By Tariq Abdell, Founder & Chairman, Mesopotamia Insight.

The opinions expressed here are those of the author, and do not necessarily reflect the views of Iraq Business News.

The end of U.S. combat operations in Iraq presents a unique opportunity for a new beginning in U.S.- Iraq’s relationship. However, given Iraq’s crippling challenges and U.S. sluggish economy, the success of a such strategic partnership is contingent upon the political will of both U.S. and Iraqi governments, the support of the international community, and the genuine commitment of the international oil companies – Iraq’s biggest investors.

Drawing on past experiences, the stakeholders (U.S. government, Iraqi government, UNDP, World Bank, international oil companies, etc…) need to devise a concerted post-conflict reconstruction strategy, Marshall plan type, that is capable of  a) averting the collapse of State’s institutions and b) creating the conditions for a sustainable socio-economic recovery. However, before undertaking a such colossal challenge, stakeholders need to build a strategic framework defining  the mission’s objectives (attainable and realistic), organizational design (steering committee, for instance) , stakeholders’ roles and responsibilities, needed resources, and performance metrics.

Respectively, I’ll explore key stakeholders’ roles and responsibilities in Iraq’s post-conflict reconstruction  as it’s mandated by their respective missions.

Iraqi government

In this process, Iraqi government should be treated as an equal partner that is fully responsible and accountable of its actions before its constituents and the international community. Consequently, the new elected government needs to formulate a comprehensive development strategy in concert with key stakeholders, including the planning for the impending multi-billion dollar mega-reconstruction projects, and the followings are some key areas of common interest and cooperation:

• National reconciliation to fend off ethno-sectarian strife and political violence.
• Reining in corruption and enhancing institutions efficiency.
• Providing basic services (e.g., drinking water, electricity, running sewer, health care, education, etc….)
• Promoting rule of law and human rights.
• Tackling  illiteracy challenges, a serious threat to the country’s future.
• Creating jobs, higher unemployment rates are source of societal and political upheavals e.g., organized  crime, militias, etc….
• Revamping severely languished infrastructure.
• Reviving the country strategic industries to curtail its dependence on petrodollars.

U.S. Government 

To ensure the success of its new mission “New Dawn” in Iraq, the U.S. needs to learn from its past mistakes – $53 billion of unfinished or poorly executed projects– and capitalize on its acquired knowledge and understanding of Iraq’s ethno-sectarian fabric, political landscape, and socio-economic dynamics. Thus, U.S. Department of State’s Iraq strategic partnership office ISPO and USAID  should play a crucial role in coordinating and overseeing the reconstruction efforts in concert with other stakeholders e.g., Iraqi government, UNDP, etc….

United Nations Development Programme

Given UNDP extensive experience –Honest broker– in conflict and post-conflict zones, the UNDP is well-positioned to promote and oversee national reconciliation, rule of law, and rehabilitate State’s decadent institutions to enhance efficiency and  inclusiveness – Hiring and promotions are merit-based and not politically dictated.

World Bank

Given the decay of Iraq’s financial institutions  as result of decades of wars and sanctions, the World Bank’s role,  key partner in this reconstruction efforts, is to provide post-conflict reconstruction expertise, financial and technical assistance,  which are key ingredients for a sustainable development.

International oil companies (IOCs)

Given the current Peak Oil and IOCs vested interest in a stable and secure Iraq, IOCs should play a major role in this reconstruction efforts. Oil sector is the engine of Iraq’s economy  -%90 of government revenue. Nonetheless, the oil sector challenges are hampering the country’s economic recovery:   

• Major oil fields require billions of dollars for rehabilitation and development as result of decades of wars and sanctions.
• Current oil workforce is in desperate need of training and technological know-how.
• Oil sector is a highly politicized field.

Thus, given Iraq’s vast reserves of oil and gas,  IOCs’ should help revamp the oil sector swiftly by introducing technological know-how, the industry best practices, and fostering local workforce. With such perspicacious initiatives, IOCs will help enhance the oil sector efficiency, increase production, spur economic recovery;  and, eventually, countervail some of deep-seated distrust and apprehension.

In sum, in the absence of a clear post-conflict reconstruction strategy, Iraq’s convoluted political impasse and the international community inaction — lack of political will– are recipes for a prolonged political instability and ethno-sectarian strife; subsequently, jeopardizing all the hard-earned successes (e.g., fair elections, strong Army, etc…) and exacerbating  geopolitical tensions. Moreover, given the endured sacrifices, thus far,  in blood and treasure — Thousands of lives and over $ 751 billion war price tag — it’s imperative to stand by Iraq in these difficult times to prevent it from reverting to a military dictatorship or ,worst, religious tyranny.  In his speech to congress (12th March, 1947), President Truman exquisitely puts it when he warns us against lose of hope, destitution, and their grim outcomes chiefly chaos and tyranny:

“… The seeds of totalitarian regimes are nurtured by misery and want. They spread and grow in the evil soil of poverty and strife. They reach their full potential when the hope of a people for  a better life has died. We must keep that hope alive. If we falter in our leadership, we may endanger the peace of the world – and we shall surely endanger the welfare of our own nation…”

The opinions expressed here are those of the author, and do not necessarily reflect the views of Iraq Business News.

