Oil and the Iraqi curse

In the context of the Iraqi Constitution, Iraqis seemingly agreed to disagree. Politicians vowed to make amendments to the Constitution in order to appease Sunni factions, when already the vast majority of Iraqis had approved it in a referendum. This just goes to show that democracy Iraqi-style is simply a veil for political parties who will get their way no matter what, and regardless of the choices of the people.

Finally, after much compromise and wrangling, the Iraqi factions moved painstakingly closer to agreement on the draft hydrocarbon law of which oil is the primary factor. However, it is clear that it was grudgingly accepted by some, and much like the Constitution, could spur further debate or infighting later.

On Tuesday, July 3, Iraqi Prime Minister Nouri al-Maliki claimed his government had approved the draft oil law and would send it to Parliament for ratification. This prompted much (short-lived) joy and optimism from the Bush administration and among Iraqis. However, keeping in line with the Iraqi political track record, the joys of the announcement were hampered by subsequent apprehension and rebuke, first by the Kurdistan Regional Government (KRG) and then by Sunni factions.

The Kurdish statement released by the KRG was firm in its dismay over the announcement claiming that they had not seen or approved the final text of the law, while quickly emphasising that any changes to the originally agreed-upon oil law ratified by the Iraqi government would be considered a violation of the region's constitutional rights.

The law was designed to regulate Iraq's oil industry and in turn determine, among other things, the role and power of the central government and the distribution of oil wealth among Iraq’s disparate population.

The draft law was first approved by the Cabinet in February after much squabbling between Kurdish, Shiite, and Sunni factions who demanded certain amendments from the original proposed draft law. The original had been strongly rejected and propagated much tension. The Kurds in particular, a key party in the negotiations, were adamant that it would reject any major changes to what had already been agreed.

The biggest issue centred on the proposed formation of the Iraqi National Oil Company (INOC), which would effectively hold sway over 90 per cent of Iraqi oil, going against federal arrangements of the past. The Kurds later reluctantly accepted the oil law for 17 per cent return on any future oil funds and assurance that all existing contracts made with foreign firms would be honoured. This is in contrast to statements by Oil Minister Hussein Shahristani earlier this year, which insisted that any contract signed before the adoption of the oil law by the government, would be annulled, thereby angering Kurds.

Al-Maliki proposed that debate within Parliament could start on Wednesday July 4, 2007 after the text was sent to the Cabinet’s legal committee, an authority that oversees drafting of text and language but not changes to the articles of the law itself. However, an agreement on the draft failed to materialise on the targeted day, opening the way for more delays.

The government claimed that the new draft law only contained linguistic and structural changes, but the deep mistrust felt among Iraqi factions could be felt through the negativity of the KRG reply, which stated that “while the KRG is happy with the legal committee's language improvements and restructuring of the legal text, we reject its changes to the substance of the law".

The Kurdish concern centres on the lack of clarity around which version of the text was put forward to the committee. After much debate, changes were made to the original draft to appease Kurdish discomfort.

Any agreement on July 4 would have lacked credibility in any case with only 24 of the Cabinet's 37 members available to vote, due to boycotts by ministers from the Sunni Iraqi Accordance Front and Muqtada al-Sadr’s influential Shiite bloc, owing to separate disputes with al-Maliki.

Arguably the greatest faction with the most at stake in the provision of the draft oil law is the Bush administration. Stuck in the middle of a ubiquitous insurgency, often much-hailed previous political milestones have not had the desired affect they have craved. With widespread terror and bloodshed, the US has been urging the government towards reconciliation by setting a number of benchmarks for the al-Maliki administration. In fact, it arguably sanctioned the recent security surge to buy al-Maliki time, after most of the benchmarks set for the Iraqi government in 2006 weren’t met as the government was bogged down in a security struggle.