Kurdish Leader Urges Decentralized, Free Market Policy on Iraqi Oil:

Qubad Talabani - the main Kurdish Regional Government representative in th US and the son of Iraqi President Jalal Talabani - recently called for decentralized control of Iraq's oil resources, and for a more free market policy on oil:

We're trying to modernize Iraq, build a new Iraq, built on new foundations, new policies. The symbol of this new Iraq will be how it manages its oil infrastructure," Talabani said. "And if people want to revert back to Saddam-era policies of a state-controlled oil sector with no accountability, with no accountability to the Parliament or the people of the country, with no oversight except from by one or two, then I'm sorry, that is not the Iraq that the Kurds bought into. That is not the Iraq that the Kurds would want to be part of."

"If a centralized oil regime is imposed on us, we will not participate in the state of Iraq," Talabani said. "And we have to make it absolutely clear to our friends in Washington, to our brothers in Baghdad, this is a make-or-break deal for Iraq."

He said Iraq needs to embrace the free market and break free from the nationalized mindset. Numerous oil and Iraqi experts as well as key Iraq oil union leaders have told UPI that Iraqis see nationalized oil with pride.

Free market reforms of the state run oil industry can help increase production and attract foreign investment. They can also prevent the central government from using its control of oil to dominate the country and stifle political opposition - as has happened in many other oil-rich nations, such as Saudi Arabia and Venezuela. As Talabani explains, it is essential to avoid an oil law under which the central government has complete control over the industry and its revenues:

We want to create an automatic payment mechanism where it doesn't rely on the goodwill of the finance minister or the oil minister for the regions to get their fair share," he said.

"Trust is lacking in Iraq, and unfortunately it's been Iraq's miserable history that has created this system, this society that mistrusts each other, which is why something as critical as oil can be a trust-building measure," Talabani said. "By putting in place mechanisms and institutions that can ensure that I will not get robbed again, that my resources will not be used against me again, will eventually over time build my trust."

Obviously, the new Iraqi oil law will also have to ensure that regions without oil wells of their own get some share of the revenue, particularly the majority-Sunni regions in central Iraq, where most of the insurgency is based. I discuss various ways to achieve this goal in several previous posts on federalism and oil in Iraq. See here, here, here, and here.