 The author, Tariq Abdell, is an Iraq analyst, and Founder & Chairman of Mesopotamia Insight

He can be contacted at: atariq2000@hotmail.com

or

Followed on twitter: http://www.twitter.com/atariqx

US President Barack Obama delivered a major speech from the Oval Office on Tuesday, marking the official end of combat operations in Iraq.

As just over 50,000 US troops will remain in the country until the end of 2011 in non-combat roles, the real significance of the military draw-down is hotly debated.

But it is clear that the US remains committed to the success of the Iraqi mission, and the transition from Operation Iraqi Freedom to Operation New Dawn will continue to require considerable investment of both money and political will over the coming years. By no stretch of the imagination is the West simply walking away.

Vice President Joe Biden is again visiting Iraq and trying to coax the political factions to find some solution to the ongoing electoral stalemate. The latest snippets of information point to a possible agreement within days, but given the history of this election we shouldn’t get too excited just yet.

And in the business arena, activity is clearly increasing, especially with regard to oilfield development. To quote a headline from Forbes yesterday, “As U.S. Troops Move Out Of Iraq, Oil Companies Move In”.

The article concludes, “The rush is on for Iraqi oil”. And while oil will be the driving force, it’s fair to say the rush is on for Iraqi oil, gas, roads, rail, housing, jobs … the list is practically endless.

If your business can meet the needs of Iraq’s developing economy, Upper Quartile and AAIB can help you. For more information please contact Gavin Jones or Adrian Shaw.

America’s new ambassador to Iraq, James Jeffrey, arrived in Baghdad last week and presented his diplomatic credentials to President Jalal Talabani.

He replaces Christopher Hill, who retired after a 16-month stint in the post, and a 33-year career in the diplomatic service.

Unlike Hill, Jeffrey already has wide experience in this part of the world, including serving in Baghdad as deputy chief of mission and then charge d’affaires from June 2004 to June 2005.

Mr Jeffrey could hardly be coming at a more interesting time. The US pulled its combat troops out last week ahead of schedule, and will be scaling back its non-combat military presence over the next year.

Politically, the power vacuum still remains unfilled, to the frustration of many both locally and abroad.

By the time Jeffrey leaves office, we can only hope that Iraq will be further along the road to prosperity, and will not have slipped back further into the violence that we have seen in recent days.

Let’s wish Mr Jeffrey every success in his new post, and hope that he will be a positive force for Iraq’s development.

An Iraqi oil industry veteran, Dr Thamir Al Uqaili, says there is a general belief that the production plateau targets (PPTs) of the international oil companies who have won contracts in Iraq are too ambitious and that export will face a marketing problem.

The exploration of Iraq’s rich oil and gas fields will be under the spotlight during Iraq Energy Future 2010, a top meeting of oil executives and Iraqi energy regulators in Istanbul from 27-28 September, as global companies that have won contracts prepare to start the development of various fields.  Dr Al Uqaili heads up a distinguished list of speakers and experts and will host a roundtable discussion at the event addressing operational challenges, opportunities, legislation, infrastructure and pipeline modernisation.

Common issues on different oil sites
A 30-year-old veteran of Iraqi oil companies such as the Iraq Petroleum Company, Basra Petroleum Company, Iraq National Oil Company, State Company of Oil Projects and the Iraq Drilling Company, Dr Uqaili comments on the challenges facing the IOC winners of the 1st and 2nd bid rounds as they prepare their teams and sites:  “There are certainly common issues, mainly use of production surface facilities, export terminals in addition to achieving and maintaining the contracted plateaus ‘PPTs’ (production plateau targets).”

Maintaining field pressure and boosting production is a key area for the IOCs to solve as they get started, says Dr Al Uqaili: “The fields are multi-reservoir fields of different characters. The IOCs are evaluating the characteristics and requirements of each reservoir. The evaluation includes revising recoverable oil under water injection and may be other solutions, to be able not only to achieve the production plateau target but to maintain it for some seven years. “

Export infrastructure

According to Dr Al Uqaili there are several production or export facilities that need upgrading and expansion to ensure Iraq can export its output.  “A new production centre like Hlafaya-Nahr-Umer-Majnoon down to the Fao [Faw] sea terminal and removing the bottlenecks in the pipelines from Rumaila and Zubair depots to the Fao terminal”, he continues, “as well as sea lines from Fao to the Basra sea terminal and installations of single buoy moorings (SBMs) in the Basra sea terminal”.

