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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 />

20

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