• Iraq occupies a very geo-strategic position at the north end of the Persian Gulf where about half of the world's oil production originates, and almost 2/3 of the world's proven oil reserves reside.  The Syrian terror regime is on Iraq's western frontier.  Its southern border is Saudi Arabia and Kuwait while aggressive Iranian regime occupies most of its eastern border. 
  

• Iraq has long been a strategic and military buffer  between the militarily weak Sunni Arab Gulf States and the much larger and extremist Shiite regime in Iran.  Saddam's regime was a problem, but his military served as an effective military deterrent to Iranian ambitions in the Middle East. 
  

• Saddam's military was defeated by the USA, and America has since filled the security void in Iraq while maintaining a deterrent to Iranian and Al Qaeda ambitions in the Middle East.  The new Shiite led regime in Iraq is very weak politically, and Iraq's military is a shadow of its former self.  Iraq today is incapable of maintaining security within Iraq much less deterring the aggressive Iranian regime or Al Qaeda.

• Iraq may possess up to 20% of the earth's remaining oil reserves yet it is producing oil at levels that may be as low as 20% of its potential.  Establishing security in Iraq, and helping the Iraqis accelerate the production of their oil is critical to reducing the global price of oil and to stimulating economic growth in the USA.
  

• They view the Arab Sunni States as apostates for their support of American interests in the Middle East.

• The Shiites have had a running feud with the Sunnis for about 1500 years. 

• The religious Iranian radicals would like to supplant the Saudi royal family as caretakers of Mecca and Medina. 
  

• The secular Iranian radicals would like to use the reasons above as a rationale to expand their control of oil reserves in the region as a base of economic, military and world power.

• Acquisition of nuclear weapons by the Iranian regime would make it very difficult for anyone to resist their ambitions.
  

• If Iran can seize effective control of Iraq and position itself on the Saudi border, it would be in the ideal position to pursue its ambitions.
  

• Iran has made the strategic decision to limit its military activities within Iraq through its proxies in the Mahdi Army and the Badr Brigade.
  

• They have concluded that the high levels of violence they earlier sponsored in Iraq failed to drive the USA from Iraq and resulted in heavy casualties for their proxies.

• A far less costly and more effective strategy to achieve their ambitions would be to reduce the violence in Iraq to levels that would permit U.S. politicians to withdraw American ground forces from Iraq and the region.

• The exit of U.S. ground forces from Iraq would leave a huge security void in Iraq that would  unleash bloody chaos and engender permanent resentment from the Iraqi people toward the USA.  The Iraqi military and police would be unable to control the violence, and the weak Shiite regime would likely turn to Iran and Syria to help fill the security void. 
  

• Once in effective control in Iraq under an Iraqi proxy government, Iran would be positioned on the Saudi border and ideally situated to pursue its ambitions.

• Iraq possesses about 10% of the world's proven oil reserves, but only exports about 5% of total global exports because its oil and security infrastructure is in such poor condition.  Geological estimates indicate that Iraq may ultimately produce over twice the current proven reserves once its oil potential is fully developed.  Saddam squandered billions of dollars on wars and the military equipment to support them rather than fully developing the oil producing and economic potential of Iraq.  As a result, many large potential fields remain undeveloped. 
  

• Today, Iraq produces about 2 million barrels of oil per day which may be only 20 - 25% of its daily oil production potential.  If Iraq could reach its full oil export potential, it would be very beneficial to the Iraqi people and to the global economy because the additional supply should drive down oil prices.

• Significantly, Iraq's current oil production approximates the about 2.5 million barrels per day differential between global oil supply and global oil demand.  Therefore, a significant reduction in Iraqi oil exports could cause oil prices to disproportionately skyrocket.
  

America did not invade Iraq to "seize" Iraq's oil reserves. However, 1) helping Iraq maximize the potential of its oil production capacity is in the USA's national interest, and 2) abandoning perhaps 20% of the world's oil reserves to domination by America's worst enemies is insanity.

The Military Situation in Iraq

America presently has about 165,000 troops on the ground in Iraq.  In the absence of Saddam's army, those ground forces represent a vital deterrent to Iranian, Syrian and Al Qaeda ambitions in Iraq and beyond.  They are also a critical leg of the strategic triad of ground, naval and airforces in the region to defend global access to almost 2/3 of the earth's oil reserves.

After five years of effort, American and Iraqi forces have succeeded in reducing the violence in Iraq to levels that can permit economic and political progress on reconciliation among the various Sunni, Shiite and Kurd factions in Iraq.  Economic and political progress has been slow, and the security situation remains fragile. 

Iraqi security forces are growing in their capabilities, but American support is vital to their success in maintaining and improving security.  Fortunately, the Iraqi forces are assuming primary security responsibility in most areas and this is allowing American forces to assume a support role where they suffer fewer casualties. 

Everyone in Iraq is waiting to see what the Americans will do.  The early exit of American forces from Iraq would leave a huge security vacuum in Iraq that Iraqi forces are unprepared to handle.  It could also expose the Iraqi security forces to severe personal reprisals for cooperating with the USA. 

• Iraq is emerging from an extended period of sectarian and terrorist violence that has killed thousands of Iraqis and has inflamed sectarian tensions.

• The recent security improvements have allowed Iraq to move toward sectarian political reconciliation. However, the security and political situations remain very fragile.

