With foreign companies amassing higher stakes and a greater presence in the Iraqi oil business, Greg Muttitt traces the rise of Production Sharing Agreements (PSAs) and its effects on Iraqi sovereignty.
Photo Courtesy United States Forces, Iraq
agreements, and there is no room for discussing this matter. This is the demand of
the Iraqi street, and the privatization of oil is a red line that may not be crossed.”
—Statement of Iraqi trade unions, December 2006
The Sweifieh district of Amman seems like an unlikely place to start a rebellion. One of the newest parts of Jordan’s capital, its traffic-clogged streets are lined with shops offering Western clothes, perfume, and jewelry—a good spot for chic Ammanites to spend Friday afternoon.
Fifty yards downhill from the polished shopping area, I entered the Middle East headquarters of the Solidarity Center, the AFL- CIO’s international arm. It was in an unmarked concrete office block on a dusty, rubble-strewn street. By late 2006, the center was hosting a new group of Iraqis every couple of weeks. Each contingent trained in workplace organizing, international labor standards and campaign communications.
On December 10, 2006, the Solidarity Center invited me to a workshop where eighteen Iraqi union leaders discussed Iraq’s oil situation and how it would affect them. Leaders of all five of Iraq’s trade union federations, each representing thousands of workers, sat around a long conference table with a plastic Iraqi flag at one end. Western newspapers didn’t even tell us Iraqi trade unions exist. Instead they usually suggested that meetings of Iraqis from mixed ethnic and religious backgrounds were likely to descend into chaos.
There were Sunni and Shi’a, Arabs and Kurds, the devout and the secular. The unions they represented had roots that went back decades; they had had widely disparate experiences under Saddam, under the Kurdish parties, and under the occupation: from co-optation and favoritism to marginalization and repression. Some of the unions had been all but wiped out by Saddam, living on only in the hearts and furtive whispers of the workers.
Hassan Juma’a was there with three colleagues from the Iraq Federation of Oil Unions from Basra. In meetings on oil, Hassan always stood tall. All of the unions were concerned about the future of Iraq’s oil and all had sections representing workers in the industry, but as the head of the only sector-specific union federation Hassan represented far more oil workers and knew the subject better than any of his colleagues.
The General Federation of Iraqi Workers (GFIW) had six of its leaders at the meeting. It had been formed by the merger in 2005 of two reformed remnants of a Saddam-era union with the union federation associated with the Iraq Communist Party. Now claiming 800,000 members, it was Iraq’s largest union federation and represented workers in all sectors of the economy, with a diverse range of political views.
The much smaller Federation of Workers’ Councils and Unions in Iraq (FWCUI), aligned to the Workers’ Communist Party, had three members present. It resembled a cultural or political organization more than a trade union. With secular, democratic, and progressive views, it represented a key segment of left-wing Iraqi society, especially in Baghdad. Finally, there were five leaders from the two Kurdish federations, from Irbil and Sulaymaniya.
I gave a presentation about the new oil law and the the long-term contracts – known as production sharing agreements (PSAs) – that multinational oil companies wanted in Iraq. I talked about how these contracts could effectively lock Iraq into its current economic situation for 20 or more years, prolonging the misery of Iraqis as they gave up a large share of their biggest asset. My presentation was met with dejected faces.
I’d fallen for the picture of Iraq painted by newspapers, by U.S. officials, by international organizations—that it is only outsiders who can forge agreement among Iraqis.
Had I bored them? Why was no one reacting, not even asking a question? “We thought the situation in Iraq was bad,” one of them eventually explained, “but we didn’t realize it was this bad.” I’d given the same message plenty of times before: to antiwar activists, to British and European policy makers, or to anyone else who would listen. But this was a different audience.
The unionists had just lived through nearly four years of war and occupation and decades of war and oppression before that. Electricity, water, and public services had collapsed long before, and now the sectarian violence was at its bloodiest. I had just told them that things would get worse, as Iraq was set to surrender control of its economy too. It would make their struggle so much harder, because decisions would no longer be made by Iraqis. I tried to think of an appropriate thing to say.
