Iraq/Dinar News Until 5/31/2007 7:15 PM CST..

Update: We Again Failed To Support Allawi For Maliki
Al-Mada claimed that a plan by Iyad 'Allawi to withdraw his bloc’s ministers from the government was botched when he learned that the ministers in question will refuse to leave their cabinet seats.

The newspaper alleged that 'Adnan al-Bajaji, a senior member of 'Allawi’s Iraqiya coalition, came to Baghdad to announce the withdrawal of the coalition from the cabinet, but was forced to postpone the announcement fearing non-compliance from his ministers.

Al-Mada and Az-Zaman reported over the last few days that 'Allawi’s plan is to announce the creation of a new major alliance in the Iraqi parliament (seeking to topple al-Maliki’s cabinet) in parallel with his coalition’s withdrawal from al-Maliki’s government.

The State Department has made it clear to the world that we will stand by Maliki (right or wrong) because there is no promise that a new government would be any better and only be more costly in time to get up and running....

The problem for us is that Maliki and his people know this and you can see that by their going back on the agreement with the Kurds and Sunnis at the President Council Meeting last week...

End Result

Further delays and inaction as Maliki's supporters laugh at the proposed benchmarks, little alone meeting them.

http://www.rolclub.com/rumors-predic...ssure-u-s.html
IraqSlogger: Iraqi Papers Thursday: Impasse
http://www.rolclub.com/rumors-predic...t-no-coup.html

NEW DELHI, May 23 A top Iraqi oil official touted the upcoming auction of oil and gas, once the hydrocarbons law is passed, and is courting potential refinery deals.

"Iraq is preparing 15 fields and blocks for first round of auction after approval of the oil and gas law ... tenders are under preparation," Fayadh Hassan Nima, director general at Iraq ' s Oil Ministry, said during a visit to New Delhi. Gulf News reports Nima wants Indian companies to build two of the planned four refineries in Iraq, aimed at increasing capacity for oil products and turning around a growing shortage of transportation, cooking and heating fuels.

Iraq, which has had a nationalized oil system, is moving toward opening up its sector to foreign companies. They, however, must wait until the government passes a law governing the 115 billion barrels of proven reserves, the third-largest in the world.

But opponents of the bill vary in opinion, though not in strength: Kurds say it isn't allowing enough of the oil to be open to the free market and want more regional control and a better mechanism for redistributing oil revenue. Sunnis and most Shiites want stronger central control. The oil unions are threatening to strike if foreign companies are given too much access. And last month more than 60 Iraqi oil experts wrote a letter to Prime Minister Nouri al-Maliki urging the government to wait until the security situation improves and constitutional issues are resolved.

A self-imposed late May deadline to pass the bill is likely to be missed. Nima said the bill won't be completed for another "two to three months." Meanwhile the Bush administration is leaning hard on Iraq to make progress on the law so it can use it as a sign of progress in the country

Iraq pushing oil, law in India

Iraq To Auction 15 Oil/Gas Blocks Once Oil Law Final-Official

NEW DELHI -(Dow Jones)- Iraq plans to auction 15 crude oil and natural gas blocks to international oil companies once the country's long-delayed hydrocarbons law becomes final, an Iraq oil official said Wednesday.
"We are preparing a plan for 15 fields and blocks for the first round of auctioning after the approval of the new oil and gas law," Fayadh Hassan Nima, director general of studies and planning in the Iraq oil ministry told reporters here on the sidelines of an industry event.
Iraq plans to invite Indian oil companies to build two refineries each with a capacity of 100,000 barrels a day, Nima said, without elaborating on which companies might be invited.
Nima was speaking ahead of a planned visit by Iraq's oil minister to India scheduled to start Friday.
Iraq's hydrocarbons law has been delayed for several months and many analysts believe lawmakers will miss an end-May deadline to have the legislation approved and signed by the Iraqi parliament as Baghdad and the autonomous Kurdish government in northern Iraq continue to fail to come to agreement on a number of issues, including method for distributing oil revenues.
Iraq currently has 750,000 barrels a day of refining capacity and the country plans to double this capacity in the next 10 years, Nima said.
-K. Dinkar, Dow Jones Newswires; +91 011 2307 4020; [email protected]

