Best case scenario for Iraq is to be like Russia?

"The best-case scenario for Iraq is that it will be another Russia — an imperfect, corrupt, oil democracy that still holds together long enough so that the real agent of change — a new generation, which takes nine months and 21 years to develop — comes of age in a much more open, pluralistic society. The current Iraqi leaders are holdovers from the old era, just like Vladimir Putin in Russia. They will always be weighed down by the past. But as Putin is discovering — some 21 years after Russia’s democratic awakening began — that new generation thinks differently. I don’t know if Iraq will make it. The odds are really long, but creating this opportunity was an important endeavor, and I have nothing but respect for the Americans, Brits and Iraqis who paid the price to make it possible."

Karl Marx loved America, hated Russia

Interesting. From a Michael J. Totten interview with Christopher Hitchens:

MJT: Well, you know what Karl Marx thought of Russia.

Hitchens: He hated Russia. He loved America.

MJT: How counterintuitive that is if you don't know it.

Hitchens: Karl Marx's best writing is on America. He said it was the great new country for worker's equality. There was free land for the peasants. It was republican, not monarchical, and it was anti-imperialist. If you look at Henry Adams' memoirs, when his father was at the embassy in London, the Times of London was in favor of the Confederacy. Gladstone helped the Confederacy build a navy. Karl Marx, meanwhile, said Lincoln is our man. The United States is our future. That's not what they teach you in school about Marx.

MJT: That's not what the communists taught their kids, either.

Hitchens: Well, that's true to an extent.

MJT: I mean the schools in the Soviet Union.

Hitchens: For Marxists, Russia was the heart of darkness.

Thanks Anand for sending the link.

Russian alliance with Baathists in the making?

It has happened before.

"So far, the United States is trying to cajole Maliki into supporting the Awakening, offering $300 to $500 per month for each member of the Sunni militia. At the same time, US military officers in Iraq have promised to guarantee the payments to the Sunni forces and to shield the Awakening from attacks or reprisals by the regime. But among Sunnis, including those interviewed for this story, there is widespread concern that they are on their own and that the United States will not abandon the government in Baghdad despite its sectarian, pro-Iran leanings.

In that case, said a former top Iraqi official, many Sunnis may turn to an unlikely source for support: Russia. "The Russians are very active," he said. "They are talking with many Iraqis, including resistance leaders and Awakening members, in Damascus, Syria. They are in discussions with big Baathists." According to this official, former Baathists, army officers and Awakening members in Damascus, Amman and inside Iraq are looking to Russia for support, especially since Russia seems intent on reasserting itself in the Middle East. "The Russians intend to come out strongly to play with the Sunnis," he said. "I heard this from sahwa members in Damascus and Amman. 'If the Americans abandon us, we will go to the Russians.'"

Don't minimize Stalin's crimes

Don't minimize Saddam's crimes either, I say.

Don't minimize Stalin's crimes, Gorbachev says

Enlarge By Dmitry Lovetsky, AP Mikhail Gorbachev, shown here in a Sept. 20 photo, had harsh words on Wednesday for the secretive way Russian President Vladimir Putin reshuffled the Cabinet earlier this month, echoing critics who said his maneuvering underscores the lack of popular input in running the country.

MOSCOW (AP) — Former Soviet leader Mikhail Gorbachev warned Wednesday against whitewashing the crimes of dictator Josef Stalin, stressing that Russia cannot move forward without facing the truth about its bloody past.

In words that appeared aimed at President Vladimir Putin, Gorbachev also emphasized the need to pursue democracy.

His remarks, less guarded than usual, came amid growing concern among Russia's marginalized liberals that Putin's government is recasting Stalin's legacy to justify its own increasingly tight control.

The Stalin era is being portrayed as a "golden age," said Gorbachev, whose 1980s "glasnost" campaign as the last Soviet president prompted stunning revelations about Stalin's murderous policies.

"We must remember those who suffered, because it is a lesson for all of us — a lesson that many have not learned," Gorbachev said at a discussion marking the 70th anniversary of the bloodiest year of Stalin's Great Terror.

"It is impossible to live in the present or build long-term plans for the future if the disease of forgetfulness afflicts the country and society, or at least certain sections of it," he said.

Rather than reckoning with one of the most traumatic episodes in Russian history, scholars and activists said during the discussion at Gorbachev's charitable foundation and think tank, Putin's government is reshaping that legacy for its own purposes.

"It's not just forgetfulness, not just a lack of cultural memory — what's happening is a massive attack aimed at revising our memory," said Irina Shcherbakova of Memorial, a prominent non-governmental group dedicated to investigating Stalin's repression.

As one of the signs that Stalin's crimes are being swept under the rug, she said a teacher's manual that suggests his actions were justified by the need to modernize the economy is being pushed on high schools nationwide.

"Textbooks today are aimed not to ensure the memory (of Stalin's abuses), but to push this memory to the distant periphery of the consciousness," said Arseny Roginsky, also an official at Memorial.

Roginsky said that despite repeated requests, the state has done little or nothing to help establish the names of the millions killed under Stalin or the locations of their remains — only a fraction of which are known decades later, he said.

More than 1.7 million people were arrested in 1937-38 by the Soviet security services alone, and at least 818,000 of them were shot, Roginsky said.

But there is "decidedly no political will" on the government's part to preserve a "national memory" of those abuses, he said, and he contrasted the atmosphere in Russia with the way Germany has acknowledged the Holocaust.

In central Berlin, he said, there are signposts pointing to Nazi concentration camp sites: "A child passes by and asks his mother, 'What's Dachau, what's Buchenwald?' That's how national memory is preserved and passed down."

In Moscow, he said, "There is not a single memorial plaque that says, 'This person was a victim of the Terror."'

continued

Everybody Wants Oil

My father and I were talking about the future of oil a few days ago, and he said basically that of course international oil companies want part of the action, and of course the US and Europe would want to control the last untapped oil reserves on earth. He told me that Russia is Europe's main source of natural gas. Russia has huge reserves of oil and gas. So does Iraq.

Just two days later I ran into my friend Klaus, and we talked about the post I wrote about him recently. He read it and we discussed a few of the comments, including RhusLancia's question about the government of Angela Merkel, the first woman Chancellor of Germany (I learned something new today). He said yes, it is a puppet government. Klaus said Putin has great influence in Germany, and sometimes Putin uses gas as a means to influence the Merkel government!

Elsewhere in the world, every country needs oil for transportation. China and India are both experiencing a boom in their economies, and both countries are adding thousands of cars to their roads every day. I spent three weeks in Beijing in the summer of 2006, and I could not believe how polluted it was. In Beijing alone 1,000 new cars are added to its roads every day. This is happening at a time when greenhouse gases are already out of control and affecting the earth's climate. But the world's oil supply is finite, and one day there will be no more oil. Royal Dutch Shell's chief executive fears that demand will outstrip supply in just seven years. Whoever has oil in the next 50 years will be king.

Saddam was a Stalinist

Very interesting reading.

"In 1968, Iraq had a weak president who was beholden to Nasser, a follower of Nasser. But the defeat of [the Arabs by Israel] in 1967 meant that whatever government was in power when that defeat took place had to go. So the Ba'ath saw an opportunity in this and they thought the time has come for them to take over the country again. The background was extremely interesting. There were two things happening within Iraq at that time. They were developing their own oil and very close to giving the concessions for huge new oil fields, to the USSR and France. And the price of sulpher had shot up so greatly that they were about to mine the sulpher mines in the north and sell it in the world market.

The United States didn't want either to happen. The United States wanted the oil for American oil companies; they wanted the sulpher for themselves. They thought that if Iraq went to the Soviet Union or France, Iraq would be lost to them. In this they were joined by the Ba'ath Party. The Party used the concessions for oil and sulpher as a bargaining point to endear itself once again to America. And they arrived once again at some kind of an agreement of collaboration between the two sides. On the American side negotiating for both the oil and sulpher was a well-known personality, Robert Anderson, the former secretary of treasury under Eisenhower. He met secretly with the Ba'ath and they agreed that if they took over power these concessions will be given to the United States.

