Amongst the benchmarks in the supplemental appropriations bill for 2007, section 1904(b) states, “On or before October 1st, 2007, the President shall certify to the Congress that the Government of Iraq has enacted a broadly accepted hydro-carbon law that equitably shares oil revenues among all Iraqis.”
“Oil” was a catchword before the Iraq war even began. So what do we know about Iraqi oil and what can we say about the significance of this hydrocarbon law in terms of Iraq and its people, and the oil industry as a whole?
Iraq’s oil sector was nationalized in 1972 and has since been a source of national pride for everyone in the country. Privatization may seem like a good idea in the U.S., but it’s not a real option for Iraq at this point. The oil law on the table – actually the first of four – creates a national framework for managing Iraq’s oil sector under the new regime.
Yahia Said, Middle East and North Africa regional director at Revenue Watch Institute, a nonprofit organization monitoring Iraq’s oil industry, said in a PBS interview: “This is the first application of Iraq’s federal constitution. It will show the way of how the Iraqi union will be structured and how it will work into the future.” The law centralizes management over the oil sector in the Iraqi government, rather than dividing it among Sunni, Shi’a and Kurds. This retains the nationalist flavor of the oil sector.
The remaining three laws will tackle a much more complex and controversial issue: distribution of oil revenue. The central and northwestern Sunni-dominated regions of Iraq contain little oil, so Sunnis fear they will miss out on profits. To the north lies the oil-rich city of Kirkuk, which is mixed Kurdish and Arab. Kurdish leaders have threatened to annex Kirkuk and withdraw from Iraq if they are not given their own fair share of oil revenue.
An equitable law would signify reconciliation and unity between Iraq’s various religious and ethnic groups at the national level. Iraq needs to create these laws carefully and with benchmarks in mind. EPIC has argued in favor of such benchmarks and we will continue to follow the progress of Iraq’s oil sector now and in the future.