Iraq Hydrocarbons Law - Essay Example

Topic: Iraq Hydrocarbons Law Absract This paper seeks to highlight the different aspects of Iraq hydrocarbons law and provide a healing answer for the pivotal question: why such issue has been so controversial and of great public interest inside and outside Iraq. Based apparently on the sharing of revenues, the hydrocarbons law is said to regulate the oil sector in Iraq and to divide utter responsibility between the central government in Baghdad and other Iraq’s regions. Yet, it should be stressed from the very outset that disagreement on the contents of this law and the subsequent conflicts has unmistakably delayed the passage of the finalized version of this oil law. Essay Referred to as the Iraq hydrocarbon1, the Iraq oil law is a piece of legislation that was submitted to the Iraqi Council of Representatives in May 2007. 2 It was approved by the Iraqi cabinet in February and was so disputable. Analysts argue that the successful implementation as well as the passage of this law would certainly help calm the state of chaos in Iraq and would reflect a spirit if consensus and compromise amidst all the political parties. Other analysts, nevertheless, hold the assumption that the suggested law shall lead to terrible aftermaths on the political, social and economic stability if ever it fails to pass. In fact, many political actors were involved in the hydrocarbons law, a law that has more to do with the overall disordered political situation than with the content of the law itself. The latter turned out to be a good pretext for those who are hankering after achieving Iraq unity and those who want a more decentralized federation. Perceived as a token of power and a platform of national security and reconciliation, the hydrocarbons law was above all a political battlefield for all the political leaders trying to rule and govern Iraq. Interestingly enough, one can note that it is Bush administration that has decided to launch the law in 2004. The law was a benchmark for the government of the Iraqi president Nuri Kamal al-Maliki.3 It could not be passed given its unpopularity, as viewed by the Iraqi citizens, most of whom would prefer Iraq’s oil to be generated not by foreign companies, but rather by Iraqi state-owned companies. This may be one reason why the law has stalled in the Iraqi parliament. 4 What is stunning is that the law starts with an article from the Iraqi constitution which clearly points out that “the Oil and Gas are owned by all the people of Iraq,” a claim which may be presently untrue owing to the great foreign intrusion and exploitation. The law was so controversial and highly debatable simply because it concerns how power will be divided between the Iraqi government and the other regions like Kurdistan, whose Regional Government has repeatedly emphasized that Kurdistan’s oil belonged to the Kurds and that newly discovered oil fields must be exploited exclusively by Kurdistan Regional Government (KRG). Most importantly, KGR has given cosmopolitan oil firms more priority over national ones. The KRG’s objective was so clear since it tried to bring oil under its sway and thereby maximize foreign investment. Qubad Talabani, the son of the Iraqi President Jalal Talabani and the Kurdistan Regional Government’s representative to the United States, declared in an interview from his Washington office, that “the oil issue for [them] is a red line. It will signify [their] participation in Iraq or not.”5 Many of the arguments over the law dates back to the 2005 constitution. Ambiguous statements and vague structures central to the law are most likely to lead to total misunderstandings and bring about serious conflicts amongst the Iraqis. Very often, whenever we read about the hydrocarbons law, we hear that the law will provide equal opportunities for the Sunnis, Shia and the Kurds to share oil revenues. The question that should be raised here is: who else is going to share those revenues? In his talk about the Iraqi hydrocarbons law, the Congressman Dennis Kucinich indicates that the law creates a structure to facilitate the privatization of Iraq oil. His speech, which was delivered on May 23, 2007 and which lasted for an hour is worth referring to even though it got little press coverage. Here below, you shall find a few excerpts from the most salient stories found on the subject. On March 13, 2007, edition of The New York Times, Antonia Juhasz, an analyst with the watchdog group Oil Change International, wrote a very interesting