Thread: Archive Latest News - Think Tank - 01/01/08 - 14/04/08

Continued......

Shut out elsewhere, executives await the end of a long exile

Just months before US tanks rolled into Baghdad and Saddam Hussein was toppled, US government officials met allies from Iraq’s opposition and decided it was in the country’s interest for a new government to open its oil industry to foreign participation as quickly as possible, writes Dino Mahtani

The so called “Oil and Energy” working group of the US state department, which met four times in 2002 and 2003 and included influential Iraqi exiles, had put forward the idea as a crucial plank in Iraq’s postwar reconstruction plans. Increased foreign participation in Iraq’s oil industry, members argued, would help revitalise its most important economic lifeline – ravaged by years of neglect and underinvestment under Saddam’s regime.

But it would also get US oil companies close to Iraq’s reserves, which remain significantly under-exploited compared with those of other big producers and, according to some geologists, could hold the world’s largest deposits, surpassing even those of Saudi Arabia.

The Middle East has largely been off-limits to international oil companies ever since a wave of oil industry nationalisation swept the region, starting in the 1950s. In Iraq’s case, the military coup that forced out the British- and US-backed royal family in 1958 was followed by the gradual takeover over the next 14 years of the Iraq Petroleum Company, previously a concession that gave ownership of Iraq’s oil reserves to a consortium dominated by US, British and French interests.

Access to Iraqi oil today would give western oil companies an important foothold in the Middle East, home to about 60 per cent of global oil reserves, at a time when resource nationalism is on the rise and companies are having trouble finding new oil reserves to replace those they exhaust. The reserves they claim are a main determinant of their stock prices.

Western oil executives had long been impatient with the reluctance of Middle Eastern countries to open up to foreign participation. This was summed up in 1999 by the US vice- president Dick Cheney (below), then a director at the oil fields services company Halliburton. “Even though companies are anxious for greater access there, progress continues to be slow,” he said in a speech to the oil industry.

After the US invasion, American officials collaborated closely with their Iraqi political allies and oil industry executives. Many members of the Oil and Energy working group had pushed for production-sharing agreements to be introduced in Iraq after the invasion. These arrangements would allow companies to claim a share of the reserves produced as their own, at least for accounting purposes. In effect, such contracts would amount to a significant step in reversing Iraq’s nationalisation process.

The oil industry was well-placed to lobby for such an arrangement. After the invasion, former executives of big multinationals acted as consultants to the new Iraqi oil ministry. The US then hand- picked oil ministry officials under the coalition provisional authority, which eventually handed over to the interim government of Iyad Allawi. This in turn advocated partly privatising Iraq’s oil industry. When a transitional government came into place, the US backed Ahmad Chalabi – a man who famously said in 2002 that “US oil companies will have a big shot at Iraqi oil” – to chair Iraq’s Energy Council.

Today, however, the openness of Iraq’s oil industry to foreign participation is still in doubt, not only because of the security situation. Iraq has no national oil law in place. Its constitution is vague about the degree of control regional governments can exert over oil policy.

Iraqi officials know they will have the power to dictate terms to foreign oil companies. “Iraq is definitely in the driver’s seat. They [the government] know they have one of the most prolific resources left in the world,” says Bob Fryklund, vice-president of IHS, the international consultancy.

Energy producers such as Russia, Venezuela and Algeria have typified a new wave of resource nationalism, in effect expropriating foreign ownership of oil projects. In Libya, another country whose oil industry has only just opened up to foreign participation after years of sanctions, the government has now increased its take from all oil projects to an average of 95 per cent, from 81 per cent in 2000. Even in Kurdistan, where the regional authority has signed production-sharing agreements, the government’s take of future oil produced is estimated at 87 per cent, says Mr Fryklund.

Oil industry executives say their companies will not invest if they do not get a significant part of “the upside”, industry jargon for expected increases in production. But Tariq Shafiq, a former director of Iraq’s national oil company, says companies would be prepared to accept variations of service contracts that pay companies fixed returns rather than rewarding them with control over reserves.

“Given how prolific Iraq is, the return to international oil companies [under service contracts] would be just as favourable as under investment [contracts]. And I believe the companies are aware of that,” he says.

FT.com / In depth - Forbidden fields: Oil groups circle the prize of Iraq?s vast reserves

UN recommends transfer of $100 mn fund for Iraq development

United Nations, March 21 (Xinhua) UN Secretary-General Ban Ki-moon has asked the Security Council to transfer $100 million from the UN Iraq Account to the Development Fund of Iraq to initiate development activities in the country.