And so once again the United States was in the business of supporting the Ba'ath office for the government of Iraq. The Ba'ath was successful. This time Saddam Hussein played a key role. He was one of the people who donned a military uniform -- though he's not a military man -- and attacked the presidential palace and occupied it. The president, being weak, surrendered immediately. Two weeks after they took over power on the 17th of July 1968, there was what they call "the correction movement." That meant getting rid of the non-Ba'ath elements in the coup, and Saddam was prominent in that. As a matter of fact he held a gun to the head of the prime minister and said, "You're going with me to the airport because you're leaving this country." And the guy pleaded with him, said, "I have family, I have a wife and kids." And Saddam said, "Well as long as you behave, they'll be fine." He took him to the airport, he put him in a plane, he deported him, and of course years after, he assassinated him in front of the Intercontinental Hotel in London. The man couldn't escape him in the long run.

However, the communists are hardly thrown out and not long after, they turn to Saddam, and he personally leads a delegation to Moscow, and there's a development of a relationship between the two. What game was he playing?

Well, alliances of convenience don't last very long. The Ba'ath Party was committed to certain things which American foreign policy could not tolerate. In this particular case it lasted a very short time, really a matter of two weeks. And Saddam got rid of all of the pro-American elements in the government and he asserted his authority on the country. He was not the president. He was the second man, after a relation of his from Tikrit, President Ahmed Bakr. But what happened immediately after that is the things they needed, they couldn't get from the United States anymore. They needed help economically. They needed arms. And the United States were not in the business of openly supplying arms to Arab countries to re-equip themselves for another round of fighting. That was the major issue between the two sides. Saddam knew he could get the arms from Russia and he journeyed to Russia -- this was his first trip outside Iraq, outside of exile of course -- and he got what he wanted. And the alliance of convenience disintegrated as they always do.

So, there was a new alliance, this time with the Soviets.

In 1972, Iraq and the Soviet Union signed a treaty of friendship and cooperation. They wanted to seal the cooperation taking place between them in a formal alliance. The reason Saddam signed that treaty of friendship and cooperation was because that obligated the local communist party, which was very strong, to cooperate with the Ba'ath Party, which was not so strong at that time.

Of course the Russians loved an opportunity to have a hold on Iraq and they signed the treaty and told the local communist party to join the Iraqi government. That alliance internally did not last very long. But the external one was on and off for a very long time. And the Soviet Union at one point thought Iraq was a more important ally than Egypt. Its army always acquitted itself better than the Egyptian army. It was a wealthy country that didn't need a lot of aid, like Egypt. And it was the gateway to the Gulf, to oil. It represented a more immediate threat to the West's lifeline than Egypt did.

So Saddam in the early '70s is Iraq's vice president. Could you describe how he's already setting up a Stalinist system with control of the government.

In the early '70s, Saddam started out controlling one small department called the Peasants Department; at that time the Ba'ath regime, for a very brief period of time, was committed to installing a democratic system in Iraq. It was a bit of a dream. Came the time for them to assign the job of head of the security system, and no one from the inner circle wanted the job. Everybody says, "This is a dirty job. I don't want it." Young Saddam Hussein raised his hand, and said, "I want the job. I'll take over the security system."

He took over the security system, called it the Department of General Relations and proceeded to expand it. This was his first step towards attaining power.

The president at the time, Ahmed Bakr had been a general, and a very nice man. Quite a religious man too. Saddam was a relation of his. He surrendered everything to Saddam, because Saddam worked an 18-hour day. In no time at all, Saddam was head of security, he was head of the Peasants Department, he was head of relations with the Kurds, he was head of the committee that controlled the oil. He was head of the committee that controlled relations with the Arab countries. He was head of the workers syndicate.

There was a conflict between all these departments that Saddam controlled so tightly and the armed forces -- because the armed forces is the one organization capable of overthrowing government. Saddam proceeded to emasculate the army and place his professional soldier relations from Tikrit in key positions. For example, his brother-in-law became chief of staff of the army. And of course soon enough, like all people who are dictators, who are jealous of the army, he appointed himself general and eventually like Stalin he became field marshal.

So much of what you just described certainly has Stalinist overtones.

Without any doubt everything Saddam did had Stalinist overtones. In particular, the reliance on the security system rather than the armed forces, the jealousy of the generals in the armed forces, the use of criminal elements within the country, and, incorporating them into the security system. And those people were sort of semi-literate thugs whose loyalty was to Saddam, without whom, they were nothing. And so he brought them in, he depended on them, and they did him service. Anybody he wanted to get rid of he got rid of. And the door was wide open.

He had two qualities that put him ahead of his colleagues. His ability to work an 18-hour day. Endlessly. And a sense of organization. You didn't see Saddam at three o'clock and miss that appointment by five minutes. Because Saddam would ask you why you are five minutes late, or five minutes early. If you had an appointment with Saddam at three, you showed up at three. That was that. He is that organized. He is that methodical. "

Saddam was a monster the World helped create

A few days ago I found and posted an article about the western countries that sold weapons to Saddam.  I called it "Saddam was a monster the West helped create".  Today I thought more about who helped Saddam become powerful and I remembered that Russia also sold weapons to his regime, as did China.  I searched my blog for "Russia" and found some interesting posts, but none about Russian arms sales to Iraq. The discussion about Russian arms sales took place in the comments (haloscan) section, and RhusLancia of IBC wrote a post in January 2007 titled "Where did Saddam get his chemical weapons?"  That was a good post, and in it RhusLancia pointed out the following:

• All told, 52% of Iraq's international chemical weapon equipment was of German origin.
• Around 21% of Iraq’s international chemical weapon equipment was French.
• About 100 tons of mustard gas also came from Brazil.
• The United Kingdom paid for a chlorine factory that was intended to be used for manufacturing mustard gas
• An Austrian company gave Iraq calutrons for enriching uranium. The nation also provided heat exchangers, tanks, condensers, and columns for the Iraqi chemical weapons infrastructure, 16% of the international sales.
• Singapore gave 4,515 tons of precursors for VX, sarin, tabun, and mustard gasses to Iraq.
• The Dutch gave 4,261 tons of precursors for sarin, tabun, mustard, and tear gasses to Iraq.
• Egypt gave 2,400 tons of tabun and sarin precursors to Iraq and 28,500 tons of weapons designed for carrying chemical munitions.
• India gave 2,343 tons of precursors to VX, tabun, Sarin, and mustard gasses.
• Luxemburg gave Iraq 650 tons of mustard gas precursors.
• Spain gave Iraq 57,500 munitions designed for carrying chemical weapons. In addition, they provided reactors, condensers, columns and tanks for Iraq’s chemical warfare program, 4.4% of the international sales.
• China provided 45,000 munitions designed for chemical warfare.

I was surprised to see India and Singapore on the list.  One of the Wikipedia pages that RhusLancia linked to mentions that Saudi Arabia loaned or gave $20 billion to Iraq between 1980 and 1982.  Other Gulf countries also loaned Saddam money in the 80s, including Kuwait.  

Many countries and international companies did business with Saddam, but today the most controversial  support, the support that most people talk about, was the support the US gave Saddam.  In 2005 NPR diplomatic correspondent Mike Shuster answers answered an important question:

CHADWICK: Can you say--is there any sense that the US created Saddam Hussein, that the United States essentially was responsible for the rule of Saddam Hussein?


SHUSTER: Well, certainly not created Saddam Hussein. Saddam Hussein came to power in the late 1960s in Iraq. He created Iraq's secret police and intelligence, and he became the number one strongman of Iraq in 1979. But after that, the United States did play a key role in all of his actions, military and political, in the Middle East. In effect, the United States chose Iraq, led by Saddam Hussein, to be its surrogate for policy in the Persian Gulf region and to counter the actions of Iran, which the United States, the Reagan administration, saw as the biggest threat. And the fact that it supported Saddam Hussein in all these clandestine ways, a man who had been the pariah to the United States in the decade earlier, it seems to me could not have helped encourage Saddam's grandiosity about his role in the Arab world. He was meeting with senior US diplomats. They were looking the other way when he was using chemical weapons and developing other unconventional weapons. He couldn't have helped but to think that the United States was behind him.

