New Iraq Oil Law to Open Iraq's Oil Reserves to Western Companies
The Iraqi blogger Raed Jarrar has obtained a copy of the proposed oil law and has just translated it into English. He discusses the new law with Antonia Juhasz, author of “The Bush Agenda: Invading the World One Economy at a Time.” [includes rush transcript]
AMY GOODMAN: In one of the first studies of Iraqi public opinion after the U.S.-led invasion of March 2003, the polling firm Gallup asked Iraqis their thoughts on the Bush administration’s motives for going to war. One percent of Iraqis said they believed the motive was to establish democracy. Slightly more, 5 percent, said to assist the Iraqi people. But far in the lead was the answer that got 43 percent: quote, “to rob Iraq’s oil.”
Well, with the four-year mark of the Iraq War less than a month away, the answer may come into clearer view. After a long negotiation process involving U.S. officials, the Iraqi government is considering a new oil law that would establish a framework for managing the third largest oil reserves in the world. What would this new law mean for Iraq?
Well, with me now in Washington is Raed Jarrar. He is the Iraq Project director for Global Exchange, and he has obtained a copy of the proposed oil law, which he translated from Arabic and posted on his website, raedinthemiddle.blogspot.com. Antonia Juhasz is also with us on the telephone. She has written extensively about the economic side of the U.S. occupation of Iraq and is author of the book, The Bush Agenda: Invading the World One Economy at a Time. Antonia is currently a Tarbell fellow at Oil Change International. We welcome you both to Democracy Now!.
Raed Jarrar, first, how did you get this document?
RAED JARRAR: The document was leaked by Professor Fouad Al-Ameer and published on a website called al-ghad.org. And then it was leaked to other important websites like niqash.org and other places. There are different ways of — different copies of it. Some of it are scanned, and others of the original document, but it just hit the Internet last week.
AMY GOODMAN: And explain what it says, now that you’ve finished translating it.
RAED JARRAR: It said so many things. I don’t think we can summarize it this short, because it’s a very long document, around 30 pages. But majorly, there are three major points that I think we should talk about. Financially, it legalizes very unfair types of contracts that will put Iraq in very long-term contracts that can go up to 35 years and cause the loss of hundreds of billions of dollars from Iraqis for no cause.
And the second point is concerning Iraq’s sovereignty. Iraq will not be capable of controlling the levels — the limits of production, which means that Iraq cannot be a part of OPEC anymore. And Iraq will have this very complicated institution called the Federal Oil and Gas Council, that will have representatives from the foreign oil companies on the board of it, so representatives from, let’s say, ExxonMobil and Shell and British Petroleum will be on the federal board of Iraq approving their own contracts.
And the third point is the point about keeping Iraq’s unity. The law is seen by many Iraqi analysts as a separation for Iraq fund. The law will authorize all of the regional and small provinces’ authorities. It will give them the final say to deal with the oil, instead of giving this final say to central federal government, so it will open the doors for splitting Iraq into three regions or even maybe three states in the very near future.
AMY GOODMAN: Antonia Juhasz, what is the significance of this for Western oil companies?
ANTONIA JUHASZ: Well, in my mind, the law certainly opens the door to U.S. oil companies and the Bush administration winning a very large piece of their objective of going to war in Iraq, at least winning it on paper. The law does almost word for word what was laid out in the Baker-Hamilton recommendation, which I discussed previously on your show, which is, at the very basic level, to turn Iraq’s nationalized oil system, the model that 90 percent of the world’s oil is governed by, take its nationalized oil system and turn it into a commercial system fully open to foreign corporate investment on terms as of yet to be decided. So it leaves vague this very important question of what type of contracts will the Iraqi government use. But what it leaves clear is that basically every level of the oil industry will be open to private foreign companies.
And, as Raed said, it introduces this very unique model, which is that ultimate decision making on contracts rests with a new council to be set up in Iraq, and sitting on that council will be representatives — executives, in fact — of oil companies, both foreign and domestic. In addition, it does maintain the Iraq National Oil Company, but gives the Iraq National Oil Company almost no preference. It’s almost in all cases just another oil company among lots of other companies, including U.S. oil companies. And this council, the new oil and gas council, is going to be the decision making body to determine what kind of contract the Iraqis can sign, and all contract models are still on the table, yet to be determined. I think that’s left vague or open, so that the very necessary criticism to earlier drafts of the law, which included specifically production sharing agreements, might be quieted.
But the law definitely sets up a very dangerous setup for Iraq’s future economic stability, economic development, and certainly sets the stage for a tremendous amount of increased hostility and violence to U.S. soldiers positioned on the ground, as being seen as the implementers of this oil hijack.
AMY GOODMAN: Antonia, what about the advocates’ argument for Western company involvement, that they need to come into Iraq to kickstart the oil development?
ANTONIA JUHASZ: Iraq’s oil development has actually been going quite well since the invasion under the guidance of the Iraqis themselves. Prior to the war, Iraq produced 2.5 million barrels of oil a day. Since the war, it’s been producing about 2.2 million barrels of oil a day. That’s definitely dropped most recently, because of the intense violence in Iraq of late. And there have definitely been targeted actions against the oil system as demonstrations of opposition to the occupation. So I believe there is a very concrete argument that can be made that the best thing that Iraq can do right now to see its oil infrastructure secure and pumping at a reasonable level is to see the U.S. occupation end.
Given that Iraq’s oil only costs less than a dollar per barrel to pump and oil is selling at over $50 per barrel, the Iraqis are already making a tremendous return on their oil. The danger is that under the different models of oil contract that are being put on the table, that the Iraqis would lose the vast majority of that profit to the foreign oil companies.
