VOL. XLVI
No 37
15
IRAQ
Occupied Iraq And OPEC Conference Meetings
The following article was written for MEES by Dr Fadhil J Chalabi, Executive Director, Centre for Global Energy Studies, London.
Since Iraq has been under occupation by the coalition forces, its right to attend OPEC Conference meetings has been questioned by OPEC spokesmen on the grounds that the country lacks a legitimate, internationally recognized government. For this reason, Iraq was excluded from the last OPEC meeting. According to current OPEC interpretation, the conference meetings ought to be attended only by member countries’ legitimately elected ministers or their deputies. The recent formation of Iraq’s governing council and the interim government did not change OPEC’s position vis-à-vis Iraq, but it has recently emphasized that once the UN recognizes Iraq’s present interim government, then Iraq may resume its attendance of OPEC conference meetings. In other words, Iraq’s OPEC membership, meanwhile, has been de facto suspended, and Iraq’s recently designated oil minister is not considered politically qualified to attend so long as the UN does not recognize Iraq’s government.
However, this stance towards Iraq is unjustified if we examine the nature of OPEC, its history, its statutes and, above all, its long-term interests.
When OPEC was founded in Baghdad in September 1960, its entire raison d’être was to defend its members’ interests in confronting the international oil companies’ actions in unilaterally imposing two successive cuts in the then ‘posted price’ which was, at the time, the tax reference determining government revenues. OPEC was never intended to be a political organization representing sovereign states enjoying international, political recognition. In essence, OPEC is an economic group of commodity (oil) exporters and its formation was similar to that of many primary commodity agreements designed by producer-exporters collaborating simply to defend their own interests in international trade and to take action against price volatility of their commodities. In fact, many primary commodity agreements (involving coffee, copper, diamonds, etc) have been concluded in the past without great success. In the case of OPEC, its success has been derived from the importance of oil in the world economy, as well as oil’s fundamental importance in the economies of the producers themselves.
In fact, in 1961, when OPEC sought to establish its headquarters in Geneva, it was its non-political and purely economic nature that proved an obstacle deterring the Swiss authorities from granting the organization international status with diplomatic immunity. They declared that OPEC was not an international organization serving any political end, but a group of commodity exporters that should be treated commercially. For this reason OPEC moved to Vienna, Austria, where chancellor Bruno Kreisky agreed to confer diplomatic status on the organization. At that time, the far-sighted chancellor’s policy was to open the Austrian capital up to more inter-regional and international activity and investment, in order to place Vienna firmly on the international scene. Many UN agencies were transferred to Vienna for the same reason.
Furthermore, OPEC’s history shows clearly that its own membership is not contingent upon state sovereignty or UN membership or any obligation for a member country to be internationally recognized. In fact, OPEC Resolution 1.2, para. 3, states: “Any country with substantial exports of crude petroleum can become a member”. The word “country” is reiterated in OPEC resolutions without any qualification, the sole criteria for the member country being its production and export of oil and not whether or not it is a sovereign state, or temporarily colonized, or under a foreign mandate, or, for that matter, under occupation.
This is confirmed by OPEC’s own history, and this fact could not have been made more apparent than at the time of OPEC’s inception in Baghdad in September 1960, when Kuwait, itself a founding member of OPEC, was not recognized internationally as a sovereign state, and remained a British protectorate until late 1961, a year after the formation of OPEC. Indeed, the Kuwaiti representative at the time, Ahmad Sa'id 'Umar, was not a minister but simply the chairman of the Kuwait National Oil Company, dealing not with exports of crude oil but refined products. Kuwait was neither an Arab League member nor a member of any international organization, such as the UN – to which it gained admission on 14 May 1963, after gaining independence in late 1961. Qatar joined OPEC in 1961 without being an independent, internationally recognized, sovereign state. Its representative was Hasan Kamil, the Egyptian advisor to the Emir. Qatar did not proclaim its independence until 1971 and was admitted to the UN on 21 September 1971.
Similarly, when Abu Dhabi joined OPEC in 1968 it was neither a sovereign state nor a member of the UN. At that time Abu Dhabi was represented by an Iraqi advisor to Shaikh Zayid, Dr Nadim Pachachi, who, in January 1971, was appointed Secretary-General of OPEC on behalf of Abu Dhabi 11 months before that country even became an independent sovereign state on 2 December 1971, joining the UN on 9 December 1971.
In fact, since its inception, OPEC has never been intended as a political instrument. Even the measures taken in October 1973, to limit oil production as an instrument of political pressure during the war between Egypt and Israel, were taken not in the name of OPEC but by Arab oil ministers who met in their official and national capacity, not even as members of OAPEC (in whose Kuwait headquarters their meeting was held to take that crucial decision). Therefore neither the status nor the history of OPEC gives any precedence, legally speaking, for the exclusion of Iraq from OPEC conference meetings on the grounds that it is not internationally recognized.
Even more important than the question of legality is the fact that the prevention of Iraq’s attendance of OPEC conference meetings is neither in OPEC’s nor Iraq’s interests. It may take years for Iraq to acquire its so-called legitimate government in the fullest sense of being democratically elected. The question meanwhile is whether OPEC’s attitude towards Iraq is in the organization’s own interests. Iraq has such enormous oil potential that, if the country is excluded from OPEC, the future development of Iraqi oil reserves will present a problem that OPEC can ill afford to ignore and can only resolve with Iraq’s cooperation. OPEC’s attitude runs the risk of encouraging certain voices within Iraq, clamoring to leave the organization in order to feel free to produce as much oil as possible without the production restrictions imposed by OPEC’s archaic quota system.
Iraq is not only a major oil producer but it was Iraq that took the initiative in the formation of OPEC in Baghdad in September 1960. Therefore, it is both historically speaking just and in OPEC’s long-term interests to keep Iraq in the organization’s ‘family fold’.