Iraq is one of the most potentially wealthy nations of the world. Its petroleum and natural gas reserve are quite enormous. Iraq is located in the Middle East and has been involved in lots of wars, political crisis and disputes. It is situated at the northern tip of the Persian Gulf. It is an OPEC nation bounded by three other OPEC countries. A study on Iraq will reveal its place in the world and its economic importance as well as the future of the East Asian country.
Forewords
Iraq is one of the most potentially wealthy nations of the world. Its petroleum and natural gas reserve are quite enormous. Iraq is located in the Middle East and has been involved in lots of wars, political crisis and disputes. It is situated at the northern tip of the Persian Gulf. It is an OPEC nation bounded by three other OPEC countries. A study on Iraq will reveal its place in the world and its economic importance as well as the future of the East Asian country.
History of Iraq
Iraq has one of the oldest civilizations in the world. The present Iraq was created in 1920 by the British after the First World War; it attained independence in 1932 and became a republic in 1958. The official name of the country is the Republic of Iraq which is known as Al Jumhuriyah al-Iraqia in Arabic language. Three of the world greatest civilizations can be said to begin in Iraq. These include Assyria, Babylonia and Sumer.
Babylonia is located in the central and southern part of the modern day Iraq. It has Babylon as its capital. Babylonia was developed in 1894 BC by an Amorite king known as Sumuabum and was founded as an independent state. The cultural practices of Babylonia were derived from those of the Akkadian and Sumerian. They were influenced by Akkadian and Sumerian as they used Sumerian languages for religious purposes but spoke Akkadian languages for conversational purposes.
Assyria is located in the Northern part of the modern day Iraq and was named after the ancient city of Assur. It had an empire between the 19th and the 18th century BC, and with the rise of the Middle Assyrian Empire which controlled the entire Mesopotamia, Assyria became the major power between the 14th and the 11th century.
These civilizations defined the present day Iraq and have gone a long way in shaping its histories and culture. Iraq has up to 10,000 years civilization. Assyrian kingdom become very powerful and conquered much of the renowned powers of their time including the 25thdynasty Egypt, Asian Minor, the Caucasus, Arabia and so forth. Iraq is located between two major rivers which include the Tigris and the Euphrates and that define its ancient name. It was given a Greek name Mesopotamia which stands for a land between the rivers.
The relationship between Iraq and its neighboring countries has been tense. It has been at war and in dispute for a longtime with Iran, a Persian Gulf country located in the eastern part of Iraq. It has also tried claiming Kuwait, a neighboring nation and this resulted to the Persian Gulf War. Most of the war between Israel and Arab nation involved Iraq. The rule of a dictator Saddam Hussein led Iraq to several quagmires as he tried to topple other Arabian nations. This led Iraq to several sanctions and ultimately the dictator was overthrown by an invasion led by the United States.
Past, Present & Future
Mesopotamia is the cradle of civilization. It has one of the longest civilizations known to mankind. Iraq has seen lots of conquests, victories, wars as well as defeats. Common among these are the Arab Islamic conquest, Mongol and Persian rule, Ottoman supremacy, British rule and so forth.
The impact left by British on Iraq was indeed intense. Mesopotamia has for long been a combination of different ethnicities and religious groups including Kurds, Arabs, Muslims, Jews and Christians. Since the time of Alexander the Great and even before, Iraq has been renowned for wars. The British observed the potentials in Iraq during the Ottoman Empire in the late 19th century. Just like India, the British focused on potential economic benefits in Iraq and hence mounted control over Mesopotamia. This led to the development of Basra, in the southern part of the country, and it played an important role in shipping and trade in the region.
The British claimed that their interests were neither to conquer the land nor to strip them of their wealth but to help them flourish. In fact, Great Britain defended Basra by sending troops to protect their interests when Turkey connived with Germany in World War I against Iraq. The Arab joined the British troop to secure victory over the Turks as they assumed that secret promises has already been outlined for them during the war. They believed that the British were committed to offering them independence. However, to their utter dismay, they realized that the British were not ready to grant them independence when they arrived at the Paris Peace Conference in 1919. Britain and France only made outward noises and falsely promises to Iraq grant them self-governance, but in the actual sense, they had already secretly divided the region among themselves and authority in the nation remained with the foreign powers.
