Category Archives: Iraq

Bush’s troop surge

How many more people must die for this weak man’s vanity?

Corporations to control Iraq’s Oil: so how is this meant to work exactly?

As you’ve probably heard by now, control of Iraq’s oil is to be handed over to certain corporations, under what are known as Production-Sharing Agreements (PSAs). These agreements are long term (decades long) deals which give the oil corporations the lion’s share of the profits, and which bind the Iraqis to terms agreed by their current government. Terms which a reasonable person might conclude are not exactly favourable to the Iraqi people.

Here’s the main article in which the story was broken in the English-speaking world, by yesterday’s Indepedent on Sunday.

And Iraq’s oil reserves, the third largest in the world, with an estimated 115 billion barrels waiting to be extracted, are a prize worth having. As Vice-President Dick Cheney noted in 1999, when he was still running Halliburton, an oil services company, the Middle East is the key to preventing the world running out of oil.

Now, unnoticed by most amid the furore over civil war in Iraq and the hanging of Saddam Hussein, the new oil law has quietly been going through several drafts, and is now on the point of being presented to the cabinet and then the parliament in Baghdad. Its provisions are a radical departure from the norm for developing countries: under a system known as “production-sharing agreements”, or PSAs, oil majors such as BP and Shell in Britain, and Exxon and Chevron in the US, would be able to sign deals of up to 30 years to extract Iraq’s oil.

PSAs allow a country to retain legal ownership of its oil, but gives a share of profits to the international companies that invest in infrastructure and operation of the wells, pipelines and refineries. Their introduction would be a first for a major Middle Eastern oil producer. Saudi Arabia and Iran, the world’s number one and two oil exporters, both tightly control their industries through state-owned companies with no appreciable foreign collaboration, as do most members of the Organisation of Petroleum Exporting Countries, Opec.

Critics fear that given Iraq’s weak bargaining position, it could get locked in now to deals on bad terms for decades to come. “Iraq would end up with the worst possible outcome,” said Greg Muttitt of Platform, a human rights and environmental group that monitors the oil industry. He said the new legislation was drafted with the assistance of BearingPoint, an American consultancy firm hired by the US government, which had a representative working in the American embassy in Baghdad for several months.

“Three outside groups have had far more opportunity to scrutinise this legislation than most Iraqis,” said Mr Muttitt. “The draft went to the US government and major oil companies in July, and to the International Monetary Fund in September. Last month I met a group of 20 Iraqi MPs in Jordan, and I asked them how many had seen the legislation. Only one had.”

Blood and Oil

We haven’t yet seen the final bill, which is due to be rammed through this week, but the draft, familiar to the oil majors and the IMF, but not apparently to most Iraqi MPs, contains things which give rise to understandable concern. From the Independent, who have seen a copy of this quasi-secret draft:

“A Foreign Person may repatriate its exports proceeds [in accordance with the foreign exchange regulations in force at the time].” Shares in oil projects can also be sold to other foreign companies: “It may freely transfer shares pertaining to any non-Iraqi partners.” The final draft outlines general terms for production sharing agreements, including a standard 12.5 per cent royalty tax for companies.

It is also understood that once companies have recouped their costs from developing the oil field, they are allowed to keep 20 per cent of the profits, with the rest going to the government. According to analysts and oil company executives, this is because Iraq is so dangerous, but Dr Muhammad-Ali Zainy, a senior economist at the Centre for Global Energy Studies, said: “Twenty per cent of the profits in a production sharing agreement, once all the costs have been recouped, is a large amount.” In more stable countries, 10 per cent would be the norm.

While the costs are being recovered, companies will be able to recoup 60 to 70 per cent of revenue; 40 per cent is more usual. David Horgan, managing director of Petrel Resources, an Aim-listed oil company focused on Iraq, said: “They are reasonable rates of return, and take account of the bad security situation in Iraq. The government needs people, technology and capital to develop its oil reserves. It has got to come up with terms which are good enough to attract companies. The major companies tend to be conservative.”

Dr Zainy, an Iraqi who has recently visited the country, said: “It’s very dangerous … although the security situation is far better in the north.” Even taking that into account, however, he believed that “for a company to take 20 per cent of the profits in a production sharing agreement once all the costs have been recouped is large”.

Immediate Value

So, it appears that the bloody shambles the incompetents in Washington have made of Iraq is turning out to be advantageous for at least some, those oil companies who will obtain PSAs at extremely favourable terms, justified by the risks implied by the horrific security situation in Iraq.

