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Kickin' Ass and Takin' Names
Guest
U.S. Attempt to Control Iraq's Oil and Economy Continues Behind the
Scenes
By Maya Schenwar, TruthOut.org
Posted on April 7, 2008, Printed on April 12, 2008
http://www.alternet.org/story/81573/
As violence rises again in Iraq, negotiations to institutionalize US
economic dominance continue unabated.
While the battle of Basra raged last week, a series of talks between
the Bush administration and the US-backed Maliki government rolled
forward. These negotiations may have at least as many implications for
Iraq's future as the violence on the ground.
The discussions, ongoing since November, stem from a "Declaration of
Principles" agreement signed by the two leaders, aimed at establishing
a long-term "friendship" between their countries.
While the portion of the Declaration that suggests a permanent US
military presence in Iraq has garnered much attention, the agreement
also proposes another goal: to solidify "economic ties" between the
two countries and grant the US preferential treatment in trading with
Iraq.
As brought to light by last week's oil price surge during the assault
on Basra, economic concerns are inextricably linked to the occupation.
When it comes to oil, the coming months may be crucial in determining
what kind of "friends" the US and Iraq are going to be over the long
haul.
A Framework for Occupation
In a House Foreign Affairs Committee hearing last month, State
Department Iraq Coordinator David Satterfield revealed the Declaration
of Principles proposals have now been divided into a binding Status of
Forces Agreement (on military involvement) and a nonbinding Strategic
Framework Agreement (on economic and diplomatic relations). Neither
would be submitted for the consent of Congress. Though Satterfield
emphasized that, being nonbinding, the Strategic Framework would not
"tie the hands" of future administrations, it could solidify changes
the US has already made to Iraq's economic landscape - and pave the
way for increased US control over Iraq's oil in years to come,
according to Antonia Juhasz, a fellow at Oil Change International.
"A lot of frameworks for foreign investment were set up under [former
Director of Iraq Reconstruction L. Paul] Bremer, and are already in
place," Juhasz told Truthout. "A bilateral agreement would lock all
that in and also place pressure on the government to pass the domestic
oil law, to settle access for foreign companies to Iraq's oil
underground."
The "all that" encompasses a host of sweeping reforms: Thanks to
Bremer's alterations of Iraqi law during the first year of the US
occupation, American companies are now allowed to buy out 100 percent
of Iraqi businesses, instead of partnering with them. Bremer's orders
also eliminated Iraq's high taxes on corporations, exchanging them for
a 15 percent "flat tax." They abolished the practice of giving
preference to Iraqi companies - in contracting out reconstruction
work, for example - and erased a requirement to hire Iraqi workers.
Previously, Iraqi banks were closed to foreign ownership. Now, not
only can foreign banks operate in Iraq, they can take over private
Iraqi banks as well.
Bremer reworked Iraq's trademark and copyright laws, eliminated trade
barriers and afforded foreign businesses the option of circumventing
Iraq's legal system and taking any disputes to international
tribunals.
A bilateral agreement like the Strategic Framework could serve as the
perfect next step for the administration, making Bremer's "emergency"
economic changes look like standard policy, according to Juhasz. Even
if it remains a nonbinding pact, it would exert significant pressure
on the Iraqi government to leave Bremer's legacy alone.
Where the Oil Flows
The November version of the Bush-Maliki agreement suggested a
commitment to "facilitating and encouraging the flow of foreign
investments to Iraq, especially American investments, to contribute to
the reconstruction and rebuilding of Iraq."
According to James A. Paul, executive director of the Global Policy
Forum, the "flow of foreign investments to Iraq" wouldn't manifest as
generously as it sounds: The deal would primarily translate into "US/
UK oil company control."
Last week's assault on Basra was "part of an effort to defeat the
'nationalists' in Iraq and consolidate a pro-US political regime that
will go ahead with the oil deals," Paul told Truthout. Just before
fighting erupted in Basra, the Iraqi presidential council approved the
"provincial law," which clears the way for elections - potentially
allowing nationalist leaders who oppose US oil interests to come to
power. Maliki's Basra attack, says Paul, represents a failed attempt
to quash that possibility.
