There have several diaries and/or front page posts here on "the" Daily Kos referencing the legalization of thievery that is known as the Hydrocarbon Law, which is also referred to as the "Iraqi Oil Law." Observing and participating in these discussions, as well as discussions with countless others off "the tubes," one can only conclude that there is a distressing lack of knowledge and information on this important issue. That's not terribly surprising, considering that the corporate media has completely abrogated it's responsibility on this (and so many other) issues.
If the Iraqi Parliament were to pass a Hydrocarbon Law that benefits the big oil companies to the detriment of the Iraqi people, there is little ZERO chance of long-term peace and stability there.
In this diary, I will attempt to provide some insight and reference material to help folks have a better understanding of what, exactly, the Hydrocarbon Law is, and why, exactly, we should oppose this thievery. If anyone has further helpful information, please post links in the comments so this diary can be as comprehensive a guide as possible.
Much, much more after the jump...
PRE-WAR RELEVANT FACTS
Where should we start? Well, how about at the beginning? (Author's note: I'm absolutely positive that this isn't the real beginning, but it'll do for our purposes.)
The PNAC also supported the Iraq Liberation Act of 1998 (H.R.4655), which President Clinton had signed into law.[11]
In January of 1999, the PNAC circulated a memo that criticized the December 1998 bombing of Iraq in Operation Desert Fox as ineffective, questioned the viability of Iraqi democratic opposition which the U.S. was supporting through the Iraq Liberation Act, and referred to any "containment" policy as an illusion.[12]
In September 2000, the PNAC published a controversial 90-page report entitled Rebuilding America's Defenses: Strategies, Forces, and Resources For a New Century.
In the run-up to the current Iraq War, cries of "It's about the oil!" were heard from many of those who opposed an illegal war of aggression. Unfortunately, many were swept up in post-9/11 patriotic fervor or were still pissing their pants in fear and war was not prevented.
In Iraqi War Scenario, Oil Is Key Issue
By Dan Morgan and David B. Ottaway
Washington Post Staff Writers
Sunday, September 15, 2002; Page A01
A U.S.-led ouster of Iraqi President Saddam Hussein could open a bonanza for American oil companies long banished from Iraq, scuttling oil deals between Baghdad and Russia, France and other countries, and reshuffling world petroleum markets, according to industry officials and leaders of the Iraqi opposition.
Although senior Bush administration officials say they have not begun to focus on the issues involving oil and Iraq, American and foreign oil companies have already begun maneuvering for a stake in the country's huge proven reserves of 112 billion barrels of crude oil, the largest in the world outside Saudi Arabia.
This was not only denied by Bush, he claimed the exact opposite in a speech to the UN-- that the Iraqi people should be the true beneficiaries of their own natural resources.
In 1990, after Iraq's invasion of Kuwait, the world imposed economic sanctions on Iraq. Those sanctions were maintained after the war to compel the regime's compliance with security council resolutions.
In time, Iraq was allowed to use oil revenues to buy food. Saddam Hussein has subverted this program, working around the sanctions to buy missile technology and military materials.
He blames the suffering of Iraq's people on the United Nations, even as he uses his oil wealth to build lavish palaces for himself and to buy arms for his country.
By refusing to comply with his own agreements, he bears full guilt for the hunger and misery of innocent Iraqi citizens. In 1991, Iraq promised UN inspectors immediate and unrestricted access to verify Iraq's commitment to rid itself of weapons of mass destruction and long range missiles.
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If the Iraqi regime wishes peace, it will immediately end all illicit trade outside the oil-for-food program. It will accept UN administration of funds from that program to ensure that the money is used fairly and promptly for the benefit of the Iraqi people.
If all these steps are taken, it will signal a new openness and accountability in Iraq and it could open the prospect of the United Nations helping to build a government that represents all Iraqis, a government based on respect for human rights, economic liberty and internationally supervised elections.
