The Role of OPEC - Iraq.

Having managed to raise oil production to about 2.5m b/d and exports to more than 1.5m b/d, Iraq under US control could overtake Saudi Arabia as the world's biggest supplier before 2010. But for this to happen, the US-led authorities in this country must first end a chaotic situation - in which

insurgency combining Saddam loyalists with Islamic/Wahhabi militants, plus tens of thousands of criminals released from jails before the Baathist regime was toppled last April 9 - and then enact a law allow-ing the biggest number of IOCs possible to explore and develop its vast petroleum resources. Iraq could potentially have the largest reservers of oil in the world, with its Rumaila Triangle of super-giants likely to be bigger than Ghawar of Saudi Arabia.

Yet the challenges in Iraq are huge, not only for its people but mainly for the US. It is in Iraq that the credibility - if not the logevity - of the American empire is being tested. If the US (whether under George W. Bush or under a Democrat elected next November to succeed him) withdraws from Iraq before turning this part of the Muslim world into a model federation of prosperous democracies, the entire Middle East would be in turmoil for many years.Last month, the Bush administration settled on an "exit strategy" for Iraq in which the US committed itself to installing a sovereign government in Baghdad by June 30, 2004 - well ahead of its previous schedule and just as the American presidential election will be getting under way. But the administration's initial plan for that transfer of authority has since unravelled, raising doubts about whether the June 30 deadline for ending the US-led occupation authority (CPA) in Iraq is still feasible. The fundamental quandary is whether the US has left itself enough time to put in place a government that can survive and be seen as legitimate by Iraqis and the rest of the world.

The New York Times (NYT) on Nov. 29 quoted a Bush official as saying: "We're boxed in. We have a highly difficult set of issues to deal with here. We can't settle for just anything that gets us out of Iraq". President Bush's surprise Nov. 27 visit to Baghdad and his Thanksgiving Day pledge that US forces "will stay until the job is done" is not the issue. The Pentagon plans to keep 100,000 troops or more in Iraq well into 2006. At stake, rather, is the sudden need for speed in fulfilling Bush's desire to transfer sovereignty to a friendly Iraqi regime on a hurried-up schedule for next year, coupled with the need to have some sort of electoral process as the best way to insure that regime's validity.

American policy makers say it is not just the US election timetable that requires quick action to transfer power in Iraq. Hostility to the US-led occupation has been growing so fast that if Iraq does not get to self-government quickly, attacks on coalition forces could increase, along with Iraqi support for them.

Running counter to the pressure to speed up the pace of the transfer is the concern that any future government of Iraq be seen as something that Iraqis themselves have chosen. The 24-member Iraqi Governing Council (IGC), handpicked by the US, is not seen that way by most Iraqis.

The US administration's dilemma sharpened on Nov. 26 when Grand Ayatollah Ali Al-Sistani, Iraq's most senior Shiite religious leader, laid down his own definition of legitimacy: nothing less than an election. Other Shiite leaders support his formulation, knowing that Shiites - who make up 60% of Iraq's population and are better organised than other groups - would be the likely beneficiaries of a national ballot.

Backed by the US, leaders of the IGC have been meeting with Sistani and his aides to find some room for compromise. US officials say a national election is impractical in the absence of up-to-date voter rolls; but Sistani has said the rationing system established country-wide for the oil-for-food programme can be used as a basis for holding general elections. But several IGC members say this is inadequate because, under the Saddam regime, many non-Baathist Iraqis were excluded from the ration-ing systam. Some IGC members say a system of provincial and local elections, town meetings and caucuses might be acceptable to the Shiites.

One step the US has opposed in recent weeks is establishing the IGC as an interim government, even though many of its members would like such a move. Dominated by former exiles, the IGC is held in especially low regard by Sunnis in the centre of Iraq, where much of the anti-US violence is rooted. US experts say Sunnis are feeling marginalised by the American occupation because their main sources of power - the Baath Party and Saddam's Sunni-dominated army and security forces - have been disbanded. Finding Sunni tribal and community leaders to work with has been difficult.

The NYT recently quoted a US official as saying: "If we turn things over next July 1 to whatever slapdash conglomeration that is out there - let's say the Governing Council plus some others, which is what they want - you could have a civil war in Iraq come next November".

American policy makers also worry that - although elections are the most legitimate path to self-government - an election held too quickly could be dangerous as well as impractical. Iraq's census and voter rolls are in disarray. In addition, some American policy makers fear that a nationwide ballot right now would bring out the most radical elements in the electorate, ready and able to exploit growing Iraqi resentments towards any candidates seen as favoured by the US.