The US did not create Saddam, but in the 80s the world's powerful countries helped make him a powerful dictator.  After 8 years of senseless war and a decade of ethnic cleansing, torture, and murder, in 1990 Saddam finally violated the rules of the west by invading Kuwait and thus drew the condemnation of the American President, who drew a line in the sand.  In 1991 the West, along with a few key Arab allies, destroyed much of Iraq's infrastructure and its military and forced Saddam to withdraw the Iraqi army from Kuwait.  

After the 1991 Gulf War the West, led by the US, sought to destroy the remainder of Saddam's WMD via UN sanctions and inspections, ensuring that Saddam would not be able to threaten his neighbors.  They did not, however, destroy Saddam's ability to mass murder and imprison innocent Iraqis.  Iraqis not only suffered through another 12 years of murder, torture, and imprisonment, but they endured through sanctions that crippled the country's economy.  As a result of the sanctions and government neglect, ordinary Iraqis struggled to survive as Saddam built 81 palaces in the 90s. I have said many times that Saddam should have been overthrown in 1991, but I was still happy when it happened in 2003. Kan'an Makiya summarized my feelings in a 2006 interview:

It is very sad for me that Europe, which is a bastion of so many of the highest ideals to which I aspire, sat back and was happy to let the Iraqi people live under that inhuman regime of sanctions, which were killing people in vast numbers. And [Europe] allowed this situation of abuse and tyranny of the regime to continue, and did not think it morally necessary -- forget practically, maybe it's not practical -- to get rid of that kind of institutionalized abuse on that kind of scale.

Now, the United States chose to act, for whatever reason. From my point of view as an Iraqi, that decision was a thousand times better, morally speaking, than the inaction of the Europeans. The complicity of so many people in the United Nations, for instance, with the former regime. We now know so much about that because of documents that were discovered inside Iraq after the fall of the regime.

It wasn't just the Europeans who wanted Iraqis to continue to suffer under Saddam.  So did the Arabs. The Arabs who continue to defend Saddam are simply stupid. 

"Our neighbours are the worst"

'Iraq signed with Shell and a Chinese company to develop the Majnoon fields. And today I heard they signed with Russia's Lukoil. Iraq is reportedly going to increase production to 12 million barrels a day, up from 2.5 million today. Funny, I remember people told me that the United States wanted to steal Iraq's oil. Here are some hefty deals signed, none of which is with the United States.

But back to the businessman's point of view. He said Iraq will become the third largest oil producer in the world, and nobody wants that to happen. He said, "Our neighbours are the worst." He pointed to Saudi Arabia, Iran, and the other Gulf countries. "They don't want Iraq's oil to compete with theirs. It is in none of their interest to have a successful Iraq. "

The man said a successful Iraq' democracy would frighten those same countries. He said a stable Iraqi economy would threaten the neighbours. That's why the countries that back al-Qaeda, of which he said Saudi Arabia was one, send bombers to make a statement here. The man said Syria let the killers go through their border to enter Iraq. "But the deals were signed, the bombs didn't stop anybody from signing," he said.'

Trading our futures

By Andrew Shouler, Editor, Financial Review Published: August 19, 2008, 23:32

Oil prices were already known to contain a risk premium. Now they seem to carry a big speculative premium too. Dr Muhammad-Ali Zainy tells Financial Review that the US's review will probably find some sort of legislative compromise. There has been a fair amount of talk about the speculative froth in oil prices, and the extent to which this mainstream cost for the importing, substantially OECD or Western, countries has been driven by financial traders. What is your view of that debate? Who are the players in such trading? And does it surprise you that the reaction has not become more political, general and vocal? There has been a positive correlation between the volume of trading on the oil futures markets and the price of oil. Tens of billions of dollars have moved to the oil futures markets trading in 'paper' barrels. This phenomenon has given rise to speculative pressures pushing the oil price upwards. One should remember, however, that these investor-speculators are not haphazard gamblers basing their decisions on mere luck; they study the market carefully and make their decisions. Such decisions, therefore, incorporate, in addition to speculation, elements of potential impacts of geopolitics as well as fundamentals. The New York Mercantile Exchange (Nymex) is regulated by the Commodity Futures Trading Commission (CFTC), so traders on this exchange cannot follow manipulative practices or excessive speculation since such practices are prohibited by law and regulated by the CFTC. The billions of dollars of the so-called speculators are playing the over-the-counter (OTC) exchanges and the US trading terminals of the London-based Intercontinental Exchange (ICE) trading in West Texas Intermediate (WTI). The OTC and ICE US terminals are unregulated and their dealings are opaque. The players are, therefore, not exactly known to the public, but they include corporate and government pension funds, sovereign wealth funds, large trader banks, hedge funds and other institutional investors. I believe the reaction to such practices is gathering pace. As the oil price soared, the US airlines, truckers and other shipping companies are calling for a crackdown on financial speculators. It is also becoming more political as the Democrats in the US Congress have proposed legislation to curb speculation in energy trading. The Republicans, however, want to introduce several amendments, including removing the congressional ban on drilling in the US Outer Continental Shelf (OTC); President Bush has already removed the presidential ban on drilling in the OTC. There may also be pressure groups (such as the US pension funds) impeding such legislation.  Before the speculative premium it used to be the risk premium that received most mention, sometimes cited as representing perhaps $20-$30 of the price, even at $100 (Dh 367.3) per barrel. How would you relate that element to the fundamentals of oil pricing currently? A risk premium is always there, given the chronic instability in the Middle East, terrorism, military conflict, infrastructure sabotage (as in Nigeria) and resource nationalism (as in Russia, Venezuela and some other countries). The risk premium was quite pronounced in 1973-74 in the aftermath of the Arab-Israeli war, in 1979 with the impact of the Islamic revolution in Iran, and a brief premium (price spike) in 1991 Gulf War, which premium was then suppressed by a prompt production increase from Saudi Arabia and good management of the US Strategic Petroleum Reserve (SPR). The risk premium would be very little when Opec, the world's swing producer, had ample spare production capacity that would cover any perceived supply disruption. That was the case with the Gulf War in 1991 when Saudi Arabia, more than any other Opec member, had a considerable spare capacity and was able to replace Iraq's exports plus Kuwait's exports when the latter disappeared from the market for a brief period. Tight spare capacity, on the other hand, gives rise to large premiums, which characterises the situation nowadays. Opec's current spare capacity is barely 2.5 million barrels per day (bpd); about 75 per cent of it rests in one country, that is Saudi Arabia. Given Iran's nuclear issue and the possibility that it might be attacked, Opec's spare capacity cannot replace Iran's present production of over 3.9 million bpd, let alone deal with the potentially disastrous event of closing the Strait of Hormuz through which around 40 per cent of the world's oil trade passes. There is definitely a pronounced risk premium now, which itself partially fuels speculation. To the extent that it has become part of the political arena, for instance in Congressional hearings in the US and parliamentary scrutiny in the UK. How do you interpret that attention and reaction and where it might lead? There is much more political fuss in the US Congress than in the UK parliament and, perhaps, that is due to the fact that oil is cheaper to the euro and sterling areas by virtue of the US dollar decline against these two currencies. The Americans are not used to very high gasoline prices which, for some time, exceeded $4 (about Dh14.71) per gallon at the pump. Price inflation of gasoline and diesel hurt the constituencies of Senators and Congressmen, and they have to respond to the outcry of their people if they want to be re-elected, especially as this year happens to be an election year. The Democrats are moving ahead with legislation to curb speculation and the Republicans introduced amendments to open the US Atlantic and Pacific Outer Continental Shelves for oil and gas drilling. The outcome will ultimately result in some legislative compromise to accommodate both. Speculation will have to be reined in and, after all, if the US needs to increase its domestic oil and gas production and reduce its reliance on the Middle East, it will have to lift the 1981 congressional moratorium on drilling the OCS and, maybe, even the Alaska National Wildlife Refuge (ANWR).   Climate change, energy conservation and alternative fuels have become mantras globally.  What is your view of these general efforts in the face of the world's historic dependence on fossil fuels, and especially oil. Is it well-informed? Is it too little, too late? According to the BP Statistical Review of World Energy 2008, during the four decades spanning the period 1967-2007, world oil consumption increased from 36,072 million bpd to 85,220 million bpd, world natural gas consumption increased from 765.4 billion cubic metres to 2,921.9 billion cubic metres and world coal consumption increased from 1,442.5 million tonnes oil equivalent to 3,177.5 million tonnes oil equivalent, each growing at an average rate of 2.1 per cent, 3.3 per cent and 2 per cent per annum respectively. This is, of course, a clear growing dependency on fossil fuels, especially oil since it is almost the only energy source, so far, to fuel the transportation sector. Burning fossil fuels emit carbon dioxide (CO2), which is a greenhouse gas (GHG) that contributes to global warming, although the world is not absolutely clear whether the global warming phenomenon is entirely due to the emission of GHGs or a recurring one in the earth's past history. CO2 emission, however, has to be curbed, whether through the Kyoto Protocol, emissions trading or some other system. To curb the world's dependence on fossil fuel in general, energy conservation should always be pursued and improved, and research has to continue in earnest for the development of economically viable alternative sources of energy. The ongoing efforts in this direction are not too little and it is never too late. If strong global demand trends for hydrocarbon-based energy is presumed, what trends do you foresee on the supply side, particularly from the Middle East? What price expectations and perception of the strategic dimension do you have in this respect for the medium term? By hydrocarbon-based energy I assume oil is meant, to the exception of natural gas and coal, since the question's focus is on Opec and Arabian Gulf states. Non-Opec supply is faltering and many of the major oil provinces are now in decline. The recent announcement by the US Geological Survey that the area north of the Arctic Circle holds around 90 billion barrels of oil and 1,670 trillion cubic feet of natural gas is good news, but supplies from there will not be forthcoming in the medium term. Oil supply from Alberta's oil sands is slowly rising and may reach 3-4 million bpd in the medium term, but the cost per barrel (capital and operating) is about $70 (about Dh257.1), which will put a floor to the oil price as long as oil from oil sands remains the market's marginal supplier. The onus will fall on Opec supply in case of a strong global oil demand trend. And out of the 12 members of Opec, only Saudi Arabia, Iran and Iraq promise oil supplies that would meet any expected strong demand, given their present proven reserves of 264, 138 and 115 billion barrels respectively. Strategically speaking, there could be a scramble for oil supply security between the rising Asian economic giants: China and India on the one hand and the United States and Europe (to a lesser degree) on the other hand. Do you agree with the pundits who say that oil prices will now remain high indefinitely? It is not so many years that they dropped into single digits, and for many years they stayed comparatively low, without any expectation of a climb, let alone rocketing ascent. What other themes or factors do you think should be borne in mind about the current situation, and future? The price explosions of the 1970s were in the lesser part justified by the economics of the oil market at the time, especially when the price was raised in 1973. On the major part, however, the price exploded either in response to geopolitical events (the Islamic revolution) or raised mechanically by Opec without justifiable market forces. To such unwarranted high prices the market responded by opening the new oil provinces of the North Sea and Alaska and also new additional supplies from many other parts of the world. Additionally, conservation drives and improved efficiency of oil use played a significant role in reining in demand. The situation now is different, as there has been a major structural change in the market. The price increases from 2002 and afterwards were, essentially, demand-led. Demand increments, caused by emerging markets (led by China) are still on, albeit with lower volumes. Non-Opec supplies are practically stagnant, and will increase only slowly and modestly as there aren't North Seas or Alaskas anymore. The Arctic potential supplies will need a long time to materialise, and by then world oil demand will have increased too. Opec will remain with a relatively small spare production capacity, and world refining conversion capacity is currently very tight and may remain comparatively tight even with the addition of new capacity in Asia and the Middle East, given that the marginal Opec supplies are mostly heavy crudes. I have already mentioned above that oil sands, being a marginal supplier, are putting a price floor of $70 per barrel (about Dh257.1). Even if additional non-Opec supplies start pressuring the price downwards, I do not think that Opec will accept a price below the range of $70-$80 per barrel. Opec will move to cut production. - Interview by Andrew Shouler, Editor, Financial Review.