Nasdaq 100 Flash Quotes&

Fighting overshadows Iraq's oil law
By Adam Wolfe

Iraq's national oil law has been touted as a major step toward the political reconciliation of the country's major sects. The US military "surge" in Baghdad is, in part, designed to provide the sectarian-defined political groups breathing room to pass this and other measures that would give every group a greater stake in the political and economic future of a unified Iraq. Yet as negotiations over the oil law drag on, and grow increasingly bitter, such



reconciliation seems less and less likely.

It now appears impossible for the Iraqi Parliament to pass the national oil law by the government-imposed deadline of May 31. The immediate cost of this failure will be economic - while many of the Western majors will not invest in Iraq because of the remaining security risks, Eastern and smaller oil firms appear willing if the political risks are first removed through legislation.

However, the long-term damage done by the failure to reach a consensus on the oil law will be a hardening of the sectarian fractures in Iraq's political landscape. The debates surrounding the oil law do not center on what is best for the country as a whole, but only on what is best for each sectarian group. By defining the debate as yet another zero-sum competition, Iraq's politicians have made it impossible to emerge from the negotiations without at least one group feeling like the losers. The US Embassy in Iraq has only encouraged this situation by insisting on a greater role for foreign firms in future investments.

As such, reconciliation will never emerge from the passage of an oil law in Iraq. This darkens the prospects of success for the US military "surge".

Background on the oil law
The Iraqi constitution passed in 2005 was deliberately vague on ownership and control of Iraq's oil. The document was written in such a way as to win the approval of the Kurdish and Shi'ite negotiators (Sunni Arab representation at the negotiations was minimal because the Sunni leadership was still largely boycotting the political process at the time). To do so, the text was vague on issues of governance and specific on issues of power politics.

Article 111 of the constitution states that "oil and gas are [under] the ownership of all the people of Iraq", while Article 112 calls for distribution of oil revenues to be allocated "in a fair manner in proportion to the population", with little clarity on either issue. Because the constitution is so vague, and because Sunni Arab leaders remain unsatisfied with large portions of the constitution, a new oil law is needed to clarify issues of control and revenue distribution.

The importance of a comprehensible oil law cannot be understated. The oil sector accounts for 95% of the government's revenues. Iraq's proven reserves are estimated at 115 billion barrels, putting it only behind Saudi Arabia and Canada. Less than 20% of the country has been explored, however, and many believe that Iraq's western regions could almost double Iraq's proven reserves if exploration were to go ahead.

It is vital for the future of Iraq that there is legal certainty in the oil industry to encourage future exploration and acceptable distribution of the country's leading stream of revenue among Iraq's major sectarian groupings.

The Kurdish position
Kurdish opposition to the current draft is based on fear that the central government will have too much control over the oilfields in the relatively peaceful north.

Kurdish leaders claim that the constitution gives them the right to develop the proven reserves in their semi-autonomous region because it grants regional control over existing oil reserves. However, Shi'ite and Sunni leaders interpret the constitution as only granting regional control to operations that were developed before 2005. This would mean that incremental additions to existing operations would also be controlled by the central government. Since the constitution did not define what constitutes a "new" field, the sectarian groups are now pushing for their interpretation to be spelled out in the law.

The Kurds also want decisions about foreign investment to be made at the regional level. In fact, they have already negotiated deals with foreign oil firms to explore and develop the Kurdish semi-autonomous zone. In 2004, the Kurdish Democratic Party reached an agreement with Norway's DNO ASA, which began drilling in December 2005. This month, DNO announced that it had begun pumping oil and will be able to deliver it to the market in June. Under the existing draft of the oil law, the deal reached with DNO and other contracts made by the Kurdistan Regional Government (KRG) would have to be renegotiated.

