[Dialogue] Benchmark Boogie: A Guide to the Struggle Over Iraq's Oil

Mon Jul 16 20:14:38 EDT 2007

AlterNet

Benchmark Boogie: A Guide to the Struggle Over Iraq's Oil

By Antonia Juhasz, AlterNet
Posted on July 14, 2007, Printed on July 16, 2007
http://www.alternet.org/story/56672/

What does a war for oil look like? American troops going into battle with
tanks waving "Exxon Mobil" and "Chevron" flags right behind? Are the flags
then planted squarely in the ground and the oil beneath officially declared
war bounty? Well, some members of the Bush administration and U.S. oil
companies may have favored such an approach. But the device ultimately
chosen to win this war for oil is only slightly more subtle: a law, to be
passed by the Iraqis themselves, which would turn Iraq's oil over to foreign
oil companies.

The president's benchmark

The U.S. State Department Iraq Study Group began laying the foundations for
the new law prior to the invasion of Iraq. Its recommendations, released
only after the invasion, were quickly enshrined in a draft oil law
introduced to the interim Iraqi government by the U.S.-appointed interim
prime minister of Iraq, Ayad Allawi (a former CIA operative).

The Bush administration has spent four years trying to force successive
Iraqi governments to pass the law, referred to as either the "hydrocarbons"
or "oil" law. While it has gone through several permutations, the basics
have remained the same and have followed the original prescriptions set out
by the State Department.

The law would change Iraq's oil system from a nationalized model -- all but
closed to U.S. oil companies -- to a privatized model open to foreign
corporate control. At least two-thirds of Iraq's oil would be open to
foreign oil companies under terms that they usually only dream about,
including 30-year-long contracts. (For details of the law, see my March 2007
New York Times Op-Ed, "Whose Oil Is It,
<http://www.bushagenda.net/article.php?id=369>  Anyway?")

In January, after four years of trying to get the law passed in Iraq,
President Bush went public with this demand when he made his "speech to the
nation" announcing the "surge" of 20,000 additional American troops to Iraq.

The president explained that the surge would be successful where other U.S.
efforts had failed in Iraq because the Iraqi government would be held to a
set of specific "benchmarks." Those benchmarks were laid out in a White
<http://www.whitehouse.gov/news/releases/2007/01/20070110-3.html>  House
Fact Sheet released the same day that explained that the Iraq government had
committed to several economic and political measures, including to "enact
[a] hydrocarbons law to promote investment, national unity, and
reconciliation."

After the speech, the administration increased public pressure on the Iraqi
government to pass the law. However, that speech was just about the only
time that the president or anyone in the administration would use the word
"investment" to describe the law. Instead, the administration would refer
generally to the law's capacity to bring "national unity and reconciliation"
by establishing a mechanism to evenly distribute Iraq's oil revenues among
Iraqis on a per capita basis.

With few exceptions, the American press has adopted the administration's
language and continually and virtually exclusively refers to the oil law as
a revenue sharing measure -- ignoring completely the fact that Iraqis would
only be able to share the revenues left over after the foreign oil companies
received their very sizeable cut.

The pressure worked. In February, the oil law passed what seemed to be the
most important hurdle, Iraq's cabinet. The cabinet signed off on the law and
agreed to send it to the parliament. However, resistance in the parliament
was too great, and the law was not introduced.

The Kurdistan Regional Government posted the February draft of the oil law
on its website (PDF
<http://web.krg.org/uploads/documents/Draft%20Iraq%20Oil%20and%20Gas%20Law%2
0English__2007_03_09_h17m2s47.pdf> ). The law has almost nothing to say
about oil revenues. In fact, just three sentences of the law addressed this
issue, stating that an additional law -- the "federal revenue law" -- would
be required to ensure a "fair distribution" of oil revenues.

Congress adopts the president's benchmark

By the time the Congress took up the issue of funding the war in May, public
awareness of and opposition to the oil law both in Iraq and the United
States had grown substantially. Congress passed and the president signed the
Iraq Supplemental War Spending Bill (PDF
<http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&do
cid=f:h2206enr.txt.pdf> ) to fund the Iraq war through the end of September.

In the Supplemental, Congress deliberately adopted the president's
benchmarks, specifically and continually referencing his January 10, 2007,
speech. Congress made clear its desire to hold both Bush and the Iraqi
government to the commitment to meet the benchmarks. But, the words
"hydrocarbon law" were never used. Instead, Congress referenced the
president's benchmarks but described only the revenue-sharing component.

The Supplemental finds that "it is essential that the sovereign government
of Iraq set out measurable and achievable benchmarks and President Bush
said, on January 10, 2007, that 'America will change our approach to help
the Iraqi government as it works to meet these benchmarks.'" And, "The
president's January 10, 2007, address had three components: political,
military, and economic . The United States strategy in Iraq, hereafter,
shall be conditioned on the Iraqi government meeting benchmarks . including:
(iii) Enacting and implementing legislation to ensure the equitable
distribution of hydrocarbon resources of the people of Iraq without regard
to the sect or ethnicity of recipients, and enacting and implementing
legislation to ensure that the energy resources of Iraq benefit Sunni Arabs,
Shia Arabs, Kurds and other Iraqi citizens in an equitable manner."

Congress stipulated that if the benchmarks were not met by September, it
would cut off funds being made available to Iraq under the "Economic Support
Fund." These are funds used for, among other things, U.S. reconstruction
efforts in Iraq.

Congress required the Bush administration to report back on the status of
the benchmarks by July 15. Thus, a flurry of effort erupted between the Bush
administration and the Al-Maliki government in recent weeks to try to
finally pass the law. Negotiations were rekindled and a new draft of the oil
law was agreed to by the Iraqi cabinet on July 3 (only Arabic translations
of the law have been released publicly to date).

Four days later, on July 7, Usama al-Nujeyfi, a member of Iraq's
parliamentary energy committee, quit in protest over the oil law, saying
that it would cede too much control to global companies and "ruin the
country's future." He vowed to work to defeat the draft in parliament. His
response has been typical of the mood of the parliament. Thus, while the law
has been officially presented to the parliament, because of the extreme
level of opposition, the parliament has not yet taken the measure up for
consideration.

The federal revenue law

At the same time as the new oil law was moving to the parliament,
negotiations were also moving forward on the federal revenue law (referred
by the Bush administration as the "revenue management law"). Although, the
revenue law received far more press attention then the oil law. A limited
agreement was reached on the revenue law, but it has yet to approved by the
Iraqi cabinet.

As opposed to the conditions set out by Congress in the Supplemental, the
draft revenue law does differentiate between Iraqis by sect, while it does
not ensure an equitable distribution of revenues to the rest of Iraq's
citizens.

In fact, the current draft of the revenue law (PDF
<http://web.krg.org/pdf/English_Draft_Revenue_Sharing_law.pdf> ) seems more
concerned with overcoming the resistance of the Kurdistan Regional
Government to the oil law and to demonstrating movement towards its passage
than to actually achieving the goal of equitable and fair distribution of
oil revenues.

The draft guarantees that after Iraq's federal government's expenses and
"strategic projects of benefit to all" are paid for, the Kurdistan Regional
Government will receive a set 17 percent of all oil revenues "until a
population census is held by the state." There is no mention of how the rest
of the country will fare other than that a newly established commission will
"confirm the accuracy and fairness of distribution of revenues ." There is
no standard establish for what a "fair" distribution means.

None of these incongruities has dulled the interest of the Bush
administration in the revenue law. To the contrary, in its "Initial
Benchmark Assessment Report" submitted to Congress on July 12, the Bush
administration explains, "The United States has provided technical advice to
the Iraqi government and is actively engaged in encouraging both sides to
expeditiously approve the draft [revenue] law."

The revenue and oil laws are two of a package of four laws generally (and
confusingly) also referred to as "the oil law" because of the centrality of
the law that rewrites Iraq's entire oil system. The revenue law and two
others detailing the roles of the Iraq National Oil Co. and the Ministry of
Oil are three small pieces of this larger transformation.

According to the July 12 "Initial Benchmark Assessment Report," "Prime
Minister Maliki intends to submit the revenue management law to the [Iraqi
cabinet] soon, for subsequent consideration by the [Iraqi parliament] along
with the framework hydrocarbon law."

As I write, the future of the "framework hydrocarbon law" (the oil law) is
very unclear. As U.S. pressure intensifies to pass the law before September
2007, the deadline established by the Supplemental, Iraqi resistance grows.

What must be done

On June 19, five Nobel Peace Prize recipients released a statement
<http://www.nobelwomensinitiative.org/news.php?WEBYEP_DI=113>  publicly
denouncing not only the Iraq oil law, but also the pressure being applied by
the U.S. Congress and the Bush administration on the Iraqi government to
pass it.

The laureates' statement, which has been circulated by Rep. Jim McDermott,
D-Wash., to every member of the U.S. Congress, declares that "the U.S.
government should leave the matter of how Iraq will address the future of
its oil system to the Iraqi people to be dealt with at a time when they are
free from occupation and more able to engage in truly democratic decision
making. It is immoral and illegal to use war and invasion as mechanisms for
robbing a people of their vital natural resources." (You too can sign on to
this statement. See below for details).

The debate in the U.S. Congress has finally shifted from "whether" to "how"
to end the U.S. invasion of Iraq. But the devil may yet be in the details.
We must be vigilant and demand not only that the occupation end, but as the
details of withdrawal are worked out, that the requirement that Iraqis
change their oil system is taken off of the table.

Reflecting the widespread opposition to the oil law among not only Iraq's
people in general, but Iraq's oil workers in particular, Faleh Abood Umara,
general secretary of the Iraqi Federation of Oil Unions, explained, "We
reject this kind of agreement absolutely. The law will rob Iraq of its main
resource -- its oil. It will undermine the sovereignty of Iraq and our
people."

For more information on the Iraq oil law and for activist steps you can
take, visit http://www.PriceOfOil.org and http://www.HandsOffIraqiOil.org.

To sign the Nobel Laureate Statement, please send your name, country of
residence, and organizational affiliation (if any) to Kelek Stevenson with
Oil Change International at kkelekk at gmail.com. You can also sign an online
petition signed by several prominent Iraqi and American activists at
http://www.petitiononline.com/iraqoil/petition.html. 

Antonia Juhasz, Tarbell Fellow, Oil Change International, is author of The
Bush Agenda: Invading the World, One Economy at a Time, now available in
paperback, updated with a new afterword. http://www.TheBushAgenda.net. 

-------------- next part --------------
An HTML attachment was scrubbed...
URL: http://wedgeblade.net/pipermail/dialogue_wedgeblade.net/attachments/20070716/2b7314f5/attachment-0001.html 
-------------- next part --------------
A non-text attachment was scrubbed...
Name: not available
Type: image/gif
Size: 1533 bytes
Desc: not available
Url : http://wedgeblade.net/pipermail/dialogue_wedgeblade.net/attachments/20070716/2b7314f5/attachment-0001.gif 