Published by the International Institute for Sustainable Development (IISD) Vol. 05 No. 186 Wednesday, 30 April 2003 CSD-11 HIGHLIGHTS: TUESDAY, 29 APRIL 2003

On Tuesday morning, delegates heard statements by ministers and other high-level representatives on "Visions for the Future CSD." They also participated in two regional implementation forums focusing on the Economic Commission for Europe (ECE) and the Economic Commission for Latin America and the Caribbean (ECLAC) regions. In the afternoon, ministerial round table discussions considered "Protecting and managing the natural resource base of economic and social development" and "Health and sustainable development."

HIGH-LEVEL SEGMENT

MINISTERIAL STATEMENTS: During this segment, ministers and other high-level government officials continued to present their views on the future modalities and work programme of the CSD. Many speakers affirmed that the CSD should focus on implementation of goals agreed in the Johannesburg Plan of Implementation (JPOI) and Agenda 21. With regard to the extent of forward planning for the work programme, SENEGAL said the programme could look ahead three cycles (six years), while LUXEMBOURG favored setting it four to six cycles ahead. Several ministers supported a flexible work programme and agreed that the number of issues addressed in each cycle should be limited. The US and SWITZERLAND suggested addressing one single key theme during each cycle.

On the selection of issues for future sessions, many speakers agreed on water and energy as key topics meriting early consideration. SWITZERLAND and GABON highlighted health, and FINLAND identified sanitation, as further issues. SENEGAL said the CSD should pay particular attention to African issues. SAUDI ARABIA highlighted financial commitments, technology transfer, capacity building and education. GERMANY underscored the role of renewable energy in poverty reduction. PERU, speaking for the RIO GROUP, highlighted, inter alia, vulnerability to extreme weather events, mountain ecosystems, and trade.

On other organizational arrangements, the US said innovative means of capacity building, such as the "Partnerships Fair" and the "Learning Center," should be considered throughout the UN system. SWEDEN called for a gender perspective and supported the exchange of experiences through CSD task forces or sub-committees. Many countries highlighted the importance of regional implementation, with TAJIKISTAN supporting regional implementation forums and enhanced subregional cooperation. CHINA stressed the comparative advantage of existing institutions, such as the UN regional commissions. BELGIUM highlighted the use of national strategies for sustainable development.

REGIONAL IMPLEMENTATION FORUMS: Late Tuesday morning, two regional implementation forums were held concurrently, with participants discussing initial steps taken in the ECE and the ECLAC regions to implement the JPOI.

ECE: This session was chaired by UNFCCC Executive Secretary, Joke Waller-Hunter. Kaj Barlund, ECE Executive Director, outlined the Commission’s work on follow-up to the WSSD, including its intention to establish an open forum on sustainable development for discussions among all ECE partners, with a strong emphasis on civil society. Julio Garcia Burgues, EC, highlighted work undertaken in the EU on sustainable development strategies. Lynne Brennan van Dyke, UNEP Regional Office for North America, gave an overview of the office’s activities in support of countries in the region, including collaborative work with other organizations. Dafna Gorchava, UNDP, reported on progress in implementing the Capacity 2015 initiative, and on new initiatives to assist countries with economies in transition. Claude Fussler, World Business Council for Sustainable Development, urged partnership stakeholders to meet regularly to ensure that commitments are met. Marec Maciejovski, Baltic 21, presented his organization’s experience as an example of successful subregional collaboration in implementing sustainable development goals.

SWITZERLAND supported the idea of an ECE discussion forum, and called for a strong link between the global and regional processes. Emphasizing the importance of subregional work, SWEDEN shared the experience of the Nordic Council. The US, supported by CANADA, questioned whether grouping regional implementation forums around the regional economic commissions would be an effective way to achieve implementation of the WSSD goals in a CSD context. HUNGARY called for a critical self-assessment of the way the ECE region implements the WSSD’s outcomes.

