Thursday, October 23, 2003

More on Iraq's "New Economy"

Previously, I noted the Bush administration's plans for "reforming" the Iraqi economy with a plan of "shock therapy," here, here, and here.

I promised that this week I would poke around a little to try to find out who actually wrote the plan. Meanwhile, here is an article from The Iraq Press, titled "Iraqis must retain 51 percent stake in foreign investment, businessmen say." (I admit I have no idea who publishes the thing, but the phone number for the editorial offices is clearly British and the subscription rate for the print edition is given in pounds sterling.)

The article, dated October 13th, says that a group called the Association of Iraqi Businessmen met with the U.S.–picked Governing Council of Iraq to demand "that Iraqis should have at least [a] 51 percent stake in any foreign investments in the country." The plan as currently written "[a]llows up to 100% foreign ownership in all sectors except natural resources."

Hamid al-Aqabi, the association's chairman, "said no other country in the region was giving full ownership to foreigners and Iraq should follow investment rules prevalent in the oil-rich Arab Gulf states where foreign investors are not allowed to have more than [a] 49 percent stake in any project."


Another article in The Iraq Press, this one titled "Minister says there'll be more jobs than number of unemployed," has Iraq's finance minister, Kamel al-Kailani, making the wildly optimistic claim that in 2004, "There will be more job opportunities in Iraq than the current unemployed figures." (Harking back to my previous postings on this topic, the current unemployment level in Iraq is 50 to 60 percent. The author of this article puts it at "at least 50 percent.")

Kailani says he is expecting a budget of 33 billion dollars for 2004: 20 billion from the U.S. and 13 billion from oil exports. But is that $13 billion a realistic figure?

A quick Google of "iraqi oil exports" netted me this article, dated June 11, 2003, whose last three grafs are as follows:

"Earlier this month, Bush administration officials testified before a U.S. Senate panel that Iraq's oil production is now about 800,000 barrels per day and is expected to rise to about 1.5 million barrels per day later this summer, about 40 percent of its top pre-war output.

"Production will increase to 2.5 million barrels per day by year's end, according to the officials.

"At that rate, Iraq could receive between $14 billion to $15 billion per year in gross revenues, depending on world oil prices."

So, clearly, Kailani is assuming oil production of 2.5 million bpd. What is it right now? Another article, dated Oct. 22nd, says, "Iraq's first post-war budget, released 10 days ago, assumes total Iraqi exports will average only 1.6 million bpd next year. [. . .] The budget assumes Iraq will only return to post-war export capacity of 2.4 million bpd on average in 2005."

In other words, the finance minister is talking through his hat.