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.