US ambassador to Iraq Christopher Hill called on the government in Baghdad to open more oil fields to investors and boost the economy, a move that will help undermine support for terrorism.
A second round of bidding from international oil companies on contracts is set for December and “needs to be a success,” Hill said, adding that approval of a hydrocarbons law outlining rules for the oil business is essential.
“A market economy generating sustained economic growth and increased employment opportunities will weaken insurgent and extremist networks,” Hill, 55, told the US House Foreign Affairs Committee yesterday in prepared testimony. Hill, posted to Iraq in April, said it was time for Iraqis to take charge of their economy. The country should negotiate a stand-by lending agreement with the International Monetary Fund and make changes to join the World Trade Organisation, he said. He also praised Iraqis for “rejecting retribution and a new cycle of violence” in the aftermath of recent attacks, including the August 19 bombings of the Finance and Foreign Ministries in Baghdad.
US combat forces are scheduled to pull out of Iraq by August 2010 and elections are planned for January, prompting US officials to shift the focus toward helping Iraq prepare for the transitions. Hill said he was concerned that elections may result in months of political paralysis just as the US is withdrawing tens of thousands of troops.
“I worry it will take a long time to form a government after January,” Hill said, speaking later in the day to the Senate Foreign Relations Committee.
The tension in oil-rich northern Iraq between the semi- autonomous Kurdish regional government and Arab Iraqis is one of the dangers still facing Iraq, Hill told the panel.
Hill said he just visited Iraqi Kurdistan to confer with President Massoud Barzani on how to resolve territorial disputes between Arabs and Kurds.
A suicide bomb ripped through the Kurdish village of Wardek, near Mosul in northern Iraq, early yesterday, killing at least 19 people and wounding dozens. Wardek lies about 220 miles (354 kilometers) north of Baghdad in Nineveh province. The region, disputed by Kurds and Arabs, is one of the most volatile
in Iraq. “We can be helpful, but on the economy the time has come for the Iraqis to step up to the plate” in mobilising the nation’s oil wealth, Hill said.
Unrestrained by Opec quotas, Iraq is offering 10 projects covering more than a dozen oil fields for development in its second oil-licensing round since the 2003 US-led invasion.
The undeveloped fields are estimated to contain 41 billion barrels of oil, more than a third of Iraq’s total reserves, according to the US Energy Information Administration. In the absence of an oil law, Iraqi Oil Minister Hussain Al Shahristani has said that only Cabinet approval is necessary for contracts in the licensing rounds to be legal. Oil executives are concerned that a potential change in government after scheduled January elections may alter any contracts signed this year.
Lawmakers have yet to approve a hydrocarbons law governing contracts with international companies and exports from the Kurdish region.
More than 20 companies, including eight of the world’s top 10 non-state oil producers such as Royal Dutch Shell Plc and ConocoPhillips, submitted bids for $16 billion of technical service contracts for six producing oil fields and two gas fields offered in the first oil licensing round in June.