With the passing of Dr. Fadhil Chalabi, the world has lost a master economist of energy and a strong advocate for international cooperation.
He will be remembered as an astute strategist who displayed both jovial charm and at times, “quiet gravitas.” Mr Chalabi led a multitude of lives across many countries, shaping a global vision which many of us can only imagine. He sought balance in times of turmoil, a legacy needed now more than ever.
Iraq Energy Institute (IEI) was fortunate to have Dr. Fadhil Chalabi as a long-term friend and supporter. Contributing to our oil market strategy research and actively participating in a number of our organised events and workshops, we will forever remember him for his knowledge, strong technical acumen and heart-warming friendship. Dr. Chalabi was the first awardee of the institute’s prestigious Iraq Energy Award on December 12th 2012.
Born in 1929 in Baghdad to Jafar Mohamad al-Chalabi and Fatima Yousif al -Uzri, Fadhil Chalabi studied law at Baghdad University and graduated in 1951. He then spent time in Paris, a city he had dreamt of visiting, having long had a passion for French literature. In 1962, he earned his PhD in oil economics at the University of Paris before returning to Baghdad, which he describes colourfully as the regional centre of arts and music in his masterwork, Oil Policies, Oil Myths.
In 1968 he was appointed the director of oil affairs in the Iraqi Ministry of Oil, rising to become Iraq’s permanent undersecretary of oil in 1973, while navigating Iraq’s increasingly dangerous domestic politics as a resolute technocrat.
A passionate defender of the region’s right to exploit hydrocarbon resources on favourable terms, he became assistant secretary-general to the Organization of Arab Petroleum Exporting Countries from 1976 to 1978. From 1978 to 1988 he was deputy secretary-general of OPEC, serving as acting secretary-general from 1983 to 1988.
During his long career, his counsel was called upon by everyone from economists, diplomats, energy ministers and heads of state, during some of the most tumultuous times in the Middle East.
At OPEC, his team worked feverishly to ascertain the global supply-demand balance, contending with both seismic shifts and transient trends. In 1980, he recalled how OPEC’s price considerations took account of alternatives including the cost of producing synthetic oil from coal, almost a historical anachronism today. But these strategic calculations pioneered the modus operandi of OPEC, as it grapples with new challenges.
His passion for Iraq to fully exploit its energy potential for the benefit of its people is explored in his masterwork, Oil Policies, Oil Myths, which has become essential reading for anyone seeking to understand not only OPEC but the political economy of energy.
The book was praised for its frank discussion of the debates at the heart of OPEC, highlighting the challenges of communicating logical policy amid the short time horizons of politicians. Unsurprisingly, it won accolades from pillars of the global energy community. Sheikh Ahmed Zaki Yamani, the former Minister of Petroleum and Mineral Resources for Saudi Arabia (1962-1986) described it as “an enormously unique and valuable book.”
Throughout his career, he advocated the importance of OPEC for establishing balance in the global market in order to smooth out the sharp shocks to price that follow slumps in investment, as he remarked in 1984, “a further weakening of the price structure which is not in the interest of anyone. It will not serve the interests of the consumers themselves.”
The understanding that new oil projects required long timelines and vast investment drove Chalabi’s astute diplomacy, which saw him reach out to non-OPEC members in the East and West during the Cold War. He warned, presciently, that rising Soviet oil production posed further risk to prices during the 1980s oil price slump, an understated forecast as the Soviets themselves would find when low prices ended the USSR.
Chalabi understood that behind the pomp and ceremony of power politics, there was a great deal of posturing, which he was unafraid to call out, as he wrote in 1992, “oil ministers are politicians and, by definition, politicians look always to the short term.” Despite his often highly cautious analysis, those who encountered him often remember a cheerful persona.
Washington Post reporter Henry Allen recalled meeting a jovial and modest intellectual who recounted people’s surprise when he told them he worked for OPEC: A self-professed “technocrat,” he had the appearance of a professor. However, his laid back persona belied his remarkable influence on global oil markets, as well as his strident pushback against what some believed was the “real cartel,” the Seven Sisters. As he told the Washington Post in 1984:
“In 1960 the level of posted prices for our oil was half what it was for oil on the East Coast of the United States. The concession system made companies the sole arbiters of the price of oil. We knew three things for sure: The price of oil was understated, the price of oil was eaten up by inflation, and the depletion of oil was going very fast.”
During the runup to the Iraq war, Chalabi’s deep knowledge of his home country was called upon by a host of different actors who needed to understand the situation of Iraq’s hydrocarbon sector and its post-war challenges. Regardless of whether people were for or against military action, they knew they could count on him for impartial, technical advice.
While at the United Nations Special Commission, Charles Duelfer recalled asking for Chalabi’s advice on the situation in Iraq, in October 2001. Duelfer recalled that Chalabi, “conveyed calm gravitas, with a deep and balanced view of Iraq and its context in the region.” At the meeting, Mr. Chalabi was under no illusions regarding the challenges the US would face in Iraq, lamenting that “raw sewage” was in the streets of Basra.
Nonetheless, he correctly predicted Iraq would enjoy an energy renaissance, despite all the challenges; his analysis after 2003 proved invaluable for those seeking to understand Iraq’s role in transitioning global energy markets.
With decades of insight spanning the modern history of oil and gas, Chalabi was a master at forecasting. After oil prices spiked over $147/ bbl in 2008 before crashing during the global recession, Chalabi had the foresight to predict that “even after the recession, oil demand will be weak, except in China and India.” Importers, aware that prices could reach such painful highs, would push for greater efficiency. He warned in 2009 that Iraq’s highly ambitious production targets could destabilise world markets, warning that “what Iraq can gain from producing more oil it will lose in a fall in price.”
Unsurprisingly, OPEC has been quick to praise his tremendous legacy, with OPEC Secretary-General Mohammad Sanusi Barkindo among the first to pay tribute:
“We have lost a dear and cherished member of the OPEC family. Our thoughts and prayers are with his family at this difficult time. We should also remember Dr. Chalabi’s great life, his work and his achievements. He gave so much to OPEC and the oil industry, as a consummate diplomat and renowned international expert with an encyclopedic knowledge whose writings are acknowledged and admired around the world.”
Dr. Fadhil Jafar al Chalabi 1929-2019, distinguished Iraqi economist, energy historian and pillar of OPEC