International oil companies: Overcoming Iraq's uncertainty

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."  ( 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: [email protected]
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One Response to International oil companies: Overcoming Iraq's uncertainty

  1. Mohamad Shbaro 23rd August 2010 at 22:06 #

    Simply excellent. Waiting for your next article Mr. Abdull.