The actual article is old, from last December but it is worth reminding people from time to time since articles about the new oil law are notably missing from most of the large dailies. The actual law was secret and still has not been released to the media. A leaked copy was translated and widely circulated on the internet but there is deafening silence in the mainstream press. There was virtually nothing until the Iraqi cabinet approved the law and there has been almost nothing since as it goes before parliament. Apparently no one thinks it odd that a supposedly democratic government refuses to give to the public a key document that will determine the future of Iraq to a considerable extent, a document that was prepared at the behest of and no doubt with the guidance of the US and UK occupiers.
This Month Iraq's Government May Sign Long-term Agreements Giving Big Western Companies Control of Its Oil Resources; Do You Think That Has Any Bearing on White House Decisions About Iraq?
By Joe Rothstein
December 1, 2006
Iraq has the second largest proven oil reserves in the world. Many experts believe Iraq actually is #1, and that serious exploration in its western sands would turn up enough oil for Iraq to surpass Saudi Arabia.
Petroleum analysts believe that when Iraq is fully explored, its reserves will represent 25-30% of the entire world's supply.
Not only is Iraqi oil plentiful, it's close to the surface and easy to extract, making it all the more profitable. Under normal conditions, oil companies can produce a barrel of Iraqi oil for less than $1.50 and possibly as little as $1, including all exploration, oilfield development and production costs. Contrast that with other areas where oil is considered cheap to produce at $5 per barrel or the North Sea, where production costs are $12-16 per barrel.
As part of the community of energy producing nations of the world, Iraq should be a star player. In the hands of the bad guys of the world, Iraqi oil wealth could finance considerable deadly mischief.
But in all the talk about resolving the Iraqi tragedy o-i-l has become something of an unmentionable three-letter word.
The Iraqis certainly know the score. A recent poll showed that when asked what Iraqis thought were the three main reasons why the United States invaded Iraq, 76% gave "to control Iraqi oil" as their first choice.
For years the White House has been fending off the "O" word, fearful of playing into the "blood for oil" scenario painted by many of those who opposed the invasion.
But in the heat of the recent political campaign, Bush was reaching for arguments to justify his Iraqi policy to skeptical voters, and finally added oil to the list.
"You can imagine a world in which these extremists and radicals got control of energy resources," Bush said at a campaign rally. "And then you can imagine them saying, 'We're going to pull a bunch of oil off the market to run your price of oil up unless you do the following. And the following would be along the lines of, well, retreat and let us continue to expand our dark vision."
At another campaign stop, Bush said extremists controlling Iraq "would use energy as economic blackmail" and try to pressure the United States to abandon its alliance with Israel. He suggested that such radicals would be "able to pull millions of barrels of oil off the market, driving the price up to $300 or $400 a barrel."
Maybe. Maybe not. After all, Iran has a lot of oil, too, and it's a big part of Bush's "axis of evil." But Iran keeps selling oil because it needs to finance its government and support its people. Hugo Chavez in Venezuela considers Bush the devil incarnate. ("I can still smell the sulfur"). But Chavez is selling heating oil at a discount in the U.S. to embarrass Bush, not blackmail him.
Maybe Iraq would be different if anti-American insurgents got their hands on the oil. But here's a more likely scenario. Our troops will stay in Iraq indefinitely to protect oil production and distribution, because the U.S. and other western countries, through their big oil companies, will control Iraq's resources. It's not conceivable that the U.S., Britain and others with such huge financial interests will give them up.
Under intense U.S. pressure, Iraq's government is faced with a December deadline to come up with an oil policy that favors big U.S. oil companies. Not only is the pressure on for Iraq to deal with the major oil companies of the West, but to sign agreements that will give those companies control of Iraq's oil for a very long time.
The White House effort to control Iraqi oil began in 2002 with a "Future of Iraq" project, bringing together influential exiled Iraqis with U.S. government officials and oil company consultants. Some of the exiles became part of the Iraqi government. The result of the project's work was a draft framework for Iraq's oil policy recommending a major role for foreign companies, through long-term contracts--an approach different than other Middle Eastern countries where major oil producers keep their oil in the public sector.
Oil accounts for more than 90% of Iraqi government revenue. If the Iraqi government signs on to agreements being pursued by the U.S. government, contracts with western oil companies will not be reversible. They will control Iraq's income and future.
Maybe that's not such a bad thing. The U.S. depends on foreign oil for more than half of its energy supply. Having western oil companies in control, managing a rational flow of oil from one of the world's richest oil sources could be seen as a positive outcome to our Iraqi adventure---certainly when compared with many potential alternatives.
Whether you agree with the Bush administration's efforts to corner Iraqi oil for the long term, or not, the fact is that oil plays a huge role in White House decision-making about the region. To deny that is to ignore the 800 pound guerilla occupying the stool in the middle of the room. And since we hear virtually nothing about this from those in our government, or our media, that's exactly what everyone seems to be doing.
Joe Rothstein, editor of US Politics Today, is a former daily newspaper editor and long-time national political strategist based in Washington, D.C.