Iraq: the Bull-ish view
Tuesday, January 4, 2011 at 9:13AM 
Bartle Bull in the WSJ on Iraq's oil-based future (what other future do you start with when you possibly own the world's largest oil reserve?).
His opening bid: what was once a dictatorship and bully of the region (now replaced by Iran) is currently the region's best-functioning democracy (yes, the stalemate finally passed without any fight) and probably the world's biggest crude producer within a decade (the ambition).
After three decades of non-exploration, the country is now going to get surveyed. Why? This is what the Iraqis offer: you can own 100% of Iraqi companies, you only pay 15% flat tax on profits and you can re-pat those profits at your pleasure. [I don't think that describes the oil industry, however.]
Larger point: having seen how the Saudis rose and got rich when their oil production took off. The investment based on the oil deals signed last year could add up to $200B into the economy, and that money will attract that much more money.
Toss in the ability to grow food (once the region's breadbasket--especially considering the water-plentiful north) and the fact that the economy is unusually free for the region, and you've got a very dynamic package now that the basic security is there.
All the economic basics are solid, and the oil profits look to be extended to the public on an individual basis a la the Alaska oil account model.
Corruption still bad, but the oil industry is - by comparison - stunningly transparent (witness the auctions). If anything, the biggest problem is the government's slow-paced bureaucracy. But a well-educated and ambitious people and - again - that stabilized security environment (40% fewer deaths from violence than Mexico - not to pick on Mexico but to provide some relative measure).
A decade from now, when Iraq is rich and powerful and a hugely stabilizing force in the region, people will look back on the intervention with different eyes. It will be viewed as a process of enormous difficulty, lots of screw-ups, stunning and unforgivable amount of wasted spending (we refuse to seriously organize ourselves for such things and remain - to this day - unilateral control freaks), a godawful amount of evolution forced upon the U.S. military (beneficial), incredibly painful for the Iraqi people -- and totally worth it given the positive outcome.
This is what I wrote in Esquire before the invasion:
As baby-sitting jobs go, this one will be a doozy, making our lengthy efforts in postwar Germany and Japan look simple in retrospect.
I wasn't particularly surprised by the difficulty of the occupation. The plans going in looked crazy optimistic and I knew our military just wasn't shaped for the challenge (we saw that in Somalia earlier). So I figured it would be bad and we'd change in response (think North Africa, 1942-43). As for the recovery. history told me it would be a generation - roughly. So an Iraq that's on par with Saudi Arabia's oil production in 2020 sounds about right, because that country is going to experience once helluva boom.
Reader Comments (3)
To me one of the keys in Iraq is how broad based their economy gets rather than a narrow band of energy and food in terms of determining ultimate success.
I have wondered what the world would be like today if Saddam was still in power?
Any thoughts on that picture?
Loved this one by Tom, and immediately made a short post linking to it on the DOD Energy Blog. It's not cleantech energy by any means, but clearly what's going on in Iraq may become quite renewable as far as its long-suffering people are concerned.
Hopefully the oil profits will be used as leverage build up the economic infrastructure and further lift all boats as opposed to being plowed mostly into social programs or held by a few connected elites. It will be an interesting comparison in 2020 between Iraq, Iran and the other countries in the region assuming Iraq continues on this path.