The year 1920 and 1921 saw the creation of new states in Iraq from the three former Ottoman Empire. However, in London, Britain decided how Iraq should be ruled. However, an opportunity was created for an Arab to reign in Iraq (but not rule over Iraq). The monarch was totally under the control of the Britain. He was given the throne as a compensation for losing the throne in Damascus taken over by France.
The Iraqis were angered by the prospect of governance imposed by the British. This resulted in the staging of a rebellious battle by the Kurds and the Shi’as against the British rulers. The British deployed considerable forces to put down the rebellion. They also used bureaucratic measures against Iraq by leveraging official elements of their old regime which is the Sunni urban and educated minority. In the Cairo Conference of 1921, Winston Churchill proposed that the Sunni minority will rule over the Shi’a majority continually and that this would be achieved by placing them in a higher administrative hierarchy.
The Kurdish constantly challenged the new monarchy, demanding self-determination. However, with the discovery of oil in Kurd, the British found a reason not to let Kurd alone. They compelled Bagdad to keep hold of the region. By 1933, Iraq had been independent, but they were still under the bondage of Britain. More so, the Anglo-Iraqi treaty created a room for the British to have control over the country and gained ample oil supplies. While it seemed that Britain has released all the power to Iraq, they still controlled the nation from the backroom. They influenced Iraq's polity and the top men in Iraq submitted to Britain.
During World War II, Britain was only interested in securing their oil positions. Pro-Nazi led army ousted British supported government and British troop was held in a coup, but Britain responded by releasing troops and restoring the Monarch to power. This resulted to military actions and coups against coups. In 1968, a coup brought the Ba’ath Party to power with Ahmad Hassan al-Bakr as the president but was powered by Saddam Hussein.
Saddam Hussein molded the party to his image between 1968 and 1979 and gained lots of influences and finally in 1979, he took over, having dominated every aspect of Iraq. This completely erased democracy and lots of people were either seduced or forced to submission by the dictator. His rule brought regional conflicts in the country and foreign misadventures. His country was completely wrecked and hundreds of thousands died in wars. Ultimately Iraq was sanctioned, and this further wrecked and impoverished the nation. His regime extended over twenty years was filled with violence and tyranny.
The past of Iraq was shambles. According to Agatha Christie, war settles nothing both winning and losing bring disasters. America made soothing promises to Iraq just like the British did, but it was quite obvious that those were just fake promises. Iraqis showed their ambivalence and clear hostility over permanent form of western presence in their nation. Americans were likely to do what the British did, although they made promises. To some Iraqis, the future is worse than the present. Lots of Iraqis perceive that their future days would be gloomier than it is at present. This poses historical, philosophical and psychological dimensions. Although there are some instances of security issues in Iraq, the new government does its best to ensure economic progress in the country. The future of Iraq can be said to hold some positive prospects with the new governmental dimensions.
OPEC Member – Role of Iraq
Iraq is bounded by three OPEC member countries and these include the Islamic Republic of Iran, Saudi Arabia and Kuwait. The Persian Gulf country is potentially one of the richest nations in the world owing to its huge petroleum and natural gas deposit as well as its location between two major rivers Tigris and Euphrates.
OPEC was born in 1960 with the intention of ensuring the betterment of its member countries and that they benefit from the sale of their oil. It also aimed at dealing with the marginalization of westerners and the erstwhile dominant oil companies referred as “Seven Sisters”. Together with Iran, Saudi Arabia, Venezuela and Kuwait, Iraq was one of the Founder Members of the Organization of Petroleum Exporting Countries (OPEC). Due to the impact of the Gulf War and the sanctions on Iraq, its oil production quota has been suspended since 1998.
The conference that led to the formation of OPEC was hosted by Iraq in Bagdad (its capital city). Other member nations did not agree with Iraq to go by a single negotiation method with international oil companies but rather negotiated separately. The severe conditions posed by Iraq on the supermajors made them withdraw production from the country. In 1972, OPEC was hugely involved in Iraq's nationalization.
In the 1980s, Iraq had serious rivalry issue with a neighboring OPEC member country, Iran over OPEC production quotas with Iraq demanding equality in quota. Iran had about 3.4 million barrels of oil per day while Iraq had 1.54 million barrels per day and OPEC stated that the quota was based on stated proven reserves. Iraq decided to ignore the quota and produce whatever amount of oil that serves its interest. OPEC suspended Iraq's quota in 1998 till date, but in October 2011, Iraq asked to rejoin the organization's quota system by 2014.
