• Iraq: the good oil

The chances of reducing corruption are greater under a democratic capitalist system, with an elected parliament, than under conditions of military dictatorship under a fascistic one.

Barry

PS - Another reason it's pointless to debate with bpors is that he keeps posting links, expecting others to read them, when he doesn't relate them directly, through excerpts, to what they are meant to reveal. He has quite a record of even getting his own links wrong - that is, he claims they prove a point when, as has been revealed elsewhere, they sometimes provide evdience contrary to the claim he is making. I can tolerate arrogance in people who get it right - but it's repulsive coming from someone who is so terribly wrong. Also, the Administrator might like to think about his tactic of immediately replying to thoughtful posts so that his own off-the-top-of-the-head comment becomes the last word.

BYork,

that you don't get the irony of the statement: 

"The chances of reducing corruption are greater under a democratic capitalist system, with an elected parliament, than under conditions of military dictatorship under a fascistic one."

is in itself a testament of your refusal to see things as they are. If you can say Iraq is currently "a democratic capitalist system", you need to give the game away. You have to be joking.

my post was directed to youngmarxist who specifically asked for a reply about the subject.

Your  reply wasn't welcome and not invited and not worth countering with  a logical argument. It is self-evidently ludicrous to call the occupied Iraq any sort of democracy while it is in the middle of a civil war that only adherents of Fox News are still denying is taking place.  Please keep to your word and stop replying to my posts. There's a good fellow.

So much for the Iraqi 'puppet government' obeying its 'masters' directive to promulgate a new national oil law by the end of 2006. Some progress has been made, though, after about four months of negotiations by members of the Shia-Sunni-Kurd committee to draft the law.

I'm reluctant to place too much faith in reports about a leaked copy of the draft, as it remains a draft that can be changed. What will matter is how the Iraqi parliament deals with it and what form the final law takes.

It seems very likely, however, that the new law will provide for all oil revenues to be centrally controlled and distributed on a population basis. This is good for national reconciliation. However, there seems to still be disagreement about the role of the proposed national oil and gas council, as to whether it should have power to veto contracts proposed by regions.

There is also a very important unresolved issue relating to existing contracts that are productive. It is likely that the new law will allow for the Iraqi government to review all existing contracts and that they will approve those, such as in the Kurdish region, that are working. Any such review power also allows for the government to honour, or repudiate, the huge contracts (PSAs) negotiated with foreign (French, Russian and Chinese) oil companies under the old regime.

According to Oil Minister, al-Shahristani, the law, if passed, will allow any region that produces at least 150,000 barrels a day to create its own operating company.

The oil law represents an historic opportunity for Iraq.

Information above is from this report: http://www.aina.org/news/20070120135328.htm  

Barry

IRAQ'S NEW OIL LAW: Written up for the Iraqis by an American company BearingPoint in the new American Palace in Baghdad.

It hadn’t even been seen by Iraqi legislators yet, but details of a new “Iraqi” hydrocarbons law, drafted in reality by U.S. contractors, were revealed Jan. 7 in the Independent, a major London newspaper that has been critical of the Iraq war.

Once information about the leaked document got out, it was condemned around the world as an unprecedented giveaway to the multinational oil companies—in particular, those based in the U.S. and Britain.

“Its provisions are a radical departure from the norm for developing countries,” wrote the Independent.  Under a system known as ‘production-sharing agreements,’ or PSAs, oil majors such as BP and Shell in Britain, and Exxon and Chevron in the U.S., would be able to sign deals of up to 30 years to extract Iraq’s oil.

“PSAs allow a country to retain legal ownership of its oil, but give a share of profits to the international companies that invest in infrastructure and operation of the wells, pipelines and refineries. Their introduction would be a first for a major Middle Eastern oil producer. Saudi Arabia and Iran, the world’s number one and two oil exporters, both tightly control their industries through state-owned companies with no appreciable foreign collaboration, as do most members of the Organization of Petroleum Exporting Countries, OPEC.”

The article quoted Greg Muttitt of Platform, a human rights and environmental group that monitors the oil industry. “He said the new legislation was drafted with the assistance of BearingPoint, an American consultancy firm hired by the U.S. government, which had a representative working in the American Embassy in Baghdad for several months.”

