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WORD COUNT
648
JANUARY 18, 2006
IN IRAQ, ‘IT’S THE
OIL, STUPID’ – by Antonia Juhasz
Amid all the talk of
training Iraqi soldiers, heading off a civil war, and protecting a
fledging democracy, one overriding agenda has been ignored in the debate
over the timetable for bringing U.S. troops home. President George W.
Bush will not withdraw our forces until U.S. oil companies have secure
access to Iraq’s resources.
The process of
securing this access involves three steps. The first, put into motion
with the December 15, 2005, election, is the formation a legitimate
Iraqi government with the authority to, among other things, sign
contracts with foreign oil companies. The second step is the completion
and passage of a new national oil law that is set to conclude at the
start of 2006. The third, having enough security on the ground for U.S.
oil companies to get to work, is uncertain, and therefore the timeline
for full U.S. troop withdrawal remains unknown.
Prior to the 2003
invasion, foreign companies had limited to no access to the Iraqi
market. Only Iraqis or citizens of Arab nations could own a business in
Iraq, the oil sector was fully nationalized, and other than a few deals
through the U.N. oil-for-food program, no U.S. companies had oil
contracts.
Following the
invasion, the Bush administration implemented orders that have the
effect of law allowing for the privatization
of Iraq’s state-owned enterprises, 100 percent foreign ownership of
Iraqi businesses, and repatriation of 100 percent of profits earned in
Iraq by foreign companies. These orders were enshrined in the October 15
Iraq constitution.
Before new oil
contracts can be signed, the existing contracts had to be erased. In May
2003, “Energy Intelligence” reported that
the U.S.-appointed senior adviser to the
Iraqi Oil Ministry, Thamer al-Ghadban, announced that few, if any of the
dozens of contracts signed with foreign oil companies under the Hussein
regime would be honored. In June 2004, after being appointed Iraq’s
Minister of Oil, al-Ghadban told Shell Oil in-house magazine that 2005
would be the “year of dialogue” with multinational oil companies.
The
Bush orders laid the groundwork for U.S. oil companies in Iraq, but a
new national law currently making its way through the Iraqi Parliament
will seal the deal. The law has its roots in the
U.S. State
Department’s Future of Iraq Project’s Oil and Energy Working Group,
which found that Iraq “should be opened to international oil companies
as quickly as possible after the war” and that the best method for doing
so was through Production Sharing Agreements (PSAs). Ibrahim Bahr al
Uloum, a member of the Working Group, succeeded al-Ghadban as Minister
of Oil in early 2005.
None of the top oil
producers in the Middle East use Production Sharing Agreements because
they favor private companies at the expense of the exporting
governments, including terms of 25 to 40 years and agreements that lock
in the laws in effect at the time the contract was signed. Meaning that
future Iraqi governments could change their laws, but the changes would
not affect these oil contracts.
A new
report by Greg Muttitt published by Oil Change International, the
Institute for Policy Studies, and others, states that
Iraq’s new oil law is
set for implementation in 2006. It allows for currently producing oil
fields – 17 out of 80 known fields – to be developed by Iraq’s National
Oil Company, while all new fields would be opened to private companies
using PSAs, giving private companies control of 64 percent of known
reserves. If a further 200 billion barrels are found, as the Oil
Ministry predicts, foreign companies could control 87 percent of Iraq’s
oil.
The Iraqi Oil
Ministry aims “to begin signing long-term contracts with foreign oil
companies during the first nine months of 2006,” according to the
report.
Signing the contracts
is just the beginning, U.S. oil companies also need a safe place to
work. This is where the U.S. military comes in and it is why Bush
refuses to bring our troops home.
--
Antonia Juhasz is a
visiting scholar at the Institute for Policy Studies and on the Board of
Oil Change International. She is author of “The Bush Agenda: Invading
the World, One Economy at a Time,” Regan Books, to be published in April
2006 --
www.ips-dc.org -- A photo of Antonia Juhasz is available
CLICK HERE
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