Letting Politics Jeopardise Development

By Padraig O'Hannelly.

On the day Iraq announced that Exxon Mobil wants to abandon its business in southern Iraq in favour of potentially more profitable contracts in Iraqi Kurdistan, the Oil Ministry has cancelled a major exploration deal with Turkey's TPAO.

The reasons were described as "non-technical", with the decision coming from the cabinet; the move is widely believed to be a reaction to the political disagreements between the two counties, specifically Turkey's refusal to hand over Deputy Prime Minister Tareq al-Hashemi to face a death sentence, Turkish military incursions into Iraq, and a difference of opinion on the Syrian uprising.

Given the significance of Turkey to Iraq's economy, allowing political differences to get in the way of mutually beneficial commercial deals looks very strange -- Turkey is Iraq's biggest supplier of imported goods, and one of its top providers of foreign direct investment (FDI).

While the latest news relates to just one, state-owned, Turkish company, and to only one of that company's deals, this action will be perceived as arbitrary and capricious, and will be viewed negatively when assessing the risks of doing business in Iraq.

8 Responses to Letting Politics Jeopardise Development

  1. Re da Caste 8th November 2012 at 10:09 #

    Probably wise of Maliki and Shahristani to bet on Russian and Chinese oil companies to help them exploit the oil in south Iraq. All others will surely help Kurdistan (including Kirkuk!). Due to Bagdad politics the split of Iraq looks unavoidable. The question is how the sunnis will react. Allawi would probably be a much better PM choice for the people of Iraq and for the unity of the country. Now Obama has been re-elected, let's see if he will listen to New York Times advice in "Time to Get Tough on Iraq": http://www.nytimes.com/2012/10/30/opinion/time-to-get-tough-on-iraq.html?_r=0

  2. Re da Caste 8th November 2012 at 11:21 #

    Business News is as usual late. In Iraq Oil Report you may read that TPAO/Turkey is already in contract negotiations with KRG. I quote: "the entry of a new Turkish state company into the KRG oil sector could be the leading indicator of a sea change in Turkey-Iraq relations." Soon we will have Turkey/Kurd pipelines delivering oil to the world!

  3. Editor 8th November 2012 at 12:50 #

    @ Re da Caste: Thank you for your comments, but how does that make us "late"?

  4. Mohammad 8th November 2012 at 16:52 #

    Please make yourself understand that times of tough America in Iraq are gone now, it is time for external powers to quit mingling into Iraqi politics and assist Iraq with unselfish intentions and let its peolpe make decisions. As far as Turkey is concerned it is their loss that they will realize very soon indeed and regret.

  5. Daddy WarBux 8th November 2012 at 23:08 #

    Pffft, the only decision they can make is who to blow up today.... I'm looking forward to draining that rock dry over there and then letting the entire area implode on itself... The Iraqi Govt couldn't find it's backside if it was trying to wipe it with Dinar in each hand...... They should rename Iraq "The village Idiots home for rejects that failed Clown School". So Yeah, I'm pretty unimpressed with the lot of them. The local citizens suffer as usual......What a waste.

  6. Re da Caste 9th November 2012 at 09:34 #

    Editor: You write that TPAO has expelled by Bagdad from exploring energy block 9, but you don't write that at the same time TPAO/Turkey is preparing a major oil business with KRG. This shows Turkey is turning is back to Bagdad, as well as Exxon, and I'm sure more oil companies will follow. This is the new paradigm in Iraq. Bagdad aligning with shia Iran and Syria, and trying to attract Russian and Chinese investors. The Kurds aligning with US & EU & Turkey (=NATO), UAE, Saudi, etc. I'a sure Turkey will defend Kurdistant from any attempt of Bagdad to impose their policies in Erbil. As long as Maliki & Shahristani are in command the split of Iraq is unavoidable as they will not accept to loose their face and back on their wrong politics. They must go and I believe Allawi is a better solution for the unity of Iraq.

  7. Re da Caste 12th November 2012 at 21:28 #

    Mohammad: probably you have noticed what happens when ayathola Maliki tries to buy weapons from Russia? You don't play around with Washington, my friend. And this is just the beginning... I don't think this government will seat there for much long time if they don't start implementing the Erbil agreement very soon and start to calm down the relations with his brothers in Iran.

  8. Mohammad 13th November 2012 at 05:36 #

    Re da Caste get real, Malaki may not be doing right thing for Washington, but he is doing to a darn good job of keeping wrong doers in line and in check for the sake his country. I am no fan of Malaki still like 60% of his moves, including removal of CBI governer who is now being stopped giving free Iraqi dollars to the world with his corrupt auctions. Now if you are looking things from Washington's eye than you are not speaking the will of Iraqi people and in this forum intrest should be well being of Iraq and not fulfiling every Washington's wishes just or unjust.