Iraq signing oil contracts without oil law

The capitalists see it as a good thing, naturally.

Iraq: Baghdad may yet fulfill its potential
By Carola Hoyos
Published: May 26 2009 05:25

After almost 40 years of exile, international oil companies are about to return to Iraq.

For companies such as BP, Shell, Total and ExxonMobil, Iraq represents the biggest opportunity in decades.

Not since the fall of the Soviet Union led to the revival of Russia’s industry and significant discoveries in central Asia, has such a promising oil frontier emerged.

The companies are among those expected to bid next month for oil service contracts. They hope their work in helping revive Iraq’s tired old fields will lead to being allowed to tap its vast undeveloped reserves.

Iraq has reserves of 115bn barrels, but war, sanctions and underinvestment have meant the country is able to produce only about 2.4m barrels a day, a fraction of its potential.

But the fall in oil prices – to about $60 a barrel, from $147 last July – has left a gaping hole in Iraq’s budget. As a result, politicians in Baghdad have finally become serious about writing contracts that oil companies are willing to accept, even without a hydrocarbons law.

The oil grab that went awry

This is amazing.  I'm glad this did not happen the way the Bush team envisioned it.  I think this confirms my (most Iraqis') worries about ulterior motives.  (Thanks Datta)

The Iraq oil grab that went awry
By Dilip Hiro

...Advocating "going after Saddam" during the January 30 meeting, defense secretary Donald Rumsfeld said, according to O'Neill, "Imagine what the region would look like without Saddam and with a regime that's aligned with US interests. It would change everything in the region and beyond. It would demonstrate what US policy is all about." He then discussed post-Saddam Iraq - the Kurds in the north, the oilfields, and the reconstruction of the country's economy (Suskind, p 85).

Among the relevant documents later sent to NSC members, including O'Neill, was one prepared by the Defense Intelligence Agency (DIA). It had already mapped Iraq's oilfields and exploration areas, and listed US corporations likely to be interested in participating in Iraq's petroleum industry.

Another DIA document in the package, titled "Foreign Suitors for Iraqi Oilfield Contracts", listed companies from 30 countries - France, Germany, Russia and Britain, among others - their specialties and bidding histories. The attached maps pinpointed "super-giant oilfield", "other oilfield" and "earmarked for production sharing" and divided the basically undeveloped but oil-rich southwest of Iraq into nine blocks, indicating promising areas for future exploration (Suskind, p 96).

According to high-flying oil insider Falah al-Jibury, the US administration began making plans for Iraq's oil industry "within weeks" of Bush taking office in January 2001. In an interview with the British Broadcasting Corp's Newsnight program, which aired on March 17, 2005, he referred to his participation in secret meetings in California, Washington and the Middle East, where, among other things, he interviewed possible successors to Saddam.

By January 2003, a plan for Iraqi oil crafted by the State Department and oil majors emerged under the guidance of Amy Myers Jaffe of the James A Baker III Institute for Public Policy at Rice University in Houston. It recommended maintaining the state-owned Iraq National Oil Co, whose origins dated to 1961 - but open it up to foreign investment after an initial period in which US-approved Iraqi managers would supervise the rehabilitation of the war-damaged oil infrastructure. The existence of this group would come to light in a report by the Wall Street Journal on March 3, 2003.

Unknown to the architects of this scheme, according to the same BBC Newsnight report, the Pentagon's planners, apparently influenced by powerful neo-conservatives in and out of the administration, had devised their own super-secret plan. It involved the sale of all Iraqi oilfields to private companies with a view to increasing output well above the quota set by the Organization of the Petroleum Exporting Countries for Iraq to weaken, and then destroy, OPEC.

Secondary evidence
On October 11, 2002, the New York Times reported that the Pentagon already had plans to occupy and control Iraq's oilfields. The next day The Economist described how Americans in the know had dubbed the waterway demarcating the southern borders of Iraq and Iran "Klondike on the Shatt al-Arab", while Ahmad Chalabi, head of the US-funded Iraqi National Congress and a neo-con favorite, had already delivered this message: "American companies will have a big shot at Iraqi oil - if he gets to run the show."