He also believes that the current bottleneck in the Iraq-Turkey export pipeline must be removed and perhaps a third line constructed.  Furthermore, should Iraq reach an agreement with Saudi Arabia, the Iraq Petroleum Saudi Arabia (IPSA) pipeline should be put into service.  He continues:”There is the possibility of constructing a pipeline each to Kuwait and Jordan.  Furthermore, we can resolve the current stalemate of the oil export from Kurdistan by using Iraq’s transport transportation system.”

Safety and security

“The main worries are security and political stability”, says Dr Al Uqaili, “that may severely affect fulfillment of a reliable national integrated plan that includes other sectors beside the oil sector. This integrated plan has not been started yet.”

High-level speakers at Iraq Future Energy 2010 include:

• His Excellency Thamir Al Ghadhban, Chairman, Advisory Committee to the Prime Minister of Iraq, Former Oil Minister
• Michael Townshend, President Iraq, BP
• Dr Abdul Hadi Al Hassani, Vice Chairman, Oil and Gas Committee, Iraqi Parliament
• Baroness Nicholson of Winterbourne, Executive Chairman, IBBC (Iraq Britain Business Council)
• Mounir Bouaziz, Vice President Commercial, New Business, LNG, Middle East and North Africa, Shell EP International

Event website:  www.theenergyexchange.co.uk/iraq10
Event dates and location:  27-28 September 2010 – Istanbul, Turkey

For more information:
Programme director: Claire Pallen c.pallen@theenergyexchange.co.uk
Mobile: +44 78 330 93510

For more information, interviews and media accreditation:
Communications manager:  Annemarie Roodbol
Tel.  +27 21 700 3558
Fax.  +27 21 700 3501
Mobile: +27 82 562 7844
Email:  annemarie.roodbol@clarionevents.com

AAIB View

A spokesperson from A.A.I.B. Insurance Brokers observed “a number of commentators have recently raised the question of the achievability of the documented production targets within the planned timescales, feeling that they may not be realistic considering the circumstances faced.

However, penalty clauses built into contracts if certain project milestones are not met and output targets are not achieved, are additional spurs for the International Oil Companies and the oilfield support and service companies to strive to meet contractual deliverables and get the Oil and Gas sector infrastructure refurbished and expanded as quickly as they are able to.

The challenges of operating in Iraq in this sector are formidable and should not be underestimated. The security situation, the bureaucratic procedures faced by businesses operating in the country, the current degree of political uncertainty, the transportation bottlenecks at Umm Qasr etc. have all been highlighted and are caused for concern.

However the International Oil Companies and their support network have faced similar obstacles before in many other challenging environments such as Angola and Nigeria, etc. and have gained valuable experience in overcoming such obstacles.

They have demonstrated adaptability and determination and they will certainly need these qualities in order to build a long term presence in Iraq and in supporting the modernisation and expansion of Iraq’s Oil and Gas sector.

By Tariq Abdell, Founder & Chairman, Mesopotamia Insight.
The opinions expressed here are those of the author, and do not necessarily reflect the views of Iraq Business News.

Operation New Dawn, ensuing the U.S. perspicacious plans to end combat operations in Iraq Aug. 31, underlines the U.S. commitment to a torn country that is in desperate need of rebuilding and reconciliation, as result of decades of wars and sanctions. Inarguably, Iraq’s impending multi-billion dollar mega-reconstruction projects (e.g., houses, roads, hospitals, bridges, airports, schools, dams, etc…) coalesced with a colossal and untapped natural resources (billion of proven oil and gas reserves) are irrefutably the modern day Eldorado, affording risk-taking investors a unique and unparallel opportunity to thrive and prosper.

Nonetheless, venturing into Iraq’s muddle (e.g., fragile democracy, geopolitical tensions, ethno-sectarian strife, severely languished infrastructure, impoverished population, etc… ) with no strategic foresight entails grave risks and dire consequences far beyond repair: Assets depletion, workforce distress, capital exposure, and, ultimately, business annihilation. Conversely, to overcome the aforementioned constraints and the unforeseen externalities associated with them, International oil companies (IOCs), including foreign investors, need to recalibrate their strategies to reflect Iraq’s post-conflict era and its idiosyncrasies (e.g., political landscape, tribal and cultural nuances, ethno-sectarian fabric, bureaucracy, etc…). Furthermore, IOCs must cultivate their leaders’ global mindset (e.g., transcultural competence, social capital, and situational awareness) mirroring Iraq’s ever-changing socio-economic environment, a crucial prerequisite for coping with omnipresent societal and institutional hurdles.

