U.S. May Tap Oil for Iraqi Loans

  1. http://www.latimes.com/news/nationwo...s-world-manual
    U.S. May Tap Oil for Iraqi Loans
    The White House weighs a plan to pledge future revenue to finance postwar reconstruction. Critics question the effort's legitimacy.
    By Warren Vieth
    The Los Angeles Times
    Friday 11 July 2003
    WASHINGTON - The Bush administration is considering a provocative idea to pledge some of Iraq's future oil and gas revenue to secure long-term reconstruction loans before a new Iraqi government is in place to sign off on the proposal.
    The plan, endorsed by the Export-Import Bank of the United States and some of America's biggest companies, would help avert a looming cash crunch that has the potential to stall the postwar rebuilding effort. One U.S. official rated the proposal's prospects at 50-50.
    But the plan is drawing fire from some administration officials, lawmakers, policy analysts and prominent Iraqis who say it would mortgage the Persian Gulf nation's most treasured resource, prevent future leaders from deciding how to spend their oil money and put U.S. taxpayers at risk.
    "Iraqis believe their oil should not be touched by foreigners, that it should remain in the hands of the Iraqi government and that no one has a right to do anything before an elected government is in place," said Fadhil Chalabi, executive director of the Center for Global Energy Studies in London and a former Iraqi Oil Ministry official.
    "As an economist, I believe in what they are proposing. You couldn't come up with a better formula," Chalabi said. "But Iraqi politics and the way they look at these things are not encouraging. It could create problems later on. Better to wait until a government is formed."
    That may be too late, in the view of the plan's supporters. The Export-Import Bank and an industry coalition that includes Halliburton Co., Bechtel Group Inc. and other major companies that are interested in winning contracts in Iraq are warning that unless steps are taken soon to secure new funds, the reconstruction well could run dry.
    "Common sense says get Iraq running. How do you get the country running? By using its own oil revenue 100% for the benefit of the Iraqi people," said Export-Import Bank Chairman Philip Merrill. "If you want to wait three or four years, be my guest. But that means the country is going to be running on the dole of the United States."
    Many experts agree that Iraq is headed for a possible cash flow crisis as reconstruction costs escalate, initial funds are depleted and the resumption of oil exports is delayed due to damage caused by looting and sabotage.
    But they part company over whether the U.S.-led occupation administration in Baghdad has the legal or moral authority to pledge future oil revenue as loan collateral before the issue can be debated by elected Iraqis.
    "Unless a reconstituted Iraqi government or the U.N. Security Council authorizes the plan, it appears to violate international law," said Rep. Henry A. Waxman (D-Los Angeles). "We do not have the right, without additional authority, to impose financial obligations on the future government of Iraq."
    Waxman, the ranking Democrat on the House Government Reform Committee, has asked the Export-Import Bank, the Pentagon and the U.S. Army Corps of Engineers to disclose more information about the proposal and the role played by Halliburton and other companies in crafting it.
    Opponents of the plan warn that if a future Iraqi government chose to stop making payments on the obligations, U.S. taxpayers could wind up holding the bag.
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  2. 30 Comments

  3. by   roxannekkb
    Excuse me, but why should Iraq hand over its oil revenues to pay for reconstruction? The U.S. bombed the hell out of the place and destroyed the infrastructure and now we want the Iraqis to pay for the clean-up with their oil? And isn't that a big surprise, that Halliburton is one of the companies constructing the proposal. Hmm, what's their percentage of it? This whole thing makes me so ill.
  4. by   H ynnoD
    Seems like a pretty good deal.Not the same as before when Saddam kept all the food for oil for himself.Someone I'm sure will make alot out of the deal,but So will Iraq.Doubt they've seen anything from their oil in 30 years.Believe things can only now get better for them?
  5. by   fergus51
    I just don't understand how people would ignore the OBVIOUS political storm this will bring. Remember all that "We aren't going in for the oil, it belongs to the Iraqi people" talk from before the war???? Remember how those who suggested our government had its sights set on Iraqi oil were told how wrong they were? Then within 2 months we are already talking about how the Iraqis will spend their future money without getting an agreement from them?
  6. by   Q.
    I thought the whole premise was yes, the oil belonged to the Iraqi people because it is a source of income to "rebuild their country." I am the only one who remembers this talk from before? So I guess this isn't a surprise to me.