On October 30, Oil and Gas International revealed that the Bush administration wanted a working group of 12-20 people to (a) recommend ways to rehabilitate the Iraqi oil industry "to increase oil exports to partially pay for a possible US military occupation government", (b) consider Iraq's continued membership of OPEC, and (c) consider whether to honor contracts Saddam Hussein had granted to non-US oil companies.

continued


Also check out this Ron Paul commercial, which features a 2004 60 Minutes interview with Paul O'Neil that reveals the Bush team planned to invade Iraq as soon as they took office.

US invasion benefits Russia and China

'Critics said the 2003 U.S. invasion of Iraq said was driven by oil, but United States oil majors were largely absent from an Iraqi auction of oil deals snapped up instead by Russian, Chinese and other firms.'

Would Iran feel threatened by tripling of oil output from Iraq?

By Michael Christie and Simon Webb

BAGHDAD/DUBAI, Dec 9 (Reuters) - The geopolitical power balance in the Middle East faces upheaval if Iraq succeeds in tripling oil output, and fellow Shi'ite power Iran will feel more threatened than rival Sunni oil giant Saudi Arabia.

Iraq's potential leap into the ranks of the top three global oil producers could result in a strengthened Shi'ite Muslim front within OPEC if Baghdad aligns supply policy with Tehran.

That would rattle Riyadh, already suspicious of the rise to political supremacy of Iraq's Shi'ite majority since the fall of Sunni dictator Saddam Hussein. Disunity within OPEC could increase, undermining efforts to present an image of harmony.

But oil development in Iraq is more likely to feed tensions with Iran, draw away potential foreign investment from Iraq's neighbour and fuel social discord by depriving Tehran of much-needed money should it result in lower oil prices.

Revenue from the additional 4.5 million or more barrels per day that Iraq is hoping to pump could also give it the economic might to challenge Iran's influence over the Shi'ite world.

"Iraq's development is inevitable," said analyst Gala Riana of IHS Global Insight. "The changes in the balance of power won't be immediate, they are longer term and bring difficulties that Iraq and surrounding countries will need to deal with."

OIL INVESTMENT

Both Iraq and Iran need huge investment in their dilapidated oil industries. Iraq's opening to global energy firms, albeit on tough terms, gives it the edge in attracting the billions it needs to execute oilfield development of an unprecedented scale.

That would make it harder for Tehran to attract the cash it needs at a time when the Iranian state is already under enormous social and political pressure following the contested re-election of hardline President Mahmoud Ahmadinejad.

Even worse, Chinese state energy giants are participating in Iraq, leaving them less resources for elsewhere. Tehran has turned to Asian state firms for money and technology as Western companies have shunned it due to politics and sanctions.

"Why would you want to invest in Iran? It's very risky. You have the sanctions and the politics. If you're in Iraq, you would want to limit your exposure to another risky country in the region," said a senior western oil executive.

Iran could well become the destination for those that lose out in Iraq's oil auctions, he added.

If all of the contracts Baghdad is offering are signed, Iraq could boost its output capacity to 10 million bpd - rivalling Saudi Arabia's 12.5 million bpd and Russia's 10 million bpd, and leapfrogging over Iran, which says it can pump 4.2 million bpd.

Iran is more dependent than top oil exporter Saudi Arabia on high oil prices to finance social spending programmes. Higher output from Iraq would be bearish in the long term for the oil price and could also claw away market share from others.

"Another price downturn like that of last winter would really put the squeeze on the Iranian government, already suffering unpopularity from economic mismanagement, as well as the obvious political problems stemming from the election," said David Mack, a former U.S. envoy to the Middle East.

UNDER SWAY OF ARCH-FOE?

Saudi Arabia will watch the rise of Iraqi oil power and its relationship with Tehran with caution. Dominated by the puritanical Wahhabi sect, many of whose adherents view Shi'ites as apostates, Riyadh regards Persian Iran as its arch-foe.

But analysts say the view that post-Saddam Iraq is under the sway of Iran is often overstated.

Many of Iraq's Shi'ite leaders sought shelter in Tehran under Saddam, but Iraqi nationalism runs strong, as do memories of the 8-year Iran-Iraq war that killed a million people.

Even if a general election next year ushers in an overtly pro-Iranian government in Baghdad, the impact that increased Iraqi oil output might have on economic and political tensions inside Iran may drive the two neighbours apart, analysts say.

Ultimately, staunch U.S. ally Saudi Arabia would rather see a developing and prosperous Iraq than a country that serves as a base for al Qaeda. The kingdom has become entangled in neighbour Yemen's internal conflict and deepening instability.

"It's in our interest that Iraq emerges stable, we don't want another Yemen," said one Saudi official. "If Iraq becomes a regional economic power, that will help the Saudi economy." (Additional reporting by Rania El Gamal in Kuwait; editing by James Jukwey)

The courageous Iraqis who stayed

A very nice photo essay about the Iraqis who stayed in Iraq despite the violence: 'Russia Abrahim, 26, lost her father and two brothers to sectarian violence. She insists on staying in Iraq to teach geography.

“Most times when you talk to someone who has been through that, they are bitter and would love to leave the country,” Ms. Bruce said. “She wants to stay and teach geography. She thinks the more people know about others in the world and are more educated, the less likely something like that would happen in the future. She actually has a reason for staying.”

Ms. Bruce said her portrait series grew from long discussions she had with Yasir Ghazi and Duraid Adnan, reporters for The Times in Baghdad, who also helped her to find subjects who were staying in Iraq. Sometimes Mr. Ghazi or Mr. Adnan would excitedly tell her about someone they discovered.'

Thanks Marsha for sharing!

US & UK "chasing a phantom enemy"

So it turns out Al Qaeda does not exist as an organization. No surprise there. Wahhabi terrorism, however, has caused much death and destruction in Iraq and other parts of the world. Takfir and the notion that non-Muslims (from the Wahhabi perspective) are infidels or apostates must be combatted through education (and satire). Those who are influenced by Wahhabism and are determined to cause harm to innocent people must be arrested and jailed before they commit crimes.



This is a comment (Oct 5) for this post:

'If you have watched the video, please point out any inaccuracies you find. Where did the name "Al Qaeda" come from, if not from bin Ladin?

Thanks anan for pointing out that bin Ladin did set up an organization in 1998. In 1990 he volunteered to expel Iraqi forces from Kuwait and urged the Saudis not to invite infidels into the House of Islam. I wonder if he and his mujahideen really could have expelled Iraqi forces from Kuwait. That would have been an interesting turn in that story, if the Saudis had taken bin Ladin's offer before inviting the Americans.

The reason I posted this video is because what is discussed in it, including legal cases, seems to be true. I also wanted to emphasize that even IF Al Qaeda doesn't have an organization in the traditional sense, the Arabs and Muslims who were influenced by Wahhabi ideas were quite willing to be allied with a group that was responsible for the most horrendous sectarian violence in the history of the world. This video doesn't change the fact that jarab from Morocco to Salt to Riyadh volunteered to mass murder Iraqis. It doesn't change the fact that fundamentalist Muslims blew up Budhhist statues in Afghanistan and mass murdered Shia in Afghanistan and Pakistan.

It's also interesting to see the reaction of some Arabs to this video (and the person who posted it - "BBC now admits al qaeda never existed"), as if there are no Wahhabi terrorists who blow up markets in Iraq, as if 19 Arabs did not hijack planes and fly them into tall buildings in NYC 8 years ago.'

Update (Oct 6): Anand sent me this via email:

'AQ was a highly capable organization. It's name was written in the founding notes for the meeting in 1998 that formed the organization. There are detailed records of these founding meetings.

The Jihad against the Soviets in the 1980s has 13 major Mujahadeen groups. The 7 sunni extremist ones were:
http://en.wikipedia.org/wiki/Islamic_Unity_of_Afghanistan_Mujahideen (they were backed by the Pakistani and Saudi governments)

One of the important ones was:
http://en.wikipedia.org/wiki/Maktab_al-Khadamat
This was founded by Osama Bin Laden and Abdullah Azzam in 1984. This was a very large and well funded group. It was very real; and a feared enemy of the Soviet Union. It also participated in killing Shiiites.


Abdullah Azzam and Osama Bin Laden formed Al Qaeda in March 1988. Again, it was an important group from the start.

