Top Energy Stories

Iraqi oil production increased in August, despite pressure from OPEC to make further cuts. Countrywide output rose by 160,000 barrels per day (bpd), to 3.89 million barrels bpd, according to an Iraq Oil Report analysis based on data gathered from every producing field in both federal Iraq and the semi-autonomous Kurdistan region. In contrast, Iraqi exports fell in August, which led many observers — including OPEC secondary sources — to believe production had also declined. Now, however, it appears the export drop reflects an increase in domestic consumption and storage rather than a reduction in oil field output. A close look at field-by-field data suggests that Iraq's output has probably hit its floor, given fiscal constraints and the structure of the contracts governing Iraq's largest fields. For more details, read the full story.

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If the Iraqi National Oil Company (INOC) is actually reconstituted, Oil Minister Ihsan Ismaael is poised to be its first president. The company's formation has been stalled since Iraq's highest court invalidated several foundational provisions in the 2018 INOC law. But in August, the Iraqi Cabinet decided to consider two different slates of proposed amendments that could bring the law in line with the Constitution, and also authorized Ismaael to appoint himself INOC president. The appointment does not appear to have any practical effect in the short term, but it does suggest that — if the Cabinet and Parliament do pass INOC law amendments during the remainder of Kadhimi's term — Ismaael will be empowered to lead the creation of the company. Read the full story on Iraq Oil Report.

Ihsan Ismaael, then-director general of the South Gas Company, in his Basra office on Jan. 29, 2017. (ALI AL-AQILY/Iraq Oil Report)

National News

Prime Minister Mustafa al-Kadhimi appointed new leaders for several economic and security institutions. He put some of his close advisors in key positions, including former J.P. Morgan equity analyst Suha Najjar at the head of the National Investment Commission, and Salem Chalabi at the helm of the of the state-run Trade Bank of Iraq. Mustafa Ghalib, a follower of cleric Muqtada al-Sadr, is the new director of the Central Bank of Iraq. The appointments have elicited contradictory lines of criticism. Some have decried Kadhimi for reinforcing Iraq's muhasasa ("quota") system, under which each political bloc expects a portion of key positions. Others have observed that the appointments do not include every major political bloc, drawing praise from some quarters and complaints from others who say moving away from muhasasa could undermine inclusive, unity governance.

Grand Ayatollah Ali Al-Sistani put his weight behind early elections. During a meeting in Najaf with the Special Representative of the United Nations Secretary-General for Iraq, Jeanine Hennis-Plasschaert, he voiced his support for a plan advanced by Kadhimi to hold elections a year early, in June 2021. That timeline is hardly inevitable. In order for the elections to enjoy popular legitimacy, Iraq needs a new election law. And in order to happen a year early, legislators would have to vote to dissolve Parliament, voluntarily depriving themselves of power and privilege. Sistani's pressure is therefore necessary — yet probably not enough.

Iraqi politicians don't always heed Sistani's messages despite his position as the highest Shia authority in Iraq, according to Abbas Kadhim in an analysis for the Atlantic Council. "Sistani’s statements have always been received selectively by Iraqi political leaders," Kadhim writes. "They often cling to the sections that benefit them and ignore or procrastinate on inconvenient elements." Sistani's recent messages have included plenty of inconvenient demands. In his meeting with Hennis-Plasschaert, he underscored the need to combat corruption, bring weapons under state control, and bring to justice the perpetrators of the violence meted out against protestors since October 2019. According to Kadhim, Sistani's decision to deliver these messages to a representative of the UN is "a reminder to the intergovernmental organization that it can, and must, play its proper role to help Iraq overcome its domestic and international crises."

Armed groups continue to target Iraqi convoys supplying the U.S.-led coalition. For over three months, IED attacks have been launched on roads in Dhi Qar, Basra and Babel provinces, among others, and the pace is increasing. This week, one attack targeted a British diplomatic convoy on the Baghdad airport road, according to Amina Ismail, reporting for Reuters. There were no injuries or casualties. Several factors may be behind the violence: Kadhimi's efforts to assert greater control over paramilitary groups and border crossings; the ongoing U.S.-Iraq strategic dialogue; recent U.S.-sponsored agreements seeing the UAE and Bahrain normalize relations with Israel; and the upcoming U.S. elections.

The Iraqi state has an opportunity to break from a dark history of torture. In an article published by Just Security, Belkis Wille describes the account of a young man who says he was beaten, hung from the ceiling, and electrocuted by various branches of the Iraqi security services, and then forced while blindfolded to sign a document that said he had joined the self-proclaimed Islamic State (IS) militant group in Mosul, despite the fact that he had passport stamps showing he was in Iran when the extremist group occupied the city. Such stories are common, Wille says, and the Iraqi government has proven unable to police itself. One step toward fixing the problem could be for Parliament to ratify the Optional Protocol to the Convention Against Torture, which would give Iraq access to international expertise and support.

Interview of the Week

Haitham al-Jibouri, the chairman of the Parliament Finance Committee, says there will be no 2020 budget law without a real plan for serious economic reforms. In a Sept. 13 interview with state-run Iraqiya TV, Jibouri said he recognizes a need for more borrowing, but that Parliament also needs to see plans to raise non-oil revenues.

While acknowledging that real economic reforms will take time, Jibouri insisted that the Kadhimi government’s efforts so far have been insufficient. Jibouri is a member of the State of Law coalition, led by former Prime Minister Nouri al-Maliki, who oversaw years of unrestrained spending, burning through more than $20 billion in cash savings during a period of historically high oil prices, and leaving his successors without any financial cushion to manage downturns in the commodity price cycle.

Jibouri mocked Kadhimi’s televised leadership of military detachments to take control of border crossings, arguing that what is really needed is not more force but better digital record-keeping at customs points:

If I'm sitting in front of a computer, or if you're on that iPad that you've got in front of you, and I bring 10,000 Humvees and park them outside your door, is that going to stop you from manipulating the software on your iPad?

In another part of the interview, Jibouri acknowledged that many of the government’s challenges are the result of bad decisions by previous cabinets. Jibbouri also praised Kadhemi’s sincerity. But at the same time, he expressed doubts about the government’s current economic path:

[Adil] Abd al-Mahdi's government made big mistakes. They opened up the door to massive spending, they increased salaries by 10 trillion [Iraqi dinars], and now we're paying. Most of what we're paying for are the mistakes of the Abd al-Mahdi government. May God help Mr. Kadhimi. May God help him a thousand times. I said it to his face — I said, "You're on a suicide mission." And I'm saying it again now. But Mr. Kadhimi has a responsibility. His intensions are sincere. But he has to choose the right tools if he's going to achieve real economic reform.

The Parliament Finance Committee is expected to begin its review of the budget law in the upcoming week.

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