As violence rises again in Iraq, negotiations to
institutionalize US economic dominance continue unabated.
While the battle of Basra raged last week, a series
of talks between the Bush administration and the US-backed Maliki government
rolled forward. These negotiations may have at least as many implications for
Iraq’s future as the violence on the ground.
The discussions, ongoing since November, stem from a “Declaration
of Principles” agreement signed by the two leaders, aimed at establishing a
long-term “friendship” between their countries.
While the portion of the Declaration that suggests a
permanent US military presence in Iraq has garnered much attention, the
agreement also proposes another goal: to solidify “economic ties” between the
two countries and grant the US preferential treatment in trading with Iraq.
As brought to light by last week’s oil price surge
during the assault on Basra, economic concerns are inextricably linked to the
occupation. When it comes to oil, the coming months may be crucial in
determining what kind of “friends” the US and Iraq are going to be over the
long haul.
A
Framework for Occupation
In a House Foreign Affairs Committee hearing last
month, State Department Iraq Coordinator David Satterfield revealed the
Declaration of Principles proposals have now been divided into a binding Status
of Forces Agreement (on military involvement) and a nonbinding Strategic
Framework Agreement (on economic and diplomatic relations). Neither would be
submitted for the consent of Congress. Though Satterfield emphasized that,
being nonbinding, the Strategic Framework would not “tie the hands” of future
administrations, it could solidify changes the US has already made to Iraq’s
economic landscape - and pave the way for increased US control over Iraq’s oil
in years to come, according to Antonia Juhasz, a fellow at Oil Change
International.
“A lot of frameworks for foreign investment were set
up under [former Director of Iraq Reconstruction L. Paul] Bremer, and are
already in place,” Juhasz told Truthout. “A bilateral agreement would lock all
that in and also place pressure on the government to pass the domestic oil law,
to settle access for foreign companies to Iraq’s oil underground.”
The “all that” encompasses a host of sweeping
reforms: Thanks to Bremer’s alterations of Iraqi law during the first year of
the US occupation, American companies are now allowed to buy out 100 percent of
Iraqi businesses, instead of partnering with them. Bremer’s orders also
eliminated Iraq’s high taxes on corporations, exchanging them for a 15 percent “flat
tax.” They abolished the practice of giving preference to Iraqi companies - in
contracting out reconstruction work, for example - and erased a requirement to
hire Iraqi workers.
Previously, Iraqi banks were closed to foreign
ownership. Now, not only can foreign banks operate in Iraq, they can take over
private Iraqi banks as well.
Bremer reworked Iraq’s trademark and copyright laws,
eliminated trade barriers and afforded foreign businesses the option of
circumventing Iraq’s legal system and taking any disputes to international
tribunals.
A bilateral agreement like the Strategic Framework
could serve as the perfect next step for the administration, making Bremer’s “emergency”
economic changes look like standard policy, according to Juhasz. Even if it
remains a nonbinding pact, it would exert significant pressure on the Iraqi
government to leave Bremer’s legacy alone.
Where
the Oil Flows
The November version of the Bush-Maliki agreement
suggested a commitment to “facilitating and encouraging the flow of foreign
investments to Iraq, especially American investments, to contribute to the
reconstruction and rebuilding of Iraq.”
According to James A. Paul, executive director of the
Global Policy Forum, the “flow of foreign investments to Iraq” wouldn’t
manifest as generously as it sounds: The deal would primarily translate into “US/UK
oil company control.”
Last week’s assault on Basra was “part of an effort
to defeat the ‘nationalists’ in Iraq and consolidate a pro-US political regime
that will go ahead with the oil deals,” Paul told Truthout. Just before
fighting erupted in Basra, the Iraqi presidential council approved the “provincial
law,” which clears the way for elections - potentially allowing nationalist
leaders who oppose US oil interests to come to power. Maliki’s Basra attack,
says Paul, represents a failed attempt to quash that possibility.
It’s not a question of pressure from oil companies,
according to Reese Erlich, co-author of “Target Iraq: What the News Media Didn’t
Tell You.” Buying up oil reserves is a strategic move to ensure US energy “security.”
The corporations become the vehicles for that security.
