January 21st, 2007

Pending Iraq oil “privatization” law central to US policy

Posted in Mideast & Oil by ed

The (slightly) new Bushvision for Iraq seems to be martial law for Baghdad (no political interference to be tolerated by new shock’n'awe boots on ground) — to prop the failing quasi-puppet government — perhaps just long enough to allow Iraq’s (hardly) new American-made OIL LAW to pass.

The Guardian this week published a cri de coeur re the new law by Kamil Mahdi. The concluding words:

The US, the IMF and their allies are using fear to pursue their agenda of privatising and selling off Iraq’s oil resources. The effect of this law will be to marginalise Iraq’s oil industry and undermine the nationalisation measures undertaken between 1972 and 1975. It is designed as a reversal of Law Number 80 of December 1961 that recovered most of Iraq’s oil from a foreign cartel.

Iraq paid dearly for that courageous move: the then prime minister, General Qasim, was murdered 13 months later in a Ba’athist-led coup that was supported by many of those who are part of the current ruling alliance — the US included. Nevertheless, the national oil policy was not reversed then, and its reversal under US occupation will never be accepted by Iraqis.

END QUOTE. (The full piece is linked above and copied below as a comment.)

Regime Change in Iraq was on the agenda at Bush’s first Nat’l Security meeting in January 2001. But dividing the Bushmen from the start was the question as to whether Iraq’s oil production facilities should be kept in the hands of the newly installed government or “privatized.”

The Likud Lobbyists running Bush’s foreign policy were for privatization, as a means to challenge (on behalf of Israel) the Saudi-dominated OPEC status quo in the region.

(That is:

– For 50 years saggy-gutted Uncle Sam had enjoyed a menage a trois in the mideast with local nubility Saudi Arabia and Israel. The Likud Lobby wanted to kick the Saudis out of bed — by taking Iraq’s vast reserves outside of OPEC, via privatization and then using that free-market oil to bust OPEC (Saudi) control of oil production and prices.

– But the primary Oil Mob corporations themselves — OPEC’s sisters since 1960, partners in controlling the global oil flow — wanted nothing to do with the Likud Lobby’s plan. Instead wanted something akin to the status quo, with technical ownership retained by whatever new (and well controlled) Baghdad government the Bushmen might install, as the best means of continuing to control production, distribution and thus price.

See Armed Madhouse by Greg Palast (2006) for a badly written, ill-supported but nevertheless worthwhile account of this Likud Lobby/Oil Mob infighting since 2001. It seems (but is not clear) that the LL plan was akin to the Yukos wonderama in Russia: for entrepreneurs outside the corporate Oil Mob core to purchase and then pump Iraq’s oil at will, ushering in a brave new mideast where Saudi Arabia and the southern gulf emirates would wield considerably less power.)

Whatever the sordid details may be, ’twas certain a marriage of convenience that baby Bush blessed upon installation in the White House: Likud Lobby strangeloves leading a radical war-mongering foreign policy. While old family Oil Mob pals massaged the bony presidential shoulder counselling conservative global gansterism.

Each group wanted Saddam gone, it seems (although the mind of the Oil Mob on this remains, from my armchair, a mysterious House of Many Rooms). But the Likudists wanted conquest pure and simple (they promised), while known elements of the Oil Mob, supported by bureacratic bulk in the Pentagon and State Department, favored a quick coup that would install a new saddam (a new Man We Can Work With sans begrudgments re Bush pere betrayals) but leave the existing power and social structures in place.

On February 7, 2002, baby Kristol, son of Irving, betook his self-eminent self to the Senate, where he announced to an astonished world that Iraq was Next in the War on Terror. Even so, baby Bush dragged his feet. Then in August a whole passel of moderate Republican strangeloves — led by Bush pere consigliere Brent Scowcroft — mounted an Op-Ed and Sunday talk show campaign to persuade boy George to (take off that damn ten-gallon hat and) Just Say No to cracking open Chaos in Mesopotamia.

The trembling president finally pushed a button in early 2003. And by means yet mysterious from this armchair, it was the Likud Lobby plan — total war — that he chose.

It had taken a while for Rumsfeld to find a piece of brass in the Pentagon to lead the charge, recall. Three or four guys with scrambled eggs on their shoulders were dispatched to well-endowed retirement before Myers of the Air Force — by far the zaniest of the four Pentagon tribes — said “Sure, why not?”

And presumably the Oil Mob gave its grudging consent, having lobbied for the quick coup and somehow lost.

But the Oil Mob never agreed on how to handle the Iraq oil business post conquest, and eruptions occurred (remember Bremer?) in the aftermath of declared victory, leading to what at least seemed the ouster of the prominent Likud Lobby leaders in both the White House and Pentagon. In particular (as Palast details), the early push by the LL in late 2003 to pass a privatization law was crushed by Oil Mob emmissaries in Baghdad and D.C.

Soon the task of maintaining a puppet government, any puppet government, overwhelmed the American occupiers. And now (if Mahdi’s alarm and anonymous whispers are roughly true) the privatization law is back on the drawing board, and heading for the Iraqi cabinet for approval.

