Iraqi oil spoils

This is from the NYTimes. This article shows the problems facing US Iraq oil policy and also the fact that not only Kurdistan but some oil companies including Hunt oil in the US are making an end run around the central government. No word yet on when the federal oil bill will pass.


Iraqi Oil Spoils

Published: October 15, 2007
The quickening pace of oil deals between Kurdish regional leaders and foreign companies is another sign that Iraq is spinning out of control and the Bush administration has no idea how to stop it.

President Bush set enactment of a national oil law that centralizes development and ensures an equitable division of the profits as a key benchmark of progress. Iraq’s leaders, who have little interest in equity or reconciliation, have blithely ignored it. So the Kurds have taken matters into their own hands, signing nine legally questionable exploration deals with foreign companies.

The administration has complained that the deals “needlessly elevated tensions” between the Kurds and the central government. But it apparently hasn’t leaned very hard on the one American oil company involved, Hunt Oil of Dallas, which has close ties to the White House. Iraq’s oil ministry, meanwhile, has warned that the contracts will be either ignored or considered illegal.

We cannot blame the Kurds for wanting to get on with exploiting their region’s lucrative oil deposits for energy and for profit. While the rest of Iraq is convulsed in violence and politically paralyzed, the Kurdish-administered northeast is the one relatively peaceful region, with functioning schools and government, a separate army and booming business.

The oil contracts, however, are a dangerous attempt to establish facts on the ground, fanning even more distrust and resentment. The Sunnis, many of whom live in areas without any oil resources, fear they will get shut out completely from the country’s oil wealth. The Shiite-dominated government suspects that the Kurds are looking for the resources to secede from Iraq. Any sign that Iraq is about to break up will encourage even more dangerous meddling by neighboring Turkey and Iran.

The Kurds agreed to a carefully constructed compromise national draft oil law last February and insist they remain committed to sharing oil revenues with the rest of the country. But as The Times’s James Glanz reported last month, the compromise appears to have collapsed in an ever more bitter struggle among the Shiite-led government in Baghdad and the Sunnis — who both insist on a strong central government role in letting contracts and running the oil fields — and the Kurds, who demand more regional control.

Foreign oil companies are so eager for profits that they don’t seem worried about whether the deals are legally binding or how they may contribute to Iraq’s chaos.

The White House needs to send a clearer warning to these companies — American and foreign — about the dangers of their course. It should also urge the companies to bring their own pressure on Iraqi officials to adopt a law that ensures that whatever system emerges is transparent, accountable and profitable for all Iraqis. Ignoring that is a recipe for continued chaos.