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[P]
More Than Wells Are Stuck In The Sand Over Iraqi Oil

By cybrpnk in News
Sun Nov 09, 2003 at 05:36:36 AM EST
Tags: News (all tags)
News

Iraq has a lot of oil, estimated at 112.5 billion barrels in proven reserves which is the world's second-largest after Saudi Arabia's. As many as 220 billion barrels are considered probable additional Iraqi reserves. Before the current war, Iraq was producing 2.5 million barrels of oil per day, with only 1.7 million of this output authorized under the U.N. imposed "Oil-For-Food" economic sanctions. At an average price of $25 per barrel, Iraq was making $43 million per day in sanctioned sales and $20 million per day in unsanctioned ones. The United States was the biggest importer of Iraqi crude, importing 366,000 barrels a day directly into the U.S. during December 2002, with an estimated third of Iraqi oil output (800,000+ barrels per day) ultimately ending up in the United States after intermediate processing by third countries.

Thus on the eve of Operation Iraqi Freedom, Americans were paying Saddam around $21 million per day or $620 million per month or around $7.5 billion per year. The rest of the world was paying him twice this much for a total of around $25 billion per year. Such "tough" economic sanctions led in some American political circles to (somewhat hypocritically, considering the level of our Iraqi imports) have contempt for the United Nations and concern over the amount of petromoney available for hostile military buildup and WMD and even terrorist bankrolling...

And so there was a war.


As an aside, a brief outline of the American oil situation is desirable for context. America has proven oil reserves of "only" 22 billion barrels and currently produces around 8 million barrels of oil per day, down from a peak of 10.6 million per day in 1985. America currently imports a little less than 12 million barrels of oil per day from many foreign sources to meet current consumption levels of around 20 million barrels per day total. About half of this oil ends up as gasoline, a quarter of it as heating oil and the rest as a lot of other stuff.

Now America finds itself currently in control of Iraqi oil infrastructure, and what an infrastructure it is. There are 22 total oil fields in Iraq, 9 of them major ones, with the two most important being the northern Kirkuk field with 1000 wells and the southern Rumaila field with 500 wells. The other twenty fields contain a total of around 300 wells between them. The Rumaila field extends all the way to the Kuwait border and in fact, so-called "slant drilling" by Kuwait to tap Iraqi reservoirs was the alleged event which triggered the Iraqi invasion of Kuwait and Gulf War I.

So far, most effort to get Iraqi oil production restarted after the current war has centered on the Rumaila field and has been the responsibility of the U.S. Army Corps of Engineers. Brig. Gen. Robert Crear, Commander of the Corps' Southwestern Division, leads Task Force RIO (Restore Iraqi Oil) and far from being classified, their efforts and accomplishments have been regularly reported by weekly RIO Updates. The accomplishments of the RIO Task Force are impressive. Oil began flowing from Rumaila in late April within weeks after the Americans took control.

So, where's this oil going? The U.S.-military-supervised State Oil Marketing Organization (SOMO) of Iraq agreed in mid-July to sell six million barrels to ChevronTexaco, Petrobras of Brazil, and Switzerland's Vitol. In late July two supertankers, the Seattlebello and the Front Lord, docked at Iraq's Mina Al-Bakr terminal and started taking on two million barrels of oil apiece. Routine supertanker shipments are now underway taking oil out of Iraq. An October 29 RIO press release about replacing $2 billion in non-competitive support contracts with Kellogg Brown and Root by competitive ones noted, "Exceeding their project goals, the Iraqi Ministry of Oil and TF RIO, working together, have brought crude production up to over 2 million barrels per day." At $25 per barrel, that means current Iraqi oil production levels are generating $50 million of oil per day, or $1.5 billion per month, or $18 billion per year.

Meanwhile, even as Iraq exports unrefined crude oil in a corrupt, pirate-filled environment, it is importing gasoline and fuel oil. As of Oct. 19, Halliburton had imported more than 61 million gallons of gasoline for civilian use as part of operation Iraqi Freedom, and had been paid nearly $163 million under its non-competitive Army Corps contract. As reported by the British news agency Reuters, the Pentagon's Defense Energy Support Center is able to import military fuel from Kuwait to Iraq for $1.08 to $1.19 per gallon, compared with the $2.65 per gallon that Kellogg Brown & Root, a subsidiary of the oil services firm Halliburton once run by Vice President Dick Cheney, charges the U.S. government for fuel destined for use by everyday Iraqis under a no-bid U.S. Army contract. Democratic lawmakers Rep. Henry Waxman of California and Rep. John Dingell of Michigan wrote to the Army Corps of Engineers Wednesday urging it to take over the job of importing gasoline. "This action could save American taxpayers hundreds of millions of dollars," they wrote.

In other news last week, the U.S. Congress agreed to go along with President Bush's demand that $20.3 billion in Iraqi aid be a grant instead of a repayable loan even as Commerce Secretary Don Evans optimistically discussed the possibility of tripling current Iraqi oil output to 6 million barrels per day over the next four years. That would be $55 billion or so per year in oil income, or over $20,000 per Iraqi citizen per year for each of Iraq's 25 million or so citizens. In contrast, currently in the United States there are 35 million Americans at or below the Federal poverty level of $10,000 per year income for an individual or $18,000 per year income for a family of four.