Thus, IOCs’ main goal is to build enough political capital susceptible to shield and protect their long term interests against the country’s political uncertainty. Furthermore,  in the absence of socio-economic data repositories to support strategic foresight analysis and projections, IOCs’ viable alternative is to adopt an integrative approach incorporating constrictive engagements, strategic partnerships, and corporate social responsibility as part of a broad engagement strategy; the end products of such approach are employed to strengthen International oil companies’  political capital and, thus, their operational efficiency. Subsequently, the suggested approach will entail four interconnected phases with three focal points (Strategic partnerships, political capital, and operational efficiency):

Phase I: Constructive engagements

Given the deep-seeded apprehension and mistrust of foreign investors (as result of years of planned economy), earning and maintaining the trust of local communities is an absolute imperative for IOCs’ survival in a hostile environment such as Iraq. Thus, to gain a deep understanding of the local communities’ customs, value system, and nuances; IOCs should engage all the concerned stakeholders in their areas of operations (e.g., Tribal and religious leaders, NGOs, media, members of the provincial government, etc…) via a participatory and inclusive approach enabling them, in the process, to foster mutual understanding, respect and, most importantly, access to strategic insights.

Phase II: Strategic partnerships

With the already established relationships that is corroborated with strategic insights, IOCs should capitalize on the achievements of the previous phase by strengthening and solidifying relationships perceived to be promising, fruitful, and viable to turn into sustainable strategic partnerships.

Phase III: Genuine corporate social responsibility

Given the socio-economic fabric of their areas of operations, IOCs must adopt acculturated corporate social responsibility for a broad and immediate impact. Subsequently, IOCs should leverage the already fostered strategic partnerships to help devise and deliver their envisioned corporate social responsibility strategies in concert with local partners and beneficiaries. For instance, IOCs should work with renowned and genuine NGOs to solve a communal problem, given that the NGO or the implementing partner’s track record is solid in its respective fields of operations.

Phase IV: Political capital

In this last phase, given the strength of the established strategic partnerships and the achievements of corporate social responsibility programs as result of constructive engagements, International oil companies should have, hitherto, amassed enough political capital that counterparts their operational efficiency; consequently, ensuring their businesses success and, most importantly, survival in an environment replete with uncertainty and political instability.

In sum,  Strategic foresight, global mindset leadership, and  sustainable political capital are the prerequisites for IOCs survival in Iraq’s uncertainty.  ”The main worries are security and political stability”, says Dr. Thamir al Ugaili, Iraqi oil industry veteran, “that may severely affect fulfillment of a reliable national integrated plan that includes other sectors beside the oil sector. This integrated plan has not been started yet.”  (Zawya.com Aug.18) 

The opinions expressed here are those of the author, and do not necessarily reflect the views of Iraq Business News.

The author,  Mr. Tariq Abdell, is an Iraq analyst, former Iraq advisor to senior U.S. diplomats, and Founder & Chairman of  Mesopotamia Insight.

He can be contacted at: atariq2000@hotmail.com
or
Followed on twitter: http://www.twitter.com/atariqx

We launch our new Jobs in Iraq page today on the IBN web site in response to reader demand. This is a free reciprocal service for Recruitment Agencies and Employers with jobs on offer in Iraq. For readers it provides a welcome source of employment options in a country crying out for skilled labour and competent management.

Oil & Gas, Construction & Engineering, Public works, Agriculture , Education, Communications, and Transportation are all sectors where skilled people are needed.

If you have vacancies in Iraq contact Antony Wakeham on www.iraq-businessnews.com or email antony.wakeham@iraq-businessnews.com. The service is free on a reciprocal link basis.

It has been a busy week politically in Iraq, with both good and bad news emerging from the country:

• The last American combat brigade left the country on Thursday morning, seven years after the US-led invasion; 6,000 support troops will remain until the end of the month, and a further 50,000 will stay until the end of the year in a purely advisory capacity.
• The outlawed Kurdistan Workers’ Party, or PKK, which has been blamed for several recent bomb attacks on the Kirkuk-Ceyhan pipeline, has announced a ceasefire for the month of Ramadan.
• The constitutional challenge to Iraq’s oilfield development contracts has reportedly been rejected by the Supreme Court on Monday.
• Talks between Ayad Allawi and Nouri al-Maliki have broken down, and even the loose coalition between the Iraqi National Alliance and the State of Law parties is showing signs of strain. Vice-president Adel Abdul Mahdi is being spoken of as a possible compromise candidate.

But as even a basic read of this week’s news items will tell you, business is going ahead and plans are being made.