Muttitt added: “Three outside groups have had far more opportunity to scrutinize this legislation than most Iraqis. The draft went to the U.S. government and major oil companies in July, and to the International Monetary Fund in September. Last month I met a group of 20 Iraqi MPs in Jordan, and I asked them how many had seen the legislation. Only one had.”

....(con't)

and:

As journalist Chris Floyd explained, “The new law offers the barreling buccaneers of the West a juicy set of production-sharing agreements that will maintain a fig leaf of Iraqi ownership of the nation’s oil industry--while letting Bush's Big Oil buddies rake off up to 75 percent of all oil profits for an indefinite period up front, until they decide that their ‘infrastructure investments’ have been repaid.”

http://www.socialistworker.org/2007-1/617/617_03_Oil.shtml

There's a view in some quarters that if you keep repeating a mantra often enough, and just ignore points made in prior debates, then it comes true.

Iraqi legislators haven't seen the bill yet because it doesn't yet exist. The committee drafting it - consisting of Kurd, Shia and Sunni Arba representatives - is yet to agree on a final wording. (The leaking of a draft document is interesting but I'm not willing to debate on the basis of that document because (a) it might not be accurate and (b) it is at best only a draft which, being a draft, will probably be changed.

Journalist Chris Floyd carefully adds "up front" to his false claim that Bush et al will "rake off up to 75 percent of all oil profits for an indefinite period". He wants to create the impression that it will be for an indefinite period but covers himself with "up front" - which actually indicates that he is dishonest, as he knows that the Iraqi PSAs will almost certainly follow the standard pattern of a contractual life of 25-35 years.

He is also wrong to state that only one side of a PSA - the company - decides when the initial cost capital has been recovered. It's typical disinformation. PSAs are complex documents that involve both parties in negotiating the specific terms prior to the agreement being approved. There contain schedules relating to payments, though these are often conditional.

The problem for Iraq is how to create a security environment in which US and other major oil companies will be willing to invest, not the investment itself (which will see the development of a greatly expanded modern oil industry and reap billions for Iraq).

The posturing talk on another thread about the 'productive forces' not being ready yet for democracy in Iraq is quite silly in light of the enormous oil wealth of the country. The old regime held back its development through nationalization under conditions of dictatorship, lack of transparency, corrupt mismanagement, reliance on old technology and using the wealth to fund oppression at home and disastrous war against neighbours.

With the old regime gone for good, the productive forces can advance most effectively and quickly through foreign investment. The Iraqi government knows this - and the Bolsheviks knew it too.

Barry

BYork,

Are you saying that the oil draft legislation that was passed around for approval to a foriegn country (America), and to the multi-national oil companies back in last July - and eventually found its way into a British newspaper - doesn't have to be seen by the Iraqi politicians!? That is ridiculous. In order to hold a position that Iraq is some kind of sovereign democracy you torture logic and common sense like no-one I've ever read before.

BYORK: He is also wrong to state that only one side of a PSA - the company - decides when the initial cost capital has been recovered. It's typical disinformation. PSAs are complex documents that involve both parties in negotiating the specific terms prior to the agreement being approved. There contain schedules relating to payments, though these are often conditional.

 

Really?

Who is it that dictates the profit margin? The private oil companies will sell it to themselves, and be in charge of how much is pumped out. You said before that the American oil companies bought from Saddam in the past. Well, from now on they will buying their own oil from themselves, won't they. But how much will Exxon Iraq Ltd sell to Exxon America Ltd? Maybe they will pump like crazy, keep the prices low and the oil production profits low and make all the profit stateside. That way the Iraqis will forever be paying off the mortgage. Or better yet, make all the profit at some foriegn built refininery and wash the profits through the Caymans before it reaches stateside, thus ensuring they don't have to pay American taxes. Sweeeeet!!! 

You see BYork, when you own the game, you can do anything.

And thats no matter what a complaining future Iraqi Government says. Read your history. That is why Iraq went to the French and the Russians in the past because they did not have a stranglehold on the world markets like the five deadly sisters do. In the sixties and seventies when the Iraq governments complained about the low production, the American/British oil companies played dumb but pumped like crazy in the more pliable states at the time like Iran and Nigeria and Venuzuela. The oil companies also bled those countries dry.

The Iraq oil industry should be nationalized. When it was it was the only time the Iraqi people saw any benefit from it.

