Iraq's decision to allow international oil companies to support the development of its productive oil fields is being seen as one of the most important economic decisions taken by an Iraqi government since 2003. The significance of this move lies in the fact that Iraq's productive capacity will rise from the present rate of 2.5 million barrels, to 11 million barrels by 2017, i.e. an increase of nine million barrels per day. This rise in production, in case oil prices maintain the range of 70 to 100 dollars per barrel, will provide Iraq additional revenues of 200 billion dollars annually by the middle of this decade, compared to 45 billion at present. These contracts were awarded after a tendering process. Asian state-owned oil companies, in particular the Chinese and Malaysian companies, had the lion's share of these contracts, followed by the two European companies Shell and BP, in addition to the American companies ExxonMobil and Occidental, and the Russian company Lukoil. If Iraq attains a new production level, and then increases the latter to about 20 million barrels by 2020, this will mean that Iraq will provide 10 percent of the global oil production annually; this will effectively render Iraq one of the top three oil producing countries worldwide. However, this ambitious plan raises an important question: Can Iraq implement this massive program, even with the cooperation of international companies? What about the geopolitical risks surrounding the country, and the administrative failure of the government, the absence of security, and most importantly, the absence of a social contract between the ruling class and the people, and among the different factions of the people itself? Is it possible to carry out this program and achieve its estimated capacity and on schedule? The answer to these questions can be summed up with the conclusion that Iraq will face immense difficulties in implementing this program as planned, and within the assumed timetable. Nonetheless, production can be forecasted to rise to about six to seven million barrels per day by mid-decade. More importantly, however, Iraq has finally, and after much hesitation and setbacks, started moving in the direction of developing its massive reserves. But what are the risks involved and the challenges being anticipated? First of all, there is the inability of the government in assuming its responsibilities and its corruption. Second, there is some risk of possible attacks by militias and terrorist groups against the oil installations. While the government has indeed pledged to protect the oil fields, the security of foreign personnel in their offices in Baghdad, Basra and in the public roads is the responsibility of the companies themselves, which rely on private security firms which are notorious in Iraq. It is expected that such attacks against facilities or individuals would increase with the presence of thousands of foreigners in Iraq in the current circumstances. Third of all, there is the issue of the legitimacy of the agreements themselves, as the Ministry of Oil insisted that the approval of the Council of Ministers is enough to ratify the agreements, thus avoiding the approval of the Parliament. The reason behind this is plain, and lies in the difficulty of obtaining the approval of the legislative branch of the authorities, which would only delay the ratification of the contracts. However, this measure leaves room for future governments to alter or even terminate these contracts. It is noteworthy to mention here that the chairman of the petroleum affairs committee in the Parliament, who is a member of the government-allied Kurdish coalition, had threatened to take this kind of measures in the future. Fourth of all, there is the issue of the economic challenges that the country will face in the future, with the absence of a clear vision in what regards how to exploit these new oil revenues. This is particularly valid given the lack of any decision to invest these revenues in infrastructural or investment projects. Thus, the main concern here is that future governments will continue to expand the state's institutions and body of government employees, who do not have any actual and productive work. It should be mentioned here that the number of Iraqi government employees and retirees exceeds that in several major industrialized countries. The absence of a clearly defined plan for reconstruction and development at present represents further losses of government revenues. Finally, there is the problem of high production. The corporations will attempt to produce at the highest possible capacity and in the shortest period of time possible, in order to increase their profits, and the Iraqi government will be unable to prevent them from doing so. This will result in the flooding of the markets, and in price deterioration, not to mention big disputes with neighbouring oil countries. As such, allowing the development of these fields to quickly increase production capacity to high levels, in a short period of time, has its inherent risks, not only in terms of oil prices, but also in terms of Iraq's relations with neighbouring countries, which are in any case complex problem-ridden relations. In fact, some of these countries are able to hinder the construction of new and necessary ports needed for such an expansion, not to mention the possibility of harassments and restrictions on the borders. Hence, the country's foreign policy must be closely coordinated with its oil policy; however, it is unlikely that this will happen given the rampant chaos prevailing in the country and its governmental institutions. In spite of the number of fields contracted to foreign companies, there are about 50 additional fields still awaiting development. These are not expected to be contracted to international companies, at least not the foreseeable future, as any new agreements henceforth will focus on exploration and drilling in new areas. *. Mr. Khadduri is an energy expert
