Iraq's Oil Revival versus its Constitutional Legacy

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Iraq held a successful democratic election earlier this month and negotiations are now under way for the formation of a new government. The management of the country’s oil renaissance will be at the top of its agenda. In the latest addition to our series of research papers, Professor Peter Cameron (CEPMLP’s Director) examines the conflicts that have arisen over oil development between the federal and the Kurdish authorities in the post-Saddam years since Iraq’s Constitution was adopted. The different approaches which the regional and federal authorities have chosen favour production sharing and service contracts respectively. These differences need to be resolved, but - will a compromise be reached at the expense of the foreign investors who have already invested in the Kurdish region? What kind of Iraq-wide policy is likely to emerge towards foreign investors? Cameron analyses the current state of play and identifies the uncertainties investors face.  

 

Abstract:

In this paper I shall (1) examine the evolution of the two different models of contract for foreign investors in the context of the recently established federal structure; (2) assess how the 2009 successes of the federal government in attracting foreign investors are impacting upon the tensions between the federal government and the KRG, and (3) consider the potential for resolving them peacefully. Two caveats need
to be entered at the outset. The Iraqi general elections held in Iraq in early March 2010 will trigger many months of bargaining among the various parties before a new Government can be formed. This means that any statements about future trends in such a fluid context have to be made and treated very cautiously. A second caveat concerns the scope of this paper. It examines the development of oil in Iraq as a way of throwing light on a recently established, and still fragile federal structure in a post-conflict society; one which has so far relied upon the presence of foreign troops as a principal source of stability. There are therefore wider issues about oil and about federalism that are not examined here . In this paper I shall (1) examine the evolution of the two different models of contract for foreign investors in the context of the recently established federal structure; (2) assess how the 2009 successes of the federal government in attracting foreign investors are impacting upon the tensions between the federal government and the KRG, and (3) consider the potential for resolving them peacefully. Two caveats need to be entered at the outset. The Iraqi general elections held in Iraq in early March 2010 will trigger many months of bargaining among the various parties before a new Government can be formed. This means that any statements about future trends in such a fluid context have to be made and treated very cautiously. A second caveat concerns the scope of this paper. It examines the development of oil in Iraq as a way of throwing light on a recently established, and still fragile federal structure in a post-conflict society; one which has so far relied upon the presence of foreign troops as a principal source of stability. There are therefore wider issues about oil and about federalism that are not examined here. 


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