OBL (Osama Bin Laden) really took off in 1998 when he founded the international Islamic front. {He was emir for the entire group.} This was a huge group with arguably over a hundred thousand fighters around the world. Fortunately for the world (especially India, China, Russia, Iran, the Stans, and the Shia), the dumb Takfiri extremists attacked America too. As a result they suffered a body blow after 9/11. Al Qaeda linked networks are much weaker now than they were at their zenith (1998-2001.)'

Iraq Opens 6 Oil Fields to Global Bidding

Just days after it was reported that Iraq was in the final stages of signing short-term service contracts with four oil giants, Iraqi Oil Minister Hussain al-Shahristani announced that long-term contracts on six existing oil fields will be opened to global bidding.

Iraq Opens Oil Fields To Global Bidding

60% Increase In Output Sought

By Sudarsan Raghavan and Steven Mufson
Washington Post Foreign Service
Tuesday, July 1, 2008; Page A01

BAGHDAD, June 30 -- Iraq's government invited foreign firms Monday to help boost the production of the country's major oil fields, beginning a global competition for access to the world's third-largest reserves.

Iraqi Oil Minister Hussain al-Shahristani said the government would seek to tap Western technology and capital to increase Iraqi oil production by about 60 percent, or approximately 1.5 million barrels a day, swelling Iraqi oil revenue and potentially easing tight petroleum markets where prices have doubled in the past year.

Shahristani said 35 companies -- including firms from the United States, Britain, France, Russia, China and India -- had been selected to bid on long-term contracts to provide services, equipment, training and advice on the country's biggest oil fields, which have suffered from age, technological neglect and mismanagement during years of war and economic sanctions.

Continued

Comparing Iraq to Bosnia and Rwanda

An interesting article (thanks Z!) by Murtaza Mohsin, who compares Iraq to Yugoslavia and warns that Iraq could become the next Rwanda, although I wonder if the Shia militias would slaughter the Sunni Arabs like the Hutus slaughtered the Tutsis. I hope not.

The mother of all genocides
By Murtaza Mohsin

Genocide is an ugly word. It describes the vilest instincts that humanity has retained. Whether it be Genghis Khan's pyramids of skulls, the genocide waged by the Young Turks against Armenians in the aftermath of World War I, the atrocities of Pol Pot, the "ethnic cleansing" in Bosnia-Herzegovina or the 100-day killing rampage that was the Rwandan genocide, it shows the depth of the ability of humanity to hate.

In the last two cases, the world stood by and watched as whole populations were decimated. The North Atlantic Treaty Organization shamefully did nothing to curtail the Bosnian genocide in the backroom of Europe, the Balkans.

There are startling similarities that the situation in Iraq bears with those of the conflict in Bosnia and the Rwandan genocide. As if genocide of its own people were not enough, Iraq holds the seeds to the greatest regional conflict since World War II. While the possibility of a civil war is often mentioned, one grim specter is seldom mentioned, one with bleak reminders from the previous century, that of genocide.

Madaen, a town south of Baghdad, earned notoriety in April 2005 when upwards of 150 Shi'ite men, women and children were massacred. Despite being extremely gruesome even by the blood-drenched standards of the violence in Iraq, the incident has largely been forgotten. The event was repeated elsewhere, particularly in Diyala province, with insurgents attempting to decimate the local Shi'ite population.

The phrase "ethnic cleansing" emerged during the Bosnian civil war. One side forced expulsion or killing of the undesired ethnic group as well as the destruction or removal of the physical vestiges of the ethnic group, such as places of worship, cemeteries and cultural and historical buildings. Bosnian Serbs used ethnic cleansing to expel Muslims in the north and east of Bosnia. This parallels the situation in Iraq, with both Shi'ites and Sunnis being forcibly expelled from homes in areas dominated by the opposing community.

The situation in Iraq today bears considerable resemblance to the prelude to the Bosnian genocide. Yugoslavia collapsed in 1991 when communist strongman Josip Broz Tito died. With his death, strong nationalist forces were unleashed, with Slobodan Milosevic leading the Serb nationalists. In conjunction with a weakening of the Communist Party, he managed to implement amendments to the constitution reasserting control over the autonomous region of Kosovo, attempting to maintain a Yugoslavia under Serb dominance.

This was met by the rise of nationalist forces in Croatia in the form of the Croatian Democratic Union, which set the stage for the independence of Croatia and Slovenia through armed conflict. Subsequently, demands for independence in Bosnia were met with arms, and the Bosnian civil war began.

Now we see in Iraq that a dictator, Saddam Hussein, has been removed. This matches the death of Tito. Iraq like the former Yugoslavia is a patchwork of different ethnic groups with a single group in demographic dominance - Serbs in Yugoslavia and Shi'ites in Iraq. A single unifying political system collapsed in both cases, Ba'ath Party rule in Iraq and communism in Yugoslavia.

Without the iron rule of Tito, Yugoslavia dissolved. Milosevic attempted to use his own form of iron rule, yet he could not hold back the Hydra of independence he himself had unleashed. Serbian death squads, formed out of paramilitary units such as Arkan's Tigers, the White Eagles and others, unleashed a wave of atrocities on Muslims and Croats. In Yugoslavia, atrocities were committed by all sides, but they paled in comparison with the campaign waged by the Serbs enjoying the advantage of the heavy weaponry inherited from the old Yugoslav army.

It is all too easy for Iraq to go down this path. Already Shi'ite groups and Kurdish politicians proclaim federalism and autonomy according to region. Many observers agree this is a step away from independence of the various regions, that Iraq will break apart in this form of federalism, matching the collapse of Yugoslavia.

In another reminder from the Bosnian conflict, death squads are widespread in Iraq, with groups often directly linked to the Ministry of Interior. These include those linked to the Badr Brigades, which are in turn part of the Supreme Council for Islamic Revolution in Iraq, a powerful Shi'ite political group. Paramilitary units were also linked to political parties in the Bosnian conflict.

Iraq differs from Yugoslavia in one vital aspect. Unlike Serbs in Yugoslavia, Shi'ites never dominated Iraq. Saddam brutally suppressed Shi'ites and any possible aspirations for power during the decades of Ba'athist rule. Additionally, Sunnis and Shi'ites in the main both want the country to remain united. Many Iraqis continue to hold strong nationalist feelings not for their ethnic identity but for Iraq. Yet there are still too many similarities with the Bosnian situation for comfort.

However, there are disparities too, which force us to look further afield. In Rwanda, starting from April 6, 1994, 800,000 Tutsis and moderate Hutus were slaughtered by Hutu extremists within a hundred-day period. The genocide was remarkable as much for its speed and sheer scale as by the lack of response on the part of the United Nations and the First World, which stood by as hundreds of thousands were slaughtered.

Like Sunnis in Iraq, Tutsis, forming 20% of the population, had long been the political elite. They were the aristocracy until majority rule by Hutus began in 1959. Since then, Hutu political parties harped on Hutu nationalism and marginalized the Tutsis, forcing many to flee to refugee camps in the following decades.

In the early 1990s, Paul Kagame's Rwandan Patriotic Front (RPF) led a revolt from neighboring Uganda demanding better rights for Tutsis. The Rwandan government portrayed the invasion as an attempt to bring the Tutsi ethnic group back into power. Juvenal Habyarimana, the Rwandan president, himself reacted by immediately repressing Tutsis.

Rhetoric continued to rise in this period, egged on by radio, which began a campaign of hate and fear. The main culprit was the government-owned Radio Television Libre de Mille Collines, which issued calls for violence and anti-Tutsi propaganda. All that was required was a catalyst to bring about catastrophe.

It came with the assassination of president Habyarimana. The Mystere-Falcon jet carrying Habyarimana was shot down as it prepared to land in Kigali. As though the assassination were a signal, military and militia groups began rounding up and killing all the Tutsis they could capture, as well as political moderates irrespective of their ethnic backgrounds.

Local militias, known as Interahamwe, organized by the government waged, the genocide. The RPF responded by renewing the conflict and invaded Rwanda. The Tutsi rebels defeated the Hutu regime and ended the genocide in July 1994, but about 2 million Hutu refugees, some of whom had participated in the genocide and feared Tutsi retribution, fled to neighboring countries. This set the stage for the Congo war, regarded as "Africa's World War", directly involving nine African nations, as well as about 20 armed groups.

