--As soon as possible, the U.S. government should provide technical
assistance to the Iraqi government to prepare a draft oil law that
defines the rights of regional and local governments and creates a
fiscal and legal framework for investment. Legal clarity is essential
to attract investment.
--The U.S. government should encourage the Iraqi government to
accelerate contracting for the comprehensive well work-overs in the
southern fields needed to increase production, but the United States
should no longer fund such infrastructure projects.
--The U.S. military should work with the Iraqi military and with
private security forces to protect oil infrastructure and contractors.
Protective measures could include a program to improve pipeline
security by paying local tribes solely on the basis of throughput
(rather than fixed amounts).
--Metering should be implemented at both ends of the supply line. This
step would immediately improve accountability in the oil sector.
--In conjunction with the International Monetary Fund, the U.S.
government should press Iraq to continue reducing subsidies in the
energy sector, instead of providing grant assistance. Until Iraqis pay
market prices for oil products, drastic fuel shortages will remain.