Kurdish leaders are concerned about granting control to the central government for two main reasons. First, assuming that Kirkuk is brought under control of the KRG, the proven reserves in the semi-autonomous region would provide enough revenues to fund a Kurdish state when Kurdish leaders feel it is time to cross that bridge. Second, they are skeptical about granting control to the ill-defined bodies that would control oil developments and revenues, which the central government would oversee.

The existing draft would create the Iraqi National Oil Co (INOC), a state-run oil firm, to manage new projects. The Federal Oil and Gas Council would regulate the industry, but it is not clear how membership to the council would be granted, or whether it would be limited to Iraqis.

The Kurdish leadership would prefer regional control of all oil reserves, with a defined portion of revenues going to the central government. Ideally, existing oilfields would contribute a lower rate, and newly developed fields (narrowly defined) would contribute to the central fund at a higher rate.

Sunni objections
Opposition to the draft oil law is only part of a larger agenda for Sunni politicians. The Sunni-majority region is oil-poor, and Sunni politicians fear that the oil law could cut off their regions from Iraq's main source of income.

Vice President Tariq al-Hashimi, leader of the Iraqi Accord Front, earlier threatened to pull his party's 44 politicians out of the 275-member Parliament if the government did not meet his demands for redrafting the constitution before May 15. After a face-saving meeting with the prime minister and the president, Hashimi backed away from his threat. Nevertheless, many Sunni politicians are only interested in passing the oil law if it also leads to revisions in the constitution.

Sunni demands are primarily concerned with creating a strong central government and preventing the breakup of Iraq into autonomous zones. As such, Sunni negotiators are pushing for a larger role for INOC in new oil developments. It is their belief that Sunnis would need to be brought in to run the company because of their experience gained under Saddam Hussein's regime in operating Iraq's oil industry. They would also like to limit the role played by foreign firms in developing Iraq's reserves, partly for similar reasons.

Sunni politicians are also pushing for redistribution based on population, and discounting other concerns that might be brought into the equation such as retributions for hardships endured under Saddam.

While many of their demands are close to those of the Shi'ite leadership, the Sunnis appear willing to prevent the law's passage until their other demands are granted.

Competing Shi'ite visions
The Shi'ite leadership is united in its desire for a stronger role to be played by the central government in Iraq's oil sector, if only to prevent the Kurdish region from growing in power.

The Iraqi oil minister, Hussein al-Shahristani, has inserted language into the draft bill that would strengthen the government's role. Four appendices were inserted into the law after it emerged from the cabinet in February, which appear to grant INOC control over 93% of Iraq's reserves. This is not acceptable to the Kurdish leadership and is now a major obstacle to its passage.

However, there is a large split within the Shi'ite majority over the role of the central government. The politicians aligned with Muqtada al-Sadr favor a strong central government for strategic reasons. Since the US-led invasion of Iraq, Sadr has advocated maintaining the existing borders of Iraq, as well as a powerful national government, because he believes this will lead to the creation of a strong Shi'ite state on Iran's border.

Currently, Sadr seems to be preparing for the downfall of the government led by Prime Minister Nuri al-Maliki. For this reason, Sadr's loyalists may prove to be another obstacle to the passage of the oil law, even if they believe in the spirit of the text. They may believe that they can hasten Maliki's departure by preventing his government from achieving one of the benchmarks often mentioned in Washington to judge Iraq's political progress. They believe that if Maliki's government fails to reach the benchmarks, Washington will be forced to begin pulling its troops out of Iraq. One strategy for doing this may be to insert language into the draft oil law that they know will be unacceptable to their Kurdish counterparts.

The other main Shi'ite faction, the United Iraqi Alliance (UIA), made up of the Islamic Da'wa Party and the Supreme Council for the Islamic Revolution in Iraq (SCIRI), was formerly closely aligned with Iran. However, it has moved closer to the interests of the United States as it tries to maintain Maliki's government. In fact, SCIRI re-branded itself as the Supreme Iraqi Islamic Council (SIIC) this month to distance itself from the Islamic Revolution in Iran and give it more of an Iraqi-centric title.

