As Iraq has mostly relied on foreign aid since the war, its economic reconstruction has encountered a lot of difficulties, and the shortage of capital has influenced the economic development in the country.

Iraq needs at least $100 billion to push its economic reconstruction forward, and it faces the difficulty of collecting the money. There are two ways to get the money: one is international aid, and the other is the country’s oil income. Both ways are unreliable. Foreign countries had promised tens of billions of dollars to help Iraq, but most of these countries, including the United States, endorsed nothing but lip service. Iraq has abundant oil supplies, but its oil pipelines are damaged frequently, because Iraqis hate the fact that the Americans enjoy their oil profits. It is impossible for Iraqi oil exports to reach the level they were at before the Iraq war within a short period of time.

Now, the pie of Iraqi reconstruction is in the U.S. basket, and no other country can put their fingers in. Iraq’s dangerous security situation, particularly the growing number of crimes aimed at foreigners, raises risks for the country’s economy, foreign trade and investment.

Moreover, Iraq’s banking industry is underdeveloped, and related laws and stipulations are immature. Many banks are on the edge of bankruptcy. Absorbing foreign capital is very difficult for Iraq. The Iraqi Government has no intention of paying off its foreign debts. The high level of foreign debts and bad repayment records are ruining Iraq’s credit in the world.

In addition, the efficiency of Iraqi governmental departments is low, and corruption is a growing trend among government officials. All these factors demonstrate the inability of outside countries, except the United States, to influence Iraq’s economic reconstruction.

Iraq, not the beneficiary

The real beneficiaries of the ICI will not be Iraq, but U.S. companies. On May 9, U.S. Vice President Dick Cheney visited Iraq, telling Iraqi leaders that U.S. patience is limited. The two countries should come to a common understanding on key political targets and pass important laws and stipulations, including a new oil bill and an act regarding constitutional amendments, he said.

However, different parties inside the country held irreconcilable views on these stipulations. As a result, the new oil bill is still under approval of the Iraqi Parliament. Maliki is trying its best to get the bill approved before the deadline of June 30, fearing his government might collapse if it loses U.S. support.

Many Iraqi workers and labor union organizations are fiercely opposed to the bill. They claim that the interests of Western authorities and oil companies, particularly U.S. companies, dominate drafts of the bill. Iraq’s parliamentary members also believe that the new oil bill will damage the interests of Iraq, resulting in its oil fortune falling into foreign companies’ purses.

According to the new bill, Iraq’s oil industry will open to foreign investors, and U.S. and British oil giants will obtain 30-year exploitation rights. Among Iraq’s existing 80 oilfields, 65 will be explored by foreign oil companies in the coming 15-35 years, and foreign companies will possess 75 percent of Iraq’s oil profits, which means that U.S. oil enterprises will sweep away most of the country’s fortune. If U.S. interest groups, for example the Bush family’s oil empire, realize their interests in Iraq, the cost of losing 3,300 U.S. soldiers’ lives seems worthy, as not only will U.S. oil demands be guaranteed, but also U.S. influence over Iraq’s economy will be stabilized.

Although U.S. troops are embarrassed by the current civil conflicts in Iraq, President Bush insists that victory is close. Maybe he believes that the date of victory will come when the new oil bill is approved and U.S. oil companies control Iraq’s oil vein, but things will not go as smoothly as he might expect.

Since 1972, Iraq’s oil industry has been state-owned. Oil exploitation by foreign companies that were once driven away from Iraq would be considered an invasion of the country’s sovereignty. Iraqis believe that the United States launched the war because it wants Iraq’s oil, justifying the U.S. Government’s 352-billion-dollars bill in military expenses. However, Iraqis will not allow the country’s oil fortune to fall into the U.S. hands. Once Iraqi oil resources are out of the government’s control, there will be a new anti-U.S. wave and the social situation of the country will be even worse.

The author is a research fellow with the Institute of West Asian and African Studies, Chinese Academy of Social Sciences