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Oil extraction in Iraq, the depletion of wealth or build an economy?


Although there are some alternative energy oil sources, whether renewable or non-renewable, but it still occupies second place after oil, because they could not, or could not technological development, until the present time, to find an alternative that matched oil features General Overall, which gives some energy sources, large energy equivalent times what gives oil only if production costs or their effects on the environment are too large, too, do not compare oil production costs or impacts on the environment, and therefore can not be adopted oil shop, became not the oil remains in the forefront of sources.

There are many countries that have called on the economies of oil economies or rentier, heavy dependence on oil, as part of those countries managed to oil employ the right way to serve their economies and give them the character of “durability and regeneration”, and this contributes to the enjoyment of current societies and future economic well-being, this is due to sound management, which is characterized by two capacities essential “strategic dimension”, which looks at the future of the country in the absence of oil, and “the will of truth” serious actually to build a state-serving home immediately and in the future.

While the other section is still unable to employ oil form that gives the economies recipe “durability and regeneration” but is still suffering from the oil shocks and economic fluctuations, and this is what made their societies are unstable are looking forward to fear what is happening to oil prices, decline and it has risen, whether causes natural or economic, political or other, and this is due to the absence of sound management of the will really strategic dimension, but it is a random management, devoid of the vision of a medium-term-not Baidh- what will be the economy and society in the foreseeable future, let alone the distant future? The evidence is not maintain what is available but also led to a decline in their economies back.

Oil national wealth for all

As long as oil is a national treasure for all, it is not restricted category without another generation without the other, and may not be employed passive form that prevents the progress the economy and hinder its construction properly, so it is where the mind and Shara (created for you all of the land) and economic logic, to be distributed off on everyone, between the current generations of hand and subsequent generations on the other hand, including the right of social justice, and employed a way that increases the strength of the economy and gives the character of continuity it, in order to be able to generally oil shocks and economic fluctuations which was exposed as a result of its dependence on oil stand very large. But the question arises, how oil is employed so that the economy is gaining strength and continuity?

It can be employed oil as leading to economic diversification that would bring about the durability of the economy and gives it continuity, as economic diversification refers to two things: including, activation of economic cuts as a whole, such as agriculture two branches of plant and animal, and the industry two branches of the extractive and especially manufacturing, trade and internal and external two branches , tourism … etc. Including the leadership of the diversification of the economy, ie, that the leadership of the economy to the public sector are not limited, and must make way for the private sector which will contribute to building the economy in a real and not to allow him to exercise marginal roles in pursuit of profit only.

Oil extraction in Iraq .. depletion of wealth

In Iraq, it may seem by looking at some economic indicators, the extraction of oil which represents a drain of wealth rather than building the national economy, and can explain how oil extraction is the depletion of the oil wealth, some of the following indicators of the economy:

(A) Gross Domestic Product (GDP), where we note through the Central Bank of Iraq data in his report for the year 2015, the contribution of oil still occupies the forefront in the composition of GDP when it accounted for 51.7% and 59.9% of it in 2014 and 2015, respectively, compared with the contribution of activities the other, which accounted for 48.3% and 40.1% of it for the same two years. This means that the oil has not employed so far in the construction of economic activities and thus the entire economy, but is still drained down, because if the correct employment obtained for construction increased its contribution to output, and diminished contribution of oil, while we note through these ratios that oil and other activities, up, down.

(B) oil revenues, oil revenues are clearly indicate the extent of the depletion of Iraq’s public oil wealth, through the interview of oil revenues and consumer spending ratio.

Where the form of oil revenues from the general revenue ratio is very large, reaching rate of public revenues more than 91% and 77.2% in 2014 and 2015, and since consumer spending accounts for more than 86.5% and 73.62% of public expenditure for the same two years, so these ratios indicate a very important point is that the largest proportion of oil go for consumption rather than investment, which serves the construction process of the economy, it means that the extraction of oil is the depletion of national wealth and not building the national economy.

It must be pointed to the decline in the proportion of oil revenues as well as lower consumer spending between 2014 and 2015, does not stem from the fact that an increase in other income and an increase of investment expenditure, but the real reason behind this decline is due to lower oil prices.

(C) oil exports, accounting for oil exports in Iraq, a very large proportion, which exceed 99% (including with sulfur and phosphate) of the total Iraqi exports of goods, while the other paragraphs recorded the remaining ratio of 0.8% in 2014 and 2015 respectively. This demonstrates that Iraq has no economic diversity capable of which to satisfy the local need and then export the surplus outward, and demonstrates the loss of its ability to satisfy the local need, is the import of most products from abroad, accounting for imports accounted for 38.77% and 47.33 % of the volume of foreign trade (exports + imports) for the same two years, and Iraq will pay the bills for these imports of oil exports, and this increases the depletion of Iraq’s oil wealth, but the thing that gives some kind of hope in imports is that paragraph machinery and transport equipment occupies the highest proportion of the total imports, a 38.5% for the years 2014 and 2015, and despite this only hope that the period was more than thirteen years, not enough pain to achieve self-sufficiency type? This demonstrates the absence of the strategic dimension of prudent management.

We conclude from the foregoing, especially economic indicators, that Iraq has not worked to transform the national wealth available in the underground to the national wealth above the ground through investment to be achieved economic building is able to cope with oil shocks and economic fluctuations, and the achievement of social justice among individuals, whether between the current generation and current generations and future.

And should therefore work on the extraction of oil to achieve economic construction through two main points:

First, the employment of oil revenues, leading to the activation of economic sectors that have been referred to above.

Second, make way for the private sector to manage the economy and the state is in the option to share with him or take the issue of supervision of his career in the economic construction proper.

Note: The percentages listed above are taken from the annual economic report of the Central Bank of Iraq in 2015.


Hamid Abdul Hussein al-Jubouri

Middle East Online

One Comment on "Oil extraction in Iraq, the depletion of wealth or build an economy?"

  1. Lucifer on Sun, 9th Jul 2017 2:14 pm 

    Iraq will suffer the same fate as all the other MENA countries and end up like Yemen and Syria with death and starvation everywhere, it’s only a matter of time. Then a real flood of millions of refugees will be on European borders.

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