Grand Iraqi Dreams - for Whom?
Tuesday 06 April 2010
by: Nick Mottern, t r u t h o u t | News Analysis
Engineers of Technital SpA, the Italian firm that designed the system to save Venice from flooding, are working on the future of Iraq as embodied in their plan for the "New Al Faw Grand Port" at the southern tip of Iraq, a $6 billion major deep-water port on the Persian Gulf that will be the largest in the Gulf.
At the same time, officials of Deutsche Bahn, the German railway system, are hoping to work with the Iraqi government on a rail system that would link Al Faw to Europe. It is possible that the system might carry crude oil and petroleum products as well as dry freight to the West to augment existing pipelines and avoid ocean shipment through choke points such as the Straits of Hormuz, the Bab el-Mandab and the Suez Canal.
These plans point to a dramatically different Iraq from the emotionally, culturally and economically drained nation that it is today, horribly wounded by the US-led 2003 invasion. The Iraq of the planners will earn billions from its oil reserves, the third largest in the world, and it will attract billions from investors seeking to capitalize on its economically strategic location at the top of the Persian Gulf.
Iraq's economic potential is central to the internal political struggle now underway in the wake of the March 7 parliamentary election. and to the decision on how long US military forces stay in Iraq.
Significantly, British Maj. Gen. Andy Salmon, commander of British forces in Iraq, pointed out Iraq's economic potential in a March 2009 interview in The Telegraph, given as British troops began departing from southern Iraq. General Salmon said the Iraqi city of Basra, adjacent to Al Faw, is in a "geo-strategic" position to become an international city the size and financial power of Dubai.
"Basra has a rail link to Baghdad, which has a rail link to Turkey, so in two steps you are at the borders of the European Union, and that should not be lost on investors."
The port and rail line combination was also described in expansive terms by Iraq's Minister of Transportation Amer Abdul-Jabbar in a March 15, 2010, Reuters report: "This will change the road map for world transportation policy ... This dry channel (the rail line) would be a shorter, cheaper and safer alternative (than ocean transit through the Suez Canal)."
"The strategic position of Iraq," said a 2009 transportation ministry press release, "will make it the short-cut route to transport goods between the northern and southern parts of the world."
"The Only Possible Solution"
Alberto Scotti, president and CEO of Technital, the lead group in an Italian consortium designing Al Faw, said in answer to email questions that the port will be the 15th largest in the world for handling sea trade cargo and the only port in Iraq with a channel deep enough (17 meters, almost 56 feet) to handle large vessels. The port will have 4.3 miles of container berths and 2 and one-half miles of bulk berths, and be able to handle 66 million tons of containers and 33 million tons of dry bulk.
Technital, an engineering firm that specializes in transport infrastructure, is responsible for the design of the port infrastructure and rail system as well as its master plan. The design of the port's roads is being developed by SINA SpA; Progetti Europa & Global SpA is doing similar work for the port's utilities and loading and unloading equipment; and Renato Sarno Group its buildings. Technital is the overall supervisor of the $63 million design contract, part of the overall $6 billion port project.
Scotti described the potential of the port as follows:
Its size has been established to allow the growth of Iraq after thirty years of economic and social recession. Iraq is a country of 30 million inhabitants with a huge growth potential. A modern port with great water depth is the only possible solution for the country's development and to mobilize associated trade development.
The port is planned for internal needs. In the future the port could also be used for the trade between East and West through a "dry channel": a rail connection crossing Iraq and reaching Syria, Lebanon and Turkey.
Scotti said the port is being planned for a level of traffic that does not yet exist, and so he does not see it taking business from other ports.
The Iraqi government will possibly award construction contracts in the second half of 2011 after the design work is completed over the next 15 months. The construction of the port, which would be done in two phases, Scotti said, the first costing about $2.7 billion, would take about four years to complete. The current planning is for the port to receive only dry cargo, but consideration is likely to be given to including oil terminals, adding to those already in operation off the Iraqi coast.
Finally, a Train to Berlin
The rail line from Al Faw to Europe, going north through Iraq, a corner of Syria, into Turkey and then Eastern and Western Europe, fulfills a colonial plan for a 1,000-mile long Berlin-Baghdad line first dreamt of in Germany in the late 1800s.
"The Berlin-Baghdad Railway project was to be the centerpiece of a brilliant and quite workable economic strategy. Potential oil supplies lurked in the background ..." wrote F. William Engdahl in "A Century of War, Anglo-American Oil Politics and the New World Order."
