The Disintegration Of Iraq  

Time for an update on the infamous proposed Iraq oil law:

The Guardian reports that the oil law is stalled in Parliament, with oil minister Sharistani admitting there is "no sign of movement".

UPI reports that Ireland's Petrel Resources wants to develop a block in the western desert under a Saddam era law (containing a measly 5 billion barrels or so).

Ireland's Petrel Resources expects a production-sharing agreement for a deal it signed with Saddam Hussein for a block in Iraq's western desert. David Horgan, managing director of Petrel Resources, said the exploration and production deal will give the firm "a net production interest in Block 6 of 25 to 35 percent." "It now looks like the existing hydrocarbon laws will be used with PSA agreements in Southern Iraq," he told the British-based investment news site Proactive Investors. "Any new contracts will include local infrastructure and possibly paying some revenues to local charities." Petrel predicts 5 billion barrels of oil are to be found in the block. ...

The draft oil law remains stuck as Iraq's Kurdistan Regional Government and Baghdad differ on how decentralized control over the oil should be. PSAs themselves are controversial. They are highly favored by international oil companies that are reimbursed for all costs and then get a cut of the oil itself, as well as able to claim the reserves when reporting to Wall Street. Iraq's oil sector is nationalized and Iraq's unions, among others, don't want international oil companies to have the footprint in Iraq PSAs would offer. Iraq's oil fields have excellent find rates for exploration, and the oil is easy to produce and of high quality. "We expect to be invited soon to discuss Block 6," Horgan said, adding the block has shown to have easy to reach oil. "If we sign by summer we will deploy a seismic crew over the winter 2008/9, allowing a well the following winter."

The Washington Post has an article demonstrating its role as the US version of Pravda, piously echoing the party line about the proposed law "helping the Iraqis to share the revenue among themselves" (splutter). The Iraqi administration is trying to just go around parliament it seems - its just like democracy in the US really !

Iraq's cabinet has given the green light to the Oil Ministry to sign agreements with international oil companies to help increase the nation's crude output, a ministry official said Wednesday. The two-year deals, known as technical support agreements, or TSAs, are designed to develop five producing fields to add 500,000 barrels per day to the country's 2.4 million barrels per day output. Last December, Royal Dutch Shell PLC, BP PLC, ExxonMobil Corp. and Chevron Corp. submitted technical and financial proposals for the five fields and received counterproposals from the Iraqi side.

In January, representatives from the companies and Iraq met again in Amman, Jordan, and they will hold a third round of discussions later this month, said the official, who spoke on condition of anonymity because he was not authorized to release information. In Vienna, Iraq's Oil Minister Hussein al-Shahristani said Iraq intends to compensate these companies with crude oil rather than in cash, the Dow Jones Newswires reported Wednesday. ...


The oil giants are among more than 70 international firms that met the ministry's deadline of Feb. 18 to compete to help develop Iraq's oil reserves, seen as vital to providing the funds to rebuild the shattered country. Iraq is in dire need of expertise from international oil companies to achieve the Oil Ministry's target of 3 million barrels per day by the end of 2008. The country has been relying on a Saddam Hussein-era natural resources law until Parliament approves a new oil law to regulate the international oil companies' work and share Iraq's oil resources among the country's Shiites, Sunni Arabs and Kurds.

Shameless Democrat Senator Carl Levin is making the bizarre claim that Iraqis should pay for all the damage caused by the US invasion with what little oil revenue they are allowed to keep - which will apparently simply formalise the petrodollar recycling that is already taking place (one of the few remaining supports for the sagging US dollar).

The chairman of the U.S. Senate Armed Services Committee said on Tuesday he may try to require Iraq to spend more of its oil revenue on reconstruction instead of investing the money in foreign banks. "What kind of an absurdity is it that we are paying for the reconstruction of Iraq with American taxpayers dollars if Iraqi oil sales, to a significant degree, are going into foreign banks and not being used for their own reconstruction," said Sen. Carl Levin, a Michigan Democrat. Before the U.S. invasion of Iraq in early 2003, top Bush administration officials suggested some war costs could be financed through Iraqi oil revenues. That never occurred and U.S. taxpayers have instead seen about a half-trillion dollars of their money spent on the war so far.

In the meantime, there are estimates that Iraq has up to $30 billion in assets invested in U.S. financial institutions. Levin said he would ask Congress' investigative arm, the General Accountability Office, or others in the U.S. government to look into Iraq's use of oil revenues. He said he would decide after such an investigation whether to use this year's appropriations process to force Baghdad to change its financial practices.

Levin said Congress could condition future war funds on Iraq using its own revenues for reconstruction, reducing the burden on U.S. taxpayers. According to government estimates, Congress has given the Bush administration $16 billion for reconstruction and relief efforts in Iraq. "They (Iraq) are selling about $50 billion a year in oil. What are they doing with all the money?", Levin asked.

