Bloomberg View: Why Iraq's Oil Flows Slowly; Speaking More Clearly at the Fed

Iraq hopes to increase its oil production from 2.7 million barrels a day to 13.5 million by 2018. Such a dramatic increase will require significantly more foreign investment, but the red tape companies encounter in Iraq when they apply for employee visas, try to import equipment, or seek payment reflects attitudes rooted in the past. The oil industry was nationalized in 1972, and the idea of excluding foreign companies still has resonance, including within Prime Minister Nouri al-Maliki’s coalition government.

Iraq’s leadership has a choice: Either create an administrative environment conducive to foreign investment or accept a slow growth rate for oil production. The latter is bad for Iraq; the former needn’t be. Offshore interests can’t be allowed to plunder Iraq’s reserves. But in the 15 contracts the central government has signed so far, it has made strong deals for itself.