Tuesday, November 25, 2008

That Rainbow Is Actually An Oil Slick

While all the world's attention is turned toward the economic disaster they have achieved, a few splinters from the mainframe of occupied White House policy are busily scurrying about doing all the damage they can. Of course, the oil companies are full of these crossovers. In Iraq, a former manager of oil agreements is busily at work countering them before they can be brought into force.

In the history of the Iraq War, one name is perhaps synonymous with the collapse of the Bush administration's hopes for a post-Saddam world: Retired Lt. General Jay M. Garner. It was Garner who served as the first post-war administrator for Iraq, running the country during the fateful two months immediately following the invasion before being replaced by L. Paul Bremer III.

However, Garner's frustrating tenure in Iraq wasn't entirely wasted. This year, he and a small group of former US military leaders, officials, and lobbyists have quietly used their deep connections in Kurdistan to help Canadian companies access some of the region's richest oil fields.

Though Garner's involvement in these deals has, so far, remained under the US media's radar, the situation presents an embarrassment for the Bush administration. US policy holds that foreign companies should not jump into the Iraqi oil business until after Iraqis figure out how to apportion their petroleum between various regions and the central government. In fact, last year, an American company named Hunt Oil triggered a controversy when it signed a deal to produce oil in the area of Dahuk in Kurdistan. Hunt Oil's CEO is a friend of President Bush and a former member of his Foreign Intelligence Advisory Board; congressional investigators discovered that even though the State Department eventually condemned the contract, the administration had long known about the deal and elected not to intervene. Garner has so far evaded a similar outcry because he's acting on behalf of companies in Canada.

But Garner's deal-making is not without risks. In the spring of 2007, Iraq's cabinet began working on an oil law to govern the country's oil reserves, which are the third largest in the world. Ever since then, however, Iraq's Sunni, Shiite, and Kurdish factions have been locked in a contentious struggle over the proposal. According to several observers, including a State Department official familiar with the matter, Garner's efforts to help his Canadian employers preempt the oil law have undermined the already fragile possibility of a cohesive Iraq—which was, of course, what Garner was originally sent to Iraq in 2003 to achieve. Referring to Garner and his colleagues, the official says, "It's unfortunate that they are working for a company that is just adding fuel to the fire in disagreements between Baghdad and Erbil, but there's not much we can do about it."
When the Iraqi constitution was written, the sections relating to oil were, predictably, some of the most hotly contested, and they remain riddled with ambiguities. The Kurds successfully pushed for language limiting the central government's authority to current oil fields, as opposed to as-yet-unexplored ones. It's also unclear who has the power to actually award contracts; that was one of the matters left for the long-awaited oil law. Now, as a State Department legal adviser who worked on the draft told me, the ambiguities have "come home to roost."

What is clear is that each move by foreign companies into Kurdistan adds fresh discord to Iraq's volatile debate over federalism and oil. A poll released in August 2007 by a Washington, DC-based consulting firm found that more than 60 percent of Iraqis want their oil to be developed by the Iraqi state rather than foreign companies. More than 70 percent complained about a lack of transparency where proposed oil laws are concerned.

Baghdad has denounced most of the oil contracts signed by the KRG as "illegal," and has blacklisted the companies involved from future bids. In September, Iraq's oil minister, Hussein al-Shahristani, threatened that the oil law might never pass if Kurdistan doesn't cancel the contracts.

A stalemate on the oil law could be disastrous—not least for the Bush administration. That's why, the State Department official told me, Washington's policy is plain: "We do not support any company signing a deal before an oil law is in place."

The agreement the maladministration has been trying to put into place to keep President Obama's hands tied may just be unraveled by one of its own kind. The ironies growing out of this group of criminals all trying to get the most out of the U.S. treasury and all of its attendant troughs just grow and grow.

The primacy of greed and heedlessness of consequences that has characterized the maladministation is rife in its many former participants. The damage they can do has been displayed at large lately. The individuals running up their separate damages are going to be manifesting their misdeeds for some time to come.

The circular firing squad should give us some great reading sometime soon. If there's any solar energy for the light left to read by, that is.

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