Thursday, March 01, 2007

Not About the Oil, Pt. MCCXLIII 

It was never about the oil. It was never about the oil. It was never about the oil. It was never about the oil:
On Monday, Prime Minister Nuri al-Maliki's cabinet in Baghdad approved the draft of the new Iraqi oil law. The government regards it as "a major national project". The key point of the law is that Iraq's immense oil wealth (115 billion barrels of proven reserves, third in the world after Saudi Arabia and Iran) will be under the iron rule of a fuzzy "Federal Oil and Gas Council" boasting "a panel of oil experts from inside and outside Iraq". That is, nothing less than predominantly US Big Oil executives.

The law represents no less than institutionalized raping and pillaging of Iraq's oil wealth. It represents the death knell of nationalized (from 1972 to 1975) Iraqi resources, now replaced by production sharing agreements (PSAs) - which translate into savage privatization and monster profit rates of up to 75% for (basically US) Big Oil. Sixty-five of Iraq's roughly 80 oilfields already known will be offered for Big Oil to exploit. As if this were not enough, the law reduces in practice the role of Baghdad to a minimum. Oil wealth, in theory, will be distributed directly to Kurds in the north, Shi'ites in the south and Sunnis in the center. For all practical purposes, Iraq will be partitioned into three statelets. Most of the country's reserves are in the Shi'ite-dominated south, while the Kurdish north holds the best prospects for future drilling . . . .

But there was not much to be debated. The law was in essence drafted, behind locked doors, by a US consulting firm hired by the Bush administration and then carefully retouched by Big Oil, the International Monetary Fund, former US deputy defense secretary Paul Wolfowitz' World Bank, and the United States Agency for International Development. It's virtually a US law (its original language is English, not Arabic) . . . .

Big Oil is obviously ecstatic - not only ExxonMobil, but also ConocoPhillips, Chevron, BP and Shell (which have collected invaluable info on two of Iraq's biggest oilfields), TotalFinaElf, Lukoil from Russia and the Chinese majors. Iraq has as many as 70 undeveloped fields - "small" ones hold a minimum of a billion barrels. As desert western Iraq has not even been exploited, reserves may reach 300 billion barrels - way more than Saudi Arabia. Gargantuan profits under the PSA arrangement are in a class by themselves. Iraqi oil costs only US$1 a barrel to extract. With a barrel worth $60 and up, happy days are here again.

What revenue the regions do get will be distributed to all 18 provinces based on population size - an apparent concession to the Sunnis, whose central areas have relatively few proven reserves.

The Sunni Arab muqawama (resistance) certainly has other ideas - as in future rolling thunder against pipelines, refineries and Western personnel. Iraq's oil independence will not go down quietly - at least among Sunnis. On the same day the oil law was being approved, a powerful bomb at the Ministry of Municipalities killed at least 12 people and injured 42, including Vice President Adel Abdul Mahdi. Mahdi has always been a feverish supporter of the oil law. He's a top official of the Shi'ite party, the Supreme Council for the Islamic Revolution of Iraq (SCIRI).

A whole case can be made of SCIRI delivering Iraq's Holy Grail to Bush/Cheney and Big Oil - in exchange for not being chased out of power by the Pentagon. Abdul Aziz al-Hakim, the SCIRI's leader, is much more of a Bush ally than Maliki, who is from the Da'wa Party. No wonder SCIRI's Badr Organization and their death squads were never the target of Washington's wrath - unlike Muqtada al-Sadr's Mehdi Army (Muqtada is fiercely against the oil law). The SCIRI certainly listened to the White House, which has always made it very clear: any more funds to the Iraqi government are tied up with passing the oil law.

Bush and Cheney got their oily cake - and they will eat it, too (or be drenched in its glory). Mission accomplished: permanent, sprawling military bases on the eastern flank of the Arab nation and control of some of largest, untapped oil wealth on the planet - a key geostrategic goal of the New American Century. Now it's time to move east, bomb Iran, force regime change and - what else? - force PSAs down their Persian throats.
(Link via our steadfast colleagues at Cursor.)

UPDATE (3/3): From our distinguished colleague Nicetis, in comments below:
Much has been made of the administration's change of heart, in agreeing to Talk With the Enemy [i.e., Syria and Iran -- S.]. But who within their company was advocating for such a change? Not Condoleeza; she sneers at the very thought of diplomacy, every chance she gets. Not the Veep and not the Prez.

Maliki, however, has been pressing for this meeting for months. It has been granted, I'll venture, as his reward for wrapping up Iraq's oil reserves in a bow and handing them over to the still secret guest list of Cheney's 2001 energy strategy jamboree.

And if he ever wants a second sit-down, after this one goes nowhere? Likely the price will be just as steep.

Somehow Talibani, a principal detractor of the giveaway, came down with a mysterious medical problem a day or two before the decisive Cabinet meeting. I was going to suggest that it seemed like an eerie coincidence.
You will find further details at the excellent blog Tinsel Wing, including the following graf pulled from last Wednesday's NYT:
Iraqi officials had been pushing for such a meeting [i.e., with Syria and Iran -- S.] for several months, but Bush administration officials refused until the Iraqi government reached agreement on pressing domestic matters, including guidelines for nationwide distribution of oil revenue and foreign investment in the country’s immense oil industry, administration officials said.

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