Foreign Office Minister for Energy addresses Iraq Petroleum Conference

Iraq’s geopolitical potential

History has taught us that for nations to truly flourish and prosper, freedom is an essential ingredient. Since the fall of Saddam Hussein, Iraq is walking this path of freedom, and has taken important steps towards democracy, which gives us all great hope. I believe democracy in Iraq is beginning to succeed, and though the journey may well be difficult, Iraq can lead by example and show others in the region, from Tehran to Tripoli, that democracy and reform will harbour prosperity. There is still much to do. Work must continue to embed independent and accountable institutions in Iraq, that deliver transparent governance, basic services for citizens and a framework for a prosperous economy to flourish. Corruption must be tackled to enhance investor confidence and the Rule of Law must be a cornerstone of government. These are the necessities for the high investment we all want to see.

It is also important Iraq establishes itself sufficiently on the international stage, playing an active and positive role in the region. Foreign Policy, as I know from my experience at the FCO, is rarely a smooth road, but Iraq has already taken important steps: it holds the presidency of the Arab League; the government is helping support democratic movements across the region. It is also incumbent on the wider international community, to work with Iraq and the great nations of the Arab world to meet the new challenges of the Arab Spring, as well as the old challenges of the region, including the need to move forward towards a just resolution of the Palestinian conflict, with a Jewish and Palestinian state, living side-by-side in peace and security, as part of the Middle East Peace Process.

The energy challenge

But of course Iraq’s potential is not just political. With an estimated oil reserve of nearly 143 billion barrels, Iraq has the potential to be a game-changer helping the world meet its energy challenge in a balanced way. The challenge is in ensuring secure and affordable energy against the competing pressures of growing energy demand - mainly from emerging economies and the great rising powers of Asia - and increasing production constraints. In a global economy dependent on oil, rising prices affect us all as families and businesses see their incomes squeezed, and we are experiencing that very much here in the UK. Every major oil high has been followed by a global recession – this is bad for producer and consumer states alike. Against a backdrop of dangerous climate change and the transition to a low carbon economy the energy challenge we face is complex.

Measures to moderate demand are crucial. Within Europe we are taking bold and ambitious action: the EU seeks a 20% increase in energy efficiency by 2020. In the emerging powers efficiency is improving, indeed energy intensity – the amount of energy per unit of GDP – has fallen 30% in non-OECD countries since 1990. So there are positive developments on that side as well.