Global Policy Forum

By David Ignatius

Iraq is set to resume oil shipments on Sunday, at firmer prices than it could command during the regime of Saddam Hussein. That's a small sign that the global marketplace is ready to welcome Iraq as a modern and dynamic nation.

The United States should be encouraging this transformation, as rapidly as possible. Instead, occupation czar L. Paul Bremer's go-slow, crisis-management style is impeding the Iraqization of the new Iraq. In the process, he is turning what was a war of liberation into a war of occupation.

The firm but cautious Bremer recently canceled a local mayoral election in Najaf, presumably fearing that candidates hostile to the United States would win. Earlier, he abandoned plans for a "big tent" meeting of 300 Iraqi political leaders in July, preferring instead to appoint a 30-member council.

"If they don't give us freedom, what will we do? We have patience, but not for a long time," said Asad Sultan Abu Gilal, the man some had expected to win the Najaf election, in an interview with the New York Times.

Bremer's delays are understandable, given the ragged security situation in Iraq. But they are a mistake. The more slowly political change goes in Iraq, the more headlines you're likely to read about U.S. soldiers being gunned down in a grinding war of pacification. Success in Bremer's case should be measured by his ability to give up control to the Iraqis, not by his ability to gain more control for the Coalition Provisional Authority he heads. The Iraqi oil industry is a good case study of how U.S. occupation policy is working against itself. The Iraqis badly need foreign investment to exploit their vast oil reserves. But investors need to be confident they are dealing with a legitimate Iraqi government so their commitments will be protected. Bremer's occupation government has no more authority to make long-term deals than did Hussein's during U.N. sanctions.

Consider the structural dilemma facing the Iraqi oil industry: Some analysts argue that it should be denationalized and privatized, so it can compete aggressively the way privatized Russian firms are beginning to do; others argue that rapid expansion can best be achieved by production-sharing agreements with Western companies that are pumping Iraqi oil; still others favor a continuation of Iraq's traditional policy of state ownership and control, with service and development contracts for Western firms.

What's the right choice? Hard to say, but the point is that the decisions must be made by Iraqis. No U.S.-imposed solution will be seen as legitimate -- least of all by Western oil companies.

"No one in his right mind would invest in Iraq today, because of the looting and shooting and the lack of an Iraqi government," notes Walid Khadduri, an Iraqi-born analyst who runs the authoritative newsletter Middle East Economic Survey.

Iraqis must also decide what to do with development deals signed by the previous regime. The most important was in 1997 with the Russian firm Lukoil for development of the West Qurna field, which could produce 600,000 to 700,000 barrels a day. Lukoil announced recently that it was reopening its office in Baghdad and is said to be planning to send technicians to West Qurna.

The problem is that some experts believe the Lukoil deal was illegal because it was signed while United Nations sanctions were in place. Whether Lukoil stays or goes is for Iraqis to decide.

But instead of encouraging Iraqi experts to reassert control of their industry, Bremer's team is concentrating on de-Baathification. That's a mistake, argues Raad Alkadiri, an Iraqi-born analyst with the consulting firm PFC Energy who recently returned from a trip to Baghdad. Top energy experts may have been forced to join the Baath Party to get ahead, he notes. But they have oil on their hands, not blood.

The arrest of Hussein's closest aide, Abid Hamid Mahmud, should remind all decent Iraqis that things are slowly getting better. Mahmud's rise from bodyguard to political confidant epitomized the increasing brutality of a regime in which well-educated diplomats and technicians were shoved aside by people who were little more than thugs.

Another development that should embolden Bremer is the announcement that at least 20,000 troops from a dozen allied countries will begin arriving in mid-August. This "internationalization" of the occupation should make U.S. forces less isolated and vulnerable. And it was good to see Germany agree to help with reconstruction.

Now it's time for Iraqis to create their own modern government, in which people like the despised Mahmud will have no place. Even Ahmed Chalabi, long the Pentagon's favorite Iraqi opposition leader, wants Bremer to move more quickly. "Bremer needs more Iraqi assistance to be successful," says Chalabi's top U.S. aide, Francis Brooke. "We need to get moving toward democracy."

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