What is holding up the Iraqi oil law?

This is a guest blog from Munir Chalabi, an Iraqi political analyst living in the U.K.

As deadline after deadline and benchmark after benchmark passes and with all the pressure imposed by the IMF, the US Administration, the US oil lobby and International Oil Companies (IOCs) on the Iraqi government, the oil law, against all the odds, refuses to be born.

Despite all the attempts by the Occupation’s Governing Council (GC) and its appointed puppet, Allawi’s Government, as well as the efforts by both of the elected governments, several US/IMF deadlines have passed including one in December 2006, then in March, May and the latest one in July 2007, but the draft of the law has not even been presented officially to the Federal Parliament in Baghdad.

In parallel with all these deadlines and benchmarks, we have seen several versions of the drafts for the new Iraqi oil law leaked one way or another to the international press. This includes one in June 2006, another on January 15, then February 15, June 25, and finally July 3, 2007.

Many international political analysts and oil experts cannot comprehend how such unprecedented pressure can fail to produce results.

The answer to this is to be found within the methodology used in investigating the reasons behind the failure of the US Administration in achieving their objectives.

Analysts must not only look for external influences on any US plan in Iraq but they should also study and analyze the internal Iraqi causes affecting the success or the failure of the plan.

A. External factors and influences:

1. External influences were for the most part, behind the approval of a draft of the oil law, which will be the first and major step in the privatization of Iraqi oil wealth and will ensure that the oil will be produced and marketed by the IOCs with enormous profit to them.

2. Neither the US Republican administration nor the Democrats had any disagreement with this policy and made the approval of the oil law a benchmark for future US strategy in Iraq within the Iraqi Study Group report.[1]

3. The IMF made the approval of the oil law one of the main conditions for reducing the Iraqi international debts, as declared in December 1, 2005 in the Paris meetings between the IMF and representatives of the Iraqi Government.

4. The IOCs were united in their approval of the oil law and there were no indications from any of them to the contrary.

5. In addition, we have to remember that Iraq is still under US occupation. Over 180,000 US/multinational troops and over 50,000 active mercenaries are putting all types of pressure on the Iraqi government and parliament to ensure the success of the US oil plans.

6. Several international organizations which oppose the oil Law, including a number of environmental groups, anti-occupational movements and several international trade unions[2] provide vital support to the Iraqi anti-oil law movements and had very positive media campaigns. However, their effectiveness was understandably limited, as they could not influence the international decision-making powers.

B. Domestic influences and factors:

There are several Iraqi factors behind all the delays in the delivery of the oil law and these include:

1. The Disagreement between the Central Government and the Kurdistan Regional Government on several issues of the law including who should control the strategic oil policies and which giant oil fields should be given to the IOCs. The Kurdish Government insisted that several of the major oil fields which are allocated to the Iraqi National Oil Company under annex 2 of the draft, be moved to annex 3 in order to be given to the IOCs.

2. Increased Iraqi public awareness and pressure — the public awareness has increased noticeably in the past year against the oil law. We have seen this public pressure mounting because of:

• An increased awareness by the public of the Iraqi civil society
organizations, trade unions, in particular the IFOU (“Iraqi Federation of Oil Unions”[3]), oil experts[4], economists and the Iraqi media concerning the threat of the oil law on the future of the sovereignty of the nation, which has consequently increased the opposition to the law.

• More and more MPs are calling for the law to be carefully studied before its approval. The Iraqi parliament has gone into summer recess without discussing the oil law, but up until now the only members who are openly standing against the oil law are the MPs from Sadr’s Movement and some individual members from the “Iraqi Accord,” the Dawa Party and some independent MPs.

• The “State Shuraa Council,” which is the highest legal office in the Iraqi Ministry of Justice, submitted on July 25, 2007, 13 legal comments on the “Draft Oil & Gas Law” to the Iraqi government. The main points included the need to first re-establish the Iraqi National Oil Company which was dissolved by the Baath regime in 1987 (in their first step to privatize the nation’s oil wealth) before the Oil & Gas Law is be put to parliament. Also the Council emphasized the importance of the leading role of the central government in planning the strategic policies concerning the future of the nation’s oil and gas wealth in accordance with the needs of article 111 of the Iraqi Constitution. The third vital comment by the Council was their recommendation that all agreements with any international oil companies should be approved by the Iraqi Parliament.

The Council’s comments made it more difficult for the Iraqi Government to push the Draft Oil Law through the Iraqi Parliament.

• The latest Oil poll, which was carried out in June and July 2007 by KA Research, has shown that the Iraqis oppose plans to open the country’s oil fields to foreign investment by a factor of two to one (63% oppose to 31% for).

3. The security crises: More and more Iraqis are questioning the wisdom of trying to rush the Oil & Gas law through parliament while the country is in such a devastating state.

• Thousands of innocent civilians are slaughtered every month due to suicide bombings by the Al-Qaeda/Baathist terrorists, the occupying forces’ military attacks, the secret CIA controlled death squads and the sectarian clashes.

• Most Iraqi cities and towns have either no or severe shortages of electricity, clean water and other basic life necessities

•People are afraid to stay in their homeland and around four million are displaced, many driven from their homes by force.

