21 May 2007 - 11:09
  • News Code: 105159

BAGHDAD — Disagreement over the future role of foreign investment in Iraq"s oil fields has stalled passage of an oil law the Bush administration says is crucial to Iraq"s future.

The measure seeks to establish a framework for how the world"s third-largest oil reserves will be divided among Iraq"s rival sects. The parliament will miss a May 31 target date set by the Iraqi government to pass the bill, said Mahmoud Othman, a leading Kurdish lawmaker.

 

"There"s no way it will be done by then," Othman said. "Not even close."

 

The issue is contentious because most of Iraq"s known oil reserves are concentrated in areas where Shiite Arabs and Kurds constitute the majority of the population. Sunni Arabs, who enjoyed greater wealth and privileges under Saddam Hussein, fear they will be cut off from future oil revenue if Iraq fragments along sectarian lines.

 

President Bush has said passage of an equitable oil law would ease those concerns and help defuse the Sunni insurgency. Yet Iraq"s Shiite-dominated government has been unable to pass any major changes since taking office a year ago, and political talks are overshadowed by ongoing sectarian violence.

 

FIND MORE STORIES IN: Iraq | Baghdad | Bush administration | Sunni | Iraqi government | Shiites | Kurds | Kurdistan | President Jalal Talabani

Iraq"s Cabinet approved a draft of the bill in February, but negotiations have recently bogged down over whether foreign oil companies or the state-run Iraqi National Oil Co. (INOC) will have primary rights to Iraq"s oil. An annex to the oil bill introduced last month by Iraq"s oil minister, Hussain al-Shahristani, proposed that the INOC manage 93% of Iraq"s known oil fields and related contracts.

 

Leaders in the Kurdish north, which enjoys semiautonomy from Baghdad, have resisted most efforts to centralize economic power in the capital. A greater role by the INOC could also discourage foreign investors from modernizing Iraq"s outdated oil production facilities, said Ashti Hawran, Kurdistan"s natural resources minister.

 

"This is a source of contention," Hawran said. "It"s not what the Kurds want. The INOC is inefficient. It doesn"t have the technical capability. It is not entitled to receive all that responsibility. It"s contrary to the spirit of the (oil) law itself and certainly contrary to the constitution."

 

Many Sunnis and Shiites favor tighter control by the INOC, fearing that otherwise a greater share of oil profits — which account for more than 90% of Iraqi government revenue — could go to multinational energy companies.

 

"We want foreign oil companies, and we have to lure them into Iraq to learn from their expertise and acquire their technology, but we shouldn"t give them big privileges," Tariq al-Hashemi, Iraq"s Sunni vice president, said in Geneva on Sunday.

 

Some Sunni leaders say they will not pass the oil law until other structural questions are resolved, such as how power will be divided between Baghdad and provincial governments.

 

"Unless there"s a change in the constitution, this oil law doesn"t mean anything," said Ayad al-Sammarie, deputy chairman of the Iraqi Islamic Party, a leading Sunni group.

 

Othman, the Kurdish lawmaker, said U.S. pressure to pass the oil law as soon as possible was making matters worse. The legislation was written "in a hurry" and left some crucial details unclear, he said.

 

The prospects for an agreement took a further hit Sunday when Abdul-Aziz al-Hakim, the leader of Iraq"s largest Shiite party, was sidelined indefinitely by illness. Al-Hakim was diagnosed with lung cancer and traveled immediately to Iran to seek medical treatment, officials in his organization told the Associated Press. They spoke on condition of anonymity because of the sensitivity of the subject.

 

Hours earlier, President Jalal Talabani flew to the USA for a medical checkup and a three-week-long vacation. Talabani, a Kurd and a close ally of al-Hakim, was hospitalized briefly in Jordan in February after collapsing because of exhaustion and dehydration caused by lung and sinus infections.

 

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News Code 105159

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