The main goal of the UIA at this point is passing the oil law in whatever form is acceptable. Because Washington has hinged the prospects of its current "surge" policy on Maliki's ability to reach reconciliation with Iraq's other groups, the oil law has become even more important. Every other group knows this, and their intransigence stems from either a desire to gain concessions from the UIA on other issues or a goal of removing the UIA from power.

Benchmarks, investments drive US
President George W Bush's "surge" strategy in Iraq is increasingly losing political support. With the Democratic Party controlling Congress, the pressure to demonstrate that the military policy is working has grown.

The domestic debate in the US seems settled on granting the military until September to prove that the surge has had an effect on security conditions in Baghdad. Yet lawmakers are insistent that Iraq's government must demonstrate political progress by redrafting portions of the constitution to mollify Sunni concerns, revise the de-Ba'athification laws, hold provincial elections, and pass a national oil law.

As a result, the US Embassy in Iraq is pressuring the sectarian groups to pass the oil law as soon as possible. Still, Washington does have an agenda as to what the law should look like.

US-funded consultants had a significant role in shaping the draft oil law in Iraq. Firms such as BearingPoint were brought in to advise the Iraqi government and advocated allowing for private competition in the oil sector. It is Washington's belief that Iraq's oil sector will be most efficiently exploited and managed through the competition of private oil firms, including foreign companies. As such, Washington would like to reduce the role played by INOC in the oil sector. However, at this point passing the oil law is more important to Washington than granting rights to foreign oil companies.

Conclusion
Iraq's national oil law has become an important factor in gauging the country's progress on political reconciliation. Judging by the debate surrounding the oil law, such a reconciliation will not be in the offing any time soon. Each sectarian and political group brings to the debate its own agenda, and these are incompatible with each other. Rather than looking for areas where compromise might be found, each group has dug in and looks to demand further concessions before voting for the oil law.

This puts Washington and Maliki in the precarious position of pushing for any law to be passed, even if it may be against their interests in the long term. Washington has hinged its military "surge" on progress from Maliki's government to pass measures demonstrating the political reconciliation of Iraq's sectarian groups. In turn, Maliki must push for the passage of such measures out of fear of losing support from Washington.

This is a situation that the Kurdish, Sunni, and Sadr-led groups would like to use to their advantage. Because the debate has been framed in these zero-sum terms, there will invariably be a loser. This, by definition, makes the possibility of Iraq's oil law leading to national reconciliation zero. It is likely that the law will be passed in some form in the next few weeks, but its passage will only hasten rather than slow Iraq's drift toward factionalism.

Asia Times Online :: Middle East News - Fighting overshadows Iraq's oil law

BAGHDAD, May 22 Iraqi oil law negotiators meet in Baghdad this week amid pressure to reach consensus -- especially from the United States seeking a sign of success in Iraq.

Ashti Hawrami, natural resources minister of the Kurdistan Regional Government, told UPI talks over the oil law, a portion of which was approved by negotiators in February but has since been knocked down, will restart this week.

The Kurds want greater regional autonomy and control over Iraq's vast oil reserves. They also are the biggest promoters of allowing foreign companies into Iraq's oil sector. The central government, however, wants federal control over most of the oil. There is now a constitutional debate over which side has the rights to the oil.

The powerful oil unions are threatening to strike if foreign companies have too much control over the 115 billion barrels of proven reserves. If they halt production, Iraq's 1.6 million barrels per day will be taken from the global market.

President Bush in January said passing the law would be a benchmark for success in Iraq. Democrats in Congress have attempted to hold him to that, including it in language authorizing supplemental funding for the war. Bush, however, has vowed to veto any such measure, especially if there's a timeline for withdrawing U.S. troops.

But pressure continues from the United States via diplomatic channels. USA Today reports Kurdish lawmaker Mahmoud Othman said such pressure is making matters worse.

