Ending Iraq’s damaging oil dependency 

This article has first been published in a shorter version in Annahar.

Transparency is the key for a just energy transition, writes Iraqi campaigner Nuralhuda Muntazar Hassan al-Fadli.

My mother helped me understand how an individual can contribute positively to society. She was a social activist, and as a child I traveled with her to the provinces outside Baghdad when she attended workshops. There I would hear about women’s rights, youth empowerment, peacebuilding and the challenges facing Iraq’s oil industry.

One question overshadowed most of those discussions: why were Iraq’s living standards so low when our oil reserves were so high? This issue remains as urgent as ever today. Iraq has the fifth largest largest oil reserves in the world, but our country is scarred by poverty and unemployment. 

This is what inspired me, and many others, to campaign for transparency in our oil sector. Without transparency, the huge wealth that Iraq’s oil sector generates will not be distributed equitably: for the benefit of all Iraqis, instead of a small group of the elite. 

I remember when I was ten years old we were at a workshop in Erbil in Iraqi Kurdistan, and the instructor said, “You won’t have your rights unless you know the details: the devil is in the details.” Yet the details of our oil contracts are largely hidden from the Iraqi people. Trying to discover them can be like trying to solve the mysteries of the universe.

The lack of transparency breeds corruption, as well as suspicion and anger among Iraqis. Peoples’ disenchantment boiled over in October 2019 when tens of thousands of Iraqis took to the streets to protest against our falling living standards, high unemployment, decaying public services, as well as other grievances, including the erosion of women’s rights. 

Many Iraqis lost trust in their government, seeing billions of dollars in oil revenues hemorrhaging from the public purse, with huge sums wasted on projects with no benefit to everyday people, oil smuggling rife and oil quotas awarded on sectarian and partisan lines.

Meeting basic needs

Yet for Iraq to tackle these problems, we have to stop relying on revenue generated by oil. 

There are two big reasons for this. First, the planet’s survival depends on us radically cutting fossil fuel use and moving to a low carbon future. Second, we have to insulate our economy from the kind of market volatility which saw oil prices collapse in 2020 – halving oil revenues at one point, as well as other shockwaves, such as when ISIS captured some of Iraq’s oil fields in 2014. When governments’ budgets rely almost entirely on oil revenues, a sudden price plunge or a crisis can expose populations to extreme difficulties. In Iraq, when oil prices fall off a cliff, so do many peoples’ jobs and incomes.  

Oil provides 90% of our government’s revenue. I’m a clinical pharmacist by profession and my salary comes from the extractive industry, just as most of my friends’ salaries do. Yet when ISIS had control of Iraqi oil fields some of them didn’t get paid for six months.

Diversifying our economy through tourism, agriculture and other industries while transitioning to clean energy, is therefore critically important not just in environmental terms, but economically: if we continue to scale-up our production of fossil fuels while the world turns away from them, we risk having ‘stranded assets’ – in simple terms, this means oil reserves, infrastructure and other assets, with a rapidly declining value. Countries like ours, where the cost of production is high, will be particularly vulnerable to this as the energy transition gathers pace.  

Given Iraq’s overwhelming dependence on oil, how quickly can we realistically end our reliance on it? New research by academics at Manchester University, commissioned by the International Institute for Sustainable Development (IISD), has come up with the answer: estimating that if we start the transition now, we can phase out oil and gas production by 2050. The authors say that any delay will mean faster change later – which will be harder to manage. 

Transparency as a crucial step

We need to understand how the energy transition will impact our government’s revenues. We also need to know what kind of impact current and future extractive projects will have on people and the environment. 

Crucial information to understand all this is too often kept secret within extractive contracts made between companies and our authorities. This is why I and other members of Publish What You Pay (PWYP), a global movement working for transparency and accountability in the extractive industries, are calling for the comprehensive disclosure of all contracts relating to oil, gas and mining resources in Iraq under the #DiscloseTheDeal campaign. Iraqis have the right to know what’s in the deals their authorities are signing. By publishing them, our new government could break with decades of opacity and start a new chapter in our country’s history.

As a member of the Extractive Industries Transparency Initiative (EITI), since January last year, Iraq is already meant to publish all new extractive contracts – although it’s not the case yet. For instance, a significant $27-billion contract signed last year with TotalEnergies is still hidden from the public, and PWYP, operating under the banner of the Iraqi Transparency Alliance for Extractive Industries (ITAEI), is asking for its disclosure. 

And that’s not all. We are also specifically calling for a new law on carbon emissions reductions, which would oblige extractive companies to disclose the impact of their activities on the environment, and address these impacts in any future contracts.

Ending our dependence on oil 

If you talk to most people in Iraq about a low carbon future, many will say that first their basic needs have to be met. Understandably, they are more concerned with ending the chronic electricity shortages Iraq has suffered from for decades, than environmental sustainability. The conflicts Iraq has endured in recent years have also left many of my generation devastated and wanting to leave the country. 

We need to hear them and answer their concerns. We need to raise awareness about the traps that our dependency on oil is digging for us. And there are also many other young people who can see the path towards a brighter future – they need to be given a voice and a weight in decision making processes. Hope for change lies with them, and with Iraqi civil society,  whose position has grown stronger in recent years, although women remain seriously under-represented. 

If we can succeed in our campaign for an accountable, transparent oil sector, then ultimately it will help us end our dangerous dependence on it. Iraq has long been a leader among oil-producing nations, and our 1961 Law 80 was a turning point for countries wanting to achieve sovereignty over their natural resources. Now we have the chance to be a global leader once again by moving away from fossil fuels. 

Biography: Nuralhuda Muntazar Hassan al-Fadli is a  24 year old  pharmacist and transparency campaigner and environmental activist who lives and works in Baghdad.