Western companies grab Iraq’s energy resources

What was the impact of ‘liberating’ Iraq on the Iraqi economy?

To prove that Western countries seek full control over those economies whose elites they urge to join the market economy, human rights and democracy initiatives, we need to analyze examples of a Western state getting full control over a non-western economy. We can analyze the case of the 2003 invasion of Iraq. What was the impact of ‘liberating’ Iraq from Saddam Hussein’s dictatorship on the Iraqi economy? The answer is provided in ‘A Brief History of Neoliberalism’ by D. Harvey published by Oxford University Press in 2006.

The very core of the ‘Iraqi people liberators’ behavior is described in the four orders promulgated by P. Bremer, administrator of the Coalition Provisional Authority of Iraq, that were issued 19 September 2003. They stipulated full privatization of state-owned enterprises and permitted foreign companies to have ownership of Iraqi businesses among other thing. The orders affected all industries of the economy except the oil industry. As the major resource for the invaders, oil was not subject to division in a chaotic market where unwanted companies, including those Russian-owned, could receive exploration rights. And what about human rights that were meant to be granted to the Iraqi who suffered from Hussein’s dictatorship? According to the Coalition Provisional Authority, the labor market had to be strictly regulated. Strikes in the key sectors were forbidden, while the right to create trade unions was restricted. P. Bremer’s orders, as some believe, contradict to the Geneva and Hague Conventions as an occupying state is supposed to protect an occupied country’s assets rather than sell them.

The situation that western countries created in Iraq resembles that in former soviet republics following the USSR collapse, the only difference being that Iraq finds itself in these conditions as a result of a defeat in the war while for post-soviet states it was a free choice.

After that, to a great discontent of the western countries, the scheme of looting Iraq, and especially its oil reserves, went bust. Transnational oil companies and the defense industry benefited from the invasion of Iraq. The former wanted new oil fields and hoped for oil price growth resulting from the world oil market destabilization, while the latter sought more military orders. After the Iraq government troops were defeated, these two types of influential transnational corporations started to pursue different interests. Oil companies wanted to explore oil fields, and this only could be done under peaceful conditions. Defense industry companies needed further military actions to be able to sell weapons for years to come. For some time, full-scale exploitation of the Iraqi economy was suspended. Oil pipeline and western companies’ office blasts became a regular thing in Iraq. The war in Iraq was damaging the US economy. To stabilize the situation and to be able to withdraw the troops, the US had to grant more powers to the new Iraqi government than it initially intended. Otherwise it would not be able to substitute withdrawn US forces with their own troops to maintain control over the country.

Oil companies found a weak point for Iraq — Kurdistan. Possessing rich oil reserves, this province has always dreamt of separating from Iraq. In the current conditions it enjoys almost full independence. The new government of Iraq has a possibility to counteract to the opposition but it is not able to suppress the rebelling province. Western companies are making use of this situation. ExxonMobil and Chevron of the US were the first to win contracts for oil extraction in Kurdistan, and France’s Total has joined them recently. They ignore Iraq’s central government’s dudgeon regarding a severe violation of the Iraqi legislation when concluding separate contracts with Kurdistan.

Thus, despite that the initial plans of western corporations to gain full control over Iraq’s oil were not realized, they still have received the main prize — energy resources. They are not interested to know whether Kurdistan will share the destiny of Serbia’s Kosovo. However, it is possible if the interests of major business players in the US foreign politics match again.

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