Since 2003, more than 4,300 American troops and perhaps hundreds of thousands of Iraqis have become casualties of a war full of contradictions. One of the most fundamental of these is embodied in U.S. assurances to the Iraqi and American publics that Iraq will be a fully sovereign country upon the United States’ military withdrawal at the end of 2011. The lobbying activities of U.S. oil executives and their political allies suggest efforts to perpetuate a more dependent relationship. Since 2003, these lobbyists and embassy officials have pressured Iraqi officials to open the country’s oil industry to foreign control. This behind-the-scenes intrigue has fueled the insurgency by substantiating Iraqi suspicions of American motives, resulting in an increase in casualties on all sides.
Chevron, ConocoPhillips, ExxonMobil and other oil companies colluded under the umbrella of the International Tax and Investment Centre (ITIC) to press for fundamental changes in Iraqi law that would enable officials to sign Production Sharing Agreements with foreign investors. The details were outlined in a document released in 2004 titled “Petroleum and Iraq’s Future: Fiscal Options and Challenges.” The authors state pointedly on page three of the report that, “The most appropriate legal and fiscal form for the facilitation of FDI longer-term development of Iraq’s petroleum industry will be a Production Sharing Agreement (PSA).”
PSA’s would give foreign oil companies control over the production rates of Iraq’s oil fields, resulting in a loss of control over revenue streams critical for national development. Over 90% of Iraq’s national budget is dependent on oil exports. This legal opening could therefore eventually result in a de facto concession of Iraqi national sovereignty and all of the political instability and violence that would accompany it.
These political maneuvers, actively supported at the highest levels of the Bush administration, motivated the Iraqi insurgency to continue fighting out of fear of their country reverting back to foreign economic and political control hidden behind the façade of democratic elections. The Bush administration held the position that Iraqi legislative and regulatory reforms were critical to attracting foreign technical expertise and an increase in reconstruction revenue to the government.
Though this argument was valid, it did not necessarily follow that the Iraqi government would need to pass the Oil Law being promoted by ITIC. If passed, this law would concentrate decision-making power over contracts in the hands of the Executive branch with no oversight from the Iraqi parliament. To the extent that Iraqi officials acquiesced to U.S. demands on this issue, their legitimacy in the eyes of Iraqi insurgents was diminished, neutralizing U.S. military efforts to convince them to lay down their arms and enter the political process.
Oil companies represented by ITIC attempted to convince Iraqi political leaders that they would be unable to attract the foreign expertise and capital needed to revive Iraq’s oil industry without acquiescing to PSAs. In June 2009 these officials proved them wrong by securing a service contract with BP and CNPC that required the companies to achieve a pre-determined production level target rather than cede control to them. Observers attribute CNPC’s move as the catalyst for a second round of contracts on similar terms. Questions remain regarding the legality of these contracts but the oil companies’ bluff has been called.
On May 25, I confronted a representative of Chevron at its headquarters in Houston, one day prior to the company’s annual shareholder meeting. I asked him whether he thought it was appropriate for Chevron to have engaged in the above-described lobbying activities while Iraq remained under U.S. military occupation. He responded that Chevron has always supported the troops. Does it? Not when the company undermines their mission. Not when it exploits the economic and security situation in Iraq by attempting to gain control of Iraq’s oil fields. It is not difficult to understand the animosity felt by many in the Arab-Muslim world toward the U.S. in light of these activities.
It may take several decades for us to end our dependence on oil but we can accelerate the transition by educating the American public on how our nation’s dependence on multinationals such as Chevron undermines our security, our liberty and our image abroad. Public demand is the motivating force behind the policy changes necessary to attract sustained private capital to renewable, democratized energy. The more Americans learn how the behavior of these companies affects our families and our national security, the faster we will be able to make that transition, propelled by a political will that tolerates no pretexts for inaction by beholden politicians.
For more information: http://truecostofchevron.com/iraq.html
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