The working draft calls for the central government in Baghdad to collect oil revenues and distribute them to provinces or regions based on population. The law could also encourage foreign investment in the oil industry.

General George W. Casey Jr., the senior American commander in Iraq, and Zalmay Khalilzad, the US ambassador, have urged Iraqi politicians to put the oil law at the top of their agendas, saying it must be passed before the year's end.

Interestingly, the Iraq Study Group report released on Dec. 6, emphasized that an equitable oil law was a necessary cornerstone to the process of national reconciliation and thus to ending the war. In a major far reaching recommendation to deal with the situation in Iraq, the report called for opening Iraq to privatize foreign oil and energy companies, providing direct technical assistance for the "drafting" of a new national oil law for Iraq, and assuring that all of Iraq's oil revenues accrue to the central government.

The ISG said: "Expanding oil production in Iraq over the long term will require creating corporate structures, establishing management systems, and installing competent managers to plan and oversee an ambitious list of major oil-field investment projects.... The United States should encourage investment in Iraq's oil sector by the international community and by international energy companies."

It may be recalled that President George W. Bush hired an employee from the US consultancy firm Bearing Point Inc. over a year ago to advise the Iraq Oil Ministry on the drafting and passage of a new national oil law. As previously drafted, the law opens Iraq's nationalized oil sector to private foreign corporate investment, but stops short of full privatization.

The ISG report, however, goes further, stating that "the United States should assist Iraqi leaders to reorganize the national oil industry as a commercial enterprise." In addition, the current constitution of Iraq is ambiguous as to whether control over Iraq's oil should be shared among its regional provinces or held under the central government.

The Iraqi constitution, drafted under US supervision, leaves the door open for regions to take the lead in developing new oil resources. Article 108 states that "oil and gas are the ownership of all the peoples of Iraq in all the regions and governorates," while Article 109 tasks the federal government with "the management of oil and gas extracted from current fields." This language has led to contention over what constitutes a "new" or an "existing" resource, a question that has profound ramifications for the ultimate control of future oil revenue.

If the ISG proposals are followed, Iraq's national oil industry will be privatized and opened to foreign firms and in control of all of Iraq's oil wealth, says Antonia Juhasz, author of "The Bush Agenda: Invading the World, One Economy at a Time.

However, the proposals should not come as a surprise given that two authors of the report, James A. Baker III and Lawrence Eagleburger, have each spent much of their political and corporate careers in pursuit of greater access to Iraq's oil and wealth.

Juhasz, in his recent article "Oil for Sale: Iraq Study Group Recommends Privatization," points out that "pragmatist" is the word most often used to describe Iraq Study Group co-chair James A. Baker III. It is equally appropriate for Lawrence Eagleburger. The term applies particularly well to each man's efforts to expand US economic engagement with Saddam Hussein throughout the 1980s and early 1990s. Not only did their efforts enrich Hussein and US corporations, particularly oil companies, it also served the interests of their own private firms.

This past July, US Energy Secretary Samuel Bodman announced in Baghdad that senior US oil company executives would not enter Iraq without passage of the new law. Petroleum Economist magazine later reported that US oil companies put passage of the oil law before security concerns as the deciding factor over their entry into Iraq.

Put simply, Antonia Juhasz argues, the oil companies are trying to get what they were denied before the war or at anytime in modern Iraqi history: Access to Iraq's oil under the ground.

By Abdus Sattar Ghazali

© Arab News 2006

 

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