Iraq: The Slimiest Benchmark

The art of political hegemony is achieved when a narrow group of people is able to convince a wider society that the group’s own, narrow interests, in fact, represent the general interest or the “greater good.” Nowhere is there currently a more visible (if artless) example of such a pursuit of hegemony than in Washington’s efforts to get Iraq’s politicians to pass the oil law drafted under U.S. tutelage.

For months, now, we’ve heard the Bush Administration — and many leading Democrats — scolding the Iraqis over their lack of progress towards national reconciliation. And the most concrete litmus test cited for establishing Iraqi bona fides appears to be the passing of the draft oil law, which is currently stalled in the legislature and facing growing opposition in Iraq. Washington is not hiding its belief that passing of the oil law a primary test for the viability of the Maliki government. But in the great Rove-ian tradition of Orwellian political communication, the Bush Administration is certainly camouflaging its significance: An oil law whose primary beneficiaries appear to be the major U.S. oil companies has become, in Rove-speak, the foundation-stone of national reconciliation in Iraq — the U.S. media for the most part dutifully parrots the idea that the purpose of the law is to ensure an equitable distribution of oil revenues between Iraq’s regions, defined as they are by ethnicity and sect. But that, in fact, is a relatively minor part of the oil law. The Christian Science Monitor tells us that, in fact, a major reason for the Iraqis’ reluctance to pass it may be that “the draft law in fact says little about sharing oil revenues among Iraqi groups and a lot about setting up a framework for investment that may be disadvantageous to Iraqis over the long term.”

The CSM continues:

“The actual draft law has nothing to do with sharing the oil revenue,” says former Iraqi oil minister Issam Al Chalabi, in a phone interview from Amman, Jordan. The law aims to set a framework for investment by outside oil companies, including favorable production-sharing agreements that are typically used to reward companies for taking on risk, he says.

“We know the oil is there. Geological studies have been made for decades on these oil fields, so why would we let them [international firms] have a share of the oil?” he adds. “Iraqis will say this is solid proof that Americans have staged the war … because of this law.”

The Monitor reports that even some Democratic legislators are now beginning to question the content of the oil law, and whether it’s objectives are primarily to benefit Iraqis or U.S. oil companies.

Indeed, the opposition to the law inside Iraq appears to have united a broad political spectrum, ranging from mainstream Sunni parties and nationalist groups backing the insurgency to the Sadrists and the national trade union of Iraqi oil workers. That’s because, as Antonia Juhasz pointed out in a remarkable New York Times op ed, the draft law in fact would take Iraq entirely out of the international mainstream by putting ownership and control of its oil reserves in the hands of foreign companies — three quarters of the world’s oil is owned by governments, and the oil companies don’t like that.

She wrote:

The administration has highlighted the law’s revenue sharing plan, under which the central government would distribute oil revenues throughout the nation on a per capita basis. But the benefits of this excellent proposal are radically undercut by the law’s many other provisions — these allow much (if not most) of Iraq’s oil revenues to flow out of the country and into the pockets of international oil companies.

The law would transform Iraq’s oil industry from a nationalized model closed to American oil companies except for limited (although highly lucrative) marketing contracts, into a commercial industry, all-but-privatized, that is fully open to all international oil companies.

She explains how the terms of the law operate as a unique (in the Middle East) windfall for foreign companies, and recommends that Iraqis be allowed to determine this issue democratically, and free of foreign pressure. While I don’t believe oil was the factor that prompted the U.S. to invade Iraq, I do believe that aggressively moving to lock up its oil reserves for U.S. companies has been a key objective of the occupation regime ever since the invasion was first decided upon.

In an excellent summation of ‘The Struggle Over Iraqi Oil’, Michael Schwartz, writing on the indispensable TomDispatch, reveals the oil-grab policy inherent in the Administration’s approach to Iraq from 2002. And it clearly guided the actions of the U.S. once inside Iraq:

Not long after President Bush declared “major combat operations in Iraq have ended” under a “Mission Accomplished” banner on the deck of the aircraft carrier, the USS Abraham Lincoln, Paul Bremer, the new head of the American occupation, promulgated a series of laws designed, among other things, to kick-start the development of Iraqi oil. In addition to attempting to transfer management of existing oil facilities (well heads, refineries, pipelines, and shipping) to multinational corporations, he also set about creating an oil-policy framework, unique in the region, that would allow the major companies to develop the country’s proven reserves and even to begin drilling new wells.

