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Perfectionist

Report Accuses Multinationals Of Ripping-off Iraq's Oil Wealth

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What we have here is a classic example of two parties each with something to offer and each needing something the others don't have.

Iraq has oil reserves and resources. What it does not have is capital and expertise to develop these reserves quickly and efficiently (their oil industry has been deprived of capital, spare parts and new technology for the better part of 15 years remember).

The big oil companies have the expertise, the capital and the new technologies. They also have a market. They need crude oil.

Iraq will offer the development and pumping contracts in exchange for tax, royalties and employment. All those employed Iraqis will pay income tax on their earnings. There will be duty and VAt paid on imported parts and equipment.

Interestingly enough, there was a chap at Wits University a few years ago doing post-grad research into the total financial benefit to a country when a mineral resource was exploited. He didn't just look at the tax and royalty payments, but the whole financial inflow to the country. His preliminary research showed that the majority of the cash value of the reserve actually stayed in the country the foreign company took by far the smaller portion.

I would say Iraq is in the stronger position in this negotiation as they control the oil and there are several companies in Britain and the US alone who would be willing to bid for the pumping contract. Since I doubt the descendants of one of the oldest trading civilisations on earth have lost any of their business acumen a good Iraqi negotiating team will probably get a pretty tasty deal from whichever companies do win the contracts.

Perhaps if these mugus from the tofu weaving classes actually took their heads out of their bums every once in a while, they'd see that what is being proposed in Iraq is entirely normal and could even be seen as a sign of development. If the oil industry is interested in setting up long term contracts it means they have a reasonably favourable view of that country's future.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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