The Great Iraq Oil Robbery

Published on Counterpunch, by Alan Maass, 31 March, 2007

2 Excerpts: The oil men of the Bush administration are trying to set up one of the biggest swindles in history–the great Iraq oil robbery. The cabinet of the new Iraqi government – under pressure from the U.S. occupiers who put them in power – approved a law that would undo Iraq’s nationalized system and give Western oil giants unparalleled access to the country’s vast reserves.

The oil companies would be guaranteed super-profits–on a scale unknown anywhere else in the Middle East–for a period of 20 to 35 years from oil pumped out of two-thirds or more of Iraq’s oilfields. Meanwhile, Iraqis would continue to endure poverty and the devastation of war while sitting atop what is estimated to be the third-largest supply of the world’s most sought-after resource.

The great Iraq oil robbery isn’t a done deal. Even if the law is finalized by May as expected, the major oil companies say they won’t have anything to do with production in Iraq until “security” is established – and that would mean a success for the occupiers and their Iraqi puppets that the U.S. hasn’t been able to achieve over the past four years since the invasion …

… For one thing, Iraqi oil production has been hampered by two decades of war and sanctions–its reserves will be an important unexploited source as oil becomes more scarce.

U.S. companies would love to take advantage of the super-profits guaranteed by the production-sharing agreements (PSAs) that the Iraqi government would sign under the law.

PSAs are usually used in situations where the oil is difficult to extract, so the company’s investment in production is substantial. But the opposite is the case in Iraq–the cost of extraction is about $1 per barrel, and the selling price on the world market is around $60 a barrel. And under the PSA, foreign oil companies would be guaranteed 70 percent of the profits–seven times the typical share under other contracts in the Middle East.

But that’s assuming they get away with it. The Iraqi government is expected to approve the oil law, but getting Western oil companies to come in under circumstances of a civil war and widespread opposition to the U.S. military presence is another matter.

The other aim of the oil law, as left-wing Iraq expert Michael Schwartz put it in a recent interview with Socialist Worker, is to give U.S. companies “control over the spigots”–so that the U.S. will “get to decide how much is going to get pumped at any particular moment, and who it will be sold to.” But the crisis of the occupation has frustrated this aim as well.

Meanwhile, rather than being intimidated by U.S. power, Iran has benefited from Washington’s crisis in Iraq, and is more willing than ever to strike out on its own. One consequence has been Iran’s deeper ties with China–the very country the U.S. hoped to force into line with its tightened grip on Persian Gulf oil.

Washington’s rulers aren’t about to give up, however. For the last century, the world’s governments have been ready to go to war over oil–and they will again, until a new society that places priorities on democracy, freedom and justice is established. (full text).

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