Commentary:The Oil Law: Iraq Versus McWorld

In light of mounting Republican defections from Bush’s war policy, barring something unforeseen, troop withdrawals beginning next spring are almost a certainty. When considering how to end the occupation there will be no question more important than what to do with the oil. As it stands today, with de-escalation in 2008 a real possibility, there is a good chance that we will have little to show for our efforts in Iraq when we pull-out. The removal of Saddam is the showpiece achievement but polls indicate that a majority of Americans no longer believe that dividend was worth the tremendous price we've paid for it. With the alternative being an empty-handed exit, it’s hard to believe we will just hand over the oil to the Iraqis. Yet, the Iraqis, however they reconstitute politically after the civil war, will need control of the oil wealth to rebuild a devastated country.

Most US media outlets have reported that the difficulties facing the proposed oil law stem from intractable sectarian bickering over how the oil will be divided up among the Shi'a, Sunnis and Kurds. Certainly that's part of it, but another, possibly greater, obstacle to the law is actually just the opposite-- a growing Iraqi nationalism led by the oil unions, fearing foreign designs on national treasure, is fueling the staunch opposition to the bill.

Many Iraqis are finding common ground in opposition to this law. They are accusing the occupation of engaging in economic skullduggery, centered on seizing control of the country's oil. They look at this so-called benchmark, supposedly designed to divide Iraq’s oil wealth between its sectarian groups, and see instead the way it welcomes foreign oil companies to develop the oil fields. The oil law was crafted in secret, with tutelage from Washington, giving nationalists an easy target to accuse the government of being a proxy, making sinister deals, on behalf of the foreign thieves. They are not blind to the control it will cede to foreign oil companies— through "production-sharing" contracts favoring multinational corporations-- control over everything from deciding on production levels to the hiring of Iraqis to work in their own industry, or not. That gives Iraqis a huge motivation to fight hard to protect public ownership and control of the oil industry. Hence, in Iraq, the proposed oil law is reportedly the least popular measure the United States is currently pushing.

The Iraq oil industry was nationalized in the 1960s. For years the Iraqi Federation of Oil Unions (IFOU) has been the public oil industry's most reliable protector. These days the oil union may be the only representation of Iraqi nationalism still surviving in the midst of the sectarian meltdown. They even went toe-to-toe with Halliburton and won-- in the wake of 2003 invasion the Cheney subsidiary tried to seize control of several oil fields by withholding reconstruction aid, hoping to force workers to cave. The oil union struck for three days that August 2003, stopping exports and cutting off needed revenue. Halliburton backed off.

Last month, the IFOU called a strike that shut down the pipelines throughout the country. It was designed to pressure the government to keep oil in public hands. Faced with threats of escalation and the shutdown of the rigs themselves -- or even the cutoff of oil exports-- Maliki relented. He agreed to the union's primary demand: to postpone implementation of the oil law until October. In addition the union will be allowed to pose objections and propose alternatives to the plan. This has not gone over well in Washington, where many accuse Maliki of being weak and ineffective.

Maliki is dealing with a dynamic that many U.S. lawmakers seem unwilling to recognize: The oil industry is a symbol of Iraqi sovereignty and nationalism. Handing control to foreign oil companies is an unacceptable outcome for most of the population. As usual US officials don’t get it, or don’t care—they are forcing the government in Baghdad to betray one of the few reasons Iraqis have for supporting it -- its ability to keep the oil revenue in Iraqi hands. The unions have vowed to strike again if the law is implemented. This throws the prospects of a successful oil law into doubt, and the law is one of the main conditions that many in Congress place on ending our military occupation of Iraq. An unenforceable law is no law at all, so what happens then? 

Be seeing you...

Cite: 

David Bacon. Iraq Oil: Benchmark or Giveaway? | American Prospect.  July 6, 2007

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