Iraqi Kurd leader urges oil to free market

WASHINGTON, May 10 (UPI) -- While most of the world's oil is controlled by states, an Iraqi Kurd leader wants Iraq to adopt the free market to explore its vast crude reserves.

Qubad Talabani, the Kurdistan Regional Government's representative to the United States, told United Press International he's worried Iraq will stick with the nationalized system to govern the 115 billion barrels of reserves, the third-largest in the world.

Iraqi politicians have yet to resolve disputes over an oil law. The KRG and central Iraq government dispute who has control over which fields, how much will be opened to foreign investment, and the percentage of and mechanisms for redistributing the revenue from oil.

"They're stuck in a nationalized framework," said Talabani, the son of Iraqi President Jalal Talabani. The Kurds are pushing for both regional control and opening up to foreign investment. The Shiite-dominated central government wants to maintain state control over the oil. A new report by PFC Energy, cited in the Financial Times Thursday, says multinational corporations either own or can access less than 10 percent of global oil reserves.

"They want state control over this, they want state monopoly over this, all under the false pretext of recreating Iraqi nationalism," Qubad Talabani said. "This is not about creating Iraqi nationalism, it's about creating an oil regime that is going to be effective, going to be efficient, going to be streamlined, going to bring life back to this country. We need to get oil flowing. What kind of messages are we sending to the investor here? A bad one."

Iraq produces 2 million barrels per day now, far less than before the war and what its reserves are capable of. Aside from the unrest, the oil sector is hampered by years of U.N. sanctions and mismanagement by Saddam Hussein. The needed billions of dollars in investment could come from Iraqi coffers. Oil sales make up 93 percent of the federal budget. Though Iraq has a long history in the oil sector, it needs some foreign investment, experts on all sides of the oil law debate say.