Just Sign on the Dotted Line: Iraqi Oil and Production Sharing Agreements

“A critical component of the overall strategy is to contain expenditures within revenues and available financing, by prioritizing expenditures, controlling the wage and pensions bill, reducing subsidies on petroleum products, and expanding the participation of the private sector in the domestic market for petroleum products. . . . The authorities have recently increased prices of refined petroleum products and will need to press ahead with other structural reforms” (IMF, “IMF Executive Board Approves First Ever Stand-By Arrangement for Iraq,” Press Release No. 05/307, 23 December 2005).

Price of gas up 400%.  Foodstuffs up almost as much.  Life for Iraqis is not only difficult, it’s becoming unaffordable.  According to Washington and its client government in Baghdad, this inflation is due to other Iraqis.  Ask them who to blame and they blame the resistance.  Not the US Army or its Iraqi surrogates.  Not the corruption at all levels of the occupation government.  And, most importantly, not the mandatory price increases demanded by the IMF, which has compounded the Iraqi quagmire by its standard austerity measures (for the people, not the government or its financial backers) and privatization of all state-owned enterprises.

All of this even before the Iraqi oil industry becomes privatized.  In what oil executives hope to be the really big coup, a deputy prime minister of Iraq told investors that the Iraqi parliament was working on a bill that would legalize “potentially huge investments” from the private sector.  You can bet there’s a lot of pigs of all nationalities waiting to feed at that oily trough.  You can also bet that the majority of those porkers will be US and Iraqi oilmen used to making a buck at anyone and everyone’s expense.  What do you think George Bush means when he tells the US public that the reason the US must “win” in Iraq is that “terrorists” can’t control the oil supply?  Why else do you think his administration doesn’t care how many die in its pursuit of the Iraqi oil prize?

On September 10, 2006, Deputy Prime Minister Barham Saleh told a group of so-called western “donors” (read hopeful investors or carpetbaggers, if you will) that Iraq’s needs to work with major international companies under production-sharing agreements or PSAs.  According to the London-based social and environmental justice group PLATFORM,  PSAs are contracts “between a multinational oil company and a host government, in which the corporation provides capital investment, in exchange for control over an oilfield, and access to a large share of the revenues from it.”  These contracts usually last 25-40 years or forever.  Despite the (essentially meaningless) language that describes the host government as the “owner” and the foreign company as the “contractor,” PSAs are in practice no different than “old-style concession agreements.”  In addition, they often contain a so-called “stabilzation clause” which restricts future governments from changing or terminating the agreement.   Exactly how the hoped-for Iraqi agreements would share production and, most importantly, profits, has so far been left unsaid.  However, the regime in Baghdad is supposedly nearing agreement on a long-awaited hydrocarbon law that would allow (if not insist on) huge investments by foreign companies in Iraq’s oil sector.  As anybody who has followed Iraq since the US invaded knows, this law is the spawn of earlier decrees from the first civilian overseer of post-Saddam Iraq, Paul Bremer.

The intention here is not to help out the masses of Iraqi people.  It is to line the pockets of various Iraqi businessmen and politicians while incorporating (primarily) US and British oil companies firmly into the Iraqi oil business.  As I hinted above, the privatization of the oil business would be the latest in a series of moves designed to destroy the remains of Iraq’s system of socialized services and subsidies that made it one of the most prosperous countries in the Middle East before the Iran-Iraq war and the first Gulf War and sanctions.

The problem for Washington, however, lies in the military and political realities outside of Baghdad’s Green Zone.  US Marine commanders in Iraq are currently provoking denials and explanations from their superiors in DC because of their statements in a summer 2006 report where they claim that they do not have enough troops in Iraq to defeat the insurgency.  In much of Baghdad and a growing number of cities in southern Iraq, the attempts by US and Iraqi forces to control, if not destroy, the al-Sadr movement continue to meet with resistance and failure.  As a result of these combined failures, the number of US military members in Iraq has already risen to 147,000 in the past eight weeks.  That’s an increase of 20,000 since the end of July 2006.  Yet, those aforementioned Marine commanders are saying that they need at least ten to fifteen thousand more in al-Anbar province alone.

The growing troop levels and the limited success (if not outright failure) of the US and its client forces to make any headway in their battle to end the insurgency and other military reactions to the occupation are eerily reminiscent of the years 1965-1968 in Vietnam, where troop levels increased exponentially to a high of 500,000 in 1968 and yet the only thing that the US and southern Vietnamese forces had to show for it was increased casualties. I am reminded of an aphorism about the stupidity of doing the same thing over and over again and expecting different results.

As long as the true US goal in Iraq involves the control of that nation’s oil resources, there will be US military there.  Unless, of course, they are either soundly defeated or forced to withdraw because of intense and concerted opposition on the home front.  The former we have little influence on.  The latter is all up to us.

Ron Jacobs is author of The Way the Wind Blew: A History of the Weather Underground, just republished by Verso. Jacobs’ essay on Big Bill Broonzy is featured in CounterPunch‘s new collection on music, art and sex: Serpents in the Garden. He can be reached at <rjacobs3625@charter.net>.

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