Still No Oil Revenue-Sharing Deal in Iraq

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I was reminded of something during Senator Carl Levin’s opening statement at the Armed Services committee hearing on Tuesday:

“During my recent trip to Iraq, just before the latest outbreak of violence, a senior U.S. military officer told me that when he asked an Iraqi official, “Why is it that we’re using our U.S. dollars to pay your people to clean up your towns, instead of you using your funds?” that the Iraqi replied, “As long as you are willing to pay for the cleanup, why should we do it?”

This story crystallizes the fundamental problem of our policy in Iraq. It highlights the need to change our current course in order to shift responsibility from our troops and our taxpayers to the Iraqi government, to force that government to take responsibility for their own future, politically, economically and militarily.


But the major political steps that they need to take have not yet been taken by the Iraqis, including establishment of a framework for controlling and sharing oil revenue…”

What ever happened to the “big breakthrough” on Iraq’s oil-revenue sharing that was announced last year?

It’s been over a year now since Iraqi oil minister Hussain al-Shahristani announced a draft of an oil revenue-sharing agreement between Iraq’s Sunni, Shiite, and Kurd political factions.  The Iraqi cabinet approved the agreement for submittal to the Parliament.  It proposed a strong role for the central government, most notably the power to distribute oil revenues to the provinces or regions on the basis of population.  That provision is what enabled the Sunni minority to get on board.  

Sunni concerns had been one of the main sticking points to any revenue-sharing deal.  The vast majority of Iraq’s oil reserves are in Kurdish and Shiite territories.  The Sunnis were skeptical of any plan where autonomous regions could potentially control their own oil revenue, since the Sunni regions don’t have much oil.  Also, to address Sunni concerns about foreign contracts to develop new oil fields, the agreement also called for the formation of a “Federal Oil and Gas Council” that would have authority to prevent foreign contracts that weren’t in Iraq’s national interest.      

Several months of rocky negotiations followed.  In July of 2007, Prime Minister Nouri al-Maliki announced approval of some amendments to the agreement.  The Kurds had argued the central government’s authority described in the February agreement was unconstitutional.  An amendment was then approved that guaranteed 17% of Iraq’s oil revenue would go the Kurds.  This apparently solved the constitutionality problem from the Kurdish point of view.  Cynics might have been tempted to call it a bribe.  Whatever the terminology, the bill was ready (again) to be debated in Parliament.

What did the Iraqi Parliament do when they got the revenue-sharing bill?  First, they took a two month vacation in July and August of 2007.  Then they squabbled.  For months and months.  And this was during the salad days of Iraqi politics: The Surge was “working”, Muqtada al-Sadr had the Mahdi Army restrained with a cease-fire, Sunnis were turning and fighting al-Qaeda . . . but they still couldn’t pass a bill.  

The Sunnis were still concerned the federal government didn’t have enough authority to ensure oil revenue would get redistributed.  The Kurds were still concerned the federal government had too much authority because they want to be as autonomous as possible.  The Shiite position has not been as clear.  My own opinion is that the Shiites want the plan to be as flexible as possible.  If they could retain regional autonomy over oil fields they control, but also exert federal control by having the most seats in Parliament, they could work from a position of strength on an issue-by-issue basis.  

In March of 2008 the administration finally sent in The Big Gun.  Dick Cheney made a trip to Iraq, where he met with Kurdistan regional president Massoud Barzani to discuss the Kurds’ role in passing the oil revenue-sharing bill.  So far Mr. Cheney’s subtle diplomatic skills have not paid off in getting the bill passed either.  

Senator Levin’s point shows that our military cannot solve the fundamental problems of Iraq’s government.  Oil revenue is the prime economic interest of all groups in Iraq.  If Iraq’s government cannot pass an oil revenue-sharing bill the government is doomed to fail.  It is their highest and most urgent priority, but they can’t get it done.  No amount of U.S. military participation is going to make up for a dysfunctional Iraqi government, and to repeat part of Levin’s statement:

“It highlights the need to change our current course in order to shift responsibility from our troops and our taxpayers to the Iraqi government, to force that government to take responsibility for their own future, politically, economically and militarily.”


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  1. Even my haikus are being affected:

    Frustrations abound

    hopelessly mired in Iraq

    God, we are so screwed

  2. this was on my to-read list. got to it late. thanks for your analysis…

    sounds like there’s one man on the side of doing what is correct (it gets harder and harder for me to use the word “right”)

    if Levin means what he says… but my cynical self emerges. is this some code? if the iraqi’s can’t settle it, then what? should we should take over the oil… what about the oil leases to the big five? i’m sure we had something to do with the breakdown… pitting sides against one another… so the big five can retain control… i have no doubt.

    and then there is this… we are paying for the clean up because it puts money in bushCo’s pocket.

    i think we should be paying Iraqi firms to clean it  up. we started this mess. we made this mess.  

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