Iraq's oil

Occasional contributor Paul Mutter has a piece up at FPIF looking at the situation of oil major in Iraq, where the US still trails behind China in presence and can't get the kind of legislation for oil. Does that prove that the US was not after oil in Iraq, among other grand geostrategic objectives? No, it just shows there's hardly a silver lining for Americans after all the blood and treasure that was sunk into that adventure.

Dahr Jamail's report on energy majors in Iraq reminds us of one of the other, other, other reasons for the U.S. invasion of Iraq, the one nearest and dearest to neoconservatives' political action committees: oil.

Ostensibly, "oil" was part of the discussion on Saddam Hussein because of U.S. sanctions, the threat that Saddam would use oil money to bankroll terrorist organizations, and the idea that new oil revenues would help jumpstart the post-Saddam Iraqi economy.

Those were the reasons paraded around in public. Then there were the ones being discussed -- well before Condi and Dick made the Sunday morning talk show rounds -- in the arcane, interconnected world of multinational corporations, federal departments and think tanks:

Like it or not, Iraqi reserves represent a major asset that can quickly add capacity to world oil markets and inject a more competitive tenor to oil trade. However, such a policy will be quite costly as this trade-off will encourage Saddam Hussein to boast of his "victory" against the United States, fuel his ambitions, and potentially strengthen his regime.

The U.S. invasion rather nicely took care of that dilemma, and, of course, the U.S. government and U.S. oil majors moved to secure pieces of the pie before other countries could come in. Alongside other Western governments and oil majors, Washington is pushing for an Iraq Oil Law that would allow privatization and Production Sharing Agreements (PSAs), which, Jamail reports, are only used in 12% of the world's oil market. Why only 12%? Because more nationalistic individuals don't like signing off on them: in Russia, for instance, Vladimir Putin made rescinding PSAs Boris Yeltsin's government had signed with U.S. and UK firms a top priority. The law has stalled in the Iraqi Parliament. 

Read the rest here.