The project, spearheaded by Deutsche Bank, actually brought a rail line by 1896 from Europe into Turkey. "It was a true engineering and construction accomplishment," wrote Engdahl. "The ancient rich valley of the Tigris and Euphrates rivers (in Iraq) was coming into sight of modern transportation infrastructure."
But Britain became opposed to the railroad, believing it would give Germany easy access to Iraq's oil, and, thus, a dramatic competitive edge for the thriving Germany economy, which, in the late 1800s and early 1900s, was surging past that of Britain. Explaining British concerns, Engdahl quoted a British military adviser of the time: "If the 'Berlin-Baghdad' were achieved, a huge block of territory producing every kind of economic wealth, and unassailable by sea-power would be united under German authority."
There has been speculation that the Berlin-Baghdad line was one of the causes of World War I, but, in any case, that war prevented the line from being completed. Eventually, Iraq completed its own rail service, which was disrupted by the Gulf War and the 2003 invasion of Iraq. The railway is being restored, and in February 2010, train service resumed between the cities of Mosul in Iraq and Gazientap in Turkey, a trip of 18 hours, according to the BBC, reintroducing the reality of Iraq to Europe transit.
Deutsche Bahn wants to help rehabilitate and improve Iraq's railways, according to a June 2009 article in Der Spiegel, which said: "The company is particularly interested in working to rebuild the country's freight train network and is hoping to operate it later with Iraqi partners."
The article said, "Until now, talks between Deutsche Bahn and Iraq have remained highly secretive," and I found the Deutsche Bahn official with whom I spoke wishing to be vague about his company's goals in Iraq. He said only that this company had signed a memorandum of interest offering Iraq support in planning and rebuilding rail lines. This was consistent with the lack of response from an official of Siemens AG, which has rail contracts in the Middle East, who did not to want to discuss specifics about any interest Siemens might have in Iraq and did not follow through as promised on my request for answers to email questions.
Deutsche Bahn showed a highly detailed interest in developing the rail systems of Middle East countries, including Iraq, in a presentation at a German-Arab business forum in June 2009. It projected that nonoil imports into Iraq from Europe would rise dramatically, from about 281,000 shipping containers full of goods in 2008 to 1.4 million in 2025. Deutsche Bahn estimated that exports from Iraq to Europe would rise during the same period from 44,700 containers to 219,000. The analysis showed that Iraq would have the largest increase in trade compared to the other nations studied - Saudi Arabia, Syria, Jordan and Iran.
There is no indication in the study whether Al Faw was taken into account, but it is doubtful given the newness of the project. The presentation described Iraq's rail system as having "adequate infrastructure missing," and it appears that the growth of trade that was estimated for Iraq was based on improvement in its rail lines.
Pipeline on Rails
The use of the Iraq-Europe rail link for oil has not been specifically discussed in the press, and officials of Deutsche Bahn and Siemens seemed reluctant to talk about the idea. An email question on this to the Iraqi Ministry of Transportation web site went unanswered.
However, rail transport of crude oil appears to be a realistic option for the Iraq-Europe route, in part because existing pipelines carrying oil from Iraq into Turkey are said to be operating at full capacity now, even before the anticipated production increase. Russia, for example, exports crude oil to China by rail because of pipeline limitations, and also ships liquefied gas by rail.
Rail transport of crude oil, according the Canadian National Railways (CN), is a more energy efficient than by pipeline although somewhat less efficient than by ship.
In addition, rail lines are less an environmental threat than pipelines, according to CN. The environmental factor may be particularly important in a question of whether pipelines or rail transport would be used to expand oil flow through Turkey and into eastern European countries on the way to Germany and Western Europe. CN also said that rail shipment offers the opportunity to ship oil and petroleum products to more diverse destinations in varying amounts.
CN is promoting its PipelineonRail as a means of moving crude oil from Canada's tar sands in Alberta to the rest of Canada, the US and the Gulf Coast.
It is possible that the realization of Germany's 19th century rail line vision will generate conflict, as it did in the last century. The line may reduce the influence of Iran in Iraq as Iraq is drawn more into commerce with Europe and the US. Russia may also see the line as a threat because it could reduce European dependency on Russian oil. At the same time Kuwait, which is planning on building a major port next to Al Faw, and Saudi Arabia, which is improving its rail lines, may find the new rail link beneficial.
Growth for Whom?
