Iraqi Politics and Implications for Oil and Energy

Iraq's ability to reach its energy potential should be of broad regional and international concern. Iraq could be poised for a dramatic transformation, one in which it finally escapes the political and technical constraints that have kept it producing less than 4 percent of the world's oil, despite having the third-largest conventional oil reserves in the world. Should Iraq meet its ambitions to bring nearly 10 million more barrels of oil on line by 2017, it would constitute the largest ever capacity increase in the history of the oil industry. Should Iraq, more probably, bring only half this capacity to market, it would still represent a massive achievement. Translating Iraq's energy promise into reality is in the shared interest of Iraq, the United States, Japan, and the international community more broadly. At the highest level, the health of Iraq's energy sector--currently the source of more than 90 percent of revenues accrued by the state--is a major determinant in setting Iraq's overall trajectory. A booming energy economy is not a guarantee of a prosperous, democratic, and stable Iraq; it could also be the hallmark of an Iraq that has returned to authoritarianism or even tyranny. But it is difficult to imagine a prosperous, democratic, and stable Iraq that does not claim a thriving energy industry among its assets.