"At this point, the U.S. need to show progress is beginning to outweigh the need for a complete compromise on oil and gas development, which may not have been possible in any case," Greg Priddy, global energy analyst at the business risk analyst Eurasia Group, wrote Tuesday in the firm ' s Energy Trendwatch. "In the end, what is eventually passed will probably be intentionally vague," he added, and any investment will be limited in size and located in relatively safe places, like the Kurdish north.

Iraq feels pressure to pass oil law

Kucinich Lobbies To Oppose Iraqi Law

The Politico) Rep. Dennis Kucinich (D-Ohio) invoked a little-used rule today that allowed him an hour to speak on the House floor about the Iraqi oil law that he has been lobbying his Democratic colleagues to oppose.

Kucinich Lobbies To Oppose Iraqi Law, By John Bresnahan - CBS News

WASHINGTON, May 22 /PRNewswire-USNewswire/ -- At approximately 11:00 a.m. tomorrow, Congressman Dennis Kucinich will invoke a rarely used procedure to offer a privileged motion claiming one hour of time to speak on the floor of the House of Representatives about current legislative plans to privatize Iraq's oil.

This will be the first time in Congress that there has been a full discussion of the covert efforts to accomplish privatization of Iraq's oil through the supplemental spending bill.

Kucinich has alerted his colleagues to this concern in the past. Tomorrow he will do so on the floor of the House.

Kucinich argued against invading Iraq prior to the 2003 vote that authorized it. He published his case against it and helped persuade many of his colleagues to vote No. Kucinich challenged the legality of the war in court in an effort to prevent it. He proposed a detailed plan to end the occupation of Iraq over three years ago. His current plan is found in his bill HR 1234, which includes these findings:

"Any attempt to sell Iraqi oil assets during the United States occupation will be a significant stumbling block to peaceful resolution. There must be fairness in the distribution of oil resources in Iraq."

Kucinich has voted against every new funding bill for the occupation, including the recent Supplemental. He supports using the power of the purse to end the war. He opposes any attack on Iran and proposes formally forswearing the use of so-called preventive war. He has proposed the creation of a Department of Peace to address international and domestic violence.

SOURCE Kucinich for President

Kucinich to Speak for Full Hour on House Floor on Iraq Oil Law - Yahoo! News

DEAD SEA, Jordan May 21, 2007 (Dow Jones Newswires)

Iraq's Vice President Tariq Al Hashimi said Sunday he opposes a draft oil law that is crucial to Iraq's future because it gives too many concessions to international oil companies and the country's regions.
"We disagree with the production sharing agreement," Al Hashimi told Dow Jones. "We want foreign oil companies but not with big privileges."

Iraq's government is locked in debate over the draft oil law that must be approved by the country's parliament. Parliament in Baghdad could take two months before to approve the legislation, Al Hashimi said.

International oil companies such as Royal Dutch Shell Plc, BP Plc and ConocoPhillips are awaiting the legislation that will set a framework for licensing access to Iraq's vast oil reserves, estimated to be the world's third biggest.
Disagreements between the Kurds in northern Iraq and the central government in Baghdad revolve around who controls rights to oil exploration and how revenues from the oil rich areas of the North will be divided.
Kurds want their share of the earnings from the export of oil to be given to them directly, bypassing the central government's finance ministry.
"We are against giving regions extensive powers," Al Hashimi said. "We need to review these extensive powers given by the Iraqi constitution to the regions at the expense of the center."
Iraq's main sectarian Muslim groups of Shiites, Sunnis and Kurds are jostling for a share of the nation's oil wealth. The Kurds, with a population of around 5 million, dominate the country's north while the Shiites populate the South, where most of Iraq's oil exports are shipped.
The Sunnis, which reside largely in central Iraq, feel they may be squeezed out of their share of revenues from Iraq's oil wealth. Al Hashimi, leader of the Islamic party, is the senior Sunni politician in Iraq's government. Iraq has the world's third-biggest proven oil reserves after Saudi Arabia and Iran, but only about 10% of the country has been explored, according to the U.S. Energy Information Administration.

