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Revue <strong>de</strong> Presse-Press Review-Berhevoka Çapê-Rivista Stampa-Dentro<br />
<strong>de</strong> la Prensa-Baszn Ozeti<br />
Rtralb;':L~ribttnt December 9-10, 2006<br />
Iraqis near<br />
a draft law<br />
on dividing<br />
oil revenue<br />
Measure, if pa~sed,<br />
could help narrow<br />
political divisions<br />
By Edward Wong<br />
BAGHDAD: A group of Iraqi politicians<br />
and ministers is close to finishing<br />
a draft of a national oillaw that, if<br />
enacted, would be the most significant<br />
legislation passed by the government<br />
so far and help narrow some of the<br />
country's major politieal schisms, Iraqi<br />
and American officiaIs say.<br />
The officiaIs said the authors have<br />
reached agreement on one of the most<br />
divisive issues in Iraq: How revenues<br />
from the oil industry should be distributed<br />
The working draft ca11s for the<br />
central govemment in Baghdad to collect<br />
oil revenues and distribute them to<br />
provinces or regions based on population,<br />
the officiaIs say.The measure could<br />
calm some Sunni Arabs who oppose regional<br />
autonomy because of fears that<br />
Sunnis would be exc1u<strong>de</strong>d from a fair<br />
share of oil wealth, whieh is concentrated<br />
in Shiite and Kurdish regions.<br />
The law could also encourage foreign<br />
investment in the oil industry, although<br />
security would remain a major concem<br />
for companies operating outsi<strong>de</strong> the relatively<br />
safe region of Iraqi Kurdistan.<br />
The national oillaw lies at the heart<br />
of <strong>de</strong>bates about the future ofIraq, particularly<br />
the issue of having a strong<br />
central govemment or robust regional<br />
governments. The question of oil has<br />
also exacerbated sectarian tensions,<br />
because of the worries of Sunni Arabs,<br />
who are leading the insurgency, over<br />
the potentiaUy lopsi<strong>de</strong>d distribution of<br />
oil wealth.<br />
General George W. Casey Jr., the senior<br />
American comman<strong>de</strong>r here, and<br />
Zalmay Khalilzad, the U.S. ambassador,<br />
have urged Iraqi politicians to put the<br />
oillaw at the top of their agendas, saying<br />
it must be passed before the year's end<br />
The report released this week by the<br />
Iraq Study Group said an equitable oil<br />
law was a necessary cornerstone to the<br />
process of national reconciliation, and<br />
thus to endin~ the war.<br />
A final stieking point over approval<br />
of oil contracts remains, so there is a<br />
chance that parts of the working draft<br />
could be scrapped. But a <strong>de</strong>al could be<br />
reached within days, according to officiaIs<br />
involved in the writing. The law<br />
would then go to the 'cabinet and Parliament<br />
for approval.<br />
The Kurds, who already have an autonomous<br />
region in the north, had put<br />
up a fight to have regional govemments<br />
co11ect and redistribute oil revenues,<br />
partieularly ones from oil fields yet to<br />
be exploited. They had also proposed<br />
that revenues be shared among the regions<br />
based on both population and<br />
crimes committed against people un<strong>de</strong>r<br />
Saddam Hussein's rule. That would<br />
give the Kurds and Shiites a share of the<br />
oil wealth larger than the proportions<br />
of their populations.<br />
But the Kurds on the drafting committee<br />
have shelved those <strong>de</strong>mands,<br />
said Barham Salih, a <strong>de</strong>puty prime minister<br />
who is a Kurd and chairman of the<br />
committee.<br />
"Revenue sharing is an accepted<br />
principle by a11 the constituent elements<br />
of the Iraqi government, including<br />
the Kurds, and that is the unifying<br />
element that we're a11hoping for in the<br />
oillaw," Salih said in an interview.<br />
An Ameriean officiaI here who has<br />
tracked the negotiations said the Kurds<br />
. were willing to make concessions because<br />
a national oil law could attract<br />
more foreign oil companies to exploration<br />
and <strong>de</strong>velopment in Kurdistan. A<br />
large fQreign oil company would have<br />
more confi<strong>de</strong>nce in signing a contract<br />
with the Kurds if the company were to<br />
operate un<strong>de</strong>r the law of a sovereign<br />
country rather than just the law of an<br />
autonomous region, the officiaI said on<br />
the condition of anonymity.<br />
Furthermore, the officiaI said, some<br />
Kurdish lea<strong>de</strong>rs believe that the concessions<br />
are a worthwhile priee to pay for<br />
having a stake in the much larger revenue<br />
pool of the entire country's oil industry.<br />
The southem fields of Basra accounted<br />
for 85 percent of total Iraqi<br />
cru<strong>de</strong> production last year, partIy because<br />
northem production was<br />
hampered by insurgent sabotage. The<br />
south has an estimated 65percent of the<br />
country's 115billion barrels of proven<br />
reserves.<br />
But the Kurds are still holding out on<br />
the issue of oil contracts. They insist<br />
that the central govemment should not<br />
have final approval over contracts<br />
signed by the regions to <strong>de</strong>velop future<br />
oil fields, Ameriean and Iraqi officiaIs<br />
said. The Kurds, who have recentIy discovered<br />
two new fields in the north<br />
after signing exploration contracts with<br />
a Turkish company and a Norwegian<br />
company, argue that the Constitution<br />
guarantees the regions absolute rights<br />
over such contracts.<br />
"There are those among us who say<br />
we cannot go back to the former days of<br />
centralization, which were not conducive<br />
to good business practice and to<br />
the i<strong>de</strong>a of fe<strong>de</strong>ralism that is enshrined<br />
in the Constitution," Salih said.<br />
OfficiaIs met Thursday night to try to<br />
resolve the issue, but could not reach an<br />
agreement. The committee inclu<strong>de</strong>s<br />
politicians and ministers representing<br />
the major Shiite, Sunni Arab and Kurdish<br />
blocs in government.<br />
A possible compromise floated by<br />
the Kurds is to aUow a proposed body<br />
ca11ed the Fe<strong>de</strong>ral Petroleum Council,<br />
whose mission would be to set oil<br />
policy, to reject a regional contract only<br />
if it can mus ter a two-thirds vote, and<br />
only if the contract does not meet very<br />
specific criteria.<br />
"The Kurds are afraid that if they left<br />
the contracting up to the central govemment<br />
rather than themselves, the<br />
center might <strong>de</strong>fer contracts," said the<br />
Ameriean who is tracking the law. "For<br />
example, the govemment might find it<br />
easier to contract for production in the<br />
south or <strong>de</strong>velop only the fields there."<br />
As for revenue distribution by population,<br />
the American officiaI said a national<br />
census expected to be taken next<br />
year should <strong>de</strong>termine the share of revenue<br />
that goes to each province or region.<br />
But the proposed census and any<br />
talk of <strong>de</strong>mographies are volatile issues<br />
here - Sunni Arabs often claim they<br />
are at least 60 percent of the population,<br />
not the 20 percent that is often cited,<br />
and so have the right to rule over the<br />
Shiites ana. Kurds. The Shiites are generaUy<br />
estimated to be 60 percent of the<br />
population, and the Kurds 20 percent.<br />
If doing a census next year is too politically<br />
fraught, or if security conditions<br />
prevent it, then revenue percentage<br />
could be <strong>de</strong>termined by the household<br />
counts recor<strong>de</strong>d in roUs used by<br />
Saddam Hussein's govemment to distribute<br />
rations in the 1990s.<br />
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