To my relief, Hassan Juma’a spoke next. He knew more about the oil law than almost anyone outside the Iraqi and U.S. governments and brought with him documents revealing the current state of the law, which had been drafted a few months earlier and was being reviewed by politicians.
Hassan knew how to talk about these issues to his fellow unionists. “This law aims to produce products for foreign companies through long-term contracts like PSAs, but at the expense of the Iraqi people,” he explained. “This law would make the Iraq National Oil Company the sick man.” INOC was a source of pride to many Iraqis, but the draft oil law (amended since Tariq Shafiq’s first draft) reduced its role to that of a competitor with foreign companies, rather than the guardian of the nation’s wealth.
“Maliki promised the oil law wouldn’t be ratified without consulting you. Unfortunately, that’s not what they’re doing now,” Hassan said. And that got the unionists talking. They spoke of their fear that foreign oil companies would bring in foreign workers, leaving Iraqis unable to provide for their families. They worried that services such as on-site medical teams at oil facilities would be cut. And they knew of the multinational oil companies’ reputation for union busting and feared the companies would break any attempt by workers to defend their rights.
Several of them raised wider fears, too. If oil revenues went to foreign companies, how would the government be able to rebuild Iraq’s infrastructure and public services? And what would be the consequence of putting yet more Iraqis out of work? The mood gradually changed to defiance.
The trade unions would not fear the law; they would fight it. “We have technical people; we just need equipment and training. We don’t need thieves to send us back to the Middle Ages,” said Kareem Abdalla Hamza from the GFIW to nods from around the room. Like so many Iraqis, he had experienced the country’s tragedies firsthand: his son was murdered in sectarian violence at a checkpoint.
I wondered whether there would be any disagreement between the Kurdish unionists and their Arab colleagues. Commentators had consistently asserted that the only controversies about Iraqi oil were whether contracts with foreign companies would be signed by the national government in Baghdad or by regional governments and how the revenues would be distributed across the country. For instance, when Kurdish-British journalist Michael Howard interviewed me, he cut me off when I started talking about privatization. “No one is interested in that. The talk is all about who can sign the contracts.” Among politicians, I knew, he was right. Certainly it was the only issue raised by the Kurdish political parties. And whether in newspaper reports or international conferences, that was where the debate was assumed to be: Who gets the spoils? But at this meeting the issue did not arise.
“The Kurdish situation is completely different,” began Sadeeq Ramadan Hasan, a leader of the Kurdistan General Workers’ Syndicates’ Union, “But we speak in the name of Iraq, not Kurdistan, because we are an integral part of Iraq. We only ask for federalism.” Kurdish workers stood alongside their Arab brothers, he said; like them, “We are completely opposed to privatization, and have been since 1958.” Everyone around the table applauded—their fellowship as trade unionists was far more important than any ethnic or religious differences.
The next day the unionists began drafting a statement. “Should a neutral person help facilitate the drafting?” I asked Shawna Bader, one of the Solidarity Center organizers. “Don’t worry,” she replied. “They’ll be fine.” She was right. Very quickly they produced a consensus document compellingly clear in its analysis and demands. How embarrassing that I had doubted they would! I’d fallen for the picture of Iraq painted by newspapers, by U.S. officials, by international organizations—that it is only outsiders who can forge agreement among Iraqis.
“Given the vital importance of oil to the economy,” the statement insisted on “the right of the Iraqi people to read the draft oil law under consideration. The Iraqi people refuse to allow the future of their oil to be decided behind closed doors.” They left no doubt about their position. “Iraqi public opinion strongly opposes the handing of authority and control over the oil to foreign companies that aim to make big profits at the expense of the people. They aim to rob Iraq’s national wealth by virtue of unfair, long-term oil contracts that undermine the sovereignty of the State and the dignity of the Iraqi people.”
As the statement was read out, there were nods of agreement and determination. And with that, the campaign to stop the oil law began.
