Chapter 3 Media Article

New oil law will lead to 'transparent and fair' competition: Iraqi minister

http://www.cbc.ca/cp/world/070121/w01219A.html

With the American military presence in Iraq stirring up conflict, Iraq has not been able to regain its economic standpoint, nor their political standpoint that they once had before the American invasion. Iraq is known as one of the world's leading nations which produce a vast amount of oil from its reserves, standing at 115 billion barrels or more. Numerous countries and foreign oil corporations are eager to invest in Iraq's oil fields. However, there has been a steady increase in the number of insurgent attacks against the employees and buildings of the oil sector in Iraq, leading foreign oil companies to be skeptical to even start developing or exploring Iraq's oil fields. This is where oil minister Hussain Al-Shahristani comes in, making an attempt to revive Iraq's oil industry. Al-Shahristani proposes a new oil law which would promise foreign oil companies fair competition investing in Iraq. Oil minister Hussain says, "The competition will be transparent and fair and companies will be chosen according to their modern technological capabilities to guarantee the highest benefits for Iraqis," al-Shahristani said at a news conference. "We will not consider their nationalities and we will ignore any contract doesn't achieve the highest benefits." Evidently, The Iraqi government is encouraging foreign oil investors to come to Iraq, as they're confident that with American backing of their political leadership that this is the perfect opportunity to invest in any golden economic opportunities that would be beneficial to Iraq.

(Relation to Chp.3 government intervention, third-party effects)

The article is saying that the Iraqi government is going public trying to encourage foreign investment in their oil fields. Obviously the world knows for a fact that Iraq is a nation wealthy in oil. However, because of the continuous terrorist attacks on their oil facilities, pipelines, and employees, not too many companies would want to risk heading over to Iraq to invest. Therefore, instead of foreign companies making the initiative to go to Iraq, it's the reverse with the Iraqi government intervening; drafting a new law to encourage foreign companies to come.

With the war in Iraq being in the spotlight of the media for the past consecutive years, it's easy to see why oil corporations would refrain from venturing in oil exploring operations there. Having the Iraqi government making a public announcement to propose a new oil law, justly for the purpose of restoring confidence in investors makes me curious if oil companies would suddenly start investing in Iraq or not. As a positive third party effect, I would think if this proposal was to go forth and become something significant, the Iraqi people would eventually benefit from this in the future. The money generated from the oil sector in the long run might be used to help the people by providing them with basic necessities. The oil sector would be creating more jobs for the people. There would be more foreign investments to help jumpstart the Iraqi economy, as soon as the war is over. There will always be negative third party effects associated with bringing a large number of oil companies to Iraq. For instance, having a variety of foreign companies operating in Iraq would increase the likelihood of oil spills or pollution which would be detrimental to the health of the Iraqi people. There's also the possibility of foreign oil corporations to potentially control the market price for oil; the Iraqi government is unable to regulate/control the market even if they pass additional oil laws. I think that foreign oil companies have the utmost advantage because the power resides mostly in the hands of western companies more than in the hands of the Iraqi government.