Outside View: Oil firms boom on Iraq war
As ExxonMobil prepares to celebrate what could be a record profit of more than $10 billion for the last quarter of 2007, jubilant company officials and stockholders might want to join in a moment of silence for the more than 1 million war dead in Iraq -- Iraqi and American combined. They paid the ultimate price in a war in which ExxonMobil has had a hand and which we can estimate is responsible for at least $2.5 billion of ExxonMobil's latest profit.
"Exxon guns for all-time profit record" declared CNNMoney.com on Jan. 23, explaining: "ExxonMobil, the world's largest publicly traded oil company, is within striking distance of setting an all-time profit record -- again."
This estimate of ExxonMobil's war profit, between 20 percent and 30 percent of its overall profit, was kindly provided at my request by Dean Baker, economist and co-director of the Center for Economic and Policy Research, who said that the excess profit can be traced to: 1) the loss of at least 1 million barrels a day of Iraqi oil production due to the war; and 2) "the additional uncertainty about supplies created by the war."
"I'm just speculating," Baker says, "but the price of oil is probably about $10 to $22 a barrel higher because of the war" attributed to the two factors noted above. "If (oil) prices were 10-20 percent lower, Exxon's profits might be 20-30 percent lower."
Baker, who has testified before Congress on the oil industry, specializes in evaluating the social costs of political decisions, studying housing, Social Security and Medicare, as well as oil.
What this analysis means is that the Iraq War is not only a major factor in the profits of ExxonMobil and other major oil companies, but in the cost of gasoline and petroleum products in the United States and around the world. The $150 billion-plus economic stimulus package before Congress is prompted in part by the oil price inflation besetting U.S. consumers.
CNN reports that "For every $1 (a barrel increase) in the price of oil, Exxon makes (another) $125 million for the quarter. … Exxon is expected to make $39.2 billion for all of 2007, just shy of its previous record of $39.5 billion in 2006, which breaks down to the company earning about $75,000 a minute."
ExxonMobil benefits greatly from the Iraq War not only because of the inflation of oil prices but because it is among the largest sellers of petroleum products to the Pentagon. ExxonMobil received more than $4.2 billion from sales to the U.S. military between FY 2003 and 2007. The other two top sellers to the Pentagon for this period are Shell ($5.6 billion) and BP ($4.7 billion).
"There is also an indication that ExxonMobil, along with other Western oil companies, was involved prior to the 2003 invasion in defining a new oil law for Iraq that would bring the firms exceptional profits." That law, backed by the U.S. Congress, has met strong opposition in Iraq, particularly from Iraqi oil workers.
ExxonMobil, Shell, BP, Chevron, ConocoPhillips, Valero and Marathon now import Iraqi oil for refining in the United States. What they seek in the new oil law is significant, long-term control of Iraqi oil at prices more favorable than they pay in most other nations.
The idea that the Iraq War and its incendiary potential for the Middle East are contributing to oil price inflation is reinforced in the 2006 report, "The Economic Cost of the Iraq War: An Appraisal Three Years After the Beginning of the Conflict" by Linda Bilmes, former assistant secretary and chief financial officer of the U.S. Department of Commerce and now at Harvard's Kennedy School, and Joseph Stiglitz, winner of the Nobel Prize for economics in 2001, former chair of the Council of Economic Advisers and Columbia University economist.
"We believe … the impact of Iraq on oil prices is a large proportion of the $45-a-barrel increase since the war began. … Given U.S. imports of roughly 5 billion barrels a year, a $10-per-barrel increase translates into an extra expenditure of approximately $50 billion. Americans are poorer by that amount … if we base our estimates on a $10 price increase, and assume … it extends for a least six years, the cost is $300 billion."
They go on to say that the impact of this increased cost results in reduced consumer purchasing and economic output which, over the six-year period just mentioned, could raise the total cost to the U.S. economy to $450 billion. This level of cost is one that might be used to measure the effectiveness of the amount in the current economic stimulus package, suggesting that it is likely just the first of a series.
--
(Nick Mottern is the director of ConsumersforPeace.org and has worked as a reporter for the Providence (R.I.) Journal and Evening Bulletin and the former newsletter Consumer News; as a researcher and writer for the former Senate Select Committee on Nutrition and Human Needs; as a lobbyist for Bread for the World; as a writer and organizer for Maryknoll Fathers & Brothers; and as an organizer in New York's Hudson Valley. He is a member of the board of Traprock Peace Center in Greenfield, Mass.)
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29-01-2008, 07:25 PM #571
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29-01-2008, 07:35 PM #572
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PM to shrink govt. to 20 ministries – UIC legislator
A majority bloc legislator revealed on Monday that Iraqi Prime Minister Nouri al-Maliki will shrink his next government to only 20 ministries, suggesting some political blocs that quit would return to the new government the premier is said to announce in one week's time.
