Home > Economic Development, Foreign Policy > US should reevaluate Iraq exit after oil attacks

US should reevaluate Iraq exit after oil attacks


Recent reports that Iraqi insurgents are attacking the oil industry should give the US pause about its planned exit considering the impact these incidents could have on long term economic development.

Joel Wing at Musings on Iraq has a good summary (with links) to the reports. In all, there were five mishaps related to oil in June.

Wing explained that oil accounts for 90 percent of the nation’s revenue. He said insurgents plan such attacks to grab headlines, which leads to recruits, which leads to money, which leads to continued operations.

The constant threat of those attacks lead to unpredictability, and Wing hypothesized that insurgent timing was planned to coincide with the beginning of several foreign oil contracts.

This dynamic will have a tremendously negative effect on Iraq’s economic development potential. In his essay “International Investment and Colonial Control: A New Interpretation,” Jeffrey Frieden explained that site-specific foreign investment during a host country conflict is easier to defend with force — for example, oil fields. But there are some major security concerns ahead of the planned US exit from Iraq. The Iraqi police and army do not appear trustworthy or legitimate to many citizens, which means they cannot be counted on to provide vital security for the nation’s precious oil resources.

Whether this causes investor flight remains to be seen — although that’s doubtful considering every country has oil needs. But it could significantly alter the contracts Iraq receives. Maybe not monetarily, but something may have to give. What that is remains unclear, but one thing is certain — investors won’t like the prospect of their millions of dollars going ablaze.

The attacks on oil have another effect — by crippling the nation’s main breadwinner, the insurgents render the government ineffective. Depleted jobs numbers and oil revenue sends a bad signal to the Iraqi people that their government cannot provide for them. That in turn feeds into insurgent recruiting, as those groups are bankrolled by wealthy people and can offer essential services such as education, food and shelter.

In essence, the attacks on oil encourage civilian dependence on insurgent groups for general welfare. It’s a scenario the U.S. has tried to avoid for years, but one that may still be a factor when it leaves.

Advertisements
  1. No comments yet.
  1. August 3, 2011 at 3:14 pm

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: