Iraqi Oil Contracts

The announcement last week that the Iraqi government had awarded foreign contracts for the exploitation of a number of its oil fields created a remarkably mild, one-day reaction in the popular press. The gist of the awards, of course, was that virtually everybody, from the Russians and Chinese to the Malaysians and Angolans, were given contracts on one field or another, while American companies were essentially left holding the bag, with participation in a couple of relatively minor deals. This is not how this aspect of the Iraq war was supposed to work out, and Secretary of State Hillary Clinton’s lame comment that it shows private enterprise is alive and well in Baghdad did little to assuage those who expected more for Uncle Sam.

Two not especially complimentary explanations have snuck forward into the public dialogue. One is that the Iraqi government of al-Maliki is simply snubbing its nose at the Americans and showing that if we expected any gratitude for invading, conquering, occupying, dismantling, then putting back together Iraq six and a half years after the fact, we can forget it. The other is that it shows the failure of what some believe to have been the primary underlying motivation for invading Iraq in the first place, which was to gain control–or at least influence–over Iraqi oil reserves for the future. The book after which this blog is named is among the places where this argument can be found. Defenders of the war even argue this demonstrates that oil was not the motive in the first place, or we would not be standing by so docilely as the Iraqis sell it to other people.

Does this prove that the United States has lost out? As someone who has believed all along that the war was all about oil, my answer is that it does not. The reason for this assertion is not that the United States failed to get in on the deals let; it is that the oil in which the United States is most interested is NOT the oil that was part of the deals. If anything, the pattern of dealing suggests a more sinister underpinning that has always been there, slightly below the surface.

The key here is the location of the oil. About half of Iraq’s oil is located in the south and southeast of Iraq, in the Shiite areas such as Rumalia, Majnoon,and Halfaya, and the other half is in Kurdistan in the north. The southern fields, because they are in Shiite territory, have never been the prize for Americans; it is the Kurdish fields that American oil companies and the government have coveted. The contracts were let on almost exclusively Shiite fields in the south and southeast where the American claim is weakest, as is likely American influence after we leave. The down side is that this is the oil easiest to access and get to market, whereas Kurdish oil is more remote and has less infrastructure supporting it. Kurdistan, however, is the part of Iraq where American interest and prestige is highest, and it is by no means beyond the range of possibilities that the eventual outcome of Iraq will be a bifurcated country with a wholly or largely independent Kurdistan. Such a country would almost certainly be friendlier to the United States than the rest of Iraq.

One major artifact of the war, after all, has been to encourage Kurdish autonomy that has some of the trappings of independence, and the United States bears no small amount of responsibility for that occurrence. Iraqi Shiites may feel no comraderie with the Americans and may revel in thumbing their noses at the United States; the Kurds, on the other hand, have every reason to be grateful to the United States.

One scenario to watch involves the letting of Kurdish oil fields somewhere down the road. The current reason not to do so is because the Kurdish region is volatile and unstable, which means the Kurdistan question has not been entirely resolved–will the fields be part of Iraq or Kurdistan? The brouhaha over electoral laws has this as an aspect–who wins that battle will be able to influence where oil revenues go and in what proportions, to Kurds, Sunnis, and Shiites. The Kurdish ace in the hole is secession.

If it comes down to Kurdish separatism, would the United States consider a deal whereby we support the establishment of a de facto or de jure Kurdistan in return for oil contracts there? It is by no means idle to think this could occur. Another way to look at last week’s blanking of the United States in the competition for southern oil fields is that we did not really compete, because that was not our objective anyway–Kurdistan was. Dick Cheney was  certainly capable of thinking about the situation in those terms (and probably did); will the Obama administration feel the same way?

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One Response to “Iraqi Oil Contracts”

  1. José Vera Says:

    Sir,
    For how longer will USA’s people call their country “America” ?
    For your knowledge, America has never been a country ; America is a continent which goes from the Alaskan territory down south to the patagonian region in Chile and in Argentina and comprises a number of countries, one of which is the United States. So, please disseminate this fact in your country by every possible means so that the USA’s people no longer monopolize the term and all of us who are not USA’s citizens and have been born in the other countries of America are not deprived of such denomination. Furthermore, the USA acronym stands for “United States OF
    America” ; it is very clear, isn’t it ?

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