War Profiteering in Iraq

The Natural Resource Curse

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The Natural Resource Curse

Iraq is now in a political vacuum. Underneath the ground, it has at least 112 billion barrels of oil, up for grabs.(Warner) This creates ground fertile for greed and corruption, but not for democracy. This is not the first time a country has been doomed by its own wealth; in fact, this curse of natural resources has been experienced by countries across the globe, including Nigeria, Cameroon, Sudan, Indonesia, and Venezuela. Each country presents a different example of political corruption, profiteering, and separatism that occurs when large amounts of easy money are presented to people in positions of power. Yet most of these countries had at the very least their own sovereign governments and none of these countries were occupied by a foreign power.

Experts describe the crippling effect of abundant resources within a country as the “natural resource curse”. Iraq has clearly been victim of the natural resource curse, arguably more so than any other country in the region. As Daniel Griswald at the Cato Institute points out, “Iraq’s per capita gross domestic product is the equivalent of $2,500 a year, far lower than the per capita GDP of Qatar ($21,200), Kuwait ($15,000), Saudi Arabia ($10,600) or even Iran ($7,000). Iraq's imports are a fraction of what they were in the 1980s, when it citizens were buying almost $1 billion worth of U.S. farm products a year.” Meanwhile, the unemployment rate in Iraq continues to exceed 60 percent. Those who do possess jobs mainly work at 192 state-owned enterprises which will soon be privatized and streamlined, creating more joblessness. (Areen, 8)

Iraq’s lack of economic strength in the past was explained by the corrupted behavior of its leaders, especially Sadaam Hussein, who shamelessly handed out lucrative oil contracts in return for political alliances and favors. The following is an excerpt taken from a paper entitled “Iraq and the Natural Resource Curse”:

During Saddam Hussein’s reign, oil contracts were given to those who would support his regime. This practice of oil-for-support started in 1997 and lasted until the war began in 2003. These individuals were individuals or small companies acting as middlemen and not large oil conglomerates like British Petroleum or the Royal Dutch/ Shell Corporation. Recipients of Saddam’s benefaction were allowed to buy Iraqi oil and then resell it to legitimate corporations at an average profit of fifty cents per barrel. They were never in possession of the oil, but maintained the rights to resell it. A list, containing the names of 270 individuals, political parties or companies in 47 nations, was found in the files of the Oil Ministry located in Baghdad in January of 2004. Many of the individuals who received contracts were prominent world leaders as well as steadfast opponents to the recent war in Iraq. Indonesia President Megawati Sukarnoputri received a contract for ten million barrels of oil, worth an estimated five million dollars in profit. Another outspoken opponent to the US led war in Iraq was George Galloway, a Member of Parliament who strongly lobbied against British involvement. Galloway was in line to receive 19 million barrels of oil. The largest set of contracts was given to Russia, with 92 million barrels going to individuals in the office of President Vladimir Putin. A total of 1.2 billion barrels of oil were awarded to different political parties and individuals in Russia. The second largest set of contracts was given to France. The French receiving contracts were friend and financial supporter of President Jacques Chirac, Patrick Maugein, who was granted a contract worth $18 million in profit. Also on the list was former French interior minister Charles Pasqua as well as the French priest who arranged the meeting between Pope John Paul II and Saddam’s aid Tariq Aziz. United States citizens, Samir Vincent and Shakir Alkhalaji, also appeared on the list. They were granted contracts worth 7.5 million barrels and 10.5 million respectively. The United States Treasury Department said that any American citizen illegally involved with Saddam’s regime over oil would be prosecuted. Other countries receiving contracts were Syria, Turkey, Spain, Yugoslavia, Canada, Italy, South Africa, Jordan, Lebanon, Egypt, Qatar, Libya, Chad, Brazil, Myanmar, Ukraine, and Palestinian Territories. These contracts are not significant solely because of their direct ties to support for the war but they represent the dishonest and harmful ways Saddam sold Iraq’s most precious resource. This oil should have been sold for its full value to legitimate oil brokers and the money then turned over to help the Iraqi people. Instead the oil was given to individuals and groups who would pay for it with their loyalty to Saddam. This was a negative profit on the citizens of Iraq as they would not receive anything for the oil which is rightfully theirs. This was all done under the aegis of the United Nations Oil-for-Food program. The process of granting oil contracts shows that beneficiaries were willing to trade the welfare of the Iraqi people and their allegiance to Iraq for any amount of money Saddam was willing to pay them. (Areen 12-13)

Luckily for the Iraqi people, Saddam was ousted in the recent campaign. The U.S. could no longer permit the shameless plundering of the country by a few corrupted leaders. Instead, the U.S. must preside over the plundering itself, handing out contracts to whom President Bush wishes.

Iraqi people have seen this before, which explains why so many of them still persist to attack the same military that has just lifted them from oppression. Violent attacks have continued on nearly all of the American installations in Iraq. The solution? Hire private military companies like Northbridge Services to keep the angry locals in tact. Or better yet, train Iraqi’s to do it themselves.

The way oil continues to affect Iraq is both unfortunate and ironic. Even without corrupted leaders, Iraq must confront superpowers abroad conspiring to soak up what wealth remains. It does not seem likely that the oil money will ever be dispersed into the hands of its true owners.

Iraq is faced with all of these problems and more. The upcoming transfer of power to the provisional government is set to take place at the end of this month, but none can claim to know what will happen next. In fact, all that is certain is the long list of problems for which solutions must be found if Iraq wants any hope of democracy in the future. Among the problems is the need for an estimated $70 billion additional funding, need for more troops, the public relations disaster in Iraq, and the failure to train and equip Iraqi security forces.(Lochhead) But regaining control of its own underground resources is the most critical and trying of Iraq’s problems.

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