(World Economic Journal, Brookings)
By: Luay Al-Khatteeb and Olga Irisova
Editor's Note: Luay Alkhatteeb was speaking with Olga Irisova of World Economic Journal. This interview was originally published here.
Olga Irisova: What countries have an economic interest in Iraq today?
Luay Alkhatteeb: Many countries have significant interest in Iraq including regional ones, for security reasons, and those that have already invested in Iraq. However, the security spillover that impacted Iraq and Syria by ISIS now poses a significant threat to the international community, while the global economy is at stake. If the ISIS epidemic is not contained and eradicated any soon, it could engulf the Arabian peninsula into a full scale sectarian war, which means threatening a region that produces 40% of the world′s energy supplies and holds 60% of conventional global reserves of oil and gas.
Irisova: How bad does the ongoing Iraqi crisis affect state’s economy? What is going on with oil extraction?
Alkhatteeb: Iraq′s private banking sector and listed companies with branches in ISIS controlled territories have been impacted badly. The country′s largest refinery, Baiji, is under siege by ISIS and various insurgencies, which means around 150,000 barrel of refined products are now on halt. As for the Kirkuk oil field, exports have been offline since before the crisis (in April), but the field together with the North Oil Company has been taken over by the Kurdish Peshmerga, putting all facilities under the new authority of the Kurdistan Ministry of Natural Resources. However, there has been no interruption in southern production and exports as most of the country′s capacity is predominantly in Basra. The average of last June's oil exports reached 2.423m barrel per day, which is 160,000 b/d oil less than May exports, but this is due to the increase of consumption from the south given the offline fields in Kurdish territories. It is very important to note that southern oil production and export centers will remain safe given that they are far from the fault-lines with ISIS, and there is no chance for ISIS to takeover Iraq′s main oil production in a Shia dominated south—ISIS just doesn′t have the host there to launch any offensives.
Irisova: How in your opinion should the global community behave in order to prevent further advancement of the ISIS?
Alkhatteeb: Al Qaeda and its offshoots such as ISIS are no more domestic issues in Syria and Iraq. They are a global threat, and the international community needs to engage aggressively to end this threat before it′s too late: 1) Synergy is required amongst all regional and international players to share intelligence efforts in order to block the flow of terrorists into Iraq and Syria. 2) It is necessary to dry up regional funding to those alQaeda groups and subgroups to stop the cash influx. 3) Embargo all oil trades and smugglings from alQaeda/ISIS that are going through to Turkey, Iran and Iraqi Kurdistan. 4) Regional nations must put aside all political differences and unite in the war on terror, and 5) UN Security Council resolution 1618 of 2005 must be implemented. Time is of the essence, and it is time to act fast and smart.