Home US & World News ANALYSIS: Behind the Iraqi political crisis lies the struggle over oil

ANALYSIS: Behind the Iraqi political crisis lies the struggle over oil

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In the wake of what his political opponents are calling Iraqi Prime Minister Nouri al-Maliki's bid for dictatorial power, "Iraqiya, the main Sunni-based parliamentary formation, is boycotting parliament and its ministers have walked out of Maliki’s cabinet," WSWS reported Friday.[1]  --  "[D]ifferent factions of the Iraqi elite battle over political and economic power in the wake of the departure of U.S. combat troops," Joseph Kishore and James Cogan said, making a mockery of Barack Obama's claim last week to be “leaving behind a sovereign, stable, and self-reliant Iraq, with a representative government that was elected by its people."  --  Kishore and Cogan also reviewed how "the sell-off of oil contracts to transnational energy corporations" is playing a role in the current crisis.  --  In its reporting, by contrast, the New York Times on Friday discreetly placed analysis of the Iraqi political crisis and discussion of the business of oil in Iraq in two separate articles that appeared in two separate sections.[2,3] ...



By Joseph Kishore and James Cogan

December 23, 2011


Bombings ripped through sections of Baghdad on Thursday, killing at least 63 people and injuring nearly 200.  The attacks, which mainly targeted Shiite Muslim areas, took place in the midst of intensifying sectarian conflicts, as different factions of the Iraqi elite battle over political and economic power in the wake of the departure of U.S. combat troops.

One of the deadliest attacks was from a suicide car bomb near the central government’s Integrity Commission building and the Christian Nuns Hospital, which killed 25 people and injured more than 60.  The combined death toll from the bombings made Thursday the deadliest day in Iraq in more than a year.

The bombings followed moves by the Iraqi central government led by Prime Minister Nouri al-Maliki, who heads the dominant Shiite Muslim bloc in the parliament, to politically destroy several prominent Sunni politicians.

On Monday, Iraq’s Judicial Council issued an arrest warrant for Vice President Tariq Al-Hashemi, charging him with coordinating bombing attacks and running an assassination squad to target Shiite officials.  Maliki is also seeking a parliamentary no-confidence vote to oust Deputy Prime Minister Saleh al-Multaq, the leader of a Sunni-based party.

Fuelling sectarian tensions, Maliki immediately suggested that his Sunni rivals were culpable for the blasts.  He stated:  “The timing of the crimes and the choice of their areas confirms again to all those in doubt the political nature of the objectives that these people want to achieve.”  No one has claimed responsibility for the attacks, though media speculation has focused on the Sunni-dominated groups associated with Al Qaeda.

Hashemi has taken refuge in the northern Kurdish region and publicly charged Maliki with seeking to consolidate dictatorial control over the country, comparing him to Saddam Hussein.  Iraqiya, the main Sunni-based parliamentary formation, is boycotting parliament and its ministers have walked out of Maliki’s cabinet.  The so-called “national unity” government established last year under U.S. pressure has effectively collapsed.

The Kurdish leadership is defying Maliki’s demands that they hand Hashemi over.  The Kurdish establishment has its own conflicts with the central government, mainly over control of oil-rich regions and the authority to sign contracts with foreign companies.

Earlier this month, President Obama declared that with the departure of American combat troops the U.S. was “leaving behind a sovereign, stable, and self-reliant Iraq, with a representative government that was elected by its people."

Nothing could be further from the truth.  First of all, the United States has not left Iraq.  It retains a 15,000-man embassy in Baghdad, with CIA operatives and an army of private mercenaries.  Tens of thousands of U.S. troops are based in neighboring states such as Kuwait and Bahrain, ready to intervene if necessary to assert U.S. interests.

The political crisis now unfolding is the direct product of the U.S. invasion and near nine-year occupation, during which sectarian divisions were consciously fomented in a policy of divide-and-rule.  The U.S. occupation regime elevated Shiite and Kurdish sections of the élite at the expense of the Sunni elements who dominated Saddam Hussein’s Baath Party.  The ensuing tensions reached a high point in 2006 and 2007, with daily bombings and rampant killings by death squads slaughtering tens of thousands of people, both Shiite and Sunni.