ECLAC: This session was chaired by Albert Binger, Center for Environment and Development, University of the West Indies. In his opening remarks, Reynaldo Bajraj, ECLAC Executive Secretary, proposed that the region establish a Sessional Committee as a component of ECLAC’s biennial session to incorporate the WSSD’s outcomes into ECLAC’s work programme. Mike Gucovsky, UNDP, identified regional priorities outlined in the LAC Initiative on Sustainable Development adopted at the WSSD. Cristina Montenegro, UNEP Regional Office for Latin America and the Caribbean, stressed the need to promote regional cooperation through the Initiative and to give practical and operational priority to the implementation of the WSSD’s outcomes. Bruno Stagno, Permanent Representative of Costa Rica, outlined the region’s institutional and operational experience, stating that it forms a sound basis for implementing sustainable development. John Forgach, A2-R Environmental Funds, highlighted the role of regional development banks and small- to medium-sized enterprises in sustainable development. Marina Da Silva, Brazil’s Environment Minister, underscored the importance of linking environmental goals with social and economic development.

During the subsequent discussion, ARGENTINA drew attention to a recent regional meeting on sustainable consumption and production. GUYANA stressed the need for monitoring progress, and suggested exploring how a peer review mechanism could function in the region. MEXICO identified interagency coordination and the development of sustainable development indicators as priority issues. CHILE said UN agencies are essential for achieving sustainable development in the region and, with others, supported the proposal for a Sessional Committee of ECLAC. COSTA RICA stressed the harmonization of sustainable development policies and actions at the regional level, and called for the development of financial instruments. INDIGENOUS PEOPLE called for greater efforts to involve them in ECLAC’s follow-up to the WSSD. Stating that the Secretariat’s proposal to organize regional implementation forums around the UN regional commissions was not focused on outcomes, the US suggested non-geographically based groupings. CANADA also stated that regional implementation should not be restricted to the UN regional commissions and expressed its wish to work with LAC countries, particularly in the areas of health and environment, and knowledge transfer.

INTERACTIVE MINISTERIAL ROUND TABLE: Protecting and managing the natural resource base of economic and social development: In the discussion, speakers raised a variety of issues, including those relating to biodiversity and the Convention on Biological Diversity (CBD), water, chemicals management, and education and public awareness.

CBD COP President Hans Hoogeveen (Netherlands) suggested that ministers address how the CBD and other conventions could contribute to the implementation process and proposed that CSD-11 provide a clear mechanism on how the conventions can report to it. KENYA underscored the need for financial support to implement national biodiversity plans and strategies in developing countries. NGOs said the CSD should assist governments in valuing natural resources. Linking biodiversity and poverty, NORWAY said biodiversity loss cannot be addressed in the CBD alone, and requires a broader approach. He said CSD should monitor implementation of the pledges made at the WSSD.

On water issues, FAO stressed the importance of linking water resources, sustainable agriculture and food security. Noting the transboundary nature of water and ecosystems, CROATIA proposed the development of regional strategies for sustainable development. SOUTH AFRICA drew attention to the 2005 target for establishing national plans on integrated water resource management and water efficiency, and said the UN and CSD should contribute to meeting this target.

On chemicals-related matters, VENEZUELA stressed that the indiscriminate use of pesticides and agro-chemicals has a major impact on human health and on the contamination of water resources. She urged the prioritization of work on POPs and the development of alternatives to using DDT.

Regarding education and awareness raising, YOUTH maintained that their involvement is critical to the implementation of JPOI, and stressed the importance of education in supporting such involvement. PORTUGAL called for policy coherence, emphasizing that effective natural resource protection should occur against a background of increased knowledge and information dissemination. TRADE UNIONS highlighted the benefits of education and awareness raising in the workplace, and noted the value of workplace assessments. On capacity building, LESOTHO and PAKISTAN stressed the importance of building the capacity of rural people to manage natural resources.

Health and sustainable development: KENYA stated that sustainable development cannot be achieved without addressing the causes of ill health, including pollution, overcrowding, and inadequate water supply and sanitation. CUBA noted that progress on the WSSD’s health commitment can only be achieved if there is political will and integrated efforts. BUSINESS AND INDUSTRY said health commitments will need to be met in part by the marketplace, coupled with good governance, transparency and accountability. WOMEN stressed that gender issues are critical in addressing human health, and raised concerns regarding unequal access to health services. The IMF called for substantial increases in ODA for the health sector. INDIGENOUS PEOPLE stressed the issues of POPs and HIV/AIDS, and called on the CSD to ensure, inter alia, impact assessments as a prerequisite for mining operations and protection of traditional healing systems. The UNFCCC indicated that it would be considering implementation issues jointly with the CBD and the CCD following CSD-11.

