U.S. Officials Have Absolutely No Clue about Iraq's Oil Law

By Ben Lando, UPI. Posted June 23, 2007.

A military leader fresh from Iraq is the latest U.S. government official to push a common but false claim that the controversial draft oil law will lead to a just division of the proceeds from oil sales and pave the way for reconciliation in the war-torn nation.

Lt. Gen. Martin Dempsey, former commander of the Multinational Security Transition Command-Iraq, forwarded claims made by the Bush administration and Congress that if Iraq passes an oil law, the fighting factions there will come together because revenue from oil sales will be distributed to all.

The oil law (also known as the hydrocarbons law), however, does no such thing. A separate revenue-sharing law would decide how the oil revenue is spread around the country. It is currently being negotiated, though far behind the hydrocarbons law in the Iraqi legislative process.

Dempsey, who just returned from his in-Iraq duties, told reporters at a Pentagon briefing Wednesday, "There's an interim step toward reconciliation that might better be described as accommodation," finding "ways to become dependent on each other."

The hydrocarbons law is one way, he said, "where you equitably distribute the resources of the nation, thereby encouraging these three groups to depend on each other for some common commodity."

Only a small portion of the law mentions revenue, and explicitly states that, according to the Iraqi Constitution, a separate "federal revenue law" is required to dictate how the revenue is spent.

President Bush, during remarks with visiting Iraqi President Jalal Talabani on May 21, said, "We're working very hard, for example, on getting an oil law with an oil revenue-sharing code that will help unite the country."

Such a law was included in Bush's "benchmarks for reconciliation" in Iraq.

Other U.S. officials, including the vice president during a visit to Baghdad, have expressed U.S. desires for Iraq to pass an oil law, the one with non-existent influence on the oil revenue.

Members of Congress as well push the "oil law" as important, also not distinguishing it from revenue assumptions.

"Iraqi progress on an oil law is good news and an important step forward," Sen. Joseph Biden, D-Del., said in a Feb. 27 statement after Iraqi negotiators initially approved the hydrocarbons law. "Fair-sharing of Iraq's oil revenue is key to a sustainable political solution, but an oil law by itself will not end the sectarian warfare in Iraq," added Biden, who is in favor of breaking Iraq into Shiite, Sunni and Kurdish states.

The Democratic-led Congress, despite calls from the more progressive members, enshrined the oil law benchmark for the Iraqi government in the Iraq war-spending bill approved last month:

"Enacting and implementing legislation to ensure the equitable distribution of hydrocarbon resources of the people of Iraq without regard to the sect or ethnicity of recipients, and enacting and implementing legislation to ensure that the energy resources of Iraq benefit Sunni Arabs, Shia Arabs, Kurds, and other Iraqi citizens in an equitable manner."

Iraq oil sales made up more than 93 percent of its federal budget last year. Iraq sells about 1.6 million barrels per day.

The oil law would set guidelines for how Iraq's vast 115 billion barrels of proven reserves -- third-largest in the world -- are developed. It would determine the role of the central, regional and provincial governments and the extent of foreign companies' access to Iraq's oil, most of which isn't being pumped (and a lot more is considered to be undiscovered).

"The draft hydrocarbons framework law does not define specific terms for the distribution of Iraq's oil revenue," Christopher Blanchard, Middle East policy analyst for the Congressional Research Service, told United Press International. "The law would require Iraq's Council of Ministers to submit a separate federal revenue law to regulate a central Oil Revenue Fund and ensure the fair distribution of oil revenue."

The revenue law is the legislation that would dictate how and to whom the money is distributed.

"The hydrocarbons framework law is important," Blanchard said, "but if equitable oil revenue sharing is a key benchmark for political reconciliation and progress in Iraq, then the ongoing discussions among Iraqis about the terms of the draft revenue law deserve more attention."

As an occupying power in a country rocked by instability after more than four years of war, the misguided pressure on the oil law from the U.S. government actors is likely to work against their stated aims -- ensuring Iraqis reap the benefits from their oil.

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