article entitled “Whose Oil is it, Anyway?” In this respect, Antonia contends that “The Iraqi hydrocarbon law would take the majority of Iraqi out of the exclusive hands of the Iraqi government and open it to international oil companies for a generation or more… The Administration has highlighted the law’s revenue sharing plan, but the benefits…are radically undercut by the law’s many other provisions – these allow much (if not most) of Iraq’s oil revenues to flow out of the country and into the pockets of international oil companies.6 Antonia also goes to say that the Iraqi National Oil Company (INOC) would have exclusive control of just 17 of Iraq’s 80 known oil fields, leaving two-thirds of its known undiscovered fields open to foreign control. In the same vein, Michael Schwartz in TomDispatch.com hinted to the hydrocarbons law in his article titled “The Struggle Over Iraqi Oil: Eyes Eternally on the Prize.” In this article, Michael meticulously depicted the nature of production sharing agreements. He therefore argues that “Production sharing agreements (PSA’s) are generally applied in circumstances where there is a strong possibility that oil exploration will be extremely costly or even fail, and/or where extraction is likely to prove prohibitively expensive. To offset the huge and often risky investments, the contracting company is guaranteed a proportion of the profits, if and when the oil is extracted and sold. 7 Michael also puts forward that in the most common of these agreements, the proportion remains very high until all development costs are amortized, allowing the investing company to recoup its investment expenditures (if oil is found), and then to be rewarded with a larger-than-normal profit margin for the remainder of the contract which, in the Iraqi case, could extend for up to 25 years.8 In The San Francisco Chronicle, Lewis Seiler and Dan Hamburg in turn discussed in details the new Iraqi law which, according to them, was largely written by the Coalition Provisional Authority. The two writers hence agree that the new law “Cedes control of Iraqi’s oil to western powers for 30 years. There is major opposition to the proposed law within Iraq, especially among the country’s five trade union federations that represent hundreds of thousands of oil workers. The United States is working hard to surmount this opposition by appealing directly to the al-Maliki government.” 9 It is noteworthy that the Iraqi citizens show some sort of phobia for the sorts of contracts that are afforded to international companies via this law and openly disapprove of the long term contracts that can be granted to them. Leila Benali, director of Middle East and Africa at Cambridge Energy Research Associates said in a phone interview with her, that “even if contracts are awarded, their implementation depends on how the Iraqi situation evolves,” adding that “contracts may not be ratified. There could be several legal or operational problems. There are many stumbling blocks.”10 Also, Kirkuk, being at the centre of the northern Iraqi oil industry produces up to one million barrels a day and this is why it has become a critical spot for Iraq’s post-Saddam constitutional democracy. The coalition forces are looking with greediness at this area in order to allow their investors start their work and get the a big amount of oil. In the light of what has been said, we can venture that in spite of the countless articles that have tackled the Iraqi hydrocarbons law, still, the issue is almost totally ignored. Works Cited List Partlow, Joshua (2007-05-03). “Struggle seen on oil revenue”. Washington Post.  Lando, Ben. “Kurdish Leader: Oil Law is a Deal Breaker.” Retrieved May 14. 2007, from http://www.alternet.org/world/51721/. Carrier, Cornelia. The Privatisation of Iraq’s oil reserves. Retrieved July 02,2007,from http://www.niemanwatchdog.org/index.cfm?fuseaction=ask_this.view&askthisid=287. Daya, Ayesha. “Iraq’s Second Oil Bidding Round Needs; Higher Fees to Succeed. Retrieved August 24, 2009, from http://www.globalexchange.org/campaigns/chevronprogram/6267.html Iraqi Oil Law Poll: June-July 2007". Oil Change International. 2007-07-01. http://priceofoil.org/iraqi-oil-law-poll-june-july-2007/. Janabi, Ahmed (2007-05-05). "Row over Iraq oil law". Al Jazeera. http://english.aljazeera.net/NR/exeres/0D09B919-D28A-4CC4-A79F-0EE500239225.htm. Juhasz, Antonia (2007-03-13). "Whose Oil Is It, Anyway?". New York Times. http://www.nytimes.com/2007/03/13/opinion/13juhasz.html?_r=1&oref=slogin.   Read More