Iraq’s New Oil Contract (II): Sectarian Spoils

Baghdad — Iraq’s new draft oil and gas law passed by Iraqi Prime Minister Nouri al-Maliki’s government is billed as favoring central government over provincial power. But secrecy surrounding the law's details might set the stage for splitting up Iraq’s top source of wealth along geographic and sectarian fault-lines.

It is not yet clear whether the new legislation bears any resemblance to the scuttled draft law proposed in 2007. The differences between the two will almost certainly be minimal. The prime minister has not yet revealed the details of the new oil law before it is approved by parliament. Leaked extracts suggest that, like the previous legislation, the draft law aims to both regulate the oil and gas sectors and divide up production responsibilities between Baghdad and the provinces.

Al-Maliki’s speedy approval of the new legislation comes in the wake of attempts by the Kurdish Bloc to propose its own legislation on the matter. Two weeks ago, this bloc managed to win the support for its draft of a large number of MPs from the Iraqiya list headed by al-Maliki’s rival, Ayad Allawi. This is after draft legislation presented in 2007 was postponed because it contained clauses that ran counter to the interests of ethnic and sectarian leaders who favored autonomous control of their areas.

Some analysts says this law may provide the constitutional basis for the division of Iraq among its three main ethnic and sectarian groups: the Shia, the Sunnis, and the Kurds. The postponement of the 2007 law and the Kurdish proposal would place the keys to Iraq’s oil wealth in the hands of the leading parliamentary blocs that represent ethnic and sectarian interests, threatening the integrity of the Iraqi state.

The unity government’s 2007 draft law for the oil and gas sector failed to pass because Iraq's Kurdish leaders saw it as favoring the central government in Baghdad to the disadvantage of the autonomous Kurdish region. The latter’s authorities had approved dozens of lucrative drilling and exploration deals with foreign companies without consultation with the central government in Baghdad.

The parliamentary committee for oil and gas, headed by Adnan al-Janabi (from the Allawi list), recently completed a new draft oil and gas law. Unlike the legislation of 2007, Janabi proposes that this vital sector be taken out of the hands of the government and placed under the supervision of his parliamentary committee, where the three main ethno-sectarian blocs exercise more power. This in effect means wresting control over the oil sector from the central government and dividing the spoils among the ethnic and sectarian leaders. Norwegian oil expert Ryder Fisher says that this would turn the Ministry of Oil into nothing more than “a grand office, with the real power in the hands of a committee of politicians and a few experts."

Fisher explains the main differences between the 2007 draft and the Kurdo-Allawi draft as follows: the new draft passes responsibility of the oil sector from central government to a parliamentary committee for oil and energy exclusively managed by the heads of the three main sectarian blocks, granting them the right to undertake transactions and hold veto power against any oil deals should two-thirds of the committee agree.

A dispute has been raging between Janabi’s parliamentary committee for oil and gas and the government’s committee for oil and energy, headed by Deputy Prime Minister Hussein al-Shahristani, who strongly opposes the Kurdish oil deals. al-Shahristani's committee has also prepared a draft law inspired by the 2007 legislation. al-Maliki finally took action and proposed a separate law, both to prevent the dispute from getting out of control and to seize the initiative on this critical issue.

The behavior of Janabi's committee has come under suspicion. Not only did it completely ignore the existence of the 2007 draft, but it presented what was in effect a secret document, insisting that parliament vote on it immediately without the benefit of hearing the views of experts on this critical matter. “No one had even heard of this text until early August,” says oil expert Fouad Qasim al-Amir.

When the draft law was revealed at a parliamentary session on August 17, MPs from the Kurdistan and Iraqi List blocs insisted that it be approved. al-Maliki’s National Alliance refused and its MPs withdrew from the session and the issue was put on hold. Observers were not surprised however by Allawi's support for such legislation. Allawi is known for backing oil policies that were encouraged by the US occupation and the international oil companies and considered to be destructive to the petroleum industry by many oil experts. Neither was it surprising that the Kurdish bloc got behind this effort to divide Iraq’s oil among the different sects, despite all their talk against sectarianism in the media. What did come as a surprise was the support of Baha Aaraji, a Sadrist MP.

It appears at first sight that al-Maliki is playing the role of guardian of Iraqi unity and defender of a strong central government by resisting Kurdish-Allawi attempts to divide up Iraq’s oil along sectarian and regional lines. But some question whether al-Maliki is really such a nationalist and genuinely opposes political and economic sectarianism, or if he is just defending the interests of his sect, the largest in the country that he represents.

Iraq’s New Oil Contract (I): Grand Theft and Local Collusion

This article is an edited translation from the Arabic Edition.