Iraq is a Mass of Contradictions; Oil is at Their Center

Iraq's government is in the eye of a storm of deadlines and benchmarks and pressure from within and abroad. At some level, it's all about the oil.

The Parliament is to take next month off as key parties criticize the government and vow to withdraw. Washington, dragged by the Democratic Party, is looking for success or troop withdrawal. Iraq's citizens face more violence and poverty and less electricity and fuels.

"We are still struggling to find a political resolution on a whole number of issues," Iraqi Ambassador to the United States Samir Sumaida'ie told reporters Wednesday during a briefing at the embassy. "We're still searching for a common vision that will help us to deal with critical issues such as the constitution and its amendments, Kirkuk, federalism and to the extent that it will be applied outside Kurdistan, applied or not applied outside a Kurdish area, oil law and revenue sharing."

All are linked, he said.

Iraq's constitution, passed in 2005, was vague on certain issues now being targeted for amendment, including control over oil.

The constitution called for a referendum on disputed northern territories by the end of next year, including the oil-rich city of Kirkuk. Iraq's Kurds claim the city and other territories belong in the Kurdistan Regional government's semi-autonomous region. Turkomen and Sunnis dispute it and the outcry over its fate has sparked talk of delaying the referendum, which the KRG refuses.

In Baghdad, parliamentarians are at a standstill over legislation splitting up revenue, most of which comes from the sale of oil, and a law governing the exploration and development of the crude. Iraq has 115 billion barrels of proven oil reserves, the third largest in the world, and last year sales of it funded more than 93 percent of the federal budget. Disputes over the oil rally around whether the central or regional/local government should control key oil fields. This dispute over federalism is inherent in the holdup of the revenue sharing law. More than four years after liberation from Saddam Hussein, the government of Iraq struggles to function.

"A gap still exists between the different parties and their way of looking at this," Sumaida'ie said. "Intensive effort is going on to try to resolve this."

Prime Minister Nouri al-Maliki's coalition government is weakening. The Iraqi Accordance Front, the largest Sunni bloc in the Shiite-dominated coalition (with a heavy Kurdish partnership), has issued a list of demands to be met. Maliki has one week or the bloc will withdraw its members. The Kuwait News Agency reports IAF leader and Iraqi Vice President Tarek al-Hashemi has submitted his resignation.

The Sadr Movement and Fadhila Party, two smaller Shiite parties with a large citizen support base, have already withdrawn from the coalition. The anti-Maliki sentiment is not solely related to his push for an oil law, but the law is a major lightning rod.

"The law is discussed in the Parliament and in the Parliament there are various groups and of course there are differences," Oil Minister Hussain al-Shahristani told UPI during a telephone interview from Baghdad Wednesday morning. "Like any other issue it will be debated and we try to close the gaps and reach compromises."

All signs point to a Parliament that leaves for August recess without approving the law.

President Bush is urging the government to reconcile their differences as the troop surge assessment is due to Congress Sept. 15.

Ken Katzman, Middle East specialist at the Congressional Research Service, said the fighting will subside "once there's a deal where there is an equilibrium of power and money."

"I believe there's a mathematical equation to the fighting," he said, "once they reach a stalemate on the battlefield, they will likely reach a political compromise."

Iraqi Sunnis, which make up the largest share of the insurgency, want a guarantee on revenue sharing and control over their own area, which has a lot of violence and very little oil.

"The Sunni government will not accept Shiite-dominated forces in their area," he said.

Shiites, the dominant faction in politics and armed militias, want a guarantee on security, especially attacks on holy sites. They're in a better position to bargain for control over oil and revenue than Sunnis and Kurds, but face internal power struggles.

"The Kurds already have a lot of what they want," Katzman said: semi-autonomous with economic development far beyond the rest of the country, including starting development of its oil, much to the federal government's consternation. The KRG area is protected by its own security forces, the peshmerga, which has kept it relatively safe.

Rival Shiite parties will need to address internal issues, Katzman said. He termed the struggle along class lines: The Supreme Islamic Iraqi Council (formerly the Supreme Council for the Islamic Revolution in Iraq) and Prime Minister Nouri al-Maliki's Dawa Party are the main components of the coalition in Baghdad, the upper class. The Sadr Movement and Fadhila Party, while maintaining a presence in Baghdad politics, have solidified backing of the poor and workers of Iraq, especially in oil-rich Basra, the main port terminal. Disputes in Basra have turned bloody and all are leveraging positions for control, especially of the oil industry there and the lucrative oil and fuel smuggling racket.

"The issue for the lower classes is: are they getting the money, whether legitimate or from smuggling," Katzman said, or are the "upper classes" squeezing Sadr and Fadhila financially.

Meanwhile Iraq's citizens are fleeing en mass, with a 2 million strong refugee count. Bodies are found daily. Those who remain face a dearth of transportation, heating and cooking fuel. Electricity is out for long hours, if not days at a time.

"The onus is on Iraq to demonstrate at least the ability that the political process can produce solutions," Sumaida'ie said. "A sense of urgency exists not necessarily from the Washington benchmarks but from the pressure from the street. People are fed up with the current situation."

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