Tuesday, February 27, 2007

"Major agreement" on oil should perhaps be taken with a grain of salt

Both of the major London-based pan-Arab dailies lead their Iraq news with the reports about the attempt to assassinate vice-president and major SCIRI leader Adel Abdul Mahdi, during a meeting at the Ministry of Public Works and Municipalities, focusing on comments to the effect this shows security services are penetrated by armed groups at a very high level. Al-Hayat quoted another SCIRI leader (Jalaladdin al-Saghir, who was himself object of a US search operation in recent days) who said the operation yesterday, which killed seven government officials and injured 30 others, with explosives concealed in the ceiling of the meeting room, bears the earmarks of the Mukhabarat of the former regime. Saghir said the terrorists continue to target SCIRI and Abdul Mahdi in particular because of their opposition to terrorism, adding this recent operation won't have any effect on the new security plan. But the reporter puts the event in the context of government disunity and uncertainty, noting a couple of recent public comments by Mahdi, including: (1) Recent remarks to the BBC to the effect he was not excluding himself as a potential successor to Maliki as prime minister; and (2) remarks published yesterday in the government-run newspaper Al-Sabah, in which Mahdi criticized the cabinet committee that is supposed to coordinate security matters, saying: "Those of us in the trenches are still not operating as a single team, nor are we bound together by shared concepts [or a shared vision]."

(Al-Quds al-Arabi leads on its front page with the same story and the same concern about penetration of the security forces at a high level. The journalist quotes Shiite member of parliament Sami al-Askari to the effect this indicated the penetration of the security forces, and the journalist adds various security sources said they were inclined to agree, expressing particular surprise at the access the perpetrators had to this Ministry meeting-room.)

By contrast, the NYT reports on its front page "a major agreement among the country's ethnic and sectarian political blocs on one of Iraq's most divisive issues [oil policy]" merely because "the Iraqi cabinet" approved a draft petroleum law, without of course mentioning the (above-noted) criticism by vice-president Mahdi of the lack of government unity, not to mention the question of the disfunctional parliament.


Anonymous Anonymous said...

I see Mahdi's ardent enthusiasm for the oil draft law to be one of the main reasons that for the attack on him.

I don't know understand why Bush and the multinational energy companies are getting so excited about this oil draft law. As it is, any distribution of oil resources, especially by multinationals, will continue to face fierce resistance.

But this law is just plain silly. Here's what Pepe Escobar of Asia Times says of it:

"The law represents no less than institutionalized raping and pillaging of Iraq's oil wealth. It represents the death knell of nationalized (from 1972 to 1975) Iraqi resources, now replaced by production sharing agreements (PSAs) - which translate into savage privatization and monster profit rates of up to 75% for (basically US) Big Oil. Sixty-five of Iraq's roughly 80 oilfields already known will be offered for Big Oil to exploit."

Is there really any chance at all that this oil draft law will have any effect, given the fact that the resistance precludes any security now or even decades into the future, and are the people who are agreeing to this agreement just grabbing at straws?

11:36 AM  
Anonymous Anonymous said...

By the way, I note also that the NY Times was the only major English language paper to lead with this story - at least in the US, but from what I can tell via the internet, Britain too.

The NYTimes's Baghdad staff strikes me as quite gormless, especially Ed Wong who wrote the Times article - he tends to be a bit of a stenograher for his sources.

1:46 PM  
Blogger badger said...

Good eye, anonymous. You got that right !

2:41 PM  
Anonymous Anonymous said...

Although many of the things written in ATO are interesting, this article at least should be taken with a grain of salt. Most coverage of the oil law has been conspiratorial and severely misinformed. The Independent published a very bad article on the law that set the scene. In fact, NYT has had one of the most balanced articles so far on this issue.

Whether the law will have any effect outside legitimising KRG oil activities in the Federal Region of Kurdistan is hard to predict. But, it is safe to say that the main use of the law is actually to implement the federal system in Iraq, to decide who decides what in the Iraqi oil industry. Other than that, most countries do without a specific oil law.

Neither is this law cut in stone - there will definitely be changes to the law in the future and in what direction we might only speculate.

As to the issue of PSAs, the law being written by the US and a free for all for International Oil Companies, these assertions are either wrong or red herrings.

Tariq Shafiq, one of the three Iraqi authors of the initial draft law has several times expressed dismay and surprise over the coverage the use of this term has been given. The term PSA has become something of a symbol in this debate, and the focus on this has shadowed for other, and to my mind, more important issues and debates. Actually, in the last draft of the law the term PSA has been left out to avoid this spurious debate. In the end it is not the law that will decide the terms, the law only sets out the framework, it is the actual contract negotiations over model contracts based on one of three available regulatory models that is important.

A contract that will be something like a modified PSA will be one of the three available frameworks. For the producing fields this contract will not be available at all. I do not think it very likely that any of the large discovered but not producing fields will use this framework either. Most likely, this form of contract is reserved for more high-risk (in all meanings of the word) exploration projects for instance in Western Iraq and in the Federal Region of Kurdistan. In addition, if the law is adhered to, all documents and the contract itself will be publicly available when they are signed, something rather unprecedented anywhere else in the world.

One issue to look out for in the approved draft is what status governorates are given in the law. Are they equal to Regional rights as in the first draft, or are they less as in the 15 January draft? This will probably be more important for Iraq in the long run than the name used on different contract-types, cf. Reidar Vissers excellent paper mentioned above.

Raed in the Middle has a fairly accurate translation and the last Arabic draft from January. His understanding of the law however, seems partial at best.

6:01 AM  

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