IN THE CORRIDORS

Many delegates seemed pleased with Tuesday’s high-level discussions, noting a useful exchange of views during the morning’s regional sessions and the afternoon’s round table discussions. Some Major Groups were heard expressing satisfaction with their interactive exchanges with ministers, and a number of observers were already suggesting that holding the ministerial segment earlier than usual was proving to be a success.

While the mood in the formal meetings was generally positive, informal high-level talks were showing divergence on the choice of themes for upcoming CSD sessions. While many delegations agree that water and energy should be prioritized, there is a wide range of views on what issues should follow on from these. A non-paper circulated on Tuesday was seen by some as an attempt to address this matter; it suggested adopting two themes per work cycle, with the option of a third being set closer to the time, if required. According to some, trouble might also be brewing on regional issues. While there is clear support for a strong regional component to the CSD’s work, at least two developed countries strongly oppose holding regional implementation forums grouped around UN regional commissions, arguing that they would be unwieldy and ineffective. Some other delegates are also reportedly sympathetic to the idea of selectively using successful examples of subregional cooperation.

THINGS TO LOOK FOR TODAY

MINISTERIAL STATEMENTS: Delegates will continue to hear statements on "Visions for the Future CSD" from 10:00-11:30 am in Conference Room 4.

INTERACTIVE MINISTERIAL ROUND TABLE: Ministerial round table discussions will take place in Conference Room 1 from 11:30 am - 1:00 pm on "Means of implementation" and "Institutional framework for sustainable development."

REGIONAL IMPLEMENTATION FORUMS: Forums on the ECA and ESCWA regions will take place from 3:00 pm - 4:30 pm. The ESCAP forum will occur from 4:30-5:30 pm. Ministers and high-level officials will discuss initial steps taken in these regions to implement the JPOI. Check the Journal for venue details.

SUMMARY OF HIGH-LEVEL SEGMENT: Chair Moosa will present a summary of discussions held during the high-level segment from 5:30-6:00 pm in Conference Room 4.

LEARNING CENTER: Two courses on "Improving Johannesburg implementation" and "Sustainable development in a dynamic world" will be held from 10:00 am - 12:00 pm and 3:00-6:00 pm respectively at the Dag Hammarskjold Library Auditorium.

This issue of the Earth Negotiations Bulletin © enb@iisd.org is written and edited by Prisna Nuengsigkapian prisna@iisd.org, Richard Sherman richard@iisd.org, Chris Spence chris@iisd.org and Andrey Vavilov, Ph.D. andrey@iisd.org. The Digital Editors are Leila Mead leila@iisd.org and Leslie Paas leslie@iisd.org. The Editor is Pamela S. Chasek, Ph.D. pam@iisd.org and the Director of IISD Reporting Services is Langston James "Kimo" Goree VI kimo@iisd.org. The Sustaining Donors of the Bulletin are the US Department of State Bureau of Oceans and International Environmental and Scientific Affairs, The Netherlands Ministry of Foreign Affairs, the Government of Canada (through CIDA, DFAIT and Environment Canada), the Swiss Agency for Environment, Forests and Landscape (SAEFL), the United Kingdom (through the Department for International Development - DFID and Department for Environment Food and Rural Affairs - DEFRA), the European Commission (DG-ENV), the Danish Ministry of Foreign Affairs, and the Government of Germany (through the German Federal Ministry of Environment - BMU, and the German Federal Ministry of Development Cooperation - BMZ). General Support for the Bulletin during 2003 is provided by the United Nations Environment Programme (UNEP), the Government of Australia, the Ministry of Environment and the Ministry of Foreign Affairs of Sweden, the Ministry of Foreign Affairs and Trade of New Zealand, the Ministry of Foreign Affairs of Norway, Swan International, the Japanese Ministry of Environment (through the Institute for Global Environmental Strategies - IGES), the Japanese Ministry of Economy, Trade and Industry (through the Global Industrial and Social Progress Research Institute - GISPRI), and the Ministry for Environment of Iceland. The opinions expressed in the Earth Negotiations Bulletin are those of the authors and do not necessarily reflect the views of IISD or other donors. Excerpts from the Earth Negotiations Bulletin may be used in non-commercial publications with appropriate academic citation. For information on the Bulletin, including requests to provide reporting services, contact the Director of IISD Reporting Services at kimo@iisd.org, +1-212-644-0217 or 212 East 47th St. #21F, New York, NY 10017, USA.

This page was uploaded on 04.30.2003

<a href=economictimes.indiatimes.com>REUTERS [ WEDNESDAY, APRIL 30, 2003 11:18:22 AM ]

SINGAPORE: Oil prices traded marginally higher on Wednesday, breaking six straight days of falls that wiped more than $3 off a barrel of crude as traders awaited fresh data from the United States on the health of US fuel supplies.

US light crude climbed 18 cents to $25.42 a barrel, recovering from a five-month low of $25.18 struck on Tuesday on expectations of rising supply in a weak global economy and with the deadly SARS epidemic biting into oil demand.

London's Brent crude rose nine cents to $23.35 a barrel.

"I think at these levels, oil is becoming a good short-term buy on a risk-reward consideration. Stocks are still very low and any potential supply disruption could flick US crude back up to $26 or $27," said David Thurtell, commodities strategist at Commonwealth Bank in Sydney.

With little by way of headlines to move prices, traders will focus attention on US oil stocks data to be released by the government's Energy Information Administration (EIA) later on Wednesday.

The weekly report on inventory levels across the barrel is closely monitored by oil dealers for signs of market imbalances in the world's biggest oil consumer and for a snapshot of demand.

US fuel stocks have been running at steep deficits to year-ago levels, raising fears of a potential shortfall following disruptions to supplies from Venezuela, Nigeria and Iraq in the last six months.

Analysts polled by Reuters on Monday forecast the EIA to report a 2.85 million barrel increase in crude levels in the week to April 25 as refiners rachet up processing rates in preparation for the summer run on gasoline during the holiday season.

Analysts pegged gasoline inventories rising by 1.6 million barrels, while distillate stocks were seen up by 1.3 million barrels as demand tails off with the end of winter.

Oil prices tumbled more than $1 last Wednesday after the EIA reported an unexpectedly large nine-million-barrel jump in crude stocks on record imports, with much of the extra supply coming from OPEC producers.

SARS Threatens Oil Demand Growth

The Organization of the Petroleum Exporting Countries last week agreed to cut back less than expected of the surplus crude it pumped to cover supply during the US-led war on Iraq.

Opec raised production well beyond formal quota limits in March to keep oil prices under control ahead of war in Iraq and make up for supply disruptions from a strike in Venezuela and ethnic strife in Nigeria.

While Opec presented its deal as a cut of two million barrels per day (bpd), analysts said its threshold for the reduction was inflated, reducing the actual impact of the move.

The increased Opec supply, particularly from Saudi Arabia, has helped bring oil prices below the $30 a barrel level that analysts warn can hurt global economic growth.

Also weighing on prices, the International Energy Agency has said it may have to cut its world oil demand forecast for this year as the deadly SARS virus slashes air travel.

Opec has said it expected Severe Acute Respiratory Syndrome to hit Asian demand alone by some 300,000 bpd mainly due to declining travel. The epidemic coincides with the second quarter, when oil demand falls about two million bpd from its winter peaks.

Apr. 30, 2003. 01:00 AM

But the stock fell nearly 2 per cent as Petro-Canada revealed it had delayed spending on a key part of its oil-sands strategy and had suffered some exploration setbacks.

The company said preliminary engineering work on retooling its Edmonton refinery to handle new Alberta oil-sands output determined costs would be much higher than hoped.

That prompted it to postpone some of the spending it budgeted this year for detailed engineering, the company said.

"Instead, management will evaluate possible changes to the project's scope, staging, and technology to improve economics. Petro-Canada expects to be in a position to decide on how to proceed toward the end of the year," it said.

Shares in Petro-Canada, known for its national chain of gas stations and exploration and production at home and in the North Sea, North Africa and South America, fell 86 cents to $47.68 in Toronto despite the huge first-quarter profit.

The company earned $584 million or $2.18 a share, up from a year-earlier profit of $88 million, or 33 cents.

Excluding gains from the effect of the strong Canadian currency on its U.S. dollar debt and proceeds of asset sales, earnings were $490 million, or $1.86 a share, beating an average estimate among analysts polled by Thomson First Call by 2 cents a share.

Peters & Co. Ltd. analyst Wilf Gobert said it could be argued that Petro-Canada beat the Street by a much wider margin because operating earnings included a $46 million writedown of assets in Kazakhstan that it has marked for sale.

Cash flow, giving a glimpse into an oil company's ability to fund development, more than tripled to $991 million, or $3.75 a share, from $287 million, or $1.09 a share.

With the major jump in profit, Petro-Canada joined its global industry rivals in benefiting from oil prices that surged 55 per cent as markets feared supply disruptions in the leadup to the U.S.-led war in Iraq while a strike in OPEC member Venezuela dragged on.

Oil firms also enjoyed natural gas prices that more than doubled.

<a href=www.thestar.com>TorontoStar.com May. 1, 2003. 07:31 AM KAZ NOVAK/THE SPECTATOR JOSH RUBIN STAFF REPORTER

  Filling up at the Esso station near Bathurst St. and Lake Shore Blvd. W. yesterday afternoon, Derrick Su couldn't wipe the smile off his face.

"This is great. I'm saving 10 or 15 bucks every time I fill up. I wish it would go even lower,'' said Su, pumping his sport-utility vehicle full of regular gasoline at 59.9 cents per litre.

For the first time in more than a year, gasoline prices around Toronto slipped yesterday below 60 cents per litre. Motorists were paying almost 80 cents per litre just a month ago as fears of war in Iraq pushed up the price of crude.

But by late afternoon, the price for regular gas at the Esso station had moved back up to 68.9 cents per litre.

The head of a Calgary-based oil-and-gas research firm cautioned that the price of crude is only one factor in the price at the pumps.

"You've got other things going on. In Toronto, it's a very competitive retail market and that can move the price,'' said Michael Ervin, president of Calgary-based oil and gas research firm M.J. Ervin and Associates.

According to Ervin, the price of gasoline could drop even lower in the short term. "You can talk about another 5 cents if you want to. There's still some room for downward momentum in gasoline prices.''

The price could drop as cheaper crude oil works its way through the refining system and shows up at pumps, said Ervin.

"In a bigger market like Toronto, the lag-time between oil getting pumped out of the ground and showing up at a gas station isn't all that long. It's normally three weeks or so,'' said Ervin. Any gasoline price drop would be tempered by the fact we're coming into peak driving season, Ervin warned. More demand for gasoline means higher prices, he said.

``The big driving season really starts in May, depending on how nice weather is.''

Over the past six weeks, crude prices slid from $39 (U.S.) per barrel to around $25 per barrel. In New York yesterday, light crude was at $25.24 per barrel, just 30 cents off an 11-month low.

The drop in the price of crude reflects a quick end to the U.S.-led invasion of Iraq and the end of a strike by oil workers in Venezuela, said Jim Rollyson, an oil analyst with Raymond James, a U.S. brokerage firm. It also reflects an increase in production by the Organization of Petroleum Exporting Countries cartel, Rollyson said.

April 30, 2003 By Hussain Hindawi and John R. Thomson WashingtonTimes.com-UNITED PRESS INTERNATIONAL

     Iraq is a wealthy country, with the second-largest oil reserves in the region and, unique among Arab nations, large water supplies.

     Although it may take two years to increase oil output to the 3.6 million barrels per day prior to the 1991 Gulf war, current levels of 2.5 million t o 2.8 million barrels per day are enough to keep bread on the nation's table.

     Industry professionals estimate an unproven reserve in excess of 150 billion barrels in the long term. Added to proven reserves of 112 billion barrels, Iraq's petroleum potential rivals that of the world's largest producer, Saudi Arabia.

     The importance of Iraq's water resources cannot be exaggerated.

     The Tigris River runs from the north through the center of Baghdad to the Persian Gulf. With the mighty Euphrates, the Tigris creates the rich Fertile Crescent in the southern half of the country. The area's rich marshlands, the center of the majority Shi'ite Muslim community, were drained by the regime after the Shi'ites tried to overthrow Saddam Hussein after the 1991 Gulf war.

     In the process, agricultural capacity as well as the country's most important tourist attraction were eliminated. But Iraq's agricultural potential is so great that it again may become a net exporter of food to the Middle East in three to five years.

