This is what it was all about in Iraq, and it may not happen. Iraqi oil officials had to meet outside the country to try and hammer out an agreement, but no accord was reached:
Discussions turned contentious among the more than 60 Iraqi oil officials reviewing Iraq’s draft hydrocarbons bill last week in the United Arab Emirates.
But the dispute highlighted the need for further negotiations on the proposed law that was stalled in talks for nearly eight months, then pushed through Iraq’s Cabinet without most key provisions.
Tariq Shafiq, one of three authors of the law, said he attended the Dubai summit “reluctantly,” at the request of Oil Minister Hussein al-Shahristani. “I thought it would help,” Shafiq said, hoping all Iraqi sides in the debate over its oil law would meet and iron out their differences. “Apparently it did not.” Petroleum Intelligence Weekly reports talks in Dubai led to “heated exchanges.” Instead, the voices of those who disagree with the law or, like Shafiq, oppose what it has become since the initial draft and how it was kept from the public, were not given part of the platform.
Bush set a “deadline” of May 31 for the passage of the “hydrocarbon law”, which would
- outline the terms of “participation” by certain multinational oil companies, and
- specify the way in which oil revenue would be distributed to Iraqis.
Bush and the US have publicly emphasized the latter issue, and it remains a point of contention; two major points on “sharing” are contentious:
- will there be an automatic formula, or will the government have discretion, and
- will future oil discoveries be treated differently than present revenues.
The Kurds are sitting on huge oil deposits, as well as currently producing wells. They want
an automatic mechanism to redistribute the funds, while the central government wants it collected to the central bank, to be doled out by the Iraqi finance minister. …. Sunnis, a minority group without oil land and the power wielded while Saddam Hussein reigned, fear they’ll wind up without if the central government is weak.…the KRG’s oil minister, vowed Kurdish parliamentarians would veto it as written.
The other half of the hydrocarbon law is about the terms under which the three favored Anglo American multinational oil companies will control and extract profits from the Iraq oil. The current proposal is stacked heavily in favor of the oil companies, much more so than in any other middle eastern oil producing state. This part of the law is also very contentious; it could deprive Iraq of much of the benefit of its oil resources.
There are many who oppose the law. Iraq’s oil unions have threatened to shutdown production if foreign companies are allowed too much control. ….“If the law includes the distribution of revenue from future oil projects, then the Kurds are likely to reject it as unconstitutional,” he said. “If the law does not include such revenue, then it will accomplish little toward national reconciliation.” Shafiq said “the majority of the oil technocrats are against” the law as written. He said the eight months negotiators took after the drafters were finished was too long. And it was kept secret from the public and parliamentarians, which then added to the politicization. “The weak thing about their procedure is they never published the draft,” Shafiq said. “They should have had teams to explain this to unions, to intellectuals, to nongovernmental organizations, to the parliamentarians, and then get the gist of their reactions before they start finalizing a draft.”
What will Bush do if the oil law doesn’t pass? Obviously the entire situation in Iraq is in flux, and Bush’s support is waning at home. As recently as a month ago, it seemed that Bush might stage a coup, install a strongman who would issue some decree that would enable oil exploitation.
However, the entire US adventure in Iraq is now hanging by a thread, and that is Congressional funding. If the al-Maliki government were to fall, the odds are that the US would pull out. Frederick Kagan of the American Enterprise Institute, architect of the current “surge” strategy, has recently published a paper suggesting that, in view of the current instability in Iraq, perhaps the oil law can wait.
It looks like it will have to. Members of parliament are not interested in risking their lives on this turkey. I suspect the rightwing US thinktanks like AEI are recognizing this, and starting to engage in “softening of the blow.”
This will be a major, MAJOR defeat for Bush. In the US public eye, it makes the Iraqis seem like selfish greedy partisans who can’t agree on anything and won’t even provide funds to help with their own reconstruction. I look for Bush to start backtracking on this issue.