PSAs in which shares are, you will notice, tradable and hence can become the subject of very profitable speculation before a barrel of oil is pumped under their terms. Consider for a moment the value to a speculator of a share in the long-term rights to exploit some of the largest and potentially most profitable reserves of oil left on the planet. These deals are very long term, so the security situation may improve, in which case such shares would become far more valuable as a result, and and a canny speculator can bet profitably against that possibility.

The enormous and rapidly growing (as we use up active reserves) potential value of these PSAs could potentially underwrite, if I’m not mistaken, a hugely valuable speculative market.

In addition, it’s very likely that large additional supplies exist in the relatively unexplored regions, regions which seem to have been of great interest to Cheney’s Energy Task Force. So the potential exists for proving out those fields and radically increasing the reserves controlled by the relevant oil majors (along with their share prices and executive stock options) Those parts of Iraq are lightly inhabited, so at least as far as exploration goes, if not production, the security issue isn’t too much of a worry.

Future Value

Of course, at some point, let’s say in a decade or so, the necessity of actually pumping that oil will start to become overwhelming. It’s the last really big pool of relatively unexploited, easy to access, high quality oil on the planet. There are plenty of places with a very great deal of heavy oil, Venezuela being one obvious example, but that costs so much more to turn into something useful.

Ultimately though, someone is going to want to pump that oil. So the question is, now that they’ve got these deals locked in for a few decades, or rather assuming all this gets rammed through the Iraqi parliament on schedule, just how are they going to actually lift the oil?

Presumably security is a key concern. From the point of view of the oil companies, the motivation is to secure pipelines and infrastructure, but not necessarily to do anything particularly positive about the overall Iraqi security situation unless it happens as a side effect of their primary concerns.

A couple of things now seem very obvious. The US may withdraw troops from the cities, but it’s certainly going to want to maintain large bases from which to deploy its high-tech super weapons in defence of all that precious oil. I also doubt that any of this comes as a surprise to James Baker’s ISG or to Dick Cheney, so perhaps the US debate about Iraq can usefully be interpreted in terms of the specific commercial problem of exploiting Iraq’s oil. An issue that seems to have faded from the mainstream discussions about Iraq, but which is no doubt foremost in the minds of at least some US leaders.

There’s a lot of room for speculation here, and I’d be very interested in any comments on how the oil companies might think this could be best achieved.

A cynical person might for example, look at what happened to the PSAs negotiated after the fall of the Soviet Union with a weak Russian government and which have recently been overturned by Putin’s government, which has just re-negotiated much more more favourable deals now that it’s strong enough to do so.

A cynical person might conclude that from the oil companies point of view, a weak and divided Iraqi government, terrified that if the US doesn’t protect them from their own citizens, they and their families will be tortured to death by angry zealots from a multitude of rival militias, gangs and whatnot, might actually be advantageous to the oil companies, who would therefore have no particular reason to want the overall security situation in Iraq resolved as long as they’re able to lift and ship ‘their’ oil. After all, while their cut remains at 70% of all those hundreds of billions of dollars worth of oil, they can afford to spend a bit on pipeline security and so on. Whereas if the Iraqi government ever became strong enough and the country stable enough to tell them to fuck off as Putin has done recently, they’d be making considerably less money on the deal.

Blair on Saddam’s execution

So Blair has finally made a statement, through his spokesweasels.

“He supports the inquiry by the Iraqi authorities. He does believe that the manner of execution was completely wrong, but this shouldn’t lead us to forget the crimes that Saddam committed, including the death of hundreds of thousands of Iraqis.”

“As Tony sees it though, if you go around hanging people for killing hundreds of thousands of Iraqis, then you’d have to hang him and his mate GW, so he’s not really terribly keen on the idea.”

Source

(OK, I made up the second paragraph, but the first is apparently real)

Further thoughts on Bush’s proposed troop surge

What's around the corner?

Have you seen this jolly little bit of news in this morning’s Sunday Times?

“Israel plans to nuke Iran”

In the light of this, I see another possible explanation or two for the apparent confusion over the military objectives behind the planned ‘troop surge.’

