How will Iraq share the oil?

In the US, the demand that Iraq pass an oil law is a 'benchmark' that is becoming a flashpoint.

from the May 18, 2007 edition

Page 2 of 3

Page 1 | 2 | Page 3

Why Iraqis don't want to rush

But in Baghdad, some Iraqi lawmakers say the oil issue is too vast and complex to rush. It should be the last issue – not one of the first – to be resolved, they say.

Moreover, Iraqi critics of the current draft law say it does not address the issues that US lawmakers think it does.

"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."

On Feb. 26, Iraq's Cabinet approved the draft oil law, which was to be sent to parliament by March 15 – along with four annexes that provide the fine print, draft oil contracts, and a draft oil revenue-sharing law. The Bush administration wanted Iraq's parliament to approve the entire oil package by the end of May. But as of this week, not even the draft oil law has been submitted to parliament.

"The US talks about the sovereignty of Iraq, but why are they getting involved in this oil law?" asks Mohammed al-Dynee, member of parliament representing the Iraqi Front for National Dialogue, a Sunni group. He is in Washington to try to persuade Congress to drop calls for the oil law. "Even if this law can pass, which I doubt, it will remain ink on paper and will not be implemented on the ground."

An unofficial English translation of the draft law was first released on the website of the Kurdish Regional Government and has since been carried on oil industry watchdog sites such as www.priceofoil.org.

1 | Page 2 | 3 | Next Page

Click to enlarge Sources: The Associated Press, State Department, Defense Department, Department of Energy, Special Inspector General for Iraqi Reconstruction, The Lancet, Iraqi Ministries of Health and Education, UN Assistance Mission for Iraq, UN High Commission for Refugees, Economist Intelligence Unit/AP