The United States has no quarrel with the Iraqi people. They've suffered too long in silent captivity. Liberty for the Iraqi people is a great moral cause and a great strategic goal.
The people of Iraq deserve it. The security of all nations requires it. Free societies do not intimidate through cruelty and conquest. And open societies do not threaten the world with mass murder. The United States supports political and economic liberty in a unified Iraq. We can harbour no illusions - and that's important today to remember.
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If we meet our responsibilities, if we overcome this danger, we can arrive at a very different future. The people of Iraq can shake off their captivity.
Several weeks later, in a now-(in)famous speech given in Cincinnati, President Bush reiterates his concern for the prosperity of the Iraqi people.
The world has also tried economic sanctions -- and watched Iraq use billions of dollars in illegal oil revenues to fund more weapons purchases, rather than providing for the needs of the Iraqi people.
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Some worry that a change of leadership in Iraq could create instability and make the situation worse. The situation could hardly get worse, for world security and for the people of Iraq. The lives of Iraqi citizens would improve dramatically if Saddam Hussein were no longer in power, just as the lives of Afghanistan's citizens improved after the Taliban. The dictator of Iraq is a student of Stalin, using murder as a tool of terror and control, within his own cabinet, within his own army, and even within his own family.
On Saddam Hussein's orders, opponents have been decapitated, wives and mothers of political opponents have been systematically raped as a method of intimidation, and political prisoners have been forced to watch their own children being tortured.
America believes that all people are entitled to hope and human rights, to the non-negotiable demands of human dignity. People everywhere prefer freedom to slavery; prosperity to squalor; self-government to the rule of terror and torture. America is a friend to the people of Iraq. Our demands are directed only at the regime that enslaves them and threatens us. When these demands are met, the first and greatest benefit will come to Iraqi men, women and children. The oppression of Kurds, Assyrians, Turkomans, Shi'a, Sunnis and others will be lifted. The long captivity of Iraq will end, and an era of new hope will begin.
Iraq is a land rich in culture, resources, and talent. Freed from the weight of oppression, Iraq's people will be able to share in the progress and prosperity of our time. If military action is necessary, the United States and our allies will help the Iraqi people rebuild their economy, and create the institutions of liberty in a unified Iraq at peace with its neighbors.
There are many more examples of similar statements from numerous members of the Bush misadministration, but it's not necessary to repeat them all here.
"BENCHMARK THIS!"
As the citizens of the United States struggled to slowly awake from their post-9/11 frenzy of fear, they began to realize that the Iraq War was, indeed, the quagmire that many predicted it would be. Opinion polls began to reflect this realization and the call to withdraw from Iraq slowly gained traction. The word "benchmark" made its way into the national conversation, initiated by those who advocated a prolonged and protracted war. The "surge" was sold under the pretense of these so-called "benchmarks."
One of the most talked about benchmarks was the Hydrocarbon Law. Of course, it was almost always reported as "a plan to distribute oil revenue."
Report: Bush plan to set ‘benchmarks’ for Iraqis
WASHINGTON - U.S. President George W. Bush’s new Iraq policy will include "benchmarks" for the Iraqi government to meet to ease sectarian violence and stabilize the country, The New York Times reported on Sunday.
The newspaper cited senior administration officials as saying that the goals include steps to draw more Sunnis into the Iraqi political process and to finalize a measure on the distribution of oil revenue.
There are literally thousands of speeches and MSM reports on these benchmarks, and nearly every one describes the Hydrocarbon Law as a plan to distribute oil revenue with hardly a mention of Production Sharing Agreements. What's a Production Sharing Agreement, you ask? Please keep reading...
PRODUCTION SHARING AGREEMENTS
Most reporting and public discussion of the Hydrocarbon Law centers around the distribution of oil revenue between the Sunni, Shiite, and Kurdish Iraqi population. In fact, this is a minor detail. The true goal -- and outrage -- of the Hydrocarbon Law is Production Sharing Agreements (PSAs). These are often referred to as "Profit Sharing Agreements," but, in this instance, could more accurately be described as "Profit Stealing Agreements."
