[Vision2020] Future of Iraq: The spoils of war

[Ted Moffett]

All:

On KGO radio AM 810 last night on the John Rothman show between 1-5 AM,
which can be listened to via the KGO archives:

http://www.kgoam810.com/Article.asp?PT=Archive&id=49920

Rothman was discussing the following story, which he asserted was mostly
ignored in the US media, even in the question and answer sessions under way
in the US Congress regarding the proposed escalation of the Iraq war, when
Condi Rice et. al. appeared:

http://news.independent.co.uk/world/middle_east/article2132569.ece
 Future of Iraq: The sp*oil*s of war

 How the West will make a killing on Iraqi oil riches By Danny Fortson,
Andrew Murray-Watson and Tim Webb Published: 07 January 2007

Iraq's massive oil reserves, the third-largest in the world, are about to be
thrown open for large-scale exploitation by Western oil companies under a
controversial law which is expected to come before the Iraqi parliament
within days.

The US government has been involved in drawing up the law, a draft of which
has been seen by The Independent on Sunday. It would give big oil companies
such as BP, Shell and Exxon 30-year contracts to extract Iraqi crude and
allow the first large-scale operation of foreign oil interests in the
country since the industry was nationalised in 1972.

The huge potential prizes for Western firms will give ammunition to critics
who say the Iraq war was fought for oil. They point to statements such as
one from Vice-President Dick Cheney, who said in 1999, while he was still
chief executive of the oil services company Halliburton, that the world
would need an additional 50 million barrels of oil a day by 2010. "So where
is the oil going to come from?... The Middle East, with two-thirds of the
world's oil and the lowest cost, is still where the prize ultimately lies,"
he said.

Oil industry executives and analysts say the law, which would permit Western
companies to pocket up to three-quarters of profits in the early years, is
the only way to get Iraq's oil industry back on its feet after years of
sanctions, war and loss of expertise. But it will operate through
"production-sharing agreements" (or PSAs) which are highly unusual in the
Middle East, where the oil industry in Saudi Arabia and Iran, the world's
two largest producers, is state controlled.

Opponents say Iraq, where oil accounts for 95 per cent of the economy, is
being forced to surrender an unacceptable degree of sovereignty.

Proposing the parliamentary motion for war in 2003, Tony Blair denied the
"false claim" that "we want to seize" Iraq's oil revenues. He said the money
should be put into a trust fund, run by the UN, for the Iraqis, but the idea
came to nothing. The same year Colin Powell, then Secretary of State, said:
"It cost a great deal of money to prosecute this war. But the oil of the
Iraqi people belongs to the Iraqi people; it is their wealth, it will be
used for their benefit. So we did not do it for oil."

Supporters say the provision allowing oil companies to take up to 75 per
cent of the profits will last until they have recouped initial drilling
costs. After that, they would collect about 20 per cent of all profits,
according to industry sources in Iraq. But that is twice the industry
average for such deals.

Greg Muttitt, a researcher for Platform, a human rights and environmental
group which monitors the oil industry, said Iraq was being asked to pay an
enormous price over the next 30 years for its present instability. "They
would lose out massively," he said, "because they don't have the capacity at
the moment to strike a good deal."

Iraq's Deputy Prime Minister, Barham Salih, who chairs the country's oil
committee, is expected to unveil the legislation as early as today. "It is a
redrawing of the whole Iraqi oil industry [to] a modern standard," said
Khaled Salih, spokesman for the Kurdish Regional Government, a party to the
negotiations. The Iraqi government hopes to have the law on the books by
March.

Several major oil companies are said to have sent teams into the country in
recent months to lobby for deals ahead of the law, though the big names are
considered unlikely to invest until the violence in Iraq abates.

James Paul, executive director at the Global Policy Forum, the international
government watchdog, said: "It is not an exaggeration to say that the
overwhelming majority of the population would be opposed to this. To do it
anyway, with minimal discussion within the [Iraqi] parliament is really just
pouring more oil on the fire."

Vince Cable, the Liberal Democrat Treasury spokesman and a former chief
economist at Shell, said it was crucial that any deal would guarantee funds
for rebuilding Iraq. "It is absolutely vital that the revenue from the oil
industry goes into Iraqi development and is seen to do so," he said.
"Although it does make sense to collaborate with foreign investors, it is
very important the terms are seen to be fair."

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Vision2020 Post: Ted Moffett
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