraq, one that would become even more so if at least a part of the revenue were distributed to the population, as Moqtada is apparently proposing.  The proposal would have the added benefit of limiting the resources available for corrupt distribution among government employees, a habit common in most oil-producing countries and one Iraq will find it hard to break. While there are other things Iraq could do–Norway puts invests its oil and gas revenue abroad and spends only the dividends, but does not distribute them to citizens on a per capita basis–redistribution of at least a substantial slice of oil revenue to Iraqi citizens would go a long way to convincing them, as it has Alaskans like Sarah Palin, that their state is a wonderful place to live.

There are of course many technical problems with distributing cash to Iraqis, not the least of which is that no one knows how many Iraqis there are.  A new census is needed, and new identity cards and procedures.  But none of those problems are insurmountable.

On the bigger issues, maybe a deal can be struck:  distribution of at least some oil revenue, provided major infrastructure investments are made to get the oil out of Iraq on routes not controlled by the Iranians.  That would be a fine test of the nationalist credentials Moqtada has  been flaunting lately.

The changing face of Iraqi national reconciliation

Vice President Biden’s visit to Baghdad yesterday and today is getting scarce mention in the U.S. press, with the emphasis mainly on talk about economic cooperation and a few well-time bombs that killed two Iraqis.  But far bigger things are happening here.

The atmosphere, as I posted yesterday, is a good deal brighter and more optimistic than it has been for a long time.  The “national partnership” government, while recognized as less than ideal in the way it assigned ministries to coalition partners according to a weighting system, is a symbol of success in Iraqi eyes, opening up the possibility of a broader social and civic effort to limit violence and bring an end to the militias that have plagued Iraqi streets for too many years.  Iraqi investigative capacities are not getting much stronger, but the population is giving the security forces a lot more help with tips about where to find weapons and who is planning attacks.

The new parliament and government are viewed as distinctly different from their predecessors, despite the repeating figure of the prime minister.  The previous parliament was strongly affected by the violence of 2006/7, which created serious political problems.  The broad distribution of ministerial portfolios in the new government is expected to pacify the situation, or as Arab League secretary general said this week during his visit to Baghdad “the political situation has matured.”  The national partnership government will not necessarily be the most effective, but it is expected to prevent a return to war.  That is good news for Americans, who want nothing to prevent most of their forces from getting out of Iraq by the December 31 deadline, even if they might like to be asked to leave behind a significant contingent of trainers.

In the past, national reconciliation in Iraq meant things like paying or reintegrating the Sahwa (tribal anti-insurgent forces) into the security services, getting some of the former soldiers and police back to their jobs (or at least paying their pensions), and amending the constitution, which many Sunnis view as favoring the Shia and Kurds who dominated its drafting.  But those tasks, while not completed, are no longer topmost on peoples‘ minds.

The emphasis now is on more far reaching measures.  While some claim the problems are purely political and do not concern ordinary people in the street, the fact is that many Iraqis no longer trust those beyond their own sectarian or ethnic group.  Arabs don’t think Kurds regard themselves as Iraqi.  Kurds don’t think Arabs respect their rights.  Sunnis will sometimes refer to Shia derogatorily as Iranians, while Shia view Sunnis as beholden to Saudi money.  Violence has undermined confidence.  What is needed is a “culture of forgiveness,” one that will restore confidence and mutual respect.

How to create such a “culture of forgiveness”?  Would it be sufficient to ignore the past and start anew?  After all, no accounting–or accountability–will ever cover everything that has happened.  A major public campaign in favor of reconciliation might help.  Or is accountability vital, at least for key leaders who back Saddam Hussein?  Is there a need for apology, which is unusual in Iraqi culture because it is regarded as suggesting weakness, not strength?  Would it make any sense for the current government, which bears no responsibility for what Saddam Hussein did, to apologize for the gassing of Kurds at Halabja? Is compensation appropriate? Virtually everyone has been harmed at one point or another in Iraq’s recent history–it wouldn’t be right for some that were harmed in one way to be paying off others who were harmed in another way.

The search for national reconciliation will take the Iraqis in many directions:  it will affect their concept of citizenship and who is eligible to participate in public life, the way they teach history, their notions of equitable treatment, their views on what constitutes incitement, and their relations with Iran and Arab neighbors.  Iraq is in a process of redefining itself, or perhaps defining itself for the first time, since in its earlier incarnations it was largely defined first by the British and later by Saddam Hussein.  This is not an easy task, though oil–if wisely used–can lubricate the machinery of state and provide a lot of ways of satisfying people who otherwise might be fighting over unworthy scraps.