Gee...kinda funny, don't you think, that it's the U.S. Commerce Secretary and not Iraq's State Oil Marketing Organization (SOMO) talking about potential Iraqi oil production levels in 2007?

NOTE: This is a very slightly modified version of an original posting I put up on another Scoop site I edit.

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Related Links
o Scoop
o Iraq has a lot of oil
o 112.5 billion barrels in proven reserves
o Oil-For-Fo od
o a brief outline of the American oil situation
o from many foreign sources
o current consumption levels of around 20 million barrels per day total
o half of this oil ends up as gasoline
o 22 total oil fields in Iraq
o U.S. Army Corps of Engineers
o weekly RIO Updates
o Oil began flowing from Rumaila in late April
o State Oil Marketing Organization (SOMO)
o agreed in mid-July
o October 29 RIO press release
o corrupt, pirate-filled environment
o 61 million gallons of gasoline
o As reported by the British news agency Reuters
o charges the U.S. government for fuel destined for use by everyday Iraqis under a no-bid U.S. Army contract
o $20.3 billion in Iraqi aid be a grant instead of a repayable loan
o to 6 million barrels per day
o 35 million Americans at or below the Federal poverty level
o State Oil Marketing Organization (SOMO) [2]
o original posting
o another Scoop site I edit
o Also by cybrpnk


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More Than Wells Are Stuck In The Sand Over Iraqi Oil | 58 comments (46 topical, 12 editorial, 1 hidden)
Interesting economics here (2.30 / 13) (#1)
by RyoCokey on Fri Nov 07, 2003 at 05:35:02 PM EST

the Pentagon's Defense Energy Support Center is able to import military fuel from Kuwait to Iraq for $1.08 to $1.19 per gallon, compared with the $2.65 per gallon that Kellogg Brown & Root, a subsidiary of the oil services firm Halliburton once run by Vice President Dick Cheney, charges the U.S. government for fuel destined for use by everyday Iraqis under a no-bid U.S. Army contract.

So the US Army has a long-term contract for Kuwait at a fixed rate. How do you know A) There's usable transportation facilities for greater volume from the same source B) The contract allows for greater volume C) $2.65 isn't a reasonable price for buying on the spot market in a volatile area where pipeline supply may not be possible?

Sounds like someone's comparing apples and oranges for political gain.



The troops returning home are worried. "We've lost the peace," men tell you. "We can't make it stick
What kind of service from the Pentagon? (none / 0) (#58)
by neomonkey on Wed Jan 07, 2004 at 01:48:03 AM EST

I mean, do the Pentagon guys check the oil and the tires, and clean the windshield?  Maybe KBR gives better service and free dishes.

You know, the world has always been fucked up, and if we can't deal with the absurdity in an absurd way, we're going to be very unhappy.  Like my momma used to say, "Nobody likes you just 'cos you're right."

[ Parent ]

Wait... you're saying that stabilising Iraq (2.00 / 5) (#8)
by My Other Account Is A Hulver on Fri Nov 07, 2003 at 07:04:59 PM EST

has got something to do with oil?

It's an excellent article, just like all the other three hundred excellent Iraq == teh oil articles that preceeded it.  There must be four people in the world who haven't made up their minds one way or another about this issue by now.

+1 FP from me, but we've got the message, and I'd really like to read an article suggesting something pragmatic that we can do about it.

I believe drduck is a genuine account, and I don't delete him because I'm a hypocrite. - rusty

Isn't it obvious? (none / 0) (#34)
by scanman on Sun Nov 09, 2003 at 08:28:34 AM EST

We can complain about it! On the internet!

"[You are] a narrow-minded moron [and] a complete loser." - David Quartz
"scanman: The moron." - ucblockhead
"I prefer the term 'lifeskills impaired'" - Inoshiro

[ Parent ]

That's funny... (none / 0) (#50)
by curunir on Mon Nov 10, 2003 at 11:42:41 AM EST

I didn't see this story as having much to do with Iraq and oil. Ok...it did, but that's not why I was interested in it.

That subject, for me, is ancillary to the other point of what the author was writing about...the massive transfer of wealth from the US taxpayer to private industry that is aligned with the current administration. Regardless of how anyone feels about terrorism or the moralistic justifications for invading Iraq, one thing that's pretty clear is that the current administration is so beyond fiscally irresponsable that it's setting the table for a serious depression. $200 billion (or whatever is actually the current tab for the war) is a lot of money. Not that we'd use it that way, but we could probably solve nearly all the state budget defecits for less than that.

It's not just Haliburton and Bechtel either. There's defense contractors that rely on us having a war every few years to sell their new products. One of the (more paranoid) theories I heard for the US involvement in Serbia was that the laser-guided bombs were obsoleted by ones that were satellite-guided. Since it would be hard to justify a large purchase of new bombs when you've got a perfectly good supply of the old ones, the old ones had to be disposed of in a reasonable fashion. Whether or not that was the real justification, defense contractors who provide the military with all those 500 lb bombs that continue to be used over there are making huge profits selling new ones to take their place.

