Tuesday, August 12, 2008

Response to My Good Friend, Al

If you missed Al's latest comments, they follow my response.

What ever the causes, the transformation in Iraq can almost be said to be miraculous. A year ago, al-Qaeda was attempting to set up Iraq as their "home base", now they are routed. A year ago, millions of tribal peoples supported insurgents, now millions of people report insurgents and weapons caches to the authorities. A year ago, Iranian supported militias controlled large provinces, today most of these provinces are under the secure control of US and Iraqi troops and the leaders of these militias have asked them to lay down their arms. Many mistakes were made along the way but prospects are good for Iraq to enjoy a long term stable democratic government; one in which, women in an Islamic country will enjoy rights not enjoyed in others.

The broader view is that there is a good chance that Iran and North Korea will join Iraq on the long list of nations which no longer support terror. Much of our discussion has been directed toward the history of the situation, but, as an investor, I must focus on the results. If we are able to come away with a deal with Iran, the results for the future will be incredible.

For about 30 years, during democratic and republican administrations, the two countries with more discovered oil reserves than all but two other countries have not developed their resources. For the first time in 30 years, we are about to see very substantial growth in output from both Iraq and Iran. The investment implications are huge.

With half a trillion barrels of oil in reserve in Iran and Iraq and 26 Trillion Cubic Metric Feet of Natural Gas in Iran, it is realistic to expect that new production from Iraq and Iran will top 10 million barrels of oil and equivalents per day within 5 years. The obvious economic benefit will be lower living costs of living for 6.5 billion people. Even more important will be the security of living in a world where the risk of being bombed in the market place (mall) will have been greatly reduced.

Many thanks for your replies.


On 8/12/08, Al wrote:
There is a Chinese proverb that says "It is best to deal with the devil you know." I think that it has been a combination of factors that has created progress in Iraq. The surge, a potential change in US policy with a new president, reduced interference from neighboring countries and an internal desire to end the loss of life and get on with daily living.
Considering the disaster that he created (and I will not rehash the justification for an invasion) by not planning for the administration of Iraq after the invasion. When you defeat another country there are only two choices, loot it and leave or stay and run the country as you see fit. To stay and allow the various factions within the conquered nation free reign to gain power is to endorse civil war or worse yet, ethnic cleansing.
Mr. Bush, if he gets an agreement, will come out of this far better than anyone would have expected a year ago. But this still does not excuse his ineptness immediately after hostilities ended, which cost our military thousands of dead and wounded as well as economic difficulties for our nation.