According to James Hogan, chief executive of UK bank HSBC in Iraq, “Iraq is at the next stage of development; we’re moving beyond security considerations and into the economic recovery”.

In response to demand from our readers, Iraq Business News is today launching a new jobs page, with we are sure will be of use to companies and candidates alike.

For more on how we can help you prosper in Iraq, why not contact Gavin Jones at Upper Quartile and Adrian Shaw at AAIB.

Iraq is starting the holy fasting month of Ramadan in blistering summer heat: up to 49 C (120 F) in places!

It has been a hot week for oil news too:

• The Korea National Oil Corp (KNOC) hits oil in the Bazian and Sangaw North blocks in Kurdistan;
• Dana Gas has increased gas its production by 88% over the same period last year;
• Gulf Keystone (GKP) shares were up over 30% at one stage (they’ve since fallen back a bit), following updates on its operations in Kurdistan, and continuing rumours of a possible takeover bid;
• WesternZagros gives a positive update on exploration.

The news was not entirely positive, however, with a couple of temporary setbacks reported: a guerrilla attack on the Ceyhan pipeline in Turkey, and Sterling Energy having problems with a drilling rig.

Those success stories involve companies that all took the decision to enter Iraq some years ago, at a time when it required an even more courageous decision that it would today. A couple of years on, those guys are looking very clever!

So who will be looking clever a few years from now? Opportunities abound in Iraq for all manner of businesses, and it’s obvious that only those who take that first step can be tomorrow’s winners.

If you’re not in, you can’t win.

For more information on how Upper Quartile and AAIB can assist your business in Iraq, please contact Gavin Jones or Adrian Shaw.

By Tariq Abdell, Founder & Chairman, Mesopotamia Insight.

The opinions expressed here are those of the author, and do not necessarily reflect the views of Iraq Business News.

I always believe that politics is the art of compromising, in other words, is knowing when and where to give or to ask. Alas, President Obama’s letter, Foreign Policy magazine, to Grand Ayatollah Ali al-Sistani, Iraq’s top shiite cleric, urging him to help put an end to the country’s political impasse in the midst of the U.S. planned hastily withdrawal is a major foreign policy flaw, given the country’s protracted ethno-sectarian strife and recent upsurge of the political violence – Series of concerted attacks in different part of the country: Baghdad, Kirkuk, Kut, Anbar, Basrah, Fallujah, Mosul, etc…

The unintended consequences of such overture, given the U.S. inability to coerce all the major stakeholders to compromise and form a national unity government, could be perceived by some, mainly Iran’s proxies and Al-Quaeda in Iraq, as a desperate act of a weak and rattle administration and, consequently, deepening the already existed ethno-sectarian divide in a time when the country is striving to recover and dust off years of sectarian violence. By endorsing or appealing to a particular sect or ethnic group, U.S. risks encroaching itself into a centuries-old feud (e.g., Shiite Vs. Sunnis, Muslims Vs. Christians, Kurds Vs. Arabs, etc…) with no feasible solution in the horizon. Furthermore, with such act, U.S. is invigorating Iran’s economic and religious ambitions in Iraq, and, consequently, turning it into a Shiite Islamic theocracy – Iran’s 31st province.

If Grand Ayatollah Sistani, an Iranian born, decides to intervene to end the political deadlock, he is most likely to endorse one of the key members of the Shiite megabloc “National Iraqi Alliance” he helped create, Consequently, undermining the secular and pan-Arabist forces led by Ayad Allawi, head of the Iraqiya party a Sunni-backed bloc. Furthermore, the Shiite Alliance is a merger of the Qods force (IRGC special operations unit) groomed political and paramilitary organizations: The Supreme Council for the Islamic Revolution in Iraq (SCIRI) and its military wing Badr corps, comprised of Iraqi exiles that follow Khomeini’s ideology (Velayat Faqih) and al-Hakim family’s leadership , Jaysh al-Mahdi (JAM) militia, the armed wing of the Sadrist Movement and most powerful force on the streets of Iraq, led by the firebrand Moktada al-Sadr, and State of Law coalition led by the current PM. Nuri al-Maliki. According to a recent poll by the Asharq research centre, 41.2 percent of 12000 people question in 18 provinces: Tehran is hindering Iraq’s chances of establishing a new government. Moreover, Iran’s new ambassador to Iraq Hassan Danaifar, a Baghdad native and Qods Force veteran commander, signals Iran’s vested interest in building and strengthening its military, political and religious influence in a postwar Iraq.

