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Compromise on Oil Law in Iraq Seems to Be Collapsing

by James Glanz
NEW YORK TIMES [1]

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 [2]. 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.