Compromise on Oil Law in Iraq Seems to Be Collapsing

 New York Times

BAGHDAD, Sept. 12 —

 

A carefully constructed compromise on a draft law governing Iraq’s
rich oil fields, agreed to in February after months of arduous talks
among Iraqi political groups, appears to have collapsed. The apparent
breakdown comes just as Congress and the White House are struggling to
find evidence that there is progress toward reconciliation and a
functioning government here.

Senior Iraqi negotiators met in Baghdad on Wednesday in an attempt
to salvage the original compromise, two participants said. But the
meeting came against the backdrop of a public series of increasingly
strident disagreements over the draft law that had broken out in recent
days between Hussain al-Shahristani, the Iraqi oil minister, and
officials of the provincial government in the Kurdish north, where some
of the nation’s largest fields are located.

Mr. Shahristani, a senior member of the Arab Shiite coalition that
controls the federal government, negotiated the compromise with leaders
of the Kurdish and Arab Sunni parties. But since then, the Kurds have
pressed forward with a regional version of the law that Mr. Shahristani
says is illegal. Many of the Sunnis who supported the original deal
have also pulled out in recent months.

The oil law — which would govern how oil fields are developed
and managed — is one of several benchmarks that the Bush
administration has been pressing the Iraqis to meet as a sign that they
are making headway toward creating an effective government.

Again and again in the past year, agreement on the law has been
fleetingly close before political and sectarian disagreements have
arisen to stall the deal.

One of the participants in Wednesday’s meeting, Deputy Prime
Minister Barham Salih, who has worked for much of the past year to push
for the original compromise, said some progress had been made at the
meeting, but that he could not guarantee success.

“This has been like a roller coaster,” said Mr. Salih,
who is Kurdish. “There were occasions where we seemed to be
there, where we seemed to have closure, only to fail at that.”

“Given the seriousness of the issue, I don’t want to
create false expectations, but I can say there is serious effort to
bring this to closure,” he said.

The legislation has already been presented to the Iraqi Parliament,
which has been unable to take virtually any action on it for months.
Contributing to the dispute is the decision by the Kurds to begin
signing contracts with international oil companies before the federal
law is passed. The most recent instance, announced last week on a
Kurdish government Web site, was an oil exploration contract with the
Hunt Oil Company of Dallas.

The Sunni Arabs who removed their support for the deal did so, in
part, because of a contract the Kurdish government signed earlier with
a company based in the United Arab Emirates, Dana Gas, to develop gas
reserves.

The Kurds say their regional law is consistent with the Iraqi
Constitution, which grants substantial powers to the provinces to
govern their own affairs. But Mr. Shahristani believes that a sort of
Kurdish declaration of independence can be read into the move.
“This to us indicates very serious lack of cooperation that makes
many people wonder if they are really going to be working within the
framework of the federal law,” Mr. Shahristani said in a recent
interview, before the Hunt deal was announced.

Kurdish officials dispute that contention, saying that they are
doing their best to work within the Constitution while waiting for the
Iraqi Parliament, which always seems to move at a glacial pace, to
consider the legislation.

“We reject what some parties say — that it is a step
towards separation — because we have drafted the Kurdistan oil
law depending on Article 111 of the Iraqi Constitution, which says oil
and natural resources are properties of Iraqi people,” said Jamal
Abdullah, a spokesman for the Kurdistan Regional Government.
“Both Iraqi and Kurdish oil laws depend on that article,”
Mr. Abdullah said.

The other crucial players are the Sunnis and Prime Minister Nuri Kamal al-Maliki.
Some members of one of the main Sunni parties, Tawafiq, which insists
on federal control of contracts and exclusive state ownership of the
fields, bolted when it became convinced that the Kurds had no intention
of following those guidelines.

But the prime minister’s office believes there is a simpler
reason the Sunnis abandoned or at least held off on the deal: signing
it would have given Mr. Maliki a political success that they did not
want him to have. “I think there is a political reason behind
that delay in order not to see the Iraqi government achieve the real
agreement,” said Sadiq al-Rikabi, a political adviser to Mr.
Maliki. Mr. Rikabi was at Wednesday’s meeting.

Ali Baban, who as a senior member of Tawafiq negotiated the
compromise, said that allegation was untrue. “I have a good
relationship” with Mr. Maliki, he said. “This is an issue
of Iraqi unity. This could cause a split in this country.”

Mr. Maliki has suggested returning to the original language agreed
to in February and trying once again to push the law through
Parliament. Mr. Salih says there is basic agreement on returning to
that language, but conceded that Sunni participants in
Wednesday’s meeting might insist on a deal that includes changes
to the Iraqi Constitution to safeguard their interests in the
distribution of revenues. A law on how the revenue should be shared is
being developed as a critical companion piece of legislation to the
draft law.

The central element of the compromise was agreed to in February
after months of difficult negotiations among Iraq’s political
groups.

The main parties in those negotiations were Iraqi Kurds, who were
eager to sign contracts with international oil companies to develop
their northern fields; Arab Shiites, whose population is concentrated
around the country’s southern fields; and Arab Sunnis, with fewer
oil resources where they predominate.

Those facts meant that the compromise law had to satisfy both the
Sunni insistence that the central government maintain strong control
over the fields as well as the push by the Kurds and Shiites to give
provincial governments substantial authority to write contracts and
carry out their own development plans.

Somehow negotiators managed to strike that balance, but soon after,
the agreement began to crumble. Many of the negotiations centered on a
federal committee that would be set up to review the contracts signed
with oil companies to carry out the development and exploitation of the
fields. The Kurds objected to any requirement that the committee would
have to approve contracts. So in a nuanced bit of language, the
negotiators gave the committee the power only to reject contracts that
did not meet precisely specified criteria.

But problems immediately cropped up after the cabinet approved the
draft law and, in what seemed to be a perfunctory step, it went to a
council that was supposed to hone the language to be sure it complied
with Iraqi legal conventions.

When the draft emerged from that council, the members of some
parties, particularly the Kurdish ones, thought that the careful
balance struck in the draft had been upset, and they accused Mr.
Shahristani of meddling. Then the law languished in Parliament and,
said Hoshyar Zebari, the Iraqi foreign minister, the Kurds decided to
send a signal that they would not wait indefinitely and signed the
contract with Dana Gas.

“It served as a reminder: ‘If you keep stalling, life goes on,’ ” said Mr. Zebari, who is Kurdish.

On Monday the Kurdistan Regional Government, or K.R.G., issued
another rejoinder to the oil minister’s views that the
Kurds’ moves were illegal. “His views are irrelevant to
what the K.R.G. is doing legally and constitutionally in
Kurdistan,” the regional government said.

Mr. Shahristani was apparently traveling and did not respond to
e-mail messages sent Wednesday. But Saleem Abdullah al-Juburi, a
Tawafiq member who participated in Wednesday’s meeting, gave his
own assessment of the Kurdish agreements with Hunt and Dana Gas.
“The contracts are not legal,” he said.

Reporting was
contributed by Ahmad Fadam, Ali Hamdani and Khalid al-Ansary from
Baghdad, and an Iraqi employee of The New York Times from northern Iraq.

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