[Congressional Record (Bound Edition), Volume 153 (2007), Part 4]
[House]
[Pages 4828-4830]
[From the U.S. Government Publishing Office, www.gpo.gov]




                           CIVIL WAR IN IRAQ

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Washington (Mr. McDermott) is recognized for 5 minutes.
  Mr. McDERMOTT. Madam Speaker, finally, grudgingly, the administration 
has agreed to talk to Syria and Iran about the civil war that is raging 
in Iraq. This should have happened at least 2 years ago, so why now?
  Has the President finally concluded what many of us have said for a 
long time: That you cannot shoot your way to a peace in Iraq? That 
would be a hopeful sign, but it is doubtful since he continues to 
escalate the U.S. presence in the middle of a civil war.
  The apparent movement towards diplomacy comes at a curious time. The 
American people told their government last November to get their 
soldiers out of harm's way when they gave the Democrats a 2-year 
contract on the majority. And it didn't take long for this House to 
make a down payment on rebuilding trust with the American people.
  Despite repeated Presidential claims that meant nothing, the 
overwhelming passage of Speaker Pelosi's first step in getting U.S. 
soldiers out of harm's way was the shot heard round the world.
  No one wants to move faster than me in getting the soldiers out of 
Iraq. But every journey starts with a single step, and we have done it.
  The American people and other nations welcomed the Speaker's 
leadership in getting this country to begin to set a new course in Iraq 
based on a reality, and not based on the same old rhetoric from the 
White House. They continue to bluster; so what else is new?
  There are serious mainstream Middle East leaders who believe the U.S. 
policy has more to do with extraction than engagement. By extraction, 
they don't mean U.S. soldiers being extracted out of harm's way, they 
are referring to extracting Iraq's oil.
  The Asia Times yesterday published two commentaries that are 
reverberating throughout the Middle East. One is called, ``U.S.'s Iraq 
Oil Grab is a Done Deal.'' And the other is entitled: ``Big Oil In, 
Stability Out Under New Iraqi Law.'' I will include the two articles 
for the Record.
  As many articles in recent days have pointed out, the President's 
representatives in Iraq used intense pressure behind the scenes to get 
the Iraq government to take the first step in making production-sharing 
agreements, PSAs, the law of Iraq. There are scenarios in which 
investment and production will be a benefit to the Iraq people, but the 
Iraq people have to be solely in charge. As it stands, and as many 
fear, the PSA language approved over the weekend could indenture Iraq's 
oil wealth to U.S. oil interests for decades to come.
  As passed by the Iraq parliament, a new centralized government agency 
in Iraq, closely tied to the U.S., would have ultimate control over who 
gets access to Iraq's vast oil resources.
  The oil industry itself says it costs one single dollar to extract a 
barrel of oil in Iraq, but that barrel brings $60 today on the world 
market. How does big oil, closely aligned to the President and Vice 
President, spell conservation? It is spelled I-R-A-Q.

[[Page 4829]]

  Here is the U.S.-Iraq equation as seen by people from the Middle 
East: Billions of barrels of oil, billions of dollars in profits, 
dozens of U.S. military bases across Iraq, and thousands of U.S. 
soldiers remaining in Iraq.
  The bottom line is this: Is the President hoping Iraq will import 
democracy, or will it export oil under the thumb of U.S. oil interests?
  The production-sharing agreements have not yet been enacted into law. 
The outcome is still uncertain. But one thing is certain, production-
sharing agreements that favor the U.S. means the U.S. will be in Iraq 
for decades. The President has expressed a new found interest in 
diplomacy.
  Are we going to negotiate with Iran at the same time we push for PSA 
agreements to become law? A lot of people in the Middle East wonder. 
The U.S. needs to state its intentions if there is any hope for a 
diplomatic solution in Iraq.
  We not only need to extract U.S. soldiers from Iraq, we also need to 
extract U.S. oil interests from dictating the oil future for the Iraqi 
people. The deeper the U.S. goes in influencing the distribution of 
Iraq oil wealth, the more we inflame the tensions and suspicions about 
why we invaded Iraq in the first place.
  Remember weapons of mass destruction and Osama bin Laden and al Qaeda 
and democracy? Now it becomes clear what it is really all about: 
Getting control of Iraq oil.
  Madam Speaker, we have got to have the President come clean. Perhaps 
he will do a White House speech on this.

