Monday, January 08, 2007

It's the law

But the oil of the Iraqi people belongs to the Iraqi people; it is their wealth, it will be used for their benefit. So we did not do it for oil.
--Colin Powell,
Press briefing,
10 July 2003

While Bush's sociopathy will likely be further revealed this week when, as most now expect, he announces his "new plan" for Iraq, sociopathy is certainly not evident in the revelation that Iraq's quirky new oil law, adamantly insisted upon by White House operatives and the ISG, is soon to come into effect. The oil law, in fact, is grounded in rational motive: profit and control thereof.

Having already discussed this development before, there's not much about this law that hasn't been said, though a few new treats have come to light, such as the fact the new oil law will grant Big Oil three quarters of the profits reaped from Iraq's oil fields.
The US government has been involved in drawing up the law, a draft of which has been seen by The Independent on Sunday. It would give big oil companies such as BP, Shell and Exxon 30-year contracts to extract Iraqi crude and allow the first large-scale operation of foreign oil interests in the country since the industry was nationalised in 1972.
Oil executives have cleverly seized on the chaos in Iraq and the massive destruction wrought by the invasion and subsequent insurgent attacks on the oil infrastructure as the very reason why they need to grab such massive profits off Iraq's oil:
Oil industry executives and analysts say the law, which would permit Western companies to pocket up to three-quarters of profits in the early years, is the only way to get Iraq's oil industry back on its feet after years of sanctions, war and loss of expertise. But it will operate through "production-sharing agreements" (or PSAs) which are highly unusual in the Middle East, where the oil industry in Saudi Arabia and Iran, the world's two largest producers, is state controlled.
Yes, Iraq, you have suffered and your oil industry has suffered from "years of sanctions" and war, things heaped upon you by Western powers, so now it is time for them to come in, reap whirlwind profits, so they can get things back in shape. Twenty years of "realist" foreign policy, along with the current mayhem, has finally culminated in Western oil interests citing those very policies as the rationale for taking control of Iraqi oil fields for the first time since 1972. This is what is known as "the long game."

As I pointed out before, the current problem is that, despite this new law, which is sure to rile Iraqis of every stripe, the oil industry can't really start operating until things calm down. One of the reasons that a fractured Iraq is unacceptable is that such an oil law will become moot should Iraq fragment and it is from this perspective that we see Bush's drive to escalate the war with more troops. Withdrawing and leaving Iraq in chaos and civil war is not an option, certainly not one Big Oil will be happy with.
How the oil companies plan to operate in this theatre of war is a guess best left to them. Given this government's previous record on predicting the future in Iraq, it would appear that their best guesses will be fairly well off the mark.

My suspicion is that they don't know how to operate in such conditions, if they can at all. This probably wasn't a scenario imagined by the Energy Task Force, which was then imagining rose pedal showers while they drilled into the easy money oil fields of western Iraq.
And look,
Several major oil companies are said to have sent teams into the country in recent months to lobby for deals ahead of the law, though the big names are considered unlikely to invest until the violence in Iraq abates.
You can easily imagine that these guys are hopeful the "surge" is successful, though most of the talk of this "surge" has focused on discussing it as simply a short term strategy to quell the violence and get Iraqis sufficiently trained so US troops can then withdraw. With permanent US bases littering Iraq -- some in close proximity to oil fields -- the White House, this White House anyway, has no intention of completely withdrawing troops. They will be there to ensure that if and when the situation has stabilized, Iraqis don't get too uppity about how they're getting screwed by a law drawn up by their US overlords. It was not by coincidence that the Iraq Study Group, composed of a number of corporate oligarchs, recommended this oil law. Baker and his boys were as much a part of this deal as anyone.


Anonymous Steve said...


How can we make conditions in Iraq stable enough for American companies to extract oil?

I know, we’ll send in 20,000 more taxpayer-funded troops.

We’ll set up a strong perimeter around the oil installations and guard the pipelines.

We can’t have big oil dipping in to their profit margin by providing their own security.

When the Iraqi’s ask: “Why is no one helping us in the towns and cities?”

We’ll simply say: “By protecting your oil, we’re helping to stabilise your (read: our) economy and build your (read: our) future”.

Are there any jobs going at the State Department?

9:11 AM  
Blogger theBhc said...


Your point is well taken. I failed to mention this, but I, too, believe that US troops will be garrisoned around various oil installations as they begin construction and operation. In fact, how else could they operate. This will be our 21st century version of what General Smedley Butler long ago describe as his job in the US military:

I spent thirty- three years and four months in active military service as a member of this country's most agile military force, the Marine Corps. I served in all commissioned ranks from Second Lieutenant to Major-General. And during that period, I spent most of my time being a high class muscle- man for Big Business, for Wall Street and for the Bankers. In short, I was a racketeer, a gangster for capitalism. ...

I helped make Mexico, especially Tampico, safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefits of Wall Street. The record of racketeering is long. I helped purify Nicaragua for the international banking house of Brown Brothers in 1909-1912 (where have I heard that name before?). I brought light to the Dominican Republic for American sugar interests in 1916. In China I helped to see to it that Standard Oil went its way unmolested.
We don't have a "Standard Oil" per se anymore, but US forces will be doing this service in Iraq. That much seems certain.

9:56 AM  
Blogger Jbeli said...

Yes, the Iraqis are definitely the big losers in this scheme. There isn't one courageous individual who can stand to defend this ravaged country. Not even the so-called elected government of Iraq! It is impotent and too weak to say or do a thing about it. It’s a damn shame.

11:59 PM  
Anonymous Anonymous said...

Congratulations on your best of the web link in today's Guardian, Bhc!

3:24 AM  
Blogger theBhc said...

Thanks Kel!

3:45 PM  
Blogger The Misanthrope said...

Wow, those are powerful paragraphs from Gen. Butler.

10:28 PM  

Post a Comment

<< Home