The abundant oil resources underground is regarded as the biggest capital for the war-torn Iraq's rejuvenation. However, the postwar prospect of the oil economy is not as bright as the Bush Administration expected. The sharp decrease of oil revenue has seriously affected the reconstruction progress.

At present the oil output in Iraq is 2.5 million barrels per day, far less than the 2.8 million barrels before the war. Iraq's daily oil export is between 1.8 and 2 million barrels only. In March 2003, Paul Wolfowitz, the US Deputy Secretary of Defense said, Iraq's annual revenue from oil would reach US $50 bln after the war. But Iraq's oil revenue was only US$ 17 bln over the past 19 months.

It is estimated that the postwar Iraq has suffered a loss between US $7 bln and US $12 bln due to output decrease and damage of the pipelines and other facilities. The loss is even as high as US $12.7 bln if compared to that at peaceful time.

On the other hand, a number of British and American companies have taken over oil projects from the coalition force authority without any competition, which earns for themselves oil worth US$ one bln. The Halliburton Oil Company for which US Vice President Dick Cheney ever managed has taken over 60 percent of the projects.

Most of Iraq's oil establishment was built in 1970s, and went over little repair and maintenance since the war with Iran from 1980 to 1988. The situation is even worse since the UN imposes sanction on Iraq after the Gulf War in 1990.

"What Iraq needs is to rebuild its oil industry, but what is being done is fixing up the damaged establishments," says Walid, an Iraqi editor of the Middle East Economic Outlook magazine based in Cyprus.

He says the whole system including pipelines, underground oil tanks, refineries and export equipments requires complete renovation. "However, certain Iraqi military groups' activities have affected the investments in these projects and hindered the development of new oilfields." "The daily output will be 2 million barrels if the known oilfields are exploited."

Too much loss in oil revenue not only hinders reconstruction of Iraq, but also makes Americans to pay for it. To help rebuilding Iraq, the US has provided a great deal of loans to it. Last year the US congress endorsed a loan of US$ 18.4 bln to Iraq. So the US citizens paid more taxes.

Even if Iraq's oil output rises by three times by 2010 as expected, the per capita income for Iraqi citizens will only be US$ 1, 500. "Obviously oil will not make Iraq rich," says Keith Krane, an economist of the RAND Corporation.

By People's Daily Online