11 February 2000
Iraq’s decade of non-participation in Opec may be coming to an end. The pariah state – which plans to produce 6 million barrels per day within 10 years of United Nations sanctions against it being lifted – has indicated that it intends to reassert itself as a fully functioning member of the organization.
Iraq’s approach is two-pronged. It wants an Iraqi official installed in high office in the group, and has suggested that it will be willing to submit to output-restraint disciplines. However, Iraq’s proposals carry the potential for mischief, and are unlikely to be embraced, for now, by the organization’s most influential members.
At the last Opec meeting Baghdad nominated its former representative to the UN, Abdul Amir al-Anbari, to replace Nigeria’s Rilwanu Lukman as Opec secretary-general, standing against strong candidates from Saudi Arabia and Iran. A senior Iraqi official tells Energy Compass that Baghdad will not withdraw Anbari’s candidature when Opec next meets on Mar. 27, and that it will veto the Saudi candidate if the issue is put to a vote. For a long time, we were a passive member of Opec as a result of the problems Iraq has been facing, not least of them being UN sanctions, the source said. Now, we believe Iraq is capable of playing a more constructive role in Opec, which we helped found, and we insist on this role.
In an attempt to solve the impasse over the secretary-generalship, Opec’s president, Qatari Oil Minister Abdallah al-Attiyah plans to consult with the Iraqis, Saudis and Iranians before the next meeting in Vienna. A compromise solution has been mooted by Baghdad – it says it will back a proposal put forward when Opec last met in September to reactivate the position of the deputy secretary-general. The job, which was last held by Iraq’s Ramzi Salman, who is now adviser to the Qatari oil minister, was eliminated by the council of ministers in 1997.
The Iraqi source hinted that Baghdad would agree to its candidate being deputy, if the contest was between Anbari and Saudi Arabia’s candidate, Suleiman al-Herbish. However, the race is not quite that simple – Iraq’s proposal is unlikely to be approved by Iran, which has put forward its Opec governor, Hossein Kazempour Ardebili, for the job, and has no intention of backing down.
A source familiar with Opec’s internal politics says the Iraqi proposal is impractical: The reason why there is no consensus on the next secretary-general has to do with politics, and the position of the deputy is not less politicized. I do not believe such position will be recreated by consensus of the ministers for the sake of satisfying Iraq’s desires.
If there is no softening of the rival positions, therefore, a compromise candidate may have to emerge if Lukman is to be released from his purgatory in the secretary-general’s office to focus on his other job, as increasingly influential special adviser on oil to Nigerian President Olesugun Obasanjo.
Baghdad has a carrot up its sleeve, however: a willingness to adhere to a production quota once its capacity reaches its pre-war quota of 3.14 million b/d. Once we reach our old quota and increase our capacity beyond this, which is bound to happen sooner or later, we would be willing to restrict our production to at least the level determined by Opec before the Gulf war, says the Iraqi official. After all, it is not in our interest to see a new fall of prices.
Other member states may not be overly impressed. There’s no logic in Iraq’s asking to commit itself to a quota when it cannot speculate what it’s capable of achieving at a latter date says an Opec insider, although he concedes that Iraq’s reintegration within the system would eliminate one element of uncertainty from oil markets.
Iraq intends the proposal as a conciliatory gesture, but other members will be wary of its potential to disrupt the group’s fragile politics, including the all-important rapprochement between Iran and Saudi Arabia, upon which, in part, the present court-restraint pact is built. When Baghdad was last part of the quota system before the Gulf war, it had insisted on quota parity with Iran. More recently, it -and Iran – have pointed out that Saudi Arabia, which had a quota of 5.38 million b/d before the Gulf war, has benefitted disproportionately over the last decade from Iraq’s diminished presence on world oil markets.
However, Baghdad is not suggesting now that other producers would have to reduce their quotas to make room for it, which may mark an acceptance of the new realities of the oil market.
The situation today is different from 1990 and it would be different from today by the time Iraq achieves its objective of higher production. Depending on the supply and demand in the markets then, Iraq’s new quotas would have to be discussed within the context then, says the Opec insider.
Ruba Husari, London
(Published in Energy Compass, 11 February 2000)