The UN Iraq Account is made up of funds related to the expired oil-for-food programme.

The oil-for-food programme, under which a sanctions-bound Iraq was allowed to use monitored oil sales revenue for humanitarian purchases, was phased out in 2003 under a council resolution lifting sanctions on the country.

The Development Fund of Iraq, which will receive the funds, was set up that same year to administer proceeds from export sales of petroleum, petroleum products, and natural gas.

In a letter to the Security Council, the secretary-general also provided an update on the Iraq Account and the processing of the outstanding letters of credit, a UN spokesperson said Thursday.

Ban said as of Feb 29, the Iraq Account has over $1 billion, of which $225 million was being held in the account pending resolution of various issues.

He recommended that $187 million continue to be held as a financial reserve.

http://story.irishsun.com/index.php/ct/9/cid/2411cd3571b4f088/id/339777/cs/1/

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Genel Enerji: Iraq needs oil law for investment

Iraq would need to pass its long-delayed oil and gas law to attract much-needed funds to enhance its oil industry, a Turkish company with oil investments in northern Iraq said Wednesday.

Orhan Duran, the general manager of Turkey's Genel Enerji, said the Çukurova Group-owned company has invested nearly $200 million to drill six wells in a joint effort with Geneva-based Addax Petroleum. There is enough oil to make the venture profitable, but the oil cannot be exported before the central government passes the oil and gas law, Duran said.

Iraq's central government approved a US-backed draft oil bill early last year and forwarded it to parliament only to see it sent back on technicalities. The bill -- meant to strike a balanced share of oil and gas revenues among the nation's Shiite, Sunnis and Kurds -- has been bogged down in negotiations ever since. "If they want to see foreign investment in their country, they have to pass the oil law," Duran said at an oil and gas conference in Ankara.

With national legislation stalled, Kurdish authorities have signed more than a dozen contracts with foreign companies over the objections by Oil Ministry officials in Baghdad, who consider the deals illegal. Genel Enerji are among companies the Kurdish authorities clinched deals with and they plan to extract up to 200,000 barrels of oil per day when the oil law is passed.

Iraq has recently reached a daily oil production of 2.5 million barrels a day -- the level of output before the US-led invasion toppled Saddam Hussein's regime. Tens of billions of dollars are needed to increase the output to 6 million barrels per day within the next 10 years.

TODAY'S ZAMAN

Shatt al-Arab water surplus in return for writing off the debt

The Kuwaiti delegation participating in the Arab Parliamentary Union Conference, which concluded its work in Arbil last Friday, said it had an idea of dropping his country's debt on Iraq in return for providing it with Shatt al-Arab water surplus.

An eminent member of the Kuwaiti delegation, Waleed Al-Tabatabai, hoped stability for Iraq whose people have suffered a lot during the past decades, stressing that this would bring stability to the whole region, particularly Iraq's neighbors, including Kuwait. He added, "We are happy to visit Iraq again after what happened in the past, which the two peoples have nothing to do with, and hoped that things will return the way they were before, stabilized and the secure, and that Iraq's economy will recover again very soon." Chairman of Parliament, Mahmoud Mashhadani, and President of the Kuwaiti National Assembly, Jassim Al-Khorafi, affirmed in a press conference that the two countries have folded the past, and began a new phase of relations in accordance with the principle of good neighborliness.

Member of the Kuwaiti delegation said, "we are not asking Iraq to pay back its debt now, and we have come up with a project include that Iraq provide Kuwait with Shatt al-Arab water surplus in return for writing off its debt." The debt of Kuwait on Iraq is about $14 billion, excluding reparations approved by the United Nations due to the invasion by the former regime, which hit $37 billion, of which Iraq paid more than 12 billion by deducting 5% of Iraq oil imports; Kuwait has pledged at Madrid conference to grant Iraq a billion and a half billion for the reconstruction of the country. Al-Tabatabai noted, "in future we could replace things not used by the Iraqi people for the money it owes us; however this is just an idea and we do not want to crush Iraqis with the debt now. There could also be economic exchanges and investments that work for the interest of both sides." Member of the Kuwaiti delegation pointed out that his country strongly supports Iraq in the political area, stressing that" Jasim Al-Kharafi President of the National Assembly stressed the importance of holding the conference in Iraq, because the success of the conference there would be reflected on the reputation of Iraq, improve investment opportunities and give hope for serious progress.

http://www.iraqdirectory.com/DisplayNews.aspx?id=5707

US Cheney Meets Saudi King For Talks On Iraq, Oil Prices

U.S. Vice President Dick Cheney met Saudi King Abdullah on Friday, hoping to win more Arab support for Afghanistan and Iraq and find ways to stabilize global energy markets amid sky-high prices.

