EFLtrainer
Joined: 04 May 2005
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 Posted: Sat May 26, 2007 10:28 am Post subject: Kucinich Speaks: Iraqi Oil |
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The Truth About Oil and Iraq (Dennis Kucinich speaking from the Floor of the House)
[Ed. note: Congressman Kucinich invoked a rarely used House rule of personal privilege to gain one hour of time in Congress for the purpose of discussing in detail the Congressional and White House efforts to privatize the oil of Iraq.]
Mr. Speaker, there is an issue of critical importance facing this Congress, and that issue relates to whether or not this Congress should pass legislation to continue to fund the war in Iraq.
The legislation contains a particular provision that would lead to the privatization of Iraq's oil, a provision that I'm quite concerned about, because I think that if we take that position, it will make it very difficult for us to ever be able to end the war.
So today I'm going to lay out the case as to why this provision that's in the bill would advance privatization and as to what the options are for this Congress.
The administration has emphasized only a small part of this law, what they call the "fair distribution," that's in quotes, of oil revenues.
I want this House to consider the fact that this Iraqi hydrocarbon law contains a mere three sentences that generally discusses the so-called fair distribution of oil.
Except for three scant lines, the entire 33-page hydrocarbon law is about creating a complex legal structure to facilitate the privatization of Iraqi oil.
...Now, I have maintained from the beginning that the war has been about oil. We must not be a party to any attempt to set the stage for multinational oil companies to take over Iraq's oil resources.
...Many inside the Beltway are contemplating linking funding for the war in Iraq to the completion of these benchmarks, including passage of the hydrocarbon law by the Parliament.
Now, the war in Iraq is a stain on American history. Let us not further besmirch our Nation by participating in an outrageous exploitation of a nation which is in shambles due to the U.S. intervention.
The legislation contains only three sentences in regards to the fair distribution of oil, but does not resolve any of the issues facing this challenge. The legislation simply requires that future legislation be submitted for approval;
...The legislation ensures that "chief executives of important related petroleum companies," follow that now, "chief executives of important related petroleum companies" are represented on a Federal Oil and Gas Council, which approves oil and gas contracts. This is akin to foreign oil companies approving their own contracts.
This legislation ensures that the Iraqi National Oil Company, which is the oil company of the people of Iraq, has no exclusive rights for the exploration, development, production, transportation, and marketing.
The legislation ...directs the Federal Oil and Gas Council, which is run by chief executives of oil companies, it directs them to turn these assets over to any entity with no further instructions.
The opportunity for a foreign oil company to have control over the Iraqi oil pipeline and export terminals would give that company enormous control of the Iraqi oil market.
The legislation does not require contracts to be published for public review for up to 2 months after approval. The legislation provides for up to 35 years of exclusive control over oil fields for foreign oil companies. ...disputes between the State of Iraq and any foreign investors ...will not be decided upon by an Iraqi court.
And I might add that when you look at this, out of about 98 oil fields ...the foreign oil companies will have control of about 80, 81 of those oil fields, or over 80 percent of Iraqi oil under this agreement will be controlled by foreign oil interests.
Christian Science Monitor of May 18, 2007, in an article entitled "How Will Iraq Share the Oil?" In the U.S., the demand that Iraq pass an oil law is a benchmark that is becoming a flash point. Here's the quote.
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"The actual law has nothing to do with sharing oil revenue," says former Iraqi Oil Minister Issam Al Chalabi, in a phone interview from Amman, Jordan. The law aims to set a framework for investment by outside oil companies, including favorable production-sharing agreements that are typically used to reward companies for taking on risk, he says.
..."Iraqis will say this is solid proof that Americans have staged the war ... because of this law."
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...Dow Jones Newswires of March 4, 2007, the headline: "Iraq Oil Law Details Untouched Fields, Blocks -- Document." And the text says:
"Iraq's draft hydrocarbon law, the centerpiece in the development of the country's shaky oil industry, details dozens of untouched oil fields loaded with proven reserves and scores of exploration blocks that may prove a magnet to international oil companies, according to a document seen by Dow Jones Newswires."
In an article from the Dow Jones Newswires again, on March 10, 2007, the headline: "Some Iraqi Politicians Urge Rejection of Draft Oil Law." Here's the text:
"The law, if passed, is expected to open the country's billions of barrels of proven oil reserves, the world's third largest, to foreign investors."