"There is a wish on the part of all blocs that withdrew from the government – including the (Sunni) Iraqi Accordance Front (IAF) and former Prime Minister Iyad Allawi's Iraqi National Iraqi List (INL) – to return in the new lineup," Hayder al-Abbadi, an MP from the (Shiite) Unified Iraqi Coalition (UIC), told Aswat al-Iraq – Voices of Iraq – (VOI).
The IAF, which represents the largest bloc of Sunni Muslims in the political process and the government, had quit its five ministers and deputy premier from the Maliki cabinet, followed by Allawi's INL, which had five portfolios.
The Sadrist bloc, or Iraqis loyal to Shiite leader Muqtada al-Sadr, withdrew its six ministers from the government in mid-April 2007.
The withdrawals paralyzed the government in many of its activities, prompting Maliki to re-form a government.
"There are two options before the prime minister: either to fill the gaps caused by these withdrawals or launch a big change in all the ministries," said Abbadi.
Maliki, during the meeting of the Iraqi Political Council for National Security on Saturday, had pledged to end the current crisis his government is facing, adding a change will be in effect this week.
The IAF is the third largest bloc in the Iraqi parliament with 44 out of a total 275 seats, after the UIC's 83 seats and the Kurdistan Coalition (KC)'s 55 seats.
Earlier on Monday a lawmaker from the IAF said the bloc's ministers who quit the government last August may re-join the cabinet within a week.
"Intensive meetings between members of the IAF and the government over the last few days resulted in a final agreement on the return of the quitting ministers," MP Rasheed al-Azawi told VOI.
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29-01-2008, 07:37 PM #573
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Newspapers urge choice of comp****t individuals for govt. positions
Two Iraqi newspapers on Tuesday called on the government to adopt comp****cy as a key criterion in choosing individuals for government positions and fight corrupt elements whom they said promote distorted ideologies and deviant ideas.
Al-Mashriq newspaper, an independent daily, published an article entitled 'Seek the help of those experienced even if from other religions.'
"The new Iraqi state is in need of experienced individuals to help with reconstruction work… Experience is priceless and political affiliation is a doctrine. Individuals of pure doctrine can separate their experience from their doctrine," the newspaper wrote.
The newspaper further urged the government to appoint comp****t officials regardless of their religious or political affiliation. "Only with experience will our country develop and our society flourish," it added.
Al-Dustour, another independent daily, published an article by its Editor-in-Chief Basim al-Shiekh in which he criticized the appointment of incomp****t personnel in government posts.
Describing the situation as a phenomenon that extended to other areas of public life, the author said that many of those unqualified officials take advantage of their positions to embezzle and accept bribes.
Under a headline that read 'When will they stop tampering with our destiny?' the independent daily al-Sabah al-Jadid published an article by its Editor-in-Chief Ismail Zair in which he wrote about the fire that broke out in the Iraqi Central Bank on Monday.
The author criticized the lack of a fire alarm system in Iraq's largest bank and dismissed negligence as the reason for the blaze. He further raised suspicions of premeditated arson, citing fire that he said usually breaks out in state-run storehouses at time of inventory.
At an early hour on Monday morning, a large fire erupted in the Iraqi Central Bank building in central Baghdad without any loss of life.
Police forces said that the fire, which started in three floors of the six-storey building, caused damage to the bank and its contents. Iraqi civil defense teams managed to extinguish the fire without any casualties.
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29-01-2008, 07:40 PM #574
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Fresh mechanism to negotiate with govt. – IAF legislator
A member of parliament from the Sunni Iraqi Accordance Front (IAF) revealed on Tuesday a fresh mechanism for negotiations to return to the government, which would include having government pledges and deals in written form.
"The negotiations the front is having with the government used to be orally without writing down the agreements clinched, which made it easy for the government to renege on its promises," Nour al-Din al-Hayyali said in statements to Aswat al-Iraq – Voices of Iraq – (VOI).
"Many of the government's programs, based on which the IAF participated in the Maliki government, have not been in effect so far like the disbanding of the militias and balance in state institutions and decision-making process," he said.
The IAF, the third largest bloc in the Iraqi parliament with 44 out of a total 275 seats, had quit the Maliki government in August 2007, hinging its return on participation in the decision-making process and the release of Iraqi detainees.
Statements were made by the IAF during the past few days about its possible return to the government after the latter responded to the front's demands.
The IAF is composed of three main Sunni organizations: Vice President Tareq al-Hashimi's Iraqi Islamic Party (IIP), the IAF leader and legislator Adnan al-Dulaimi's Iraq People's Congress and MP Khalaf al-Alyan's National Dialogue Council (NDC).
