Monday, December 21, 2009

Will New Oil Deals Provide Jobs For Iraqis?



Iraq recently completed the second round of bidding on its oil fields, which will hopefully usher in the return of international petroleum companies to Iraq that will bring in much needed investment and know how. This round went much better than the first with deals for seven of the ten fields up for auction. Iraq’s Oil Minister Hussain Shahristani believes that Iraq could reach 12 million barrels a day in capacity in six years as a result, which would make it a rival to the world’s largest producer Saudi Arabia. With such high expectations, many Iraqis, especially in southern Iraq where most of the oil resides, are hoping that this wealth will trickle down in the form of jobs and better services.

Currently southern Iraq has some of the poorest sections of the country despite the huge petroleum reserves. A recent report by the government’s Central Organization for Statistics and Information Technology, found that 49% of the population in Muthanna and 41% in Babil lived in poverty, the highest rates in Iraq. Residents of Dhi Qar told Agence France Presse that they didn’t expect much from the new oil deals, feeling that the best jobs would go to those that had political connections or paid bribes. In contrast, the Italian head of Dhi Qar’s Provincial Reconstruction Team, U.S.-funded groups that are aimed at improving the political and economic development of Iraq at the local level, believed that there would be plenty of job opportunities, and the complaints about corruption were overblown. Provincial officials in Basra also expressed similar optimism.

If jobs do appear, they will have to be from spin-offs such as construction and services, because its estimated that Iraq will only need 40,000 new oil workers by 2015. That’s a drop in the bucket when compared to the 250,000 young Iraqis who enter the job market each year. In Wasit for example, the sole foreign petroleum company currently operating in Iraq, the China National Petroleum Corporation (CNPC), only hired 450 Iraqis since it started working there in late-2008. They have also been accused of damaging farmland that has set off a wave of protests and small-scale sabotage against the corporation.

The problem as ever is that petroleum is not a labor-intensive industry. There will be a flurry of construction early on to improve the oil fields, which could offer opportunities to Iraqis. After that, probably in the best case, the increased revenues from higher exports will give Baghdad the necessary funds to improve services to placate the public. Otherwise the new oil deals will just give people another excuse to complain about their government.

SOURCES

Agence France Presse, “Southern Iraq town hopes for jobs boom after oil auction,” 12/17/09

Aswat al-Iraq, “COSIT: Unemployment, poverty drop in Iraq,” 12/13/09

BBC, “Iraq oil capacity ‘to reach 12m barrels per day,’” 12/12/09

Gunter, Frank, “Liberate Iraq’s Economy,” New York Times, 11/16/09

Al Jazeera, “Iraq’s oil wealth eludes the poor,” 11/4/09

Yackley, Ayla Jean, “Iraqi oil deals mean reams of steel, miles of pipes,” Reuters, 12/10/09

5 comments:

Iraqi Mojo said...

I hope Basra is rebuilt and becomes the city it was in the 60s and 70s or even better!

Anonymous said...

Currently southern Iraq has some of the poorest sections of the country despite the huge petroleum reserves.

The Blind and Deaf will never speak the truth....

Consequences of the War and Occupation of Iraq
http://www.globalpolicy.org/iraq/humanitarian-issues-in-iraq/consequences-of-the-war-and-occupation-of-iraq.html
Nearly 5.6 millions Iraqis are living below the poverty line, according to our most recent studies. At least 40 percent of this number is living in absolute and desperate deteriorated conditions," said Sinan Youssef, a senior official in the strategy department of the Ministry of Labour and Social Affairs, adding that this level of poverty is a 35 percent increase over the level before 2003.

"We were having a good life in Iraq [before 2003] - good food, nice clothes and we enjoyed travelling - but everything went out with the occupation," Zeid said.

“A study conducted by the ministry in coordination with the International Monetary Fund and the United Nations Development Program [UNDP] shows that 20% of the population is affected by poverty”, Leila Kazem, director-general of the department of social affairs at the labour ministry, told Agence France-Presse. “Some 2 million Iraqi families live under the poverty line, as defined by international criteria, which is fixed at one [US] dollar per day per person.”


