Say Anything Blog

Lona Manning

Wolf Blitzer wants to know “should the Iraqis be selling oil to the United States at a discounted price?” On Sunday’s “Late Edition” on CNN he asked if the U.S. should get Iraqi oil at a discount “given the hundreds of billions of dollars the United States has spent to rebuild that country and try to bring some stability to the Iraqis.”

Blitzer was interviewing Douglas Holtz-Eakin, “a senior economic adviser to the McCain campaign.”

[...]

The full exchange is below.

BLITZER: Would it be wise, because Iraq is now exporting a lot and pumping a lot of oil, much more than it was, with the relative quiet that’s developed in certain parts of the country over the past year. They’re exporting; they’re pumping more oil.

Should the Iraqis be selling oil to the United States at a discounted price?

HOLTZ-EAKIN: Oil should occur on the world market at market prices.

BLITZER: Why not—given the hundreds of billions of dollars the United States has spent to rebuild that country and try to bring some stability to the Iraqis, why not have them export oil to the United States at a reduced price? They would still make some money, but they wouldn’t make as much as they are making right now.

HOLTZ-EAKIN: Look, as senator McCain, who has gone there and seen the conditions on the ground eight times, correctly pointed out, we had to bring a new strategy to Iraq.

We had to get some peace, a path to prosperity for the Iraqis. But that path doesn’t lie in the U.S. being dependent on Middle Eastern oil. The entire strategy was built around getting the United States to be able to exit with peace and build energy security for ourselves at home.

BLITZER: So, just to be precise, Senator McCain believes the Iraqis should export oil to the United States at the going international price, which, right now, is about $135 a barrel?

HOLTZ-EAKIN: Senator McCain believes there should be an international oil market but he believes the United States should not be self-dependent on that from the Iraqis or anyone else.

In spite of the obvious irony in Blitzer’s question, there is a much deeper issue here, and both sides in this exchange are trying to obscure it.
When Blitzer talks about a “discount”, he is exhibiting the protectionist, mob-style thinking that characterizes the left’s perception of business.
Likewise, when McCain’s economic adviser talks about the oil being sold at “market price”, he illustrates his ignorance(willful or otherwise) of the reality of the situation.
We have made huge infrastructure loans to the Iraqis, and their revived oil income can now be tapped for amortization of those loans.  It’s just a matter of setting the terms in a way that works for both parties.
It’s not a discount, and the McCain guy should acknowledge that having the Iraqis pay us back for our investment in their country is a legitimate outcome of the revival of their oil industry.  I’m not talking about the oil companies that will be doing the actual work, because that will be part of their deal; I’m talking about repaying the generosity of the American people.  IMO, those payments should go to defraying the military costs first, but even social programs that actually worked could benefit. The main thing should be lightening the tax burden on the American people.