"They'll have ample discussions about the problems that exist in the market, whether they and how they lend themselves to various kinds of solutions," said the vice president's national security adviser, John Hannah.

Cheney, here on a nine-day visit to the Middle East and Turkey, was also expected to sound out his host on ways to curb Iran's regional influence, especially in Iraq, and discuss Syria as well as Lebanon's political crisis.

The king welcomed his longtime friend to the lush Al-Jenadriyah horse farm, a sprawling retreat that is home to the monarch's 500 or so Arabian and thoroughbred horses, complete with officials carrying incense.

"Mister vice president, we've been friends a long time," the king said just before awarding his guest the green and gold Abdul Aziz sash, the highest Saudi award for a vice president.

"How was your trip?" the monarch asked through an interpreter. "Very good," said Cheney.

The two also publicly chatted about the vice president's surprise visits to Iraq and Afghanistan before beginning a private meeting.

"They will review a broad agenda of diplomatic and security issues as well as where we are now in the global energy market," Hannah told reporters on the flight in from neighboring Oman.

"I'm sure they will talk about the need for a cooperative way forward to try and stabilize this market, reduce the volatility in the market and serve the interests both of consumers and producers alike," said Hannah.

Cheney, who will also visit Israel, the West Bank, and Turkey before returning to Washington, hoped to discuss efforts to confront Iran over its nuclear program, a senior U.S. official said on condition of anonymity.

The U.S. vice president and the king were expected also to discuss Syria and Lebanon, and Cheney was to push his host as well as other Arab countries to step up efforts to help U.S.-led efforts in Iraq and Afghanistan.

On Iraq, Cheney was to push for Saudi Arabia to lead other Arab nations in sending an ambassador to Baghdad and step up other government-to-government contacts.

"If Arab states (are) concerned about Iranian influence in Iraq, one of the ways for them to counter that is to make a commitment to have a presence here as well," Cheney said during his visit to Baghdad on Monday.

On Afghanistan, Cheney was to urge the king to encourage private sector investment and step up financial assistance for the U.S.-led reconstruction effort, the U.S. official said.

Looking at the list of donor countries, "Saudi Arabia and the Gulf countries are not in the very top tier of countries, so I think there's clearly more they can do. They obviously have the resources to do more," the official said.

Cheney and his host were also to discuss cooperation in Pakistan, particularly on counter-terrorism, the official said.

Company News Story

Real estate loans increased to 50 million dinars

The Finance Ministry has prepared a plan to increase the amounts allocated for lending citizens to build their residential units through the real estate bank from 30 million to 50 million dinars during this year. The ministry confirmed that the Al-Rafidain and Al-Rasheed banks will contribute during the next two years in building housing units for citizens and furnishing them; the banks will deduct the amounts from them at specific monthly rates.

The Minister of Finance, Baqir Jabr Al-Zubaidi, said in press statements issued by the Information Office of the ministry that the Cabinet is interested in providing housing units for citizens to eliminate this crisis, noting that a committee has been formed to work on overcoming some obstacles and routine in the allocation of land belonging to the State to build housing units. He added that the ministry has qualified the Real Estate Bank and funded it with $200 million, which enabled it to construct five thousand housing units throughout Iraq distributed equitably within a short period of its rehabilitation, stressing that the ministry is seeking to double the number during the next term to ten thousand units.

Minister Al-Zubaidi explained that Iraqi economy is fine and the financial returns are great; therefore, the next two years will witness a significant declined in the housing crisis, especially as the overall thrust of building will be expanded vertically and not horizontally for optimum utilization of land in addition to building modern villages away from city centers.

http://www.iraqdirectory.com/DisplayNews.aspx?id=5705

SIIC, Dawa deny planning to liquidate Sadrists

Parliamentarians from the Dawa Party and the Supreme Islamic Iraqi Council (SIIC) on Friday denied planning to liquidate Sadrists, asserting that measures taken by the security apparatuses are not being directed against anyone.

Sheikh Jalal el-Din al-Sagheer from the SIIC denied any plans to liquidate Sadrists, saying “I completely deny these reports.”

