Bearish Oil Market Prompts Shift in Iraqi Security Agenda

By John J. Kruzel
American Forces Press Service

June 8, 2009 - Falling oil prices and a reduced Iraqi budget have prompted the U.S. command responsible for overseeing Iraqi security forces to re-evaluate its priorities, a military official said today. "The reduced Iraqi budget has caused us to address some tough choices with our [Iraqi Interior Ministry] colleagues," Army Maj. Gen. James Milano, deputy commander of the Multinational Security Transition Command Iraq's interior affairs directorate, said in a Pentagon news conference.

The most recent Defense Department report on Iraqi stability published in March cited the relationship between a bearish oil market and Iraqi government budget constraints.

"Iraq's near-term economic development depends largely on its success in managing the oil and gas sector," the so-called 9010 report states. "Although the rapid rise in oil prices and projected revenues led to the expansive 2008 supplemental budget, the collapse of oil prices in the last quarter of 2008 has caused an equally rapid Iraqi [government] shift to a more conservative posture."

One effect of the economic downturn is a hiring freeze at the Interior Ministry. The ministry employs some 560,000 employees, but hasn't added new personnel since December despite plans to grow the ranks of the national police from four to five divisions.

"They're not going to be able to hire additional national police right now to fulfill that objective, nor will they be able to purchase the associated equipment for that," Milano said.

Additionally, the ministry has put on hold its plans to hire more border guards and to purchase four-wheel drive vehicles and other equipment.

"They're having to rack and stack their priorities and determine what are their most critical needs right now, and what can they possibly wait to purchase until the budget situation improves," he said.

U.S. and ministry officials agree on the need for more comprehensive logistics system in Iraq, in addition to better information technology, warehousing, distribution and forensic capabilities, Milano said.

"We need additional surveillance and security equipment at the ports of entry and along the border," he said. "We're making progress in that area, but those are some of the items of equipment and capability that they need."

The general said the United States aided the ministry in developing a three-year strategic plan for 2010 through 2012 that takes into account the current fiscal climate.

"But again, it's the effective application of their available budget, their discretionary budget, and ours that we want to implement to get the biggest bang for the buck, if you will," Milano added.