There are an alarming number of similarities in Iraq to Rwanda. Shi'ites have gained political power at the expense of the traditional power elite, the Sunni Arabs, and the demographics also directly match the situation in Iraq if one discounts the Kurds. Although it took decades for the concept of "Hutu power" to gain the proportions needed for genocide to happen, the violence currently being waged against the Shi'ites can more easily bring about rage equivalent to that in Rwanda.

I fear that local media, which in Rwanda were used as a tool of genocide, may be used in Iraq to increase ethnic tensions. Already there are allegations that media are increasingly widening the gap between Sunnis and Shi'ites.

The Rwandan genocide happened because the government created it; it was supported at all levels. Again I fear that Iraq may follow the same path if ever the Americans leave Iraq in the precarious situation it is in now and a Shi'ite-dominated government arises that is ruthless and determined to preserve its hold over power at any cost. It could wage total war against Arab Sunnis in a manner similar to the Rwandan government's war on the Tutsis.

Eventually, some political entity will fill the gap and make brutal decisions. It will not take the form of the civil war that Abu Musab al-Zarqawi and his followers so ardently tried to provoke. It will instead be a long list of atrocities, like the two genocides discussed in detail. It will take the form of massacres carried out by militias that are numerically stronger, better organized and better armed than the insurgency.

Those who have been forced out of their homes will return as guides for the death squads. Iraq will succumb to violence of unbelievable levels; whole neighborhoods will be wiped out in a manner similar to the ethnic cleansing carried out by the Hutus and Serbs. Kurds will probably attempt to exploit the violence to break away as an independent entity, with a wary Turkey watching.

It is likely that both the army and police, like their counterparts in the Rwandan genocide, will actively take part in the violence. Despite efforts to keep both non-sectarian in nature, the Iraqi army and police are riddled by internal divisions. The composition of the army and police is mainly Shi'ite and Kurd. This army may turn its weaponry against the people of Iraq.

Civil conflicts often have a transnational dimension, in that neighboring states may provide support to one party in hopes of making gains. Iraq is no exception; the conflict there is being fueled, at least in part, by its neighbors. Saudi Arabia continues to be the main external source of funding for the insurgency and provides the main source of funding and suicide bombers.

Iran supports Shi'ite militias including the Badr Brigade. In a civil conflict with genocidal overtones, neighboring countries will undoubtedly intervene; we may see what has happened to Congo in the aftermath of the Rwandan genocide. Religious tensions will be exacerbated by the presence of refugees, in much the same way as Hutu refugees exacerbated inter communal tensions in Congo, triggering the Congo war.

Neighboring countries will no doubt intervene using the rhetoric of protecting their co-religionists; Jordan would claim it was protecting western Iraq from genocide. It would attempt to invade and hold parts of Iraq because of its weakened state, particularly exploiting that ever-valuable resource, oil, in much the way that Congo was exploited by foreign invaders. Turkey would move into northern Iraq, strenuously claiming it was trying to prevent cross-border Kurdish raids, and take over the northern oilfields.

Eventually, Iraq may turn into one massive battlefield, with the whole of the Middle East fighting over the oil-rich country. It is also doubtful that the First World, emerging powers such as China, resurgent powers such as Russia, and others will not become involved in what may prove to be one of the largest conflicts the world has ever seen.

While much of the analysis given above is pure hypothesis, there exists too much chance for this horrible sequence of events to occur. We may be on the brink of the "mother of all genocides", which will pale all other genocides in comparison.

Blueprint for Peace in Iraq

For the first time, a real blueprint for peace in Iraq (Thanks CSS)

By Ali Allawi, former Iraqi Defence Minister
Published: 05 January 2007

The Iraqi state that was formed in the aftermath of the First World War has come to an end. Its successor state is struggling to be born in an environment of crises and chaos. The collapse of the entire order in the Middle East now threatens as the Iraq imbroglio unleashes forces in the area that have been gathering in virulence over the past decades.

It took the American-led invasion and occupation of Iraq, and the mismanagement of the country by both the Coalition Provisional Administration and subsequent Iraqi governments, to bring matters to this dire situation.

What was supposed to be a straightforward process of overthrowing a dictatorship and replacing it with a liberal-leaning and secular democracy under the benign tutelage of the United States, has instead turned into an existential battle for identity, power and legitimacy that is affecting not only Iraq, but the entire tottering state system in the Middle East.

The Iraq war is a global predicament of the first order and its resolution will influence the course of events in the Middle East and beyond for a considerable time. What we are witnessing in Iraq is the beginning of the unravelling of the unjust and unstable system that was carved out of the wreckage of the Ottoman Empire. It had held for nearly 100 years by a mixture of foreign occupation,outside meddling, brutal dictatorships and minority rule.

At the same time, it signally failed in providing a permanent sense of legitimacy to its power, engaged its citizens in their governance, or provided a modicum of well-being and a decent standard of existence for its people.

The Key Challenges

The nature and scope of the Iraq crisis can be encapsulated in the emergence of four vital issues that have challenged the entire project for remaking the Iraq state. In one form or another, these forces also affect the countries of the Arab Middle East, as well as Turkey and Iran, and the relationships between all of them.

Firstly, the invasion of Iraq tipped the scales in favour of the Shia, who are now determined to emerge as the governing majority after decades, if not centuries, of perceived disempowerment and oppression. The consequences of this historic shift inside Iraq and elsewhere in the Middle East are incalculable.

Secondly, the invasion of Iraq legitimised the semi-independent region that Iraq's Kurds had forged over the past decade. The Kurds whose rights to self-determination were acknowledged in the 1920 Sevres Treaty, and then subsequently ignored by the states of the post-Ottoman Middle East, have received an enormous fillip in their march towards recognition of their unique status.

What is still left to be decided is the geographic extent of the Kurdish region in Iraq, and whether it would have proprietary access to the resources of that area. This may prove a way station to the beginnings of the formation of a Kurdish state. The challenges that will pose to the integrity and self-definition of Turkey, Iran and Syria now or in the future is another formidable side effect of the overthrow of the old Baathist state.

Thirdly, the uneven, poorly prepared and messy introduction in Iraq of democratic norms for elections, constitution-writing and governance structures is a stark break with the authoritarian and dictatorial systems that have prevailed in the Middle East. While the Iraqi experiment has so far been marred by violence, irregularities and manipulation, it is quite likely to survive as the mechanism through which governments will be chosen in the future.

Lastly, the overthrow of Saddam coincided with the attempts by Iran to assert its influence and to gain entry into regional counsels. That has exercised a number of countries in the area no end, giving rise to alarmist warnings of Iranian hegemonistic designs and "Shia crescents". The responses that are being planned for the perceived threat are terrifying in their implications, with scant attention paid to their consequences to the peace and stability of the area.

Iraq was used as a foil to revolutionary Iran during the Iran-Iraq war, with devastating consequences for both. We are witnessing a possible reprise, the consequence of which, if the new warmongers get their way, will be catastrophic for it will go to the heart of the fragile societies of the Middle East. Shia will be pitted against Sunni not only in Iraq but in Lebanon, and the Gulf countries.

Dangers of Sunni Insurgency

In the sterile world of zero-sum politics, the loss of power of the Sunni Arab community in Iraq was soon translated into a raging insurgency that challenged not only the US occupation but also the new political dispensation.

The insurgency fed on the deep resentment Sunni Arabs felt to their loss of power and prestige. It has been aggravated by the fact it was a totally unexpected force that achieved the impossible- the dethronement of the community from centuries of power in favour of, as they saw it, a rabble led by Persianate clerics. The Sunni Arabs' refusal to countenance any serious engagement with the new political order had effectively pushed them into a cul-de-sac and has played into the hands of their most determined enemies.

The state is now moving inexorably under the control of the Shia Islamists, albeit with a supporting role for the Kurds. The boundaries of Shia-controlled Baghdad are moving ever westwards so that the capital itself may fall entirely under the sway of the Shia militias.

