WORLD / Middle East
Iraqi Cabinet approves draft oil law
(AP)
Updated: 2007-02-27 06:13
BAGHDAD- The Iraqi Cabinet approved draft legislation Monday to manage
the country's vast oil industry and divide its wealth among the
population, a key U.S. benchmark for progress in this country. The
legislation now goes to parliament for approval.
Prime Minister Nouri al-Maliki announced the decision after the Kurds
accepted the draft oil bill over the weekend �� nearly two months after
the government's own deadline for enacting a new oil law.
Al-Maliki said the measures would be "another foundation stone" in
building a new Iraq, which relies on oil revenues for about 90 percent of
its national budget.
It was unclear when 275-member parliament will vote on the measure. The
legislature reconvenes early next month.
All major parties have agreed to work for approval of the measure by May,
but there are no guarantees in Iraq's fractious, sectarian political
system.
"The draft law represents a major breakthrough for Iraq's economic and
political transition," said Deputy Prime Minister Brahma Sale, a Kurd. "I
very much hope the main political groups will rise to the occasion" and
approve the bill in parliament.
Iraq has some of the world's largest petroleum reserves, and supporters
hope the legislation will encourage major oil companies to invest
billions - if the security situation improves.
Under the measure, revenues will be distributed to all 18 provinces based
on population size - a concession to the Sunnis whose central and western
homeland has relatively few proven reserves. Most of Iraq's oil is in the
Kurdish north and Shiite south, and many Sunnis fear they would be cut
out of a fair share.
However, the bill had been bogged down for months in infighting between
al-Maliki's Shiite-led government and the self-ruled Kurdish
administration of northern Iraq over who had the final say in negotiating
contracts and managing the revenues.
In Washington, White House spokesman Tony Snow called a new oil law the
"key linchpin" in Iraq's recovery because it gives "everybody a shared
economic interest in working together."
The haggling went to the heart of the Iraqi crisis - the failure of
religious and ethnic parties to compromise in the interest of saving the
nation. Without such compromises, U.S. commanders doubt that military
crackdowns and the current U.S. and Iraqi security operation can produce
long-term stability.
The Bush administration, facing growing pressure to end the Iraq
conflict, has been urging the Iraqis to finish the new oil law - one of
the benchmarks that al-Maliki's government had pledged to meet by the end
of last year.
"That being done, then the Iraqis can turn to other things, such as
constitutional reform, election reform" and allowing many Sunnis to
return to public life, Snow said.
The Iraqis also missed a year-end deadline to establish provincial
elections, reverse regulations that exclude many Sunnis from government
posts, and grant limited political amnesty to some insurgents.
Under the oil legislation, regional administrations will be empowered to
negotiate contracts with international oil companies. The contracts will
be reviewed by a central government committee in Baghdad headed by the
prime minister.
A new law is needed, most outside experts believe, to encourage
international companies to pour billions into Iraq to repair pipelines,
upgrade wells, develop new fields and begin to exploit the country's vast
petroleum reserves, estimated at about 115 billion barrels.
According to Iraqis familiar with the deliberations, the draft law would
offer international oil companies several methods to invest, including
production-sharing agreements. Those would give U.S. and other
international companies a substantial share of the oil revenues to
recover their initial investments and then allow them big tax breaks.
That angers some Iraqis, who believe foreigners will get too much control
of the nation's wealth.
Some critics of the law believe the draft gives the regions too much
control. The Kurds currently have the only self-governing region in Iraq,
although the 2005 constitution allows other areas to form them too, such
as the Shiites in the oil-rich south.
If implemented, "The balance of power in the management of Iraq's oil and
gas resources would have shifted alarmingly from the center to the
regions," former oil official Tariq Shafiq, who helped draft an early
version, told an oil seminar in Amman, Jordan, this month.
The tortuous negotiations are reminiscent of the intense American
arm-twisting, public pressure and backroom dealmaking that have pushed
nearly every step in Iraq's political transformation since the U.S.-led
invasion nearly four years ago.
The process sometimes has produced agreements that enabled Washington to
declare success but ultimately created a new set of problems - such as a
divisive 2005 election that invigorated the Sunni insurgency, and a new
constitution that the U.S. now acknowledges must be amended substantially
to bring peace.
Some critics fear the oil law will become the latest example.
"The draft law is very dangerous," former oil official Faleh al-Khayat
told the Amman seminar. "It should not be implemented at this time."
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