· Before the Gulf War, Iraqi living standards were fast approaching that of southern Europe, featuring free education, ample electricity, modern farming, a large middle class and, according to the World Health Organization, access to health care for 93 percent of the population.

· The sanctions imposed by the UN Security council after the first Gulf War included items that were necessary for health and education. Printing equipment for schools were banned and extended to textbooks, medicines, medical journals, medical supplies, vaccines, vitamins, eggs, incubators, dialysis machines, dental supplies, milk and yogurt production equipment, water tankers, disinfectants, pesticides, insecticides and cancer medications.


· During the first Gulf War, the U.S. and British bombers destroyed Iraqi infrastructure, targeting water treatment, sewage plants, power generators, telephone exchanges, food production plants, food storage facilities.

· Unemployment exceeds 50 percent while those with jobs make between $4 and $8 a month.


· Iraq spent about $23 billion on goods under the UN oil-for-food program which is equivalent to about $170 per year per person – less than half the annual per capita income of Haiti, the poorest nation in the Western Hemisphere, and less than half what the UN spends to feed the dogs it deploys in Iraqi de-mining operations.

· In March 2002, a UNICEF official announced that the sanctions caused 25 and 9 percent of children in south and central Iraq to suffer from chronic and acute malnutrition. One quarter of Iraqi babies was born prematurely and underweight with few survivals.


· Typhoid cases increased from 2,200 in 1990 to 27,000 in 1999.
· 5,000 Iraqi children are estimated to have died each month due to sanctions.

· In Basra, pediatricians reported an increase of 6 to 12 times in the incidence of childhood leukemia and cancer as radiation levels in flora and fauna reached 84 times the safe limit recommended by the World Health Organization.


· Iraqi doctors reported 11 birth defects per 100,000 in 1989. By 2001, the rate was 116 per 100,000, including a doubling of congenital malformations in newborns among exposed populations and a surge in late-term spontaneous abortions due to congenital effects, reportedly now two to three cases each day, up from one per month.

Anonymous said...

Six years have passed since the fall of Saddam Hussein’s regime, and three years since his execution. Yet the country is sinking into a lake of blood and drowning at the bottom. Several Americans who have been in Iraq keep telling me that there is hope. But I saw none, and this is why I came to this country — to give my children the hope that I couldn’t find in Iraq.

People outside and inside Iraq still can’t understand the depth of the conflict, the hatred and the state of denial among Iraqis who lived in a so-called united land. Talk about improvement in Iraq is nothing but material for political point-scoring from time to time by American officials to convince the American people that their money has not been wasted. For Iraqi politicians, it is good material for electoral campaign speeches.
http://atwar.blogs.nytimes.com/2009/12/23/why-i-left-iraq-scenes-from-a-year/

Joel Wing said...

Anonymous,

The title of that article "Consequences of the War and Occupation of Iraq" is misleading because most of what they quote wasn't the result of the U.S. invasion in 2003 but rather Saddam's policies. He destroyed the country's standard of living through the war with Iran, then the Gulf War, and then refusing to comply with U.N. inspectors because he wanted to keep the image of having WMD to deter Iran, and he thought defying the U.N. and U.S. would help his image in the Arab world.

The U.S. invasion did make a lot of things worse in terms of services, etc. but it was already pretty bad to begin with.

I wrote a piece a little while ago making a comparison of the humanitarian situation before and after the U.S. invasion here:

http://musingsoniraq.blogspot.com/2009/08/life-in-iraq-before-and-after-invasion.html

Somethings have actually improved, but they are still not up to the standards that Iraq had before Saddam's foreign policy misadventures.

Iraqi Mojo said...

Good answer, Joel. It's amazing how many Arabs, including Iraqis, are so willing to blame everything on the US "occupation". No mention of how Saddam led Iraq to war and ruin, how he built dozens of palaces while ordinary Iraqis starved in the 90s. We are supposed to believe that Iraq was good before 2003 and we are supposed to believe the continued sectarian violence is caused by Americans. No mention of the violence that Saddamists and AQ continue to wage today.

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