All these plans were, however, quickly frustrated, both by the growing Sunni insurgency and by civil resistance. Iraq’s oil workers quickly unionized — even though Bremer extended Saddam’s prohibition on unions in state-owned companies — and effectively resisted the transfer of management duties to foreign companies. In one noteworthy moment, the oil workers actually refused to take orders from Bechtel officials in the oil hub of Basra, thus preserving their own jobs as well as the right of the Iraqi state-owned Southern Oil Company to continue to control the operation in that region. Bechtel’s management contract was subsequently voided.

At the same time, the growing insurgency, acting on a general Iraqi understanding that a major goal of the occupation was to “steal” Iraqi oil, systematically began to attack the oil pipelines that traveled through the Sunni areas of the country. Within a few months, all oil exports in the northern part of Iraq were interrupted — and the northern export pipelines have remained generally unusable ever since…. Meanwhile, the major oil companies refused Bremer’s invitation to invest their own money in Iraqi projects, pointing out the obvious — that the insurgency and the spreading chaos made such investments unwise. In addition, they were well aware that Bremer’s regime in Baghdad lacked clear authority to sign contracts with them. This, in turn, meant that their investments might be in jeopardy once a legitimate government took power. When technical sovereignty was finally handed over to an appointed Iraqi government headed by the CIA’s favorite Iraqi exile, Iyad Allawi, in June 2004, the new premier embraced Bremer’s policy, but to no avail. The international oil companies were no more impressed with his future than they had been with Bremer’s. Like Wolfowitz, they knew that Iraq “floats on a sea of oil”; unlike him, they were no dreamers. They weren’t willing to risk their capital in the dangerous and legally ambiguous circumstances then prevailing.

Schwartz proceeds to explain how the U.S. leaned on the elected Iraqi governments to accept a U.S.-drafted oil law by using the management of Iraqi debt to twist the arm of Baghdad. But the government is balking, not only because of pressure from the Kurds who have questions about just how much of the oil they’ll control, but also from broad swathes of Iraqi society who appear to be asking what good is a law that makes for a more equitable distribution of Iraqi oil profits at the same time as ensuring that the lion’s share of those profits go to foreign oil companies. Fair question. And if the diverse range of forces arrayed against the bill is any indication, it may well be a boost for Iraqi national unity — primarily through the opposition it provokes.

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34 Responses to Iraq: The Slimiest Benchmark

  1. Doug Kellam says:

    So, if the invasion of Iraq wasn’t to gain firmer control of the region’s oil what was it for? Spreading democracy?WMD’s?, revenge?

  2. Tony says:

    I don’t think it was any one cause or for a single purpose, as much as a confluence of purposes that enabled a coalition within the Administration to make it happen in the wake of 9/11 — broadly defined, it was an attempt to reorder to the Middle East, strategically, in order to eliminate radical challenges to the US (and Israel) emanating from there; to create a client state remade according to US specifications that would challenge even the likes of Saudi Arabia and Egypt, and to serve as a staging ground for other adventures in the region through the establishment of permanent military bases there to replace those in Saudi Arabia; to broadly speaking impose a new Pax Americana on a region critical to U.S. energy needs; to challenge other oil producing states and break OPEC by installing a client regime that would pump oil according to Western needs, etc. This crowd was not serious about “democracy,” only to the extent that they believed it would return pro-US regimes — when it doesn’t, as in the case of Palestine, democracy be damned. And, frankly, I don’t think WMD was ever more than an excuse for the architects of this war, a debate-winner in Washington that could trade on the fearful climate post 9/11. Even if Iraq had had a couple of warehouses full of old VX and mustard gas, it wouldn’t have presented a strategic threat to the U.S. or anyone else…

  3. hilzoy says:

    About reasons for war: I’ve read most of the major books about the process that led us to war, and it’s quite striking that (as far as I can recall) in none of them is there any description of an actual decision to go to war, or a decision-making process about whether to go to war, etc. It’s as though the assumption that America will go to war with Iraq is just there, in the atmosphere, for no discernible reason.