Now, just really quickly, Iraqis have lost a fair amount of expertise, technical know-how, as technology has increased over the past 11 years and the Iraqis were shut out because of the sanctions. The answer to that is found in the models put forward by their neighbors, Kuwait and Saudi Arabia and Iran, which are technical service contracts that countries sign with foreign companies to bring in that expertise, but under very limited time frames and very specific economic benefits to the companies and to the country, not these 35-year contracts, as Raed said, and the potential for vast profits leaving the country.
AMY GOODMAN: Raed Jarrar, what is the response of Iraqis, of people in Iraq?
RAED JARRAR: No one in Iraq knows about the law. The law has been kept in a very low profile, and there is a huge propaganda campaign by the government trying to portray the law as straight and good for Iraq, a law that will turn Iraq into heaven on Earth, because it will bring all of the foreign investments. Even parliamentarians in the Iraqi government, the ones who will have the final say to pass this law, haven’t received a copy of this law yet. I sent them the copy three or four days ago, and I sent a copy to many of the other Iraqi bloggers and journalists, because I think it’s very important to raise awareness about this and make it an issue. The Iraqi government and the Bush administration are trying to keep a very low profile in Iraq on this law. I think they’re planning just to, you know, surprise the parliamentarians one morning and have them vote on it without any knowledge of what the law actually causes.
AMY GOODMAN: Can you talk, Raed Jarrar, about the control, the dispute over federal or regional control of oil in Iraq?
RAED JARRAR: Most of the control will be under the regional and provincial authorities. They have all of the authority of monitoring and even dealing with small disputes. Now, there is this bigger council that is very complicated, very bureaucratic. This council just has the authority to veto what the regional and provincial authorities decide. So in case the council just stayed silent, everything can go without any interruption. So, you can see that this council is kind of controlled by foreign companies, as well, so the possibilities of the council vetoing what’s happening on the regional level will be very small. So we end up having a situation where Iraqis in different provinces will start signing contracts directly with foreign companies and competing between themselves, among themselves, among different Iraqi provinces, to get the oil companies to go to there without any centralized way in controlling this and thinking of the Iraqi interest and protecting Iraq as a country.
AMY GOODMAN: This document that you’ve translated into English was originally written in Arabic?
RAED JARRAR: No, the document was originally written in English. It was sent to the Iraqi Oil Ministry, and some parts of it were changed, and some parts were edited, some parts were added. So when I translated it, I made my translation based on a previously leaked English copy, which is the original version of this law. The English copy leaked in mid-2006. So this — the Arabic version now is totally based on that one. There are, I think out of the 29 or 30 pages, there are around six or seven totally new pages, and there are new sections here and there.
But the major differences, as I mentioned, are regarding the authorities that can control oil, and it can show very clearly what the Iraqi leaders, who are influential and can control these laws, are planning to do. It can show very clearly that there are very influential separatist Iraqi leaders who are trying to use this law to fund the separatist project and to turning Iraq into three states.
In fact, one of the things that I did while translating is I kept some traces of the original one and put a line over the — like struck them, so that people can see the small differences, how many of the authorities that were supposed to be a given to the central government and to the ministry now were shifted to the regional authorities. Like, this is the most interesting thing that happened in the changes. But overall, it’s a law that is promoted by the Bush administration and the IMF. It’s not at all an urgent item on the Iraqi agenda. It’s just an urgent item on the Bush and the IMF agenda.
AMY GOODMAN: Finally, Antonia, who has the largest oil reserves in the world, the top three?
ANTONIA JUHASZ: Saudi Arabia is one. Iraq is two. Iran is three. And I think in that list, particularly obviously Iraq and Iran, you can see pretty clearly a key focus for the Bush administration in its remaining years in office.
AMY GOODMAN: Do you think that is related to this current intensification of focus on Iran, the possibility of a U.S. strike on Iran?
ANTONIA JUHASZ: Oh, most certainly. You know, to be clear, oil is about a lot of things. Oil is about profit, and it’s about the money that the oil interests in the United States, which of course also include members of the Bush administration, can get.
But controlling the second and third largest oil reserves in the world also has a tremendous amount to do with imperial power and global power that the Bush administration wants. Controlling that oil denies it to other countries that want it, like China and India, countries that the Bush administration now sees itself in rivalry to.
And it also gets the government in control of a resource that is obviously dwindling in supply and which they want to hold onto. And they have been quite clear, meaning members of the Bush administration, but also the United States government, in its dedication to securing Middle East oil for the United States, and that agenda has hit high speed under this administration, where corporate and oil interests are part and parcel to government interest.
And I definitely think that if we in the United States want to end the war in Iraq and want to prevent another war in Iran, we have to pull back this curtain over that three-letter word, “oil,” and expose this agenda. The four-year anniversary of the war, coming up March 19th, is a critically important opportunity to do that and in the lead-up to that anniversary to really target our attention on demanding that our members of Congress defund the war and that we direct our attention and our protest energy on revealing this oil agenda. And to that end, Oil Change International, the organization I work with, is going to be in the coming weeks working with our allies to pull together some clear lists of activities and actions that folks can do, particularly on exposing the oil law in Iraq. So I encourage folks to come to our website to check that out.
AMY GOODMAN: Antonia Juhasz, I want to thank you for being with us, Tarbell fellow at the Oil Change International, author of The Bush Agenda: Invading the World One Economy at a Time. And Raed Jarrar in Washington, D.C., is the Iraq Project director for Global Exchange. His blog is raedinthemiddle.blogspot.com.