It's not a question of pressure from oil companies, according to Reese
Erlich, co-author of "Target Iraq: What the News Media Didn't Tell
You." Buying up oil reserves is a strategic move to ensure US energy
"security." The corporations become the vehicles for that security.
"It's not like oil companies were pounding on the state house door to
invade Iraq," Erlich told Truthout. "Oil companies certainly benefit,
but they're not the initiators."
As Juhasz noted, one goal Bremer could not singlehandedly accomplish
was the privatization of Iraq's reserves, which, by some estimates,
may contain a quarter of the world's oil. The famed "Iraqi oil law,"
approved by the Maliki administration but still "stuck" in the
Parliament, would, among other provisions, open up Iraq's underground
oil for foreign investment. In its most recent draft, the law would
leave only 12 of the country's oil reserves under government control,
with the remaining 74 -- not to mention any undiscovered fields, which
certainly exist -- up for grabs.
The primary grabbers would no doubt be American, as indicated by the
Declaration of Principles' "especially American investments" clause.
Since the early days of the occupation, the US has never kept its oil
execs far from Iraq's oil. The oil fields, as well as the Oil Ministry
in Baghdad, were some of the only places American soldiers guarded
throughout the initial invasion. Paul notes that US "advisers"
presided over the drafting of the latest version of the oil law.
Skirting the Law
According to the pan-Arab newspaper Al-Hayat, simultaneous with the
battle of Basra, negotiations were taking place between major oil
companies and the Iraqi ministry of oil.
An Oil Ministry official told The Associated Press last week Chevron,
Exxon and British Petroleum would soon submit proposals for contracts
on specific oil fields - including the Rumaila field near Basra.
Since the oil law has not yet passed, private companies can't obtain
long-term contracts on the fields. However, that hasn't stopped them
from getting their feet in the door. All it takes is a few powerful,
cooperative Iraqis, and, according to Erlich, some of the most
prominent are Kurds, who control Iraq's historically highest-producing
oil field, near Kirkuk. Disregarding the Parliament's objections,
Kurdistan has signed numerous "production sharing agreements" with
Western oil companies.
The Maliki administration has also done its share of dodging
Parliament's prohibition on international oil investment. Long-term
contracts may be off limits, but short-term contracts stop just short
of illegal, and Iraq's executive branch is swooping in on that
loophole.
"You have the oil minister trying to sign two-year contracts with the
oil companies, to demonstrate that the Maliki government is working
with oil companies, even if Parliament is not," Juhasz said.
Pushing Back
Parliament is holding its ground. For the past year, the body has
systematically rejected drafts of the oil law, which, in any form,
would divest the legislature of authority on oil. The 12 fields still
controlled by the government would be in the hands of an advisory
board, including members of the Maliki administration, representatives
of the provinces - and even, probably, representatives of foreign oil
companies, according to Juhasz. Paul points to Parliament's seeming
inaction as a genuine act of resistance to the occupation.
"The Parliament has remained steadfastly opposed and, in spite of
periodic predictions that parliamentary agreement is 'near,' they have
not acted," he said. "There have even been rumors that the companies
have offered $5 million to each parliamentarian who votes 'yes,' a
rumor that seems to me to be probably based in reality, yet even with
such blandishments the Parliament has not acted."
By democratic standards, Parliament has some important backers on its
side. A July poll commissioned by a group of human rights
organizations showed 63 percent of the Iraqi people would prefer Iraqi
companies maintain control of the country's oil.
Neither Democratic presidential hopeful has explicitly spoken out
against opening Iraq up to foreign oil investments. Both Barack Obama
and Hillary Clinton have emphasized the need to urge the Iraqi
government to pass one prong of the oil law -- a provision to
distribute oil revenue evenly throughout the country, over which there
is little controversy -- but have largely bypassed the broader debate
about the law.
Meanwhile, negotiations over the Strategic Framework continue, with
the looming prospect of an agreement threatening to further entrench
Bush-era economic policies in Iraq.
"I hope things would change under a Democratic administration," Juhasz
said. "But the fact that neither Clinton nor Obama has put forward an
immediate withdrawal plan is worrisome. It doesn't give me confidence
that they would abandon the oil policies the Bush administration has
pursued."