Officials close to CPA chief Paul Bremer and his aides say his concerns about these problems led to the initial US decision to wait until the writing of a constitution before holding a national election, postponing the transfer of sovereignty to end-2004 at the earliest. "It would be a disaster to have an election whose legitimacy was contested", said Noah Feldman, an assistant professor of law at New York University and an Orthodox Jew who was a constitutional law adviser to Bremer earlier this year. He added: "Nobody wants Palm Beach County in Baghdad" (referring to a Florida voting district whose results in the 2000 US presidential race were contested). Historical experience also suggests that quick elections under postwar conditions elect people not dedicated to democratization. Simply put, if you move too fast, the wrong people could get elected".

Suddenly, early in November, the American view shifted at the most senior levels of the administration in Washington. Bremer was summoned back for consultations, and a plan was worked out with the IGC for what he called "a transparent, participatory, democratic process" to choose a government. That "process" amounted to less than an election, rather an elaborate arrangement to hold caucuses in each of Iraq's 18 provinces. Delegates at each caucus were to be chosen by the IGC, a provincial council in each province and councils in the five biggest cities in each province.

This system, announced on Nov. 15, was widely criticised as cumbersome and undemocratic, since the unelected IGC could theoretically exercise a veto on the caucus participants. "It was a document that looked like some treaty between the United States and the Indians in 1882", said Rami Khouri, executive editor of The Daily Star in Beirut. "To think they put this thing together in a couple of White House meetings with everyone in a panic mode, it's just humiliating".

As if these headaches were not enough, Bush administration officials have acknowledged that the IGC is itself in some disarray, with many members - particularly the former exiles, including Ahmad Chalabi - scrambling to stay on in power beyond mid-2004.

While in Baghdad on Thanksgiving Day, Bush met Chalabi, IGC's November President Jalal Talabani and two other IGC members. But some in the Bush administration, harbouring a certain distrust of the IGC, suspect its members of trying to disrupt any transition, and hoping to stay in power.

An embarrassing indication of the internal divisions in the IGC came to light in the form of a request on Nov. 24 from Talabani for UN approval of the Bremer plan. Two days after the request arrived, it was rescinded, apparently under pressure from Washington. Among other things, Talabani's request seemed to ask for endorsement of a scheme to keep the IGC in power after next summer.

The most likely thing to happen now will be for Bremer to try to broker a deal with the Shiite religious and political leaderships for a system of at least partial elections to choose the new Iraqi regime before June 30. He may come up with a formula of local elections, at least in most of the critical areas in the Shiite region, so that the US can satisfy Sistani.

Abdel Aziz Al-Hakim, a Shiite religious leader and head of an important political party, is the December chairman of the IGC. Being close to Sistani, he may succeed in brokering a Shiite deal for Bremer.

Iraq Reconstruction Business: At a conference for prospective bidders in Arlington, Virginia, the US authorities on Nov. 19 laid out an ambitious timetable to rebuild Iraq, saying they plan to award $18.7 bn - all funded by the US - in contracts for various projects by the beginning of February. David Nash, head of the new Iraq Infrastructure Reconstruction Office (IIRO), said bids for 25 prime contracts covering tasks such as reparing power plants, training security services and fixing roads and bridges, would be due in early January.

Those prime contracts will be reserved for companies from the US-led coalition, although sub-contracts will be open to others. Nash on Nov. 19 said: "We're going to get work under way right away" - underlining the US determination to secure peace in Iraq with a robust rebuilding effort.

The sold-out conference at Arlington marked the IIRO's public debut. It was followed by a similar presentation in London on Nov. 21.

The IIRO was created to streamline and supervise rebuilding efforts led until recently by a variety of US and Iraqi government agencies and often criticised for mismanagement. Nash, a retired rear admiral, pledged that the IIRO would have "maximum transparency from beginning to end".

Bidders will have to offer information on their prospective partners, as well as their technical and financial capabilities. The IIRO will then select three finalists for each contract before declaring a winner. Nash is placing special consideration on contractors' prospective contribution to training and restoring the local Iraqi construction industry. He says bidders would be judged on security considerations.

The rebuilding effort has been hindered by theft and sabotage, which have pushed up costs and slowed progress. "We have got to make sure the transmission tower is there the next day after we put it up", Nash said during the Arlington conference. He also said the IIRO expected to extend some existing contracts, particularly for training Iraqi police and soldiers, in order to continue the "momentum".

The rebuilding process had been a political embarrassment to the White House. Congressional opponents alleged that Halliburton and other politically connected companies had received preferential treatment. Also small US businesses have been concerned that they will be shut out. "Our chances of winning are probably zero because we're going up against companies like Halliburton", one executive complained to Nash during the Arlington conference, adding: "I doubt we'll see one penny from helping to rebuild Iraq".