                  [From the Asia Times, Feb. 27, 2007]

                  U.S.'s Iraq Oil Grab Is a Done Deal

                           (By Pepe Escobar)

       ``By 2010 we will need [a further] 50 million barrels a 
     day. The Middle East, with two-thirds of the oil and the 
     lowest cost, is still where the prize lies.''--U.S. Vice 
     President Dick Cheney, then Halliburton chief executive 
     officer, London, autumn 1999.
       U.S. President George W. Bush and Vice President Dick 
     Cheney might as well declare the Iraq war over and out. As 
     far as they--and the humongous energy interests they defend--
     are concerned, only now is the mission really accomplished. 
     More than half a trillion dollars spent and perhaps half a 
     million Iraqis killed have come down to this.
       On Monday, Prime Minister Nuri al-Maliki's cabinet in 
     Baghdad approved the draft of the new Iraqi oil law. The 
     government regards it as ``a major national project''. The 
     key point of the law is that Iraq's immense oil wealth (115 
     billion barrels of proven reserves, third in the world after 
     Saudi Arabia and Iran) will be under the iron rule of a fuzzy 
     ``Federal Oil and Gas Council'' boasting ``a panel of oil 
     experts from inside and outside Iraq''. That is, nothing less 
     than predominantly U.S. Big Oil executives.
       The law represents no less than institutionalized raping 
     and pillaging of Iraq's oil wealth. It represents the death 
     knell of nationalized (from 1972 to 1975) Iraqi resources, 
     now replaced by production sharing agreements (PSAs)--which 
     translate into savage privatization and monster profit rates 
     of up to 75% for (basically U.S.) Big Oil. Sixty-five of 
     Iraq's roughly 80 oilfields already known will be offered for 
     Big Oil to exploit. As if this were not enough, the law 
     reduces in practice the role of Baghdad to a minimum. Oil 
     wealth, in theory, will be distributed directly to Kurds in 
     the north, Shi'ites in the south and Sunnis in the center. 
     For all practical purposes, Iraq will be partitioned into 
     three statelets. Most of the country's reserves are in the 
     Shi'ite-dominated south, while the Kurdish north holds the 
     best prospects for future drilling.
       The approval of the draft law by the fractious 275-member 
     Iraqi Parliament, in March, will be a mere formality. Hussain 
     al-Shahristani, Iraq's oil minister, is beaming. So is dodgy 
     Barnham Salih: a Kurd, committed cheerleader of the U.S. 
     invasion and occupation, then deputy prime minister, big PSA 
     fan, and head of a committee that was debating the law.
       But there was not much to be debated. The law was in 
     essence drafted, behind locked doors, by a U.S. consulting 
     firm hired by the Bush administration and then carefully 
     retouched by Big Oil, the International Monetary Fund, former 
     U.S. deputy defense secretary Paul Wolfowitz' World Bank, and 
     the United States Agency for International Development. It's 
     virtually a U.S. law (its original language is English, not 
     Arabic).
       Scandalously, Iraqi public opinion had absolutely no 
     knowledge of it--not to mention the overwhelming majority of 
     Parliament members. Were this to be a truly representative 
     Iraqi government, any change to the legislation concerning 
     the highly sensitive question of oil wealth would have to be 
     approved by a popular referendum.
       In real life, Iraq's vital national interests are in the 
     hands of a small bunch of highly impressionable (or downright 
     corrupt) technocrats. Ministries are no more than political 
     party feuds; the national interest is never considered, only 
     private, ethnic and sectarian interests. Corruption and theft 
     are endemic. Big Oil will profit handsomely--and long-term, 
     30 years minimum, with fabulous rates of return--from a 
