Another article on the New Oil Law in Iraq

I wonder how long it will take the main stream press to report on this or if it ever will. The source for information is the same person for both articles I have seen so far. Perhaps it is not accurate but if it is, it is certainly a bonanza for the oil companies and a recipe for conflict given the power it seems to give oil rich regions.


Western companies will officially control Iraq’s oil soon
Ahmed Abdullah


From Islam Online

Nearly four years have passed since the U.S. sent its troops to “liberate Iraq” through an illegal war, described by most analysts and experts as well as most of Iraqis, as a hidden attempt by the Bush administration, which claimed that reasons for the war was the former Iraqi leader’s alleged link to Al Qaeda network and possession of Weapons of Mass Destruction, to lay hands on the country’s oil riches.


Today, the Iraqi government, under the control of the U.S., is considering a new oil law that would establish a framework for managing Iraq’s oil wealth, the third-largest oil reserves in the world.

Here Raed Jarrar, an Iraqi blogger and architect, who said he has obtained a copy of the new oil law, discusses the new legislation with Antonia Juhasz, author of "The Bush Agenda: Invading the World One Economy at a Time,” where she uncovers the economic gains of the U.S. occupation of Iraq.

When asked by Democracy Now’s Amy Goodman about how he got a copy of the document and what it says, Mr. Jarrar, the Iraq Project Director for Global Exchange said that the :document was leaked by Professor Fouad Al-Ameer and published on a website called al-ghad.org. And then it was leaked to other important websites like niqash.org and other places. There different copies of it. Some are scanned, and others of the original document, but it just hit the internet last week.

“It said so many things. I don’t think we can summarize it this short, because it’s a very long document, around thirty pages. But majorly, there are three major points that I think we should talk about. Financially, it legalizes very unfair types of contracts that will put Iraq in very long-term contracts that can go up to thirty-five years and cause the loss of hundreds of billions of dollars from Iraqis for no cause.

“The second point is concerning Iraq's sovereignty. Iraq will not be capable of controlling the levels -- the limits of production, which means that Iraq cannot be a part of OPEC anymore. And Iraq will have this very complicated institution called the Federal Oil and Gas Council, that will have representatives from the foreign oil companies on the board of it, so representatives from, let’s say, ExxonMobil and Shell and British Petroleum will be on the federal board of Iraq approving their own contracts.

“The Third point is the point about keeping Iraq’s unity. The law is seen by many Iraqi analysts as a separation for Iraq fund. The law will authorize all of the regional and small provinces’ authorities. It will give them the final say to deal with the oil, instead of giving this final say to central federal government, so it will open the doors for splitting Iraq into three regions or even maybe three states in the very near future.”

On the other hand, Antonia Juhasz, who was also asked by Amy Goodman about the significance of such law for Western oil companies, said that it “certainly opens the door to U.S. oil companies and the Bush administration winning a very large piece of their objective of going to war in Iraq, at least winning it on paper. The law does almost word for word what was laid out in the Baker-Hamilton recommendation, which I discussed previously on your show, which is, at the very basic level, to turn Iraq's nationalized oil system, the model that 90% of the world’s oil is governed by, take its nationalized oil system and turn it into a commercial system fully open to foreign corporate investment on terms as of yet to be decided. So it leaves vague this very important question of what type of contracts will the Iraqi government use. But what it leaves clear is that basically every level of the oil industry will be open to private foreign companies.

“It introduces this very unique model, which is that ultimate decision making on contracts rests with a new council to be set up in Iraq, and sitting on that council will be representatives -- executives, in fact -- of oil companies, both foreign and domestic. In addition, it does maintain the Iraq National Oil Company, but gives the Iraq National Oil Company almost no preference. It’s almost in all cases just another oil company among lots of other companies, including U.S. oil companies. And this council, the new oil and gas council, is going to be the decision making body to determine what kind of contract the Iraqis can sign, and all contract models are still on the table, yet to be determined. I think that’s left vague or open, so that the very necessary criticism to earlier drafts of the law, which included specifically production sharing agreements, might be quieted.

“But the law definitely sets up a very dangerous setup for Iraq's future economic stability, economic development, and certainly sets the stage for a tremendous amount of increased hostility and violence to U.S. soldiers positioned on the ground, as being seen as the implementers of this oil hijack."

Asked about the advocates’ argument for Western company involvement, that they need to come into Iraq to kick-start the oil development, Juhasz said that Iraq's oil development has actually been going quite well since the invasion under the guidance of the Iraqis themselves. Prior to the war, Iraq produced 2.5 million barrels of oil a day. Since the war, it’s been producing about 2.2 million barrels of oil a day. That’s definitely dropped most recently, because of the intense violence in Iraq of late. And there have definitely been targeted actions against the oil system as demonstrations of opposition to the occupation. So I believe there is a very concrete argument that can be made that the best thing that Iraq can do right now to see its oil infrastructure secure and pumping at a reasonable level is to see the U.S. occupation end.

“Given that Iraq's oil only costs less than a dollar per barrel to pump and oil is selling at over $50 per barrel, the Iraqis are already making a tremendous return on their oil. The danger is that under the different models of oil contract that are being put on the table, that the Iraqis would lose the vast majority of that profit to the foreign oil companies.

“Now, just really quickly, Iraqis have lost a fair amount of expertise, technical know-how, as technology has increased over the past eleven years and the Iraqis were shut out because of the sanctions. The answer to that is found in the models put forward by their neighbors, Kuwait and Saudi Arabia and Iran, which are technical service contracts that countries sign with foreign companies to bring in that expertise, but under very limited time frames and very specific economic benefits to the companies and to the country, not these 35-year contracts, as Raed said, and the potential for vast profits leaving the country."

“No one in Iraq knows about the law,” said Raed Jarrar.

“The law has been kept in a very low profile, and there is a huge propaganda campaign by the government trying to portray the law as straight and good for Iraq, a law that will turn Iraq into heaven on earth, because it will bring all of the foreign investments. Even parliamentarians in the Iraqi government, the ones who will have the final say to pass this law, haven’t received a copy of this law yet. I sent them the copy three or four days ago, and I sent a copy to many of the other Iraqi bloggers and journalists, because I think it’s very important to raise awareness about this and make it an issue.

“The Iraqi government and the Bush administration are trying to keep a very low profile in Iraq on this law. I think they’re planning just to, you know, surprise the parliamentarians one morning and have them vote on it without any knowledge of what the law actually causes."

© 2007 Ahmed Abdullah