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[casi] Iraq oil assets 'up for sale'

Iraq oil assets 'up for sale'

By Andrew Walker
BBC economics correspondent in Dubai

Ali Allawi, the trade minister in the US-backed
administration in Iraq, has said that foreign
ownership of assets in the country's oil industry has
not been ruled out.

In an interview with the BBC during the IMF and World
Bank annual meetings in Dubai, Mr Allawi said that he
expects some form of foreign involvement in the
sector, although there are other possibilities than

Mr Allawi's remarks follow an announcement on Sunday
in Dubai by other members of the administration of
sweeping economic reforms.

The announcement included new opportunities for
foreign investors, allowing them to own 100% of Iraqi
enterprises. But natural resources, including oil -
Iraq's most valuable asset - was excluded.
But Mr Allawi has now confirmed that it does not mean
that oil is off the menu for foreign investors for


The sector was not covered because the arrangements
and regulations needed are far more complex.
There is no final decision on the shape of the oil
industry after reform. He said it would be a matter
for the oil ministry and the Governing Council to

But he certainly anticipates some private sector role.
It might be through equity - owning a share of some
oil businesses.

He said that foreign ownership of some Iraqi oil
assets is a possibility. But the foreign involvement
could also be through technical co-operation or
through sharing the revenue of oil remaining under
Iraqi ownership.

The prospect of foreign ownership will probably
reinforce the views of people who thought oil was the
underlying motive for the war - that the United States
wanted to get control of the second largest oil
reserves in the world.

Mr Allawi said: "this point always comes up". But he
doesn't believe it himself.


He said: "If the Americans or other western powers are
interested in Iraqi oil, they are interested as
consumers, not necessarily to protect it with

The revenue from Iraq's oil industry is going to have
a central role in financing the country's
reconstruction. It is performing far below its

Only Saudi Arabia has larger reserves. But many years
of neglect and sanctions have produced a backlog of

Now the turmoil of war and sabotage since it ended
have added to the industry's problems.

Some conservative think-tanks in the US believe that
privatisation of the state owned industry - and
allowing foreign investors to take stakes - is the
best way of getting new investment and expertise into
the business.

But whatever the commercial merits of that approach
might be it would be fraught with political problems.

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