Will Our Petro-Dependency Destroy Our Democracy?

Are we in Iraq to bring freedom to the Iraqi people, as Bush says, or are we in Iraq to preserve the "easy motoring" freedom of American consumers by staking our claim to Iraq's oil?

For those who have even a passing acquaintance with the geopolitical reality of how the world's remaining oil is distributed, the answer is obvious: "It's the oil, stupid." Iraq has the world's second-largest reserve of the light, sweet crude oil that sells for billions upon billions of dollars in the world economy.

And, while some analysts explain Bush's Iraq troop surge as a means to preserve his self-image as "commander in chief" by prolonging the war until he can leave his office and the mess to the next administration, it is more likely, as explained by Chris Floyd, that the surge is buying time until the Iraqi government ratifies the new hydrocarbon law that divvies up Iraq's oil profits.

The hydrocarbon law is being sold to the public as a solution to the knotty problem of how to distribute oil profits among the Kurds, Sunnis and Shia in order to contain the growing civil war, but it does much more than that. The most critical part of the law is how it will essentially privatize most of Iraq's oil, granting profits and control to Exxon, Chevron, Shell and other oil companies.

The Independent, a British newspaper, obtained a leaked copy of the draft law and reported that its provisions would lock Iraqi oil into 30-year Production Sharing Agreements with private oil corporations on what are absolute beggar's terms.

The PSAs would divert up to 70 percent of the oil profits to private companies while they are developing new oil fields, and 20 percent of the profits thereafter. PSAs are not a common arrangement -- most of the world's oil is owned and controlled by state-run oil companies, as was Iraq's when its oil was nationalized in 1972.

But even where PSAs are in place, a fair profit-sharing arrangement is considered to be on the order of 10 percent, not 20 percent. Similarly, the exorbitant 70 percent of profits to pay for oil-field development is way out of line with the physics of oil production in Iraq. Lying just beneath the sand, Iraq's oil today is some of the easiest in the world to produce.

Most Iraqis have no idea of the content of the new hydrocarbon law. What will happen when they find out? The Independent quotes a statement from a recent meeting of Iraqi trade union leaders:

"The Iraqi people refuse to allow the future of their oil to be decided behind closed doors. The occupier seeks and wishes to secure ... energy resources at a time when the Iraqi people are seeking to determine their own future, while still under conditions of occupation."

The Bush administration hopes to dampen this kind of reaction by promising each individual Iraqi a share of the oil profits. Tony Snow compared the hydrocarbon law to Alaska's Permanent Fund that distributes a share of oil revenues drawn from state land to every Alaska resident. But will Iraqis trust a promise like that?

The Independent's take is that the "perception that Iraq's wealth is being carved up among foreigners can only add further fuel to the flames of the insurgency, defeating the purpose of sending more American troops to a country already described in a U.S. intelligence report as a cause celebre for terrorism."

But Bush and his allies among the U.S. elites will never give up on Iraq's great oil prize. As Chris Floyd said about the likely failure of the troop surge and the hydrocarbon law: "If the effort flames out in a disastrous crash that makes the situation worse as it almost certainly will Bush will simply back another horse."

Meanwhile, on the home front, Global Public Media reported last week on a Senate Energy Committee hearing on "The Geopolitics of Oil." Senators heard from experts that a new "Axis of Oil" has emerged, with Russia and China playing lead roles in a game of "keep away" -- blocking the U.S. from its traditional lion's share of world oil supplies.