Even if, as seems likely the ‘Israel to nuke Iran’ story is a deliberate ‘intelligence source’ leak via the Murdoch press intended as part of somebody or other’s media disinformation campaign, it’s still demonstrating just how deranged things are in that region, in no small part due to neo-conservative foreign policy adventures, which appear to still be ongoing and dedicated to the challenge of making things worse. The lack of any announcements of a coherent plan for the use of these troops makes me wonder if they’re actually being sent to deal with the expected backlash when the US and/or Israel attacks Iran. After all, the neo-cons handed Iran a massive strategic gain by making such a mess of Iraq that they had to let a bunch of pro-Iranian parties form a government. They can’t be at all happy about that, so I really wouldn’t assume they’ve finished causing disasters yet.

Another plausible provocation would be the attempt to privatise Iraq’s oil, another as-yet unrealised neo-con objective, that they’re apparently going to try to ram through in the next few weeks.

Blood and Oil: How the West will profit from Iraq’s most precious commodity

Perhaps this is why Bush intends to send extra troops but is being extremely vague about what they’re supposed to be doing? If he’s expecting massive unrest to kick off because of something he plans to do, e.g. this, or bombing Iran or something, then it would make sense to send more troops (plus the extra carrier battle group that just arrived) but he’d have a hard time explaining coherently exactly why he’s sending them, because it wouldn’t necessarily look to good to say ‘we’ll need the extra forces because we plan to annoy the Iraqis even more’

The neo-cons are going to be tied up pretty soon by subpoena-waving Democrats dragging all kinds of horrible mediapathic skeletons out of the White House’s closets in preparation for the 2008 elections, so if they want to privatise Iraq’s oil, start a war with Iran and so on in order to tick off the last few items on their ‘must do’ list of global foreign policy disasters, then this is probably their last chance at act. Once the US public has seen the traditional ‘Last helicopter taking off from the US Embassy roof’ scene played out in Baghdad’s Green Zone, which can’t be more than a couple of years away now, the chance of getting them onside with any new foreign policy adventures is likely to be over for another generation.

On those assumptions it’d make a lot of sense for them to try to get their last few acts of irresponsible craziness in fast and hence also to reinforce as far as possible before the shit really started to hit the fan. Once they’ve kicked it all off, it doesn’t really matter what the Democrats do, because they’ll be committed. As the Oxford Study Group point out, it’s a lot easier to start a war with Iran than to finish it.

Although US or Israeli attacks would severely damage Iranian nuclear and missile programmes, Iran would have many methods of responding in the months and years that followed. These would include disruption of Gulf oil production and exports, in spite of US attempts at pre-emption, systematic support for insurgents in Iraq, and encouragement to associates in Southern Lebanon to stage attacks on Israel. There would be considerable national unity in Iran in the face of military action by the United States or Israel, including a revitalised Revolutionary Guard.

Indeed for a variety of reasons, a war with Iran would possibly be saleable to the US public once they’d actually started it, despite them being totally fed up with the war in Iraq. For a start there is all that unpleasant holocaust denial stuff Ahmadinejad keeps coming out with. Then there’s the US Embassy hostages humiliation, which even liberal Americans seem to be quite angry about decades later and finally, something that’s almost an existential issue for the US. If the neo-cons did manage to start their war with Iran, most of the likely scenarios would put oil prices way up, which means intolerably high fuel costs.

Bush plans (another) fucking enormous bloodbath in Iraq

War Memorial

So, we’ve all been hearing about the impending ‘surge’

WASHINGTON, Jan. 6 — President Bush’s new Iraq strategy calls for a rapid influx of forces that could add as many as 20,000 American combat troops to Baghdad, supplemented with a jobs program costing as much as $1 billion intended to employ Iraqis in projects including painting schools and cleaning streets, according to American officials who are piecing together the last parts of the initiative.

The American officials said that Iraq’s prime minister, Nuri Kamal al-Maliki, formally agreed in a long teleconference on Thursday with Mr. Bush to match the American troop increase, made up of five combat brigades that would come in at a rate of roughly one a month, by sending three additional Iraqi brigades to Baghdad over the next month and a half.

Nonetheless, even in outlining the plan, some American officials acknowledged deep skepticism about whether the new Iraq plan could succeed.

They said two-thirds of the promised Iraqi force would consist of Kurdish pesh merga units to be sent from northern Iraq, and they said some doubts remained about whether they would show up in Baghdad and were truly committed to quelling sectarian fighting.

The call for an increase in troops would also put Mr. Bush in direct confrontation with the leaders of the new Democratic Congress, who said in a letter to the president on Friday that the United States should move instead toward a phased withdrawal of American troops, to begin in the next four months.

