As Members of Congress struggle to even begin to debate the war in Iraq, U.S. oil corporations move steadily closer to victory. The Iraqi government is considering a new national oil law which, if passed, would grant U.S. oil companies that which they have always wanted but have thus far been denied: access to and control of Iraq’s oil under the ground.
For four years, the Bush administration and its allies in the oil industry have pressured the Iraqi government to pass this new oil law that would turn Iraq’s nationalized oil system over to private foreign corporate control.
Recent drafts of the law would give private companies (including foreign ones) control of Iraq's oil production and 70 percent of the profits, specified that up to two thirds of Iraq's known oil reserves would be developed by private companies, and locked the government into 30-year contracts.
The law originated in the U.S. State Department’s Oil and Energy Working Group which recommended in April 2003 that Iraq "should be opened to international oil companies as quickly as possible after the war” using production-sharing agreements. These agreements are preferred by the oil industry but rejected by all the top oil producers in the Middle East because they grant greater control and more profits to the companies than the governments.
Plans for this new law were first made public at a news conference in late 2004 in Washington, DC. Flanked by U.S. State Department officials, U.S.-appointed Iraqi Finance Minister Adel Abdul Mahdi (who is now vice president) explained how this law would open Iraq's oil industry to foreign companies. This, in turn, would be "very promising to the American investors and to American enterprise, certainly to oil companies." The law would implement production-sharing agreements. ?
Last July, U.S. Energy Secretary Samuel Bodman announced at a press conference in Baghdad that oil executives told him that their companies would not enter Iraq without passage of the new oil law. Petroleum Economist magazine later reported that U.S. oil companies considered passage of the new oil law more important than increased security when deciding whether to go into business in Iraq.
On December 6, the highly anticipated report of the bipartisan Iraq Study Group was released. Page 1, chapter 1 of the report laid out Iraq’s importance to its region, the U.S., and the world with this reminder: “It has the world’s second-largest known oil reserves.” The report specifically (and publicly) called on the Bush administration to “assist Iraqi leaders to reorganize the national oil industry as a commercial enterprise” and to open it to “international energy companies.”
While the rest of the Iraq Study Group Report was ignored, the oil recommendations were in lock step with the Bush administration’s Iraq. The president followed the release of the report with his first public demand of the Iraqi government to pass the oil law. Shortly thereafter, U.S. Ambassador to Iraq Zalmay Khalilzad and General George W. Casey Jr., the senior American commander in Iraq, made the same public demand.
On January 10, the same day that the President announced that he was sending an additional 21,500 U.S. troops to Iraq, the White House identified the key benchmarks required of the Iraqi government, including enactment of a “hydrocarbons law to promote investment, national unity, and reconciliation.” Exactly seven days later, the oil law passed its first official government hurdle in Iraq: passage out of the drafting committee. It now moves on to the Iraqi cabinet before moving to the Parliament.
U.S. oil corporations and the Bush administration are simply trying to get the best deal possible of a war-ravaged and desperate people.
Our Members of Congress must pull the curtain back to expose the three letter word which now holds our soldiers and the Iraqi people hostage: oil. The must pull themselves together and do what the American public elected them to do—end the war in Iraq.
Only the end of the military and corporate occupations will allow the Iraqi public to make a truly democratic decision about how to manage their most vital natural resource freed from the pressure of an occupying army and a powerful corporate lobby.
Antonia Juhasz is a visiting scholar at the Institute for Policy Studies and author of The Bush Agenda: Invading the World, One Economy at a Time (HaperCollins publishers, April 2006). http://www.TheBushAgenda.net.