All this makes me think of other situations in which I’ve seen these problems arise:  in Bosnia, in Serbia and Kosovo, among Afghans, between north and south Sudanese.  I do not know any magic formulas, though I do think some documentation and acknowledgment of harm is an important element in getting forgiveness to stick, even if a formal apology is not feasible.  There is no recipe though for national reconciliation.  Each country seems to find, or fail to find, its own balance among the many ingredients available.

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More than the sun shines in Baghdad

It was cold and rainy in Baghdad yesterday–I mean 40s F and it seemed to rain every time I stepped inside, which was fortunate.  Lots of mud.  Not nice.

Today is a good deal brighter, sunnier and more representative of the political mood.  People here feel things are looking up:  they are hoping their “national partnership” government (Maliki 2) will be an improvement over Maliki 1, even if they are too realistic and experienced to expect much in the way of quick change.  Checkpoints, and some of the 12-foot high T walls that protect so much in the Green Zone, are coming down.  It will take time before it makes much of an impact, but there is even some street cleaning going on, and garbage pickup by men in uniform with reflective vests on.

Everyday life has gotten back to something like normal.  The kids go off to school, the Minister of the Interior (which is how some people refer to a wife!) stays home, the breadwinners go off to do battle with public transport and massive traffic jams, caused by a flood of imported cars since the fall of Saddam Hussein.  Police get some respect from ordinary people, if not from the wealthy and powerful.  Ministry employees are being told they need to show up for work or lose their salaries.  None of this will sound like much to people outside conflict zones, but it represents what I have come to recognize as the fondest dream of people inside conflict zones:  to live a normal, violence-free existence.

Of course it is not trouble-free, or really even violence free.  Yesterday a rocket or mortar fell in the road near the Al Rasheed Hotel, now closed for renovations.  There are fewer “improvised explosive devices,” but there is a wave of (often not publicized) targeted killings of key members of the security forces with silencer-equipped pistols.  No one seems to know who is behind the current violence.  Ba’athists?  Al Qaeda? Iran?  They are labels chosen depending on the politics of the person you are talking to you rather than any hard information about the actual perpetrators, who however are a good deal less inclined to random killing than in the past.  That is some comfort to ordinary people.

At this stage in a society emerging from conflict, corruption becomes a big issue.  And so it has here in Iraq, where Maliki 2 is said to have given firm instructions to his cabinet to clean up.  We’ll see how effective that will be, but the emergence of corruption as a big issue is a good sign.  People complain less about corruption when mass murder is occurring several times a day.

The one politician with a lot to complain about these days, I imagine, is Iyad Allawi, who still sits outside the tent while all the main leaders of his Iraqiyya coalition have scurried inside to occupy much-coveted ministerial positions.  There is little movement on the legislation that would create the National Council on Strategic Policies, the watchdog group he is slated to chair.  Even the Iraqiyya-proposed version of the legislation includes an 80 per cent majority requirement for the Council’s decisions to be binding. That won’t be easy to get.

Meanwhile, the prime minister still controls the main security portfolios, though I understand that he yesterday named Sheikh Faleh Fayyadh, a distinguished associate of former prime minister Ibrahim Jaffari to the important position of minister of state for national security.  Maliki also met today with Kuwait’s Prime Minister, Nasser al-Ahmed al-Subah, in Baghdad.  That is more significant than it sounds, since Maliki has been critical of the Kuwaitis and tough-minded in seeking resolution of several difficult bilateral issues.

Normalizing Iraq’s relationships with mostly Sunni Arab neighbors is challenging for Maliki, who has been viewed negatively in Riyadh and other capitals.  Kuwait would be a good start.  Maliki is also hoping to convince the Arab League, whose secretary general was here the past few days, that it can hold its March meeting in Baghdad.  The big challenge is logistics and facilities, which just don’t look adequate, but the Iraqis are capable of amazing things when they set their minds to it.  The prime minister’s guest house, which I mentioned in a previous post, looks finished from the outside.

NOTE TO THE PRESS:  please cite www.peacefare.net when quoting or reproducing this piece in any language.