New York Times

Even the normally level-headed John Keegan appears to have joined the happy crowd shouting ‘More of that nice Kool-Aid if you please Reverend Jim!”

President George W. Bush is about to launch a final push in Iraq with a large reinforcement of American troops in the hope of crushing the insurgency before America embarks on a large-scale withdrawal of force from the country.

The size of the force is commonly set at about 40,000-50,000 troops. The aim of this surge will be to inflict severe damage and loss on the problem-making elements within Iraq, including both Shia and Sunni militias, and to increase training of the Iraqi security forces under American supervision.

The arguments against the surge are that it might exacerbate the violence without deterring the perpetrators from persisting in their attacks and that it might result in a sharp increase in American casualties with no observable gain. The arguments for trying a surge are that it is defeatist to concentrate on withdrawal from Iraq without attempting a final effort to make military force work.

Daily Telegraph

This line in particular is a corker, what sort of really powerful mind-altering drugs is John Keegan taking these days? Or does Blair’s PR office have his kids held hostage someplace?

The cost of such tactics is likely to be high but not unbearable if enough armoured vehicles are used to protect the attacking troops.

‘Cost’ for who John?

Doing a Fallujah in say Sadr City isn’t just going to kill active participants. Fighting in a built-up area full of grannies and little kids, the troops will have absolutely no way to tell whether their heavy weapons are hitting fighters or civilians. Using armour and air power is just going to kill all of them indiscriminately.

The idea seems to be that they’re going to repeat the Grozny-like success of their operation in Fallujah against either some other Sunni cities or more likely Sadr City. It doesn’t sound like they’re really too sure what they intend to achieve actually, it sounds like they’re thrashing around helplessly without any coherent plan at all other than ‘kill some more Iraqis to prove we aren’t sissies’ but whatever it is it’ll probably kill a lot of people for no particular reason. A second US carrier battle-group arrives in the region this week, so we can be fairly sure the bombs are going to rain down on some poor buggers in the near future.

These idiots are in dreamland. They appear to have mistaken their domestic political propaganda for reality somewhere along the line. They’re living in a myth. So much more comfortable than reality, but a lot more dangerous to those around them. Top 10 Myths about Iraq.

Doubtless our lying shitweasel of a Prime Minister the Reverend Tony Blair will be just as keen to support this murderous stupidity as he was to prevent a ceasefire in the Lebanon in order that the IDF could carry on doing Gods Work (TM) against the unfortunate Lebanese civilian population and vital infrastructure. Maybe he’ll even volunteer some UK troops to join in the fun, just by way of showing the increasingly angry and cynical population of the UK once again just who it is that he really works for. It certainly isn’t the majority of ordinary working people of the UK, who now have the blood of thousands of innocent strangers in the Middle East on their hands whether they like it or not (and almost all of us do not) and have the exciting challenge of wondering about whether we’re going to get suicide bombed on the way to work, for no reasons that make any sense to any of us, thanks to Blair’s puppy-like eagerness to be of faithful service to his neo-conservative masters.

After invading and occupying Iraq on the basis of of a bunch of big fat stinking lies, turning it into a sort of live-action Disneyland for wanna-be jihadis and letting them practice on US troops until they get to be really competent and dangerous jihadis, increasing the threat of domestic terrorism, getting a whole lot of mostly working class lads who joined the US and UK military killed, along with a couple of hundred times their number of Iraqis and all of it for no readily obvious reason, you’d think there would be some way to do something about these lunatics, but no. They’re still in power and still making the world a shittier place to live in for almost all of us.

The thought that all it’s achieved is to put a bunch of chanting, noose-waving, hooded death squad guys in power and generate fat revenue streams for KBR, Blackwater and Halliburton isn’t particularly convincing me that any of this was a smart move.

If there was some point to it, that might be different, but it’s pretty clear that the Iraqis overwhelmingly (81%) want occupation troops gone sometime pretty soon and without waiting around for ‘security to improve’, that they think, almost certainly correctly that the occupying troops are causing more violence than they’re preventing (78%) but that they don’t believe that they’re going to go away willingly (78%), which is why so many Iraqis (61%) now actually support attacks on US troops.

Poll data

If we’re supposed to be there for the Iraqis’ benefit, it’s pretty clear that hasn’t worked out, so it’s time to leave. If we’re actually there for some other reason that our government doesn’t want to admit to, let’s hear what it actually is and see whether we think it’s in our interests.