Sympathy for the Devil
This story in the New York Times has already been widely noted across the blogiverse this morning: “Four Western oil companies are in the final stages of negotiations this month on contracts that will return them to Iraq, 36 years after losing their oil concession to nationalization as Saddam Hussein rose to power….”
This story in the New York Times has already been widely noted across the blogiverse this morning:
Four Western oil companies are in the final stages of negotiations this month on contracts that will return them to Iraq, 36 years after losing their oil concession to nationalization as Saddam Hussein rose to power.
Exxon Mobil, Shell, Total and BP — the original partners in the Iraq Petroleum Company — along with Chevron and a number of smaller oil companies, are in talks with Iraq’s Oil Ministry for no-bid contracts to service Iraq’s largest fields, according to ministry officials, oil company officials and an American diplomat.
The deals, expected to be announced on June 30, will lay the foundation for the first commercial work for the major companies in Iraq since the American invasion, and open a new and potentially lucrative country for their operations.
The no-bid contracts are unusual for the industry, and the offers prevailed over others by more than 40 companies, including companies in Russia, China and India. The contracts, which would run for one to two years and are relatively small by industry standards, would nonetheless give the companies an advantage in bidding on future contracts in a country that many experts consider to be the best hope for a large-scale increase in oil production.
There was suspicion among many in the Arab world and among parts of the American public that the United States had gone to war in Iraq precisely to secure the oil wealth these contracts seek to extract. The Bush administration has said that the war was necessary to combat terrorism. It is not clear what role the United States played in awarding the contracts; there are still American advisers to Iraq’s Oil Ministry.
The initial reaction can be summed up as varying shades of “Yep, this is the imperialism we were expecting.” And the response is certainly justifiable; favorable business deals under the shadow of imposing force are how “protection” rackets have functioned since the dawn of time.
An important caveat (noted by Andrew Tilghman at TPM Muckraker), though, appears midway through the NYT article:
The no-bid deals are structured as service contracts. The companies will be paid for their work, rather than offered a license to the oil deposits. As such, they do not require the passage of an oil law setting out terms for competitive bidding. The legislation has been stalled by disputes among Shiite, Sunni and Kurdish parties over revenue sharing and other conditions.
A service contract approach, rather than so-called production sharing agreements (PSAs) that would give foreign companies a share of the oil itself, is exactly how liberals have called for Iraq to handle its resource development. With no PSAs, and no much-desired (by the Bushites) oil law to support a more
rapacious generous approach to Western involvement in Iraq’s fields, these contracts could be seen as a bone thrown by the Shiite government in Baghdad to placate the U.S. for a few months until Barack Obama a new administration comes to Washington, DC.
This may especially be the case when one considers the resistance by the Maliki government to approving a long-term security agreement that would prolong the occupation. Given the hints of hardball tactics by Bush/Cheney et al. to get their way, a few small oil contracts could be an attempt by Maliki & Co. to ease the pressure. As the bards sang forty years ago:
If you meet me
Have some courtesy
Have some sympathy, and some taste
Use all your well-learned politesse
Or I’ll lay your soul to waste…
In other words, a little token favor in the face of unrestrained vice might be excused as a necessary evil. We’ll have to see what next steps follow these contracts (particularly in terms of the so-called Status of Forces Agreement, or SOFA) to determine whether the Iraqi government is in fact trying to buy time from the devils they’re forced to deal with, or whether they’ve joined the latter as full partners in crime.