In summary, the U.S. and its ally forces went to Iraq, presumably, to take down a military dictatorship and replace it with a constitutional democracy, not a Shiite Islamic theocracy which is a mere extension of the Mullah regime in Iran. Thus, with such act, U.S. will ultimately end up handing Iraq to Iran (oldest nemesis) on a silver platter, as result of poor strategic foresight and misunderstanding of the region’s inherited geostrategic value to the world stability (beyond the oil), as Mr Tarek Aziz, Iraq previous foreign minister, said, in interview with the British Guardian, to Mr. Obama, “… He is leaving Iraq to the wolves…”

The opinions expressed here are those of the author, and do not necessarily reflect the views of Iraq Business News.

Related articles:

• IOCs and Iraq’s Peculiarities
• Investing in Iraq: Post-Conflict Constraints and Rewards
• Is Iraq Reverting to Square One?

The author, Tariq Abdell, is an Iraq analyst, and Founder & Chairman of Mesopotamia Insight

He can be contacted at: atariq2000@hotmail.com

or

Followed on twitter: http://www.twitter.com/atariqx

By Dr. Sami Shubber, founder of Hamourabi Office in Baghdad, Iraq.

For more details about this case, please click here.

1. The Iraqi Ministry of Oil awarded a contract to BP and China National Petroleum Co. (SINOPEC) in 2009 for the development of the Rumaila oilfield. A lawsuit has been filed before the Iraqi Supreme Court by a former Iraq MP alleging that the BP contract violated the Iraqi Constitution of 2005. The legal bases for this allegation are not available to us.

2. The Iraqi Ministry of Oil has replied to the said allegation to the effect that: (1) the constitutional requirement for the approval of the Council of Representatives (the Iraqi Parliament) only applies to international treaties and agreements between the State of Iraq and other States, so commercial contracts between the Regional Oil Company (ROC) and the International Oil Companies (IOCs) do not need such approval; and (2) the Technical Service Contracts (TSC) were awarded under the proposed Hydrocarbons Law, although this has not yet been approved by the Council of Representatives.

3. The arguments of the parties to the case have to be examined against the background of the Iraqi Constitution. The first point to be made is that the Iraqi Constitution provides for the separation of powers of the federal authorities, namely, the executive, legislative and the judicial authorities (Article 47 of the Constitution). Each authority exercises its functions and jurisdiction on the basis of the separation of powers. Accordingly, each one of these authorities is fully entitled to function according to the jurisdiction granted to it by the Constitution, and independently of the other authorities. The second point is that there are certain executive actions which have to be approved by the legislative authority (the Council of Representatives). These actions are enumerated in Article 61 of the Constitution. They include, inter alia, the ratification of treaties, the appointment of senior judges, ambassadors, and senior army officers.

4. The award of the TSC to BP has to be examined against those constitutional provisions. First, it is a measure taken by part of the executive authority, i.e., the Ministry of Oil, in the exercise of its functions. Therefore, there appears to be no illegal exercise of power by the Ministry, hence no violation of the Constitution appears to have been committed. Secondly, the award of the TSC to BP is not one of the actions of the executive that has to be approved by the Council of Representatives. Such actions are expressly enumerated in Article 61 of the Constitution. Therefore, it would seem clear that such contracts need not be approved by the Council of Representatives. It may be observed that to subject such contracts to the approval of the Council of Representatives could cause a great deal of delay in the approval process, which would prevent the beginning of the commercial operation of the oil company concerned. This state of affairs may not be in the public interest.

5. In the light of the foregoing, it seems reasonable to suggest that the award of the TSC to BP is not illegal and does not seem to violate any provisions of the Constitution. However, it does seem odd that the Ministry of Oil has relied on a non-existent law, the proposed Hydrocarbons Law, from a legal point of view, in support of its case. For the proposed Law does not have any legal effect until it is approved by the Council of Representatives and published in the Iraqi Official Gazette, (Articles 61 and 129 of the Constitution).It is submitted with respect that this argument is not sound in law.

6. It would be fair to say the lawsuit under consideration is probably politically motivated. It does not seem to have legal merits and therefore is likely to be rejected by the Iraqi Supreme Court.

Sami Shubber, Lic.en Droit, Baghdad, LL.M.,London, Ph.D. in International Law, Cambridge, Barrister-at-Law (Gray’s Inn) and Member of the Iraqi Bar, is the founder of Hamourabi Office in Baghdad and Geneva, and was formerly Senior Legal Officer for the World Health Organisatio (WHO). He is the author of several books on International Law, and has teaching experience at the University of Baghdad, the University of Cambridge, and the University of Geneva.

