news-miner.com Article Published: Sunday, May 04, 2003 - 3:00:37 AM AKST By Doug Reynolds

Now that most of the fighting is over in Iraq, the question is how will Iraq's oil industry be set up? In the U.S. we have property rights embedded in our constitution where individuals have the right to own property, including the right to own oil and gas mineral rights and exploit the minerals.

However, a number of oil producing countries, including Kazakstan, Norway, Mexico and Russia, tend toward national ownership of all oil and gas resources. This desire is so universal that Alaska itself is even trying to own a natural gas pipeline, and we already have a constitutionally embedded permanent fund derived from oil revenues.

At this point, we might sit back and think, what is the best way to maximize social welfare with Iraq's oil while still creating national pride? What Iraq really could use right now is a rallying point that will quickly create order and unify its diverse peoples. Oil can do that. If a new Iraqi court system, a new Iraqi legislative branch, and a new Iraqi leader recognize that the oil is for all people in Iraq, then those entities will defend a new constitution more diligently. And the Iraqi people will know, or at least perceive that, their oil can't be taken away by a company, another country, or another dictator.

The real question though is will the Iraqi military swear to uphold a new Iraqi constitution or not. They would be more likely to uphold it and defend it, as well as defend a court system and legislative system that counterweights a powerful executive, if they knew their constitution included some sort of national control of the oil.

Therefore, Iraq could follow a number of models, based on what other countries have done. One possibility is the Mexico model. There the constitution itself mandates that all oil or gas exploration, development and production is nationally owned, even including retail sales. While this model might create a sense of national unity if applied to Iraq, it does tend to create a lot of inefficiencies. For example, the Mexican oil company, Pemex, has more workers than necessary, and exploration and development of new reserves tends to be slow.

Another possibility is to create a national host oil company (HOC) to partner with multinational oil companies (MOC) through joint ventures or other relationships. This would work better. In fact most oil producing countries have HOCs with MOC partnerships including such diverse countries as Norway, Saudi Arabia, and Nigeria. However, it is still hard for the MOC to get its job done because too much time is spent negotiating profit-share agreements with the HOC. Once the MOC finally does invest in infrastructure, the host country could nationalize it. This often creates hesitancy for new investment in oil and gas infrastructure, and again exploration and development is slower than what happens in the U.S. Still, having an HOC is always a great way to create pride in one's country and pull a country together.

One last idea then is based on what we have in Alaska. Alaska has a constitutionally mandated permanent fund, although the earnings from the fund are not constitutionally mandated to be given to the people. Still, the Alaska model could be made workable for Iraq.

For example Iraq could constitutionally mandate that 5 percent of all Iraq's oil revenue (not profits but actual revenue) be divided up and given directly to the Iraqi people. If this is embedded in an Iraqi constitution, the people will feel a national pride in their oil and will want to defend their constitution. They may even eventually want to create more of a property right system in order to maximize their share of the revenues rather than have an Iraqi oil company manage their oil resources.

One plan right now for the current discussions on an Iraqi government might be to bring in oil and gas experts from Norway, Mexico, Venezuela, Kuwait or Kazakstan to help set up the best method for Iraq to control its oil and gas resources.

A constitution that gives control of resources to a government is foreign to American sensibilities, but it is the most typical model for countries around the world and certainly would be more appropriate for Iraq than a U.S. model. As Iraq and the U.S. set up the Iraqi government, maybe putting an Alaska type clause into their new constitution or as a new law might not be a bad idea.

Doug Reynolds is an associate professor of oil and energy economics at the University of Alaska Fairbanks. He can be contacted at ffdbr@uaf.edu.

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Sunday, May 04, 2003 By: David Coleman

Two small-scale gold miners have been seriously injured, one with gunshot wounds, and robbed of 30 million bolivares (US$19,000) in a raid on a house on Avenida Perimetral district of Parques del Sur in Ciudad Bolivar, southeastern Venezuela.

The men, named as Alirio (28) and Sergio Bravo (31) were pistol-whipped by at least three robbers who surprised them as they sorted nuggets in their La Sabanita workshop.  The attackers escaped in a 4WD Blazer with 30 million bolivares in cash.

"The first thing I saw was the muzzle of a 3.6 mm pistol in my face ... I tried to escape and call for help, but they beat me to the ground with the butts of their guns and shot at my brother (Sergio) who was hit by one of the bullets."

Ciudad Bolivar detectives have secured forensic evidence at the scene of the shooting and expect to make arrests over the course of the weekend.

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Sunday, May 04, 2003 By: Patrick J. O'Donoghue

Venezuela's most criticized mayor Freddy Bernal has announced the dismissal of 10 Libertador municipality officials for alleged acts of corruption. 

The move is said to be part of an attempt to answer long-term criticism that the Mayor has neglected bread and butter issues in his Caracas municipality for political forays and one-upmanship. 

"These 10 officials will be subject to administrative reviews and will be taken to court if there is evidence of corruption ... let us see if we can we can put some corrupt persons in jail in the Bolivarian Republic." 

Speaking at the 1st Bolivarian Promotion of Police Officers, Bernal has declared that he has embarked on an anti-corruption drive and warns rookie officers that they must be firm in the face of bribes and corruption as well as confronting criminal bullets. 

The Mayor has come under fire for the continuing high level of homicides in his municipality and critics have questioned his use of Bolivarian Circles in the municipality, arguing that if they are neighborhood watch committees, they have been unsuccessful in controlling the crime rate.

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Sunday, May 04, 2003 By: Patrick J. O'Donoghue

National Lands Institute (INTI) president, Adan Chavez says the government will set up the first rural security brigades  (BSR) within the next  couple of days and they will consist of State Political & Security (DISIP) Police, Police Detective Branch (CICPC) and the National Guard (GN) in their task to protect groups of small farmers and peasants that have requested agrarian certificates to occupy idle lands in areas where rural leaders have been murdered. 

Chavez says the BSRs will also monitor conflict zones. 

The President's brother made the announcement at a National Assembly (AN) grilling when called upon to explain alleged illegal takeovers of private land. 

"The government will restore land if it can be shown that a mistake has been made but we will continue to implement a plan that ends on August 16." 

By that time the INTI, Chavez insists, hopes to have handed over at least 1.5 million hectares that will benefit 200,000 families of small farmers and peasants.

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Sunday, May 04, 2003 By: Patrick J. O'Donoghue

Proyecto Venezuela  (PV) has reinforced its decision to break away from the opposition Coordinadora Democratica (CD) and has set up its own recall referendum organization. 

At a special assembly this weekend, PV leader, Henrique Salas Romer has hit out at the opposition Coordinadora Democratica (CD) and its supposed presidential candidate, Enrique Mendoza, saying "we don't want just one opposition presidential candidate imposed by a CD clique." 

Salas Romer also slammed marches as the answer to Chavez Frias ... "marches are alright but they don't win elections." 

The former Carabobo State Governor and frequent visitor to Washington warns the CD to get its act together and start preparing its votes for the recall referendum.

As for his own presidential ambitions, Salas Romer told party members that it had two candidates: himself and his son, Henrique Salas Feo ... "we will decide which of us will be the candidate when the moment is right." 

PV's election strategy, Salas Romer says, is not to get rid of Chavez Frias but to elect a new President. 

"We want to defeat his strategy and we will not attack him because it would mean attacking Chavists ... let them see for themselves that Chavez Frias is the black sheep of the family ... Chavez Frias always finds a fool to answer his insults."

PV claims it has 75,000 volunteers that will start the party's "Yes" campaign and promote a current of opinion favoring PV's strategy.