Figure 1 Present and projected oil exports of Iraq
Information Technology in Iraq
Information technology has become the lifeblood of development in the world today. In fact, development today is often measured in terms of advancement in internet infrastructures in different countries of the world. Highly developed nations such as the US and the UK has highly developed internet and IT infrastructures. Information technology is a major driver in the oil and gas industries. It plays important roles in all the value chains of the petroleum industry. Since Iraqi economy is basically based on oil and gas, one would expect nothing less for the country than leveraging state of the art and highly advanced information technology.
Increase in computer processing power has significant impart in the advancement in the industry. For instance the capacity of Saudi Aramco Exploration & Petroleum Engineering Center has been increased to about 34 trillion floating point operation for each second, more than the processing power of 30,000 desktop systems combined together. The increase is quite exponential and it has also resulted to exponential development in the upstream oil and gas sector. The high end technology is highly essential in the industry when it comes to searching for new oil and gas reserves.
The Iraq Information & Communications Technology Alliance supported by the USAID is doing its best to ensure the growth of information technology in the Arabic country. The alliance has several key IT firms as partners and these include multinational companies, Iraqi organizations and donors. The multinational companies included in the alliance partners are BearingPoint, Computer Associates, Cisco Systems, Cyber Learning, HP, Intel, Microsoft, Motorola, Oracle, Tajari, Lucent technologies, Sun Microsystems, Verizon and Inmarsat. The Iraqi Organizations under the alliance include, InterGlobe, Iraq-Com, Iraqi I.C.T. Association, Near East Resources, RiTS, Kufan Group, IComPort, and Technology Partners. The donors include USTDA, USAID/Iraq, UNIFEM, UN/ICTDAR and UN/ESCWA/Iraq Task Force.
Information technology advancement in the Iraq oil and gas industry is indeed critical and with respect to this, several IT organizations are now investing heavily into various software solutions in the nation. No developed or developing nation can cope today without the internet. The internet is seen as the most advanced technology and also the key to progress in communication and also in the exchange of goods and services, information and technologies in the world today. The internet has created several opportunities and also provided room for growth in developed and developing nations alike since it was introduced in the late 1960s.
Iraq went through hard times and faced lots of challenges with respect to increasing internet penetration, capacity building and changing the traditional method of communications. Several factors limit Iraqis from leveraging this technology in the full and such factors include insufficient incentives and encouragement from the government and social factors as well as inadequate resources. However, times and trends have changed and Iraq has moved through the difficult stage of penetrating the internet technology and market. Today, Iraq is one of the growing members of information outflow in the internet. They were able to achieve this by converting online texts into their own languages and thereby retaining their cultural identity and at the same time meet the world’s demand of becoming digitally advanced via the internet.
The effect of increased information technology in Iraq is evident in various industrial processes, especially the Iraq oil and gas industry. The recent advancement in the industry has a root in the growth of the IT sector. It is therefore important for Iraqi government to further make the required investments in the IT infrastructures and systems so as to meet the citizens’ demands and meet up with the global needs. With the recent move in e-government, effectiveness and availability can be greatly ensured.
Nanotechnology in Iraq
The astounding power and features exhibited by matters at nanoscale dimensions are now employed in the oil and gas industry as well as various other industries to produce seamless objects which possess enhanced properties. Various countries of the world are now leveraging nanotechnology because of the benefits it offers, although the technology is still in its infancy. Iraq is surely not left behind in this quest.
On 14 December 2011, the Iraqi Ministry Defense announced that it has started using nanotechnology in military applications as well as security. According the ministry, the technology will help in the development of the military technology and would go a long way in curbing violence. The Deputy Chief of Army Staff said that the technology will be used in producing lots of military equipment in the future which will substitute the presently used ones. He also added that the technology will be used in detecting car bombs and explosive devices. It will also be used in detecting armed group and also capture them.
According to Aswat al-Iraq, the Iraq’s Ministry of Industry and Minerals has created a new department which specializes in nanotechnology. The role of this department is to provide information and ideas to researches in the country and also those abroad. There are 8 research centers in the Directorate and these research centers are in various industrial fields which include petrochemicals, energy, textiles, packing, pharmaceuticals and environment.
