Precious target in a precarious state
The suicide boat attacks struck at the heart of Iraqi hopes for reconstruction and future prosperity.
Jitters on the international markets following previous attacks on its oil infrastructure – such as the incident which closed Iraq’s pipeline to Turkey in August last year sending the price of crude upwards, highlight the commodity’s vital importance to Iraq – and Iraq’s potential importance in the global marketplace.
With proven crude reserves of 112 billion barrels, Iraq is potentially the world’s second largest oil producer.
But its key industry has suffered from decades of underperformance.
As well as restoring the county’s basic infrastructure, one of the key priorities for the Coalition Provisional Authority has been to restore the battered oil industry as a major asset for the country.
Even amid crippling economic sanctions in the years between the 1991 Gulf War and the fall of Saddam Hussein last year, oil provided a vital lifeline.
The UN oil-for-food programme, which began in late 1996, allowed the then pariah state to again export the precious fuel in exchange for food, medicine and some spare parts for its crumbling infrastructure.
And following the fall of Saddam work has begun in earnest to rebuild the industry as a major source of future prosperity for the country.
The establishment of a Trade Bank of Iraq laid the foundation for that process providing guarantees enabling Iraqi ministries to import the all-important refinery machinery needed.
Work has already begun with major rebuilding contracts awarded to international companies.
But even before last night’s attacks the need to protect the country’s most precious asset has been a high priority for the coalition.
Less than three months after the fall of Saddam the industry had already recruited as many as 3,000 security guards to protect its facilities.
Oil provided the foundation for Iraq’s earlier prosperity, accounting for 95% of its foreign exchange earnings in 1979.
Before the outbreak of the Iran-Iraq war in September 1980 the country appeared to have a bright future with 3.5 million barrels per day being pumped out of its oil fields and an estimated $35bn (€29bn) in foreign exchange reserves.
But the war with Iran shattered its reserves and saddled it with debts of more than 40 billion US dollars.
After the war oil looked set to provide the key to recovery with exports gradually ramped up as new pipelines and repaired facilities began to take effect.
But the invasion of Kuwait in 1990 and subsequent Gulf War shattered the country’s economy and the year’s which followed saw infrastructure deteriorate as Saddam diverted resources to his own supporters.