Sending it straight back to you, mate.

Energy Investment Strategies has an article on a book outlining what few seem willing to publically recognise - Iraq has more oil than Saudi Arabia (Ace at TOD has a scathing look at Aramco's PR practices, by the way).

A new book written by a team of experts provides a field-by-field detailed explication of the thesis that Iraqi oil reserves are substantially greater than previously thought. The proven reserves were officially put at 112 billion barrels in 2007 but the final figure could exceed 300 billion barrels. The proven reserves of the Kurdish region are expected to double within the next two years.

Iraq currently produces just over 2 mb/d, down from 2.5 mb/d prior to the U.S. invasion. The authors believe it could boost production to 3.5 mb/d before the impact of a new oil law is felt. They suggest that a 1980’s-vintage plan to produce 6 mb/d could eventually become realized. An initial investment of $40 billion (Dh146.8bn) is needed to put Iraq’s oil industry back on track, according to a new book.

The country is an oil superpower with the world’s third largest proven reserves – and development programmes could add billions of barrels within a few years, catapulting it to the number one position. But three major wars and more than 12 years of crippling UN sanctions have reduced the Arab state to a minor crude exporter despite the fact it is one of a handful of countries with super-giant oilfields. Meanwhile, other countries with much smaller hydrocarbon resources have become major oil exporters.

“Plans were prepared in the early 1980s to increase the production capacity to six million barrels per day (bpd) had three wars not taken place in 1980-1988, 1991 and 2003,” say the authors of the book, Hydrocarbon Exploration and Field Development in Iraq. “The looting and vandalism that followed the two Gulf wars caused great damage to oil installations. UN sanctions against Iraq added further damage due to the difficulties created in getting spare parts and in performing well services. The pre-2003 production capacity has not recovered.”

Between 1980 and 2005 Iraq suffered a loss of more than $400bn in oil revenues as a result of a massive decline in crude exports. The total loss has risen sharply over the past two years as exports remain far below target, says Fadhil Chalabi, Executive Director of the London-based Centre for Global Energy Studies (CGES), which published the 600-page book. The centre is owned by former Saudi oil minister Sheikh Ahmed Zaki Al Yamanai.
The losses reflect only the decline in oil exports calculated on a monthly price basis since the start of the Iraq-Iran war in 1980 – they do not include damage to the sector caused by conflicts, the UN embargo and looting.

Chalabi, a former senior Iraqi oil ministry official, believes the country has huge undiscovered reserves on the grounds but no major development projects have been undertaken for more than two decades. The proven reserves were officially put at 112 billion barrels in 2007 but Chalabi believes the final figure could exceed 300 billion barrels. “Iraq could have this figure, there is no exaggeration in this,” he said. His view is supported by a Western oil analyst who goes even further by saying Iraq’s real oil potential could surpass that of Saudi Arabia, which controls nearly a quarter of the world’s proven oil deposits.

Colin Lothian, a senior analyst at United Kingdom-based energy consultants Wood Mackenzie, says Iraq has many giant oilfields that have remained undeveloped. “Iraq’s remaining reserves, particularly in the south, are of considerable scale, high quality and most are at a relatively immature stage in their respective development cycles,” said Lothian. There are many fields that each contain billions of barrels of oil.

“On the whole their depletion rate is very low and in several cases these fields have never been in production. If you add to that the possible results of exploration in the Western Desert and in established areas, the potential is enormous. As for whether Iraq’s reserves are larger than those in Saudi Arabia, I would certainly not rule out that possibility.

Jonathan at Past Peak points to a Patrick Cockburn article on the situation on the ground in Iraq, in the wake of the "surge".

Patrick Cockburn, in The Independent, writes that the Turkish invasion of northern Iraq only accelerates Iraq's ongoing disintegration. Excerpts:

Iraq is disintegrating faster than ever. The Turkish army invaded the north of the country last week and is still there. Iraqi Kurdistan is becoming like Gaza where Israel can send in its tanks and helicopters at will.

The US, so sensitive to any threat to Iraqi sovereignty from Iran or Syria, has blandly consented to the Turkish attack on the one part of Iraq which was at peace. The Turkish government piously claims that its army is in pursuit of PKK Turkish Kurd guerrillas, but it is unlikely to inflict serious damage on them as they hide in long-prepared bunkers and deep ravines of the Kurdish mountains. What the Turkish incursion is doing is weakening the Kurdistan Regional Government, the autonomous Kurdish zone, the creation of which is one of the few concrete achievements of the US and British invasion of Iraq five years ago.

One of the most extraordinary developments in the Iraqi war has been the success with which the White House has been able to persuade so much of the political and media establishment in the US that, by means of "the Surge", an extra 30,000 US troops, it is on the verge of political and military success in Iraq. All that is needed now, argue US generals, is political reconciliation between the Iraqi communities.

