What Happened to the Oil Law “Benchmark” for Iraq?

(great piece – promoted by buhdydharma )

I think you’ll remember the much discussed benchmark, the so-called “Oil Revenue Sharing Law”. President Bush has said that passage of the oil law will result in the sharing of oil revenue among all Iraqis and that its passage will help unify the country. The oil law has broad support in Congress among both democrats and republicans. The Iraq Study Group supports its passage as does the IMF.

The legislation of the new Iraqi Oil & Gas Law by the Iraqi parliament has become the most important benchmark of the US Administration, its oil lobbies, the IOCs, the IMF, and the occupying forces. The Bush administration wants this law to be passed as soon as possible, whatever the cost to the Iraqi people.

Source

A year has passed since the landmark deadline of December 2006, for the Iraqi government to deliver the long awaited Iraqi oil law. The Iraqi Parliament has not passed it. Let’s take a look at what has happened.

Some Background and History

U.S. officials in the Bush Administration, our elected lawmakers and the establishment corporate media have generally billed this law as one that will equitably distribute Iraq’s massive oil revenues between the country’s different sectarian groups. This is not a complete or accurate picture of its contents.

Rather than originating in Baghdad, the law was first conceived within the bowels of the State Department prior to the war. The U.S. then brought in BearingPoint, a private contractor, to assist Iraq’s Ministry of Oil with the actual writing of the text.

After its completion, in a thoughtful gesture to their occupiers, executives from the major U.S. oil companies and the International Monetary Fund were given the opportunity to offer their comments on the draft. Only then was the Iraqi Parliament shown the law.

Source

House Speaker Nancy Pelosi (D-Calif.), though, didn’t see the bill as pressuring Iraq to privatize. “Democrats support an Iraqi oil bill that fairly distributes revenues among the Iraqi people in a way that the Iraqi people decide is best for them,” spokesman Drew Hammill said in an e-mail.

Except for three vague sentences that deal with revenue sharing, the rest of a 33-page draft of the law effectively lays the foundation for the privatization of Iraq’s oil industry.

As per the oil law, international oil companies could be granted 25 year (20, plus a 5 year extension) contracts which would give them much greater ownership of and profits from Iraqi oil fields than they would be allowed by other possible models for the development of the country’s oil sector. Other major oil producers in the region, including Saudi Arabia, Kuwait and Iran maintain nationalized oil systems that do not allow foreign control of their oil reserves.

The IMF insists that forgiveness of some of Iraq’s debt is dependent on the passing of the legislation. While re-establishing a state owned Iraqi National Oil Company and giving it a role in maintaining pipelines and extracting oil from fields which are already being exploited, the law provides for the long-term leasing of the country’s vast untapped reserves to foreign companies.

Working closely with the Americans, British officials in Baghdad saw drafts of the law before the Iraqi parliament. Britain supports the IMF line that Iraq’s final tranche of Saddam-era debts cannot be forgiven until Iraq has a law permitting foreigners a role in the oil industry.

Source: The Guardian

The IMF (from Wikipedia)

An unwritten rule establishes that the IMF’s managing director must be European and that the president of the World Bank must be from the United States. Executive Directors, who confirm the managing director are voted in by Finance Ministers from countries they represent… The First Deputy Managing Director of the IMF, the second-in-command, has traditionally been (and is today) an American.

The IMF is for the most part controlled by the major Western Powers, with voting rights on the Executive board based on a quota derived from the relative size of a country in the global economy. Critics claim that the board rarely votes and passes issues contradicting the will of the US or Europeans, which combined represent the largest bloc of shareholders in the Fund.

The Economic Hit Man

John Perkins wrote Confessions of an Economic Hit Man. The interview is available on video and also in print on the Democracy Now website. In his interview with Amy Goodman, Mr. Perkins said:

The World Bank provides most of the money that’s used by economic hit men, it and the I.M.F. But when 9/11 struck, I had a change of heart. I knew the story had to be told because what happened at 9/11 is a direct result of what the economic hit men are doing. …

But my real job was deal-making. It was giving loans to other countries, huge loans, much bigger than they could possibly repay. One of the conditions of the loan-let’s say a $1 billion to a country like Indonesia or Ecuador-and this country would then have to give ninety percent of that loan back to a U.S. company, or U.S. companies, to build the infrastructure-a Halliburton or a Bechtel. These were big ones. Those companies would then go in and build an electrical system or ports or highways, and these would basically serve just a few of the very wealthiest families in those countries. The poor people in those countries would be stuck ultimately with this amazing debt that they couldn’t possibly repay. A country today like Ecuador owes over fifty percent of its national budget just to pay down its debt. And it really can’t do it. So, we literally have them over a barrel. So, when we want more oil, we go to Ecuador and say, “Look, you’re not able to repay your debts, therefore give our oil companies your Amazon rain forest, which are filled with oil.”