I'm as sick and tired of talking about terrorism and the "evil Saddam" as anyone here. But when it comes to talking about why we're spending thousands of dollars for every American so recklessly, I take a lot more interests. I'd be happy if the government spent my money on researching emerging energy sources. Or if they used it ensure that there are enough hydrogen fuel cell refueling areas to make those vehicles feasible. I'd even be happy if they used it to ensure new nuclear power plants so that they could be built to drastically reduce our dependance on oil. But when an administration basically wire transfers billions to their business associates, I'm sorry, there's more of a story there than "Iraq == oil."

[ Parent ]
Loans versus Grants (2.85 / 14) (#15)
by jjayson on Fri Nov 07, 2003 at 08:44:34 PM EST

The President did the right thing in holding out for grants, instead of loans, from the legislature. Iraq has a mountain of debt that international creditors will start pressuring Iraq to payback quickly. Saddam's Iraq drove up a debt of $383 billion dollars, 1200% of GDP. Who were Saddam's biggest creditors? France and Russia.

As creditors become impatient or see a volatile situation, they pressure lesser developed countries to raise taxes. Taxes are raised (under these BS austerity programs), and local businesses find it difficult to compete with the larger multinational corporations who either don't pay as much taxes or they can afford to work with a slimmer profit margin. This is the economic imperialism: high-taxes caused by overburdening debt allows local business that would normally be competitive to be crushed by MNCs.

Debt restructing often doesn't work either since the credit rating of these countries is shot and they are forced to pay higher interest rates. The solution is simple forgiveness of debt incurrect by despots once they are removed from power.

I can only imagine the screams now from the rest of the world and home-grown dissenters if the President elected for a loan option. They would be screaming about how we are not forcing Iraq to pay for damage that we did, and how we are siphoning out their oil revenue under the disguise of reconstruction loans.

(ps. -1. The bold and italics is really annoying and makes it difficult to read without my eyes jumping all over the place. And a number of grammar problems, including things from simple punctuation to passive or confusing sentences.)
_______
Smile =)
* bt krav magas kitten THE FUCK UP
<bt> Eat Kung Jew, bitch.

Credit where credit is due. (2.71 / 7) (#17)
by Kwil on Fri Nov 07, 2003 at 10:34:20 PM EST

You're right.

And as much as I dislike how Bush used the presidency, threat of terrorism, and spin to convince the American public to pay for his personal vendetta on Saddam Hussein, I will admit that making the payments to Iraq into a grant instead of a loan is a good move. Ensuring that Iraqis aren't pushed right back into the poverty cycle on this money is possibly the best action he could take to actually fight terrorism other than removing American support of the Saudi Royals.

That Jesus Christ guy is getting some terrible lag... it took him 3 days to respawn! -NJ CoolBreeze


[ Parent ]
The Problem (none / 2) (#37)
by Amesha Spentas on Sun Nov 09, 2003 at 03:26:35 PM EST

Ensuring that Iraqis aren't pushed right back into the poverty cycle on this money is possibly the best action he could take to actually fight terrorism other than removing American support of the Saudi Royals.

While I agree that loans are very good in principal the problem with them in this instance is that there is still little or no accountability for where that money is going. What most congressmen were wondering (I hope) is who exactly is getting that money?

Let's take the $20.3 billion per year grant earmarked for rebuilding Iraq. Who is getting paid those billions for reconstruction? Companies like Halliburton, for importing gasoline into Iraq at $2.65 per gallon. So why is the Bush administration so dead set against Iraq ever having to pay back the loan? Because, then the Iraqi leadership might look into who was awarded what money and what they did to earn it. If money earmarked for Iraqi reconstruction is deposited to Halliburton but no evidence of services rendered is supplied. The Iraqi leadership may start asking questions publicly about why they have to pay back billions for something that should have only cost them millions.

This little shell game allows nobody in Iraq to care about the money and the watchdogs in the US who should be keeping the corporations honest are the ones running the lobbyists and in current control of the Bush Administration.

Registered to die for the government at 18, and had to pay postage on the registration form - AnalogBoy
[ Parent ]

screwed either way (none / 3) (#40)
by jjayson on Sun Nov 09, 2003 at 04:53:01 PM EST

You sound like a Counter Punch columnist. Whack-job conspiracy theoriests like you will scream no matter what happens. Now, you rant about them being grants because that allows less accountability in the process and makes it easier to just give money to oil companies. If they were loans, you could rant about the US loaning money that will then be returned by oil profit, just a way for the US to profit off of Iraq's oil without actually taking it by force. There is no story that doesn't involve a twist to support your views, even in the absense of evidence.

And I see no evidence that loans would create more oversight. Either way, those in charge are either going to way to see results for their money or they are not going to care and just be feeling the Halliburton machine. It wasn't like those $10 billion in loans were ear-marked for Halliburton and Bechtel and then became changed. Please, a little more proof and a little less tinfoil in your next post.