His latest book is entitled ‘The Law of Investment in Iraq’.

www.hamourabioffice.com

Related articles:

• Legal Challenge to Iraqi Oil Contracts
• Rumaila Drilling Spree
• Business as Usual for Oil Companies

In a recent opinion piece in the Times, Lord Jeffrey Archer was enthusiastic about the opportunities to be grasped in modern Iraq:

• “Today [Baghdad] is a boom town, rather than a bomb site. If I were a young man, looking to make my fortune, I would be off to Iraq like a shot.“
• ” … there is an opportunity in Iraq that rivals the gold rush.“
• “If I were 30 and not 70, I would go and find out who wants what and see that they got it.“

He was particularly bullish about Iraqi Kurdistan, with which he has had a long association:

• “The city of Erbil looks like Dubai 15 or 20 years ago.“
• “Go east young man, go to Kurdistan. You could make your first million, and what’s more, you won’t be taxed at 50 per cent.“

And while Lord Archer’s relationship with the truth has sometimes been called into question,  his arguments for Iraq are clearly supported by the evidence, as regular readers of Iraq Business News will be aware.

But it’s not always an easy place to do business, which is why it’s important to get the best advice and guidance.

The difficulties are not all on one side, however: President Barzani spelled out the problems that Iraqis have in getting entry visas to Britain, for example, a problem they do not face in France or Germany. Indeed, we have highlighted this issue in the past.

As ever, the rewards will be reaped by those who face the difficulties and take the risks.

Will your business be part of the Iraqi success story? If so, Upper Quartile and AAIB are the perfect team to help you manage the risks and grasp the opportunities. For more information please contact Gavin Jones or Adrian Shaw.

Related articles:

• Rebuilding Iraq: The century’s deal
• Iraq Launches Five-year Plan for Economic Development

By Ali Al-Mawlawi, Iraqi Institute for Economic Reform

The Iraqi Ministry of Oil hosted a symposium on Sunday as part of efforts to include Iraqi civil society organizations in the Extractive Industries Transparency Initiative (EITI). The event was organized by the head of the Iraqi EITI, Alaa Mohie El-Deen, and brought together NGO’s nationwide, including representatives from the Kurdistan region and southern provinces.

The EITI is a global standard for transparency in the oil, gas and mining industries that seeks to reconcile payments made by resource companies to governments. An independent validation process is overseen by a multi-stakeholder group comprising government, private sector and civil society representatives. Iraq’s 16-member committee includes senior officials from the oil, finance and industry ministries, the Integrity Commission, the Supreme Board of Audit and a member of the Iraqi parliament. Shell, Exxon Mobil and CNPC were also chosen to represent the international oil companies following a workshop held in Dubai last June and Iraq’s unions and professional guilds are represented by the journalists, accountants and lawyers unions.

Sunday’s event sought to introduce civil society activists to the EITI process and to establish a mechanism for selecting Iraqi NGO’s to join the multi-stakeholder committee. Mr Mohie El-Deen explained that Iraq’s implementation of the EITI was only the first step towards creating an open and transparent oil industry. Further efforts are required to enhance public accountability, including full disclosure of federal budget allocations and revenue sharing legislation.

A supporting committee will now be formed consisting of Iraqi NGO’s that are engaged in transparency and anti-corruption work. Three organizations will then be selected to work on the multi-stakeholder group, which will be tasked with monitoring and evaluating the EITI process.

Iraq was officially accepted by the EITI as a candidate country in February this year after Prime Minister Nouri Al-Maliki expressed the Iraqi government’s interest in joining the process. With Yemen being the only other country in the Middle East to gain candidacy in the initiative, Iraq is set to become the largest oil producing country to implement the EITI. It now has less than two years to fulfil the validation criteria, which include ensuring that payments made by international companies to the government are independently audited according to international standards.

Currently, only Azerbaijan and Liberia are EITI-complaint, with Peru expected to become the third shortly. If Iraq is successful in implementing the EITI, it could create pressure on other oil-rich countries in the Middle East to open up their industries to public scrutiny.

Ali Al-Mawlawi, ali.mawlawi@iier.org
Related articles:

• Iraq’s media regulator calls for greater press freedoms
• Iraq to Join EITI
• Iraq on Road to Stamping out Oil Graft

By Tariq Abdell, Founder & Chairman, Mesopotamia Insight.

The opinions expressed here are those of the author, and do not necessarily reflect the views of Iraq Business News.

Recent oil conferences in Baghdad and Basrah, hosted respectively by the oil ministry and the USG, underscored the International oil companies (IOCs) poor situational awareness, strategic foresight, versatility, and, most importantly, obliviousness to the country’s ages-old nuances. Furthermore, given the country continues ethno-sectarian contentions and a convoluted political impasse, such frailties coupled with unforeseen externalities associated with the country post-conflict environment are inherent sources of capital exposure and, consequently, business extinction.