I still see no point, after a few months of trying, to debate with bpors. He just makes stuff up and, as the last line of his previous post reveals for all to see, he is actually pro-fascist.

The draft legislation is not even in existence yet, as the parties to the committee drafting it, have not reached agreement. It's just crazy to say it was passed around in the US seven months ago.

This post took me a couple of minutes. I'm not willing to give any more time to this person - there are more positive things on my agenda, including an article for mainstream media explaining why leftists support foreign investment, via PSAs, to develop and expand the Iraqi oil industry.

Barry

I suspect BYork is upset because I have blown to bits all of the superficial arguments that he stiches together to pretend he knows what he is taking about. For instance BYork dishonestly claims:

"The draft legislation is not even in existence yet, as the parties to the committee drafting it, have not reached agreement. It's just crazy to say it was passed around in the US seven months ago."

 

But it is the same draft in which he previously says does exist:

BYork: "The leaking of a draft document is interesting but I'm not willing to debate on the basis of that document because (a) it might not be accurate and (b) it is at best only a draft which, being a draft, will probably be changed."

 

Yes, BYork doesn't want to debate that draft. Because its the same draft that he later says doesn't exist because its still being debated in the Iraqi "government".

But in truth, what is being debated by the Iraqi "government" is the same draft law, but the only debate is about the who gets the spoils of whats left after the oil companies get the lion's share. BYork is playing a shell game, pretending the legislation being discussed is not the draft law that was being passed around to the American government and the oil companies last year. Here is what the Independent says that backs up what I am saying:

The Independent on Sunday has obtained a copy of an early draft which was circulated to oil companies in July. It is understood there have been no significant changes made in the final draft. The terms outlined to govern future PSAs are generous: according to the draft, they could be fixed for at least 30 years. The revelation will raise Iraqi fears that oil companies will be able to exploit its weak state by securing favourable terms that cannot be changed in future.

http://news.independent.co.uk/world/middle_east/article2132574.ece

 

So, that is why BYork does not want to debate it. Why? Because it completely demolishes his denial that the Iraqi draft legislation that affects the privitization of Iraq's oil - and what the oil companies get - was in fact circulated to the oil companies last July 06.... but kept from Iraqi government members!

How dishonest is that?! 

But what else could you expect from someone who thinks state-controlled enterprises equates to fascism. Maybe BYork is part of a new movement called "Marxists For Militant Captitalism!" I dunno. But he is funny.

As for any article that BYork says he will get published, good luck with that. I mean it. But for God's sake I hope he doesn't say this in the article, as he did previously in this thread:

BYORK: "There are two points there: the first, that the US oil companies actually want the price of oil to increase, is mainfestly absurd. As they import the oil, it is in their interests for the price to be cheaper, not dearer."

 

 

What can you say about that??!! I just cracked up laughing. While I personally found BYork's ignorance of the oil industry hilarious in that he did not even know the U.S. oil companies also drill for, and produce oil - thereby making huge profits in a oil price spike - I don't want it shared with the broader public.

Now we get to the last point: why reply to someone who just said they won't reply back? Its simple. BYork doesn't have a leg to stand on, doesn't know how multi-nationals work, and was most likely confused and taken aback on how I explained to him all the little games the major oil companies could play on Iraq to keep the money. Games that they have played in the past and has been documented for many many years. So therefore he is taking his bat and ball and going home. As for me, I have no problem tearing his posts apart. I enjoyed the "debate", such that it was.

bpors is completely dishonest. The link he just published which he says "backs up what I am saying" is the SAME link byork published here

I agree with byork that there is no point arguing with him further since he just makes stuff up. But he shouldn't be allowed to appear as though he is unanswered as a result of people just giving up on responding to someone who won't read what they write in response.

His further posts after byork gave up should be moved to the junk forum rather than encouraging byork to waste further time on him rather than preparing his article for publication.

keza,

where am I being disruptive, specifically? Are you saying I must agree with BYork? I have not said anything to BYork that I did not receive.

Saying I'm making stuff up is rubbish. If so, just ask for it to be backed up. When GuruJane claimed the Hamas Government had abrogated the Oslo Agreement, I just asked her to point out when that was. I am assuming her lack of reply means she looked and couldn't find any.