In response to an email request for information on Iraq's potential for economic growth, the Iraq group of the World Bank reported:
Following a relatively modest growth performance in 2009 (with a real GDF growth of about 4.2%), Iraq's economy is projected to grow upwards of 7% per year during 2010-2012. Under current conditions, much of this growth would be driven by crude oil exports, reflecting both a partial recovery of oil prices as well as projected increases in oil production. An improved security situation could potentially contribute to a more broad-based economic growth process in Iraq, since lack of security is a key constraint to private investments, particularly in the non-oil economy. It should be noted, however, that improved security is not enough to guarantee sustained non-oil growth: Policy and institutional reforms - such as strengthening the financial sector and improving the overall framework for doing business - are essential as well.
The completion of Al Faw and the Iraq-Europe rail link would obviously spur growth in the nonoil sector dramatically and help diversify Iraq's economy. But who will be the primary beneficiaries from the growth of Iraq's economy? Will it be an elite of Iraqi economic and political life and international corporations, or will it be the Iraqi masses? Corruption is said to be part of the Iraqi government's DNA, suggesting that, regardless of who prevails in the current power struggle, it may well be the elites who benefit from growth.
Certainly, the question of who will benefit in Iraq is a factor in the armed resistance and is clearly the issue in the political tension among Iraqis who advocate nationalization over privatization. Iraqi resistance to privatization also challenges international corporations such as ExxonMobil and Shell which are competing with national oil companies for oil reserves around the world, including those in Iraq.
So far, as Michael Schwartz reported in "The Iraq Oil Conundrum" (TomDispatch.com, February 2, 2010), Iraqis who want national control over their resources and their economy have been somewhat successful in dealing with international oil companies. But, he wrote:
The end is not in sight and the outcome still unclear. Will the vast Iraqi oil reserves be developed and sent into the hungry world market any time soon? If they are, who will determine the rate of flow, and so wield the power this decision-making confers? And once this ocean of oil is sold, who will receive the potentially incredible revenues? As with so much else, when it comes to Iraqi oil, the American war has generated so many problems and catastrophes - and so few answers.
The World Bank analysis speaks of security, but security for whom? Is security needed to protect international corporations doing business in Iraq because they are viewed as not benefiting the Iraqi people? Michael Schwartz noted, for example, that when the Chinese oil firm CNPC brought foreign workers into Iraq, in spite of agreeing to use Iraqi workers, "equipment was sabotaged, work undermined, and the project's viability remains threatened."
There is a popular notion in the United States that all US forces will leave Iraq by the end of 2011. For example, The Associated Press said in an article in the March 29, 2010, edition of my local newspaper, The Journal News, that a Shiite victory in the struggle for political power in Baghdad after the March parliamentary election "would leave the minority Sunni Arabs seething" and "that could undermine the credibility of Iraq's nascent democracy and unleash a new bout of sectarian violence just as the US is preparing to pull all its troops out of the country."
Dahr Jamail, in "Operation Enduring Occupation," provided ample evidence that "it is highly unlikely that the US government will allow a truly sovereign Iraq, unfettered by US troops either within its borders or monitoring it from abroad, anytime soon." (The AP article is also misleading because it seems an exaggeration to describe Iraq as having a "nascent democracy" while the government is believed to be holding at least 30,000 detainees, and the US is holding several thousand more; torture and executions are believed to continue. See "Dirty Truths About Iraq."<http://www.truthout.org/article/dirty-truths-about-iraq>
Asked about long-term US military presence in Iraq, Army Maj. Gen. Terry W. Wolff, who is among those overseeing the current US troop drawdown there, said in a Department of Defense Bloggers Roundtable interview on March 11, 2010:
... based on the next government (of Iraq) getting formed and based on what both sides (Iraq and the US) decide, they will at some point decide whether or not to explore, you know, additional US force presence.
Again, the objective that has been - has been articulated over time is a long-enduring strategic relationship ... We'll over time, both governments will figure out what our - what our enduring presence militarily should be, and - but so I can't comment anymore on that.
As the US approaches the moment at the end of 2011 when control of Iraq is being advertised to be officially to turned over to Iraqis, this question will be considered: Exactly whose grand dream are US forces protecting in Iraq?
The Joint Operating Environment 2010 report, of the US Joint Forces Command, released March 15, 2010, expressed this view:
The economic importance of the Middle East with its energy supplies hardly needs emphasis. Whatever the outcome of the conflicts in Iraq and Afghanistan, U.S. forces will find themselves again employed in the region on numerous missions ranging from regular warfare, counterinsurgency, stability operations, relief and reconstruction, to engagement operations. The region and its energy supplies are too important for the U.S., China, and other energy importers to allow radical groups to gain dominance or control over any significant portion of the region.
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