Iraq's Burdens: Oil, Sanctions, and Underdevelopment

Iraq's Burdens: Oil, Sanctions, and Underdevelopment

Iraq's Burdens: Oil, Sanctions, and Underdevelopment

Iraq's Burdens: Oil, Sanctions, and Underdevelopment


Oil revenue has been an economic curse for Iraq. In the second half of the 20th century the international oil sector shaped Iraq's economy, forcing it to rely too heavily on revenue brought in by oil production and exports. Here the author helps the reader understand this important Arab, Middle Eastern, oil-exporting country that has been a constant focus of U.S. foreign policy since 1990. He proposes that the availability of capital is an insufficient condition for economic development, and may in fact retard it, as it did in this now reviled and wrecked country.


The Rise and Decline of a National Oil Industry

One of the most serious developments in the history of the Arab region following the defeat of the Ottoman Empire in World War I was the entry of foreign multinational capital to develop the region’s oil resources. Such development was designed to export oil worldwide, thus forging new links between oil producing countries and the international economic system.

The Iraq Petroleum Company, which was owned by five multinational oil companies (British Petroleum, Exxon, Mobil, Shell, and Compagnie Francaise des Petroles), was awarded in 1925 a concession for the exploration and production of oil in Iraq. The concession covered most of the territory of Iraq. And those areas of Iraq that were not covered by the IPC concession were given under similar concessions to two subsidiaries of IPC: Basrah Petroleum Company (BPC) and Mosul Petroleum Company (MPC).

In Saudi Arabia the concession went to Exxon, Mobil, Texaco, and Standard Oil of California. In Kuwait the concession was awarded to BP and Gulf Oil, while in Qatar and the United Arab Emirates the concessions went to the same five companies that obtained the Iraqi concessions. And in Iran BP was, until 1951, the sole holder of that country’s concession.

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