I assume that, after being challenged by youngmarxist to post any evidence of theft of Iraqi oil by the Americans - which I did - his lack of reply was an acknowledgement of the fact. Otherwise he would have gleefully demolished my claim.

Funny thing, everytime I prove my point, posters here won't reply.

I have a pro Arabist, anti corporate America stance, and this seems to upset people here.  I have made the assumption that many posters here are ex leftists turned neocons in sheeps clothing. I really don't know.

As far as anything I say may be wrong, please have pleasure in pointing it out. It is a good way to explain and promote your views.

I note that one of your posters was given free rein to say what he liked in another forum. And it was taken in good spirits, although they found his views odd, to be sure. But they never accused him of being disruptive, no matter what his views. They genuinely accepted he was sincere.

 As for being disruptive, I replied in kind from the attacks I have received which you have ignored. I figured, well, "maybe that is how it is done here as keza seems to approve".

BYork attacks me for being fascist for supporting state owned enterprises. Yet I'm disruptive.

You have one rule for you friends and another for people who you disagree with.

I have reread my posts and they were in tune with what what was being said back to me. I have never gone over the top in insults, and I have stuck to the argument and I have answered every post sent back to me, no matter how churlish it was in style.

By all means junk my posts and expose your narrow-mindedness to OTHER people who read this forum. You have the button. Its your forum.

But remember, no-one asked to put up public forum on the internet. You are inviting comment.

If you delete my posts please do the courtesy of emailing them to me before so, if that is possible.

It is more than apparent that a REAL leftist's views are not welcome here.

Arthur: bpors is completely dishonest. The link he just published which he says "backs up what I am saying" is the SAME link byork published here

 

And the link does back up what I'm saying. It says it is the same draft law that is in front of the Iraqi government now, and it says it was passed around by the oil companies back in July. BYork say this isn't so.

Can't get any simpler than that.

 I assume that, after being challenged by youngmarxist to post any evidence of theft of Iraqi oil by the Americans - which I did - his lack of reply was an acknowledgement of the fact. Otherwise he would have gleefully demolished my claim.

the IAMB has repeatedly raised the following issues with the CPA:

• The absence of oil metering. The IAMB recommended in March 2004 the expeditious installation of metering equipment in accordance with standard oil industry practices. Contrary to earlier representations by the CPA, the award of metering contracts has been delayed and it is therefore impossible to ascertain that all oil extraction is properly accounted for.
  
  
• The use of barter transactions for certain oil sales. The IAMB has been concerned that barter transactions are not reflected in the DFI as required by UNSCR 1483. The IAMB understands that some bartering of oil for electricity with a neighboring country continues. The use of barter transactions makes it difficult to determine whether fair value has been received for Iraq's oil revenues.

Any posts deleted from here will be moved to the junk forum (and replaced with a link to their new location on that forum so that people can still read them if they choose).

youngmarxist: No, it's an acknowledgement of me being extremely busy and without the time yet to properly read and respond to the link you posted. Among other things, I'll need to read and understand the accounts and associated reports of the Development Fund for Iraq and the International Advisory and Monitoring Board for Iraq to give a worthwhile reply.

 In that case youngmarxist, forgive me my assumption. After you posted this:

Posted by youngmarxist at 2007-01-14 05:44 AM  
Bpors' reasoning is, again, thoroughly dishonest, and there is no response to my reply about the allegedly missing oil money, even though bpors complained previously that we ignored this issue.

As soon as I took up bpors' point, and asked for more evidence, what I said was ignored, and bpors simply repeated the same assertions that I have already shown to be wrong.

Anyone who wants to see my reply to what bpors says above should read my comments above in the thread. I have already addressed bpors' points, and bpors has offered no actual argument to demonstrate that what I say is wrong in his post above.

I replied with some links the same day with:

Posted by bpors at 2007-01-14 11:50 PM   
To youngmarxist,
here is a few articles regarding the theft of the Iraqi people's wealth by the American/British occupiers. My view is nothing has changed since the Iraqis voted a parliament into the Green Zone which is under even tighter control than the occupied towns of Iraq. One must wonder what Bush really means when he expects Milaki to keep his promise.