The front had occupied six ministerial portfolios in the Maliki government, in addition to the vice president post.
On Monday a lawmaker from the IAF said the bloc's ministers who quit the Maliki government last August may re-join the cabinet within a week.
"Intensive meetings between members of the Accordance Front and the government over the last days resulted in a final agreement on the return of the ministers who quit the front to the cabinet," MP Rasheed al-Azawi told VOI.
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29-01-2008, 07:42 PM #575
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Iraq govt extends ration card till mid 2008-spokesman
An Iraqi government spokesman on Tuesday announced the Council of Minister’s approval of extending the delivery of ration card items until mid-2008.
“The Council of Ministers on Tuesday’s session decided to approve an extension in the delivery of ration cards to the first half of 2008,” the statement, received by Aswat al-Iraq - Voices of Iraq - (VOI), quoted Ali al-Dabagh, an Iraqi government spokesman, as saying
The announcement pointed out that “the Council of Ministers approved providing the Ministry of Trade with the required funds to supply the system items.”
The spokesman added “a committee consisting of representatives from the Trade Ministry, Planning Ministry, and Interior Ministry will design the means of sorting out the individuals eligible for the ration card system, provided that the rationing system has started as of July 1, 2008.
Last December, the minister of trade representative during a parliamentary session stressed that the ration card system formed 20% of the fiscal budget for the calendar year 2007, while it dropped to 1.5 “ in 2008.
He called for extra funds exceeding $5 billion to cover the ration card items due to price increases of items in the international markets.
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29-01-2008, 07:44 PM #576
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Iraq receives BIAP airspace control in April-Aviation source
Iraqi aviation director on Tuesday said preparations were underway for the handover of airspace control from U.S. troops to Iraq in April.
“The Iraqi administration is preparing for the handover of Iraqi airspace from U.S. troops to Iraq next April after having been unable to employ the use of radar to control airspace since 1991” Rahmi al-Sheibani, the director of Iraqi aviation, told Aswat al-Iraq - Voices of Iraq - (VOI).
He added “Nine airspace control trainees were taking theoretical and practical courses for roughly eight months to receive the administration of regulating radars and controlling the movement of airplanes to ensure the passengers safety.”
U.S. troops gained administration and control over airspace and airplanes’ movements after entering Iraqi in March 2003.
“The administration of Baghdad airport set on receiving the airspace from the U.S. troops which could help increase the number of arriving airplanes,” Joudat Abdul Sattar, the director of the Aerospace Center said.
Elsewhere, director of National Command Center, Abdel Karim al-Juburi, noted the Interior Ministry was “working on preparing security and technical staff to receive the security of Baghdad International Airport from British Global Security Company in two months.”
He added “the agency of information and national investigation was working with the Interior Ministry offices to prepare the procedures for complete handover of Baghdad International Airport to Iraqi administration and to provide the equipment for protection; explosive detectors as well as trained sniffing dogs.”
Earlier, Iraq warned the British Global Security Company administering and protecting Baghdad International Airport of flouting the rules and decided to cease its contract, handing the airport over to Iraqi authorities.
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29-01-2008, 07:45 PM #577
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Presidential Council ratifies new Iraqi flag
The Iraqi Presidential Council on Tuesday ratified changing Iraq's flag draft law, approved by the Iraqi parliament a week ago.
"The council - in its regular session today - ratified the new flag draft law," Nasser al-Aani, head of the presidential divan, told Aswat al-Iraq - Voices of Iraq - (VOI).
"A presidential decree was issued today to ratify the new flag draft law and to work on it for just one year," he explained.
"The law will be enforced after publishing it in Iraq's al-Waqaea newspaper in the coming days," al-Aani noted.
The Iraqi parliament had voted last Tuesday with a majority of votes - 110 out of 165 - in favor of a draft to modify the national flag by removing the three stars from the old flag and keeping the words Allahu Akbar (God is Great).
Iraq's flag has three colors - red, white, and black - and in the central white there were three stars and the words Allahu Akbar, which were added by the former regime of President Saddam Hussein months before the 1991 Gulf War.
Iraqi Kurdistan Region President Massoud al-Barazani had urged the central government in Baghdad to speed up changing the Iraqi flag ahead of the Arab parliamentarians conference to be hosted by Arbil in February 2008.
Barazani affirmed that the Kurds "would never raise the current flag because it still carries the three stars symbolizing the (former) Baath Party."
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30-01-2008, 06:19 PM #578
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Inquiry demanded after bank arson
Iraqi members of parliament have asked the government to set up a commission to investigate the fires that devastated large sections of the Central Bank building in Baghdad.
The MPs say the blazing fires were premeditated and were an attempt by certain senior officials to obliterate documents implicating them in corruption.