Maya Schenwar is a Chicago-based freelance writer and an editor for
Publications International.
Scenes
By Maya Schenwar, TruthOut.org
Posted on April 7, 2008, Printed on April 12, 2008
http://www.alternet.org/story/81573/
As violence rises again in Iraq, negotiations to institutionalize US
economic dominance continue unabated.
While the battle of Basra raged last week, a series of talks between
the Bush administration and the US-backed Maliki government rolled
forward. These negotiations may have at least as many implications for
Iraq's future as the violence on the ground.
The discussions, ongoing since November, stem from a "Declaration of
Principles" agreement signed by the two leaders, aimed at establishing
a long-term "friendship" between their countries.
While the portion of the Declaration that suggests a permanent US
military presence in Iraq has garnered much attention, the agreement
also proposes another goal: to solidify "economic ties" between the
two countries and grant the US preferential treatment in trading with
Iraq.
As brought to light by last week's oil price surge during the assault
on Basra, economic concerns are inextricably linked to the occupation.
When it comes to oil, the coming months may be crucial in determining
what kind of "friends" the US and Iraq are going to be over the long
haul.
A Framework for Occupation
In a House Foreign Affairs Committee hearing last month, State
Department Iraq Coordinator David Satterfield revealed the Declaration
of Principles proposals have now been divided into a binding Status of
Forces Agreement (on military involvement) and a nonbinding Strategic
Framework Agreement (on economic and diplomatic relations). Neither
would be submitted for the consent of Congress. Though Satterfield
emphasized that, being nonbinding, the Strategic Framework would not
"tie the hands" of future administrations, it could solidify changes
the US has already made to Iraq's economic landscape - and pave the
way for increased US control over Iraq's oil in years to come,
according to Antonia Juhasz, a fellow at Oil Change International.
"A lot of frameworks for foreign investment were set up under [former
Director of Iraq Reconstruction L. Paul] Bremer, and are already in
place," Juhasz told Truthout. "A bilateral agreement would lock all
that in and also place pressure on the government to pass the domestic
oil law, to settle access for foreign companies to Iraq's oil
underground."
The "all that" encompasses a host of sweeping reforms: Thanks to
Bremer's alterations of Iraqi law during the first year of the US
occupation, American companies are now allowed to buy out 100 percent
of Iraqi businesses, instead of partnering with them. Bremer's orders
also eliminated Iraq's high taxes on corporations, exchanging them for
a 15 percent "flat tax." They abolished the practice of giving
preference to Iraqi companies - in contracting out reconstruction
work, for example - and erased a requirement to hire Iraqi workers.
Previously, Iraqi banks were closed to foreign ownership. Now, not
only can foreign banks operate in Iraq, they can take over private
Iraqi banks as well.
Bremer reworked Iraq's trademark and copyright laws, eliminated trade
barriers and afforded foreign businesses the option of circumventing
Iraq's legal system and taking any disputes to international
tribunals.
A bilateral agreement like the Strategic Framework could serve as the
perfect next step for the administration, making Bremer's "emergency"
economic changes look like standard policy, according to Juhasz. Even
if it remains a nonbinding pact, it would exert significant pressure
on the Iraqi government to leave Bremer's legacy alone.
Where the Oil Flows
The November version of the Bush-Maliki agreement suggested a
commitment to "facilitating and encouraging the flow of foreign
investments to Iraq, especially American investments, to contribute to
the reconstruction and rebuilding of Iraq."
According to James A. Paul, executive director of the Global Policy
Forum, the "flow of foreign investments to Iraq" wouldn't manifest as
generously as it sounds: The deal would primarily translate into "US/
UK oil company control."
Last week's assault on Basra was "part of an effort to defeat the
'nationalists' in Iraq and consolidate a pro-US political regime that
will go ahead with the oil deals," Paul told Truthout. Just before
fighting erupted in Basra, the Iraqi presidential council approved the
"provincial law," which clears the way for elections - potentially
allowing nationalist leaders who oppose US oil interests to come to
power. Maliki's Basra attack, says Paul, represents a failed attempt
to quash that possibility.
