Iraqi oil workers are waking up to the fact that a proposed hydrocarbon law the Bush administration wants the Iraqi Parliament to pass will effectively place the country’s massive oil reserves in the hands of big U.S. and British oil giants for decades.
Many Iraqis are only realizing now what experts have been saying since 2003: that the invasion of Iraq was about oil and Israel, and not about America’s security.
The new law would transfer ownership of the majority of Iraq’s oil from the Iraqi government and hand it to multinational oil companies linked mostly to the United States, though the British would have a slice of the action.
There would be no benchmarks establishing how much of the profits oil companies would have to share with Iraq.
The law would not pass muster in any other oil producing country in the world, especially one with the huge reserves Iraq has. The measure was drawn up by Bearing Point, a Virginia company that received a $240 million contract within weeks of the Iraq invasion to work with the Iraqi oil ministry.
At that time, Ahmed Chalabi, the darling of the Washington neo-cons was heralding a new Iraq in which an American-led group of oil companies would take over and manage the country’s oil reserves.
Chalabi was not alone. In 2004, as L. Paul Bremer was vacating Iraq where he had been virtually its ruler, he passed the baton for economic reconstruction—in particular Iraq’s oil future—to a former CIA source, Iyad Allawi and his close associate, Adel Abdul Mahdi. Within months Allawi presented proposals for a new petroleum law to Iraq’s Supreme Council, calling for an end to nationalization and the privatization of the oil industry. To close observers it was clear Allawi was the puppet chosen by the United States to do its bidding in the critical area of oil.
Since then the United States has put continuous pressure on the Iraqis to privatize their oil. A draft of the new law was shown to the Bush administration in 2006, but the Iraqi parliament was not allowed to see it until February 2007.
This is no surprise to those who have closely studied the Bush Administration’s bogus case for going to war and more importantly the activities of Vice President Dick Cheney, beginning with his first 10 days in office in January 2001. He was the number two in an administration staffed mostly by former oil company executives who understood the importance of Iraq’s oil reserves. None was better informed or better placed to plan to control those reserves than Cheney.
During week two of the Bush presidency, Cheney set up the National Energy Policy Development Group that later became known as the vice president’s “Energy Task Force.” Cheney has since used executive privilege to hide the activities of that that group and its meetings with heads of the big energy companies in the United States.
But Freedom of Information Act searches have provided reporters with insights into what Cheney was up to prior to and after the Sept. 11 attacks.
The group was busy drawing up lists of companies and countries that were keen to get their hands on Iraq’s national resources. The lists were entitled “Foreign Suitors for Iraqi Oil Contracts as of March 5, 2001.”
Cheney knew Iraq possessed oil riches. It had enough oil for the United States to break the OPEC stranglehold on world oil prices. Iraq’s oil is high grade and easily refined. More importantly Cheney knew it would be cheap to extract it from the ground because most of it is in shallow wells 1,400 to 2,000 feet beneath the desert floor. In total, the reserves were reckoned to be several hundred billion barrels with at least 120 billion barrels already located.
There was enough to put Iraq in the top tier of oil producers for well into the latter half of this century.
A commentary by James A. Paul of the respected Global Policy Forum in December 2002 contained observations that were to prove prescient considering they were written before the Iraq invasion. Paul wrote:
“Oil analysts believe a U.S.-controlled Iraqi government would quickly make deals with the companies for privatized production. Such deals, though possibly agreed in advance of the war, would be justified by the new government on the basis that only the companies would be able to quickly resume post-war production. . . .”
In other words, Paul was saying that after an invasion the US would have enough troops on the ground to ensure that oil production was brought up to speed and that oil facilities were protected.
Paul also foresaw a takeover of Iraq’s oil as a prelude to the United States putting pressure on Kuwait, Iran and Saudi Arabia to de-nationalize their oil companies and allow U.S. and UK oil giants a 50-50 split in the production and profits from those countries’ oil.
During the planning stages for the attack on Iraq, Cheney focused on Iraq’s oil. Evidence of that can be seen in the fact that the State Department was tasked to examine ways to control Iraq’s oil post invasion. In the four months leading up to the beginning of the war, the State Department’s Oil and Energy Working Group burned its own midnight oil planning for the future of Iraq’s energy reserves.
The State Department’s planners devised a method of privatization through what they called PSAs, or production sharing agreements. They were, in effect, contracts whereby big oil companies would get the most profitable deals. The Iraqi government would still have ownership but exploration and production would be in the hands of U.S. and British multinationals.
According to oil experts familiar with PSAs they are only used in relation to 10% of world’s oil because they are weighted in favor of private companies and not in favor the nations which own the oil.
It only got better for Cheney when a month after the war began, a new Iraqi oil minister was appointed by U.S. Coalition Provisional Authority chief L. Paul Bremer. The minister quickly announced that Iraq would tear up all previous oil contracts agreed to by Saddam, leaving the “suitors”—the Russians, Chinese and French—out in the cold.
Bremer ran Iraq like ancient Rome, hiring and firing at will, while making sure he chose the right Iraqis to handle the oil issue. One of his appointees, Adel Abdul Mahdi, announced at the end of 2004 that a new petroleum law would open up Iraq to foreign oil companies.
Iraqi oil workers and senior members of the Shiite majority are now beginning to realize what has been happening under their noses. The Kurds were the first to spot the subterfuge and have threatened to block the new law, but their efforts may have come too late.
White House pressure on Nouri al-Maliki’s government to pass the oil privatization law has been unrelenting. After all, oil was the prize behind the invasion, and there will be no draw down of U.S. troops until Bush and Cheney are sure Iraq’s oil production and exploration are in the hands of U.S.-British oil giants.
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