Iraq's new cabinet: economic recovery and the oil challenges

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 unanimous approval of the new Iraqi government by the Iraqi lawmakers, to be led by the incumbent premier al-Maliki, is long-awaited news - ending nine tumultuous months of political horse-trading. However, the highly politicized nature  of the new cabinet could easily jeopardize its effectiveness and its decision-making independence; subsequently, protracting Iraq’s tribulations: ethno-sectarian strife, improvised population, and languished infrastructure.

Inarguably, Iraq's new cabinet first order of business is security, 2011 budget, hydrocarbon and investment laws and, most importantly,  revamping of  Iraq's underdeveloped oil sector which provides over 90 percent of its budget revenues.

Given Iraq’s colossal energy reserves, 115 billion barrels of oil and 112 trillion cubic feet of gas, and the international markets insatiable appetite for energy resources, chiefly the U.S., China, and India; Iraq is strategically positioned as ever before to reclaim its well-deserved seat among the major oil producers  such as Saudi Arabia and Iran.

Nevertheless, the daunting challenges of the oil sector - decades of wars and sanctions- are solemnly hampering the country’seconomic  recovery and its multi-billion dollar mega-reconstruction projects (e.g., housing, schools, hospitals, roads, bridges, airports, dams, etc…) – among them:   

  • The oil sector is a highly politicized field.
  • Major oil fields require billions of dollars for rehabilitation and development.
  • The oil workforce is in desperate need of training and technological know-how.
  • OPEC constraints (production quotas, for instance).
  • Severely languished oil  infrastructure (systematic bottleneck, for instance)
  • Repealed hydrocarbon law

Given the aforementioned challenges, the new Iraqi Government shall devise a concerted post-conflict oil strategy, that is capable of revamping the oil sector and, subsequently, boosting production capacity to its desired levels - from 2.5 million barrels a day to 12 million bpd over the next six years- the strategy shall entail the followings:

a)  Independent and inclusive Petroleum Council -reflecting the geographic distribution of Iraq’s energy resources- that is responsible for formulating oil strategies, enforcing transparency and accountability as bulwarks against corruption, and, most importantly, deflecting the politicization of the oil sector.

b) Conducive and transparent business environment compatible with Iraq’s new constitution -ratification of  the  investment and hydrocarbon laws-  susceptible to assure and attract greatly needed foreign capital and technological know-how.  

C) Equitable distribution of oil revenues to avoid the resource-rich nations’ deleterious disease also known as the resource war. Historically, the bulk of Iraq’s oil revenues are distributed along ethno-sectarian and tribal allegiances, as opposed to inclusive and growth-oriented economic policies,

Moreover, given the IOCs vested interest in the Iraqi oil, the new government ought to seek the IOCs' expertise to help revamp its oil sector by introducing technological know-how, the industry best practices, and foster a professionally literate workforce. With such perspicacious initiative, Iraqi government will definitely enhance its oil sector efficiency, boost production, and, eventually, spur economic recovery.

Conversely, in the absence of a concerted and inclusive national development strategy susceptible to resuscitate the country’s weakened economy, create jobs, and, ultimately, improve the well-being of  of its impoverished population; Iraq may risk reigniting political instability, ethno-sectarian strife, religious fanaticism, and foreign intervention as result of its  injudicious policies. 

 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: [email protected]


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3 Responses to Iraq's new cabinet: economic recovery and the oil challenges

  1. EMMET 5th January 2011 at 20:59 #

    It will be interesting to see oil shares for sale in the Iraqi stock Market. THE IRAQI STOCK MARKET IS HEATING UP...

  2. Andy Skal 24th January 2011 at 06:10 #

    Has Iraq appointed a Minister of Security?

  3. Editor 27th January 2011 at 10:41 #

    @Andy Skal:

    Maliki has not yet named one - he is still acting minister for security, defence, and interior.