After my reply on the 14th, you posted on here (according to your post search, if I read it correctly)

Posted by youngmarxist at 2007-01-17 06:38 PM
                                       2007-01-18 08:06 PM
                                       2007-01-19 05:46 AM
                                       2007-01-22 12:34 PM
                                       2007-01-23 12:51 PM
                                       2007-01-24 08:25 PM
                                       2007-01-31 05:43 PM
                                       2007-01-22 12:34 PM

...without addressing my reply to your request.

I didn't mind you not replying, of course. I just thought it was an acknowledgement by omission. I apologize for jumping to that conclusion.

Most recent on America's theft of Iraqi oil billions:

http://www.guardian.co.uk/frontpage/story/0,,2008191,00.html

.....According to Stuart Bowen, the special inspector general for Iraq reconstruction, the $8.8bn funds to Iraqi ministries were disbursed "without assurance the monies were properly used or accounted for". But, according to the memorandum, "he now believes that the lack of accountability and transparency extended to the entire $20bn expended by the CPA".

To oversee the expenditure the CPA was supposed to appoint an independent certified public accounting firm. "Instead the CPA hired an obscure consulting firm called North Star Consultants Inc. The firm was so small that it reportedly operates out of a private home in San Diego." Mr Bowen found that the company "did not perform a review of internal controls as required by the contract"

However, evidence before the committee suggests that senior American officials were unconcerned about the situation because the billions were not US taxpayers' money. Paul Bremer, the head of the CPA, reminded the committee that "the subject of today's hearing is the CPA's use and accounting for funds belonging to the Iraqi people held in the so-called Development Fund for Iraq. These are not appropriated American funds. They are Iraqi funds. I believe the CPA discharged its responsibilities to manage these Iraqi funds on behalf of the Iraqi people."

Bremer's financial adviser, retired Admiral David Oliver, is even more direct. The memorandum quotes an interview with the BBC World Service. Asked what had happened to the $8.8bn he replied: "I have no idea. I can't tell you whether or not the money went to the right things or didn't - nor do I actually think it's important."

Q: "But the fact is billions of dollars have disappeared without trace."

Oliver: "Of their money. Billions of dollars of their money, yeah I understand. I'm saying what difference does it make?"....

The sooner the insurgents are defeated and the militia brought to heal, the sooner the democratically-elected Iraqi Government can proceed with the business of debating and promulgating a new oil law. Conditions of stable democracy improve the opportunities for suppression of corruption, too. The chances are much better under the rule of law than under military dictatorship. Always remember that, should Iraq be lucky enough to enter into PSAs with international major oil companies on an 80/20 basis, then over 30 years, the Iraqi government will receive $777 to $897 billion in revenues - plus have a modern oil industry developed. (These figures are based on Greg Muttitt's tables, cited in my posting of 2 January 2007. (Sorry, I don't know how to link to it).

The Iraqi government and its allies will crush the insurgents eventually but they will continue to harm the developing democracy and reconstruction. I'm happy to add the Iraqis to the list of people with whom I've been in solidarity over the past four decades: the Vietnamese, the South Africans, Chileans, and now the Iraqis.

True friends of Iraq want to see peace there and the full development of the oil industry through foreign investment and PSAs.

Repeat: $777 to 897 billion (US dollars) over 30 years, plus a modern oil industry infrastructure. Readers, please keep these figures in mind when reading the next distraction from the usual supporter of the old regime.

Barry

The Iraqi Parliament has just passed its largest ever budget. The budget provides $(US) 41 billion for services and projects including a new oil refinery (a 'mega-project'); new electricity and other infrastructure; new schools and factories; and ten new hospitals. (All of which are, and will continue to be, targetted for destruction by the insurgency, not by the foreign military forces that are helping the Iraqis crush the insurgents).

The budget includes $1.5 million in compensation payment to Kuwait, and it incorporates a (projected) deficit of around $(US) 7 billion.

Revenues are expected to be around $(US) 33 billion, the great majority of which comes from oil. The revenues are calculated on the assumption that oil will sell for $(US)50 per barrel and that 1.7 million barrels will be exported per day.

With the defeat of the insurgents and the militia, and the development of practical Production Sharing Agreements with foreign oil comanies, Iraq will be able to greatly expand oil production and eventually come close to doubling its exports. As shown in previous posts, the oil earnings to Iraq over the standard 30 year period of a PSA should be around $(US) 800 billion - plus Iraq ends up with modern and efficient infrastructure. It's win-win for Iraq.