What is a PSA?
PSAs are contracts between major oil companies and (usually poor) countries that are designed to protect an oil companies investment in return for exploring/developing unknown/hard to recover crude reserves. They have been in existence for about 40 years and currently exist in about a dozen countries.
LINK warning: PDF
Production-Sharing Agreements (PSAs) are among the most common types of contractual arrangements for petroleum exploration and development. Under a PSA the state as the owner of mineral resources engages a foreign oil company (FOC) as a contractor to provide technical and financial services for exploration and development operations. The state is traditionally represented by the government or one of its agencies such as the national oil company (NOC). The FOC acquires an entitlement to a stipulated share of the oil produced as a reward for the risk taken and services rendered. The state, however, remains the owner of the petroleum produced subject only to the contractor's entitlement to its share of production. The government or its NOC usually has the option to participate in different aspects of the exploration and development process. In addition, PSAs frequently provide for the establishment of a joint committee where both parties are represented and which monitors the operations.
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PSAs are distinguished from other types of contracts in two ways. First, the FOC carries the entire exploration risk. If no oil is found the company receives no compensation. Second, the government owns both the resource and the installations. In its most basic form a PSA has four main properties. The foreign partner pays a royalty on gross production to the government. After the royalty is deducted, the FOC is entitled to a pre-specified share (e.g. 40 percent) of production for cost recovery. The remainder of the production, so called profit oil, is then shared between government and FOC at a stipulated share (e.g. 65 percent for the government and 35 percent for the FOC). The contractor then has to pay income tax on its share of profit oil. Over time PSAs have changed substantially and today they
take many different forms.
It is clear that PSAs are designed to protect the oil companies from risk. What, exactly, is the risk that no oil will be found in Iraq?
THE HYDROCARBON LAW
The Hydrocarbon Law has been through several revisions since it was originally reported on in late 2005.
While the Iraqi people struggle to define their future amid political chaos and violence, the fate of their most valuable economic asset, oil, is being decided behind closed doors.
This report reveals how an oil policy with origins in the US State Department is on course to be adopted in Iraq, soon after the December elections, with no public debate and at enormous potential cost. The policy allocates the majority (1) of Iraq’s oilfields – accounting for at least 64% of the country’s oil reserves – for development by multinational oil companies.
Iraqi public opinion is strongly opposed to handing control over oil development to foreign companies. But with the active involvement of the US and British governments a group of powerful Iraqi politicians and technocrats is pushing for a system of long term contracts with foreign oil companies which will be beyond the reach of Iraqi courts, public scrutiny or democratic control.
COSTING IRAQ BILLIONS
Economic projections published here for the first time show that the model of oil development that is being proposed will cost Iraq hundreds of billions of dollars in lost revenue, while providing foreign companies with enormous profits.
Our key findings are:
At an oil price of $40 per barrel, Iraq stands to lose between $74 billion and $194 billion over the lifetime of the proposed contracts (2), from only the first 12 oilfields to be developed. These estimates, based on conservative assumptions, represent between two and seven times the current Iraqi government budget.
Under the likely terms of the contracts, oil company rates of return from investing in Iraq would range from 42% to 162%, far in excess of usual industry minimum target of around 12% return on investment.
The most recent text of the Hydrocarbon Law, provided by the Kurds in February of this year, can be read at the link below. Keep in mind that this law was literally written by oil companies and their allies in the Bush administration.
Since setting passage of the oil law as a benchmark for the Iraqi government in January, President George W. Bush has emphasized that the draft law, which was only made public in March, would distribute oil revenues evenly throughout the country on the basis of population, rather than where the oil is produced. While that’s widely seen as key to preventing factional conflict, that provision was already part of the Iraqi constitution, ratified in October 2005.