The country has been left crippled and fractured.  Over one million people lost their lives and more than 4.7 million have been turned into refugees or internally displaced persons -- in large part due to sectarian violence.  The social infrastructure has been decimated, and the majority of the population faces chronic unemployment and poverty.

In light of the revolutionary movement in Egypt and popular unrest across the region, sectarianism and communalism are being frenetically promoted by the Shiite, Sunni, and Kurdish elites in order to divide the Iraqi working class and oppressed.  It is a conscious attempt to channel social discontent into reactionary and fratricidal hatreds and conflict, in order to prevent a unified political struggle against every faction of the venal and corrupt ruling class.

The Sunni establishment has openly turned to promoting a de facto partition of the country in order to regain a degree of the power and privilege they once held.  Two predominantly Sunni-populated provinces, Salahaddin and Diyala, are demanding the same autonomous status as the Kurdish north, raising the possibility of the country fracturing into sectarian- and ethnic-based enclaves.  Before he was accused of terrorism, Hashemi had been vocally supporting Sunni autonomy, which the Shiite parties oppose.

The internal tensions within Iraq are entwined with the growing regional conflicts, stoked by the United States.  Maliki and his Shiite bloc have close relations with the Shiite regime in Iran.  They feel threatened by the growing anti-Iranian campaign in the region led by the U.S. and other imperialist powers.  The Iraqi Sunni groups, which are supported by Turkey, Saudi Arabia, and other Arab states, have developed ties with the opposition in Syria, which is seeking to oust the government of Bashar al-Assad, an Iranian ally.  The uprising within Syria is rapidly approaching the point of a full-scale civil war, with the European powers and the U.S. siding with the anti-Assad opposition.

The major factor propelling the U.S. invasion of Iraq and its intrigues through the Middle East -- control over oil -- is also at work in the conflicts within the Iraqi establishment.  The different factions, all of which collaborated with the U.S. occupation, are battling for as much influence over territory as possible, so they can benefit from the sell-off of oil contracts to transnational energy corporations.

The Kurdish Regional Government (KRG) in the north, which is currently protecting Hashemi, has signed a number of contracts with foreign companies, provoking furious opposition from Maliki’s government.  The Shiite parties are insisting that only the central regime in Baghdad, which they dominate, has the authority to auction off the country’s natural resources.

In October, U.S. energy giant ExxonMobil signed an agreement with the KRG for natural gas exploration in the Kurdish north.  The Maliki government responded by threatening to cut Exxon off from other agreements in the southern part of the country.  Last week, during a trip to the U.S., Maliki met personally with Exxon CEO Rex Tillerson and apparently reached an agreement that the company will sign a new contract that involves the central government.

The British newspaper Independent reported on Sunday that Exxon is seeking to purchase the Kurdish-focused Gulf Keystone Petroleum company.  Other companies, including Chevron, have indicated an interest in pursuing oil deals in the north.  In the majority Sunni western province of Anbar, the local élite are raising ever more strident calls for autonomy as it becomes clear that the Akaz gas field, being developed by South Korean transnational KOGAS, contains vast reserves.  Three more production contracts in the field are scheduled to be auctioned off in March 2012.

As rival ruling cliques wage their struggle, the great danger is that the sectarian and ethnic hysteria being used to try and align sections of the population behind them devolves into a murderous civil war.


Middle East


By Jack Healy

New York Times

December 23, 2011 (posted Dec. 22)


[PHOTO CAPTION: Iraqi security forces gathered Thursday at the scene of a car bomb attack in Baghdad. Bombings ripped across the city just days after American forces left Iraq.]

BAGHDAD -- A series of explosions ripped through Iraq’s capital on Thursday, an ominous turn for a country reeling from a deepening political and sectarian crisis that erupted after the departure of the United States military.  It was Baghdad’s deadliest day in more than a year.