“We have no interest in attacking anyone and these blocs have a great effect on the Iraqi society,” Sheikh al-Sagheer told Aswat al-Iraq – Voices of Iraq (VOI) by phone.

“There is a difference between accusations and measures taken by the government against outlaws,” he added.

“There are two kinds of Sadrists; one of them wants to cooperate to achieve justice and we will work with this kind to boost security authorities,” the SIIC MP added.

“The other kind wants to cause problems, because they can not live in a peaceful atmosphere,” he said.

For her part, Nada al-Sudani, legislator from Dawa party, told VOI over the phone, “security measures taken in the provinces are not directed against any body.”

Ahmed al-Massoudi, a legislator from the Sadrist bloc, or Iraqis loyal to Shiite leader Muqtada al-Sadr, had accused earlier the government of Prime Minister Nouri al-Maliki, his Dawa Party and the Supreme Islamic Iraqi Council (SIIC) of planning a military campaign to liquidate the Sadrists in Babel province.

“Abdul-Aziz al-Hakim's "SIIC and the Dawa Party have held meetings with officers of the militias merged recently into security agencies to launch a military campaign outwardly to impose order and law but the real objective is to liquidate the Sadrist bloc," he added.

"Prime Minister Nouri al-Maliki is directly supervising this scheme with officers from the Dawa Party and the SIIC," he noted.

Massoudi warned that the Sadrists would be targeted in Babel just like they were targeted in the provinces of Diwaniya, Kut and Karbala.

The Sadrists in the Iraqi parliament have 30 seats, in addition to two deputies representing the bloc's Risalyoun list, out of a total 275 seats.

The Sadrists entered parliament within the Shiite Unified Iraqi Coalition (UIC) during the legislative elections held by the end of 2005. They, however, withdrew from the UIC in mid-September 2007 due to what they described as "the insistence of some parties inside the bloc to marginalize the Sadrists."


Aswat Aliraq

Update.......

Iraq's presidency endorses controversial Provinces Law

DPA POLITICS Iraq Politics Iraq's presidency endorses controversial Provinces Law Baghdad

Iraq's presidency council has endorsed controversial legislation which its backers hope will eliminate electoral distortions and foster national reconciliation, local media said Thursday.

The presidency council has unanimously rescinded its previous veto on the provinces legislation after long consultations with political groups, the council said in a statement carried by the Voices of Iraq news agency.

The provinces law, which is the brainchild of the US administration, had been passed by Parliament in early February after long and acrimonious debate.

But the three-member presidency council, made up of the president and two vice Presidents, vetoed the law at the last minute, reflecting the country's sectarian discord.

The veto came after the powerful Shiite bloc, the Supreme Islamic Iraqi Council, argued that some provisions in the law would strip power from Iraq's provinces. The bloc, which is represented in the presidency by Vice-President Adel Abdel-Mahdi, is along with Kurdish blocs the staunchest advocate of a federal Iraq. The law calls for provincial elections by October.

Its supporters hope that the new local elections would remedy uneven provincial councils, in which Sunni Arabs in particular are under-represented.

Such electoral distortions are the by-product of Sunni Arab boycott of previous provincial elections. In the north-eastern Diyala province, Shiite Muslims control local councils although Sunni Arabs make up the majority of the population. The raging sectarian violence in the province is fuelled by Sunni Arabs' uneven representation in its local government, many believe.

In Sunni-dominated Nineveh and Salahaddin provinces, Kurds have more power on provincial councils than their actual numbers would normally allow. It is hoped, the US and some Iraqi politicians contend, that the new law would herald a gradual integration of Sunni Arabs in the political process and an eventual end to their insurgency.

The law would also help with unseating corrupt local leaders by allowing people a chance to elect officials who are more accountable.

The legislation will come into effect as soon as it is published in the official newspaper, according to the presidency statement.

LexisNexis News - Latest News from over 4,000 sources, including newspapers, tv transcripts, wire services, magazines, journals.

Gates hints at April Iraq Assessment

U.S. Defense Secretary Robert Gates and other top officials met the U.S. commander in Iraq to discuss the April progress report on troop levels in Iraq.

Gates and his advisers said they will prepare a separate progress report on Iraq as an addendum to the report Army Gen. David Petraeus and U.S. Ambassador to Iraq Ryan Crocker will deliver to the president in April, Voice of America said.

Most analysts expect the U.S. military will bring the number of troops stationed in Iraq to 140,000 down from 160,000 in July, but will halt any further redeployments until the security situation receives a formal assessment.

