The oil law and Production Sharing Agreements (re-named ‘Exploration and Risk Contracts and Development and Production Sharing Contracts in the Oil Law) do not amount to privatisation of Iraqi oil in a strict technical sense.  With PSAs and the provisions of the oil law, the oil underground technically remains 'the property of the Iraqi people'.  It is not set to pass into private ownership; existing assets will not pass into private ownership and corporate structures will also not be privately owned.  However, the rights to control what happens to Iraq's oil - how it is developed, its' rate of extraction, the profits which the state is able to claim - the control of oil flow and development - this is all up for exclusive private control.  Sami Husseini of the Institute for Public Accuracy uses Standard Oil’s John D Rockefeller’s maxim to illustrate this.  ‘Own nothing, control everything’.  Despite being sold as a de-facto peace plan for Iraq; The mechanism for uniting all Iraqi factions by offering a fair distribution of oil wealth, only one out of 43 articles actually deals with this.  The details of revenue distribution, including the proportion shared between central government and the regions, and the means by which allocations and percentages will be decided is actually the subject of another separate law which has yet to be published.  The Law could risks exacerbating sectarian tensions.  Its provision for a creation of a Federal Oil and Gas Council - most likely composed by the Prime Minister, in consultation with the main parties, could see the current sectarianised decision-making reflected in economic oil policy ­ potentially pitting region against region in a race to secure competitive contracts.

Contentious articles of the law Article 41 of the law stipulates that any disputes between foreign companies and Iraqi authorities which cannot be resolved through negotiation, will be resolved ‘through arbitration or the competent authority’.  In practice this means that, a successive Iraqi government wishing to reverse any terms would not be able to use its own judicial system to do so.  It would be forced to take its case to a remote court where it would be treated as a corporate entity, on an equal footing with an international oil company rather than as a country representative of 35 million people and their welfare.

Article 11 does not allow for Parliamentary scrutiny of contracts or revenues accrued from new fields.  Fields such as West Qurna and Majnoon each alone account for approx.  10% of all government revenue.  As such, the terms of these developments should be subject to Parliamentary debate as they are in other countries such as Syria, Azerbaijan, Russia and Yemen.  If long-term PSAs are signed, then the vote on the oil law will be the last say Parliament will have over what happens to Iraq’s oil for a generation.  It is normal practice in major oil producing countries with a technically skilled workforce to guarantee a minimum percentage of state participation in contracts.  No such minimum is set in the law.  For a country as well endowed with resources and technical skills as Iraq, a high minimum threshold would have been expected (50% is a normal level).

Article 35 also allows companies unlimited transfer of profits outside of Iraq.  This could restrict the government’s ability to manage financial crises.

Article 9 states that foreign companies are only ‘encouraged’ to co-operate with Iraqi companies and purchase goods and services from them ‘whenever they are competitive’.  Iraqis should only be employed ‘to a reasonable extent’.  Normally contracts specify minimum Iraqi content and employment and minimum levels of training and technology transfer.

Article 4 equates the definition of ‘good oil field practices’ with what oil companies think is right.  This could seriously restrict the regulatory influence of the Iraqi government on environmental and health and safety issues.

Yet opposition to the law is mounting at parliamentary, expatriate and grassroots level.  In a recent statement, the Association of Muslim' Scholars said: "We call on members of the parliament to reject this law.

This critical draft law would revive foreign companies' control on Iraqi oil wealth that Iraq had gotten rid of years ago’.  The National Accord Front, Iraqi National Dialogue Party and prominent members of the Sadr bloc and Alawi’s Iraqi list have all publicly spoken against the law.

Also, at a gathering in Jordan in February, 50 Iraqi technocrats and former senior civil servants in Iraq’s oil ministry issued a statement in which they criticized the law for its ‘gaps and ambiguities’, rejected long-term contracts and called for more parliamentary scrutiny of the oil investment process.  They said: ‘Long-term contracts of exploration, development and production with international companies are better avoided until the security situation improves…In all cases, it is better to present contracts with international companies to the parliament for approval.’ A ministry of oil source who cannot be named explained, ‘I know that Iraq doesn’t need PSAs, but there are some things that the Americans will not compromise on.  They will not compromise on PSAs’.  It appears that the US and its’ partners have drawn a red line that cannot be crossed.  Conversely, powerful actors within Iraqi civil society have also drawn their own red line.  Five trade union federations representing hundreds of thousands of workers stated in December 2006, ‘We strongly reject the privatization of our oil wealth, as well as production sharing 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.

So it appears that the lines have been drawn ­ between the interests of foreign oil companies and their sponsoring states and the interests of the Iraqi people, constrained by the political and economic violence of occupation.  The developments of the coming months will reveal whose interests the oil law will finally serve.