LA Times: It’s still about oil in Iraq


Richard Moore

Original source URL:,0,4717508.story?track=tottext

It's still about oil in Iraq

A centerpiece of the Iraq Study Group's report is its advocacy for securing 
foreign companies' long-term access to Iraqi oil fields.

By Antonia Juhasz

ANTONIA JUHASZ is a visiting scholar at the Institute for Policy Studies and 
author of "The Bush Agenda: Invading the World, One Economy at a Time."

December 8, 2006

WHILE THE Bush administration, the media and nearly all the Democrats still 
refuse to explain the war in Iraq in terms of oil, the ever-pragmatic members of
the Iraq Study Group share no such reticence.

Page 1, Chapter 1 of the Iraq Study Group report lays out Iraq's importance to 
its region, the U.S. and the world with this reminder: "It has the world's 
second-largest known oil reserves." The group then proceeds to give very 
specific and radical recommendations as to what the United States should do to 
secure those reserves. If the proposals are followed, Iraq's national oil 
industry will be commercialized and opened to foreign firms.

The report makes visible to everyone the elephant in the room: that we are 
fighting, killing and dying in a war for oil. It states in plain language that 
the U.S. government should use every tool at its disposal to ensure that 
American oil interests and those of its corporations are met.

It's spelled out in Recommendation No. 63, which calls on the U.S. to "assist 
Iraqi leaders to reorganize the national oil industry as a commercial 
enterprise" and to "encourage investment in Iraq's oil sector by the 
international community and by international energy companies." This 
recommendation would turn Iraq's nationalized oil industry into a commercial 
entity that could be partly or fully privatized by foreign firms.

This is an echo of calls made before and immediately after the invasion of Iraq.

The U.S. State Department's Oil and Energy Working Group, meeting between 
December 2002 and April 2003, also said that Iraq "should be opened to 
international oil companies as quickly as possible after the war." Its preferred
method of privatization was a form of oil contract called a production-sharing 
agreement. These agreements are preferred by the oil industry but rejected by 
all the top oil producers in the Middle East because they grant greater control 
and more profits to the companies than the governments. The Heritage Foundation 
also released a report in March 2003 calling for the full privatization of 
Iraq's oil sector. One representative of the foundation, Edwin Meese III, is a 
member of the Iraq Study Group. Another, James J. Carafano, assisted in the 
study group's work.

For any degree of oil privatization to take place, and for it to apply to all 
the country's oil fields, Iraq has to amend its constitution and pass a new 
national oil law. The constitution is ambiguous as to whether control over 
future revenues from as-yet-undeveloped oil fields should be shared among its 
provinces or held and distributed by the central government.

This is a crucial issue, with trillions of dollars at stake, because only 17 of 
Iraq's 80 known oil fields have been developed. Recommendation No. 26 of the 
Iraq Study Group calls for a review of the constitution to be "pursued on an 
urgent basis." Recommendation No. 28 calls for putting control of Iraq's oil 
revenues in the hands of the central government. Recommendation No. 63 also 
calls on the U.S. government to "provide technical assistance to the Iraqi 
government to prepare a draft oil law."

This last step is already underway. The Bush administration hired the 
consultancy firm BearingPoint more than a year ago to advise the Iraqi Oil 
Ministry on drafting and passing a new national oil law.

Plans for this new law were first made public at a news conference in late 2004 
in Washington. Flanked by State Department officials, Iraqi Finance Minister 
Adel Abdul Mahdi (who is now vice president) explained how this law would open 
Iraq's oil industry to private foreign investment. This, in turn, would be "very
promising to the American investors and to American enterprise, certainly to oil
companies." The law would implement production-sharing agreements.

Much to the deep frustration of the U.S. government and American oil companies, 
that law has still not been passed.

In July, U.S. Energy Secretary Samuel Bodman announced in Baghdad that oil 
executives told him that their companies would not enter Iraq without passage of
the new oil law. Petroleum Economist magazine later reported that U.S. oil 
companies considered passage of the new oil law more important than increased 
security when deciding whether to go into business in Iraq.

The Iraq Study Group report states that continuing military, political and 
economic support is contingent upon Iraq's government meeting certain undefined 
"milestones." It's apparent that these milestones are embedded in the report 

Further, the Iraq Study Group would commit U.S. troops to Iraq for several more 
years to, among other duties, provide security for Iraq's oil infrastructure. 
Finally, the report unequivocally declares that the 79 total recommendations 
"are comprehensive and need to be implemented in a coordinated fashion. They 
should not be separated or carried out in isolation."

All told, the Iraq Study Group has simply made the case for extending the war 
until foreign oil companies ‹ presumably American ones ‹ have guaranteed legal 
access to all of Iraq's oil fields and until they are assured the best legal and
financial terms possible.

We can thank the Iraq Study Group for making its case publicly. It is now our 
turn to decide if we wish to spill more blood for oil.

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