     The political arena is where the postwar battle of Baghdad is being waged.

     In Babylonian times, 2,600 years ago, the government that replaced King Nebuchadnezzar bore some resemblance to democracy, but except for a brief period in the 1920s, modern Iraq has had no experience with democracy.

     Across the centuries, the land and people of Iraq have been conquered by invaders. Foreign-born and domestic despots have been the rule. The current challenge is whether indigenous faction leaders can lead their people to a solution that is both representative and effective, as well as democratic.

     Iraq has one advantage: Its ethnic and religious groups had a long history of peaceful coexistence before Saddam Hussein set tribe against tribe and sect against sect. That and the high education level of Iraqis may give the country a reasonable chance to achieve a workable political framework.

     A separate issue is whether the United States and its allies will strike the right balance of guidance or control during the months, or perhaps years, of peacekeeping in Baghdad and the other main population centers: Basra, Kirkuk and Mosul.

     Many observers expect the United States to dominate postwar Iraq, creating long-term consequences throughout Arab nations and the entire Muslim world. Some Iraqi analysts do not rule out an armed Iraqi national resistance that could inflict such heavy losses that Washington would withdraw, as it did 30 years ago from Vietnam.

     Saddam, apparently hoping for such a scenario, told a visiting Vietnamese delegation shortly before the war that his country was unable to stop an American attack, but could and would survive.

     Analysts reminded Washington of what happened when World War I British forces invaded that portion of the German-allied Ottoman Empire that became Iraq. Hundreds of British troops died during a June 1920 revolt, leading to Britain's withdrawal and eventual recognition of an independent Iraq.

     The newspaper Al Thawra, the leader among Iraq's government-controlled press, contended several months ago that the "Americans and British are trying, more than 80 years after the [1920 revolt], to impose a mandate on the Iraqi people under illusory and foolish pretexts."

     However, several Iraqi intellectuals, including Islamists and leftists, have refrained from prejudging U.S. intentions toward their country.

     After the April 21 arrival in Baghdad of U.S. postwar civil administrator Jay Garner, 65, a retired general, most Iraqi intellectuals remain skeptical of President Bush's commitment to help the Iraqi people create a pluralistic and democratic government that guarantees freedoms and maintains control over the country's natural resources.

     Gen. Stanley Maude, commander of the British force that occupied Baghdad in March 1917, spoke similarly to the Iraqi people on entering the capital: "I am designated to invite you, through your representatives, to participate in administering your interests; and to assist the British political representatives accompanying the army to support you, north and south, east and west, in achieving your national aspirations."

     Gen. Maude said the British aim in opposing German territorial ambitions was to "liberate the people with final and total freedom, and establish governments and national administrations chosen by the national residents."

     After recognizing Iraq's nominal independence, Britain sent a garrison of 150,000 troops. Iraq did not achieve real independence until the 1958 military overthrow of King Faisal.

     Meanwhile, U.S. ideals expressed in the Declaration of Independence won admiration among the Arab elite — until the CIA-backed coup in Iran overthrowing Mohammed Mossadegh in 1952.

     Concerns over American intentions deepened after the first Ba'athist coup in 1963, in which an estimated 5,000 leftist and democratic Iraqis perished. The role of U.S. intelligence services was well-known, prompting Ali Saleh al-Saadi, secretary-general of the Ba'ath Party, to say years later: "We came to power on an American train."

     Until Iraq's 1990 invasion of Kuwait, the Arab image of the United States was negative, particularly regarding the Palestinian issue and a perceived Washington bias toward Israel. This, combined with Washington's strong economic interest in secure sources of oil, prompted criticism of a U.S. double standard regarding democracy.

     "Iraq will burn with its oil," an Iraqi poet predicted more than 60 years ago on hearing the news of Iraq's first petroleum revenues. In subsequent decades, the country's "black gold" proved to be a curse and the cause of manifold miseries, including foreign occupations, military coups, and wars internal and external.

     It was oil that allowed Saddam to intimidate, coerce and kill his Kurdish and Shi'ite countrymen and to invade Iran and Kuwait. Earlier, oil had been the overriding reason for Britain's occupation. Oil was also the driving force behind the first Ba'athist coup in 1963 and the second in 1968, supported financially by British and U.S. oil companies.

