Home > Americas, Economics, Middle East, Politics, USA > Why Iraqis Oppose U.S.-backed Oil Law

Why Iraqis Oppose U.S.-backed Oil Law

David Bacon writes in San Francisco Chronicle:

Across the political spectrum in Washington, members of Congress are now demanding that the Iraqi government meet certain benchmarks, which presumably would show that it’s really in charge. But there’s a big problem with the most important benchmark: the oil law. It is extremely unpopular in Iraq.

Congress has been told the law is a way to share oil wealth among Iraq’s regions and religious sects. Iraqis see it differently. They say the law will turn over the oil fields to foreign companies, giving them control over setting royalties, deciding production levels, and even determining whether Iraqis get to work in their own industry.

Under Washington’s guidance, the Iraqi government wrote the oil law in secret deliberations. It needed secrecy to obscure the fact that it gives foreign corporations control over exploration and development in one of the world’s largest oil reserves, through agreements called “production-sharing” contracts. Such deals are so disadvantageous that they have been rejected by most oil-producing countries, including Kuwait, Saudi Arabia, the United Arab Emirates and otherwise conservative regimes throughout the Middle East.

The leaders of the Iraqi opposition to the oil law are the industry’s workers. In early June, the Iraqi Federation of Oil Unions shut pipelines from the Rumeila fields near Basra, in the south, to Baghdad and the rest of the country. Their main demand was that oil remain in public hands, although they also sought to force the government to improve conditions for workers.

Iraqi Prime Minister Nouri al-Maliki responded by calling out units of the 10th Division of the Iraqi army and surrounding the strikers at Sheiba, near Basra. U.S. aircraft buzzed the strikers as well, while al-Maliki issued arrest warrants for the union’s leaders. Facing the possibility, however, that the strike would escalate into shutdowns on the rigs themselves, cutting off oil exports, al-Maliki blinked. He agreed to hold off implementation of the oil law until October, giving the union a chance to propose alternatives.

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