WASHINGTON - The U.S.-backed Iraqi cabinet approved a new
oil law Monday that is set to give foreign companies the long-term
contracts and safe legal framework they have been waiting for, but which
has rattled labor unions and international campaigners who say oil
production should remain in the hands of Iraqis.
According to local labor leaders, transferring ownership to the foreign companies would give a further pretext to continue the U.S. occupation on the grounds that those companies will need protection.  |
Iraqi workers walking at Iraq's largest refinery complex in Baiji, some 200 kilometres (140 miles) north of Baghdad. Iraq's cabinet approved Monday a draft law on oil revenues that is seen as cover for privatization. (AFP/File/Karim Sahib)
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Independent analysts and labor groups have also criticized the process of
drafting the law and warned that that the bill is so skewed in favor of
foreign firms that it could end up heightening political tensions in the
Arab nation and spreading instability.
For example, it specifies that up to two-thirds of Iraq's known reserves
would be developed by multinationals, under contracts lasting for 15 to 20
years.
This policy would represent a u-turn for Iraq's oil industry, which has
been in the public sector for more than three decades, and would break
from normal practice in the Middle East.
According to local labor leaders, transferring ownership to the foreign
companies would give a further pretext to continue the U.S. occupation on
the grounds that those companies will need protection.
Union leaders have complained that they, along with other civil society
groups, were left out of the drafting process despite U.S. claims it has
created a functioning democracy in Iraq.
Under the production-sharing agreements provided for in the draft law,
companies will not come under the jurisdiction of Iraqi courts in the
event of a dispute, nor to the general auditor.
The ownership of the oil reserves under this draft law will remain with
the state in form, but not in substance, critics say.
On Feb. 8, the labor unions sent a letter in Arabic to Iraqi President
Jalal Talbani urging him to reconsider this kind of agreement.
"Production-sharing agreements are a relic of the 1960s," said the letter,
seen by IPS. "They will re-imprison the Iraqi economy and impinge on
Iraq's sovereignty since they only preserve the interests of foreign
companies. We warn against falling into this trap."
Ewa Jasiewicz, a researcher at PLATFORM, a British human rights and
environmental group that monitors the oil industry, told IPS in a phone
interview from London that,
"First of all, it hasn't been put together in any kind of democratic
process... It's been put through a war and an occupation which in itself
is a grotesquely undemocratic process."
The law was prepared by a three-member Iraqi cabinet committee, dominated
by the Kurds and the Shiites. It is now expected to be ratified by
parliament because the powerful faction leaders in the government have
cleared it.
The first draft was seen only by the committee of the Iraqi technocrat who
penned it, nine international oil companies, the British and the U.S.
governments and the International Monetary Fund. The Iraqi parliament will
get its first glimpse next week.
Concerns about the process are compounded because of the ongoing disputes
in Iraq over the legitimacy of the Iraqi cabinet and the Iraqi parliament,
which have been constructed by the occupation-created governing council,
which itself was created in 2004 along sectarian lines.
In a speech earlier this month by Hassan Juma, head of the Iraqi Oil
labor Union, posted on the union's website, he called on the Iraqi
government to consult with Iraqi oil experts and "ask their opinion before
sinking Iraq into an ocean of dark injustice."
The content of the law has also worried both international campaigners and
local Iraqi groups who say that it puts Iraqi oil wealth firmly on the
path to full privatization.
"The hydrocarbon law reflects the process of readying Iraq's oil for
privatization," said Jasiewicz. "Drafted in secret, shaped by foreign
powers, untransparent, undemocratic and forced through under military
occupation."
Jasiewicz said the law can be regarded as the economic goal of the war and
occupation and that "it will be viewed by most Iraqis as not just
illegitimate, but a war crime."
But officials from the Iraqi government, who have already sent the draft
oil law to parliament for consideration, say it represents a step forward
for the war-torn country. Under the law, oil revenues would be distributed
to all 18 provinces based on population size, and regional administrations
have the authority to negotiate contracts with international oil
companies.
Prime Minister Nouri al-Maliki, a close ally of Washington, called the law
"another founding stone in state-building."
"This law will guarantee for Iraqis, not just now but for future
generations too, complete national control over this natural wealth," Oil
Minister Hussain al-Shahristani has reportedly said.
Initial drafts of the law starting eight months ago saw squabbles between
the Kurdish factions who control the northern part of Iraq and the
Shiite-led regime, as they both vied for bigger shares of the country's
oil wealth, estimated at 115 billion barrels. That they have finally come
to a final agreement may be a sign of long-sought stability.
Yet critics, including Iraqi oil professionals, engineers and technicians
in the unions, are instead advocating for technical service contracts,
meaning a company would come in and offer services such as building a
refinery, laying a pipeline, or offering consultancy services, get their
fees and then leave.
"It is a much more equitable relationship because the control of
production, development of oil will stay with the Iraqi state," said
Jasiewicz.
"That is the model that Saudi Arabia, Iran, Kuwait generally operate.
There's no other country in the Middle East with the kind of oil reserves
that Iraq has that would consider signing a production-sharing agreement,"
she said. "It's a form of privatization and that's why those countries
haven't signed these because it's not in their interests."
© Copyright 2007 IPS - Inter Press Service
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