• The Iraqi economy and infrastructure are a disaster with unemployment above 30%.  There is little security and no functioning safety net for the poor and unemployed, so there is much unrest within those groups that could be a motivator for further violence.


• The Iraqi government is rife with corruption and incapable of providing basis services to its people or investing its oil revenues in a timely and prudent fashion.  As a result, the infrastructure is not being rebuilt, jobs are not being created and oilfield development is not occurring as fast as it could and should be for the benefit of the Iraqi people.
  


• Iran, Al Qaeda and large Sunni and Shiite militias are biding their time waiting for an American retreat from Iraq that will allow them to pursue their ambitions.

• Despite the above conditions, American political advocates of the decision to leave Iraq are prepared to assume that the Iraqis are ready to:

• Reach political reconciliation on their own.
  
• Assume full responsibility for their own security, and prevent a civil war.
• Control the large Sunni & Shiite Militias.
  
• Control Al Qaeda within their borders.
• Defend their borders from aggression.
• Be a willing partner in helping the USA to defend its own vital interests in the region after we have abandoned their nation to almost certain chaos.

They also assume that America will only have to provide special forces and air support to the Iraqis in order to avoid a chaotic disaster that could spill over into the rest of the Middle East, and trigger an oil price spike that would wreck the global economy.

• In truth, the exit of USA ground forces anytime soon will almost certainly unleash a major civil war in Iraq that Iraqi security forces will not be able to control.  The bloodbath that would ensue would leave the weak Iraqi regime little choice but to seek assistance from Iran and perhaps Syria to help quell the civil war and fight Al Qaeda.


• American special forces and airpower will be able to do almost nothing to deter the conversion of Iraq into a proxy state for Iran and Syria much as exists in Lebanon.  The difference will be that Iraq may have up to 20% of the earth's oil reserves, and Iran and Al Qaeda will be ideally positioned on the Saudi Arabia and Kuwait borders where they can undermine those weak regimes, and threaten 2/3 of the world's oil supply.
  

America leaving Iraq is the real world equivalent of playing Russian Roulette with the global economy, and could well produce an oil price driven economic catastrophe.

Summary Key Perspectives on Iraq and Oil Prices

In America there has been much frustration and some outrage over the $125 billion a year that the USA is spending in Iraq.  This is reflected in the poll numbers that show almost 60% of American voters wanting to remove American ground forces from Iraq within a year.  The prevailing opinion of many voters appears to be as follows:

• Iraq is a hopeless social and political disaster.
• America has already invested too much blood and treasure on a lost cause.
  
• America should remove its ground forces from Iraq within a year and let the Iraqis deal with their own problems.
• The USA should stop spending money on Iraq and invest the $125 billion per year on U.S. domestic priorities.

• What would be the economic consequences of abandoning Iraq and possibly the Middle East to chaos that could result in domination of up to 2/3 of the earth's oil reserves by radical Islamic factions that are dedicated to America's destruction?

• What happens if the USA moves to withdraw substantially all of its ground forces from Iraq, and the oil market fears that have driven the oil price from $22 per barrel in May 2003 to over $105 today become a chaotic, disastrous reality?
  

• The U.S. economy is already struggling under the burden of high oil prices.  What would be the global economic effect if oil prices skyrocket to much higher levels?
  

• The fact that oil prices would only have to rise by about $17 per barrel to offset the annual $125 billion cost of staying in Iraq to defend our access to Middle East crude oil.  The fact that this amount is only about a third of the $46 per barrel increase in the price of oil since the Democrats took control of Congress and began trying to force an early retreat from Iraq.
  

• The fact that the $125 billion cost of staying in Iraq is small relative to the additional $600 billion the USA is spending on oil since May 2003 largely as a result of our political irresolution on Iraq.
  

• The fact that the $125 billion annual cost of staying in Iraq is far less than the enormous increase in the price Americans would have to pay for oil if the USA abandons Iraq.  It is also tiny in comparison to the devastation that much higher oil prices could cause to the USA's $14.5 trillion annual economy.
  


• The fact that the American mission in Iraq is only costing the bottom 75% of wage earners about $8 per month per person because they only pay 14% of Federal income taxes.  This is a fraction of what they spend on car insurance each month and a very small price to pay to insure themselves against the oil price explosion and economic devastation that could occur if the USA abandons Iraq to chaos.
  

• The direct connection between staying in Iraq to defend our access to Middle East crude oil, oil prices and the financial well being of almost every American.
  

• The very real likelihood that Iran and Al Qaeda are biding their time waiting for the USA to vacate the region to their domination.

• The extreme difficulty the USA would have trying to control a deteriorating situation in the region with naval and airpower alone once its ground force deterrent is removed from Iraq.


• What would be the psychological, social, political and military effect of an American retreat from Iraq on the Iraqi people, the Islamic world, and the global community?  Would America be exposing itself as a political and military "Paper Tiger"?  Would this not encourage America's adversaries to challenge the USA even more aggressively?
  

• How would perceptions of America's lack of political and military resolve to defend its most vital interests change the geo-political landscape?

• What would be the global effect of America abdicating its responsibility to defend global access to Middle East crude oil? 

• What would the effect of an American retreat from Iraq be in nuclear Pakistan and Russia?