[NYTr] Finally, Good News from Baghdad: The IOil Law has Stalled

[All the News That Doesn't Fit]

The Guardian - Aug 3, 2007
http://www.guardian.co.uk/Columnists/Column/0,,2140859,00.html


Good news from Baghdad at last: the oil law has stalled

The panic and distraction of the security crisis should not be used as 
cover for handing Iraq's wealth to foreigners

by Jonathan Steele:

Glad tidings from Baghdad at last. The Iraqi parliament has gone into 
summer recess without passing the oil law that Washington was pressing
it to  adopt.

For the Bush administration this is irritating, since passage of the
law was billed as a "benchmark" in its battle to get Congress not to
set a timetable for US troop withdrawals. The political hoops through
which the government of Nouri al-Maliki has been asked to jump were
meant to be a companion piece to the US "surge".  Just as General David
Petraeus, the current US commander, is due to give his report on
military progress next month, George Bush is supposed to tell Congress
in mid-September how the Maliki government is moving forward on reform.

The signs are that, on both fronts, the administration will carry on 
playing for time. Bush and his officials are already suggesting they
will maintain the surge for another year, and that Petraeus's report
will merely be an interim score card. It will not use the fateful
Vietnam-era language of light at the end of the tunnel, but it will say
progress is under way and therefore more congressional patience is
needed.

Similarly  Ryan Crocker, the US ambassador in Baghdad, is playing down
the urgency  of  the  benchmarks.  He  has reminded the US media that
Congress can  take  years  to  make reforms on complex issues such as
immigration and healthcare. He argues it is unfair to expect the Iraqi
parliament to do everything as fast as outsiders might wish.

That said, the administration - particularly the vice-president, Dick 
Cheney - and the oil lobby are enraged that the oil law is stalled.

The  main reason is not that the Iraqi government and parliament are a 
lazy bunch of Islamist incompetents or narrow-minded sectarians, as is 
often implied. MPs are studying the law more carefully, and have begun
to see it as a major threat to Iraq's national interest regardless of 
people's religion or sect.

This  is  the  second bit of good news from Iraq.

Civil society, trade unions, professional oil experts and the media
are stirring on the oil issue and putting their points across to
parliament in the way democracy is meant to work. The oil unions have
held strikes even at the risk of having leaders and members arrested.

The  pervasive  outside  image of Iraq as a country in free-fall where 
violence  on  a mass scale is an ever-present threat is not wrong. But
it can mask the fact that "normal life" and indeed "normal politics"
are still possible.

The real reason why the Bush administration wanted the oil law rushed 
through was that it feared public discussion, and was worried that the 
more people understood what the law entails, the greater the chances of 
its defeat. Key parties in the Iraqi parliament oppose it, including
the main Sunni party - which this week withdrew from government - as
well as the Shia Sadrists and Fadhila.

Washington  has promoted the law as a "reconciliation" issue, claiming
its early  passage  would  show  that  Iraq's  ethnic  and  sectarian 
communities could share revenues on a fair basis.

But this is a trick.

Only one of the law's 43 articles mentions revenue-sharing, and then
just to say that a separate "federal revenue law" will decide its
distribution. The first draft of this other law only appeared in June,
and it is clearly unreasonable to expect the Iraqi parliament to pass
it in less than two months.

The law that Washington and the US oil lobby really want would set the 
arrangements  for  foreign  companies to operate in Iraq's oil sector.

Independent  analysts  say  the  terms  being  proposed  are  far more 
favourable   for  foreign  oil  companies  than  those  of  any  other 
oil-producing  state in the region, including Kuwait and Saudi Arabia. 
They  all impose some safeguards for the national interest, whether it
is having  a national company that controls production; specifying in 
contracts   the   maximum   level  of  foreigners'  profits;  limiting 
foreigners to a small number of fields; or insisting that disputes are 
arbitrated in local rather than international tribunals. Other big oil 
countries,  including  Russia  and  Venezuela, insist on parliamentary 
approval  for  contracts  covering  "strategic"  fields  or  for joint 
ventures.

Platform, an oil industry watchdog, warns that the Iraq oil and gas law 
could "sign away Iraq's future". Greg Muttitt, its co-director, says: 
"The law is permissive. All of Iraq's unexploited and as yet unknown 
reserves, which could amount to between 100bn and 200bn barrels, would
go to foreign companies."

Public  pressure has already brought some changes.

The first drafts of 2006 talked of production-sharing agreements, a
system of concessions like those Russia gave to foreign oil companies
in the days of proto-capitalist weakness in the early 1990s, and which
Moscow no longer uses.  The latest Iraqi drafts now talk of
"exploration risk contracts". They could last for 30 years without a
chance of revision, and be equally bad.

One  of  the  most significant aspects of Iraqi society's awakening on
the issue is a recent letter to parliament from 106 Iraqi oil industry 
technocrats,  including  exiles who fled the Saddam regime.

They argue that there is no need to rush the law, since at a time of 
insecurity no foreign investment is likely.  They want parliament to
have the right of scrutiny of proposed contracts with the national oil
company. They propose passing the revenue-sharing law before the oil
law, and not vice versa - an eminently sensible view that Bush should
adopt.

Whether  the issue came up in Camp David this week is unclear, but the 
British  government's  role  - like that of most western governments -
has not  been  good.

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.
As a staunch supporter of the current international financial
architecture, Gordon Brown is unlikely to press for a relaxation of
these unfair terms.

More's the pity, since the best way for Iraq to prosper once the 
occupation is over and it finally solves its sectarian crisis is to
have maximum control over its major natural resource.  Most Iraqis
believe the invasion of 2003 was largely about oil. Peace is also about
oil, and it surely makes sense not to let the panic and distraction of
the current security crisis be used as a cover for handing the
country's wealth to foreigners.