Sunday, January 07, 2007

How the West will make a killing on Iraqi oil riches

For anyone who argued that the Iraq war was about oil, the most recent law being pushed through the Iraqi parliament will hardly quell their suspicions. Iraq's oil reserves are being thrown open for large scale exploitation by western oil contractors giving companies like 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.

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."

So, having invaded them and created the set of conditions that now exist, we are now quoting the fact that this instability exists as a reason for us to force this deal upon the Iraqis. A deal that allows us easy access to Iraq's oil fields. For the next thirty years.

Surprise, surprise, the US has been helping the Iraqis to draft this controversial legislation, which sounds like it comes out of one of Dick Cheney's wet dreams.

James Paul of Global Policy Forum, another advocacy group, said: "The US and the UK have been pressing hard on this. It's pretty clear that this is one of their main goals in Iraq." The Iraqi authorities, he said, were "a government under occupation, and it is highly influenced by that. The US has a lot of leverage... Iraq is in no condition right now to go ahead and do this."

We were assured that this war was not about oil, however - should this legislation go ahead - it will be impossible to argue that we have not used the war, and the resulting chaos, to negotiate access to Iraq's oil fields at a price and for a time scale that Saddam would never have countenanced.

Nor is this deal going to support the US/UK desire to restore order to Iraq. Indeed, it is likely to do the very opposite.

Iraqi trade union leaders who met recently in Jordan suggested that the legislation would cause uproar once its terms became known among ordinary Iraqis.

"The Iraqi people refuse to allow the future of their oil to be decided behind closed doors," their statement said. "The occupier seeks and wishes to secure... energy resources at a time when the Iraqi people are seeking to determine their own future, while still under conditions of occupation."

The resentment implied in their words is ominous, and not only for oil company executives in London or Houston. The perception that Iraq's wealth is being carved up among foreigners can only add further fuel to the flames of the insurgency, defeating the purpose of sending more American troops to a country already described in a US intelligence report as a cause célèbre for terrorism.

So, we are pushing ahead with a deal that allows us access to Iraq's oil for the next thirty years - even though this deal is likely to fuel the insurgency - and yet we are still being asked to believe that the invasion was nothing to with Iraq's main export.

I am with Chomsky on this one. He said, “We are supposed to believe that the US and Britain would have liberated Iraq even if its main export was pickles.”

Just before this deal goes through, let us remember what the participants said before the invasion:

"Oil revenues, which people falsely claim that we want to seize, should be put in a trust fund for the Iraqi people"

Tony Blair; Moving motion for war with Iraq, 18 March 2003

"Oil belongs to the Iraqi people; the government has... to be good stewards of that valuable asset "

George Bush; Press conference, 14 June 2006

"The oil of the Iraqi people... is their wealth. We did not [invade Iraq] for oil "

Colin Powell; Press briefing, 10 July 2003

"Oil revenues of Iraq could bring between $50bn and $100bn in two or three years... [Iraq] can finance its reconstruction"

Paul Wolfowitz; Deputy Defense Secretary, March 2003

"By 2010 we will need [a further] 50 million barrels a day. The Middle East, with two-thirds of the oil and the lowest cost, is still where the prize lies"

Dick Cheney; US Vice-President, 1999

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