Is the West robbing the Iraqi people?

November 22, 2005 6:57 AM

Crude Designs: The Rip-Off of Iraq’s Oil Wealth Detailed argument from the Global Policy Foundation, et al, that the use of Production Sharing Agreements - "quite common in countries with small oil reserves and/or high extraction costs" - is inappropriate for Iraq and effectively robs the Iraqi people by ignoring other, more equitable options.
posted by mediareport (22 comments total)

Global Policy Forum. Apologies.
posted by mediareport at 6:59 AM on November 22, 2005

mediareport, the other thread was deleted for the following reason: "one-link newsfilter hot-topic post." This is exactly the same (all of your links are actually just one link). Buh?
posted by Gator at 7:02 AM on November 22, 2005

Anti free-market think-tank disapproves of free market ideology in Iraq, suggest nationalization.

I am dumbfounded. Next thing you'll tell me is that the Cato Institute wants Saudi Arabia to de-nationalize their oil production!
posted by fet at 7:11 AM on November 22, 2005

Just out of curiosity Gator (good name for a deleter) what is actually wrong with one topic posts?
posted by donfactor at 7:11 AM on November 22, 2005

Gator isn't a "deleter". Maybe you should lurk until you have more of a grasp of how the site works.

So yeah. What was the point of reposting this if you weren't really going to make it a better post?
posted by selfnoise at 7:17 AM on November 22, 2005

"one-link newsfilter hot-topic post."

what is actually wrong with one topic posts?

lol. GG reading.
posted by AspectRatio at 7:18 AM on November 22, 2005

the Independent also just had a thing on this: Iraqis face the dire prospect of losing up to $200bn (£116bn) of the wealth of their country if an American-inspired plan to hand over development of its oil reserves to US and British multinationals comes into force next year. A report produced by American and British pressure groups warns Iraq will be caught in an "old colonial trap" if it allows foreign companies to take a share of its vast energy reserves. The report is certain to reawaken fears that the real purpose of the 2003 war on Iraq was to ensure its oil came under Western control.
The Iraqi government has announced plans to seek foreign investment to exploit its oil reserves after the general election, which will be held next month. Iraq has 115 billion barrels of proved oil reserves, the third largest in the world. ...

This really is why we're there, when all is said and done. The Oil Company bosses lying to Congress and not having to testify under oath about the Cheney Energy meetings pre-invasion sealed it for me.
posted by amberglow at 7:21 AM on November 22, 2005

Gator, the other post linked to a brief Reuters story and nothing else. The difference is clear.
posted by mediareport at 7:25 AM on November 22, 2005

donfactor, you might try asking the person who actually deleted your last thread. Free hint: It wasn't me.
posted by Gator at 7:26 AM on November 22, 2005

Now this is how this post should have been composed. Nice job mediareport.
posted by caddis at 7:34 AM on November 22, 2005

The first table in section 6 of the report speaks volumes, I think, especially if it's true that Russia's use of PSAs has been extremely controversial and probably won't be continued. Really, I'd love to hear from folks who've read the piece and would argue there's not an unnecessarily harsh rip-off going on here.

Oh, and thanks, caddis. I tried to rescue the original thread by linking the full report there, then thought it was a shame the info was lost because the original lazy and over-editorialized post was deleted. Glad at least some folks get the difference.
posted by mediareport at 7:49 AM on November 22, 2005

So you guys actually think we're spending what will probably end up being half a trillion dollars so some oil companies can make $200 billion?

Yeah, that makes a lot of sense.
posted by pjdoland at 7:53 AM on November 22, 2005

It makes sense when "we" is the US taxpayer and "some oil companies" are Bush's Buddies. Doesn't it?

Follow. The. Money.
posted by dickasso at 7:57 AM on November 22, 2005

suggest nationalization

fet, that's an obvious over-simplification. The report discusses a variety of options, including bank loans using future oil revenues as collateral, and, more simply, other kinds of contracts - "risk service contracts, buyback contracts or development and production contracts" - that are more flexible and equitable, giving operatorship of the oil fields to the company but giving it a fixed fee or fixed rate of return in exchange for its services.