Loans are a poor mechanism because rapayment is often made by increasing taxes. They like to call them "austerity programs." This squeezes the local economy, allowing MNCs to walk in and setup shop. This is the true meaning of economic imperialism in third world countries, not Nike hiring workers that would otherwise not have a job. Often these loans often go to what outsiders consider important. The British did it to Indian, the French did it to Vietnam, and it could have been the US doing it to Iraq. These projects often don't even come close to paying for themselves.
_______
Smile =)
* bt krav magas kitten THE FUCK UP
<bt> Eat Kung Jew, bitch.

[ Parent ]

well (2.50 / 4) (#18)
by Politburo on Fri Nov 07, 2003 at 11:20:08 PM EST

when you put it that way, it fucking makes sense. now why can't a certain someone put it that way, instead of trying to guilt us into supporting them?

[ Parent ]
Interest rates to LDCs will go up (none / 2) (#29)
by felixrayman on Sat Nov 08, 2003 at 09:58:00 PM EST

Debt restructing often doesn't work either since the credit rating of these countries is shot and they are forced to pay higher interest rates. The solution is simple forgiveness of debt incurrect by despots once they are removed from power.

You think that's going to lower interest rates for developing countries? Nonsense. "Forgiving" Iraq's debt ( in quotation marks because you can't forgive debt that isn't owed to you ) will raise the cost of borrowing money for developing countries because it will raise risks to creditors and send creditors the message that any money they lend is liable to be lost at any time due to the political whims of the US. They will of course require a higher return to compensate for the risk that the dictator the US considers "our kind of guy" one day will turn out to be the target of a Christian jihad the next.

As for local businesses in Iraq competing with the multinationals, tell me, how exactly DO you compete with a company that gets no-bid contracts?

Call Donald Rumsfeld and tell him our sorry asses are ready to go home. Tell him to come spend a night in our building. - Pfc. Matthew C. O'Dell

[ Parent ]
I didn't say there would be low interest rates. (none / 3) (#35)
by jjayson on Sun Nov 09, 2003 at 02:52:20 PM EST

You think that's going to lower interest rates for developing countries? Nonsense. "Forgiving" Iraq's debt ( in quotation marks because you can't forgive debt that isn't owed to you ) will raise the cost of borrowing money for developing countries because it will raise risks to creditors and send creditors the message that any money they lend is liable to be lost at any time due to the political whims of the US.
I didn't say that interest rates would be low if debt was forgiven. I said that interest rates were already painfully high, so refinancing loans wasn't very beneficial. If the choice is between crushing debt and no debt with slightly borrowing conditions, they should chose the no debt route. Development loans for developing countries have historically not worked. All the African farm aid loans produced no benefit. Even if you look back at the British Empire and their development loans to India, they produced a rail system that wasn't even worth the amount put into them. Countries are not rich because they have advanced infrastructure; they have advanced infrastructure because they are rich.

Also, I didn't say that all third world debt should be forgiven. I said that debt paid to despotic leaders that took the loans and used it for personal palaces and military machinery to oppress their populace should be forgiven. Why should a poeple be forced to pay for their own oppression after they rid themselves of old oppressors? If anything, this will make countries and banks think twice before extending a loan to a regime such as Saddam's or African warlords.

As for local businesses in Iraq competing with the multinationals, tell me, how exactly DO you compete with a company that gets no-bid contracts?
Whatever. I have no idea what you are babbling about. We are not talking about reconstruction contracts, but the market being created for the future. Tell me the Iraqi company that could have stepped in for Halliburton.

_______
Smile =)
* bt krav magas kitten THE FUCK UP
<bt> Eat Kung Jew, bitch.

[ Parent ]
You said painfully high - they will go higher (none / 2) (#36)
by felixrayman on Sun Nov 09, 2003 at 03:13:24 PM EST

I didn't say that interest rates would be low if debt was forgiven. I said that interest rates were already painfully high, so refinancing loans wasn't very beneficial.

Again, the US has no power to "forgive" the debt. The creditors alone have that power. If the US defaults on Iraq's debt, the result will be painfully high interest rates that go higher.

Development loans for developing countries have historically not worked.

It seems quite silly of you to be arguing about interest rates if you believe that - the point is simply moot if you believe foreign investment has no value.

Also, I didn't say that all third world debt should be forgiven

Which is why in my post I quite specifically addressed the question of '"Forgiving" Iraq's debt ' - again, the word forgiving in quotes as it is completely inaccurate in regards to Iraq's debts to France and Russia.

If anything, this will make countries and banks think twice before extending a loan to a regime such as Saddam's or African warlords.

It will make them think twice before extending loans to ANY developing country. As I argued before, some of those loans were made when Saddam was "our kind of guy". If you don't respect the rights of lenders, the rates go up to reflect that risk. It is not the business of creditors to decide in advance which dictator supported today by the US will be attacked by the US tomorrow.

Whatever. I have no idea what you are babbling about. We are not talking about reconstruction contracts, but the market being created for the future.

Don't be retarded. You were talking about the ability of local companies to compete with multinationals. The fact that contracts in Iraq are given out as political favors with no bidding by Iraqi companies is completely relevant here and your assertion that you have "no idea" what I am talking about is ridiculous.

