years old or younger in 2011
Source: U.S. Census Bureau
But jobs, on a large scale, cannot be created overnight. That takes both higher economic growth rates and time, along with openness, stimulation of entrepreneurship, reduced regulation and control, and dampening down of corruption. China and the other countries of East Asia have created jobs by intensively integrating with the global economy. Taiwan and South Korea were at the same stage of development as Egypt in the 1960s. Now Taiwan and South Korea export more to the world economy in two days than Egypt does in a year. But opening to the world economy brings with it the forces and values of globalization, which in the Middle East are seen as threatening and are resisted, sometimes fiercely, and often with religious exclusions. This stagnation leaves the young—especially young men—with no jobs and often no spouses, no homes of their own, alienated, and nowhere to go.9 The potential of political participation brings the possibility of moving beyond stagnation. But the expectations for economic improvement are way ahead of how fast economies can actually change and generate opportunity. So the hopes and optimism of the Arab Awakening will have to contend with the disillusionment that comes with the uncertain pace of economic improvement.
IRAQ’S POTENTIAL
For decades, Iraq’s potential to rank among the very top producers has been recognized—along with the fact that it was producing well below its potential. By 2009, six years after the U.S.-led invasion, and a after years of violence and sabotage, output was almost back to the 2001 level of 2.5 million barrels per day. The postwar government realized that it needed enormous investment and technology transfer from outside the country, and starting in 2009 it held bidding rounds for a number of fields. As would have been expected, the winners included oil companies from all over the world. Surprisingly, however, U.S. companies were notably underrep resented. Iraq was asking among the stiffest terms of any oil-exporting country, and a number of the U.S. companies could not make the economics work.10
Some of the projections bruited about for Iraqi output are exceedingly optimistic. To make the leap from 2.5 million or 3 million barrels per day to 12 million barrels a day, as one Iraqi minister had suggested, seems almost impossible. Much more reasonable is that by 2020 Iraq could be around 6.5 million barrels per day.
Yet even that lower target faces considerable obstacles and uncertainties: Development on such a scale requires political stability and physical security for the oil fields and pipelines and loading terminals. There needs to be a political consensus about the need for international investment and the fiscal terms so that the whole effort is not undone by subsequent changes in the rules of the game. These risks are further compounded by the sheer logistical complexity of delivering people, services, skills, and equipment—and the building of pipelines and export facilities—in a country that was technologically shut off from the global industry for decades. The companies that are investing recognize these risks. But they also see the potential and have concluded that it would be too risky to find themselves sidetracked from what may be one of the biggest oil opportunities of the twenty-first century.11
One further obstacle could well stand in the way of the steady development of Iraq’s resources: Iran. And that may be the most important of all. Iran regards any substantial expansion in Iraqi output as a threat because that could lead to lower oil prices. From a geopolitical point of view, Iran does not want Iraq to supplant it as the second-largest producer in the Gulf and in OPEC. Tehran made this clear in 2010 when Iraq decided, based upon the bids and new exploration, to raise its estimated oil reserves from 115 billion barrels to 143 billion. Iran waited hardly a week to leapfrog back over Iraq, lifting its own reserve estimates from 138 billion to 150 billion barrels.12
The longer-run question is to what extent Baghdad will come under the lasting sway of Tehran. Although Iraq is at least 75 percent Arab, and Iran is primarily Persian and Azeri, religion and religious authority tie Shia Iran together with the majority Shia population of Iraq. Since 2003 Iran’s deep involvement in Iraq, and its support of various groups, has not been a secret. Moreover, geography is inescapable. As one Iranian official told a U.S. diplomat, “Eventually, you will have to leave Iraq. But we’re not going away.”
SEEKING HEGEMONY
For decades, under the rule of the shah,