Unions Organize Against the Law
In the weeks following the meeting, the unions began to organize with the opposite goal, despite growing risks to their safety. On January 11, 2007, eight members of the radical secular union FWCUI were kidnapped on their way to a press conference held to criticize the oil law. Four of them were later released, the other four were found dead. It underscored the risk in speaking out on a strategic subject in which so many powerful and dangerous interests were involved.
As for the sense of urgency to pass the law, he believed it was to achieve what he saw as the Bush administration’s core reason for the occupation: handing over the oil industry to multinational companies, even as efforts to control Iraq were rapidly collapsing.
On February 6, the oil workers’ union, the IFOU, held a conference on the law at the South Oil Company’s cultural center in Basra. To an audience of five hundred oil officials, trade unionists, political leaders, and civil society groups, Hassan Juma’a warned that the statement in the constitution that oil and gas are the property of the Iraqi people would “remain but ink on paper if the oil law and oil investment law being presented to the parliament are ratified—laws which permit production sharing contracts, laws without parallel in many oil producers, especially the neighboring countries. So why should Iraqis want to introduce such contracts in Iraq, given that applying such laws will rob the Iraqi government of the most important thing it owns?”
Most of the other speakers were academics from the University of Basra’s Arabian Gulf Studies Center, which co-sponsored the conference. According to economics professor Nabil Marsoumi, “This law would lead to almost exclusive foreign domination of all oil fields. . . The contracts [it proposes] are expressly privatization under another name.”
The final statement, signed by the conference participants, was quite clear in its assessment of PSAs: they “would put the Iraqi economy in a straitjacket and would compromise Iraqi sovereignty as happened in the past. This type of agreement favors the interests of foreign companies over all matters of national interest.”
The statement appealed to members of parliament to defend the national interest and to the government to consult with Iraqis before putting anything in place. Hassan was more direct in his conclusion: “If those calling for production sharing agreements insist on acting against the will of Iraqis, we say to them that history will not forgive those who play recklessly with our people’s wealth and destiny, and that the curse of heaven and the fury of Iraqis will not leave them.”
Representatives of all the main political parties attended the conference. At the end of the day, countless participants thanked the IFOU’s leaders for the stand they were taking. The union was now a major player on the national stage.
Oil Experts Say No
In Baghdad, one of the first and most active campaigners against the oil law was a chemist and technocrat named Fouad Qasim al- Ameer. In January 2007, he obtained a leaked copy of the latest draft. Within less than a month, he had written a fifty-page study on the law and its legal, economic, political, and historical context.
He argued that the investment needed for Iraq to increase its oil production was well within the capacity of national budgets, and that if more capital were required, it could easily be borrowed. As for the sense of urgency to pass the law, he believed it was to achieve what he saw as the Bush administration’s core reason for the occupation: handing over the oil industry to multinational companies, even as efforts to control Iraq were rapidly collapsing. But from an Iraqi perspective, he insisted, it would be disastrous to decide the fate of future generations “under the rule of the occupation, with insecurity, poverty, and corruption spreading like wildfire.”
As the draft law was circulated, many Iraqi oil experts–the men who had run the industry since nationalization in the 1970s–grew worried about its contents. As no one had sought their advice or opinion–consultations so far had been with U.S. officials and multinational oil companies–in early February a group organized an urgent meeting in Amman to discuss the law.
On February 17, 2007, sixty Iraqi oil experts attended the meeting at the Amman Meridien. They included senior Oil Ministry officials and six former ministers. Many had been involved in the Iraq National Oil Company at its inception in 1964 or had worked for the Iraq Petroleum Company before that.
Tariq Shafiq, who was also at the meeting, had come to oppose the law he had drafted. While he still wanted to see an oil law of some sort, even as damage limitation, it was not this one, which had been overhauled during eight months of politicized revisions.
Saleh al-Mutlaq, a secular parliamentarian said, “We have no need for foreign companies. We are experienced enough to reap the fruit of our wealth. . . We don’t want a new law that will further divide us. We need a law that will unite the Iraqi people.”