You might want to refrain from deliberately oversimplifying complex issues if you want to be taken seriously in this discussion.
posted by mediareport at 7:58 AM on November 22, 2005

Meanwhile, weren't the Iraqi oil revenues supposed to pay for this whole thing?
posted by amberglow at 8:01 AM on November 22, 2005

and the Iraqi citizens would shower the liberators with flowers and praise
posted by caddis at 8:06 AM on November 22, 2005

GG reading.

Meaning?
posted by signal at 8:11 AM on November 22, 2005

So you guys actually think we're spending what will probably end up being half a trillion dollars so some oil companies can make $200 billion?

I can't speak for all the other "guys" but no, I think the motivations on the part of Bush and Co. were more complicated than that. I think it was certainly about the oil, but more focused on maintaining access to that oil for the US and ensuring the currency of oil transactions remained the US dollar. It was also about Saddam, not just his attempt to assassinate GHW Bush, but his generally belligerent and evil behavior toward his neighbors, the US, his own citizens, you name it. He represented some level of threat. Moreover, there was the neocon dream of fostering democracy and US friendly capitalism throughout the Middle East. I also think that it was also about WMDs. That was the issue that I believe they shamefully abused to rally public support, but that nevertheless they still were concerned about.

I personally disagree with all of these reasons. If we had merely allowed Saddam to start pumping oil the US would have more access to it than they do now, as now it essentially is barely flowing. Even if he refused sales to the US, oil is a global market and others would make up the difference. One supplier does not have sufficient impact to disrupt US purchases, well perhaps Saudi Arabia, but not Iraq. Saddam was crazy, evil and unpredictable, yet held in check by the then existing controls. He certainly was not enough of a threat to justify the cost of this war in lives and money. The neocons dream is just that, a dream without reality. Nice if it could work, and too bad they weren't right, but the chances for success in that area were always slim, and they remain slim. Finally, it became clear in the build up toward the war that to the extent that Saddam had any WMDs he did not possess anything remotely sufficient to harm the United States and that he was hardly an ally of al Qaeda. He had no incentive to attack the US or its interests as he would be subject to reprisals. As a state, Iraq and its leader differ fundamentally from al Qaeda.

So, yes it was about oil, but not necessarily just to protect US oil companies. If they benefit, that is great (in the minds of Bush and Co.) and I am sure that they believe established oil companies will be better able to get production up and running than Iraq. I certainly believe they would subvert the interests of Iraq, and even the US, to benefit their friends in the US oil industry and I think to some extent they have done so. However, they did not start a war just for that purpose.
posted by caddis at 8:39 AM on November 22, 2005

Two out of the three "more equitable solutions" that are from the linked page are effectively nationalization of oil. To wit:

This is simply not true. In fact Iraq has at least three options for generating investment in its oil industry, without giving away its revenue and control over the industry:

1. Direct investment from government budget.

2. Government / state oil company borrowing from banks, multilateral agencies and other lenders.

Yeah. Perhaps the GPF oversimplified?

Thou dost protesteth too much, methinks.
posted by fet at 9:54 AM on November 22, 2005

It was about oil in the strategic resource / national security sense. They saw an opportunity to address a long-standing national weakness, America's dependence on foreign oil.

Oil remains a critical resource and dependence on a foreign resource may have been understood, one or two hundred years ago, to be a perfectly good reason to go to war by many countries. But not in the 21st century. Nations are not supposed to start wars any longer over resources. We're supposed to trade with each other instead.

So, if you like, they really did have America's interests at heart. The argument is with their solution (war instead of trade or perhaps encouraging reduced usage) and their management of the solution.
posted by scheptech at 12:09 PM on November 22, 2005

caddis: Well put. I agree completely. Oil was a reason but not the only reason.
posted by StarForce5 at 12:21 PM on November 22, 2005

You don't need other reasons if you can do this:
These PSAs commonly contain a "stabilisation clause", and these immunise the companies involved from any changes in the law that could potentially damage their profits - these include labour, environmental and tax laws. Iraq is largely an oil-based economy, like many in the Middle East including Syria, the remaining Baathist state. Any agreement that gives such leverage to Western oil companies effectively renders Iraq a dependency - which was the point of sanctions and is the point of present policy.
posted by amberglow at 10:16 PM on November 22, 2005