     Are more oil fires in Iraq's future?      The paradox, or perhaps the problem, is that there appears to be no end to oil discoveries — so much so that industry analysts believe Iraq may replace Saudi Arabia as having the world's largest proven reserves and highest production.

     Just 15 of 74 proven oil fields are in production, and of the 59 that are untapped, 10 rank among the largest in the world. Moreover, of 526 known and evaluated petroleum deposits that have been classified as prospects, 125 have been drilled. It was these fields that French and Russian oil companies coveted and for which they had been vying for signed agreements with the ousted regime.

     Extraction of Iraqi oil, limited under international sanctions imposed since 1990, stood at war's end this month at 2.8 million barrels per day, down sharply from an estimated 3.6 million barrels per day in the first half of 1980, before the outbreak of the Iraq-Iran war.

     Iraq's Oil Ministry had planned last year to develop 350 wells across the country under contracts with several Russian and French oil firms. Major emphasis was to be on the huge southern oil fields, as part of an ambitious plan to increase production to 6 million barrels per day.

     Some analysts view the United States as having mixed motives for toppling Saddam's regime. The stated objective of disarming Iraq of weapons of mass destruction was considered by some convenient cover for Washington to reduce its dependence on Saudi oil, as well as to guarantee U.S. supervision of Iraq's oil wealth.

     Paradoxically, U.S. refineries continued to be the largest importer of Iraqi oil while the Bush administration mobilized its forces to oust the regime. A report by the Commerce Department revealed that Iraqi oil shipments to the United States tripled in the fourth quarter of 2002, constituting about 6.4 percent of U.S. oil imports.

     Whatever happens, oil will be a central element affecting Iraqi events. Whether an Iraqi leadership loyal to the United States is installed in Baghdad or the Americans administer the country more directly, oil will figure prominently.

     Before the outbreak of hostilities, Secretary of State Colin L. Powell said the United States would control the oil resources from the outset, "to manage them for the interest of the Iraqi people." It is widely presumed that U.S. energy companies seek long-term involvement in the rehabilitation and expansion of Iraq's oil industry.

     One scenario predicts the United States will increase Iraq's oil production to 8 million barrels per day, with the aim of breaking the power of the 11-member Organization of the Petroleum Exporting Countries (OPEC) by lowering oil prices and reducing dependency on Saudi oil.

     This would be a historical irony, since Iraq was one of OPEC's five original founders in 1960, along with Iran, Kuwait, Saudi Arabia and Venezuela.

     French analysts fear that contracts between French oil firms and Saddam's regime are moot, recalling former CIA Director James Woolsey's warning that only if the French and Russians cooperated with the United States in replacing Saddam would U.S. companies be inclined to cooperate with counterparts in these two countries.

     One Arab observer mused on an either-or situation:      "How will Iraq's oil revenues be used? To finance the coalition occupation ... without explicit U.N. authorization? Or to concentrate on improving the lives of Iraqis so they may savor the taste of change?"

     In the first case, the United States would be the primary party responsible for all of Iraq, including its oil, giving Washington a chance to weaken, if not destroy, OPEC. It would exploit Iraq's oil reserves as a means to reduce the influence of the other Gulf countries, especially Saudi Arabia, and enable more Iraqi oil to be pumped at lower prices to the American market.

     In addition, it would punish countries opposed to the U.S.-British use of force — particularly France, Germany and Russia.

     How the new Iraqi government deals with OPEC and existing production and pricing commitments will have significant impacts on the oil industry worldwide. Russia, with $7 billion to $8 billion of aging Soviet-era loans owed to it by Iraq, would have benefited significantly from exploration and production deals between Russian oil companies and Iraq as part of a larger economic agreement.

     Just last year France successfully negotiated an agreement to develop the Majnoun field, believed to contain 30 billion barrels of oil. This agreement is in jeopardy, as is France's favored commercial position with Iraq for the past 30 years in which Jacques Chirac, now its president, was a prime player.

     • Hussain Hindawi is an Iraqi historian and journalist who currently serves as editor of UPI's Arabic News Service. John R. Thomson has lived in Beirut, Cairo and Riyadh, Saudi Arabia, and reported on Israel's 1967 Six-Day War and the 1991 Gulf war.