He wrote in a paper he presented to the meeting, that without a central united policy there will be differences and competition between INOC (the state’s income) and the regions and governorates, as well as friction and resentment between the haves and have-nots amongst the various regions and governorates. A stampede for exploration and development contracts at this particular juncture of Iraq’s political and economic development would be viewed as mortgaging the reserves of future generations.
In a letter to the Iraqi parliament, the experts at the meeting made many of the same comments as their working-class colleagues had made at the IFOU conference in Basra, albeit in more diplomatic language: “We were hoping the public and organizations of civil society as well as oil experts could be able to review the draft in order to make the required corrections before presenting it to the parliament to discuss the enactment. Yet, we think the process has been accelerated during the current complicated conditions of Iraq.”
It made little sense to them to pass a law before constitutional amendments had been made. Their central call was to slow down the process. Iraqi oil would best be developed in a series of phases, rather than all at once, and “long- term contracts . . . with international companies are better avoided until the security situation improves.” Finally, they wrote that any proposed contracts should be reviewed by the parliament, as had been the case in Iraq since 1967.
The Oil Ministry and Oil Minister Husain Shahristani–who had driven the oil law project–were taken by surprise by the experts’ opposition, according to Issam al-Chalabi, a former oil minister who was influential among the experts (no relation of Ahmad Chalabi). Al-Chalabi explained, “They hadn’t realized this subject could unite people.”
Shahristani responded with vitriol. “There is a blackmailed propaganda campaign against the draft law which is being launched by certain parties who don’t want Iraq to achieve progress and who want to make this government a failure,” he said to the media.
Speaking to U.S. diplomats, Shahristani dismissed the oil experts as Ba’athists and Arab nationalists, and confidently predicted that with the oil law soon to be passed, the ministry would hold an auction of producing oilfields in the second half of the year.
Issam al-Chalabi now set about organizing a larger gathering, this time inviting politicians. On March 9th, he chaired a meeting of 240 people at Amman’s Four Seasons hotel, which was broadcast on several Iraqi and Arabic television channels. During the six-hour meeting, many oil industry experts presented their views, including Bakkaa, al-Chalabi himself, and Khayat.
The Association of Muslim Scholars–a grouping of Sunni clerics and intellectuals–was there, having three days earlier added a religious dimension to the oil law critique. The AMS’s one-page statement argued that as long as Iraq was occupied, the oil law would necessarily fail to reflect the Iraqi people’s interests.
Like other critics of the law, the AMS noted that it would reverse the popular Law No. 80 of 1961 (which under the revolutionary government of Abd al-Karim al-Qasim had ended the Iraq Petroleum Company’s monopoly on Iraq’s oil future) and the nationalizations of the 1970’s.
The association also echoed the oil workers in warning parliamentarians not to side with the occupation over the Iraqi people. “We caution the political parties–especially those that are active in pushing for this law, and which are known to the sons of our people–that they are moving in the wrong direction,” the statement concluded. “They today seek to strike deals with the occupier that would squander the biggest national wealth possessed by the Iraqis. We caution them that the Iraqi people are watching all these scenes and will not allow anyone to trade in its resources. The Iraqi people will not forgive any person who squanders its resources.”
Speaking at the conference, Saleh al-Mutlaq, a secular parliamentarian said, “We have no need for foreign companies. We are experienced enough to reap the fruit of our wealth. . . We don’t want a new law that will further divide us. We need a law that will unite the Iraqi people.”
When I met him in 2009, he had talked about the Iraqi achievements of the 1970s. “I know very well how the Iraqis used to be enthusiastic about developing their abilities and skills to drill the oil. . . After more than thirty years, we’re going back again to hand over our oil to foreign companies and to limit our human abilities”
This excerpt originally appeared in Fuel on the Fire: Oil and Politics in Occupied Iraq. Copyright (c) 2012 Greg Muttitt. Published by The New Press, Inc. www.thenewpress.com
Reprinted here with permission
Greg Muttitt is the former co-director of the campaigning charity Platform and has served as the campaigns and policy director for the antipoverty organization War on Want. His articles have appeared in The Guardian, the Financial Times, and The Independent, among other publications.