From an article from the American Lawyer, April 25, 2007, "Our Man in Iraq." Here is the text:
"Under the new law, the Iraq National Oil Company would have exclusive control of only about 17 of Iraq's approximately 80 known oil fields."...Under the proposed law, foreign companies would not have to invest their earnings in Iraq, hire Iraqi workers, or partner with Iraqi companies."
Next, from the U.S. Morning Star Online, January 28, 2007, headlined "Iraqi Officials Insist Oil Law Won't Favor U.S."
"The proposal would provide for production-sharing agreements that would give international firms 70 percent of the oil revenues to recover their initial investments and subsequently allow 20 percent of the profits without any tax or restrictions on transferring the funds abroad."
This from CommonDreams.org, April 18, 2007, entitled "Time to Do the Math in Iraq":
"The most notable feature of the law is a revival of exploitive type of contact widely used prior to the rise of Arab nationalism in the 1960s, known as a production sharing agreement. Although the Oil Law uses an alternative term, 'exploration and production contract,' the effect is identical. The new arrangement would allow the bulk of Iraq's reserves to be controlled by outside oil companies, privatizing what until now has been a nationalized resource under the auspices of the Iraq National Oil Company. It specifies the royalty that will be paid to Iraq: '12.5 percent of gross production, measured at the entry flange to the main pipeline.' And as if the rest of the law were not already explicit enough, article 35(A) reiterates: 'Holders of exploration and production rights may transfer any net profits from petroleum operations to outside Iraq after paying taxes and fees owed.'"
This, from a publication called PLATFORM in 2005, entitled "Crude Designs: The Rip-Off of Iraq's Oil Wealth," by Greg Muttitt:
"At an oil price of $40 per barrel," and keep in mind that the price of oil is about $65 a barrel right now, heading towards $70 a barrel, but at a "price of $40 a barrel, Iraq stands to lose between $74 billion and $194 billion over the lifetime of the proposed contracts.
"Under the likely terms of the contracts, oil company rates of returns from investing in Iraq would range from 42 to 162 percent, far in excess of the usual industry minimum target of around 12 percent return on investments."
Next, on March 13, 2007, Antonia Juhasz, an oil industry analyst, in an op-ed contribution, asks: "Whose Oil Is It, Anyway?" Here is what Antonia Juhasz writes:
"In 1998 Kenneth Derr, then chief executive of Chevron, told a San Francisco audience, 'Iraq possesses huge reserves of oil and gas, reserves I'd love Chevron to have access to.'
"A new oil law set to go before the Iraqi Parliament this month would, if passed, go a long way toward helping the oil companies achieve their goal...
"In March, 2001," continuing to quote from this article, "the National Energy Policy Development Group, better known as Vice President Dick Cheney's energy task force, which included executives of America's largest energy companies, recommended that the United States Government support initiatives by Middle Eastern countries 'to open up areas of their energy sectors to foreign investment.' One invasion and a great deal of political engineering ..." later, this is exactly what the Iraq oil law would achieve. It does so to the benefit of oil companies but to the great detriment of Iraq's economy, democracy, and sovereignty.
"Since the invasion of Iraq, the administration has been aggressive in shepherding the oil law toward passage. It is one of the administration's benchmarks for the government of Prime Minister Nuri Kamal al-Maliki, a fact that" the administration officials "are publicly emphasizing with increasing urgency." And, that is that these are the benchmarks of the administration.
"The administration has highlighted the law's revenue sharing plan, under which the central government would distribute oil revenues throughout the nation on a per capita basis. But the benefits of this excellent proposal are radically undercut by the law's many other provisions. These allow much, if not most, of Iraq's oil revenues to flow out of the country and into the pockets of international oil companies."
...Now, for the sake of discussion, let's take this figure of 300 billion barrels of oil so we can see how much money we are talking about here. As I mentioned earlier, the price of oil, somewhere around $65 a barrel right now and moving up quickly, as American consumers are finding out. It is not unusual to predict at this moment that the price of oil could go to $70 a barrel. Now, if it does go to $70 a barrel, we are looking here at a potential value of Iraqi oil at being about $21 trillion. Now, if the foreign oil companies have control over 80 percent or more, you start to get an idea of the kind of money that is at stake here and why there is such pressure being put on the Iraqi Government to privatize their oil.