From the mundane to the mundane

Made it to Baghdad without much adventure.  Fourteen hour flight to Kuwait, four hour layover, Gryphon charter into Baghdad.  No really good stories to tell from this trip.  There is that moment when they turn off all the cabin lights–presumably to make it really hard for someone on the ground to see the aircraft–that a hush falls over the passengers and everyone waits calmly but expectantly for the wheels to touch down.  And I’ll have to remember that United doesn’t want you to use the lounge in Kuwait on arrival, only on departure.  Nice way to treat passengers who’ve just endured 14 hours on one of your aluminum cans!

Of course what you really want is for the trip in from the airport to be as dull as possible.  Ours was, though we managed to get lost on the complicated and unmarked military side for 20 minutes before finding our way to the exit.  From there to the first Green Zone checkpoint is no more than 10 minutes, after which there is a series of pro forma checkpoints whose purpose is perfectly unclear.  One soldier wanted to see the Interior Ministry paper work for the PSD (personal security detail).  I’m not complaining.  As trips into war zones go, this one was close to perfect.

The big problem is that my cell phone isn’t working.  I had T-mobile turn on international service last week and was assured everything would be fine.  Not fine.  It didn’t work in Kuwait and isn’t working here in Baghdad–it seems to know there is a signal out there but isn’t interested in having me use it.  Bless the internet access where I am staying (note how I don’t say where that is), even if it is extraordinarily slow.

But what I’ve really got to focus on now is the Iraqis, and how we may be able to use the next few days to help them move ahead.  The Iraqis call the government a “national partnership” that includes all the significant political blocks.  They hope that means the use of politics rather than violence to settle conflict.  They readily acknowledge the need to improve services, fight corruption, resolve Arab/Kurdish issues (Kirkuk and the disputed internal boundaries in general) and settle relations with their neighbors, by which Iraqis mean ending the neighbors’ interference in Iraq and gaining some measure of respect for Iraq’s sovereignty and territorial integrity.  The Iraqis are also anxious, at least with Americans, to emphasize human rights, especially protection of their small Christian population, which has been under attack.

The real trick here is not about what the Iraqis say they want but about operationalizing their objectives, moving (as Qubad Talabani put it at a USIP meeting last week) from politics to policies and working out the mechanics of governing effectively.  Iraq has lots of oil, but no oil policy, lots of agricultural potential but no agricultural policy, lots of security problems but no effective security policy.

Of course part of the problem is that this national partnership does not entirely trust its leader, Prime Minister Maliki.  Some think the Parliament should be the main check on his power, or maybe the cabinet (that’s an odd idea in my view–ministers who nominally work for him should restrain him?).  Others are looking to an Iyad Allawi-led, still-to-be-created National Council for Strategic Policies, whose mandate and powers will be a real test of whether we’ve got a partnership or not.  Another test, as Sean Kane pointed out at the USIP event, is how lustration of former Ba’athists is handled:  will the new Justice and Accountability Board find a better solution than the notorious de-Ba’athification Commission, which went overboard so far as to prevent Saleh Mutlaq–now a deputy prime minister–from running in the March elections?

It is not only Saleh Mutlaq in the new government–there are also Moqtada al Sadr’s people, who come from the other end of the religio-political spectrum, and who in turn find themselves in a government with (mostly secular) Kurds who want a long-term strategic relationship with the U.S.  The Kurds of course like a Federal Iraq and wouldn’t be unhappy to see at least one more regional government formed, an idea that is anathema to others in the government even if some Anbaris are beginning to think about it.  In policy terms, there are dozens of these contradictions within the government, and a lot of fractious pressures also from outside.

I suspect, but I’ll find out for sure this week, that Maliki views this fractious government as suiting his purposes well.  None of its many components will be anxious to leave it,  because it would not be clear whether they could get back in if Maliki falls.  The majority is so large that Maliki can afford to lose the votes of one or another coalition on any given issue–in practice, his majority will be one of what the Europeans call “variable geometry.” Maliki is the linchpin for this game of variable geometry, a role he managed to play very well in the previous government.

So this may not be the prettiest of governments, and it is likely to have more than its share of crises over specific issues, but can it find ways forward that begin to exploit Iraq’s extraordinary endowments of people, resources and geography?  Often national reconciliation is regarded as the prerequisite.  It may sometimes more likely be the result.  Can Iraqis find practical things they can do together–whether it is divide oil revenue, delegate more powers to the provinces or deliver more electricity–that bring tangible benefits and enable people to look past their differences to a better future?