Why Iraq Needs the Oil

Jan 25, 2017 | Jack Watling
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Baghdad’s control of Iraq’s provinces is, in part, based on its custodianship of the country’s petrodollars, with the oil sector contributing up to 99 percent of government revenue. The war against ISIS, however, forced the government to divert huge sums of money to the army, as well as to the salaries of 110,000 fighters from the Popular Mobilization Forces in November, in a bid to rein in Shia paramilitary groups. This siphoned much-needed revenue from the provinces.

On his first full day in office, Donald Trump stood before the CIA’s Memorial Wall, which commemorates the agency’s fallen officers, and railed against the media, boasted about the size of his inauguration-ceremony crowd, and took the opportunity to restate his conviction that “we should have kept the oil” in Iraq—a reference to America’s apparent failure to claim the country’s fossil fuels as its own following the 2003 invasion and subsequent war. “Maybe we’ll have another chance,” he mused, drawing laughter, reportedly from his own staffers in the room. But there is nothing amusing about Trump’s proposal, originally aired on the campaign trail and dismissed as something between a pipe dream and a war crime.

Trump’s nonchalant re-airing of the idea betrays a dangerous ignorance of Iraq’s petro-politics, which for years has both bound the country together and threatened to tear it apart. Petrodollars underpin the Iraqi economy, but as the country struggles to fund the war against the Islamic State, it has none to spare. Trump’s threat strikes at some of the most sensitive political fault lines in the country. And if he follows through, it may prove detrimental, not just to Iraq, but to two of Trump’s other stated policy objectives: defeating ISIS and supporting the Kurds.