The only thing stopping that is the deployment of American troops to block the entry of the Shia militias in force into these mixed or Sunni neighbourhoods. The geographic space outside Baghdad in which the insurgency can flourish will persist but the country will be inevitably divided. Under such circumstances, the power of the Shia's demographic advantage can only be counter-balanced by the Sunni Arabs' recourse to support from the neighbouring Arab states. It is inconceivable that such an outcome can possibly lead to a stable Iraqi state unless one side or another vanquishes its opponent or if the country is divided into separate states.

Impact of Shia Ascendancy

The response to these existential challenges emanating from the invasion of Iraq, both inside Iraq and in the Arab world has been panic-stricken or fearful, and potentially disastrous to the stability in the area and the prospects for its inhabitants.

The Arab countries of the Middle East have been unable to adjust to events in Iraq, not so much because of the contagion effect of the changes that have taken place there. This had virtually disappeared as Iraq cannot be seen as model for anything worth emulating. It has less to do with the instability that might spill over from the violence in the country. It is more to do with accommodating an unknown quantity into a system that can barely acknowledge pluralism and democracy, let alone a Shia ascendancy in Iraq.

Egypt, Saudi Arabia and Jordan, linchpins of the American security order in the Arab world, cannot accept the principle of a Shia-dominated Iraq, each for its own reasons. They will do their utmost to thwart such a possibility, and failing that, will probably try to isolate such an entity from regional counsels

Implications for Middle East

It is this with this backdrop that solutions are being proffered to resolve the Iraqi crisis. However, rather than treat the problem in a much wider context, each party is determined to stake out its narrow position irrespective of its effects on other communities, groups and countries.

The seeds of another 100 years of crisis are being sown, with the Middle East consigned to decades of turbulence and the persistence of unmitigated hatreds and grudges. The most serious issue that is emerging is the exacerbation of sectarian differences between Shia and Sunni. That is a profoundly dangerous issue for it affects not only Iraq but also Saudi Arabia, Syria, Lebanon and the Gulf countries.

It is plausible that the cost of a Shia ascendancy in Iraq, if it is marked as such, will be further pressure on the vulnerable Shia communities in the Gulf countries. There is already the rekindling of anti-Shia rhetoric in a remarkably similar rerun to the pattern that accompanied the Saudi-led campaign to contain the Iranian revolution in the 1980s. The effect of that was the rise of the jihadi culture that was the harbinger of mass terrorism and suicide bombings.

This may drag the entire area into war or even the forced movement of people as fearful countries seek to "quarantine" or expel their Shia population.

The Solution

It requires genuine vision and statesmanship to pull the Middle East from its death spiral. The elements of a possible solution are there if the will exists to postulate an alternative to the politics of fear, bigotry and hatred.

The first step must be the recognition that the solution to the Iraq crisis must be generated first internally, and then, importantly, at the regional level. The two are linked and the successful resolution of one would lead to the other.

No foreign power, no matter how benevolent, should be allowed to dictate the terms of a possible historic and stable settlement in the Middle East. No other region of the world would tolerate such a wanton interference in its affairs.

That is not to say that due consideration should not be given to the legitimate interests of the great powers in the area, but the future of the area should not be held hostage to their designs and exclusive interests.

Secondly, the basis of a settlement must take into account the fact that the forces that have been unleashed by the invasion of Iraq must be acknowledged and accommodated. These forces, in turn, must accept limits to their demands and claims. That would apply, in particular, to the Shias and the Kurds, the two communities who have been seen to have gained from the invasion of Iraq.

Thirdly, the Sunni Arab community must become convinced that its loss of undivided power will not lead to marginalisation and discrimination. A mechanism must be found to allow the Sunni Arabs to monitor and regulate and, if need be, correct, any signs of discrimination that may emerge in the new Iraqi state.

Fourthly, the existing states surrounding Iraq feel deeply threatened by the changes there. That needs to be recognised and treated in any lasting deal for Iraq and the area.

A way has to be found for introducing Iran and Turkey into a new security structure for the Middle East that would take into account their legitimate concerns, fears and interests. It is far better that these countries are seen to be part of a stable order for the area rather than as outsiders who need to be confronted and challenged.

The Iraqi government that has arisen as a result of the admittedly flawed political process must be accepted as a sovereign and responsible government. No settlement can possibly succeed if its starting point is the illegitimacy of the Iraqi government or one that considers it expendable.

A Brighter Future

The end state of this process would be three interlinked outcomes. The first would be a decentralised Iraqi state with new regional governing authorities with wide powers and resources.

Devolution of power must be fair, well planned, and executed with equitable revenue-distribution. Federal institutions would have to act as adjudicators between regions. Security must be decentralised until such time as confidence between the communities is re-established.

The second essential outcome would be a treaty that would establish a confederation or constellation of states of the Middle East, initially including Iraq, Syria, Lebanon, and Jordan. The main aim of the confederation would be to establish a number of conventions and supra-regional bodies that would have the effect of acting as guarantors of civil, minority and community rights.

The existence of such institutions can go a long way towards removing the anxiety disadvantaged groups feel when confronted with the radical changes sweeping the area. The gradual build up of such supra-national institutions in the proposed confederation may also expand to cover an increased degree of economic integration and harmonisation.

That may include a regional development body which would help establish and fund common energy and infrastructure policies. Lastly, an indispensable end outcome is a regional security pact that would group the countries of the Arab Middle East with Iran and Turkey, at first in some form of anti-terrorism pact, but later a broader framework for discussing and resolving major security issues that impinge on the area as a whole.

That would also provide the forum for combating the spread of virulent ideologies and sectarian hatreds and provide the basis for peacefully containing and resolving the alarm that some countries feel from the apparent expansion of Iranian influence in the area.

The Importance of the US

It was the US that launched this phase of the interminable Middle East crisis, by invading Iraq and assuming direct authority over it. Whatever project it had for Iraq has vanished, a victim of inappropriate or incoherent policies, and the violent upending of Iraq's power structures.

Nevertheless, the US is still the most powerful actor in the Iraq crisis, and its decisions can sway the direction and the manner in which events could unfold.

In other areas of the world, the US has used its immense influence and power to cement regional security and economic associations. There is no reason why the regional associations being mooted in conjunction with a decentralised Iraqi state, could not play an equally important part in resolving the Iraqi crisis and dispersing the dangerous clouds threatening the region.

The Iraqi proposals

1 Iraq government calls for regional security conference including Iraq's neighbours to produce an agreement/treaty on non-intervention and combating terrorism. Signatory states will be responsible to set of markers for commitments.

Purpose: To reduce/eliminate neighbouring countries' support for insurgents, terrorists and militias.

2 Iraq government calls for preparatory conference on a Middle-Eastern Confederation of States that will examine proposals on economic, trade and investment union. Proposals will be presented for a convention on civil, human and minority rights in the Near East, with a supreme court/tribunal with enforcement powers.

Purpose: To increase regional economic integration and provide minorities in signatory countries with supra-national protection.

3 Iraq government calls for an international conference on Iraq that would include Iraq, its regional neighbours, Egypt, the UAE, the US, UK, France, Germany, Russia and China that would aim to produce a treaty guaranteeing:

a. Iraq's frontiers.
b. The broad principles of Iraq's constitutional arrangements.
c. Establishing international force to replace the multi-national force over 12 to 18 months. Appointing international co-ordinator to oversee treaty implementation.

Purpose: To arrange for the gradual and orderly withdrawal of American troops, ensure that Iraq develops along constitutional lines, confirm Iraq and its neighbours' common frontiers.

4 Iraq government will introduce changes to government by creating two statuary bodies with autonomous financing and independent boards:

a. A reconstruction and development council run by Iraqi professionals and technocrats with World Bank/UN support.
b. A security council which will oversee professional ministries of defence, interior, intelligence and national security.

Purpose: To remove the reconstruction and development programme from incompetent hands and transfer them to an apolitical, professional and independent body. Also to remove the oversight, command and control over the security ministries from politicised party control to an independent, professional and accountable body.

5 The entire peace plan, its preamble and its details must be put before the Iraqi parliament for its approval.

Ali A Allawi was Minister of Trade and Minister of Defence in the Iraqi Governing Council Cabinet (2003-2004). He was in the Transitional National Assembly, and Minister of Finance, Transitional National Government of Iraq (2005-2006). His book, 'The Occupation of Iraq Winning the War, Losing the Peace' will be published in March