The Hindu Business Line : `Normalcy in Iraq crucial for stability in oil prices'

INTERNATIONAL oil prices are likely to remain volatile unless new steps are initiated to restore normality in Iraq, according to the Defence Minister, Mr Pranab Mukherjee.

"Unless international security environment is improved and certain initiatives to restore normalcy in that area (Iraq) is taken, I am afraid that the energy crisis is not likely to be resolved," Mr Mukherjee said in his address at the 99th Annual General Meeting of the PHD Chamber of Commerce and Industry here today.

He also highlighted that the situation in Iraq has not improved even after the end of the US Presidential elections. "We were given to understand that once the US Presidential elections are over, the situation in Iraq would improve. That has not happened," the Defence Minister said.

Mr Mukherjee also said that he had on Thursday discussed the issue of "ensuring security of international energy supplies" with the visiting US Defence Secretary, Mr Donald Rumsfeld. The Defence Minister held that India cannot afford another oil shock.

The Minister also underscored the need for a "conducive" security environment within the country for attracting investments. He said that it was important to have substantial investible domestic savings rather than placing excessive reliance on foreign direct investment.

Later speaking to newspersons, Mr Mukherjee said that the 5th meeting of the Group of Ministers that had been set up to look into Enron-related issues would meet before the end of the Winter Session. "I think all issues would get settled in that meeting," he said.

On the issue of allowing a larger role for private sector in defence production, the Defence Minister said that the report of Dr Vijay Kelkar is likely to be submitted by December 15. "We will look at it after the report has been submitted," he said.