Iraq and The Price of Oil

Regretfully, the situation in Iraq has deteriorated for Iraq Prime Minister Nouri Maliki and his western allies. The Islamic State of Iraq and al-Sham (ISIS) is continuing to take territory in Iraq, Fallujah and parts of Ramadi have fallen. On the door step of the Iraqi capital, Bagdad, ISIS is marching towards the Euphrates River damn, about 120 miles northwest of Bagdad. Islamic fighters have reached Burwana, the eastern side of Haditha, according to recent reports in the New York Times. ISIS continues to outthink, outmaneuver and take territory, despite the Iraqi army being greater in number and better equipped.

The battlefield in Iraq is evolving in two ways, according to Michael Knights who specializes in Middle

Eastern military and security affairs for the Washington Institute. “Firstly, Jihadist fighters (ISIS) have obtained greater strategic depth in terms of distance than Iraqi government soldiers would need to travel to retake key areas,” said Mr. Knight. This implies that ISIS already has a logistical and strategic advantage due to the recent territory taken. Secondly, making reference to approximately 60 of the 243 Iraqi army combatants being unaccounted for and their equipment lost, he added that ISIS offenses have resulted in a serious moral issue that should not be brushed under the carpet.

A compelling question that might be perplexing western analysts now arises; why is a better equipped, greater in number Iraqi army conceding to a Jihadist force amounting to only 6,000 or so Islamic fighters? It does seem rather strange that ISIS is achieving successive military victories in Iraq against the odds.

Maybe there are several reasons for ISIS military success. For example, ISIS has gained additional manpower from jailbreaks. Approximately 500 prisoners have escaped from Abu Ghraib last July. Most of these prisoners are surge/sahwa war veterans, so with these war veterans now aligned to the Jihadist force they have raised ISIS fighting competence level.

Moreover, ISIS recent military victory in Iraq is raising its prestige and luring foreign fighters to join the Jihadist force. In the last few weeks ISIS has been recruiting heavily from fighters based in Syria who have also crossed the border to aid with the overthrow of the Iraqi Maliki government.

But a militant/revolutionary force, such as ISIS would not be able to make such strides against Iraqi government force, a more numerous and better armed opponent, without the support of the populace. Additionally, the Iraqi army may feel dispirited and frankly unwilling to fight for their leader, Maliki, a polarizing figure who has been criticized for stirring up religious friction between the Shia and the Sunni Muslims and excluding the latter. The Iraqi army in some regions is dominated by Sunnis, while their political masters are mainly Shia. Some Iraqi soldiers may not feel like fighting their Sunni brothers for a political master that opposes them. With this in mind the Iraqi leader and commander and chief, Maliki, may have lost legitimacy.

The situation in Iraq has a wider implication for the US and its allies since it also affects the price of oil. Indeed, oil prices have spiked up to a nine month high at 106 USD (July 1). Oil markets continue to remain on edge as escalating concerns over the prospects of oil supplies to OPECs second largest oil producer, Iraq, could be jeopardized. Furthermore, oil consumers are now more dependent on Iraqi’s increasing oil production over the last few years, this being particularly the case as Libya continues to struggle to come back online amid the continuing violence and persistent political turmoil. In February 2014 Iraqi oil production reached 3.6 million barrels a day, which represented its highest output in more than 30 years. However, oil production has slipped back to 3.3 million barrels a day last month, according to oil analysts. The Iraqi government’s intention was to raise production to 4 million barrels a day by the end of 2014 with further planned increases to oil production reaching 7 million barrels a day by 2016, according to economists at Capital Economics.

Therefore, given Iraq’s significant contribution to OPEC’s output, a major disruption to its oil production could also result in a major spike in oil prices, according to analysts. The worse fears in the oil markets are now a reality. Fighting has spread to Iraq’s main oil production areas in the south and Iraq’s largest oil refinery in Baiji now remains under ISIS control.

But a stable Iraq is desirable for western interests, although knowing what effective foreign policy to adopt is complex for the government. Re-equipping the embattled Iraqi army with more modern weaponry may not be the solution. If fractions of the Iraqi army are unwilling to engage ISIS due to common beliefs, then the fear is that any weaponry supplied to Iraqi forces could also be transferred to ISIS. Sending in US allied ground troops would also not be the solution. “If the Iraqis will not fight for their own country, America should not get involved,” said US diplomat James F. Jeffrey. Indeed, massive US troop involvement would reek of US western imperialism and the last thing US would want to do is stir up more anti US western sentiment in the region. Perhaps then the solution lies with assisting the Iraqi’s to elect a more cohesive and inclusive government through the democratic process in Iraq. Maybe a new Iraqi leader who would not ignite friction between the Shia and Sunni Muslims could be part of the solution to win the Iraqi army and its people back on side. Moreover, US military support, through the use of armed drones, maybe desirable if it is perceived as supporting the Iraqi army in its offensive against ISIS. Indeed, armed US predator drones fitted with Hellfire missiles have begun their flying missions in Bagdad and elsewhere in Iraq with the aim of protecting US troops and diplomats on the ground and attacking ISIS positions. The situation remains fluid.