Call Donald Rumsfeld and tell him our sorry asses are ready to go home. Tell him to come spend a night in our building. - Pfc. Matthew C. O'Dell

[ Parent ]
I don't you are understanding the position (none / 2) (#38)
by jjayson on Sun Nov 09, 2003 at 04:00:52 PM EST

Again, the US has no power to "forgive" the debt. The creditors alone have that power. If the US defaults on Iraq's debt, the result will be painfully high interest rates that go higher.
This wasn't a call for the US to forgive the debt Iraq owes other nations, but a call for other nations to forgive the debt Iraq owes to them. Of course the US cannot forgive debt not ower to her, but she can still exert diplomatic pressure for other countries to forgive debt.

And the idea isn't to forgive all debt, just the debt that Saddam accumulated that went to military machinery, palaces, and other tools of oppression. He took the debt out against the will of his people, and it is hit debt, not the debt of the countries. It was the equivalent of forging the signature of the Iraqi people. Maybe these foreign banks need to learn the lesson to not loan money to dictators, for when the dictator no longer has has control of his income and human capital, he can't repay the loan. Debt accumulated that went to the population, such as social programs, infrastructure, and a small cut of the military spending would still be repaid in full.

It is uncertain if interest rates would rise significantly. Interest is a hedge against the ability to repay in the future (and with it, inflation). Even if Iraq unilaterally repudiated a portion of their national debt yet still paid for that which it believes it should pay, with a new growing national economy and internationally legitimate government, banks might feel very safe about getting their loans back.

It seems quite silly of you to be arguing about interest rates if you believe that - the point is simply moot if you believe foreign investment has no value.
Even if I believed that foreign loans have negative benefit, which I do think that it often does, the burden of debt repayment leading to pressure to keep implement austerity programs keeping taxes high would do like it has done in almost every other country this has been the scenario in, lead to a stagnant economy and slow local growth being swamped by larger corporations that swoop in to pick up the slack. (I have continaully said that trade, not aid, is the way to help developing countries. But if aid is given, if should be in the form of grants and not loans, especially for things such as infrastructure and healthcare.)

The fact that contracts in Iraq are given out as political favors with no bidding by Iraqi companies is completely relevant here and your assertion that you have "no idea" what I am talking about is ridiculous.
Tell me what Iraqi companies could have done the job that Haliburton is doing. There isn't one. Besides, this is entirely irrelevent to the topic of debt forgiveness. Even if there was a company in Iraq that could have done the Haliburton job, or any other that we have given to American companies, it doesn't mean that Iraq's creditors should not forgive the debt, instead of applying repayment pressure that would result in the rest of the Iraqi economy being overrun by MNCs.
_______
Smile =)
* bt krav magas kitten THE FUCK UP
<bt> Eat Kung Jew, bitch.

[ Parent ]
"no-bid" = "corruption" (none / 1) (#41)
by mcelrath on Sun Nov 09, 2003 at 05:50:59 PM EST

Tell me what Iraqi companies could have done the job that Haliburton is doing.
We don't know because the option was not investigated. Iraq was the most industrialized nation in the middle east after Israel, and has many companies and resources for building infrastructure.

Furthermore, even if your argument is correct and there really is no one in Iraq that can build buildings (think about that for a sec..) American companies were not allowed to compete for the contracts either.

"No-bid" contracts are corruption, plain and simple. It is no coincidence that they were given to the Vice President's company. Frankly, Bush should be impeached for graft. It is the government's responsibility to determine the best and cheapest way of going about a course of action. They have not. They have chosen the most expensive route that generates the most political favors. This is graft.

-- Bob
1^2=1; (-1)^2=1; 1^2=(-1)^2; 1=-1; 2=0; 1=0.
[ Parent ]

Wow. Haven't you ventured off topic. (none / 2) (#44)
by jjayson on Sun Nov 09, 2003 at 09:38:22 PM EST

And all this relates to debt forgiveness how?
_______
Smile =)
* bt krav magas kitten THE FUCK UP
<bt> Eat Kung Jew, bitch.

[ Parent ]
Ok moron (none / 2) (#46)
by felixrayman on Mon Nov 10, 2003 at 01:57:59 AM EST

You wrote a post that said, in part:
Tell me what Iraqi companies could have done the job that Haliburton is doing.

Someone responded with an argument quite relevant to that. You tried to pretend you were bewildered that anyone would post such a thing. How fucking lame can you get, accusing someone of being off topic for responding directly to a question you posted? I really want to know, how fucking lame can you get? Answer, so I can respond with "Aren't you a bit off topic here?".

