Oil is our damnation

Despite devastating U.S.-led economic sanctions, Iraq's stature as a global oil giant endures. Though it cranks out some three million barrels per day, the industry is in tatters. Under the oil-for-food program, Iraq is permitted to produce and sell an unlimited amount of its oil. But it does not control the revenue generated by these sales. The money is put into an account administered by a highly politicized group at the United Nations, known as the 661 Committee. Iraq must then apply for permission to use the funds to purchase goods or services on the world market. Consistently, the U.S. and Britain have blocked the importation of various goods, labeling them as "dual use"--meaning they could have military value. Over the last decade, this has included such items as pencils, chlorine, and ambulances.

Ultimately, the sanctions prevent Baghdad from carrying out any significant restoration of facilities damaged or destroyed by a decade of consistent U.S. bombing, beginning in the 1991 Gulf War. The prohibitions on importing spare parts or new machinery and equipment have largely blocked Iraq from producing oil at a level even remotely close to its projected capacity. More importantly, the stranglehold caused by sanctions has prevented Iraq from exploiting the untapped reserves of what it describes as gigantic oil fields.

Iraq's proven oil reserves total more than 112 billion barrels. Potential reserves are estimated at more than 200 billion barrels. Additionally, according to U.S. Department of Energy documents, Iraq contains 110 trillion cubic feet of gas.

"If you control the Iraqi oil, you are halfway there to controlling the world oil," says Dr. Faleh Al-Khayat, director general for planning at the Iraqi Oil Ministry. "And with your substantial hold on the Saudi fields, then you are in complete control of oil supplies for a long time to come."

The fields Al-Khayat refers to lie in southern Iraq: Majnoun and West Qurna (known as "The Giant"). These fields have lain largely idle for several decades, as they were repeatedly attacked during the Iran-Iraq war, as well as the Gulf War. Russia, which is owed some $8 billion by Iraq, has a $3.5 billion, twenty-three-year deal to rehabilitate Iraqi oil fields. Included in this agreement is the fifteen-billion-barrel West Qurna field. A 1997 deal between Baghdad and Moscow resulted in a plan for the Russian company Lukoil to begin oil production at the site. For years, Iraq has been negotiating a contract with the French company Elf for the lucrative twenty-billion-barrel Majnoun field. But, citing the U.N. sanctions, neither of these "friendly countries" moved much on the projects.

Last June, Iraq marked the thirtieth anniversary of its nationalization of foreign oil companies by announcing that it would no longer wait for the Russians or French. Iraq's oil minister, Amir Mohammed Rashid, accused them of "slackness" and bowing to pressure from the United States. Rashid announced that Baghdad was beginning immediate production at the two sites, saying it was a message to foreign oil companies that Iraq will not wait for them or an end to the sanctions. "We decided to move alone in developing these oil fields without any help," Rashid said.