News Release

Leaked Iraqi Oil Law


The New York Times reported this week: “A draft version of the long-awaited law that would govern the development of Iraqi oil fields and the distribution of oil revenues has been submitted to Iraq’s cabinet, the first step toward approving the legislation, two members of a senior negotiating committee said this weekend.”

A leaked copy of the 29-page proposed oil law has just been translated by Raed Jarrar, a D.C.-based Iraqi analyst who is in close contact with Iraqi parliamentarians.

Jarrar is Iraq Project director for Global Exchange. A translated copy of the proposed oil law is at his web page.

He said today: “Financially, the proposed law legalizes very unfair types of contracts that may freeze Iraq into very long-term contracts that can go up to 35 years and cause the loss of hundreds of billions of dollars from Iraqis.

“The proposed law undermines Iraq’s sovereignty since Iraq would not be capable of controlling the levels of production, which threatens Iraq’s membership in OPEC. And Iraq will have this very complicated institution called the Federal Oil and Gas Council, that will have representatives from the foreign oil companies on the board of it. So representatives from companies like ExxonMobil and Shell and British Petroleum will be on the federal board of Iraq approving their own contracts.

“Finally, the law gives regional authorities final say in dealing with the oil, instead of giving this final say to a central federal government. So it opens the door for splitting Iraq into three regions or possibly even three states in the near future.”
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Juhasz is a Tarbell Fellow at Oil Change International and a visiting scholar at the Institute for Policy Studies. She said today: “The proposed law does almost word for word what was laid out in the Baker-Hamilton recommendations, which, at the very basic level, is to take Iraq’s nationalized oil system — the model that 90 percent of the world’s oil is governed by — and turn it into a commercial system fully open to foreign corporate investment on terms yet to be decided.”

“Given that Iraq’s oil only costs less than a dollar per barrel to pump and oil is selling at over $50 per barrel, the Iraqis are already making a tremendous return on their oil. The danger is that under the different models of oil contract that are being put on the table, the Iraqis would lose the vast majority of that profit to the foreign oil companies.

“Iraqis have lost a fair amount of expertise, technical know-how, as technology has increased over the past 11 years and the Iraqis were shut out because of the sanctions. The answer to that is found in the models put forward by their neighbors, Kuwait and Saudi Arabia and Iran, which are technical service contracts that countries sign with foreign companies to bring in that expertise, but under very limited time frames and very specific economic benefits to the companies and to the country, not these 35-year contracts.” Juhasz’s latest book is The Bush Agenda: Invading the World, One Economy at a Time.
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For more information, contact at the Institute for Public Accuracy:
Sam Husseini, (202) 347-0020; or David Zupan, (541) 484-9167