Nov 22 (Reuters) - Iraq is poised to strike deals with international oil companies that could vault it into third place in the table of oil producing nations.
Emerging from years of sectarian slaughter and war triggered by the 2003 U.S. invasion, it desperately needs the billions of dollars in development and reconstruction funds that a large increase in oil exports will bring.
But oil riches often cause more economic damage than benefit, a phenomenon known as the oil or resource "curse."
Following are descriptions of how other countries have dealt with their oil wealth.
NORWAY
Norway's management of its oil revenues since its major discoveries in the 1970s is often held up as a model for other oil-rich countries to follow. It was helped by already being a wealthy, democratic and stable country.
The government laid down ethical principles for earmarking revenues and the requirement that they be used for future generations. The Petroleum Fund, set up in 1990, effectively isolates oil revenues from the economy by investing abroad and returning its above-inflation gains of about 4 percent. The $400 billion fund, managed by the independent central bank, owns about 1.0 percent of global listed equities.
Despite some calls for the government to spend more of the revenues, there is a broad political consensus on the rules.
MEXICO
Mexico's oil industry has funded a significant portion of government spending since the discovery of massive offshore reserves in the 1970s. Oil export revenues pay for nearly 40 percent of government spending and are for the most part spent as they come into federal coffers. The country's deep economic recession this year has shown the inadequacy of past efforts to save bumper oil revenues. Past economic crises are also evidence that oil provided no protection against financial turmoil.
The heavy tax burden imposed on state oil monopoly Pemex, which often means the corporation posts losses even when oil prices are high, has robbed the oil industry of investment. Crude output has been falling since 2004 as the giant fields have entered their natural phase of decline. Mexico's reliance on the declining oil industry has prompted Standard & Poors and Fitch Ratings to warn they could cut its bond rating.
VENEZUELA
A major oil exporter since the 1920s, Venezuela has long relied on its vast oil wealth to fund government spending and development. Its heavy reliance on oil means its economy moves in lockstep with world crude prices. Oil brought Venezuela prosperity through the 1970s, making it the richest nation in Latin America. But since the 1980s, the economy has lost ground as population growth outstripped the increase in oil earnings. Attempts to save revenues in boom years for use when the oil price falls have been largely unsuccessful.
President Hugo Chavez has used the oil wealth to fuel an expansion of social spending and to nationalize swathes of the economy. But the spending boom has fueled Venezuela's stubborn problem of inflation, which is among the highest in the world.
ANGOLA
Angola emerged from a 27-year civil war in 2002 as one of the world's fastest-growing economies, partly on the back of record oil prices. But little of Angola's oil wealth has filtered through to its citizens. Angola rivals Nigeria as Africa's biggest oil producer but about two-thirds of the population live on less than $2 a day and it ranks 158th on Transparency International's 180-nation corruption index.
Dependent on tax and royalty fees from energy firms for 90 percent of its income, Angola relies on oil revenue to finance rebuilding projects but suffered from a sharp drop in crude prices last year. It has asked OPEC to exempt it from output cuts to help it avoid negative growth this year.
NIGERIA
Five decades of oil extraction in Africa's most populous nation have lined the pockets of a powerful elite, but have brought conflict to the Niger Delta and little tangible benefit to the vast majority of the population. Standard Bank last year estimated the Nigerian government received a nominal $436 billion in direct hydrocarbon revenues and taxes between 1970 and 2007, or around $1.2 trillion in today's money. But decades of mismanagement and corruption have left the vast majority of the country's 140 million people living on $2 a day or less.
Attacks by militants along with kidnappings and robbery by armed gangs have turned the Niger Delta oil production area into a virtual military zone. Nigeria saves windfall oil revenues above a benchmark price into an excess crude account, a pillar of IMF-backed reforms launched in 2003. But the central bank estimates the Niger Delta unrest is costing it $1 billion a month in lost revenue and the country also spends billions of dollars a year on fuel import subsidies.
(Reporting by Stuart Grudgings in Rio de Janeiro; Nicholas Tattersall in Lagos; Terje Solsvik in Oslo; Robert Campbell in Caracas; Agnieszka Flak in Johannesburg; Alex Lawler in London; Editing by Jon Loades-Carter) ((michael.christie@thomsonreuters.com; +964 7901 917 030; Reuters Messaging: michael.christie.reuters.com@reuters.net))