Tuesday, February 27, 2007

(A Little) Good News From Iraq

Two pieces of good news from Iraq in today's papers. First, from my local Tacoma News Tribune, a report that a local congressman, Norm Dicks (D-WA) has returned from a trip to Iraq more optimistic about the chances for success. According to the article, Dicks, a long-time critic of President Bush and the war in Iraq and who voted for the recent non-binding resolution criticising the surge, "'said the troop buildup led by Gen. David Petraeus, the new U.S. commander in Iraq, could work – if Iraqis believe in it and participate fully.'" "'I think this plan has possibilities, if the Iraqis will get their troops in the field and do the embedding with the U.S. forces, and if they do the political reconciliation' necessary for long-term stability."

But will the Iraqis get on board? That brings us to the second piece of good news. According to the New York Times, the Iraqi cabinet reached an agreement today on guidelines for the distribution of the country's oil revenues and foreign investment. According to the Times:

The draft law approved by the cabinet allows the central government to distribute oil revenues to the provinces or regions based on population, which could lessen the economic concerns of the rebellious Sunni Arabs, who fear being cut out of Iraq’s vast potential oil wealth by the dominant Shiites and Kurds. Most of Iraq’s crude oil reserves lie in the Shiite south and Kurdish north.

The law also grants regional oil companies or governments the power to sign contracts with foreign companies for exploration and development of fields, opening the door for investment by foreign companies in a country whose oil reserves rank among the world’s three largest.

Iraqi officials say dozens of major foreign companies, including ones based in the United States, Russia and China, have expressed strong interest in developing fields or have done some work with the Iraqi industry. The national oil law would allow regions to enter into production-sharing agreements with foreign companies, which some Iraqis say could lead to foreigners reaping too much of the country’s oil wealth.

Iraqi officials say all such contracts will be subjected to a fair bidding process, but American inspectors have reported that the upper echelons of the government, including the senior ranks of the Oil Ministry, are rife with corruption. There are also fears among non-Americans that American companies could be favored.

But oil industry analysts in the United States say it is unclear whether companies will rush to sign contracts because the law is vague about what legal protections investors would be given....

The oil law’s drafters reached agreement on the principle of revenue sharing fairly early in the process. Much more contentious was the issue of signing oil contracts. The Kurds, who have enjoyed de facto independence in the mountainous north since the end of the Persian Gulf war in 1991, argued strongly for regional governments or companies to have full power in signing contracts with foreign companies to develop oil fields. Sunni Arab leaders insisted on keeping this power in the hands of the Oil Ministry. The Shiites fell somewhere in the middle.

The draft law has a compromise: regions can enter into contracts, but a powerful new central body, the Federal Oil and Gas Council, would have the power to prevent the contracts from going forward if they do not meet certain prescribed standards, Mr. Salih said. A panel of oil experts from inside and outside Iraq would advise the federal council on the contracts.

The draft law also re-establishes the state-run Iraq National Oil Company, which was founded in 1964 to oversee oil production but was shut down by Mr. Hussein in 1987. The company would operate separately from the Oil Ministry and use a business model. In addition, any region that can produce at least 150,000 barrels of oil a day can create its own operating company.

This is a hugely important deal. One of the most critical sticking points between the three main players (Kurds, Sunnis, and Shiites) has been the distribution of oil wealth. The uncertainty has been a catalyst for the ethnic violence/insurgency, as the Sunnis have feared being shut out of the country's oil wealth; if this deal can reassure Sunnis that they will benefit from a united and stable Iraq it may be possible for the government to get the violence under control. While there is a lot more work to be done (for an excellent analysis, see this post over at Westhawk), but this deal is, at the least, a little bit of good news.

UPDATE: Over at The Corner of National Review.com, Rich Lowry posts the following, which bolsters the slim hopes noted above:

My “Pentagon intel guy” writes in an e-mail:

Since my job at the Pentagon is to follow and report these kinds of things- there are several trends we are seeing lately:

1) Definite and measurable decrease in number of sectarian killings within Baghdad: From nearly 1,400 to 680 in the last two months.

2) We are killing and capturing increasing numbers of Sunni insurgents and Al Qaeda fighters. And when I say "we"- I mean Multi-National Forces Iraq as well as the Iraqi Army, the Iraqi Police Commando, and the newer "National Guard"/Territorial Forces in Anbar.

3) The recent bombings in ANBAR demonstrate red on red kinetic operations. Something which has been rare until the last few months. More and more Sunni tribes are pledging fealty to the Iraqi government and the Coalition and turning their back on the insurgents/AQI. This has caused them to be targeted.

We have seen the enemy bomb police recruitment drives, and now mosques of "apostate" Imams and Sheikhs who have sided with the Americans. This has happened twice in the last week. While the mainstream media considers this more proof of failure- it is actually a sign of the precarious position the terrorists are in. They need the Sunni population to protect them and shelter them. If they are now butchering them like everyone else- this could be a turning point in the relationship. This is crucial to watch. We need to protect the tribal leaders who have come over to us- and AQI knows that it is a death sentence for them if they can't stop it.


Gary Anderson said...

Unfortunately contracts have already been written to favor the countries that invaded Iraq. Here is one assessmement: http://www.atimes.com/atimes/Middle_East/IB28Ak02.html

Gary Anderson said...

http://www.atimes.com/atimes/Middle_East/IB28Ak02.html This is the corredct link.

Seth Weinberger said...


The article you cite makes absolutely no claims of or reference to existing contracts that "have already been written to favor the countries that invaded Iraq." The process is one intended to open up the Iraqi oil industry to foreign investment and control (despite your claims that the US already controls the Iraqi oil, it is in fact in control of the Iraqi national government) and to create a means to create contracts. You can, as the authors of the op-ed you cite do, debate the law and the process. But it does not in any way support your long-standing claims that the war was all about oil, or that the US has manipulated the process to favor US oil companies at the expense of those countries that did not participate in the invasion.

Gary Anderson said...

It costs a buck a barrel to extract Iraq oil. Here is the link. Don't tell me that extracting for a buck and selling for 60 bucks was not the primary motivation for Iraq. Obviously the US government is linking the contracts to support for the Shiite government. Here is the link about cost of drilling. http://www.motherjones.com/washington_dispatch/2007/01/iraqi_oil.html

Anonymous said...

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