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Originally posted by PLATO1003
Sieze it from whom? The Iraqi government? Last I looked they were nowhere to be found. Are you proposing that we just shut things down until a functioning Iraqi government is up and running?
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The nation of Iraq, while it is still permitted to exist as such, is a sovereign entity, with the legal right to own property. I'm not sure if you missed the point, or are obfuscating it, but there's a very substantial difference between owning an asset and operating it. You're well past smart enough to know that. Issuing contracts to repair the oilfield assets and get them running is one thing, this is consulting work preparatory to transfering ownership of those assets to third parties, under terms we deem suitable for the Iraqis.
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IMO, the new government will have its hands full with plenty of things other than running an oil business. They will, however, have the power to allocate revenue through taxation so that the flow of cash to the treasury should not be significantly impaired.
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The US has a large number of nationalized utility assets, primarily in electrical power generation - TVA, WAPA, and state and local public utilities (not investor-owned utilies, I'm referring to munis, etc.) I live in Mexico which has nationalized oil (Pemex) and electricity (CFE), and stated-level owned water (CESPT). None of the agencies who own, operate, maintain and manage those assets are in the "business" of providing general governmental services. They are staffed by specialists and the agencies confine themselves to their charter of owning and managing those assets. To say that the general government will be too busy to run an oil business is spurious, as the practice of government enterprises is to create (the Iraqis already have one, just nobody is getting paid) a specialty agency to run the enterprise.
The power of taxation is a non-issue. Taxation of who? The USAID is taking it upon itself to create a plan for ownership transfer, and they may well evalute the "best" option is to simply give the Iraqis a royalty, of say, whatever the hell Shell feels like bidding in, and that's all she wrote. The US is also planning to remake the form of government, so it's highly unlikely that the net result will see as much revenue into Iraq as the pre-sanctions oil production under the Iraqi oil ministry. The only difference, which is not a result of privatization or ownership change, is going to be that revenue is not going to be pissed away into building another four dozen palaces. That is a result of a change of government, not a change in the oil asset ownership.
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Further, I would say that with privitization and a profit motive in place, the revenue could actually increase due to increased efficiencies.
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That tends to be the myth, but actually (and I've done more work in the field than I ever wanted to), public agencies in the utilities field (and this include oil and gas production) can be and often are as efficient or inefficient as private entities. I've done a lot of evaluations of gas, electric and water entities (both public and private, and privatization initiatives), and it really is a function of the management culture and types of incentives applied. Prudent management practices, although always debateable as to exact form, are the same whether the enterprise is public or private - the driver isn't the form of ownership, it's the goals of the owner. A lot of private entities are abysmally run, and have the same or worse internal bureaucracies and empire building as any public bureacracy.
In Iraq's case, maintaining nationalization and capturing the entire net revenue stream directly into the treasury would allow for much lower general tax rates (this is how good muni utilities are run) for a given level of government service, thus providing a low-tax stimulus to non-oil sector private enterprise. Nationalized revenue producing assets tain't necessarily either bad or inefficient.
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WRT who gets to let the bids and award contracts, the only other available option is the UN and that is just a laugher.
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The UN is a laugher, but at least has legal authority. That's a serious issue wrt privatizations. The US has no unilateral authority to constitute a form of government in Iraq, nor does it have any unilateral authority to seize and transfer non-military assets. A legally constituted (i.e. not the interim US lackey government we're going to stuff down the Iraqi's throats) Iraqi government would be within it's rights to repudiate any such privatization and renationalize the assets, on the grounds the US had no right to transfer them in the first place. That risk factor is something that any prudent bidder would consider, and they will weigh their offering prices accordingly. You can bet on that one - political risk and international law risk always gets assessed.
The best (oh, and btw, legal and moral) thing to do is to confine the contracting to operating and management, and defer any planned change of ownership structure to such time as a lawfully constituted Iraqi government can undertake such an evaluation of privatization proposals. If there's any corruption in that process, that's on them, not us, and it's an internal political issue for the Iraqi people to decide.
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It's easy to criticize every plan coming down the path, but not all of them are bad MTG.
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I don't have a problem with the existing emergency contracts to assess the condition and repair the oil production and transfer assets, even though the RFPs were done before the war even started and Halliburton got the contracts. Halliburton won't milk USAID contracts any more than any other contractor or consultant would, including myself. They're also one of the top two companies in the world in that business, so they're well qualified, regardless of the political connection.
Issuing infrastructure contracts to Bechtel was purely political, as Bechtel is an atrociously and notoriously inefficient company that can't compete at all in the private sector, so that's one I have a problem with. I'm no fan of Black and Veatch and several other large A&E firms I've dealt with, but they are at least less inefficient by good margin than is Bechtel. If anything, those infrastructure contracts should have been broken down to smaller units, so that multiple bids and multiple bidders could have been evaluated.
Permanent transfer of asset ownership, however, is something totally above and beyond contracts for operations, management or repair, and they play right to the core contention that this whole adventure is about control of the oil. If it's not, then why the burning need to undertake and control transfer of the asset from the sovereign Iraqi state to a private party selected by the US?
