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Context of 'May 16, 2003: US Adviser to Iraq Oil Ministry Says Iraq Might End Its Membership in OPEC'

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The Bush administration picks Philip Carroll, a former CEO of Royal Dutch/Shell’s US division, to advise post-Saddam Iraq’s oil ministry. [Harper's, 4/2005, pp. 74-76] He is formally appointed in January 2003 along with Gary Vogler of ExxonMobil, three employees of the US Department of Energy, and an employee of the Australian government. In the months before the invasion, they are sent to Kuwait where they “begin planning for the restructuring of the ministry of oil to improve its efficiency and effectiveness [and] begin thinking through Iraq’s strategy options for significantly increasing its production capacity,” Carroll later explains. [Muttitt, 2005]

Entity Tags: US Department of State, Gary Vogler, Australia, Philip J. Carroll

Timeline Tags: Events Leading to Iraq Invasion

In a paper titled, “The Road to Economic Prosperity for a Post-Saddam Iraq,” which is a part of the study, “A Future of a Post-Saddam Iraq: A Blueprint for American Involvement,” authors Ariel Cohen and Gerald P. O’Driscoll argue for the implementation of neoliberal reforms including the privatization of Iraq’s major industries. The document says that poverty in Iraq is a result of Saddam Hussein’s mismanagement, namely Saddam’s decision to nationalize certain industries; Iraq’s war with Iran; the invasion of Kuwait; and Saddam’s refusal to comply with the requirements for the suspension of UN sanctions. The paper’s proposal for jumpstarting Iraq’s economy focuses on privatization of Iraq’s industries and several other neoliberal reforms. To complement this, the authors recommend using the “media and the educational system to explain the benefits of privatization and the changes to come in order to ensure broad public support.” The costs of reconstruction, they suggest, could be paid for with funds generated from the sale of Iraq’s oil. “Iraq’s vast oil reserves are more than ample to provide the funds needed to rebuild and boost economic growth,” the report says. [Observer, 11/3/2002; Cohen and O'Driscoll, 3/5/2003] But in order to generate this amount, Cohen and Driscoll write, the post-Saddam government would probably have to reconsider its membership in the Organization of Petroleum Exporting Countries (OPEC). “Following the demise of Saddam Hussein, it is unlikely that the Saudi kingdom would transfer a fraction of its production quota under the [OPEC] regime to Iraq to compensate for those lost profits and facilitate its rebuilding,” the authors note. “Iraq will need to ensure cash flow for reconstruction regardless of OPEC supply limitations. Combined with the potential privatization of the oil industry, such measures could provide incentive for Iraq to leave the OPEC cartel down the road, which would have long term, positive implications for global oil supply.… An Iraq outside of OPEC would find available from its oil trade an ample cash flow for the country’s rehabilitation.” [Cohen and O'Driscoll, 3/5/2003] Cohen will later admit in an interview after the invasion of Iraq that his interest in Iraq withdrawing from OPEC was to destabilize Saudi Arabia (see Early 2005).

Entity Tags: Gerald P. O’Driscoll, Saddam Hussein, Ariel Cohen

Timeline Tags: Events Leading to Iraq Invasion

The Oil and Energy Working Group, one of 17 such groups working under the US State Department’s “Future of Iraq” project (see April 2002-March 2003), meets to discuss plans for the oil industry in a post-Saddam Hussein Iraq. The only known member of the 15-member group is Ibrahim Bahr al-Ulum, who will become Iraq’s oil minister after the invasion. Other people likely involved include Ahmed Chalabi of the Iraqi National Congress, Sharif Ali Bin al Hussein of the Iraqi National Congress; recently defected personnel from Iraq’s Ministry of Petroleum; the former Iraqi head of military intelligence; Sheikh Yamani, the former Oil Minister of Saudi Arabia; and unnamed representatives from the US Energy Department. The responsibilities of this working group include: (1) developing plans for restoring the petroleum sector in order to increase oil exports to partially pay for a possible US military occupation government. (2) reconsidering Iraq’s continued membership in the Organization of Petroleum Exporting Countries (OPEC) and “whether it should be allowed to produce as much as possible or be limited by an OPEC quota.” (3) “consider[ing] whether to honor contracts made between the Hussein government and foreign oil companies, including the US $3.5 billion project to be carried out by Russian interests to redevelop Iraq’s oilfields.”] [Oil and Gas International, 10/30/2002; Observer, 11/3/2002; US Department of State, 12/19/2002; Financial Times, 4/7/2003; Financial Times, 9/5/2003; Muttitt, 2005] By April 2003, the working group will have met a total of four times. One of the policies they agree on is that Iraq “should be opened to international oil companies as quickly as possible after the war” and that development of Iraq’s oil fields should be done through the use of Production Sharing Agreements (PSAs). Under a typical PSA, oil ownership remains with the state, while exploration and production are contracted to the private companies under highly favorable terms. [Muttitt, 2005; Los Angeles Times, 12/8/2006]

Entity Tags: Ahmed Chalabi, Sheikh Yamani

Timeline Tags: Events Leading to Iraq Invasion

Philip Carroll, the chief adviser to the new Iraqi government’s oil ministry, tells the Washington Post that Iraq might end its membership in OPEC. “[Iraqis] have from time to time, because of compelling national interest, elected to opt out of the quota system and pursue their own path…. [The new Iraqi government] may elect to do that same thing.” But Carroll later tells investigative reporter Greg Palast that he personally would not have supported privatization. “Nobody in their right mind would have thought of doing that,” he later explains. [Washington Post, 5/17/2003, pp. E01]

Entity Tags: Philip J. Carroll

Timeline Tags: Events Leading to Iraq Invasion, Iraq under US Occupation

Philip Carroll, the chief adviser to the new Iraqi government’s oil ministry, and Gary Vogler, another adviser, resign and are replaced by Rob McKee, a former vice president of ConocoPhillips, and Terry Adams of BP Oil. [Muttitt, 2005; Harper's, 4/2005, pp. 75]

Entity Tags: Gary Vogler, Philip J. Carroll, Rob McKee, Terry Adams

Timeline Tags: Events Leading to Iraq Invasion, Iraq under US Occupation

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