News Release

Iraq War and Oil

The Dow Jones news service, which has obtained a proposed draft of a new oil law for Iraq, reports: “Iraq’s first postwar draft hydrocarbon law recommends the government sign production sharing agreements and other service and buyback contracts … An Iraqi oil ministry official told Dow Jones Newswires Wednesday the new law proposes allowing — for the first time — local and international companies to carry out oil exploration in Iraq.” (Full article)

Co-chair of the Iraq Study Group, Lee Hamilton was questioned yesterday about provisions in the Group’s report that call for Iraq’s oil industry to be “reorganized” as a “commercial enterprise” to “encourage investment in Iraq’s oil sector by … international energy companies.” He declined to clarify whether the Group was calling for some sort of privatization, though he did note that the Group’s report had “as many recommendations on oil” as on any other issue.

Similar questions were asked of incoming Senate Foreign Relations Committee chair Joseph Biden (D-Del.) and Sen. Gordon Smith (R-Oregon). (Full transcript below; video at Washington Stakeout)

A visiting scholar at the Institute for Policy Studies, Juhasz wrote the piece “It’s Still About Oil in Iraq,” published in the Dec. 8 edition of the Los Angeles Times, which states: “While the Bush administration, the media and nearly all the Democrats still refuse to explain the war in Iraq in terms of oil, the ever-pragmatic members of the Iraq Study Group share no such reticence.

“Page 1, Chapter 1 of the Iraq Study Group report lays out Iraq’s importance to its region, the U.S. and the world with this reminder: ‘It has the world’s second-largest known oil reserves.’ The group then proceeds to give very specific and radical recommendations as to what the United States should do to secure those reserves. If the proposals are followed, Iraq’s national oil industry will be commercialized and opened to foreign firms.

“The report makes visible to everyone the elephant in the room: that we are fighting, killing and dying in a war for oil. It states in plain language that the U.S. government should use every tool at its disposal to ensure that American oil interests and those of its corporations are met.” Juhasz is author of the book The Bush Agenda: Invading the World, One Economy at a Time.
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Executive director of the Global Policy Forum, Paul has written several pieces about oil including “Oil in Iraq: The Heart of the Crisis.” He said today: “The cat is finally slipping out of the bag. U.S. policy in Iraq has been fixated on the oil prize for a very long time and the Baker-Hamilton report gives us an important glimpse of that. The language about re-organizing Iraq’s oil industry as a ‘commercial enterprise’ is shorthand for Exxon and BP returning to their former (pre-1972) control over Iraq’s oil so that they can rake in future profits in the trillions of dollars. Iraq may be an unspeakable tragedy, but the oil giants are still hoping for ‘victory’ if they can push the oil law through the Iraqi parliament and ink the contracts before the occupation collapses into oblivion.”
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Muttitt is lead researcher at the British group Platform. He is the primary author of the report “Crude Designs: The Rip-Off of Iraq’s Oil Wealth,” which outlines the structure of production sharing agreements [PSAs]. He said today: “We know from the Dow Jones report that there are plans for Iraq’s oil to be developed by PSAs — which can be described as Privatization by Stealth Agreements. They give rights to Iraq’s oil to multinational companies for decades into the future at the expense of the Iraqi people.

“The Baker-Hamilton report says very clearly that an oil law is needed for foreign investment — this is shorthand for PSAs. Elsewhere the report says that Bush should emphasize that the U.S. is not interested in oil in Iraq. These are two recommendation of the report that Bush will follow.

“The Bush administration had been calling for a new oil law. It had been claiming that such a law was necessary because foreign investment is needed. More recently, the administration has been claiming such a law would help solve sectarian problems. But this is a Trojan Horse. If one’s actual goal were solving sectarian conflict, PSAs would hardly be the remedy. Their real reason is to ensure that multinational oil companies take a share of Iraq’s oil.”
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Question to Hamilton by Sam Husseini of the Institute for Public Accuracy: “Mr. Hamilton, can you clarify one of your recommendations, number 63, which called on the U.S. to ‘assist the Iraqi leaders to reorganize the national oil industry as a commercial enterprise’ and to ‘encourage investment in Iraq’s oil sector by the international community and by international energy companies.’ Are you calling for some sort of privitization?”

Hamilton’s full response: “Oil of course is the critical asset in Iraq. It furnishes a very large percentage of the GDP of Iraq. It furnishes a huge percentage of the total revenues of the government. We recommend many things with regard to the oil industry. I think there are as many recommendations on oil as any other feature of it, and you have to look at them as a package. Okay, thank you.”

When Sen. Joseph Biden was asked if these ISG recommendations were “a de facto call for privatization or quasi-privatization” of Iraq’s oil, he replied: “No, I think what it’s a de facto call for is a political settlement.” However, Sen. Gordon Smith (R-Oregon), when he was questioned about the oil recommendations, stated: “This is Iraq’s oil, it’s not our oil. They need to make these political decisions in how to distribute the resources among the population of Iraqis.”

Hamilton, Biden and Smith spoke on Dec. 10.

For more information, contact at the Institute for Public Accuracy:
Sam Husseini, (202) 347-0020; or David Zupan, (541) 484-9167