Call Donald Rumsfeld and tell him our sorry asses are ready to go home. Tell him to come spend a night in our building. - Pfc. Matthew C. O'Dell

[ Parent ]
Saddam's Debt (none / 0) (#54)
by cronian on Tue Nov 11, 2003 at 12:15:44 PM EST

Umm, do you know anything about war financing. When you lend money to someone who loses a war you generally don't get anything back. Confederate bonds became quite worthless after the confederate war. I'm pretty sure German war bonds became pretty worthless after World War II. When you lend money you always assume a risk of default. The US could simply announce that the old regime no longer exists, and that Saddam and company is responsible for all of the old debt. The US could then go about seizing all of Saddam's assets, divvy it up between the creditors, and announce Iraq is debt-free. Anyway, Iraq's debt isn't held by private individuals, but by France and Russia. Investor's didn't lend Iraq money under sanctions because they didn't think they would get paid back. It is hard to say exactly what interest rate Iraq could get now, but the US could always secure Iraqi debt (I.E. agree to pay it in case of default), or the US could just lend the money to begin with, and it doesn't really matter what investors think of Iraqi debt. However, unless the security situation improves there can't be all that much investment in Iraq. People generally don't like to pay for buildings that are likely to get blown up soon.

We perfect it; Congress kills it; They make it; We Import it; It must be anti-Americanism
[ Parent ]
Its the US's debt now (none / 0) (#56)
by felixrayman on Wed Nov 12, 2003 at 11:59:11 PM EST

We are not talking about war bonds, we are talking about loans made in a time of peace to a country the US supported until quite recently ( A fact you admitted to, after contradicting it, by the phrase "Investor's didn't lend Iraq money under sanctions because they didn't think they would get paid back." ). Some of these loans are loans that were made while Rumsfeld was still going to Iraq to shake Saddam Hussein's hand and while the US was still shipping bioweapons material to Saddam. To argue that because the US shifted from shipping bioweapons material to Saddam to shreiking hysterically "oh my god! he has bioweapons!" that loans made to Iraq should be defaulted on is simply stupid.

It is true enough that when you lend money, you assume a risk of default. A default by the Iraqi government ( by which of course I mean the US ) on its debt would raise the risk in lender's eyes of future defaults. It would raise the cost of money for the whole third world.

Call Donald Rumsfeld and tell him our sorry asses are ready to go home. Tell him to come spend a night in our building. - Pfc. Matthew C. O'Dell

[ Parent ]
actual consequences (none / 0) (#57)
by cronian on Thu Nov 13, 2003 at 11:05:50 PM EST

Defaulting on Iraq's debt would raise the interest rates for certain countries, although I doubt it would apply to the whole 3rd world. I don't see how exactly it would affect China, and India. Third world countries aren't just a bunch of dictators. My guess is that Columbia, Syria, and Pakistan would be worst hit along with possibly Iran. The net effect being that various dictatorships would be weakened around the world. Iraq can simply have the US secure its new cred after a default, or back the credit with oil revenues. Why should Iraq pay more money for some other coutnry to have more credit?

We perfect it; Congress kills it; They make it; We Import it; It must be anti-Americanism
[ Parent ]
A bit off (none / 2) (#21)
by cronian on Sat Nov 08, 2003 at 03:05:23 AM EST

You say that Iraq will be getting about $55 billion/year in earl revenue. Howevever, that won't happen for a while, and will require a large upfront investment to make that happen. Furthermore, $55 billion/year is not $20,000 per Iraqi but is about $2000/year per Iraqi. Iraq's economy has consisted mainly of oil, and before the latest war Iraq's GDP per capita was about $2600. However, Iraq needs to repair the damage from the war, and improve its infrastructure.

We perfect it; Congress kills it; They make it; We Import it; It must be anti-Americanism
Oops (none / 0) (#47)
by cybrpnk on Mon Nov 10, 2003 at 08:16:47 AM EST

...you're right. Good catch, my bad.

[ Parent ]
Some points... (2.75 / 4) (#22)
by Skywise on Sat Nov 08, 2003 at 03:36:14 AM EST

1>  Which is it?  You can't have SOMO being US militarily controlled and then expect us to be shocked and awed by your statement that the US commerce secretary is discussing guidance positions on SOMO's output.  (Or should I be shocked because US Generals should control the oil outputs?)

2> Haliburton is importing gasoline while SOMO is selling oil to outside countries because Iraq has very few *refineries* (those things that turn oil into gas) to meet demand.

2a> (If you really want to dig up some dirt, try to connect the dots to why Russia and France got first dibs on Iraqi oil...And why France REALLY opposed US intervention in Iraq)

3> Loans on a depressed country that lost a war are, provably, a "bad thing"(tm)  Check your history of a little country called Germany post WW1 and read how it got itself out of economic war debt...  (hint:  His name was Adolf Hitler)

Advantages of conquerer (3.00 / 4) (#26)
by svampa on Sat Nov 08, 2003 at 03:10:43 PM EST

1> Which is it? .... (Or should I be shocked because US Generals should control the oil outputs?)

Are they selling it to the best buyer? no, they are selling oil to who USA wants. It's not shocking that USA generals control Iraqi oil, what is a little more shocking is that USA is keeping after USA interests, not Iraqi people interests. Well it's not shocking, it's only shocking if you believe what they claim

2> Haliburton is importing gasoline ...

Is importing at the best prices? or where USA wants to keep its own companies, or its political relations?.