(Vile foonote: The primary organ pushing for the New Law Now is the World Bank. Which since June 2005 has been headed by none other than Paul Wolfowitz. wolfowitz.jpg Who as Rumsfeld’s lieutenant in the Pentagon was the Bushman perhaps most responsible for selling the Iraq war. And now is in position to craft the so-called peace, via drafting of reconstruction plans and control of funds for same.)

What does the apparently imminent passage of the new oil law mean? More questions.

Have the Oil Mob bosses — in face of the patent failure of the Bushmen to install a puppet goverment with working moving parts — now agreed to the Likudist privatization idea?

The Pentagon has built permanent bases to protect Iraq’s oil production facilities. Once the new law and privitization have come, will the US boots retreat to the new bases, to defend the oil zones, and abandon Baghdad? Abandoning the “Iraqi government” to “sectarian violence”? Abandoning the odd very idea of Iraq that was stitched together of diverse peoples post World War I to allow Britain and France to best probe and squat upon the oil fields?

And are the Saudis and the petty Arabian emirates now on board with privatization, having stridently opposed it (to protect the OPEC/Oil Mob structure) heretofore?

Why, during these few new weeks of 2007, has Saudi Arabia’s magisterial oil minister, Naimi, abruptly turned tail to talk down the price of oil? Unhappy with $60 a barrel in December, this past week he declared $51 “fine” and suggested OPEC needn’t even meet in February?

And why did Israel, after blasting away in Gaza for a month, abruptly yank out its tanks in December and begin, the next day, expressing such care for the life, liberty and happiness of its Palestinian underclass?

In light of Bush’s speech on mideast policy two weeks ago it may be the best guess that all this cosmic harmony west of the Tigris asudden falls under the heading: “Get Yer Ducks in Line Before the Attack on Iran.”

Perhaps this is what Cheney and King Fahd spoke about during his unscheduled and intially unreported two-hour visit to Saudi Arabia in December. The Decider has decided to push the Attack Iran button and so it’s time for all those who fear the Shia to settle up and stand shoulder to shoulder.

That the Attack Iran idea is alive and well among the Bushmen is an apprehension that, in the ten days since Bush’s speech, has crossed over from the Scott Ritters and Daniel Ellsbergs of the world to the newly repopulated corridors of power. Both Henry Reid (new leader of the Senate) and John D. Rockefeller (new head of the Senate Intelligence Committee) have now explicitly warned the White House about Iran.

The initial strike on Iran does, again, seem likely, but, just as likely, to be executed by Israel alone.

If it comes, however it may come, it will tend to bring the Saudi/emirate nexus, Israel and the Sunni so-called insurgency in Iraq, all shoulder to shoulder, old cocks into the breach, in the effort to keep angry Shia east of the Tigris. The Samara-Baghdad-Basra line may become the front in a war that — as Kissinger daydreamed in the 80s re Round One — may never end.

Israel seems to have the power to ignite this new regional war with the air strikes it has planned against the Iranian nuclear enrichment plant at Natanz. These plans (Israeli generals told the BBC on January 7) feature the use of “mini-tactical” nuclear bombs, which are to be dropped down holes blasted by conventional bombs to destroy underground bunkers. That the nukes will explode beneath the surface is said to be expected to limit the spread of poisonous fallout.

The Likud Lobbyists in Washington first dreamt of these mini-tactical nukes in Project for the New American Century screed during the 90s. Bill Clinton then warned the world during his speech to the Democratic Convention in 2004 that the Bushmen had actually built the bombs and were talking about using them in first strikes.

The right-wing in Israel this week won the head of the general who showed so poorly in Lebanon this past summer. They now take aim at the embattled premier, Ehud Olmert, who inherited Ariel Sharon’s breakaway Kadima party just a year ago, after Sharon suffered … whatever it is he suffered.

I confess myself feeling sorry for Olmert. If the Kadima coalition fails a vote of confidence, and the Likud under Netanyahu retakes power atop a right-wing coalition likely to include Avigdor Leiberman’s russki-israeli Beitenu, the voice of fascistic anti-Arab policy rooted in the Soviet life and mindset … Then it seems the green light for making nuclear war in the mideast will start flashing.

US participation in this bigger and better Iran-Iraq War would be a given, since we already have boots on the ground (not quite people) at the faultline, and now are sending more. Thus, questions raised this week by Senators Reid and Rockefeller, as to whether or not Bush-Cheney may be construed to have been authorized to make war on Iran, may be moot.

The bulk of Iran’s oil goes to China. Both Russia and China have been providing material and diplomatic support to Tehran since the 90s, and more so each year. Together, via the Shanghai Cooperatoin Organzation, they have pushed the Americans back in central Asia.

Perhaps then China’s surprising demonstration, two days ago, of its ability to shoot satellites out of orbit in space might be taken as an expression of its concern over the redux of the Attack Iran idea in Washington and Tel Aviv.

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  1. ed says:

    Here is Kamil Mahdi’s patriotic piece from the Guardian this week.

