Iraq's new oil law: not even a figleaf

It hadn’t even been seen by Iraqi legislators yet, but details of a new “Iraqi” hydrocarbons law, drafted in reality by U.S. contractors, were revealed Jan. 7 in the Independent, a major London newspaper that has been critical of the Iraq war.

Once information about the leaked document got out, it was condemned around the world as an unprecedented giveaway to the multinational oil companies—in particular, those based in the U.S. and Britain.

“Its provisions are a radical departure from the norm for developing countries,” wrote the Independent. “[U]nder a system known as ‘production-sharing agreements,’ or PSAs, oil majors such as BP and Shell in Britain, and Exxon and Chevron in the U.S., would be able to sign deals of up to 30 years to extract Iraq’s oil.

“PSAs allow a country to retain legal ownership of its oil, but give a share of profits to the international companies that invest in infrastructure and operation of the wells, pipelines and refineries. Their introduction would be a first for a major Middle Eastern oil producer. Saudi Arabia and Iran, the world’s number one and two oil exporters, both tightly control their industries through state-owned companies with no appreciable foreign collaboration, as do most members of the Organization of Petroleum Exporting Countries, OPEC.”

Iraq has the third-largest proven oil reserves in the world.

The article quoted Greg Muttitt of Platform, a human rights and environmental group that monitors the oil industry. “He said the new legislation was drafted with the assistance of BearingPoint, an American consultancy firm hired by the U.S. government, which had a representative working in the American Embassy in Baghdad for several months.”

Muttitt added: “Three outside groups have had far more opportunity to scrutinize this legislation than most Iraqis. The draft went to the U.S. government and major oil companies in July, and to the International Monetary Fund in September. Last month I met a group of 20 Iraqi MPs in Jordan, and I asked them how many had seen the legislation. Only one had.”

BearingPoint is based in McLean, Va., conveniently close to the CIA. Its most lucrative contracts come from the U.S. Agency for International Development, which has provided funding cover for many CIA activities in the past. According to a Jan. 14 article in the Independent, “Across the world, BearingPoint has become, thanks to USAID funding, a part of the U.S. government’s strategy of spreading free-market reforms to developing countries and America’s allies.”

The Center for Public Integrity says that, since 2003, BearingPoint has had a $240 million contract with USAID to “facilitate Iraq’s economic recovery.” It has collected another $100 million for its activities in Afghanistan. It also has won USAID contracts for post-war reconstruction in El Salvador, Serbia, Montenegro and Kosovo.

While the misery caused by war may put money in BearingPoint’s pockets, it seems that the buck stops there.

A wrenching story about Afghanistan in the Washington Post on Jan. 22 described the death of a child in an unheated Kabul apartment. “It is a season of unrelenting harshness for tens of thousands of poor families, focused on the struggle to survive. People spend their days scrounging to buy a few chunks of coal or firewood. ... More than five years after the U.S.-led overthrow of Islamic Taliban rule and the advent of an internationally backed civilian government, the country is still so destitute and undeveloped that most inhabitants have no central heating, electricity or running water.”

During the “recovery” in Iraq that BearingPoint is also being paid for, the population has shrunk by 10 percent. In addition to hundreds of thousands of deaths, almost 2 million Iraqis, unable to take it any more, have left their country. There are no jobs except in the army or police, electricity functions six hours a day and the majority don’t even have clean water.

Now, the same company that gave us Iraq’s “recovery” has drafted the law that would give the lion’s share of Iraq’s oil profits to the oil companies that dominate the U.S. government that started the war that destroyed Iraq that led to BearingPoint’s $240 million contract.

So far, the only mentions of the draft law in the U.S. corporate media read like an oil industry press release.

The Wall Street Journal, which has been trying to buck the tide of capitalist pessimism over the war, on Jan. 18 promised its readers lucrative profits ahead: “Iraq’s long-awaited hydrocarbons law, which could attract huge investments from foreign oil companies, has been drafted and will be submitted to the cabinet for endorsement next week.”

Their real message? “Stay the course! We can’t afford to let this great prize slip through our fingers!”

Two days later the supposedly more liberal New York Times also tried to present the law as a positive development for Iraq, saying it “would distribute all revenues through the federal government and grant Baghdad wide powers in exploration, development and awarding major international contracts. ... The draft comes down firmly on the side of central oversight, a decision that advocates for Iraq’s unity are likely to trumpet as a triumph.”

So this is why more than half a million Iraqis and over 3,000 U.S. troops have died—so Iraq can have a central government that will distribute its oil earnings throughout the country? Anyone with a memory longer than last week will know that just such a central government existed in Iraq before the U.S. invasion.

To the victor belong the spoils. But the U.S./British occupation forces are far from victors. They are in a desperate and losing situation all over Iraq. Pushing through a humiliating law that is yet another assault on Iraqi sovereignty will only make it worse for them.

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