Iraqi Oil to Help American Economy, Hurt America's Enemies

We’ve all heard the mantra. The U.S. economic recession is made significantly worse by the extremely high cost of Operation Iraqi Freedom, with a price tag of nearly $700 billion going into 2010. The cost of the war in Iraq has been unnecessarily and tragically high, both in lives and treasure, but if the Iraqi government has its way, the country will massively increase its oil output, bringing down the price of oil and decisively impacting global geopolitics in the West’s favor.


The Russian Lukoil company has won a massive contract to develop the West Qurna Phase 2 oil field in southern Iraq, putting to rest allegations that the Bush administration launched the war to seize the fields for its buddies in the oil business, a laughable accusation of Satan-level evil that has had a disappointingly long shelf life.

When news of the deal was published, my good friend and fellow Pajamas Media writer Nick Guariglia lamented, saying on his Facebook page, “our blood; Russia’s oil.” Most readers upon reading this will agree, but there is much reason to be excited about how America and the free world will benefit from this deal. Yes, you read that right. This deal may end up being just what America needs in this time of economic and geopolitical crisis.

Iraq wants to increase its oil production, which currently stands at 2.5 million barrels per day, to a whopping 12 million barrels per day in ten years. The minister of oil thinks this can even be accomplished by 2016. That would make Iraq the second largest oil producer in the world, behind only Saudi Arabia. Lukoil is excited about the future of Iraq, saying it will cause a “revolution” in the market by increasing the world’s oil supply by 20 percent.

“A top manager at a leading Western firm said the modern history of the oil business will be split into the pre-Iraq and post-Iraq periods. I agree,” said Leonid Fedun, a Lukoil shareholder who was ranked #122 on Forbes’ list of the world’s billionaires this year.


Some are saying this goal is too ambitious and is “crazy.” That may or may not be true, but Iraq’s oil output is about to dramatically increase and impact the world’s dynamics. This will probably result in a decrease in oil prices unless Iraq agrees to OPEC’s demands to keep the price high, something the Iraqis will be reluctant to do if they feel they can get a bigger share of the pie through competitive pricing. And the Iraqis aren’t so hot on the Saudis and their other neighbors right now anyway.

With the price of oil dropping, the American economy will receive a much-needed boost. Without total energy independence being achieved, we’ll still see hundreds of billions of dollars leaving American shores each year, but oil is so central to American life that every citizen will have fewer gray hairs with each drop in the price.

The dramatic increase in oil production will benefit the U.S. and its allies in other ways. As Christopher Hitchens points out, new oil and natural gas reserves have been discovered in the Sunni areas of western Iraq, including Anbar Province, and Baghdad. One of Iraq’s major conundrums, namely that the Shiites and Kurds controlled all the oil, will be solved, as the Sunnis will also have their share. Any violence committed by Sunni insurgents will directly impact the wallets of the Sunnis they claim to defend. Ironically, the very commodity that some thought would tear the country into pieces will help keep it together. And the increased revenue will lead to decreased reliance upon the U.S. and a stronger Iraqi government more capable of combating its enemies — enemies that we share.


The Iranian government should be worried. Faced with massive popular unrest and economic troubles that are pushing the regime into bankruptcy, a drop in oil prices and rising up of an economically successful democratic Iraq could be the final nail in its coffin. The regime needs every dime it can get, as many government workers are going months without pay, which makes it all the more vital that Americans put their money in terror-free mutual funds. Their ideology will suffer a mortal blow, as all Iranians and Iraqis can compare the prosperity of a democratic Iraq with the instability, misery, and economic stagnation of the theocratic Islamic Republic of Iran. That is a contrast that the Iranian regime cannot allow to become apparent.

U.S. security is enhanced as dependence upon Venezuela, Saudi Arabia, and ironically Russia decreases. If a terrorist attack or Iranian missile were to hit a Saudi oil field, a disaster would ensue but the pain would be significantly less. At the same time, the decreased reliance gives the U.S. much greater leverage where it previously had little, particularly in handling Gulf countries with a spotty record on combating extremism.

Soon after the economic crisis started in the U.S., Dick Morris made a valid observation. He said that falling oil prices are accomplishing what we hoped domestic drilling and alternative energy sources would accomplish: “the defeat of OPEC, Iran, Chavez, Putin and the weakening of the financial underpinnings of Islamist terrorism. In each of these nations, the hold of the dictator is weakening as, one after the other, they face the consequences of dropping oil prices.”


This statement still holds true today, and as Iraq’s oil production increases, the effect of these benefits will multiply. In many ways, it’s a game changer. If Iraq doesn’t collaborate with OPEC and restrict sales of oil in order to keep the prices high, then history will show that the overthrow of Saddam Hussein couldn’t come soon enough.


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