Loose Change

Oil and the War in Iraq

Posted in Geopolitics by Raj on 05/24/2010

I first published this on 06/21/2007 but it still seems as relevant now as it was back then.

Critics of the War in Iraq have argued that the invasion was always more about oil than any of the purported reasons like weapons of mass destruction or atrocities that the neo-cons bandied around. This claim, by the way, is not as far-fetched as you would think.
The Iraqi government approved a new hydrocarbon law on the 26th of February which is currently being mulled over by the Iraqi parliament. If approved, this legislation will hand over Iraq’s entire oil wealth to Western oil companies on a silver platter. For example, the law allows western companies to operate underProfit-Sharing Agreements or PSAs . Under this arrangement, Iraqi provinces will share the profits only after the oil companies have taken their cut. No other major Middle Eastern oil producer has allowed anyPSAs on its territory. In fact, PSAs are used only in 12% of the world’s oil reserves, some of them signed in times of political upheaval as in Russia. The new law also freezes thePSAs for a period of 30 years. What this means is that any future Iraqi attempts to renegotiate the contract before the 30 years are up will be arbitrated internationally. We all know what that means. The law also permits the oil companies to take their profits out of the country without paying any taxes. While the costs of developing the oil fields are being recovered, companies will be able to recoup 60 to 70% of revenue as against the more usual 40% elsewhere. Also, after the costs have been recouped, the law allows oil companies to keep 20% of revenue – 10% more than is normal.
Supporters of the law argue that being so generous with the oil companies is a necessary evil because those companies need to be persuaded to set up shop in a volatile and insecure country. They also assert that the investment will jumpstart the faltering Iraqi economy and seed a robust private sector.
However, this claim sounds hard to believe when you factor in the enormous oil wealth that Iraq is sitting on. Iraq has 115 billion barrels of the world’s known oil reserves. This amounts to 10% of the world total — the second largest conventional oil reserves of any country; and most of it is poorly developed — only 24 out of 71 discovered oil fields have been developed. With Saudi oil production projected to decline in the near future, Iraq is set to become a major player in the oil-producing world.
A little history: Iraq nationalized (more…)


Ethnic diversity and China’s Great Leap West

Posted in Geopolitics, History by Raj on 05/22/2010

The majority of Westerners are aware of only one of the many (officially, 56) ethnic minorities in China: the Tibetans. Lately, because of the recent anti-Han rioting in Urumqi, some media attention has also been focused on the Uighurs. However, Westerners still remain largely unaware of the existence and status of other ethnic minorities in China. The official discourse focuses on the Han majority not only due to their overwhelming numbers but also because of the fact that the history of modern China, from the communist revolution to leaps in industrial development is largely a story of Han accomplishments.

This page gives a simple two-paragraph introduction to the history of ethnic minorities in China. Short verbal descriptions of the different groups can be found here, and here and some excellent portraits can be found here (an example is shown below).

To understand the emerging geographical patterns of China’s development, especially in its west, it is increasingly important to consider the role played by its ethnic minorities. The map below shows the geographical distribution of China’s minorities grouped roughly into six ethnolinguistic groups (five if you only wish to consider the mainland).

The provinces of Sichuan, Gansu, Guizhou, Yunnan, Qinghai and Shaanxi, the municipality of Chongqing, the tiny, “autonomous” province of Ningxia, Tibet and Xinjiang together covering more than two million square miles account for more than half of China’s land area but only one-quarter of its entire population (source: The Economist; needs subscription). Even in 1998, the population of East China alone was almost twice the population of West China (source: The Westward potential of the Chinese Economy; MS-Word document). Per capita GDP in 1998 showed a similar inequality (more…)