Now, I would like to turn to a quote further talking about the Iraq oil, a basic fact. This, from the Global Policy Forum called "Oil in Iraq: the Heart of the Crisis," December 2002:
"According to the Oil and Gas Journal, Western oil companies estimate that they can produce a barrel of Iraqi oil for less than a $1.50 and possibly as little as $1, including all exploration, oil field development and production costs and including a 15 percent return.
...Now, I have stated many times on this floor that I believe that the war against Iraq was about oil. Now let me provide you with some quotes that may reflect on my thinking on this.
Mr. Dick Cheney, CEO of Halliburton, in a speech at the Institute of Petroleum in 1999, said, "By 2010, we will need on the order of an additional 50 million barrels a day. So where is the oil going to come from? Governments and national oil companies are obviously controlling about 90 percent of the assets. Oil remains fundamentally a government business. While many regions of the world offer great oil opportunities, the Middle East, with two-thirds of the world's oil and lowest cost, is still where the prize ultimately lies. Even though companies are anxious for greater access there, progress continues to be slow."
..."The reasons for this choice were explained in the formal policy recommendations of the working group, published in April 2003," and I quote from this article from Platform:
"Key attractions of production-sharing agreements to private oil companies are that, although the reserves are owned by the state, accounting procedures permit the companies to book the reserves in their accounts; but, other things being equal, the important feature from the perspective of private oil companies is that the government intake is defined in terms of the production-sharing agreement, and the oil companies are therefore protected under a production-sharing agreement from future adverse legislation," which means it would be very tough to be able to have a government, once it gives up its oil wealth, to be able to get it back.
..."Violating the very notions of freedom and democracy" the administration invokes in nearly every speech, "the U.S. Government has actively intervened in the restructuring of Iraq's oil industry since at least 2002.
"In December 2002, the State Department established a working group on oil and energy as part of its 'Future of Iraq' project. The project brought together influential exiled Iraqis with U.S. Government officials and international consultants. Later, some members of the group became part of the Iraqi Government. The result of the project's work was a draft framework for Iraq's oil policy. Despite Iraq being rich in oil and technical expertise, the group recommended a major role for foreign companies through long-term contracts, an approach that would set Iraq at odds with the rest of the Middle East where major oil producers keep their oil in the public sector.
...I am going to quote from the first war supplemental, that the President shall make and transmit to Congress a determination, No. 2, whether the Government of Iraq is making substantial progress in meeting its commitment to pursue reconciliation initiatives, including enactment of a hydrocarbon law. Then under subsection (b), it says if the President fails to make this determination, the Secretary of Defense shall commence the redeployment of our Armed Forces from Iraq.
In other words, privatize your oil, or we are leaving you without having a security and peacekeeping force to replace the United States Army.
...Finally, in the third supplemental that is before this Congress this week, there is an article from the Senate side that relates to Iraq oil, and I quote: "The United States strategy in Iraq shall hereafter be conditioned on the Iraqi Government meeting certain benchmarks." And one such benchmark, "enacting and implementing legislation to ensure the equitable distribution of hydrocarbon resources of the people of Iraq." And it goes on to pay homage to the issues of equity and ethnicity.
...I am here to say that there is another path that can be taken, and that path is part of H.R. 1234, a bill that I have written that would enable the war to end by Congress determining that no more money will go for this war, telling the administration that it must open up diplomatic relations with Syria and Iran, and moving in a direction where we put together an international peacekeeping and security force that would move in as our troops leave. And then we set the stage for real reconciliation that cannot come with the U.S. serving as an occupying army.
...I would like to believe that this war has not been about oil. I would like to believe that there was some kind of a righteous cause connected to what we did; but I know better, and the proof is in this Hydrocarbon Act.
This Congress has an opportunity to finally take a stand and reject this Hydrocarbon Act. We can strip out this provision forcing Iraq to privatize its oil. We can strip that out of the legislation. Or we can simply defeat the legislation because that is in there, and then go back to the boards and tell the President, look, Mr. President, we are not going to give you any more money for this war, which is what I believe we should do. Tell the President, this war is over, Mr. President, and use the money that is in the pipeline to bring the troops home. Let's go and reach out to the international community. With the end of the occupation and the closing of bases, we will have people who will start listening to us internationally, and we will have some credibility. |
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