This won't surprise anyone, but it is interesting to see the reason put to an actual dollar amount.
Control of Iraq's future oil wealth is being handed to multinational oil companies through long-term contracts that will cost Iraq hundreds of billions of dollars, according to a new report published today.
Crude designs: the rip off of Iraq's oil wealth, reveals that current Iraqi oil policy will allocate the development of at least 64 per cent of Iraq's reserves to foreign oil companies. Iraq has the world's third largest oil reserves.
Figures published in the report for the first time show:
* the estimated cost to Iraq over the life of the new oil contracts is US $74 to US $194 billion, compared with leaving oil development in public hands. These sums represent between two and seven times the current Iraqi state budget.
* the contracts would guarantee massive profits to foreign companies, with rates of return of 42 per cent to 162 per cent.
The kinds of contracts that will provide these returns are known as production sharing agreements (PSAs). PSAs have been heavily promoted by the US government and oil majors and have the backing of senior figures in the Iraqi Oil Ministry. Britain has also encouraged Iraq to open its oil fields to foreign investment.
However PSAs last for 25-40 years, are usually secret and prevent governments from later altering the terms of the contract. "Crude Designs" lead researcher, Greg Muttitt of PLATFORM, said: "The form of contracts being promoted is the most expensive and undemocratic option available. Iraq's oil should be for the benefit of the Iraqi people, not foreign oil companies."
The new Iraqi constitution opened the way for much greater foreign involvement in Iraq's oilfields.
It says wonders about the situation with Iraqi Oil that the Oil Minister
resigned recently for the second time, and was replaced by the
Tourism Minister.
The
privatization plan for Iraq's businesses and natural resources was drawn up by a Bush-appointed, political fundraiser, Thomas Foley, back in August of 2003.
Iraqi
labor unions had been fighting the
privatization of the oil industry from the start of the occupation. But it was the American-sponsored, Iraqi Constitution that made the
denationalization of Iraqi Oil a forgone conclusion.
Also gone was the provision affirming the Iraqi people's collective ownership of Iraq's oil and other natural resources and obliging the state to protect and safeguard them. Instead, a new article lays the legal ground for selling off Iraq's oil and putting it under the control of the big multinational oil companies. Article 110 goes so far as to spell out that "the federal government and the governments of the producing regions and provinces together will draw up the necessary strategic policies to develop oil and gas wealth to bring the greatest benefit for the Iraqi people, relying on the most modern techniques of market principles and encouraging investment."
By "modern techniques of market principles," the draft is most likely referring to current plans--supported by the interim government's top leadership--to privatize the Iraqi National Oil Companies and to open up Iraq's oil reserves to the big oil companies. Referring to such plans, Adil Abdel Mahdi, a senior leader of SCIRI and now Iraq's vice president, told an audience in Washington, just before the elections: "[T]his is very promising to the American investors and to American enterprises, certainly to oil companies."
Iraq nationalized its oil back in 1972, kicking out the American and British oil companies that had long dominated the middle east. Now, the same two countries have managed to
roll back the clock to the colonial period again.
Andrew Simms, Policy Director at nef (the new economics foundation) and co-publisher of the report said: "Its back to the future for Iraq. Over the last century Britain and the US left a global trail of conflict, social upheaval and environmental damage as they sought to capture and control a disproportionate share of the world's oil reserves. Now it seems they are determined to increase their ecological debts at Iraq's expense. Instead of a new beginning Iraq is caught in a very old colonial trap."
While Americans are largly oblivious to this, and probably wouldn't understand the significance of it anyway, you can bet that every single Iraqi is keenly aware of it and what it means.