2a> ... why France REALLY opposed US intervention in Iraq)

I have no doubt that France is not lamb (so none that supported USA is), the difference is that USA need a war, and France need peace. I don't care the motivation of France, this time it wanted peace. And the difference between France treaties and USA treaties is that France buy it in a free market, where Iraq could decide to sell or not, USA can buy it because has invaded the country.

3> Loans on a depressed ... Hitler... WWI

The problem of WWI were the war compensations ,that Germany had to pay. That drove Germany into bankruptcy. Loans are good, look at Plan Marshall after WWII.

It wasn't blood for oil. In fact there are less sodiers dead that murders in a year in USA, or people dead in car accidents (Forget everthing about Iraq civilians, and current chaos violence). It's not blood, it's government money for oil.

I think it' been a good deal. Government invest in war, war gain access to oil, oil generates money to American oil companies. And more, money paid to Iraq by American oil companies is invested back in American companies for rebuiding.

Government's money invested in defense + Iraq OIL=more money in private American companies + control of a strategic resource.

WMD? Terrorism? Iraqui people? Democracy?



[ Parent ]
Germany (none / 0) (#33)
by chbm on Sun Nov 09, 2003 at 08:19:43 AM EST

> 3> Loans on a depressed country that lost a war are, provably, a "bad thing"(tm)  Check your history of a little country called Germany post WW1 and read how it got itself out of economic war debt...  (hint:  His name was Adolf Hitler)

I wasn't aware Germany had hundreds of billions of Euros worth of natural resources just waiting to flow from the underground.

-- if you don't agree reply don't moderate --
[ Parent ]

Many companies (none / 1) (#23)
by The Central Committee on Sat Nov 08, 2003 at 05:30:46 AM EST

have been exporting Iraq oil lately.. I remember Sinochem was at one point..

You personaly are the reason I cannot believe in a compassionate god, a creature of ineffable itelligence would surely know better than to let someone like you exist. - dorc

You folks keep trying, (1.00 / 12) (#24)
by Akshay on Sat Nov 08, 2003 at 09:59:43 AM EST

and I'll continue -1-ing. I've had enough of Iraq, thank you very much, now let's move on to world's other trouble spots. Like Faroe Islands, for instance. Or Tristan da Cunha for another. Or someplace. I don't care about liberals or conservatives or their Offical Towel Wrappers (tm), but SOMETHING OTHER THAN THAN IRAQ FOR GOD'S SAKE!

Which of course is no comment on the article per se, but on the article topic.

OK (3.00 / 8) (#25)
by mcc on Sat Nov 08, 2003 at 02:37:13 PM EST

let's move on to world's other trouble spots. Like Faroe Islands, for instance. Or Tristan da Cunha for another.

Write up what exactly you mean by those, and I will +1 it.

---
Aside from that, the absurd meta-wankery of k5er-quoting sigs probably takes the cake. Especially when the quote itself is about k5. -- tsubame
[ Parent ]

You got a deal. (none / 0) (#53)
by Akshay on Tue Nov 11, 2003 at 08:13:35 AM EST

Only problem is, I'm extraordinarily lazy. Well, let's see...

[ Parent ]
Too bad (none / 1) (#28)
by KilljoyAZ on Sat Nov 08, 2003 at 09:57:45 PM EST

the guy with about 30 dupe accounts is voting it +1 FP.

===
Creativitiy cannot be SPELT by over 98% of all American troops. - psychologist
[ Parent ]
Trouble in Faroe Islands... (none / 1) (#43)
by gjetost on Sun Nov 09, 2003 at 08:00:10 PM EST

For the first time in three years there was a murder!

[ Parent ]
It's all about Oil! (none / 0) (#52)
by ajduk on Mon Nov 10, 2003 at 12:18:55 PM EST

And not whale oil either..

[ Parent ]

I, for one, welcome our new American overlords (none / 1) (#31)
by K5 Troll Authority on Sat Nov 08, 2003 at 10:45:26 PM EST

This is certainly an interesting time to be alive for we can accompany first hand the most important race humanity has ever witnessed: the collective human kind's will to self-destruct pitted against new scientific discoveries which keep us alive for another round. The only catch is, we bet out lives on it. With the united state's last move the bets are once again favoring the doom and destruction.

You ask how can I say such a thing of a beautiful democracy built on the respect of human rights, but the american constitution's respect of human rights only applies to americans. Right now they're playing the good guys, saving Iraq from evil Saddam, but do they really fool anyone with that flaky mask? Not me. I ask, what will happen forty years down the line when the world's oil supply dwindles?

If you're american, take my most hearty congratulations on having an excellent president because Mr. Bush certainly knows how to protect the american public. I, too, wish I were a fat american, laying on my couch knowing that Mr. Bush will provide the gasoline for my Hummer long after the rest of the world's gone dry.