RIGZONE - Iraq's Oil Law Gives International Oil Companies Too Much -VP

by Anne Alexander
Iraqi union leaders representing tens of thousands of oil workers across southern Iraq are optimistic that a threatened strike last week has won significant concessions from the US-backed government.
The Iraqi Federation of Oil Unions (IFOU) represents 26,000 workers in the provinces of Basra, Dhi Qar, Maysan and al-Muthanna. The union has organised three strikes since 2003 which paralysed the oil industry, halting all Iraqi oil exports.
A strike called for 14 May was halted by last-minute negotiations with Iraqi prime minister Nuri al-Maliki.
One of the key issues in the dispute was the controversial new oil law being debated by the Iraqi parliament. The law allows multinational companies to grab huge profits by developing Iraq’s huge untapped oilfields under contracts lasting up to 30 years.
The IFOU has long campaigned against the sell-off, organising two conferences in Basra last year in protest at the US-backed government’s plans. Hassan Juma Awad, president of the union said, “The oil law does not represent the aspirations of the Iraqi people.”
It will let the foreign oil companies into the oil sector and enact privatisation under so-called production sharing agreements.
He appealed for solidarity from the international trade union movement in defeating the law. "The federation calls on all unions in the world to support our demands and to put pressure on governments and the oil companies not to enter the Iraqi oil fields.”
The union is not alone in its condemnation of the draft oil law. Opponents of the law also include all of Iraq’s other trade unions, a number of political parties, and a group of over 60 senior Iraqi oil experts.
On 5 May union negotiators sent a letter to Iraqi Prime Minister Nuri al-Maliki listing the demands of the coming strike which included a call for the law to be submitted to the union for revision.
The union is also demanding improvements in pay and conditions, government measures to tackle rising prices and medical treatment for oil workers, particularly those in areas affected by the use of cancer-causing Depleted Uranium weapons.
Union negotiators said last week that Al-Maliki “clearly agreed” to their demands and promised further meetings between representatives from his office, the Ministry of Oil, the Southern Oil Company and the IFOU

http://www.so******tworker.co.uk/art...ticle_id=11673

May 18, 2007
(The Politico) A broad coalition of 24 liberal organizations sent a letter yesterday to Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry Reid (D-Nev.) urging them to drop the "Oil Law Benchmark" in legislation that will continue to fund the war but require the Iraqi government to meet certain benchmarks, reports Politico's Ryan Grim.

The coalition is concerned that the benchmark puts undue pressure on the Iraqi government to open its oil industry to foreign companies. The signers include MoveOn.org; Public Citizen; United for Peace and Justice, a leading antiwar group; and U.S. Labor Against the War; among other groups with strong support among liberals.

Liberal Groups Want Oil Benchmark Law Out Of Iraq Funding Bill, By John Bresnahan - CBS News

Calcutta News.Net
Sunday 20th May, 2007

An Iraqi law could mean overseas companies will control their oil fields.

A British campaign group, Hands Off Iraqi Oil (HOIO), has singled out the role of Shell, which it said had been working closely with Britain and the U.S. to create a policy to allow multinational companies to take control of Iraq's oil.

A spokesman for HOIO claims there has been a revolving door between Shell and the Foreign Office, with four of the last five permanent heads of the Foreign Office going on to become directors of oil and gas companies, two of them at Shell.

HOIO says a lobby group, working on behalf of BP, Shell, ExxonMobil, Chevron, Total and ENI, has been advised by the U.K. government on strategies for influencing the Iraqi government.

In March, an all-party group of British MPs expressed concern about involvement by the UK government in drafting Iraq’s new oil laws.

Meanwhile, The New York Times has reported that over between 100,000 and 300,000 barrels a day of Iraq’s oil production is unaccounted for and could have been siphoned off through corruption or smuggling.
Iraqis could lose their own oil to U.K and U.S. multinationals