Few demands could be more hypocritical. American success in reducing the level of violence over the last year has happened precisely because Iraqis are so divided. The Sunni Arabs of Iraq were the heart of the rebellion against the American occupation. In fighting the US forces, they were highly successful. But in 2006, after the bombing of the Shia shrine at Samarra, Baghdad and central Iraq was wracked by a savage civil war between Shia and Sunni. In some months the bodies of 3,000 civilians were found, and many others lie buried in the desert or disappeared into the river. I do not know an Iraqi family that did not lose a relative, and usually more than one.

The Shia won this civil war. By the end of 2006 they held threequarters of Baghdad. The Sunni rebels, fighting the Mehdi Army Shia militia and the Shia, dominated the Iraqi army and police, and also under pressure from al Qa'ida, decided to end their war with US forces. They formed al-Sahwa, the Awakening movement, which is now allied to and paid for by the US.

In effect Iraq now has an 80,000 strong Sunni militia which does not hide its contempt for the Iraqi government, which it claims is dominated by Iranian controlled militias. The former anti-American guerrillas have largely joined al-Sahwa. The Shia majority, for its part, is determined not to let the Sunni win back their control of the Iraqi state. Power is more fragmented than ever. [...]

[I]n the long term neither Sunni nor Shia Arab want the Americans to stay in Iraq. Hitherto the only reliable American allies have been the Kurds, who are now discovering that Washington is not going to protect them against Turkey.

Very little is holding Iraq together. The government is marooned in the Green Zone. Having declared the Surge a great success, the US military commanders need just as many troops to maintain a semblance of control now as they did before the Surge. The mainly Shia police force regards al-Sahwa as anti-government guerrillas wearing new uniforms.

Meanwhile, the most any American presidential candidate will say is that the US attack on Iraq was a "mistake," a "strategic blunder," instead of what it is: a vicious crime that has destroyed a nation and inflicted incalculable suffering on its inhabitants. It's happening to real people, in a real place, now, as you read this.

The Huffington Post has a look at the enormous cost of our oil war - now estimated to be around 3 trillion dollars - sure could pay for a lot of renewable energy infrastructure with that money - "The $3,000,000,000,000 War is a Domestic Issue".

As our seemingly endless primary process reaches the homestretch and the focus shifts to the general election, we need to pull the plug on the media's disturbing habit of acting as if foreign policy and domestic policy are completely separate entities -- a pair of high stakes board games that can only be taken off the shelf and played one at a time. To hear the media tell it, combining the two would make about as much sense as using your Monopoly pieces to play Risk.

But while there is almost nothing about the Iraq war that can be labeled a success, we can declare that it has been exceedingly successful in showing how intertwined foreign and domestic policy actually are. In the book The Three Trillion Dollar War: The True Cost of the Iraq Conflict, Nobel Prize-winning economist Joseph Stiglitz, along with co-author Linda Bilmes, argue that, even using "conservative assumptions," the Iraq war will cost at least $3,000,000,000,000, and likely as much as $5,000,000,000,000.

Stiglitz also argues that the war has played a major role in the current subprime credit crisis and our long, hard slog toward recession. Because of the cost of the war, the Fed flooded the system with credit. "The regulators were looking the other way and money was being lent to anybody this side of a life-support system," Stiglitz told The Australian's Peter Wilson.

The book (excerpted here by the Times of London, and here's an interview with the authors at Democracy Now) notes that the cost is 60 times the $50 - 60 billion we were told the war would cost by Don Rumsfeld. The Iraq war is already the second costliest war in American history, trailing only World War II.

Stiglitz makes the case that no country can fight a protracted war without deep and long-lasting effects on domestic policy. Particularly a protracted war paired with tax cuts. Now this doesn't mean a war shouldn't be fought (see World War II), but it does mean that our leaders should be honest about what the real costs will be. And not just in terms of dollars and cents but also in opportunity costs.

The single defining constant of the war over its disastrous, almost-five-years has been the complete and total lack of honesty from those who got us into it and have championed its continued prosecution -- including head war cheerleader John McCain. And although the driver of the 100 Year War Express is fond of offering frequent, empty, and clichéd nods to "sacrifice," he somehow thinks that's all the discussion that's needed about the costs of the war. Note to McCain: your protestations about "out of control" government spending would carry more weight if they weren't accompanied by calls for making permanent the tax cuts you once opposed as "not appropriate" in a time of war.

Maybe Saddam Hussein's head was worth $3,000,000,000,000 -- $5,000,000,000,000, maybe it wasn't (like most of the country, I believe the latter), but if McCain wants us to be there for 100, or 1,000, or a million years, he should be forced to make the case that the benefits outweigh the costs -- foreign and domestic.

