IRAQI AND INTERNATIONAL EXPERTS CALL FOR COMPREHENSIVE STRATEGY FOR MANAGING IRAQ'S OIL
July 2005

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NEW YORK, July 31—Democracy in Iraq hinges on a comprehensive and transparent approach to the management of its resource wealth, says a group of Iraqi and international stakeholders who met to carve out a strategy for the future of Iraqi oil.

The group's policy recommendations focus on how to promote economic reconstruction, transparency and accountability, equitable revenue distribution, and how to prevent corruption. Most importantly, they urge Iraqis to create an environment in which political, economic, and social actors can participate in developing an oil industry that will support Iraq's transition to democracy.

These recommendation were put forward by more than 60 experts—including Iraqi and international petroleum specialists, parliamentarians, activists, corporate executives, academics, and journalists—who earlier this month in London attended a conference sponsored by the Open Society Institute and the London School of Economics.

They discussed issues of governance and development in the Iraqi oil industry, and explored various approaches to the management of Iraqi oil and its relationship to the country's democratic transition.

"Although Iraq needs international cooperation to harness political and technical expertise, it is up to Iraqis to design and implement their own system of oil governance," said Yahia Said, a research fellow at the London School of Economics.

The legacy of Saddam's repression and abuse of national resources has led to demands among certain constituencies over political and fiscal control—especially as it pertains to oil revenues. According to the policy recommendations, the issue of federal versus central control over Iraq's extractive industries must take into account the distinction between oil extraction operations and the management and distribution of revenues. It is imperative that constitutional safeguards are developed to mitigate opportunities for rent-seeking, corruption and centralization of power fueled by oil.

The policy recommendations highlight the success of Norway's oil management strategy, which has helped that Nordic country avoid the ill-effects of resource wealth. The Norwegian model outlines key elements of transparency, including: a tender and licensing process that allows for significant public scrutiny, a legal framework that protects civil society actors involved in combating corruption, independent auditing of production, sales, and payments from oil companies, including the state oil company, to government entities, and freedom of the press.

"There are lessons to be learned from the failures and successes of other oil and gas dependent countries," said Said. "At this critical stage of transition, we have the opportunity to ensure that Iraq's oil wealth is used to benefit all its people."

The policy recommendations can be found at www.iraqrevenuewatch.org.

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