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Watch this flash video from Jim Hightower.
Iraq has 115 billion barrels of known oil reserves--10 per cent of the world total. There are 80 discovered oilfields, of which only 17 have been developed. Oil accounts for more than 70 per cent of Iraq's GDP and 95 per cent of government revenue.
The proposed Iraq hydrocarbon law would take the majority of Iraq's oil out of the exclusive hands of the Iraqi government and open it to international oil companies for a generation or more. The law is a dramatic break from the past. Foreign oil companies will have a stake in Iraq's vast oil wealth for the first time since 1972, when Iraq nationalized the oil industry.
BearingPoint, a Virginia based contractor is being paid $240m for its work in Iraq, winning an initial contract from the US Agency for International Development (USAid) within weeks of the fall of Saddam Hussein in 2003. A BearingPoint employee, based in the US embassy in Baghdad, was hired to advise the Iraqi Ministry of Oil on drawing up a new hydrocarbon law.
BearingPoint employees gave $117,000 to the 2000 and 2004 Bush election campaigns, more than any other Iraq contractor.
The process of drafting the oil law has been particularly troubling. The timeline of which entities have seen the draft suggests that Iraqi interests are not being considered first and foremost:
The Iraq National Oil Company would have exclusive control of just 17 of Iraq's 80 known oil fields, leaving two-thirds of known "and all of its as yet undiscovered" reserves open to foreign control.
The law sets no minimum standard for the extent to which foreign companies would not have to invest their earnings in the Iraqi economy, partner with Iraqi companies, hire Iraqi workers or share new technologies.
The international oil companies could also be offered some of the most corporate-friendly contracts in the world, including what are called production sharing agreements. These agreements are the oil industry's preferred model, but are roundly rejected by all the top oil producing countries in the Middle East because they grant long-term contracts (20 to 30 years in the case of Iraq's draft law) and greater control, ownership and profits to the companies than other models. In fact, they are used for only approximately 12 percent of the world's oil.
Iraq's neighbors Iran, Kuwait and Saudi Arabia maintain nationalized oil systems and have outlawed foreign control over oil development. They all hire international oil companies as contractors to provide specific services as needed, for a limited duration, and without giving the foreign company any direct interest in the oil produced
Iraqis may very well choose to use the expertise and experience of international oil companies. They are most likely to do so in a manner that best serves their own needs if they are freed from the tremendous external pressure being exercised by the Bush administration, the oil corporations and the presence of 140,000 members of the American military.
The leadership of Iraq's five trade union federations released a statement opposing the law and rejecting ''the handing of control over oil to foreign companies, which would undermine the sovereignty of the state and the dignity of the Iraqi people.'' They ask for more time, less pressure and a chance at the democracy they have been promised.
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