It's not a question of pressure from oil companies, according to Reese
Erlich, co-author of "Target Iraq: What the News Media Didn't Tell
You." Buying up oil reserves is a strategic move to ensure US energy
"security." The corporations become the vehicles for that security.
"It's not like oil companies were pounding on the state house door to
invade Iraq," Erlich told Truthout. "Oil companies certainly benefit,
but they're not the initiators."
As Juhasz noted, one goal Bremer could not singlehandedly accomplish
was the privatization of Iraq's reserves, which, by some estimates,
may contain a quarter of the world's oil. The famed "Iraqi oil law,"
approved by the Maliki administration but still "stuck" in the
Parliament, would, among other provisions, open up Iraq's underground
oil for foreign investment. In its most recent draft, the law would
leave only 12 of the country's oil reserves under government control,
with the remaining 74 -- not to mention any undiscovered fields, which
certainly exist -- up for grabs.
The primary grabbers would no doubt be American, as indicated by the
Declaration of Principles' "especially American investments" clause.
Since the early days of the occupation, the US has never kept its oil
execs far from Iraq's oil. The oil fields, as well as the Oil Ministry
in Baghdad, were some of the only places American soldiers guarded
throughout the initial invasion. Paul notes that US "advisers"
presided over the drafting of the latest version of the oil law.
Skirting the Law
According to the pan-Arab newspaper Al-Hayat, simultaneous with the
battle of Basra, negotiations were taking place between major oil
companies and the Iraqi ministry of oil.
An Oil Ministry official told The Associated Press last week Chevron,
Exxon and British Petroleum would soon submit proposals for contracts
on specific oil fields - including the Rumaila field near Basra.
Since the oil law has not yet passed, private companies can't obtain
long-term contracts on the fields. However, that hasn't stopped them
from getting their feet in the door. All it takes is a few powerful,
cooperative Iraqis, and, according to Erlich, some of the most
prominent are Kurds, who control Iraq's historically highest-producing
oil field, near Kirkuk. Disregarding the Parliament's objections,
Kurdistan has signed numerous "production sharing agreements" with
Western oil companies.
The Maliki administration has also done its share of dodging
Parliament's prohibition on international oil investment. Long-term
contracts may be off limits, but short-term contracts stop just short
of illegal, and Iraq's executive branch is swooping in on that
loophole.
"You have the oil minister trying to sign two-year contracts with the
oil companies, to demonstrate that the Maliki government is working
with oil companies, even if Parliament is not," Juhasz said.
Pushing Back
Parliament is holding its ground. For the past year, the body has
systematically rejected drafts of the oil law, which, in any form,
would divest the legislature of authority on oil. The 12 fields still
controlled by the government would be in the hands of an advisory
board, including members of the Maliki administration, representatives
of the provinces - and even, probably, representatives of foreign oil
companies, according to Juhasz. Paul points to Parliament's seeming
inaction as a genuine act of resistance to the occupation.
"The Parliament has remained steadfastly opposed and, in spite of
periodic predictions that parliamentary agreement is 'near,' they have
not acted," he said. "There have even been rumors that the companies
have offered $5 million to each parliamentarian who votes 'yes,' a
rumor that seems to me to be probably based in reality, yet even with
such blandishments the Parliament has not acted."
By democratic standards, Parliament has some important backers on its
side. A July poll commissioned by a group of human rights
organizations showed 63 percent of the Iraqi people would prefer Iraqi
companies maintain control of the country's oil.
Neither Democratic presidential hopeful has explicitly spoken out
against opening Iraq up to foreign oil investments. Both Barack Obama
and Hillary Clinton have emphasized the need to urge the Iraqi
government to pass one prong of the oil law -- a provision to
distribute oil revenue evenly throughout the country, over which there
is little controversy -- but have largely bypassed the broader debate
about the law.
Meanwhile, negotiations over the Strategic Framework continue, with
the looming prospect of an agreement threatening to further entrench
Bush-era economic policies in Iraq.
"I hope things would change under a Democratic administration," Juhasz
said. "But the fact that neither Clinton nor Obama has put forward an
immediate withdrawal plan is worrisome. It doesn't give me confidence
that they would abandon the oil policies the Bush administration has
pursued."
Maya Schenwar is a Chicago-based freelance writer and an editor for
Publications International.
