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Those So-Called Oil Contracts in Iraq

So-called “oil contracts” have been on the table of the Iraqi Parliament for months, and the fluff of lies printed about them in U..S. media is nauseating.

Every report I have been able to find in the general media has been long on inferences and short on facts. The result is that the average American knows nothing about them, and even those of us who try to follow important policy matters cannot find out more than the simple assertion that there are such things as Production Sharing Agreements, and that their signing is one of the “benchmarks” the US has put up as a requirement for our withdrawal of military forces.

These “contracts” are literally a matter of life and death in Iraq, admitted by Prime Minister Maliki himself to be “the most important law in Iraq.” They are proposals for agreements between the Iraqi government such as it is and the world’s largest energy corporations which will determine for a decade or more just how much oil can be pumped out of which fields by whom and how the enormous profits will be shared.

Traditionally the revenue from these fields has been controlled by the Iraqi government as a state-owned resource. Present proposals will probably reduce the amount of control the Iraqi state maintains, while the oil companies are likely to benefit from Iraq’s present weakness which will force them to sign agreements to their disadvantage. Making agreement on the contracts one of the “benchmarks” for the US military departure from Iraq is a form of arm-twisting pressure, saying, in effect: “If you want us out, sign the proposals!”.

The most recent report in the New York Times (7/3/07) says “Maliki’s Cabinet Approves Oil Law Draft” and goes on to state that this means the Parliament can now begin to debate the proposed contracts. This is touted as “a major sign of progress” and will work “to boost reconciliation between Iraq’s Sunnis and Shiites.” Without stating any particulars at all, the article denigrates the disagreements among Iraqi factions as “bickering” and states that negotiations have been “plagued by squabbling.” Use of such prejudicial words minimizes the importance of the proposals at the same time it tells nothing about what those proposals are.

Whatever figures are given on how oil resources are to be shared, are practically meaningless because they have no context. We are told that Kurds will be allotted l7 of the net revenues after deducting federal government expenditures.” 17 what? How much “net revenue”? How much “federal government expenditures?” And totally excluded from the account what will be the rake-off of the international oil companies?

We are told that the decision in the Cabinet to discuss the proposals was “unanimous.” However, of the 37 members, only 24 were present to vote. The Sunni Iraqi Accordance Front and the Shiite Sadrist movement “boycotted” the meeting. Then the article admits that the “key sticking point” is “who should control lucrative untapped fields.” Such a statement indicates that decisions regarding control of development would be done by “a yet-to-be-established national oil company,” implying (but not clearly stating) that the resources will stay in the hands of the Iraqi government and not be placed in the hands of foreign corporations. One cannot help but wonder who this “yet-to-be-established national oil company” will be, and how easy or difficult it might be to form it and to make it effective in dealing with the powerful oil-hungry foreign energy interests

Rather than pointing out the importance of these agreements to the daily livelihood of the Iraqi people, the article stresses that agreement itself will “help convince the US public and Congress that Iraqi leaders are doing what’s needed to halt the violence.” This, of course, implies that the continuing violence in Iraq is caused by lack of agreement on oil contracts which is not true. Discussions over the details of the proposed contracts are not the cause of the war’s continuing and hence the “need” for US troops to remain. Rather, the US does not want to withdraw till it is assured of control over Iraq’s oil.

Under such a cloud of obfuscation and lack of on-going specific information it is easy for reporters to rely on handouts presenting only the US government’s point of view. The interests of the Iraqi people simply do not matter. And concerned Americans can’t find out enough solid information about what is going on to object.

Yet questions arise: Is it really about the disagreements among Iraqi factions, or disagreements about the amount that foreign companies will be allowed to extract? Is it really “unanimous” when only 2/3 of the members are present to vote? Is it likely that the Kurds, who are 20% of the Iraqi population, will be satisfied with 17 (and is it per cent, or what?) of the oil revenues AFTER deducting federal government expenditures? Judging from our own experience here at home, will “federal government expenditures” have any limit? If so, who will limit them, and how?

Questions, questions and no answers. All the cabinets and parliaments in the world will not make it come out right so long as people of ordinary intelligence are excluded from information about what is really going on behind the scenes.

JEAN GERARD lives in Los Osos, California.

 

 

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