The long discussed plan to hand over most of Iraq’s oil assets to big foreign oil companies is about to happen. When people can’t figure out what Bush means when he claims victory in Iraq, this is what he is talking about.
According to the Independent, the companies are looking at terrific profit potentials. “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 nationalized in 1972.”
The plan envisions production sharing agreements among the oil companies and the Iraqi government. Such agreements are unusual in the Mideast. The production sharing agreements would run for 30 years with companies taking an initial 75 percent of all profits to cover costs and then 20 percent of all profits. According to the Independent that’s twice the industry average.
The Baker-Hamilton Iraq Study Group recommended American involvement in devising a scheme for future oil exploration. That plan differed in certain respects from earlier schemes in that Baker-Hamilton wants the oil business to be dealt with as a centralized entity, not divided up into three sections to be handed out to the three prominent players in the country — Kurds, Sunni and Shia. If that happened, the country would doubtless break up since oil is the only real economic base. Divided three ways, the Kurds and Shia would stand to get the larger share.
The large Iraqi unions of oil workers are protesting the deal: “This law has a lot of problems. It was prepared without consulting Iraqi experts, Iraqi civil society or trade unions. We reject this draft and demand more time to debate the law,” according to Hasan Jum’a, President of the Federation of Oil Unions.
Adnan Saffar, member of the Executive Committee of the General Federation of Iraqi Workers, said “The Iraqi national interest is surrendered in this law which allows foreign companies investment terms that exploit Iraq’s oil wealth. They benefit the foreign investors more than they benefit Iraqi workers, through long term oil contracts that negatively impact Iraq’s sovereignty and national independence.”
When the war started, virtually all American officials and politicians denied oil was a primary interest. As the Independent points out, in arguing for the war in 2003, Tony Blair denied the “false claim” that “we want to seize” Iraq’s oil revenues. About the same time, 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.”
Of course, the modern oil industry was launched by the British Navy with a takeover of Mesopotamia’s oil resources at the turn of the last century. The British then were eager to establish secure resources to the new fuel for its battle ships in the upcoming world war.