Regional and geopolitical factors – geography matters – would influence the prospects of Iraqi oil expansion further. Such an expansion would bypass Iran, challenge Saudi Arabia and threaten oil interests of other Arabian Gulf States. Equally so, the vast economic rent associated with and generated by oil production and export capacities would prompt other neighbours to claim higher share by maximizing their location rent. Being a semi-landlocked country with narrow corridor to international waters would make Iraq and the prospects of its development vulnerable to regional pressures. This requires the country to adopt regional coordination and integration policies to mitigate the disadvantages of geography.
The international factors are powerful determinants economically and geostrategically. Global demand on oil, call on OPEC oil and OPEC quota are significant variables in deciding Iraq’s export oil revenues. Uncertainties surrounding these variables are real, significant and effective. Having high production and export capacities would generate huge influx of foreign exchange at the upturn of the global economy, but the country would be left with very expensive idle capacity at the downturn of the world demand on oil. Hence, the Iraqi economy would be heavily affected by such probable cyclicality of the world economy.
Geostrategically, with Iraq having high installed oil capacities makes the country vulnerable to external pressures to utilize such capacities in the service of foreign policy objectives of influential foreign powers – United States in the first place, which would not necessarily coincide with Iraq’s national interests, if not contravene it.
Considering the above, this special issue of IJCIS on ‘Oil in Iraq’ is timely to provide informed opinions and analyses on the latest development regarding oil in Iraq, identifying possible scenarios and addressing various issues pertaining to the adopted expansion capacities, at this critical stage of political development in the country.
Ahmed Mousa Jiyad provides comprehensive and detailed count of big-push strategy adopted by Iraq, and assessed possible outcomes as consequences of the concluded contracts relating to the development of the highly prized oilfields. He argues that such a strategy would deepen the structural dependency of the economy on oil, and since this strategy depends on foreign companies at the expense of the national oil companies, the structural dependency could be detrimental. Jiyad, however, predicts that for a variety of reasons and dynamics the stated objectives could not be attained in full. He, thus, discusses four different scenarios and proposes conceptual policy framework to prepare for possible eventualities.
Comments are closed.