     former developing-world stalwart methodically devastated into 
     failed-state status.
       In these past few weeks, U.S. Ambassador Zalmay Khalilzad 
     has been crucial in mollifying the Kurds. In the end, in 
     practice, the pro-U.S. Kurds will have all the power to sign 
     oil contracts with whatever companies they want. Sunnis will 
     be more dependent on the Oil Ministry in Baghdad. And 
     Shi'ites will be more or less midway between total 
     independence in the south and Baghdad's dictum (which they 
     control anyway). But the crucial point remains: nobody will 
     sign anything unless the ``advisers'' at the U.S.-manipulated 
     Federal Oil and Gas Council say so.
       Nobody wants to colonial-style PSAs forced down their 
     throat anymore. According to the International Energy Agency, 
     PSAs apply to only 12% of global oil reserves, in cases where 
     costs are very high and nobody knows what will be found 
     (certainly not the Iraqi case). No big Middle Eastern oil 
     producer works with PSAs. Russia and Venezuela are 
     renegotiating all of them. Bolivia nationalized its gas. 
     Algeria and Indonesia have new rules for future contracts. 
     But Iraq, of course, is not a sovereign country.
       Big Oil is obviously ecstatic--not only ExxonMobil, but 
     also ConocoPhillips, Chevron, BP and Shell (which have 
     collected invaluable info on two of Iraq's biggest 
     oilfields), TotalFinaElf, Lukoil from Russia and the Chinese 
     majors. Iraq has as many as 70 undeveloped fields--``small'' 
     ones hold a minimum of a billion barrels. As desert western 
     Iraq has not even been exploited, reserves may reach 300 
     billion barrels--way more than Saudi Arabia. Gargantuan 
     profits under the PSA arrangement are in a class by 
     themselves. Iraqi oil costs only US$1 a barrel to extract. 
     With a barrel worth $60 and up, happy days are here again.
       What revenue the regions do get will be distributed to all 
     18 provinces based on population size--an apparent concession 
     to the Sunnis, whose central areas have relatively few proven 
     reserves.
       The Sunni Arab muqawama (resistance) certainly has other 
     ideas--as in future rolling thunder against pipelines, 
     refineries and Western personnel. Iraq's oil independence 
     will not go down quietly--at least among Sunnis. On the same 
     day the oil law was being approved, a powerful bomb at the 
     Ministry of Municipalities killed at least 12 people and 
     injured 42, including Vice President Adel Abdul Mahdi. Mahdi 
     has always been a feverish supporter of the oil law. He's a 
     top official of the Shi'ite party, the Supreme Council for 
     the Islamic Revolution of Iraq (SCIRI).
       A whole case can be made of SCIRI delivering Iraq's Holy 
     Grail to Bush/Cheney and Big Oil--in exchange for not being 
     chased out of power by the Pentagon. Abdul Aziz al-Hakim, the 
     SCIRI's leader, is much more of a Bush ally than Maliki, who 
     is from the Da'wa Party. No wonder SCIRI's Badr Organization 
     and their death squads were never the target of Washington's 
     wrath--unlike Muqtada al-Sadr's Mehdi Army (Muqtada is 
     fiercely against the oil law). The SCIRI certainly listened 
     to the White House, which has always made it very clear: any 
     more funds to the Iraqi government are tied up with passing 
     the oil law.
       Bush and Cheney got their oily cake--and they will eat it, 
     too (or be drenched in its glory). Mission accomplished: 
     permanent, sprawling military bases on the eastern flank of 
     the Arab nation and control of some of largest, untapped oil 
     wealth on the planet--a key geostrategic goal of the New 
     American Century. Now it's time to move east, bomb Iran, 
     force regime change and--what else?--force PSAs down their 
     Persian throats.
                                  ____


