Jay Reding.com

Oil’s Well That Ends Well

Christopher Hitchens writes that Iraq’s hydrocarbon law represents a major step for Iraq democracy:

The recent hydrocarbon law, approved after much wrangling by Iraq’s council of ministers, deserves a great deal more praise than it has been receiving. For one thing, it abolishes the economic rationale for dictatorship in Iraq. For another, it was arrived at by a process of parley and bargain that, while still in its infancy, demonstrates the possibility of a cooperative future. For still another, it shames the oil policy of Iraq’s neighbors and reinforces the idea that a democracy in Baghdad could still teach a few regional lessons.

To illustrate my point by contrast: Can you easily imagine the Saudi government allocating oil revenues so as to give a fair share to the ground-down and despised Shiite workers who toil, for the most part, in the oil fields of the western region of the country? Or picture the Shiite dictatorship in Iran giving a fair shake to the Arab-speaking area of Khuzestan, let alone to the 10 percent of Iranians who are both Sunni and Kurdish? To ask these questions is to answer them. Control over the production and distribution of oil is the decisive factor in defining who rules whom in the Middle East.

I think that if the oil law works as intended, it would be a dramatic step for Iraq. Indeed, just getting the thing passed was a sign of democratic progress — the majority Shi’ite population could have stood firm and let the Sunnis (quite literally) pound sand. Instead, they decided to craft a law that gives benefits to all the interested groups in Iraq. That sort of democratic compromise was virtually unheard of in the Middle East until the last few years. Provided that it passes Iraq’s parliament — which is a significant hurdle, to be sure — Iraq’s oil law would represent a major democratic milestone in the region.

The problem is that corruption in Iraq is endemic, and there’s so much incentive to cheat that it’s going to take a much stronger and less corrupt government to effectively administer this program. Over the long term, corruption is a greater threat to Iraq’s stability than even terrorism is. (Indeed, the two feed off of each other.) Fixing the corruption in the oil ministry is a necessary step to the effective administration of Iraq’s oil resources.

Still, Hitchens has a point here. The Middle East, despite being fabulously wealthy, is also fabulously undemocratic, and despite the massive amount of oil wealth in the region, democracy is hardly commonplace. Small groups — the Ba’athists in Iraq, the Shi’ite revolutionaries in Iran, the al-Saud family — have used the region’s oil wealth as a form of social control, ensuring that those who they wish to oppress are kept from exercising any control over this valuable resource.

Iraq has an opportunity to break the cycle of dysfunctional petro-states, and this oil law is a valuable first step towards this goal. As always in the development of a nascent democracy, much is left to be done, but at least the Iraqi government is doing something to ensure that Iraq’s wealth goes towards building a stable infrastructure and society rather than feeding more conflict and chaos.

3 responses to “Oil’s Well That Ends Well”

  1. Mark says:

    Judging from your title, I thought the post would be about Halliburton deciding its partnership with the U.S. government simply wasn’t profitable enough and is thus relocating its headquarters to Dubai….but then I remembered, you don’t talk about topics that expose the unbridled avarice and unquenchable gluttony of Republican party subsidiaries.

  2. Jay Reding says:

    Judging from your title, I thought the post would be about Halliburton deciding its partnership with the U.S. government simply wasn’t profitable enough and is thus relocating its headquarters to Dubai….but then I remembered, you don’t talk about topics that expose the unbridled avarice and unquenchable gluttony of Republican party subsidiaries.

    No, because there’s nothing to the story. Halliburton is still incorporated in the US, still pays US taxes, and is still a US corporation. That doesn’t change.

    It makes sense to have your headquarters be in the same time zone as your major business interests, and since Halliburton is an oil services company, moving their corporate headquarters to the Middle East is a smart business move for them.

    Plus, they’re not relocating their headquarters — the CEO is moving to a new regional headquarters in Dubai, but the Texas one will remain.

    And they are spinning off their military contracts division into a separate US-based company.

    It’s only the people who go off half-cocked and make wild conspiracy tales that make anything of it. Hell, even MPR could get the story right this morning, which leaves you with no excuse for spreading more left-wing talking points that have no basis in the facts.

  3. Eracus says:

    Why bother, Jay?