    Iraqis will never accept this sellout to the oil corporations

    The US-controlled Iraqi government is preparing to remove the country’s most precious resource from national control

    Kamil Mahdi
    Tuesday January 16, 2007
    The Guardian

    Today Iraq remains under occupation, and the gulf between those who profess to rule and those who are ruled is filled with blood.

    The government is beholden to the occupation forces that are responsible for a humanitarian catastrophe and a political impasse.
    While defenceless citizens are killed at will, the government carries on with its business of protecting itself, collecting oil revenues, dispensing favours, justifying the occupation, and presiding over collapsing security, economic wellbeing, essential services and public administration.

    Above all, the rule of law has all but disappeared, replaced by sectarian demarcations under a parliamentary facade. Sectarianism promoted by the occupation is tearing apart civil society, local communities and public institutions, and it is placing people at the mercy of self appointed communal leaders, without any legal protection.

    The Iraqi government is failing to properly discharge its duties and responsibilities. It therefore seems incongruous that the government, with the help of USAid, the World Bank and the UN, is pushing through a comprehensive oil law to be promulgated close to an IMF deadline for the end of last year.

    Once again, an externally imposed timetable takes precedence over Iraq’s interests. Before embarking on controversial measures such as this law favouring foreign oil firms, the Iraqi parliament and government must prove that they are capable of protecting the country’s sovereignty and the people’s rights and interests. A government that is failing to protect the lives of its citizens must not embark on controversial legislation that ties the hands of future Iraqi leaders, and which threatens to squander the Iraqis’ precious, exhaustible resource in an orgy of waste, corruption and theft.

    Government officials, including the deputy prime minister, Barham Salih, have announced that the draft oil law is ready to be presented to the cabinet for approval.

    Salih was an enthusiast for the US-led invasion of Iraq, and the Kurdish militia-led administration he represents has signed illegal oil agreements that it is now seeking to legalise. Given that parliament has not been meeting regularly, it is likely that legislation will be rushed through after a deal brokered under the auspices of the US occupation.

    Iraq’s oil industry is in a parlous state as a result of sanctions, wars and occupation. The government, through the ministry of oil’s inspector general, has issued damning reports of large-scale corruption and theft across the oil sector. Many competent senior technical officials have been sacked or demoted, and the state oil-marketing organisation has had several directors. Ministries and public organisations are increasingly operating as party fiefdoms, and private, sectarian and ethnic perspectives prevail over the national outlook.

    This state of affairs has negative results for all except those who are corrupt and unscrupulous, and the voracious foreign oil corporations. The official version of the draft law has not been published, but there is no doubt that it will be designed to hand most of the oil resources to foreign corporations under long-term exploration- and production-sharing agreements.

    The oil law is likely to open the door to these corporations at a time when Iraq’s capacity to regulate and control their activities will be highly circumscribed. It would therefore place the responsibility for protecting the country’s vital national interest on the shoulders of a few vulnerable technocrats in an environment where blood and oil flow together in abundance. Common sense, fairness and Iraq’s national interest dictate that this draft law must not be allowed to pass during these abnormal times, and that long-term contracts of 10, 15 or 20 years must not be signed before peace and stability return, and before Iraqis can ensure that their interests are protected.

    This law has been discussed behind closed doors for much of the past year. Secret drafts have been viewed and commented on by the US government, but have not been released to the Iraqi public – and not even to all members of parliament. If the law is pushed through in these circumstances, the political process will be further discredited even further. Talk of a moderate cross-sectarian front appears designed to ease the passage of the law and the sellout to oil corporations.

    The US, the IMF and their allies are using fear to pursue their agenda of privatising and selling off Iraq’s oil resources. The effect of this law will be to marginalise Iraq’s oil industry and undermine the nationalisation measures undertaken between 1972 and 1975. It is designed as a reversal of Law Number 80 of December 1961 that recovered most of Iraq’s oil from a foreign cartel. Iraq paid dearly for that courageous move: the then prime minister, General Qasim, was murdered 13 months later in a Ba’athist-led coup that was supported by many of those who are part of the current ruling alliance – the US included. Nevertheless, the national oil policy was not reversed then, and its reversal under US occupation will never be accepted by Iraqis.

    · Kamil Mahdi is an Iraqi academic and senior lecturer in Middle East economics at the University of Exeter


    January 20th, 2007 at 4:53 pm

  2. ed says:

    Here is a Jan 17 report on status of the law, from Al-Jazeera. Succinct ambiguity re privatization in the reference to an Iraqi “federal committee” that would “oversee” all “contracts.”

    Iraqi Leaders Reportedly Agree On Draft Oil Law

    January 17, 2007 —

    Reports say Iraq’s Oil Committee, which groups senior national and regional leaders, has agreed a final draft of an oil law that sets rules for sharing revenues and boosting output.

    Oil Ministry spokesman Asim Jihad said the draft calls for a federal committee headed by the prime minister to oversee all contracts.

    It would also have the
    power to review existing deals signed under Saddam Hussein or by the Kurdish regional government.

    Jihad said the bill would go to the cabinet next week for consideration.

    January 20th, 2007 at 9:38 pm

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