Maj. Gen. Mike Oates, the commander of the Army's 10th Mountain Division and a key strategist involved in the assessment, said the Iraqi report warrants cautious optimism.

"We're going to take force down and making some assessment about what has changed and what the impact is on that. How long that should last, I don't know," Oates said.

Oates said the U.S. military "learned through hard experience" of the failure to match the number of troops to the security situation on the ground, VOA reported.

Anthony Cordesman with the Center for Strategic and International Studies in Washington said the U.S. commitment in Iraq is long term, but suggested the number of U.S. troops deployed there may draw down as the mission moves from "fighting a counterinsurgency to a strategic overwatch."

Michele Flournoy of the Washington-based Center for a New American Security echoed Cordesman's sentiments. She recognized the U.S. troop numbers depended on the ability of Iraqi forces to come fully online, but stressed the Bush administration may leave any further decisions on the U.S. troop commitment to the next administration.

Gates hints at April Iraq assessment - UPI.com

The final battle for Basra is near, says Iraqi General

General Mohan al-Furayji, the Iraqi commander in charge of security in the south of Iraq, has warned his troops they must prepare for the final battle to defeat the Shia militias terrorising Basra.

For the British force based at Basra airport, the general's strategy raises the spectre of a return to the city they left last September after a summer of incessant attacks by the gunmen.

General Mohan is determined that the armed Shia groups have to be defeated before the provincial elections in the autumn. Failure to do so, he maintains, will mean the gunmen will take over what is left of the degenerating political process, making it impossible to shift them in the near future. No date has been fixed for the drive against the militias in Basra, he said yesterday. But he also delivered an uncompromising warning to his troops: they must be ready for a decisive military push, and it will come soon.

Two militias, the Mehdi Army, led by the radical cleric Muqtada al-Sadr, and the Badr Brigade used to dominate Basra. There are now, however, more than a dozen groups seeking the rich pickings of the region. The Mehdi Army has split into factions, with one group rejecting the current ceasefire called by the cleric.

Meanwhile, a messianic cult, the Soldiers of Heaven, launched attacks in Basra and Nasiriya during the Shia religious ceremony of Ashura two months ago in which 70 people died and more than 100 were wounded.

British troops no longer venture into the city. But the UK has pledged to give General Mohan military support if asked, and senior government sources say that Gordon Brown's pledge to cut the number of troops here from 4,100 to 2,500 will almost certainly be postponed until at least the end of the year.

The reasons are the dependence of the Iraqis on UK troops as well as continuing attacks on the airport base. After a lull following the British withdrawal from their base at Saddam Hussein's old palace in Basra, mortar and missile rounds have continued against the British troops on a regular basis, seen as a sign of renewed confidence by the militias. Soldiers complain that they are coming under attack without being able, as in the past, to take action against the enemy in Basra city.

The British Government, however, is extremely wary about getting stuck once again in the Basra quagmire, and efforts will be made to ensure that any commitment will be short of a full-scale redeployment.

At present British troops are mainly engaged in training and mentoring their Iraqi counterparts and providing logistical support and intelligence. Some UK forces do take part in joint operations with the Iraqis, but strictly outside Basra city limits.

Asked whether he thought the British contribution will involve armour and air power in a conflict with the Shia fighters, General Mohan said "the British have promised help and I am sure they will provide it, but what exactly they do will be up to them".

Meanwhile, Iraqi preparations for confronting the militias are going ahead. At their former base at Shaiba, the 1 Scots Battlegroup is providing training in house-to-house fighting – a key ingredient in any attempt to retake Basra from the militias. The procedure is what the Americans call Mout (military operations in urban terrain) and the British, call Fish (fighting in someone's house).

According to Iraqi sources, the best time for military operations would be in the summer with Ramadan due to last almost the whole of September. The elections, originally scheduled before the end of September, are now expected to take place in October.

General Mohan was sent from Baghdad by the Iraqi government to oversee security in the south, an area which accounts for 90 per cent of state revenue, 70 per cent of oil reserves and has been described as "the lung of Iraq" by premier Nouri al-Maliki. He has been urged to wrest the region from the armed groups which have been looting oil, on an industrial scale.

Last week, the deputy prime minister, Barham Salih, called for a "very strong military presence in Basra to eradicate the militia," adding that Western forces would be involved. British forces are staying out of Basra city with the agreement of the Iraqi authorities so as not to provoke militia violence.

The final battle for Basra is near, says Iraqi general - Middle East, World - Independent.co.uk