Conclusions:

1- The legislation of the new Iraqi Oil & Gas Law by the Iraqi parliament has become the most important benchmark of the US Administration, its oil lobbies, the IOCs, the IMF, and the occupying forces. The Bush administration wants this law to be passed as soon as possible, whatever the cost to the Iraqi people.

2- The failure of the US policies in the occupation of Iraq, the success of the Democratic Party in the 2006 elections in controlling both legislative houses in the US, and the presidential elections next year, have made the Bush Administration and its allies more desperate in their attempts to reach a successful conclusion on the oil law in order to prepare the ground for a partial US withdrawal from Iraq, within the lifetime of this administration.

3- This has led to enormous pressure being imposed by the US administration and its forces on the ground in Iraq on Al-Maliki’s government in the past eight months. They insisted that the government should go ahead and get this oil law approved by parliament, together with the re-Baathification law, and other privatization laws such as the privatization of the Iraqi oil processing industries which they succeeded in passing through parliament three days before the start of summer session.

4- The Bush Administration and their Ambassador in Baghdad had openly threatened to replace Al-Maliki’s government with a new government, headed by their man in Iraq — the old Baathist, Iyad Allawi.

Al-Maliki has openly accused Allawi in several speeches of attempting to overthrow his government with the help of some units of the Iraqi army and security generals including the head of the Iraqi security forces, the old Baathist general Mohammed Al-Shahwani. These generals were appointed to their positions during Allawi’s appointed government by the last US official administrator Paul Bremer back in May 2004, and are still taking their orders directly from the US embassy in Baghdad.

5- The US administration recognized that a US-led military coup d’etat would not result in any laws being recognized as legitimate by the international community if parliament were to be dissolved. They therefore moved to a new policy, which involved direct interference with the political process in Iraq through their more reliable allies to reorganize the political alliance on which the government relied in order to achieve their goals. They finally succeeded in achieving the establishment of such a front, which was called the “The front of the moderates” on August 15, between the two main Kurdish parties (KDP and PUK), two of the Shiite parties (the SCIRI and Al-Dawa party — the Al-Maliki wing is called the “External organization”), with negotiations still ongoing to persuade the Islamic Party/Accord front — the main Sunni party — to join this new alliance.

The US administration made it clear that the new Iraqi government has important targets to accomplish, and they listed the oil law as the first priority and the re-Baathification law as a second main concern.

6- The claim of the US Administration that the oil and gas law will allow all Iraqis to share the oil revenue is no more than another peace of misinformation, as the “Revenue Sharing Law” is a separate federal revenue law which is still being negotiated between the different Iraqi parties representing all sectors of Iraqi society.

7- The US Administration is aware that time is not on their side, especially when it concerns the oil law. They now recognize that as more people come to understand the law, this will increase the chance of its defeat. This was the main reason behind all the attempted secrecy that surrounded any information about the oil law.

The latest oil poll which was carried out in June and July 2007 by KA Research has shown that the vast majority of Iraqis (91%) did not feel informed enough about the oil law. This included the 33% who said they knew a little information on the law, 30% who said that they were not very informed and 28% that stated that they knew nothing about it.

8- If the formation of the new political right wing alliance succeeds, then this will create for the first time, perilous circumstances which will allow the oil and gas law together with other US benchmarks to be passed through the Iraqi parliament within the next few months.

This danger is very real and should be seriously considered by all the parties who are opposing the law in their future planning.

9- There have been several attempts by some Iraqi groups opposing the law to raise several important issues, in order to prevent the law being approved by parliament within the near future. Issues such as this law should be treated as sovereignty issues due to their affect on the future of the nation and therefore should only be passed by a referendum.

10- It is time for the US administration to recognize that their attempts to get the Iraqi parliament to approve this oil law by using all manner of pressure and threats, will not guarantee their chances of succeeding in implementing a law which does not reflect the interests of Iraqis in any shape or form, in the near and long term future, as was the case with many of their original plans.

11- It is international law which states that the occupying forces have no right to impose laws which reflect their interests only, and do not reflect the interests of the occupied people and that such laws are null and void if any future elected Iraqi parliament declares them to be so.[5]

Notes:

1. Munir Chalabi, “The Future of Iraqi oil as proposed by the Iraqi Study Group,” ZNet, Jan. 8, 2007.

2. UK Organizations: PLATFORM; War on Want; US Organizations: Global Policy Forum; Institute for Policy Studies; Oil Change International; US Labor against the War.

3. IFOU, the “Iraqi Federation of Oil Unions,” was the first to recognize the threats within the law and started their campaign against the law in May 2005 when they organized the first conference in Basra to discuss the future of the Iraqi oil industry and are in opposition to the PSA type of agreements.

4. Some Iraqi oil experts are having an increase role in raising the awareness of the Iraqi public and the members of the Iraqi Parliament.

The letter to parliament from 106 Iraqi oil experts, technocrats is an example of such activities. The Iraqi oil experts Fouad Alamir and Issam Chalabi are leading the campaign.

5. See more details in the analyses of February 2007 draft of the Oil Law in my article “Is Iraq in need of such an oil law,” ZNET, March 11, 2007.