  4. Tony – I agree with the reasons you give for the US invading. The question then is why a client state and permanent military bases are so important in this particular part of the world. The answer, plainly, is that this is where most of the oil is, next door to where most of the gas is, and moreover, that this is where China and India are going to be looking for most of their oil and gas supply in the predictable future (and an area where Russian state energy firms may be looking to sell their expertise to producer countries).

    So oil in particular, and energy in general, is exactly what its about. But, as Chomsky points out, the concern is not access but strategic control. Its not about enriching Exxon etc. Its about gaining leverage over Washington’s geostrategic rivals.

  5. Doug says:

    Well it seems to be a combination of so called “national interests” and corporate interests – hence the huge reconstruction and service contracts and the pressure being put on the Iraqi legislature to open up their oil for Exxon et al. There were “long term” strategic goals but there were also the short term goals of the interested corporate parties (Halliburton, Blackwater, Big Oil) to make ridiculously huge amounts of money off the backs of the american taxpayer (contracts, armaments, etc) and the Iraqi people through the theft of their natural resources. Who knows how much pressure the corporations put on the politicians and policy makers to proceed with this enterprise? And maybe that’s the wrong way to look at things, maybe there’s no real dividing line between state and corporate interests. Which brings me back full circle to what Tony said about hegemony – I guess he hit the nail right on the head in his opening paragraph. In the end oil is just a metaphor for power and control.

  6. Jorge says:

    “If I don’t do it
    Somebody else will….”
    Dr. John at “The Last Waltz”

    As has been pointed out, the U.S. isn’t the only dog in the fight. And while oil companies profit the most at the expense of dead and wounded GIs and Iraqi civilians, this is the world in which we live.

    I think most Americans realize all of the side issues (including oil and revenge and democray) that have converged to lead us into this war. Only now are most Americans dissatisfied with the war. But it’s not because of the reasons we went in (oil, revenge, etc.). It’s because of the difficulty in finishing the job.

    So the question we need to ask ourselves is, “When is the ‘national interest’ worth fighting for?” If not for energy, then for what?

    It would be nice if there were an ‘international interest,’ but can we really trust everyone else to play along? Haven’t we already seen what happens when we leave other nations to play along (Nazi Germany)? No doubt, we have also contributed to nationalist movements (Treaty of Vers.), etc.. But some of that wasn’t intentional.

    Bottom line: It is hard work creating a world in which we can be fair to others and trust that they are going to be fair with us.

    Hmmm… maybe the whole problem is that it is a dog-eat-dog world and we have never trusted anyone and we’re worried (and perhaps justifiably so) about what’s going ot happen if someone else gets the upper hand on us.

  7. AJ says:

    The amazing thing is that we are still attempting this imperialistic resource grab as the enitre Iraq project unravels. Even if this measure is pushed through a stable investment environment is unlikely to emerge in the foreseeable future, nor does it seem likely that any future Iraqi government that is not dependent on US arms would abide by this law.

  8. lolaone says:

    I heard on a progressive radio show that part of the agreement would give oil companies a forty year lease, which wouldn’t start for ten years. Supposedly, in those ten years either the factions would decimate each other,or somehow peace would have been achieved. I’m losing faith in the progressive movement now. You are right about both parties being involved. They [talk hosts] are blaming Iraqis for not signing this contract. In other words it’s their fault our troops aren’t being redeployed. i’m here to learn. lolaone

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  17. Thank you for so many and much information. It was fascinating to read. Thank you for sharing all these ideas with us and and keep up the good work.

  18. Mike Geary says:

    @Tony: you have done such a very skillful work Tony, a systematized article. Hope you would update it though.

  19. yeah it seems to be a combination of so called “national interests” and corporate interests – hence the huge reconstruction and service contracts and the pressure being put on the Iraqi legislature to open up their oil for Exxon et al.

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  22. cars says:

    just wish all these wars would just be over with. So tired of it.

  23. I think it is a combination of interests from both parties. Good job and keep up the good work.

  24. I am slightly different in My opinion iraq has suffered alot it was all because so miscommunication. Both Parties much negotiate with each other to get out of this strange looking problem

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  26. I think it is a combination of interests from both parties and which is hurting other countries of the world. Good job and keep up the good work

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