K5: we get laid more than Slashdot goons — TheGreenLantern

A showdown with OPEC is coming (2.75 / 4) (#32)
by cybrpnk on Sun Nov 09, 2003 at 07:09:21 AM EST

While this article was in moderation, several reviewers said I needed to end with a point or conclusion, so here it is. Americans like Don Evans predicting 6 million barrels of oil per day from Iraq by 2007 can only mean one thing. This war isn't about American control of Iraq's oil reserves, the world's second largest. No, it's about something even bigger: the planned disruption at worst and destruction at best of the organization that's held a stranglehold on American and Western economies for 30 years, namely OPEC. What Microsoft is to the computing industry, OPEC is to the oil industry - only more so. They produce 25 million barrels a day of oil and they're the reason it costs an artificially high $25-$30 per barrel. An American-backed Iraq that produces 6 million barrels a day would never be re-integrated back into the OPEC cartel as a member in good standing and would in fact in all probability lead to an oil price collapse - or profits diverted to non-OPEC pockets. I'll just bet this thought has occurred to old oilmen like George Bush and Dick Cheney. Anybody interested in gasoline at 10 cents a gallon like it was in the 1960s before OPEC? As a red blooded American I sure am, but the historical consequences of using 9/11 as an excuse for an unprovoked war to get it remain to be seen.

In th1 1960s, oil wasn't that much cheaper (none / 1) (#39)
by jjayson on Sun Nov 09, 2003 at 04:20:52 PM EST

Through the 1960s, crude prices were a little under $3 a barrel. Now they are a little under $30 a barrel. Similarly, the price of the monetary commodity, gold, was at $35 an ounce, and is now $380. So, oil prices haven't even kept up with monetary inflation.

The relative rise in prices against other good has been because of an increased demand, having little to do with those nasty oil people.
_______
Smile =)
* bt krav magas kitten THE FUCK UP
<bt> Eat Kung Jew, bitch.

[ Parent ]

Here's some data (none / 0) (#42)
by rankor on Sun Nov 09, 2003 at 07:47:54 PM EST

Even though the US does not use gold for its monetary standard, it seems you are correct.

This site shows the inflation adjusted price of gasoline in the US over the last 50 years.

I'd like to find another source for this data, since the site referenced does have an agenda.. that is, keep taxes on gasoline at their present levels (presumably to encourage more people to use trains).


[ Parent ]

Selling it cheaper (none / 0) (#48)
by nebbish on Mon Nov 10, 2003 at 09:15:04 AM EST

Will mean more gets used, which means increased global warming and reserves running out faster. Is it just me or would investigating alternative energy sources be cheaper, less violent and more sensible in the long term?

---------
Kicking someone in the head is like punching them in the foot - Bruce Lee
[ Parent ]

Nice (none / 0) (#49)
by Cackmobile on Mon Nov 10, 2003 at 10:06:25 AM EST

so we can drive our gas guzzlers with impunity, burning oil faster and faster until non is left.

[ Parent ]
Well, let's see. (none / 0) (#51)
by ajduk on Mon Nov 10, 2003 at 11:56:02 AM EST

Chinese and Indian oil imports are currently rocketing. Economic growth in Russia and the former Eastern Bloc is starting to translate into greater demand there. Even at 2%/year, this translates to an extra 6 million barrels/day of demand by 2007.

Outside of OPEC, only Russia and the South Atlantic Deepwater domain (Offshore Nigeria, Angola and Brasil) have any realistic hopes of substantial production increases by 2007; an extra 3mb/day would be optomistic.

At the same time, a large number of non-Opec producers are in decline; Norway, the UK, Argentina, the US, plus many other mid-tier producers. Even amongst OPEC, Indonesia will be an importer soon. At best this will offset the non-OPEC increases as above; more likely the declines will prove greater.

So in the *best* case, OPEC will retain the same power in 2007 as they do now, since Iraqi oil at 6mb/day will simply be supplying additional demand.

However, most of the more reasonable estimates of Iraqi production give around 3-3.5mb/day in 2007, assuming the place quietens down soon. This would be the result of redeveloping fields that are currently on-stream, a big enough task in itself, as well as rebuilding the pipelines and other infrastructure. Developing known but untapped fields may add another 2mb/day after that.

In short, even if Iraq became a stable, democratic, free market orientated, non-OPEC member tomorrow, OPEC's power would not be diminished. In any more pragmatic scenario, OPEC's power will increase over the forseeable future.

[ Parent ]

Why kill the goose that lays the golden eggs? (none / 0) (#55)
by Fizyx on Wed Nov 12, 2003 at 05:09:43 PM EST

in all probability lead to an oil price collapse - or profits diverted to non-OPEC pockets. I'll just bet this thought has occurred to old oilmen like George Bush and Dick Cheney.

I don't understand this conspiracy-theory: just how is it that the oilmen benefit from lower prices? I have only ever heard western oil men (quietly) admire OPEC, because it lets them raise prices while putting the blame elsewhere.

[ Parent ]

Commerce Secretary (none / 0) (#45)
by phlux on Sun Nov 09, 2003 at 10:06:47 PM EST

I posted on this a bit ago...

here is some info about the commerce secretary:

The Secretary of Commerce is an ex-oil CEO Don Evans:
http://www.whitehouse.gov/government/evans-bio.html

Also - here is an interesting tid-bit on both Evans and Bush

http://www.utwatch.org/utimco/evans.html

More Than Wells Are Stuck In The Sand Over Iraqi Oil | 58 comments (46 topical, 12 editorial, 1 hidden)
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