And today we’re going in and destroying Amazonian rain forests, forcing Ecuador to give them to us because they’ve accumulated all this debt. So we make this big loan, most of it comes back to the United States, the country is left with the debt plus lots of interest, and they basically become our servants, our slaves. It’s an empire. There’s no two ways about it. It’s a huge empire. It’s been extremely successful.

The Controversy and the Delay

Munir Chalabi, (as far as I can determine, there is no connection to Ahmed Chalabi), an Iraqi political and oil analyst living in the UK, has written two articles on this topic published by ZNet. The first was in August of 2007 and the second one on January 1, 2008. In his August 2007 piece, Mr. Chalabi wrote that the Bush Administration and their ambassador in Baghdad had threatened to replace the al-Malilki government with one run by the former CIA asset, Iyad Allawi.

The US administration made it clear that the new Iraqi government has important targets to accomplish, and they listed the oil law as the first priority and the re-Baathification law as a second main concern.

The US threat went nowhere as the US realized that in sponsoring a military coup that the international community would not recognize any laws passed as being legitimate. The next move involved direct interference in the political process in Iraq in an effort to reorganize political alliances in order to achieve their goals. Munir Chalabi continues:

They finally succeeded in achieving the establishment of such a front, which was called the “The front of the moderates” on August 15 (2007), between the two main Kurdish parties (KDP and PUK), two of the Shiite parties (the SCIRI and Al-Dawa party — the Al-Maliki wing is called the “External organization”), with negotiations still ongoing to persuade the Islamic Party/Accord front — the main Sunni party — to join this new alliance.

They Iraqi people have been poorly informed about the “oil law”. A poll taken in the summer of 2007 revealed that 91% of Iraqis polled believed that they were not well enough informed about the law.

The US Administration is aware that time is not on their side, especially when it concerns the oil law. They now recognize that as more people come to understand the law, this will increase the chance of its defeat. This was the main reason behind all the attempted secrecy that surrounded any information about the oil law.

And the US is aware of the fact that “international law which states that the occupying forces have no right to impose laws which reflect their interests only, and do not reflect the interests of the occupied people and that such laws are null and void if any future elected Iraqi parliament declares them to be so.”

In his most recent article Munir Chalabi concludes that key factors in bringing progress on the oil law to a halt are attributed to resistance from various sectors of the Iraqi population. However this resistance has brought about some changes in US tactics regarding this benchmark.

Munir writes about the disagreement between the Central Government/Oil Ministry in Baghdad and the Kurdistan Regional Government (KRG) over the passing of the “Kurdish Oil Law” and Production Sharing Contracts with International Oil Companies before awaiting approval of a federal oil law.   The KRG has signed agreements with oil companies from Norway, Canada and Turkey and fifteen others. There are no provisions in the written agreements for revenue sharing with the Central Government. The KRG has also included oil fields located outside of the recognized Kurdish Region.

The Cheney – Bush Connection

From CBS News:

Texas’ Hunt Oil Co. and Kurdistan’s regional government said they have signed a production-sharing contract for petroleum exploration in the Kurdistan region of northern Iraq, the first such deal since the Kurds passed their own oil and gas law in August.

“We’re very pleased to have the opportunity to be a part of these landmark events by actively participating in the establishment of the petroleum industry,” Ray L. Hunt, Hunt’s CEO, said in a statement.

Hunt, who is also on the board of Halliburton, has been a key fundraiser for President George W. Bush, who named him to the President’s Foreign Intelligence Advisory Board.

The Federal Oil Ministry has declared that all of these agreements are illegal and have threatened legal action to blacklist the participating companies and prohibit them from participating in future contracts with the Oil Ministry.

In concluding – as per his article published earlier this month, Munir Chalabi writes:

As this split widens, the approval of the federal oil law in the Iraqi parliament will be an extremely difficult goal to achieve under such circumstances.

Time is running out for the Bush Administration. Trillions of dollars are at stake. Will they succeed in their oil grab? How will a new administration deal with this situation? Interesting questions – and only time will tell. My best guess is that the Iraqi Parliament will not pass the “Oil Law” but that the Bush Administration, and possibly the next administration will try to find a way to work around it.

Also posted yesterday at Daily Kos. This is my first essay here at Docudharma.

24 comments

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  1. I hear we are making progress and are just about to turn the corner!

    Aaaack, cough, gasp.

    Let’s hope the Iraqis can do what is best for THEM, not Bushco and the Oiligarchy.