There's still no bill relating to oil. I wonder if the people who insisted that the Iraqis were being rushed into passing a law to serve US big business - those who said they were being forced to have it ready by the end of 2006 - now reflect on why the Iraqi 'puppet' government has been so tardy. Why, it's almost as though the Iraqi government actually is an independent government and not a US oil puppet! The Iraqi government is taking its own time in drafting a law that is critical to the country's future. The 'usual suspects' will just stop making the claim that the Iraqis are being forced to meet a US-imposed deadline and act as though they never made it in the first place. Ditto that the US would never allow genuine multi-party elections, would never allow the election of parties hostile to the US and Israel.

Meanwhile, the world keeps moving,

Barry

Barry, I agree with the general thrust of your posts. But on the specific issue of the delays in the oil bill I doubt that is about Iraq asserting independence and the effect of the terms of the bill on terms to be negotiated with oil companies. After all the oil law can only provide a framework and the actual deals come later (though provisions regarding ratification or nullification of agreements reached locally without central approval, eg between the Kurdish regional government and oil companies, may well be among the controversies and would presumably involve the relevant oil companies as having a stake in the outcome).

Your focus has been on refuting the nonsense from the usual suspects, but their material has been as usual all about "Big Oil" and the US with no insight at all into actual Iraqi politics since taking any interest in it would be contrary to their faith that its all just a US plot.

The delay is more likely to be about revenue and control sharing issues within Iraq (including that issue of how to resolve existing complications regarding local deals).

My understanding is that the Kurds want less central and more local control because they aren't planning to stay in Iraq once it is democratic enough to let them leave taking Kirkuk and its surrounding oil fields with them (like Quebec could leave Canada), but are willing to share revenue in proportion to population at least for now.

Both the Kurds and the Sunni Arabs would be likely to be anxious about how much the central government could deduct for its priorities before the remainder is distributed to regions by population since central government priorities could turn out to be for projects in the Shia regions.

Some of the Shia see no reason to guarantee the Sunni Arabs (who don't have much oil in the regions where they predominate) much at all, especially after centuries of domination by them, and especially not while being subjected to mass murder campaigns by Baathists and jihadis still able to hide within Sunni communities. (Kurds probably feel the same way but their political leadership has greater room to maneuver while Shia parties are stuck with the problem of appeasing Sunni politicians who their own mass base is in no mood to appease).

Some of the Shia also have a stake in major corrupt dealings in Oil around Basra that could be holding things up.

The Sunnis would be insisting (with US support) that guarantees they will not be hung out to dry financially are essential for them to be able to join a national reconciliation government that could suppress both the Baathists and jihadis and the death squads.

These issues are inevitably difficult and more likely to be the source of delays. They may well be intertwined with other issues relevant to political realignment and formation of a national unity government, including provincial elections (where Sunni regions are still governed by people elected when most Sunnis were still boycotting), and allowing ex-Baathists back into public life.

There's an english language translation said to be of an oil law draft dated January 15 and various "analyses" available from a hostile source here

There's a long rambling analysis from someone actually knowledgeable about the industry which I cannot follow at al-ghad apparantly from the pro-insurgency "iraq communist party(central command)".

If byork is still doing a comprehensive analysis these are likely to be the among the original sources for the derivative propaganda.

I'd guess that the issues are likely to be clear enough now for it to be worthwhile byork getting to grips with the details. (I'm still trying to figure out Iran, Syria and US developments).

Thank you for posting the link, Arthur. I check 'oil law Iraq' every morning for latest news but the past few days have been overtaken by other aspects of life.

The latest news (from yesterday) is that Massoud Barzani, the president of Iraq's autonomous Kurdish region, announced at a press conference on Saturday with Iraqi President Talabani and the US Ambassador that the Kurds have agreed to the latest version of the draft law. The report states that oil revenues will be distributed to the 18 provinces on a population basis rather than according to the location of the oil resources. http://www.miami.com/mld/miamiherald/16776659.htm This is the way it should be, so things are looking hopeful.

I'm ready to write something for wider distribution as soon as the law is passed. During the past few months, there's been much more speculation than hard analysis and, when the law comes into existence, this will change.

Barry