Best of the Week
Most Popular
1. 2019 From A Fourth Turning Perspective - James_Quinn
2.Beware the Young Stocks Bear Market! - Zeal_LLC
3.Safe Havens are Surging. What this Means for Stocks 2019 - Troy_Bombardia
4.Most Popular Financial Markets Analysis of 2018 - Trump and BrExit Chaos Dominate - Nadeem_Walayat
5.January 2019 Financial Markets Analysis and Forecasts - Nadeem_Walayat
6.Silver Price Trend Analysis 2019 - Nadeem_Walayat
7.Why 90% of Traders Lose - Nadeem_Walayat
8.What to do With Your Money in a Stocks Bear Market - Stephen_McBride
9.Stock Market What to Expect in the First 3~5 Months of 2019 - Chris_Vermeulen
10.China, Global Economy has Tipped over: The Surging Dollar and the Rallying Yen - FXCOT
Last 7 days
US Overdosing on Debt - 19th Mar 19 -
Looking at the Economic Winter Season Ahead - 19th Mar 19
Will the Stock Market Crash Like 1937? - 19th Mar 19
Stock Market VIX Volaility Analysis - 19th Mar 19
FREE Access to Stock and Finanacial Markets Trading Analysis Worth $1229! - 19th Mar 19
US Stock Markets Price Anomaly Setup Continues - 19th Mar 19
Gold Price Confirmation of the Warning - 18th Mar 19
Split Stock Market Warning - 18th Mar 19
Stock Market Trend Analysis 2019 - Video - 18th Mar 19
Best Precious Metals Investment and Trades for 2019 - 18th Mar 19
Hurdles for Gold Stocks - 18th Mar 19
Pento: Coming QE & Low Rates Will Be ‘Rocket Fuel for Gold’ - 18th Mar 19
"This is for Tommy Robinson" Shouts Knife Wielding White Supremacist Terrorist in London - 18th Mar 19
This Is How You Create the Biggest Credit Bubble in History - 17th Mar 19
Crude Oil Bulls - For Whom the Bell Tolls - 17th Mar 19
Gold Mining Stocks Fundamentals - 17th Mar 19
Why Buy a Land Rover - Range Rover vs Huge Tree Branch Falling on its Roof - 17th Mar 19
UKIP Urged to Change Name to BNP 2.0 So BrExit Party Can Fight a 2nd EU Referendum - 17th Mar 19
Tommy Robinson Looks Set to Become New UKIP Leader - 16th Mar 19
Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - 16th Mar 19
Towards the End of a Stocks Bull Market, Short term Timing Becomes Difficult - 16th Mar 19
UKIP Brexit Facebook Groups Reveling in the New Zealand Terror Attacks Blaming Muslim Victims - 16th Mar 19
Gold – US Dollar vs US Dollar Index - 16th Mar 19
Islamophobic Hate Preachers Tommy Robinson and Katie Hopkins have Killed UKIP and Brexit - 16th Mar 19
Countdown to The Precious Metals Gold and Silver Breakout Rally - 15th Mar 19
Shale Oil Splutters: Brent on Track for $70 Target $100 in 2020 - 15th Mar 19
Setting up a Business Just Got Easier - 15th Mar 19
Stock Market Elliott Wave Analysis Trend Forercast - Video - 15th Mar 19
Gold Warning - Here Are the Stunning Implications of Plunging Gold Price - Part 1 - 15th Mar 19
UK Weather SHOCK - Trees Dropping Branches onto Cars in Stormy Winds - Sheffield - 15th Mar 19
Best Time to Trade Forex - 15th Mar 19
Why the Green New Deal Will Send Uranium Price Through the Roof - 14th Mar 19
S&P 500's New Medium-Term High, but Will Stock Market Uptrend Continue? - 14th Mar 19
US Conservatism - 14th Mar 19
Gold in the Age of High-speed Electronic Trading - 14th Mar 19
Britain's Demographic Time Bomb Has Gone Off! - 14th Mar 19
Why Walmart Will Crush Amazon - 14th Mar 19
2019 Economic Predictions - 14th Mar 19
Tax Avoidance Bills Sent to Thousands of Workers - 14th Mar 19
The Exponential Stocks Bull Market Explained - Video - 13th Mar 19
TSP Recession Indicator - Criss-Cross, Flip-Flop and Remembering 1966 - 13th Mar 19
Stock Investors Beware The Signs Of Recession / Deflation - 13th Mar 19
Is the Stock Market Still in a Bear Market? - 13th Mar 19
Stock Market Trend Analysis 2019 - 13th Mar 19
Gold Up-to-Date' COT Report: A Maddening Déjà Vu - 12th Mar 19
Save Fintech? Ban Short Selling. It's Not That Simple - 12th Mar 19
Palladium Blowup Could Expose Scam of Gold & Silver Futures - 12th Mar 19
Next Recession: Concentrating Future Losses & Bringing Them Forward In Time As Profits - 12th Mar 19
The Shift of the Philippine Peso Regime - 12th Mar 19
Theresa May BrExit Back Stab Deal Counting Down to Resignation, Tory Leadership Election - 12th Mar 19

Market Oracle FREE Newsletter

Stock and Finanacial Markets Trading Analysis Worth

Could War Flare Again Between Iraq and Kuwait?