  2. that was an amazing first post

  3. It has always really been about the oil: compelling privatization and Production Sharing Agreements (PSA) wherever possible in order to boost Big Oil’s profits. Big Oil will promise millions of dollars to key players in the al-Maliki (or subsequent) government in return for bargain-rate PSA concessions. Will these “commissions” (what some would call old-fashioned imperial bribes) suffice to buy a majority in the Iraqi Parliament?

    After Ray L. Hunt’s premature telegraphing of the BushCo/Big Oil grab plan in Kurdistan, any Iraqi politician serving as a a compliant pawn for Western Big Oil may need to spend and enjoy his upfront commissions quickly. He likely would not live long enough to enjoy his new-found wealth into old age.

    Even neocolonies have a certain preference for pursuing their own best interests, rather than those of the imperial center. And even the utterly dependent al-Maliki government has shown an occasional spark of emerging sovereignty and independence.

    It surely is complicated to try to run an empire on behalf of the corporations and to loot resources in defiance of the the interests of the subject peoples.

     

    • Pluto on January 7, 2008 at 5:50 am

    ..type of Essay.

    Utterly reductionist. The very beginning of the end.

    I think back to the purple fingers. I remember that day — the day we created a totally Islamic state in Iraq, complete with Sharia law (but could not tell that to the stupid American people, who thought it was a Democracy). The day we helped create the bloodiest civil war in recent history — a human slaughter began that very night.

    The day the Iraqi’s silly puppet parliament was established to do one thing — and one thing only — agree on how to share the oil revenues. As if…

    It is a disgrace to even be alive in this millennium.

  4. I forget which one, was busy blaming the Iraqis for the failure of the surge. This line of talk always fries me, but the topper was “the Iraqis government hasn’t even passed the oil bill”. Thanks Truong Son Traveler, and nice to read you here you have always been one of my favorite voices.  

    • MO Blue on January 7, 2008 at 8:37 am

    if he ever sign it into law. Surprise, surprise, the Iraqis aren’t real keen on having the U.S, steal their oil.

    Great diary BTW.

  5. makes as much sense to me as the the mob in Chicago decreeing that Al Capone had to share his take from prostitution with Bugs Moran since Bugs had no girls.

    Won’t ever happen.

    The reality is that Iraq is not much of a country.  Only terror could have ever held it together.  That was acknowledged by every piece I ever read before Bush determined it would be mighty fine to replace Saddam’s butchery with our own. About the only thing that will ever be shared is the killing until there is no more fiction of an Iraq.

    Best,  Terry

    • documel on January 7, 2008 at 2:24 pm

    The IMF has been a member of the true axis of financial evil for a long time–under Dem and Republican leadership.  The more we open our eyes, the less we like what we see.

    Now’s not the time–maybe–but a good future will be had only when a new political party is formed.  The Dem true colors are exposed by the deeds, not the words, of Harry and Nancy.  They are traitors–not much different than the puppet-in-chief.  Dailykos pisses me off with the blind allegience to the ass (donkey): It is that kind of thinking that has fostered our present fascist state.

    • OPOL on January 8, 2008 at 9:19 pm

    and with a beautiful piece of work too.  Well done.  Keep it up my friend.

  6. the more george feels pressure…..

    they will not approve the oil law……

    the shia want us out……

    they will pretend, extend the carrot……

    and they will resist, the stick…..

    it is not in their interests to pass it….

    it is in their interests to wait us out…..

    it is election year……

    • Temmoku on January 8, 2008 at 10:19 pm

    than the Saddam Hussain plan?

    Take the money and run!

  7. well done one.

    The subject of your essay is one in which I’ve been involved in for a long time, as well, beginning way back to the energy task force and the notion of the oil grab in Iraq, on up to the present.

    Currently, as you probably know, we are almost there.

    Big Oil’s big dreams are close to coming true as Iraq’s Oil Ministry prepares deals for the country’s largest oil fields with terms that aren’t necessarily what companies were hoping for but considered a foot in the door of the world’s most promising oil sector.

    Iraq’s proven oil reserves are only smaller than those in Saudi Arabia and Iran — and the country is only about 30 percent explored. . . .

    . . . .Shahristani himself dropped hints to United Press International in a recent interview. He said he’s moving forward with oil deals despite the lack of a new national oil law, a draft of which has been stalled in negotiations for more than a year.

    “This has nothing to do with the national oil law. There is no timeline. Whenever we finish our discussions we’ll just sign the contracts,” he told UPI on the sidelines of the OPEC heads of state summit last month.

    “This is basically technical-support contracts,” he said, adding the contracts will not be the result of a bidding process. “Selected companies will offer us technical support that we need to develop our producing fields.”

    Develop producing fields? “Yes, only.” . . .

    “Confessions of an Economic Hit Many” shows what a brutally, ruthless nation we have become (and not just today).  It is a gut-wrenching book!!!  

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