Iraqi government officials say they aim to increase production from 2.5 million barrels of oil a day to 3 million barrels. That is a minor increase in global terms, but with oil at $140 a barrel, it is good news for Iraqis, who need the money to rebuild their war-torn country. But the negotiating process pursued by Baghdad is flawed and troubling. The contracts are being let without competitive bidding to companies that since the American invasion have been quietly advising Iraqâ€™s oil ministry how to increase production. The contracts would have more legitimacy if the bidding were open to all and the process more transparent.
Also troubling is that the deals were made even though Iraqâ€™s parliament has failed to adopt oil and revenue sharing laws â€” critical political benchmarks set by the Bush administration. That is evidence of continued deep divisions in Iraq over whether oil should be controlled by central or regional government, and whether international oil companies should be involved.
The US and the oil companies must encourage Iraqi officials to make the political compromises needed to establish in law the rules for managing Iraqâ€™s abundant natural resources with as much transparency as possible. Otherwise, oil will just become one more centripetal force pulling the country apart.