Endgame for Iraqi Oil?

Published on October 27, 2007

The oil legislation now pending in the Iraqi parliament awards foreign oil companies coveted, long-term, 20-35 year contracts of just the sort that neighboring oil-producers have rejected for decades. It also places the Iraqi oil industry under the control of an appointed body that would include representatives of international oil companies as full voting members.

BY JACK MILES
TomDispatch.com/ Truthout
ALTERNATIVE READER
Posted by Bulatlat
Vol. VII, No. 38, October 29-November 3, 2007

The Sovereignty Showdown in Iraq

The oil game in Iraq may be almost up. On September 29th, like a landlord serving notice, the government of Iraq announced that the next annual renewal of the United Nations Security Council mandate for a multinational force in Iraq – the only legal basis for a continuation of the American occupation – will be the last. That was, it seems, the first shoe to fall. The second may be an announcement terminating the little-noticed, but crucial companion Security Council mandate governing the disposition of Iraq’s oil revenues.
By December 31, 2008, according to Foreign Minister Hoshyar Zebari, the government of Iraq intends to have replaced the existing mandate for a multinational security force with a conventional bilateral security agreement with the United States, an agreement of the sort that Washington has with Kuwait, Saudi Arabia, and several other countries in the Middle East. The Security Council has always paired the annual renewal of its mandate for the multinational force with the renewal of a second mandate for the management of Iraqi oil revenues.

This happens through the “Development Fund for Iraq,” a kind of escrow account set up by the occupying powers after the overthrow of the Saddam Hussein regime and recognized in 2003 by U.N. Security Council Resolution 1483. The oil game will be up if and when Iraq announces that this mandate, too, will be terminated at a date certain in favor of resource-development agreements that – like the envisioned security agreement – match those of other states in the region.

The game will be up because, as Antonia Juhasz pointed out last March in a New York Times op-ed, “Whose Oil Is It, Anyway?”:
“Iraq’s neighbors Iran, Kuwait and Saudi Arabia have outlawed foreign control over oil development. They all hire international oil companies as contractors to provide specific services as needed, for a limited duration, and without giving the foreign company any direct interest in the oil produced.”

By contrast, the oil legislation now pending in the Iraqi parliament awards foreign oil companies coveted, long-term, 20-35 year contracts of just the sort that neighboring oil-producers have rejected for decades. It also places the Iraqi oil industry under the control of an appointed body that would include representatives of international oil companies as full voting members.

The news that the duly elected government of Iraq is exercising its limited sovereignty to set a date for termination of the American occupation radically undercuts all discussion in Congress or by American presidential candidates of how soon the U.S. occupation of Iraq may “safely” end. Yet if, by the same route, Iraq were to resume full and independent control over the world’s third-largest proven oil reserves – 200 to 300 million barrels of light crude worth as much as $30 trillion at today’s prices – a politically incorrect question might break rudely out of the Internet universe and into the mainstream media world, into, that is, the open: Has the Iraq war been an oil war from the outset?

Former Federal Reserve Chairman Alan Greenspan evidently thought so or so he indicated in a single sentence in his recent memoir: “I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil.” When asked, Gen. John Abizaid, former CENTCOM commander who oversaw three and a half years of the American occupation of Iraq, agreed. “Of course it’s about oil, we can’t really deny that,” he said during a roundtable discussion at Stanford University. These confessions validated the suspicions of foreign observers too numerous to count. Veteran security analyst Thomas Powers observed in the New York Review of Books recently:

What it was only feared the Russians might do [by invading Afghanistan in the 1980s] the Americans have actually done – they have planted themselves squarely astride the world’s largest pool of oil, in a position potentially to control its movement and to coerce all the governments who depend on that oil. Americans naturally do not suspect their own motives but others do. The reaction of the Russians, the Germans, and the French in the months leading up to the war suggests that none of them wished to give Americans the power which [former National Security Adviser Zbigniew] Brzezinski had feared was the goal of the Soviets.

Apologists for the war point out lamely that the United States imports only a small fraction of its oil from Iraq, but what matters, rather obviously, is not Iraq’s current exports but its reserves.

Before the invasion of Iraq in March 2003, media mogul Rupert Murdoch said, “The greatest thing to come out of this for the world economy, if you could put it that way, would be $20 a barrel for oil.” In the twenty-first century’s version of the “Great Game” of nineteenth century imperialism, the Bush administration made a colossal gamble that Iraq could become a kind of West Germany or South Korea on the Persian Gulf – a federal republic with a robust, oil-exporting economy, a rising standard of living, and a set of U.S. bases that would guarantee lasting American domination of the most resource-strategic region on the planet. The political half of that gamble has already been lost, but the Bush administration has proven adamantly unwilling to accept the loss of the economic half, the oil half, without a desperate fight. Perhaps the five super-bases that the U.S. has been constructing in Iraq for as many as 20,000 troops each, plus the ill-built super-embassy (the largest on the planet) it has been constructing inside the Green Zone, will suffice to maintain American control over the oil reserves, even in defiance of international law and the officially stated wishes of the Iraqi people – but perhaps not.

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