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Iraqi union protesters fear loss of oil control { June 3 2007 } Original Source Link: (May no longer be active)
http://www.chron.com/disp/story.mpl/editorial/4858332.htmlhttp://www.chron.com/disp/story.mpl/editorial/4858332.html
Editorial
June 3, 2007, 6:59PM
Oily law
Protesters from Iraq draw attention to a law they fear will give control of their oil to foreign investors.
Copyright 2007 Houston Chronicle
On Tuesday Iraqi oil union leaders will protest in Washington outside the offices of a consulting firm called BearingPoint. A contingent from the 26,000-member union of oil workers is on a 14-city tour to bring to the American people a heartfelt plea: Please separate U.S. withdrawal from Iraq from the passage of an oil law by the Iraqi Parliament.
With Congress pushing for benchmarks, the Bush administration has been pressing Parliament to pass the oil law. Administration and media focus has been on the provision that states that oil and gas in Iraq are owned by all its people in all regions and governorates. Unfortunately, the law does not stipulate how to fairly distribute oil revenues. Distribution of the nation's vast oil reserves is vastly unequal, and there is no system of mineral rights, which weren't needed under Iraq's national oil company.
This familiar controversy is not the source of outrage for the visiting union members. Their fear centers around the provisions in the 33-page law that have received little scrutiny in the media. They say the law forces privatization of the Iraqi oil industry, an industry that is responsible for almost 70 percent of the gross domestic product.
The nation's five trade unions, representing hundreds of thousands of workers, issued a statement that the law would amount to handing control over oil to foreign companies and undermining the sovereignty of the state and the dignity of the Iraqi people.
The draft oil law bears the stamp of the BearingPoint privatization consultants and American oil executives that helped craft it. Some of its provisions raise eyebrows:
• The oil ministry council will include, in addition to government ministers, the chief executives of "important related petroleum companies."
• The council, including its foreign energy executives, will be responsible for approving the contracts under which foreign companies will operate.
• The newly re-formed Iraq National Oil Company will have exclusive control of only part of the known oil fields in production. Other fields — including two-thirds of the known fields and all those yet to be discovered — will be open to foreign investors.
• The production contracts the law stipulates have unusually long terms and other conditions not favored in other oil-producing Arab states.
The Iraqi Parliament has been struggling with the draft since the first of the year. In light of the concerns about foreign control, its struggles are more comprehensible. The country had a national oil company before the war, and appears headed for open doors to foreign investment.
From an American perspective, the foreign debt incurred by Iraq in its war with Iran coupled with the need for vast sums for reconstruction would make foreign investment a welcome aid to restoration and development of a viable oil industry. Production has been lagging, infrastructure needs replacing and, without major external investment, these obstacles will be difficult for Iraq to overcome.
Foreign investment is not in itself a problem. The Iraqi oil union has been fiercely resisting replacement by American contract workers. The union was instrumental in getting the industry up and running following the American invasion. Its members believe Iraq can manage its oil industry without outside influence.
The union does not represent all factions in the country. The Kurds, for instance, have already contracted with private oil companies in advance of any national agreement.
The union protesters pose an important question: To what degree will foreign investment be coerced, and to what degree will Iraq share in the wealth created by that investment? If oil profits wind up in the pockets of foreign investors, there might be little of the trillions in oil wealth for Sunnis, Shiites and Kurds to share.
If, due to our national need to resolve our presence in Iraq, our leaders have initiated an oil policy that rides roughshod over the desires of the Iraqi people, the political settlement necessary to end civil conflict will be put off even further. Resentment of foreign involvement in the Iraqi oil industry will trump any dissension in Iraq over sharing the wealth.
It's a good idea to listen to the voice of protest and take a second look at the oil law we expect Iraq to enact.
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