A statement read by Norrideen Hayali on behalf of the MPs representing several parliamentary blocks said the building housing the Ministry of Labor and Social Affairs was also set on fire.
“The fires have turned into ash important documents condemning officials for corruption,” the statement said.
Both fires caused no casualties and officials said Central Bank’s possessions of god and hard cash were safe.
The statement demanded the formation of an independent investigation commission to “determine those causing such calamities.”
Despite reports of massive corruption in which senior officials are said to be involved, the government has brought no one to justice so far.
Independent transparency agencies rank Iraq as number one in corruption in the world.
Prime Minister Noori al-Maliki has refused orders for his relatives and other members of his government to stand trial.
Inquiry demanded after bank arson | Iraq Updates
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30-01-2008, 06:21 PM #579
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Iraq Cuts Off Oil Supplies to South Korea
Iraq has stopped crude oil exports to South Korea in protest at an exploration deal involving Korean firms in Iraqi Kurdistan, officials said Tuesday.
Iraq on January 1 suspended an annual contract with South Korea's top refiner SK Energy to export 90,000 barrels per day, the energy ministry said.
SK Energy said it has been told to back out of the Kurdistan deal if it wants to resume the contract. "We are trying hard to resume the contract through negotiations," a spokesman told AFP.
A consortium of South Korean firms including SK Energy signed a deal in November with the Kurdish government to explore the Bazian field, which is estimated to hold 500 million barrels of crude oil.
Iraq has demanded that the consortium led by state-run Korea National Oil Corp cancel the exploration project. The corporation has refused to abandon the deal.
Iraq has been at odds with regional governments over control of new exploration areas.
The dispute has not badly hit supplies because Iraq accounted for less then three percent of total crude imports last year, an energy ministry official said. The shortage was covered by purchases on the spot market, he said.
Seoul has about 600 troops stationed in the Kurdish region for reconstruction projects. Parliament voted in late December to keep them there for one more year.
The extension was South Korea's fourth since 3,000 troops were deployed with a one-year mandate in 2004 at the request of the US government.
Iraq Cuts Off Oil Supplies to South Korea | Iraq Updates
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30-01-2008, 06:22 PM #580
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Iraq could See Windfall from High Oil Prices: Report
The Iraqi government could see a windfall from higher oil prices this year, while it moves to assume greater responsibility for security and economic development, a U.S. government watchdog said on Wednesday.
Oil revenues represent more than 80 percent of Iraq's $48 billion 2008 budget, according to the U.S. Office of the Special Inspector General for Iraq Reconstruction.
But the government of Prime Minister Nuri al-Maliki has based its revenue estimates on an average oil price of $57 a barrel, well below an average price of $85 per barrel forecast for 2008 by the U.S. Department of Energy.
"Average oil production in Iraq ... hit a post-war high of 2.38 million barrels per day, enhancing the likelihood that Iraq's national income in 2008 will significantly exceed expectations," the special inspector general, Stuart Bowen, said in his office's latest quarterly report.
The report did not say how big a windfall Iraq might see from rising oil prices. But the Energy Department's higher price forecast is 49 percent above current Iraqi expectations.
Higher revenue would come at a time when the Bush administration has begun to withdraw combat forces from Iraq as part of a plan to adopt a lower U.S. profile focused on the training and supervision of Iraqi security forces.
The administration expects to withdraw at least 20,000 soldiers by the end of July, and top defense officials say they would like to reduce U.S. troop levels further in 2008.
"2008 will be a 'Year of Transition' in Iraq, bringing with it the continued evolution of the U.S. program," Bowen said.
"The government of Iraq must assert ever greater responsibility for national security and economic planning, including the full funding and sustainment of ongoing relief and reconstruction efforts," he added.
Lack of agreement on how to divide the oil revenue among Shi'ite, Sunni and Kurdish communities is one of the main obstacles for reconciliation in Iraq nearly five years after the U.S. invasion that toppled President Saddam Hussein.
U.S. officials originally predicted Iraq's oil production would fund the country's postwar reconstruction and relief effort, which now totals $114 billion.
But efforts to rejuvenate the oil sector have suffered setbacks, including insurgent attacks on energy facilities. As a result, improved oil production is still below a prewar average of 2.6 million barrels per day, the report said.
The U.S. Congress has appropriated $47.5 billion for reconstruction. An additional $50.6 billion has come from Iraqi funds and $15.8 billion from international donors, it said.
Bowen's office also said Iraqi security forces could be ready to lead security efforts in all 18 of Iraq's provinces by the end of 2008, a goal that top U.S. military commanders have also said is achievable.
U.S. officials view the development of effective Iraqi security forces as a prerequisite for continued U.S. troop withdrawals.
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