    Under Hussein's control, the oil was used for the "oil for food program" but as we all know and found out, food was KEPT from the Iraqi people. I agree with Donny; don't see how this can be a negative, especially when compared to Hussein.
  7. by   nialloh
    I don't see anything wrong with this. The money is being spent on the Iraki people. It's not like he is asking for reparations.
  8. by   fergus51
    Susy, I can understand that if they are the ones deciding how to spend it. This makes it sound like we will be committing their money for a very long time. I wouldn't be thrilled if the government that bombed me then decided how my country's resources should be used in the future. It would be VERY different if there were some sort of Iraqi interim government making the decision to do this. I agree that they are probably better off than under SH, but that's a very poor yard stick to judge our policies by.
  9. by   Q.
    Originally posted by fergus51
    It would be VERY different if there were some sort of Iraqi interim government making the decision to do this.
    I thought there was some sort of interim government. On my way home from camping yesterday, I remember hearing on the news that this body met for the first time yesterday or the day before - and their first measure of business was to declare a National Iraq holiday on the day Hussein fell from power. I remember this because my husband and I thought - shouldn't they be more concerned with other things?
  10. by   SmilingBluEyes
    Originally posted by fergus51
    I just don't understand how people would ignore the OBVIOUS political storm this will bring. Remember all that "We aren't going in for the oil, it belongs to the Iraqi people" talk from before the war???? Remember how those who suggested our government had its sights set on Iraqi oil were told how wrong they were? Then within 2 months we are already talking about how the Iraqis will spend their future money without getting an agreement from them?
    I am sorry not to be contributing an original thought to the thread, but these words from Fergus say what I want to, perfectly. It will be trouble; on that we can bet.
  11. by   pickledpepperRN
    Sorry. I almost never if ever have an original thought. Here is a little information:
    http://sg.news.yahoo.com/030713/1/3cigh.html
    Sunday July 13, 8:34 PM
    Shell wants "legitimate" Iraqi authority before upstream bids
  12. by   roxannekkb
    I thought there was some sort of interim government.
    Well there is, sort of. If you want to call it that.

    It's some sort of council appointed by the U.S.--note, appointed, not chosen by the Iraqis. And I tend to guess that the first order of the day, the measure to celebrate Sadam's fall from power as a national holiday was the brainchild of U.S. propaganda, and not something the Iraqis decided on.

    Also, Bremer is still in charge and makes all the decisions. It is very vague on exactly what powers this council will have, and who all of these people are, but the U.S. has made it clear that they are still in charge.

    So any decisions about oil or future revenues, made right now, is being made without real Iraqi input. Anyway you look at, we do indeed, appear to be after their oil afterall.
  13. by   Q.
    Ok, so what should be done with the oil reserves? Isn't their oil reserves the method with which Iraq can begin to become a member of the international community? To foster growth of their country?

    If you are starting a country from scratch (which basically a rebuild of Iraq is) which has rich oil fields, how else would you use them other than to supply your country with revenue?

    What if the interim government, appointed by the Iraqi people, decided to sit on the oil fields, not sell any of it, and continue to starve the common Iraqi citizen and contribute to a nonexistant economy?

    And who else should be in charge? Russia? Germany? Any Hussein loyalist? Or should they just be willy-nilly Iraqi's whom we hope isn't a Hussein loyalist? Because clearly, when left to its own devices, Iraq was a nation which supported terrorism, executed its own citizens en masse, invaded its smaller neighbor nations, starved its own citizens and supported a dangerous dictatorship.
    Last edit by Susy K on Jul 14, '03
  14. by   fergus51
    I agree with you that the oil money should be used to rebuild the country. I think the problem is that we should not be unilaterally making SERIOUSLY LONG TERM financial commitments with someone else's money that we happen to control cause we attacked them and ousted their leader. I don't have a problem with them helping to set up a government and then deciding how to spend their resources.

    As to who should be the one making the decisions in Iraq.... I understand that for the short term it has to be the US government. Long term, it needs to be a government elected by the Iraqis, even if it isn't exactly who we would like them to elect, otherwise we will be the big bad imperialists everyone loves to say we are.

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