Cheney’s Shiite Oil Patch

Posted by Cutler on December 09, 2006
Iraq

The Washington Post has published the latest installment of Robin Wright’s reporting on the Bush administration’s Iraq Policy Review and the New York Times has a report on the hydrocarbon law negotiations in Iraq.

If Wright has the factional story correct, the White House Iraq Policy Review is looking increasingly like Cheney’s Right Zionist answer to James Baker’s Right Arabist Iraq Study Group Report.

The central “news” of Wright’s article–entitled “Iraq Strategy Review Focusing On Three Main Options“–is that she identifies Cheney as leader of the faction supporting the so-called “Shiite Option” or the “80 Percent Solution.”  Here is Wright:

Vice President Cheney’s office has most vigorously argued for the “80 percent solution,” in terms of both realities on the ground and the history of U.S. engagement with the Shiites, sources say. A source familiar with the discussions said Cheney argued this week that the United States could not again be seen to abandon the Shiites, Iraq’s largest population group, after calling in 1991 for them to rise up against then-President Saddam Hussein and then failing to support them when they did. Thousands were killed in a huge crackdown.

Let us stipulate that Cheney’s concern for the Shiite is not humanitarian.  It is “strategic” and represents a return to the Right Zionist “Plan A” that dominated the early days of the US invasion of Iraq.  The heart of that plan has been a shift in the regional balance of power away from Sunni Arab dominance and toward a “reconfigured,” pro-American Shiite Crescent.

At the heart of any Shiite option has always been Grand Ayatollah Sistani and, to a lesser extent, SCIRI leader Abdul Aziz al-Hakim.

Hakim was recently in Washington for meetings with administration officials.  It would have been interesting to be a fly on the wall for those sessions.  One topic that surely made the agenda: Hakim’s position on regional autonomy for southern Iraq and the implications of autonomy for the future of oil field development in Iraq.

Hakim and the Hydrocarbons Law

It may be no coincidence that only days after Hakim’s visit to Washington, Ed Wong reports in the New York Times that Iraqis are “near” a deal on the hydrocarbons law.  Wong writes as if the Kurds have opened a path toward reconciliation:

Iraqi officials are near agreement on a national oil law that would give the central government the power to distribute current and future oil revenues to the provinces or regions, based on their population, Iraqi and American officials say.

If enacted, the measure, drafted by a committee of politicians and ministers, could help resolve a highly divisive issue that has consistently blocked efforts to reconcile the country’s feuding ethnic and sectarian factions. Sunni Arabs, who lead the insurgency, have opposed the idea of regional autonomy for fear that they would be deprived of a fair share of the country’s oil wealth, which is concentrated in the Shiite south and Kurdish north…

At the start of the talks, the Kurds fought to ensure that regional governments have the power to collect and distribute revenues from future fields, Iraqi and American officials said. They also proposed that revenues be shared among the regions based on both population and crimes committed against the people under Mr. Hussein’s rule. That would have given the Kurds and Shiites a share of the oil wealth larger than the proportions of their populations.

But the Kurds dropped those demands, said Barham Salih, a deputy prime minister who is a Kurd and the chairman of the committee.

The only problem is that the distribution of revenues has not been the key sticking point in recent months.  The contentious issue is control over new oil field development.  Have the Kurds backed down on that issue?

No, says Wong in the New York Times:

The major remaining stumbling block, officials said, concerns the issuing of contracts for developing future oil fields. The Kurds are insisting that the regions reserve final approval over such contracts, fearing that if that power were given to a Shiite-dominated central government, it could ignore proposed contracts in the Kurdish north while permitting them in the Shiite south, American and Iraqi officials said…

[T]he Kurds are still holding out on the issue of oil contracts, arguing that the Constitution guarantees the regions absolute rights in those matters.

So what has changed?  What motivates the Wong report if the Kurds have not removed the major remaining stumbling block?

The Shiites and the Bush administration may be preparing to overrule the Kurds.  Specifically, SCIRI’s Hakim seems to have abandoned his prior commitments to regional autonomy, at least with regard to the crucial issue of control over new oil field development.

On the drafting committee, Sunni Arabs have allied with the Shiites against the Kurds, who have sought to maintain as much regional control as possible over the oil industry in their autonomous northern enclave. Iraqi Kurdistan has enjoyed de facto independence since 1991, when the American military established a no-flight zone above the mountainous region to prevent raids by Saddam Hussein.

Wong has buried the big news: Shiites have allied with Sunni Arabs on the issue of Iraqi national unity (no news that Sunni Arabs oppose the Kurds on this issue…).

Combine this with word in the Financial Times that the oil majors appear to have leveraged a commitment to Production Sharing Agreements and you have a new ball game in Iraqi politics.

That helps clear the way for Cheney to embrace a Shiite Option in Iraq.  Forget James Baker.  Get ready for a really lame duck.

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