As Crooked Timber's Daniel Davies notes, "the cost of the Iraq War could have underwritten Social Security for fifty years."

Or, as Aida Edemariam puts it in the Guardian, it would have paid for "8 million housing units, or 15 million public school teachers, or healthcare for 530 million children for a year, or scholarships to university for 43 million students." Of course, as John McCain himself has told us, he "doesn't really understand economics." But foreign policy does not exist in an economics vacuum.

Yet does anybody doubt that the general election is going to feature article after newscast after editorial extolling McCain's "foreign policy expertise?"

TomDispatch has a column from William Hartnung on "The Cost of a Week in Hell".

How far off were they? Well, it depends on which figure you choose to start with. Here's the range: According to key officials in the Bush administration back in 2002-2003, the invasion and reconstruction of Iraq was either going to cost $60 billion, or $100-$200 billion. Actually, we can start by tossing that top figure out, since not long after Bush economic advisor Larry Lindsey offered it in 2002, he was shown the door, in part assumedly for even suggesting something so ludicrous.

Deputy Secretary of Defense Paul Wolfowitz championed the $60 billion figure, but added that much of the cost might well be covered by Iraqi oil revenues; the country was, after all, floating on a "sea of oil." ("To assume we're going to pay for it all is just wrong," he told a congressional hearing.) Still, let's take that $60 billion figure as the Bush baseline. If economists Joseph Stiglitz and Linda Bilmes are right in their recent calculations and this will turn out to be more than a $3 trillion war (or even a $5-7 trillion one), then the Bush administration was at least $2,940,000,000,000 off in its calculations.

That definitely qualifies as a ballpark figure for an administration that never saw a budget estimate for one of its imperial dreams that it couldn't hike. Take just one of its major "reconstruction" projects: getting the vast U.S. embassy staff out of a former palace of Saddam Hussein and into a brand-new, almost Vatican-sized "embassy," a genuine mother ship, being built from the ground up inside Baghdad's heavily fortified (and often heavily shelled) Green Zone. Originally scheduled to open in mid-2007, what will undoubtedly be the largest "diplomatic" mission on the planet was initially budgeted for $592 million. Predictably, its price tag soared another $144 million, and now comes in at $736 million, as yet unopened. In December 2007, the State Department officially certified it "substantially complete," but, as with most Bush administration construction projects in that country, it remains in a state of staggering unreadiness; two of the State Department employees who worked on it are now "under criminal investigation"; and the State Department is dragging its feet about handing over relevant documents to Congress. Ho-hum.

Nothing, of course, has been cheap for American taxpayers who are financing the Bush administration's war policies. It's been like putting up money for an administration staffed by shopaholics let loose in Neiman Marcus or gambling addicts freed to roam Las Vegas with no betting limits.

But what does money matter? After all, this administration has been spending as if there were no tomorrow. And now, with tomorrow staring them in the face, the latest scare tactic seems to be claiming that doing anything about present policies will simply be… too expensive. Not long after the price of oil crested above $103 a barrel, Karl Rove, for instance, predicted that any serious "redeployment" from Iraq would mean… $200 a barrel oil.

Sigh… Fortunately, we've got William Hartung, director of the Arms and Security Initiative at the New America Foundation, to try to put Bush spending policies in its wars of choice into perspective. ...

Also at TomDispatch, an article from Noam Chomsky on "Terrorists Wanted the World Over".

One of Noam Chomsky's latest books -- a conversation with David Barsamian -- is entitled What We Say Goes. It catches a powerful theme of Chomsky's: that we have long been living on a one-way planet and that the language we regularly wield to describe the realities of our world is tailored to Washington's interests.

Juan Cole, at his Informed Comment website, had a good example of the strangeness of this targeted language recently. When Serbs stormed the U.S. Embassy in Belgrade, he offered the following comment (with so many years of the term "Islamofascism" in mind): "…given that the Serbs are Eastern Orthodox Christians, will the Republican Party and Fox Cable News now start fulminating against 'Christofascism?'"

Of course, the minute you try to turn the Washington norm (in word or act) around, as Chomsky did in a piece entitled What If Iran Had Invaded Mexico?, you've already entered the theater of the absurd. "Terror" is a particularly good example of this. "Terror" is something that, by (recent) definition, is committed by free-floating groups or movements against innocent civilians and is utterly reprehensible (unless the group turns out to be the CIA running car bombs into Baghdad or car and camel bombs into Afghanistan, in which case it's not a topic that's either much discussed, or condemned in our world). On the other hand, that weapon of terror, air power, which is at the heart of the American way of war, simply doesn't qualify under the category of "terror" at all -- no matter how terrifying it may be to innocent civilians who find themselves underneath the missiles and bombs.

It's with this in mind that Chomsky turns to terror of every kind in the Middle East in the context of the car bombing of a major figure in Lebanon's Hizbollah movement. ...