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Gambling on Iraq's Oil

Iraqi Prime Minister Nouri al-Maliki's recent efforts to arrest Iraqi Vice President Tariq al-Hashemi on terrorism charges have elevated the risk of renewed sectarian violence in the wake of the 18 December U.S. military withdrawal.

In response to the charges against the senior official, the largest Sunni political bloc has boycotted the parliament.

Adding to the tension, on 22 December, scores of Iraqis were killed in 16 bombings throughout Baghdad, most identified as targeting Shi’a neighborhoods.

While U.S. diplomats have scrambled to halt the breakdown, ranking Senate Armed Services Committee member John McCain and others have argued that the absence of U.S. military forces has made it more difficult to prevent simmering political tensions from boiling over into violent conflict.

CBS News reported on 9 January, “Al-Maliki’s arrest warrant against Sunni Vice President and longtime critic Tariq al-Hashemi for allegedly organizing assassinations leaves the country divided at the upper echelons of government. If the schism reaches down to street level, Iraq risks sliding back toward the civil-war like violence of 2006 and 2007.” 

In this scenario, international oil companies, instrumental for rapidly bringing revenue into the Iraqi government’s coffers for reconstruction and economic development, might be forced to review their cost-benefit analysis absent the redeployment of U.S. military forces into Iraq.

Further complicating Iraq’s internal political dynamics are high unemployment, endemic corruption, a lack of transparency, and the widespread public perception that international oil companies have intentions to rob the country of its energy resources. 

In 2011, Transparency International ranked Iraq as one of the most corrupt countries in the world in its Corruption Perceptions Index: 175 out of 182.

A lack of parliamentary oversight over oil negotiations and the secrecy of oil contract terms contribute to the perception of foreign exploitation or collusion between Iraqi political elites and their foreign partners. 

Al Jazeera reported on 7 January that many Iraqis continue to believe that western oil companies are operating in Iraq in order to steal their country’s oil, according to an Iraqi Oil Ministry spokesman. 

The obstacles to a stable investment climate are significant. While the United States should by no means abandon Iraq, it should strive to diversify away from the Middle East rather than become increasingly dependent upon it as a supplier of energy resources.

What You Can Do

The Open Fuel Standard Act, H.R. 1687, is designed to increase American self-reliance by stimulating private investment in alternative fuels that are cost-competitive with gasoline and can be domestically produced.

By introducing a flex-fuel vehicle standard, the legislation will provide investors with the incentive to introduce alternative fuel stations across the country and break the oil industry’s monopoly on the transportation fuels market. Competition will level the playing field and reduce the cost of all fuels available to consumers, including gasoline.

The barriers to investment are not technological or economic; they are political. This is where you come in.

First, read up on the bill and request news updates here. Next, take a look at the list of co-sponsors on the Open Fuel Standard website. If you don’t see your legislator’s name listed, contact their office and ask to speak with their staff member who is responsible for energy issues. Tell your friends and family to do the same and follow up periodically for updates from their staff.

Members of Congress, including most notably the Chairwoman of the House Foreign Affairs Committee, are acting in the interests of our national security by supporting free market solutions to our dependence on the Middle East. If you’re looking for a tangible way to support our troops, strengthen our national security, and stimulate job growth, contact your member of Congress and ask them to support this bill. 

Thomas J. Buonomo is an Energy Policy Advocate for the Open Fuel Standard Coalition. He holds a Bachelor of Science in Political Science and Middle East Studies from the U.S. Air Force Academy and has spent the past six years researching U.S. energy policy toward the Middle East.

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