Politics / Iraq War Dec 10, 2011 - 05:29 AM GMT

By: OilPrice_Com

Politics

Best Financial Markets Analysis ArticleAccording to Iraqi Council of Representatives Oil and Energy Committee member Furat al-Sharei, the 10 oil fields that spread across the Iraqi-Kuwaiti frontier are still waiting to have a line drawn through them to delineate the border, more than eight years after a coalition led by U.S. forces toppled the regime of Iraqi President Saddam Hussein.


According to al-Sharei, the two countries must first collaborate in developing legislation for equitably sharing the fields before oil extraction can begin, noting, "The problem of the common fields can be resolved by developing legal mechanisms."

While Iraq and Kuwait are now at peace, many of the border issues that led to conflict two decades ago remain, which no amount of diplomatic bonhomie can completely paper over.

In 1993 the United Nations Security Council Resolution 833 precisely delineated the previous borders between Iraq and Kuwait following Saddam Hussein's invasion of his neighbor in August 1990. Iraqi forces were summarily expelled by a 34-nation coalition led by the United States during Operation Desert Storm, which began in February 1991. That conflict left Iraq with a $22 billion reparations bill to Kuwait that it is still struggling to pay off, tithing 5 percent of its oil revenue to its tiny plutocratic southern neighbor.

What were some of Saddam Hussein's grievances against Kuwait? By the time Iraq signed the ceasefire in its punishing eight year war with Iran in August 1988, Iraq was virtually bankrupt, owing $80 billion in debt to Saudi Arabia and Kuwait, which now pressured Baghdad for repayment with interest. Iraq pressured both nations to forgive the debts, but they refused. Iraq also accused Kuwait of exceeding its OPEC quotas and driving down the price of oil, thus further hurting the Iraqi economy, as collapsing oil prices further decimated the Iraqi economy.

Baghdad also repeatedly protested to no avail about what it claimed was economic warfare waged by Kuwait's slant-drilling into disputed border regions, which reached as far as Iraq's Rumaila oil field.

Despite the overthrow of Saddam Hussein's regime in March 2003, two years later Kuwait began the construction of a 125-mile metal barrier along its land borders with Iraq in early 2005.

But with a new administration in Baghdad, on 23 November 2006 Kuwait's Foreign Ministry Undersecretary Khaled al-Jarallah told reporters following talks with Iraq's Foreign Ministry Undersecretary Mohammad al-Haj, "We have signed a deal ... after which Kuwait will be able to complete the construction of the security fence," noting that as the arrangement calls for the payment of "compensation to Iraqi farmers" on the border, the requisite amount "had been deposited with the United Nations." Al-Haj added, "We have completed the practical requirements for the demarcation of borders," based on UN Security Council Resolution 833.

Five years later, little has moved since "the practical requirements for the demarcation of borders." The reestablishment of bilateral Iraqi-Kuwaiti diplomatic relations has been even more glacial. Kuwait reopened its embassy in Iraq in 2008 after nearly 19 years of broken diplomatic relations, while the Consulate of Iraq was again opened in Kuwait only last year.

Local Iraqis based in Basra have a very different view of UN Security Council Resolution 833, stating that it led to the transfer of a significant amount of Iraqi land, hosting both oil wells and agriculture such as tomato farms to Kuwait, as well as the establishment of a wide zone of neutrality between the two countries which again favored the emirate. A high-ranking Iraqi government official in the Safwan border region, who had had some of his own land confiscated when the new border was marked out, commented that the locals describe "the unjust demarcation of borders as well as their government's reluctance to put an end to this injustice."

Once again, local Iraqis two decades later are complaining that Kuwaitis are "stealing" Iraqi oil in border areas by using directional drilling techniques. Local Basra government officials say that they have proof of the Kuwaiti theft and have forwarded it to Baghdad, offering as proof the fact that pressure in some oil reservoirs near the border has dropped significantly, which local Iraqi government officials believe has been caused by Kuwaiti drilling to tap the same reservoirs.

Ratcheting up the tension, Kuwait's ambassador to Baghdad, Ali al-Mu'men recently denied Iraqi allegations and instead, accused Iraqi companies of extracting oil from Kuwaiti oil reserves.

For Farid Khalid, head of the energy committee of the Basra provincial council, the issue is simple - "No oil work was done on the Iraqi-Kuwaiti-Iranian borders by the Iraqi government for years which is why the oil reserves were open for looting."

So, as in the immediate aftermath of Operation Desert Storm, Kuwait has the cash and the backing of the U.S. government - hardly a recipe for regional stability. Further weighting the scales in Kuwait's favor, as some of the U.S. forces leaving Iraq by year's end are due to redeploy there, with the Pentagon discussing shifting a combat brigade team of about 3,500 troops and possibly other units to Kuwait to join the roughly 20,000 U.S. forces already there.

For those seeking to read the tea leaves about Iraq's oil future, Iraq also has ten common oilfields on its eastern border with Iran that are waiting for the demarcation process to be completed before extraction can begin, but that's another story for another time.

Source: http://oilprice.com/Geo-Politics...

This article was written by Dr. John CK Daly for Oilprice.com who offer detailed analysis on Crude Oil, Geopolitics, Gold and most other commodities. They also provide free political and economic intelligence to help investors gain a greater understanding of world events and the impact they have on certain regions and sectors. Visit: http://www.oilprice.com

© 2011 Copyright OilPrice.com- All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules