On May 28th, Amman Jordan is set to play host to a 3 day economic trade show, a corporate meet and greet between powerful, well moneyed investors and those who the guard the gates of vital decision making government ministries in the perilous but oil rich place called Iraq.
On its website, ‘The Iraq Development Program’, loosely defined organizers, call the
Efforts to contact IDP directly and understand the origin of their funding and purpose were not successful, but the group’s stated mission is to “aid
The Iraq Development Program’s web page says ‘following declaration of new foreign investment laws for the extractive industries, noting that the government is now finalizing its new hydrocarbon laws’ to which promoters of the event say “the timing of this summit could not be better.
The Iraqi cabinet approved the hydrocarbon law on February 26th and sent it on to Parliament where it now sits. If fully approved,
Critics charge the law offers excessive and unfair profits to the oil companies
.Others worry that since
Supporters of the oil law disagree. They say the regulatory, legal and tax structure the oil law sets up, will invite the necessary outside investment the country needs to jump start its economy. They see the law as an enabler of market based economic infrastructure that will produce streams of revenue, helping restore stability and prosperity for the Iraqi people.
In the background, outspoken opponents of the war, say the push for such a law is evidence that that the war had more to do with gaining access to oil than what the public was told.
“This story raises so many more questions than it answer” said Dr. Louay Bahry, Adjunct scholar of Public Policy at the non partisan Middle East Institute in
“As I read it, these foreign companies are fighting to get to Iraqi oil” said Dr. Bahry noting such practices would be new.
On Background, oil company representatives were clear about hopes to enter
PSA’s are a primary incentive of the oil laws.. According to the International Energy Agency, 12 percent of the world’s oil reserves are subject to Profit Sharing Agreements.
“This would completely break from normal practice in the region where all the major oil producing industries are in the public sector” said Greg Mutitt, co director of the British research and watchdog organization, Platform London. Mutitt said
According to Muttit, oil companies have been lobbying hard to get what they want in
Mutitt, who authored a chapter in a new book called “A Game as Old as the Empire” says that ExxonMobil, Chevron, Total and ENI funded ITIC’s efforts at influencing the oil legislation in
Founded in 1993, after the fall of the former
“Our purpose is to improve tax and investment regimes” said Daniel Witt, President of the ITIC in
Witt says the challenge in
“Make no mistake, donor money is important in transition periods” said Witt.
But, he says both the oil companies and the people of
In 2004 ITIC published its Petroleum and Iraq’s Future: Fiscal Options and Challenges report that said every $1 increase in oil sales may translate into an extra $2 for the country’s Gross Domestic Product. The report said the Iraqi government should write legislation that will create a framework where resources, rent and risk are shared between the investor, consistent with underlying economic potential and drawing on current industry norms and best practice.
The study says that profits based systems tend to align parties toward common objectives.
Beyond rebuilding the country, oil company representatives say Iraqi oil plays another necessary role, meeting the world’s energy demands.
“Given the scale of
But a number of critics worry the Iraqi people will be short changed. Some Iraqis see the oil companies as trying to gain partial ownership of the country’s primary source of revenue.
“These laws give these foreign oil companies the right to actually have shared ownership of the oil” said Raed
Jarrar says that since the laws do not set any limits of the percentage shared, over the next 30 years or so, the PSAs could cost
Privatization proponents disagree, arguing that Iraqis will maintain ultimate control over their reserves of oil while benefiting from world market trends.
According to Daniel Witt at International Tax and Investment Center, “as oil prices go up or down, you have these dynamics in the contracts but Iraq is not surrendering sovereign rights” over the oil he said.
According to a CIA memo that same year,
The Iraq Petroleum Company, or IPC, included French, Dutch, British and
Nationalization meant that one hundred percent of oil revenues went directly to the central government, a move that many in the
Nationalization set’s up a system whereby foreign oil companies buy oil from the state, under the state’s terms.
The move set the stage whereby Western oil companies, and the powerful economies they supply, found themselves in even more vulnerable positions, subject to the whims of oil rich countries.
The Central Intelligence Agency 1972 memo expressed its displeasure calling the move “sudden and dramatic.”
Some say that multi national oil interests have been anxious to get back to
Public debate over the law, both in
According to Greg Muttit at Platform London the majority of
“Most Iraqi’s would be extremely angry about this if anyone had bothered to tell them this was being done” he said.
He says that those who are, MPs, trade unions and oil experts, are actively organizing against it.
“The oil companies and governments are planning to take advantage of the occupation and the general weak position of Iraqi state institutions to push through deals on highly profitable terms, at the expense of the Iraqi people” said Muttit.
A few Iraqi political leaders have raised opposition.
A March 13th, “Voices of Iraq” report said Iraqi National Slate Party member Hussein al-Fallui was arguing that it was not the right time to be dealing with the issue.
“Socio-political and security circumstances do not allow such a step now, as the draft would allow investment companies to re-wield power over Iraqi oil” Falluji told Parliament according to the “VOI” report.
ITIC’S Daniel Witt disagrees, saying the time is right to invite new investment that will re start the stalled economy.
“Given the lack of infrastructure needed to jump start the economy, and get investment in now, verses waiting 10 or 15 years so they (the Iraqis) can debate these laws til kingdom come” he said.
But some have questioned whether the law takes into account
Dr. Louay Bahry says there is a great deal of opposition from both the sunnis and shite regarding the law. He says the Kurds, who apparently offer the most support, would prefer total freedom, and see revenue from their region go directly to them.
“When it comes to revenue sharing, the law is not clear how exactly that is going to happen” said Dr. Louday Bahryl.
He says that 80 percent of the country’s oil specialists have fled the country.
“We have so many oil specialists from
Raed Jarrar goes further, saying the law will exacerbate those divisions. He calls the law a marriage of convenience between the Bush Administration and Iraqi separatists who are monopolizing power within the Iraqi government.
“The oil law threatens the concept of a unified
The recent surge by American troops has raised eyebrows as some ask whether the increase is an attempt to buy time so outside oil interests can have a chance to gain a greater foothold over the direction of the fragile economy.
An April 5th analysis report in “Iraq Updates” by UPI’s Pamela Hess, said US officials are planning “a range of options to maintain the troop increase, from late summer through early spring 2008” whereby the hope is to quell the violence long enough in Iraq for the nascent government to address some of the ‘underlying causes of the conflict, including the oil wealth sharing law.
“The only way to fuel economic growth is through an engine of private sector investment” and “the sad part is, advocating state run equals slower economic growth which also equals slower improvement in quality of life” said Daniel Witt.
Recommendations 62 and 63 of Baker/Hamilton Iraqi Study Group recommends that the United States assist the Iraqi in drafting an oil law that helps privatize the industry and encourages investment.
One of the Study Group’s members, Former Clinton White House Chief of Staff Leon Panetta plugged the law in an April 4th “New York Times” op-ed.
In the article, Panetta listed the eventual approval of
In his April 3rd Rose Garden Press conference, President Bush told reporters he had spoken to Iraq’s Prime Minister about the ‘oil law’ earlier.
In a March 27th speech to the Washington Institute’s Public Policy forum, David Satterfield, a Senior Advisor to Secretary of State Condoleeza Rice, called the national hydrocarbon law part of the Bush Administration’s “New Way Forward” in
The Bush Administration appears to have been interested in an oil law friendly to foreign investment since the invasion began in 2003. But, some have pointed to clues that a push to gain easy access to
In 1999, Vice President Dick Cheney, while still CEO of Halliburton, said in a speech to the
In 2003, four months after the March invasion had begun, The US Agency for International Development (USAID) awarded Mc Lean Virginia consulting firm Bearing Point, a nine million dollar contract to support activities and policies undertaken by the Coalition Provisional Authority, designed to create a competitive private sector.
Bearing Point spokesperson Steve Lunceford said the firm was doing what it has done in the past in places like Kosovoand
“This included providing a single expert that consulted to the government on its oil industry” said Lunceford this past week.
“Note, this does not equal ‘drafting’ the proposed hydrocarbon law” he wrote in an email message.
Some Invasion opponents see Bearing Point’s role in helping draft the law, as part of a bridge of suggestive evidence that crosses over to the controversial period before the war, when talk of how to gain control over Iraq’s oil was quietly bubbling in pockets around the world, primarily the United States and Britan
In his 2002 “American Prospect” profile of Ahmed Chalabi,
Dreyfus’ story quotes former US Ambassador to Saudi Arabia James E. Akins as saying conservative think tanks and multinationals have denationalization in mind, and the parceling of “Iraqi oil out to American oil companies.”
Chalabi, a member of the Iraqi National Congress, had allegedly met with US oil company officials and guaranteed lucrative contracts if the
According to the “American Prospect” 2002 story, when asked about such meetings one
Later, in a July 2003 interview with PBS television program FRONTLINE, Chalabi admitted being “close” to Bush Administration members Paul Wolfowitz and Douglas Feith confirming he’d had easy access to Vice President Cheney’s office.
When confronted by FRONTLINE with a direct quote from the “London Observer” where he assured US oil companies lucrative contracts for removing Saddam, Chalabi said “no, that’s not true” arguing he’d said Iraq’s oil needed investment to increase production.
Leading back to present day, where a number of observers and invasion opponents allege that the hydrocarbon law, and the contracts it encourages, lend evidence to the “blood for oil” charge as Green Party Chairman Jim Coplen did in a March 5th press release.
The hydrocarbon law’s supporters caution against making such allegations.
Of those who attempt to draw correlations between the new hydrocarbon law and the motive for the invasion, Daniel Witt at ITIC says “they are trying to connect dots that aren’t there” arguing such controversial theory provides a platform to advance their long stated objectives.
“They have a fundamentally different view of the world than me” but “history has proven that people are better off with economic growth.”