The attacks began at 6:30 a.m. and transformed the morning commute into a bloodbath.  Car bombs and improvised explosives destroyed schools, markets, and apartments.  An ambulance packed with explosives incinerated a government office.  At least 63 people were killed and 185 wounded.

On Thursday night, four more blasts shook Baghdad, killing three more people.

There were fears that the precipitous withdrawal of American troops might lead to instability in Iraq, but [sic... shouldn't that be 'and'? --H.A.] the speed with which conditions have deteriorated has alarmed Western officials.  Until Thursday, however, the bitter fighting between Prime Minister Nuri Kamal al-Maliki, a Shiite, and his foes in Parliament had not been accompanied by a rise in violence.

But with this round of bombings, the political turmoil seemed to spill into the streets, where a still potent insurgency, in abeyance for some time, remains capable of mounting attacks that can undermine the fragile government and pit Sunnis against Shiites.

There was no immediate claim of responsibility for the attacks, but they appeared similar to others conducted by the largely homegrown Sunni insurgent group Al Qaeda in Iraq.

“This has nothing to do with the American withdrawal,” said Abdul Kareem Thirib, the head of the security committee for Baghdad’s provincial council.  “When they were here, there were also explosions.  We were the ones in control of the streets when the Americans were here.  I think there will be more cowardly attacks in the coming days, but we will face them and everything will be under control.”

Families lingering in hospital rooms blamed the political élite for bickering while civilians were dying.  Near the scene of the deadliest bombing, a woman hobbled to the hospital on bloodied legs.  When a man assisting her urged her into an ambulance, she said, “I don’t want anything from the government.”

A day earlier, Mr. Maliki added new tensions to the political climate by threatening to discard Iraq’s fragile power-sharing government.  He has never liked the American-backed arrangement, which yokes Iraq’s Sunnis, Shiites, and Kurds into an awkward partnership, but simply abandoning the idea could bring new howls of anger from Iraq’s Sunni minority and create more instability.

Mr. Maliki’s Shiite-led government set off a controversy this week when it accused the Sunni vice president, Tariq al-Hashimi, of running a death squad.  Although Iraqi officials have amassed what has been described as a strong case tying Mr. Hashimi’s bodyguards to a string of assassinations, there is scant evidence against Mr. Hashimi beyond the bodyguards’ confessions.  Mr. Hashimi has dismissed those as coerced.

The Kurdish regional government in Iraq’s semiautonomous north offered no sign on Thursday that it would heed Mr. Maliki’s demand that they surrender Mr. Hashimi, who fled there several days ago.  Mr. Hashimi, who has denied the government’s allegations, has refused to return to Baghdad, saying he cannot receive a fair trial there.

American officials were scrambling to defuse what has become an embarrassing and potentially destabilizing standoff.  The American ambassador rushed back to Baghdad after leaving before the holidays, and Vice President Joseph R. Biden Jr. spoke on Thursday with Iraq’s president, Jalal Talabani, urging a dialogue to resolve the crisis.  David H. Petraeus, the director of the Central Intelligence Agency and the former military commander in Iraq, arrived in Baghdad on Tuesday.

On Thursday, the Sunni Arab speaker of Parliament, Osama al-Nujaifi, urged the leaders of Iraq’s political factions to attend an emergency meeting on Friday afternoon.  But it was unclear who would show up.

The political tensions even colored how Iraq’s leaders responded to Thursday’s attacks.

Mr. Maliki strongly defended his security policies and political maneuvers, saying in a statement that the bombers “will not be able to change the course of the events and the political process.”  One of his main rivals, former Prime Minister Ayad Allawi, said in a Twitter message that “we hold the Government responsible for this security failure and the escalation towards violence.”

The carnage, however, was blind to Iraq’s sectarian divisions.  Car bombs and improvised explosives cut through both Sunni and Shiite areas, as well as mixed commercial neighborhoods, where new businesses and rebuilt shops have flowered in recent years.