                  [From the Asia Times, Feb. 27, 2007]

             Big Oil In, Stability Out Under New Iraqi Law

                  (By Antonia Juhasz and Raed Jarrar)

       While debate rages in the United States about the military 
     in Iraq, an equally important decision is being made inside 
     Iraq--the future of its oil. A draft Iraqi law proposes to 
     open the country's currently nationalized oil system to 
     foreign corporate control. But emblematic of the flawed 
     promotion of ``democracy'' by the administration of U.S. 
     President George W. Bush, this new law is news to most Iraqi 
     politicians.
       A leaked copy of the proposed hydrocarbon law appeared on 
     the Internet at the same time that it was introduced to the 
     Iraqi Council of Ministers (cabinet). The law is expected to 
     go to the Iraqi Council of Representatives within weeks. Yet 
     the Internet version was the first look that most members of 
     Iraq's Parliament had of the new law.
       Many Iraqi oil experts, such as Fouad al-Ameer, who was 
     responsible for the leak, think this law is not an urgent 
     item on the country's agenda. Other observers and analysis 
     share Ameer's views and believe the Bush administration, 
     foreign oil companies and the International Monetary Fund are

[[Page 4830]]

     rushing the Iraqi government to pass the law.
       Not every aspect of the law is harmful to Iraq. However, 
     the current language favors the interests of foreign oil 
     corporations over the economic security and development of 
     Iraq. The law's key negative components harm Iraq's national 
     sovereignty, financial security, territorial integrity and 
     democracy.
       The new oil law gives foreign corporations access to almost 
     every sector of Iraq's oil and natural-gas industry. This 
     includes service contracts on existing fields that are 
     already being developed and that are managed and operated by 
     the Iraqi National Oil Co (INOC).
       For fields that have already been discovered, but not yet 
     developed, the proposed law stipulates that INOC will have to 
     be a partner on these contracts. But for as-yet-undiscovered 
     fields, neither INOC nor private Iraqi companies receive 
     preference in new exploration and development. Foreign 
     companies have full access to these contracts.
       The exploration and production contracts give firms 
     exclusive control of fields for up to 35 years, including 
     contracts that guarantee profits for 25 years. A foreign 
     company, if hired, is not required to partner with an Iraqi 
     company or reinvest any of its money in the Iraqi economy. 
     It's not obligated to hire Iraqi workers, train Iraqi workers 
     or transfer technology.
       The current law remains silent on the type of contracts 
     that the Iraqi government can use. The law establishes a new 
     Iraqi Federal Oil and Gas Council with ultimate 
     decisionmaking authority over the types of contracts that 
     will be employed. This council will include, among others, 
     ``executive managers from important related petroleum 
     companies''. Thus it is possible that foreign oil-company 
     executives could sit on the council. It would be 
     unprecedented for a sovereign country to have, for instance, 
     an executive of ExxonMobil on the board of its key oil-and-
     gas decision-making body.
       The law also does not appear to restrict foreign corporate 
     executives from making decisions on their own contracts. Nor 
     does there appear to be a ``quorum'' requirement. Thus if 
     only five members of the Federal Oil and Gas Council met--one 
     from ExxonMobil, Shell, ChevronTexaco and two Iraqis--the 
     foreign company representatives would apparently be permitted 
     to approve contacts for themselves.
       Under the proposed law, the council has the ultimate power 
     and authority to approve and rewrite any contract using 
     whichever model it prefers if a ``two-thirds majority of the 
     members in attendance'' agree. Early drafts of the bill, and 
     the proposed model by the US, advocate very unfair, and 
     unconventional for Iraq, models such as production sharing 
     agreements (PSAs), which would set long-term contracts with 
     unfair conditions that may lead to the loss of hundreds of 
     billions of dollars of the Iraqi oil money as profits to 
     foreign companies.
       The council will also decide the fate of the existing 
     exploration and production contracts already signed with the 
     French, Chinese and Russians, among others.
       The law does not clarify who ultimately controls production 
     levels. The contractee--the INOC, foreign or domestic firms--
     appears to have the right to determine levels of production. 
     However, a clause reads, ``In the event that, for national 
     policy considerations, there is a need to introduce 
     limitations on the national level of petroleum production, 
     such limitations shall be applied in a fair and equitable 
     manner and on a pro rata basis for each contract area on the 
     basis of approved field-development plans.'' The clause does 
     not indicate who makes this decision, what a ``fair and 
     equitable manner'' means, or how it is enforced. If foreign 
     companies, rather than the Iraqi government, ultimately have 
     control over production levels, then Iraq's relationship to 
     the Organization of Petroleum Exporting Countries and other 
     similar organizations would be deeply threatened.
       Many Iraqi oil experts are already referring to the draft 
     law as the ``Split Iraq Fund'', arguing that it facilitates 
     plans for splitting Iraq into three ethnic/religious regions. 
     The experts believe that the law undermines the central 
     government and shifts important decision-making and 
     responsibilities to the regional entities. This shift could 
     serve as the foundation for establishing three new 
     independent states, which is the goal of a number of 
     separatist leaders.
       The law opens the possibility of the regions taking control 
     of Iraq's oil, but it also maintains the possibility of the 
     central government retaining control. In fact, the law was 
     written in a vague manner to help ensure passage, a ploy 
     reminiscent of the passage of the Iraqi constitution. There 
     is a significant conflict between the Bush administration and 
     others in Iraq who would like ultimate authority for Iraq's 
     oil to rest with the central government and those who would 
     like to see the nation split in three. Both groups are 
     powerful in Iraq. Both groups have been mollified, for now, 
     to ensure the law's passage.
       But two very different outcomes are possible. If the 
     central government remains the ultimate decision-making 
     authority in Iraq, then the Iraq Federal Oil and Gas Council 
     will exercise power over the regions. And if the regions 
     emerge as the strongest power in Iraq, then the council could 
     simply become a silent rubber stamp, enforcing the will of 
     the regions. The same lack of clarity exists in Iraq's 
     constitution.
       The daily lives of most people in Iraq are overwhelmed with 
     meeting basic needs. They are unaware of the details and full 
     nature of the oil law shortly to be considered in Parliament. 
     Their parliamentarians, in turn, have not been included in 
     the debate over the law and were unable even to read the 
     draft until it was leaked on the Internet. Those Iraqis able 
     to make their voices heard on the oil law want more time. 
     They urge postponing a decision until Iraqis have their own 
     sovereign state without a foreign occupation.
       Passing this oil law while the political future of Iraq is 
     unclear can only further the existing schisms in the Iraqi 
     government. Forcing its passage will achieve nothing more 
     than an increase in the levels of violence, anger and 
     instability in Iraq and a prolongation of the US occupation.

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