The evolving deals between Iraq and major Western oil companies could well rekindle understandable suspicions in the Arab world about oil being America’s real reason for invading Iraq and fan even more distrust and resentment among Iraq’s competing religious and ethnic factions, said New York Times in an editorial yesterday. Excerpts:
Exxon Mobil, Shell, Total and BP — original partners in the Iraq Petroleum Company — are in the final stages of discussions that will let them formally re-enter Iraq’s oil market, which expelled them 36 years ago. The contracts also include Chevron.
Iraq can certainly use the modern technology and skills these oil giants offer. Although Iraq’s oil reserves are among the world’s largest, years of United Nations sanctions and war have badly eroded the industry. Government officials say they aim to increase production from 2.5 million barrels of oil a day to 3 million barrels. That is a minor increase in global terms. Given that corruption is an acknowledged problem in Iraq’s government, the contracts would have more legitimacy if the bidding were open to all and the process more transparent. Iraqis must apply that standard when they let contracts for long-term oil field development. Also troubling is that the deals were made even though Iraq’s Parliament has failed to adopt oil and revenue sharing laws — critical political benchmarks set by the Bush administration. That is evidence of continued deep divisions in Iraq over whether oil should be controlled by central or regional government, whether international oil companies should be involved in development and how the profits should be distributed.
The United States and the oil companies must encourage Iraqi officials to make the political compromises needed to establish in law the rules for managing Iraq’s abundant natural resources with as much transparency as possible. Otherwise, oil will just become one more centripetal force pulling the country apart.