In the day’s single deadliest attack, an ambulance packed with explosives slipped past police checkpoints and security barriers and exploded just outside the offices of the government’s Integrity Commission.  At least 23 people were killed, and witnesses said that more were still buried in heaps of charred concrete.

Medics and volunteers did not have enough stretchers for the wounded and dead, so they slung bleeding bodies into blankets.  Nearby apartment buildings were ripped apart, and store windows were shattered 10 blocks from the blast site.

A woman who had been searching for her son in the rubble of one blast learned of his death at the Ibn al-Nafiz hospital.  “My God, my God,” she screamed, running out of the emergency room.

Ali Suhail, 43, was opening his gleaming new electronics shop for the first time when the explosion hurled him to the ground and destroyed an investment years in the making.  “Everybody has a dream -- you need to open a store to achieve it,” he said, standing on a heap of broken glass.  “Now I have a new dream:  To leave this country.”

In the trauma center of Baghdad’s sprawling Medical City, which was treating some of the most gravely wounded, Ammar Thayaaldeen slouched in a chair, his brother’s blood drying on his blue button-down shirt.

Mr. Thayaaldeen said he had pulled his brother from the Integrity Commission’s offices, then turned around and dragged at least three other bodies from the rubble.

“There were more under the ruins,” he said.

--Michael S. Schmidt, Zaid Thaker and Duraid Adnan contributed reporting.


Energy & Environment


By Andrew E. Kramer and Julia Werdigier

New York Times

December 23, 2011 (posted Dec. 22)


[PHOTO CAPTION: A worker at West Qurna 1 oil field in southern Iraq. Exxon Mobil wants $50 million for work to improve the oil field, which will help Iraq get on its feet financially.]

The turmoil in Iraq after the United States troop withdrawal is extending to its vital petroleum industry.

The American oil giant Exxon Mobil and its partners are embroiled in a $50 million payment dispute with the Iraqi government over an oil field in southeastern Iraq that the companies are upgrading and modernizing.  The Shiite-led government of Prime Minister Nuri Kamal al-Maliki is also unhappy with Exxon over a separate development deal the company has struck with the leaders of the semiautonomous Kurdistan region in northern Iraq.

The Iraqi government’s failure to pay Exxon, the only American oil company operating in southern Iraq, for nearly two years of work underscores the perils for Western companies seeking to do business there.  The government has not explained why it has withheld the payments.

Any perception that the Iraqi government will not honor its oil contracts could also send ripples beyond Iraq to international markets worried about disruptions in petroleum supplies.  Iraq is expected to ramp up oil production faster than any other country in the next 25 years, adding five million barrels of oil per day of capacity by 2035, more than traditional leaders like Saudi Arabia, according to the International Energy Agency.

“The international oil companies are putting in the capital and expertise,” Alex Munton, a Middle East analyst for Wood Mackenzie, a research and consulting firm based in Edinburgh, said.  “They need to recover their costs and get a profit margin on top.  For it to work, they have to be paid what they are due.

“It would certainly serve Iraq’s interests well to have that contract working smoothly,” he added.

Exxon’s 2009 deal with the Iraqi government to improve production in the West Qurna 1 field was never expected to be lucrative under the best of circumstances.  The government had agreed to pay Exxon and its partners $1.90 for each additional barrel of oil they pumped after refurbishing the already producing field.  The fees would barely be enough to cover the companies’ costs.  Other deals between Iraq and foreign oil companies had similar terms.

International oil contracts are more typically structured to compensate companies with a percentage from sales or a share of production that takes into account the fluctuating price of oil, so that they can be more profitable for the companies when prices rise.

Western oil companies, shut out of Iraq’s oil fields for decades under the government of Saddam Hussein, were willing to do the low-profit, technical service deals to get a foot in the door with the new government that was put in place after the American-led invasion in 2003.  Only a few dozen of Iraq’s 80 or so discovered fields are in production, and the government has suggested that it would give more lucrative agreements later to companies that helped the country early on.

For most of the nearly nine-year war, American government advisers aided Iraqi ministries in negotiating and fulfilling contracts.  That tapered off as Iraq assumed more sovereignty. President Obama, in a meeting this month with Mr. Maliki in Washington, said Iraq was now a country “sovereign, self-reliant and democratic.”

