Foreign Policy Blogs

Iraqi Oil Production Outpaces Iran’s

Iraqi oil is booming…so what?

Although American statesmen and Republican politicians of the Bush era hate to admit it, one of the foundational aims of the war in Iraq – the creation of a liberal democracy – guaranteed an increase in Iranian influence both within Iraq and across the region. The politics of Shi’a majority were immediately advantaged by electoral democracy, and parties and personalities – both homegrown and upon return from exile – supported by (and supportive of) Iran were sure to emerge. Members of Congress failed to recognize that America couldn’t fight its way out of this natural end result, and war waged on against militant Iranian proxies fighting in the streets of Baghdad and across the Shi’a south.

To quote the Cato Institute’s Ted Carpenter way back in 2008:

The United States did Tehran a huge favor by removing the [Ba’athi] political elite, and paving the way for the Shiite-Kurdish alliance that now dominates Iraq’s political affairs. Having taken that step, it does little good now for proponents of the war to whine about Tehran’s expanded influence.

Of course, we’ve mostly heard the latter since the end of American power presence in Iraq. Here in the States, Republican and Democrats, alike, bemoan the Shi’a dominated, post-war Iraqi government’s predilection to play it close with the Iran/Syrian alliance. Nouri al Maliki has proven supportive of the Assad regime, and has maintained even closer ties to his sectarian cousins in Tehran. Some have suggested that Iraq has matured into Iran’s latest client state, not the “sovereign, stable and self-reliant” nation President Obama extolled when proclaiming an end to America’s military misadventure.

If Iraqi governance is to achieve self-determination it will do so based on its economic solidity. Now, despite myriad security setbacks, there now appears to be a light at the end of that tunnel. Today, Bloomberg reports that Iraqi crude production in the month of June outpaced Iran’s for the first time in more than two decades. This was due to the precipitous decline of output from the Islamic Republic ahead of a European Union ban on purchase from the nation that started July 1:

Iraq pumped 2.984 million barrels a day in June, outpacing Iran’s 2.963 million, the Organization of Petroleum Exporting Countries’ Vienna-based secretariat said today in its Monthly Oil Market Report. That’s the first time Iraq’s output has exceeded Iran’s since 1988, when the countries ended their eight-year war, statistics compiled by BP Plc show.

Stated frankly, this news is significant for two reasons. First, Iraq’s robust oil production alleviates concerns that the EU embargo on Iranian crude will press global supplies. Second, the recovery of the Iraq’s largest currency earner should remind us that Iraq can stand on its own two feet.

Now the bad news. This maturation of Iraqi oil doesn’t resolve Tehran’s leverage in Baghdad for one critical reason. Since Saddam was toppled, the constitution written, and governance established, controversy has simmered over oil contracts, and the constitution’s hydrocarbon law, which remains a work in progress. Political divides within the country surrounding oil profits have contributed to the long-standing debate over the costs and benefits of a strong central government versus stronger decentralized governments.

Before Iraq can move forward as state, it still must come together as a nation. At present, it remains critically fragile — one hopes this oil boom might afford a brighter future.