What’s really new about the law is that it would open the Iraqi oil industry’s doors wide open to foreign investment. Under Saddam Hussein, foreign investment was strictly limited, as it is in most major Middle Eastern oil-producing countries. Under the new law, the Iraq National Oil Company would have exclusive control of only about 17 of Iraq’s approximately 80 known oil fields.
The law would also allow the government to negotiate different kinds of exploration and production contracts with foreign oil companies, including Production Sharing Agreements, or PSAs. Energy lawyers favor these because they allow oil companies to secure long-term deals and book oil reserves as assets on their company balance sheets. A report on the future of Iraq’s oil industry from the International Tax and Investment Center, an industry organization whose board includes senior officials of the world’s largest publicly held oil and oil services companies, as well as partners from five Global 100 firms, confirms that’s exactly what the energy industry has been pressing for.
So far, Fulbright’s oil company clients are pleased with the draft law. "The consensus seems to be that, from what we’ve seen, it’s a good first step," says Jeremy Sheldon, partner in Fulbright’s London office.
LINK TO FULL TEXT OF HYDROCARBON LAW AS PROVIDED BY THE KURDS warning: PDF
The Iraqi people always believed that the United States invaded to get our hands on their oil. As you can plainly see, the Hydrocarbon Law proves them right.
OPPOSITION TO THE HYDROCARBON LAW
There has been much opposition to the Hydrocarbon Law. The most forceful opposition has come, not unsurprisingly, from the people of Iraq. After decades of brutal oppression under Saddam Hussein, they now are faced with having their wealth literally stolen from beneath them.
Recently, the Iraqi people took to the street in protest.
Today hundreds of Iraqis, led by the Iraqi Federation of Oil Unions (IFOU), took to the streets of Basra to demand that the Iraqi Parliament reject the proposed Oil Law. [1] Simultaneous demonstrations took place in Amara and Nassiryya. Local governate officials made statements in support of the demonstration and, along with the governor of Basra, have committed to sending letters to the Minister of Oil supporting the Union's demands.
Hassan Juma'a Awad al Assadi, President of the IFOU, charges that the proposed Oil Law surrenders Iraq's economic sovereignty to multinational oil companies: "We will lose control over Iraqi oil. Therefore, the social progress in Iraq will be curtailed substantially, because the oil companies want huge profits; they are not concerned about the environment, wages, or living conditions..." The IFOU calls for immediate and complete withdrawal of all foreign forces from Iraq. The union represents 26,000 members in 10 state oil and gas companies across four governorates in the south of Iraq.
The Union was moved to public protest after initiating a strike on June 4, 2007 over a range of workplace issues and in opposition to the proposed Oil Law. IFOU leaders have said their members are prepared to strike again in defense of their nationalized oil industry. Iraq's oil has been in the public sector since the 1970s. The call to demonstrate was also sparked by increased pressure by the Bush Administration on the Iraqi Parliament to pass the Oil Law which would open two thirds of Iraq's oil to foreign control through contracts that could last as long as 30 years. Adoption of the law is one the benchmarks imposed on Iraq by the U.S. as a condition of continued reconstruction aid and support for the Maliki government.
Unions, other organizations and individuals around the world are calling on their elected representatives to demand that the U.S. government stop pressuring the Iraqis to pass the Oil Law. In the U.S., the labor and anti-war movements are calling on members of Congress who say they're against the war to drop the Oil Law benchmark and cease all U.S. pressure on the Iraqis to transform their oil industry for the benefit of multinational oil corporations. The activists will also focus on the International Oil Companies who have helped draft that Oil Law, have applied their own pressure on the Iraqis to pass the law, and seek to now profit from the invasion and occupation of Iraq.