“It’s not like oil companies were pounding on the
state house door to invade Iraq,” Erlich told Truthout. “Oil companies
certainly benefit, but they’re not the initiators.”
As Juhasz noted, one goal Bremer could not
singlehandedly accomplish was the privatization of Iraq’s reserves, which, by
some estimates, may contain a quarter of the world’s oil. The famed “Iraqi oil
law,” approved by the Maliki administration but still “stuck” in the
Parliament, would, among other provisions, open up Iraq’s underground oil for
foreign investment. In its most recent draft, the law would leave only 12 of
the country’s oil reserves under government control, with the remaining 74 --
not to mention any undiscovered fields, which certainly exist -- up for grabs.
The primary grabbers would no doubt be American, as
indicated by the Declaration of Principles’ “especially American investments”
clause.
Since the early days of the occupation, the US has
never kept its oil execs far from Iraq’s oil. The oil fields, as well as the
Oil Ministry in Baghdad, were some of the only places American soldiers guarded
throughout the initial invasion. Paul notes that US “advisers” presided over
the drafting of the latest version of the oil law.
Skirting
the Law
According to the pan-Arab newspaper Al-Hayat,
simultaneous with the battle of Basra, negotiations were taking place between
major oil companies and the Iraqi ministry of oil.
An Oil Ministry official told The Associated Press
last week Chevron, Exxon and British Petroleum would soon submit proposals for
contracts on specific oil fields - including the Rumaila field near Basra.
Since the oil law has not yet passed, private
companies can’t obtain long-term contracts on the fields. However, that hasn’t
stopped them from getting their feet in the door. All it takes is a few
powerful, cooperative Iraqis, and, according to Erlich, some of the most
prominent are Kurds, who control Iraq’s historically highest-producing oil
field, near Kirkuk. Disregarding the Parliament’s objections, Kurdistan has
signed numerous “production sharing agreements” with Western oil companies.
The Maliki administration has also done its share of
dodging Parliament’s prohibition on international oil investment. Long-term
contracts may be off limits, but short-term contracts stop just short of
illegal, and Iraq’s executive branch is swooping in on that loophole.
“You have the oil minister trying to sign two-year
contracts with the oil companies, to demonstrate that the Maliki government is
working with oil companies, even if Parliament is not,” Juhasz said.
Pushing
Back
Parliament is holding its ground. For the past year, the
body has systematically rejected drafts of the oil law, which, in any form,
would divest the legislature of authority on oil. The 12 fields still
controlled by the government would be in the hands of an advisory board,
including members of the Maliki administration, representatives of the
provinces - and even, probably, representatives of foreign oil companies,
according to Juhasz. Paul points to Parliament’s seeming inaction as a genuine
act of resistance to the occupation.
“The Parliament has remained steadfastly opposed and,
in spite of periodic predictions that parliamentary agreement is ‘near,’ they
have not acted,” he said. “There have even been rumors that the companies have
offered $5 million to each parliamentarian who votes ‘yes,’ a rumor that seems
to me to be probably based in reality, yet even with such blandishments the
Parliament has not acted.”
By democratic standards, Parliament has some
important backers on its side. A July poll commissioned by a group of human
rights organizations showed 63 percent of the Iraqi people would prefer Iraqi
companies maintain control of the country’s oil.
Neither Democratic presidential hopeful has
explicitly spoken out against opening Iraq up to foreign oil investments. Both
Barack Obama and Hillary Clinton have emphasized the need to urge the Iraqi
government to pass one prong of the oil law -- a provision to distribute oil
revenue evenly throughout the country, over which there is little controversy
-- but have largely bypassed the broader debate about the law.
Meanwhile, negotiations over the Strategic Framework
continue, with the looming prospect of an agreement threatening to further
entrench Bush-era economic policies in Iraq.
“I hope things would change under a Democratic
administration,” Juhasz said. “But the fact that neither Clinton nor Obama has
put forward an immediate withdrawal plan is worrisome. It doesn’t give me
confidence that they would abandon the oil policies the Bush administration has
pursued.”
Maya Schenwar is a
Chicago-based freelance writer and an editor for Publications International.
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