Nanotechnology holds positive prospects in different fields including clothing, food packaging, disinfectants, sunscreens, cosmetics, appliances, textiles, fuel catalysts and so forth. It is believed that this technological field will revolutionize the world economies including various individual nations’ economies in much the same way that information technology did. Though it is too early to draw conclusions with respect to this technology as it is still in its infancy, it is quite obvious that Iraq plays a noticeable role by leveraging nanotechnology in the military and otherwise.
Opportunities and Challenges in Iraq
Iraq went through protruded conflicts and stagnation, but this has opened up economic opportunities to the country. Lots of factors sum to make Iraq a wonderful business and investment destination for foreign investors. This is propelled by several needs as there is the need to build healthcare system, housing, public services, infrastructures and human resources. Iraq's economy is state-based and solely relies on oil. Although the country is opened up for investment, there are lots of challenges facing Iraq.
Opportunities
The government’s Five-Year National Plan between 2010 and 2014 targets an annual economic growth rate of 9.4 percent and an investment of US$186 billion. This sets a prospect of economic growth in the oil dominated economy. Below are a few positive indicators of investment in Iraq
High growth rate and high revenue from oil,
Increased government spending and mounting pressure to provide basic services,
Laws in place for foreign investment
Diversification of economy
Economic reforms as various institutions and schools are being built in Iraq.
Iraq heavily relies on import and hence there are opportunities in the retail sector.
Figure 2 and 3 reflectschallenges and opportunities in past, present and future in context of oil production.
Challenges
Of course, there are few challenges to doing business in Iraq especially as Iraq has been ranked among the worst places to do business on earth. A few of these challenges include:
Security, as there are some attacks on institutions by the Iraq wing of the al Qaeda,
Corruption, just like in most developing countries, corruption is high in Iraq,
Lack of transparencies with government procurement/contracting procedure in Iraq,
Unequipped banking system,
Issues with the Intellectual Property Rights (IPR)
Undeveloped arbitration law,
Internal dispute over oil rights with the autonomous Kurdistan Regional Government and so forth.
Figure 2 Variation in oil production during 2003-2012
Figure 3 Current and projected oil production areas
Multinational Companies/Foreign investments in Iraq
The Five-Year National Plan of the Iraqi's government which spans between 2010 and 2014 and targets 9.4 percent economic growth and about US$186 billion investment have encouraged lots of foreign investors to invest into the country.
Another factor attracting foreign investors into Iraq is the immense potential of the economy. More than 45 countries were actively investing in Iraq as of 2011. The investment fields include residential real estates, oil and gas, electricity, water and sanitation, defense, medicine, commercial real estate, telecom and so forth. As of 2011, Asian countries contributed 42 percent of investment into Iraq with South Korea having 25.5 percent of this investment, China 6.6 percent and followed by UAE and Iran. Europe's investment into the country is 25.1 percent whereas the US invests only 12.4 percent. South Korea invests mainly in water & sanitation, electricity and housing units. Turkey invests in housing sectors, China in the oil sector and electricity and so forth.
The major multinational companies operating in Iraq include the China Petroleum Corporation, British Petroleum, Royal Dutch Shell, Total SA, Korea Gas Corporation, Exxon Mobile, SINOPEC and many more others.
Role of Iraq in Global economy
Iraq is very important in the global economy because of its oil reserve. The nation's oil deposit as well as other petroleum deposit keeps attracting investors in different nations of the world to it. Despite the security issue and the past of Iraq, investors in many countries, especially other Asian nations like South Korea, China and even Iran invest in Iraq. In 2012, Iraq's total exports equated to $93.91 billion. The export products are mostly crude oil. Crude oil accounts for 84 percent of the export, crude materials other than fuel account for 8 percent and food and live animals account for 5 percent.
Iraq’s major trade or export partners include the United States with Iraq exporting 21.4 percent to the US, India 21.1 percent, China 13.8 percent, South Korea 11.2 percent, Canada 4.8 percent, Italy 4.5 percent and Spain 4.3 percent according to 2012 estimate. As of 2012, Iraq’s total imports reached $56.89 billion with the major import goods including food, manufactures and medicine. The main import partners include Syria, Turkey, China, United States and South Korea.
