Daily Archives: August 29, 2006

Sistani & Iraqi Oil

Posted by Cutler on August 29, 2006
Iraq / No Comments

The “so-called Iraqi government” must have got wind of blogosphere accusations from folks like Swopa and Michael Schwartz that the various Iraqi ministers, etc. represented nothing so much as an empty shell of a so-called “state.”

In response, the “government” seems to be making a bid for relevance with a new effort to resolve the minor issue of Iraqi oil.  It may be a failed bid, but even as an attempt it seems interesting and a bit surprising.

After all, there are many serious, outstanding, potentially explosive political issues on the horizon in Iraq, but it seemed like most of that contentious stuff was on hold.  Who really wants to make waves when the ship of state is sinking and the whole country is going down the drain?

Answer: the Maliki government.

The Financial Times offers up the basic story and some important analysis:

Iraq’s main political factions have hammered out an agreement on the sharing of oil and gas revenues but other contentious issues need to be resolved before a draft hydrocarbon law is completed, a senior Iraqi official said on Tuesday.

Barham Salih, deputy prime minister in charge of the economy, told reporters in Washington by video link from Baghdad that the revenue sharing dispute had been settled during three days of intense talks at a “retreat” last week.

That contentious issue is out,” he said. The cabinet hopes to present the draft law to parliament by the end of the year, he added.

Oil and gas revenues would be shared out at the federal level and redistributed to the regions according to population and “needs”, he said. This would still provide an incentive to regional oil companies to maximise output, he added.

Mr Salih, the most senior Kurd in the cabinet, did not elaborate on the negotiating process but the agreement would appear to be a compromise by the Kurdistan regional government.

Under its own regional draft oil law published this month, Kurdistan – which has already started signing contracts with foreign companies – would have received directly the revenues from “future fields”.

Hussain al-Shahristani, the oil minister from the main Shia alliance, has insisted that the federal government control all of Iraq’s resources. The formerly ruling Sunni minority fears the new constitution, which could yet be amended, would hand control of future oil development to the Shia and Kurdish dominated regions.

The key line seems to be this: “the agreement would appear to be a compromise by the Kurdistan regional government.”

We’ll see how this goes down with the Kurds.  Kurdish politicians have been trying to “manage discontent” within their own ranks since the US invasion in 2003.  We’ll see how this compromise affects Salih’s popularity among Kurds.

It would also appear that this dose of tough love was delivered to the Kurds courtesy of oil minister Hussain al-Shahristani who the politician thought to be most closely identified with Grand Ayatollah Sistani.

Shahristani also talks a very good game when it comes to dealing with major international oil companies.  One recent Reuters article described him as “hell-bent on moving swiftly to lure foreign cash to rebuild and power the country’s economy.”

[Still think Right Zionists have been disappointed by Sistani?]

Does the move also represent something of a snub for Abdul Aziz al-Hakim and his Supreme Council for the Islamic Revolution in Iraq (SCIRI), also at the hands of Sistani?

In a recent Associated Press interview, Hakim once again reiterated his commitment to regional autonomy for southern Iraqi Shiites:

Al-Hakim also said parliament should forge ahead with the establishment of a federal system in Iraq that would include a southern Shiite province.

“We need to legislate the mechanism and the rules inside in the parliament and that is supposed to take place in the coming few weeks.

Establishing such a Shiite federal region will entail an amendment to the constitution and approval in a referendum.

That province would resemble the northern Kurdish region. Sunni Arabs could wind up squeezed into Baghdad and Iraq’s western provinces. Many Sunnis fear that federalism will lead to the breakup of the country.

True enough, centralized control of oil and gas resources might mollify some Sunnis.  But it also threatens to anger Shiites like Hakim and independence-minded Kurds.

For what it is worth, Sadr will be pleased if parliament ultimately approves a centralizing hydrocarbon law.  As I discussed some time ago, Sadr is adamantly opposed to regional autonomy.  Nevertheless, recent reports suggest that Maliki may use an upcoming “cabinet reshuffle” to distance himself from Sadr.

If there is an Iraqi government, it would seem to be run by Grand Ayatollah Sistani.