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March 24, 2010


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I like where this is going in the first few follow-up posts. The argument, as I see it, is that given the basic fungibility of the product, the well developed nature of the global market and the vast reserves Iraq's sitting on, a "win" is obtained by bringing the fields first explored decades ago on-line. If so, I'm broadly sympathetic and I've made a similar (if not remotely as comprehensive) a case before.

But how do you measure the ultimate gain? Oil prices still look dislocated to me, and I see no sign that the prospect of Iraq coming on-line is driving down prices....unless we're claiming that the $140 or so we were seeing in '08 was "real" and it took a realistic prospect of Iraq coming on-line to drive it down to $80.

Hmm, I'm late to the party. I suppose that this sort of works, at least at certain angles.

Whatever happens to oil, the non-trivial costs of dealing with logistics of the war and the veterans is going to cause a lingering problem for the US. One that probably won't break nicely politically for quite some time. But Siglitz is a pinko.

At first blush, I think your two points are just wrong; I don't think China won cause China has Chinese stuff it needs to sort out internally for it to be a real 'win' for them, whatever a Texas oilman says.

To point one, Iran gained a huge amount of leverage against America, being able to threaten American troops throughout the region; its local enemies (Saddam and the Taliban) were displaced and Iran's emerged all the stronger, picking up either a fully allied, or weakly allied government in Baghdad (though Sadr as kingmaker will ultimately disappoint them). America's invasion of Iraq, and rejection of the Iranian Grand Bargain (plus the sweetheart deal with Libya) helped push Iranian politics towards the acquisition of nuclear weapons. But given that American analysts were willing to go to the press over the immenent Iranian bomb c. 1995, I'm just underwhelmed by the idea that the regime's getting nukes is 1) soon or 2) is really dangerous, at least on the Kim Jong Il level. It's a hell of a lot less scary than Mao with nukes.

As for two...I'll believe it when I see it. As much as I wish Mitch Daniels were right and oil pays for everything in the end, I'll be floored, given that the wildcard not on your discussion of Iraqi politics and oil profits--the Iraqi diaspora in the Sunni Middle East. With a Shi'a Arab nationalist (Sadr) or Shi'a (SCIRI, Maliki) running Iraq, that diaspora is not coming home, and is going to play a regional role like the Palestinians, only worse. So, what we may get from oil may end up going down in subsidies to Israel, Saudi, and Egypt as things get worse, rather than better.

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