This month marks the tenth anniversary of the U.S. invasion of Iraq, an invasion that continues to be shrouded in mystery in many of its aspects. The justifications used by rightwing factions in the United States for the war included: eliminating international terrorism following the attacks of 11 September 2011; getting rid of weapons of mass destruction; and turning Iraq into a model democratic state that could be replicated elsewhere in the Middle East. But Washington kept other important factors under wraps, factors that could not have been absent from calculations, particularly the role of Iraqi oil in U.S. economic interests and strategic Israeli calculations. The attacks in New York City and Washington D.C. were planned and carried out by al-Qaeda, and the former Iraqi regime had nothing to do with those terror acts. Furthermore, after years of meticulous inspection in Iraq, information uncovered by U.S. weapons inspectors – as well as reports by UN inspectors and testimonies by former Iraqi officials – indicated that Iraq did not have an active WMD program in the period leading up to the invasion. The information obtained by the U.S. intelligence services in this regard, whether from agents or Iraqi dissidents, was therefore either inaccurate or fabricated. Concerning the promised democratic state that would emerge in Iraq, a new weak state was created instead, based on sectarian foundations that have sown the seeds of this state's own fragmentation. Though the country enjoys more freedoms now, democracy there remains warped. This is not to mention the fragility of the state, which makes it difficult to benefit from the expertise of its citizens to build a new Iraq. And since day one of the occupation, the United States turned a blind eye to rampant corruption in the state, which quickly turned into “political money" used to buy loyalties. One must not underestimate the importance of weakening Iraq in favor of Israel's strategic interests either, despite attempts by the Americans to camouflage it. Indeed, the media in Israel could not conceal its glee and optimism over the change that took place. There were even Israeli expectations that Iraq would export oil to the Jewish state, after reactivating the pipeline from Kirkuk to Haifa. At the time, the Iraqi oil minister was forced to issue an official denial of these claims, noting that the pipeline no longer existed and had been dismantled after the creation of Israel in 1948. Israel also claimed that it received promises from senior figures in the new regime about resupplying the Jewish state with oil. Despite extensive media coverage of the war, oil was rarely publically alluded to, except timidly and in memoirs or statements by officials after they resigned or retired. In truth, U.S. companies had doubled their imports of Iraqi oil shortly after the end of the Iraq-Iran war, especially ExxonMobil. During the planning phase of invasion, the United States tried to have its oil companies dominate the development, production, and marketing operations to come in the Iraqi oil sector. However, this attempt failed for many reasons, including wide condemnation of U.S. efforts to put an end to the nationalization of the local oil industry, especially after it became clear that local staff could do all of these tasks even under very difficult circumstances. The other members of the coalition that invaded Iraq also denounced the U.S. move, and defended the interests of their oil companies. The United States also sought to increase Iraqi oil production, to serve as an important complement of oil produced by major producers, in order to achieve stability in the markets during both normal and exceptional circumstances. But again, this move encountered many difficulties, most notably: the destruction of oil installations because of the successive wars and the need to amend the country's laws, not to mention the terrorist attacks that targeted the oil industry at the time. Priorities thus shifted. The first mission was entrusted to U.S. engineering service companies to repair whatever can be repaired, and the date for the licensing round for foreign companies was postponed until 2008. The main reason was the dramatic fall in oil prices following the global financial crisis, and the Maliki government's urgent need for additional oil revenues to cover the salaries of active and retired civil servants. Meanwhile, the controversial Constitution of 2005 was drafted with the participation of a retired U.S. diplomat, who later on joined an oil company operating in the Kurdistan region. This is while bearing in mind that a number of U.S. ambassadors in Baghdad were appointed following their retirements as consultants in oil companies working in Iraq. Three Iraqi oil experts then drafted the draft law on oil and gas. But despite the fact that it was referred to parliament for approval in February 2007, the parliament has yet to ratify it, in light of the conflicting interests of the various political blocs. The ministry of oil has since launched four licensing rounds, and a fifth was announced for the coming months. But there are several notable aspects about the licensing: First of all, Asian companies dominated most of the contracts. Second, companies initially overestimated the productive capacity of the fields in question, before they eventually downgraded their estimates. Today, it is unlikely that 12.5 million barrels per day would be produced by Iraq by 2017, as originally estimated. The figure is now closer to nine million, and is being constantly readjusted. Third, there is the ongoing dispute between the ministry of oil and the Kurdistan Regional Government (KRG). For instance, the ministry has blacklisted oil companies that operate in Kurdistan and barred them from working in the rest of Iraq. Yet ExxonMobil decided to work in the Kurdistan region despite warnings that it may not continue its operations in southern Iraq, which would pave the way for other companies to replace the U.S. giant there. The biggest challenge for the Iraqi oil sector today is to find a reasonable equation that would prevent the central government from seizing oil revenues and administering them in a dictatorial manner, while neglecting to develop the various Iraqi provinces and regions. Under the federal system, officials outside Baghdad must act responsibly and transparently with the oil revenues available to them. The other challenge is the attitude of the Iraqis over supporting a local strategic industry that once managed to increase production to record levels (about 3.5 million barrels per day in the late 1970s). As for how to best deal with international companies, there are many options, including technical services contracts, and production sharing agreements. They also include, for example, replicating the experience of when an Iraqi oil delegation reached a deal with Japanese companies in the early 1990s, to upgrade infrastructure to increase Iraq's production to six million barrels per day, funded in large part by the Japanese, in exchange for increasing exports to Japan. In terms of the export of Iraqi oil, it was always available to all countries of the world except Israel, and indeed, U.S. companies had increased their imports of Iraqi oil up to three times shortly after the end of the Iraq-Iran war. * Mr. Khadduri is a consultant for MEES Oil & Gas (MeesEnergy)