Thus, although IOCs are known of operating in high-risk environments e.g., Venezuela, Nigeria, etc… Iraq’s peculiarities , left unchecked, could be a source of the workforce distress and capital depletion. Simply put, as result of decades of wars, sanctions, languished infrastructure, and brain drain, it will take sometimes for an eastern country such as Iraq – both people and institutions – to adjust to a newly adapted democratic values and western business practices. Consequently, IOCs must devise an acculturated and comprehensive investment strategy which does factor in Iraq’s peculiarities. Moreover, to ensure the success of such strategy, IOCs must build in-house leaders, who acquire transcultural competence, strategic insight, and situational awareness; to overcome the aforementioned societal and institutional hurdles, and safeguard their company business interests. The suggested approach will entail the following:

Corporate social responsibility

IOC must adopt a genuine and acculturated corporate social responsibility for a broad and immediate societal impact and self-image promotion. To this end, IOC must work with renowned and genuine NGOs with a solid track record in their respective fields of operations. Moreover, it’s advisable for an IOC to reach out to key individuals and institutions nearby their respective field of operations e.g., IOC operating in Basrah province (Zubeir, Rumeila, west-Qurna fields, etc…) may sponsor an academic exchange or cooperation program with certain departments within Basrah University.

Trans-cultural competence

IOC must build in-house leaders with an acute global mindset and transcultural competence enabling their leaders to operate flawlessly in a multiethnic and/or multicultural environments. Moreover, such attributes are a prerequisite for a successful business endeavor in a politically volatile environment such as Iraq’s.

Case-in-point:

Tony Hayward’s, the departing chief executive of BP, fiasco with the U.S. media and public as result of a poor leadership and calamitous public relations (” I want my life back”). In fact, Mr. Hayward’s miscalculations did cost him his job and, in the process, BP’s public image – Villain oil company.

Strategic insight

IOCs must initiate constructive engagements with key individuals and institutions, namely members of the provincial government, military leadership, tribal and religious leaders, businessmen, media representatives, and NGOs. Such engagements are viable expedient to dissipated some of the deep-seeded apprehensions vis-a-vis oil companies, cultivate fruitful relationships and, consequently, foster a sustainable strategic partnerships a prerequisite for business survival and success in a hostile environment.

In summary, by understanding the country’s centuries-old nuances and espousing a genuine corporate responsibility, transcultural competence, and strategic insights, IOCs are most likely to avoid undergoing BP’s ordeal in Iraq’s investment hostile climate. In fact, BP’s misfortune, as result of oil spill in the Gulf of Mexico, poor judgment, and, most importantly, misunderstanding of the America’s peculiarities; is a wakeup call for the rest of the industry to adopt a acculturated strategies in their areas of operation- Taking into account host-nation cultural, geographic, and socio-economic fabric. According to the Chinese strategist Sun Tzu “Ignorant both of your enemy and yourself, you are certain to be in peril.”

The opinions expressed here are those of the author, and do not necessarily reflect the views of Iraq Business News.

Related articles:

• Investing in Iraq: Post-Conflict Constraints and Rewards
• Is Iraq Reverting to Square One?

The author, Tariq Abdell, is an Iraq analyst, and Founder & Chairman of Mesopotamia Insight

He can be contacted at: atariq2000@hotmail.com

or

Followed on twitter: http://www.twitter.com/atariqx

The planned second session of the new Iraqi parliament was due to be held on Tuesday, but considering the lack of progress in forming the next government, few were surprised when it was postponed.

“We are postponing the session until further notice because the political entities failed to reach any agreement”, said Fuad Massum, who as the oldest member of Parliament holds the post of caretaker Speaker. “We held a meeting this morning with the heads of the parliamentary blocs and we agreed to give more time to [the] political entities to reach agreement.”

A spokeswoman for Ayad Allawi’s Iraqiya coalition said “the root cause of the problem is sectarian rather than political or national”.

That being the case, it is particularly worrying to see that the government has proposed setting up a special court to try journalists – the potential for abuse of such a court in a society where sectarianism is a problem is obvious.

To many it seems bizarre that the government would choose to focus on the ‘problem’ of journalism, when press freedom is key to solving two of Iraq’s biggest challenges: the smooth running of the democratic process, and the eradication of corruption.

Whether this, and the so-called ‘Journalists Protection Law’, are really moves by the authorities to control the media, is of course still open to debate. But according to Iraq’s constitution, “special or exceptional courts may not be established”, so we can expect some legal challenges to this initiative.

In an interesting piece of timing, UNESCO is allocating funds for the “promotion of free expression and media pluralism, associated with the free flow of information [in Iraq]”.

An environment is which information can be reported without fear is important for the people of Iraq, and also for the legions of foreign businesses that will be required to bring Iraq’s economy back to prosperity.

Upper Quartile and AAIB are the ideal partners to guide your business through the complexities of Iraqi life. For more information please contact Gavin Jones or Adrian Shaw.