Tuesday, November 22, 2005
Of course it's about oil, stupid! posted by Richard Seymour
BBC Newsnight still has the report available for while, so do try to watch it: forward to 13 mins, 35 seconds.
A special report by Paul Mason exposes the way in which Western oil companies are locking Iraq into 30 year permanent 'agreements'. The Oil Ministry decided in September 2005 to embark on a series of agreements which would be decided before the December elections and before the signing of a new oil law. These laws are curious for at least one particular factor: ordinarily, the revenues flow to host countries, whereas in the case of what are called Production Sharing Agreements, the Iraqi government pays the oil companies to invest. Greg Muttit, an analyst at the London-based energy NGO Platform, explains that the total funds that could flow to Western oil companies from Iraq would be $74bn at the low end, and $194bn at the high end. The higher figure is six times Iraq's total GDP.
The programme also interviews Dr Fadhil Chalabi who defends it as a necessary compromise. Chalabi works as the Executive Director of the UK-based 'market analysis' organisation, the Centre for Global Energy Studies, set up in 1990 by the former Saudi oil minister Sheikh Ahmed Zaki Yamani - board members of that organisation included Giscard D'Etaing, Ted Heath and Denis Healey. He used to be an acting secretary for OPEC, as well as being Iraq's oil minister during the Baathist dictatorship from 1968 (the second Ba'athist coup) until 1976. I'm just telling you who the guy is - there's no reason why you should conclude that he is an oleaginous ex-autocrat who works for the interests of Western capital. His colleague at the CGES was Dr Muhammad-Ali Zainy, another former Iraqi oil minister who was drafted to work for the State Department's team to plan what should happen to Iraq once "shock and awe" had run its course.
These PSAs commonly contain a "stabilisation clause", and these immunise the companies involved from any changes in the law that could potentially damage their profits - these include labour, environmental and tax laws. Iraq is largely an oil-based economy, like many in the Middle East including Syria, the remaining Baathist state. Any agreement that gives such leverage to Western oil companies effectively renders Iraq a dependency - which was the point of sanctions and is the point of present policy. There are enormous opportunities for exploitation of the oil in Iraq. According to the EIA, unexplored regions of Iraq could yield an additional 100 billion barrels of oil. And Iraq's oil production costs, the US government brags, are the lowest in the world. At the moment, Saudi Arabia, Venezuela and Nigeria provide more oil to the US than Iraq - but evidently, this is about to change.
Update: Full report available here.