Expanding oil production in Iraq over the long term will require creating corporate structures, establishing management systems, and installing competent managers to plan and oversee an ambitious list of major oil-field investment projects.
To improve oil-sector performance, the Study Group puts forward the following recommendations.
RECOMMENDATION 63:
- The United States should encourage investment in Iraq's oil sector by the international community and by international energy companies.
- The United States should assist Iraqi leaders to reorganize the national oil industry as a commercial enterprise, in order to enhance efficiency, transparency, and accountability.
- To combat corruption, the U.S. government should urge the Iraqi government to post all oil contracts, volumes, and prices on the Web so that Iraqis and outside observers can track exports and export revenues.
- The United States should support the World Bank's efforts to ensure that best practices are used in contracting. This support involves providing Iraqi officials with contracting templates and training them in contracting, auditing, and reviewing audits.
- The United States should provide technical assistance to the Ministry of Oil for enhancing maintenance, improving the payments process, managing cash flows, contracting and auditing, and updating professional training programs for management and technical personnel.
6. U.S. Economic and Reconstruction Assistance
Building the capacity of the Iraqi government should be at the heart of U.S. reconstruction efforts, and capacity building demands additional U.S. resources.
Progress in providing essential government services is necessary to sustain any progress on the political or security front. The period of large U.S.-funded reconstruction projects is over, yet the Iraqi government is still in great need of technical assistance and advice to build the capacity of its institutions. The Iraqi government needs help with all aspects of its operations, including improved procedures, greater delegation of authority, and better internal controls. The strong emphasis on building capable central ministries must be accompanied by efforts to develop functioning, effective provincial government institutions with local citizen participation.
Job creation is also essential. There is no substitute for private-sector job generation, but the Commander's Emergency Response Program is a necessary transitional mechanism until security and the economic climate improve. It provides immediate economic assistance for trash pickup, water, sewers, and electricity in conjunction with clear, hold, and build operations, and it should be funded generously. A total of $753 million was appropriated for this program in FY 2006.
RECOMMENDATION 64: U.S. economic assistance should be increased to a level of $5 billion per year rather than being permitted to decline. The President needs to ask for the necessary resources and must work hard to win the support of Congress. Capacity building and job creation, including reliance on the Commander's Emergency Response Program, should be U.S. priorities. Economic assistance should be provided on a nonsectarian basis.