Exxon and its minority partners in the project -- which include the Anglo-Dutch oil giant Shell -- increased output in the West Qurna field by more than 10 percent by last March.  That was the trigger point for the Iraqi government to begin paying the companies for their work.

But the payments have not been made, according to Hans Nijkamp, Shell’s country manager for Iraq.

“There are a lot of admin-type issues that we’re working through with the government,” Mr. Nijkamp said in an interview.

He said Shell did not believe the delays were deliberate and that the issues would eventually be resolved.

An Exxon Mobil spokesman declined to comment, saying the company has a policy of not discussing commercial matters.

The Iraqi government awarded 11 oil and natural gas contracts for fields at auctions beginning in 2008.  Two other consortiums that won deals and have since raised output by more than 10 percent -- those led by BP of Britain and Eni of Italy -- have been compensated.

BP said that, together with partners, it has been paid in kind in oil.  Eni is also taking crude as payment.

Western oil service companies, including the American giants Halliburton and Baker Hughes, have also made substantial profits working in Iraqi oil fields.

Mr. Nijkamp said that Shell was working to smooth over the flaws in its Iraqi technical service contracts before another field it was developing, Majnoon, entered commercial production by the end of next year.

“We’re working with South Oil Company and the Oil Ministry to get the invoicing process up to scratch until then,” he said.

Faisal Abdullah, a spokesman for Iraq’s deputy prime minister in charge of energy, Hussain al-Shahristani, confirmed in an interview in Baghdad in November that the government owed a payment to the Exxon-led consortium, but he did not characterize it as late.

“Exxon has increased output and a small amount of money has not been paid,” Mr. Abdullah said.  He said the government had not paid Exxon about $50 million, a figure that roughly conforms with estimates by Western oil analysts.

Mr. Abdullah described the delay in paying America’s largest oil company as bureaucratic and unrelated to the dispute over exploration contracts in Kurdistan that Exxon signed in November.

However, that deal has caused great consternation.  The central government considers deals in Kurdistan illegal.  Without an oil law to split petroleum wealth, these agreements are worsening an already poisonous ethnic divide between Kurds and Arabs, officials in Baghdad say.

Mr. Abdullah said that Exxon executives had expressed concerns to officials in Baghdad about the profitability of the West Qurna 1 contract before striking the deal in Kurdistan, suggesting that the Texas-based company was dissatisfied with the deal.

“They said ‘We are not getting enough profit from West Qurna 1,’” Mr. Abdullah said.  “But that is not true. It is a very big field.”

Iraqi officials say they cautioned Exxon not to sign the deal in Kurdistan, even as they were apparently withholding payment for the work in the south.

Ali al-Fayadh, the deputy chairman of the oil committee in the Iraqi Parliament, said in an interview in his Baghdad office that the government was considering banning Exxon from working in southern Iraq because the company had signed the deal in Kurdistan.

A decision has not yet been made, Mr. Fayadh said.  The government could prohibit Exxon from participating in future auctions or end its contract for West Qurna 1, he said.

If that happened, it would mean the only major American oil company operating in Iraq would be expelled on the heels of the United States military’s departure.

Oil companies are expected to invest $150 billion in Iraq in the next decade.  The payment delay to the Exxon coalition highlights the quandary they face.

Though eager to gain access to reserves estimated at 115 billion barrels, the fourth-largest in the world, companies are initially required to invest large sums with only tiny early returns and major risks.

Insurgents have not generally targeted their bombs at international oil companies, which are ensconced in well-guarded compounds.  But the companies are worried that schisms within the fracturing government would cause the administration of contracts to grind to a halt, delaying payments and regulatory decisions.

“We’re entering a period of uncertainty,” said Mr. Munton, the Wood Mackenzie analyst. “The last few days do not bode well for political stability in the country.”

--Omar al-Jawoshy contributed reporting.


Last Updated on Friday, 23 December 2011 18:18  

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