Iraqi South Oil Company went into a technical service contract in 2009, which hastargeted development at Rumalia oil field with BP of Britain and CNPC of China. Just two days after this, Iraq and some multinational companies including the US owned Exxon Mobil Corp and the European owned Royal Shell PLC endorsed a $50 billion contract. The contract was aimed at developing the West Qurna oilfield and pipeline to Daura oil refinery. The government of Iraq is doing its best to bring in foreign investments into the country. The target is the oil sector, and the aim of the government is to put the war-shattered economy back to form and rebuild the shattered or destroyed amenities. Iraq is enormously blessed with large oil reserve. The country has the third largest oil reserve in the world, but its production capacity at the present point in time is below its capability.
Influence of US in Iraq before war and after Saddam Hussein Reign
The reign of Saddam Hussein had a great toll on Iraq. He brought about lots of disputes, wars and set his country against the international community resulting to wars and bloodsheds. Hussein revived the Iraq-Kuwait territorial dispute in 1991 and sent in troops to Kuwait which overtook the nation. The UN imposed lots of resolutions telling Iraq to quite the act, but Hussein was undaunted. This resulted to a US led coalition that brought aerial bombardment into the region, ultimately the Persian Gulf War commenced. The US force invaded Iraq, killed thousands of people and destroyed Iraq's nuclear and chemical weapons. As Iraqi's Shia and Kurds rebel against Hussein, he channeled his remaining army towards killing thousands of them. Bloodsheds upon bloodsheds took place in Iraq.
The US also further insisted during the Bush Administration that Iraq surrenders further nuclear and chemical weapons. Being inspected by the IAEA and UN weapon inspectors, it was proved that the country did not have any sign of renewed nuclear weapon programs. However, the Bush Administration insisted that Iraq still hides some consideration amount of proscribed biological and chemical weapons.
Although the US did not obtain UN Security Council approval for military measure against Iraq, it built up military force against Iraq with the support of Britain and other nations. France, Russia and Germany were against the military action insisting that diplomacy should have been allowed to take its course. US forces invaded Iraq and captured the major cities including Bagdad. Hussein was later captured at a farm in Tikrit on December 2003 and executed for committing the crime against humanity.
US, just like the British in 1920, promised Iraqis loads of good tidings with soothing words. Iraqis had developed strong hostility and ambivalence against westerners. Thus, it did not fare well between the US and Iraqis. The US administration in Iraq was greatly opposed and resisted by the Sunni Arab guerrillas and Shiite parties. By the end of the year 2003, the US could no longer continue in Iraq but province council members were installed in Iraq by the United States. The aftermath of the war and the US invasion into Iraq involved series of sufferings and hardships in the nation.
However, there is indeed a great beacon of hope for Iraqis as the new government does its best to bring back Iraq to shape and to restore the nation to one of economic fortune.
Conclusion
Iraq is set for change, and this is proved by the actions of present government. The country exported 2.42 million bpd in 2012 and 2.39 million bpd in 2013. International Energy Agency (IEA) estimates that Iraq would become the second largest oil exporter after Saudi Arabia in the next 20 years to come. The report outlined that Iraq would exceed Russia in oil exportation.
Thisarticle outlined, that the daily oil production in Iraq could reach 6.1 million barrels in 2020 from its current state of close to 3 million bpd and would exceed 8 million bpd in 2035. The report however admitted that certain factors are needed to trigger these changes.The future of every nation rests on information technology and nanotechnology and so does Iraq. The government of Iraq does its best to attract investments into the country and also to invest heavily in these fields. This has resulted to unprecedented increase and advancement in the oil and gas industry as well as other industries. Information technology and nanotechnology are key players in the advancement of oil and gas industries and since the Iraqi economy depends greatly on oil and gas there is great need to further develop and advance these two technologies in order to ensure that the nation meets up with its targeted development goals and rebuild the infrastructures destroyed by war and violence.
Iraq stagnated greatly and even went below the expected limits through the years as it experienced war upon war and sanctions. Its oil production was hampered and greatly affected and also the living condition. However, the central government at the present does its best to see to the advancement of the nation and thus, Iraq is expected to recoup its lost and make as much as much as $5 trillion in revenues from oil exports over the years till 2035.
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