So now America's policy in Iraq comes down to the most basic question of capitalism: Who owns what? That is, who has the right to sell Iraqi oil? And who has the right to decide which of the world's big oil companies can invest in developing Iraq's oil wells and making a profit off those investments? Billions of dollars hang in the balance, as well as the future of Iraq and the money that's going to be needed to rebuild that nation. Beneath Iraq lies the second-largest oil reserve in the world. And it presents the first and best opportunity in decades for oil companies to make a lot of money getting it out of the ground.
Before the American attack, Iraq was selling about 2 million barrels of oil a day. Those sales were under the legal authority of the United Nations. After the first Gulf War, the UN banned Iraq from selling oil as part of sanctions intended to force Saddam to disarm. But then in 1995 the UN permitted oil salesas a means of getting food and health care to the Iraqi public. The oil-for-food program is still technically under the control of the UN. But the UN personnel who administered it left Iraq two days before the fighting began, andhaven't been invited back.
As to potential buyers of Iraqi oil -- well, no one in their right mind wants to buy Iraqi oil right now because without clear title to it, a buyer might be throwing money down a hole ... in the desert.
But the bigger question concerns modernizing Iraq's oil fields and drilling fornew oil. Presumably the UN isn't going to do this, and neither is the United States. It will have to be the work of the world's big private oil companies. But the only way they'll make these investments is if they have legal assurancethey can pump out oil for at least a decade, which is the minimal payback period for these sorts of investments.
Here's where we get to the heart of the problem. Neither France nor Russia wants to hand the management of Iraq's oil industry over to the United States. That would risk denying their own oil companies the opportunity to make these investments and get the profits. France's biggest oil company already claims itmade deals with Saddam's regime on two oil fields. Russia says its giant oil company signed deals on several others. And Exxon, British Petroleum, and RoyalDutch/Shell all want a piece of the action.
George W. Bush says Iraq's oil belongs to the Iraqi people, and he's right. Butthis begs the question of who's going to make the investments necessary to get the oil out of the ground and collect a fair return on those investments, before turning over the remaining profits to Iraq. If the United States tells the United Nations to get lost, and gives the concessions to say, Exxon, that'sjust going to confirm the worst suspicions of Iraqi's and everyone else in the world about why we went into Iraq in the first place.