The union representing the Iraqi oil workers, the Iraqi Federation of Oil Unions, has consistently led the way. Here is the statement issued by Hassan Juma'a Awad to appeal to the U.S. Congress and European Parliaments:
LINK
Open Letter to the Members of the US Congress who Oppose the War on Iraq
To members of the European Parliaments who Oppose the War
Peace be upon you and greetings to you all,
We wish to clarify certain matters relating to events in Iraq for our friends among the members of the US Congress. It is common knowledge that the occupation spared neither the old nor the young, and that Iraq is passing through the most difficult of times because all and sundry are hounding it and covet a share of its riches. We see no good reason for linking the passing of the feeble Iraqi oil law to the withdrawal of the occupation troops from Iraq.
Everyone knows that the oil law does not serve the Iraqi people, and that it serves Bush, his supporters and the foreign companies at the expense of the Iraqi people who have been wronged and deprived of their right to their oil despite enduring all difficulties.
We ask our friends not to link withdrawal with the oil law, especially since the USA claimed that it came to Iraq as a liberator and not in order to control Iraq’s resources.
The general public in Iraq is totally convinced that Bush wants to rush the promulgation of the oil law so as to be leaving Iraq with a victory of sorts, because his project is failing every day and the occupation is collapsing in all parts of Iraq.
We wish to see you take a true stance for the children of Iraq, and we always say that history will remember those who advance peace over war.
With my regards,
Hassan Juma’a Awad
Head of the Iraqi Federation of Oil Unions
Hassan Juma'a Awad does more than write letters. On Monday, June 4th, Hassan initiated a strike. He demanded that the oil workers be included in the drafting of any legislation which would steal form them their livelihood.
Iraqi Pipeline Company Workers on Strike
Monday June 4th 2007
Iraqi Oil Workers On Strike
Workers from the Iraqi Pipelines Company in Basra are on strike today.
Workers began the strike at 6.30 this morning by shutting two 14" pipelines carrying oil and gas products inside Iraq.
The strike is over unfulfilled demands tabled by the Iraqi Federation of Oil Unions (IFOU) - of which the Iraqi Pipelines Union is a member - to Prime Minister Maliki on May 16th 2007. The 16 demands focus on improved working conditions, pay, land for homes, a reduction in the national
price of fuel and crucially, inclusion in the Oil Law drafting process.
The highest Sunni religious authority recently joined in the growing chorus against the Hydrocarbon Law by issuing a fatwa which forbids any member of the Iraqi Parliament to ratify the thievery.
Baghdad, 4 July (AKI) - Iraq's Council of the Ulema, a group of senior Sunni Muslim clerics led by Sheikh Harith al-Darri, has emitted a fatwa (religious edict) forbidding members of parliament from ratifying a draft law on oil and gas which has already been approved by the government of prime minister Nouri al-Maliki. The crucial oil law that the United States is pressing Baghdad to pass to boost reconciliation between the country's Sunnis and Shiites now goes to parliament for debate.
The council which is the leading Sunni religious authority in Iraq said in a statement Wednesday that "the approval by members of the government of this terrible law is forbidden and null, and anyone who does [vote for it] will be probed and called to account [for this]."
The statement explained that "the project falls within the accords signed by politicians who have gained their positions thanks to the occupation and this could lead to a huge waste of national wealth."
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The fatwa states that anyone who expresses their opinion on the law, let alone approves it, "will incur the wrath of God in that the consequences of the connivance with the enemy in defrauding public wealth will fall on those who commit this crime, which is a betrayal of God, of his Prophet and of all Muslims."
Author's note: Is it any wonder they went on vacation?
WHAT YOU CAN DO
Please write, call, or fax your Congressmen. Urge them to support the Iraqi people and the long-term security of the United States by opposing the Production Sharing Agreements in the Hydrocarbon Law. It is nothing more than outright thievery and must be stopped.
You can also sign this petition to make a personal statement of opposition.
Most importantly, please talk to your friends/family/co-workers/neighbors and educate them on the thievery being committed in their name!
If you made it this far, thanks for reading!