Iraq’s natural resource management – Expert Q & A

Source: Ahmed Mousa Jiyad
Date: 20 Feb 2022

What role can transparency play so that Iraqi citizens can benefit from their natural resources? How will improving the knowledge Iraqi citizens have of their extractive sector promote good governance? Can Iraq learn from the examples of other countries?

In this Q & A, we asked Iraqi scholar and petroleum consultant Ahmed Mousa Jiyad for his thoughts on the way forward for transparency and accountability in Iraq.

 

What role can transparency play in ensuring that Iraqi citizens benefit from their natural resources?

This question comprises three components that require careful separation. The first is the “intrinsic” and “instrumental” values of transparency. Having comprehensive, accurate, verifiable and timely disclosed information make transparency itself invaluable “societal asset” thus having intrinsic value. And also transparency is a mean to facilitate realization of many objectives that are directly and indirectly related to various aspects of Human Rights; hence it has such important instrumental attributes.   

Though transparency is very important it nevertheless does not, by itself, provide guarantee or “ensuring” specified outcomes, and this is the second component. It is vital ingredient of an integrated Good, Democratic and Participatory Governance-GDPG, which comprises other components such as Answerability, Impartiality among others. Such GDPG could have real and effective role in “ensuring” specified outcomes.

Finally, benefiting Iraqi citizens from their natural resources is a matter of sound sustainable development planning and implementation. This is more of a much wider macroeconomics and socio-political economy function and resource management, which should incorporate and adhere to both transparency and GDPG principles and good practices. 

The essence of sustainable development is its “right based” through a continued process of “structural diversification” of the national economy both in vertical and horizontal sectural perspectives.   My research in this arena does not indicate that Iraq has achieved development level commensurate with the significant revenue stream that was generated from the export of oil. On the contrary the dependency on oil export revenues has been increasing and actual fixed capital accumulation was not impressive either due to low investment allocation and low effective implementation of investment allocation through annul budgets and National Development Plans.

What is important to understand is both transparency and GDPG are indivisible, should not be used selectively and politicized, as it is often the case in today’s domestic politics in Iraq. At this stage of democratization process in Iraq there are so many abuses of transparency but hopefully the “learning by doing” will improve the practices and then we will definitely realize how valuable and helpful transparency is. But this is another matter and entails more time to address properly!   

 

When looking at the complicated aspects of the oil and gas industry in Iraq and the intricate details related to the contracts being used, how important is it, in your opinion, for the Iraqi people to be aware of these details, aspects, and procedures? How will this knowledge (at its basic level) help them play an active role in governing and monitoring their natural resources?

Oil contracts governing petroleum upstream development in Iraq are technically, financially and legally complex, lengthy and difficult. The fact these contracts are written in legal English language makes them even more difficult to comprehend properly, comprehensively and accurately for non-professional non-specialist individuals.

I am following up the development of these contracts from their inception phase, analyzed them thoroughly article–by-article, published many academic, professional and business oriented papers about them and delivered many capacity development services on them. You will probably be surprised to hear that, apart from few generalities, very little is known about the details of these contracts. Actually, many politicians, parliamentarians, media professionals, journalist and even oil professionals lack proper knowledge about important components, yet they make categorical statements about them. This is applied to both Iraqis and non-Iraqis alike!!

Surely, there is very serious knowledge-gap pertaining to these contracts even among the specialist and definitely more so among the general public and the civil society organization. This is why I put good deal of efforts to disseminate the fundamental components of these contracts in simplified, professional, pedagogic methodology aiming at broader accurate understanding of these contracts.

Your question raises two issues pertaining to the active role of the Iraqi people in “governing” and “monitoring” their natural resources. At this stage I do not think that public debate, disclosed information, modus operandi and the prevailing conditions create viable enabling environment for the Iraqi people to play active role in “governing” their natural resources. On the other hand it is easier and more feasible for the people and their different organizations and associations to have active and effective “monitoring” role and functions.

But in either case, “governing” or “monitoring”, a proper understanding of the governing frameworks of these contracts is a prerequisite to perform such a role. For this purpose there is urgent need to raise the level of awareness through concerted effort to enhance the capacities of the Iraqi CSO linked to the extractive (mainly oil and gas) industry about the contracts, and they in turn could, through awareness and mobilization, educate the public on the main components and fundamental issues pertaining to the contracts. Needless to say bridging the knowledge gap is a means for empowerment, a must and the sooner it is done the better and more feasible for the Iraqi people to have active role in monitoring; and, at a later stage, in governing their natural resources for their own benefits in a sustainable manner that does not compromise the interest and welfare of their future generations.    

 

You currently live In Norway and have been there for the past 20 years. Norway is a leading model country when it comes to managing its wealth from natural resources. How involved is the civil society in Norway in managing/monitoring its natural resources? What lessons can we derive and share with the Iraqi civil society?

Norway is the most successful country in managing its natural resources, the wealth generated from them and in using the provisions of “Local Content” of oil contracts for the benefits of the local industry, manpower and technological advancement. The sovereign wealth fund (Pension Fund) was incepted in 1990 and by now it has accumulated total assets of $818 billion and ranked at top (scoring 10 of 10) according to Linaburg-Maduell Transparency Index for the global sovereign wealth funds.

The Norwegian civil society organization plays very important monitoring watchdog role by identifying any investment by the Pension Fund or any other funds that contravenes the moral and ethical standards. More often than not, the SCO manages to impact serious decisions affecting the management of the natural resources in the country both the depleting ones (oil and gas) or the renewables (solar, wind and hydro-power). These CSO are well organized, matured and function professionally and independently of the political parties and agendas. There is strong social tradition behind these organizations and they attract significant societal, formal, financial and legal support. They are open, transparently and democratic. They work according to known system, they are accountable for the funding they receive from all sources, and they keep records, list of members, action plans, reports and financial statements.   

Available information indicates that total members in all Norwegian SCO exceeds by many folds total population of the country, indicating how much Norwegians are involved in these SCO.

Lessons to be learned from Norway are many, but “Copy and Paste” is not viable or possible. This is due to the different social, cultural, economic and political setups: Norway is democratic, developed country with high degree of institutional maturity, social solidarity and effective peoples’ participation in all aspects of even day-to-day life. Iraq on the other is a developing country and very different in most above mentioned aspects, and suffers from internal instability and external risks.

Nevertheless, the Norwegian experience offers invaluable model to learn from on many aspects regarding: separation of authorities in formulation and implementation of petroleum policy; managing natural resources and sovereign wealth; local content policies; the role, functions and structures of SCO.               

Ahmed Mousa Jiyad is an independent development consultant and scholar. He is founder and owner of Iraq/ Development Consultancy and Research (DC&R) and Associate of the Centre for Global Energy Studies- CGES, London. Studied and graduated with BSc in Economics (Univ., of Baghdad), Post Graduate Diploma in Planning (Univ., of Birmingham, UK), MSc in Development Studies (Univ., of Bath, UK) and MA from Fletcher School of Law and Diplomacy (Tufts and Harvard universities, USA).

He has over 40 years of extensive international professional and academic experience working with governments, local governments, academic institutions, private sector, NGO and international organisations in Iraq, UK, USA, Norway, and, with UN organizations, in Poland, former Czechoslovakia, Hungary, Uganda, Sudan and Jordan.