IRAQ: Oil bill on ice

by Tina Susman

The long-suffering bill that would govern Iraq's oil industry and divvy up oil wealth has been stalled more than a year, bogged down in political squabbling and symbolic of problems rippling below the surface here despite success on the security front.

Just last year, U.S. and Iraqi officials repeatedly announced that passage of the oil bill was imminent. The bill was seen as crucial to laying the groundwork for long-term security and political reconciliation in Iraq, since it would guarantee equal distribution of the oil profits on which Iraq's economy depends.

Now, the topic rarely comes up, and when it does, it is in a far more sober context.

At a recent meeting with journalists in Baghdad, the U.S. Embassy's outgoing economic ambassador, Charles Ries, admitted that political differences blocking passage of the so-called hydrocarbon bill are too entrenched to predict when it might become law.

"I was quite optimistic when I got here," said Ries, who arrived in July 2007. "I was quite optimistic it was only a month or two" before the bill passed. "The more I understood what the real issues were … it was clear this was going to be a major political challenge," said Ries.

Those challenges are rooted in Kurdish demands for more power over oil fields in the autonomous Kurdistan region and over oil contracts Kurdish authorities have already signed. Other sticky issues include how to manage Iraq's existing oil fields and fields known to have oil deposits that are not yet producing.

Oil accounts for 90% of Iraq's revenue, which is why passage of the bill has been considered so crucial. U.S. officials had said it would not only provide Iraq with financial stability, it would be a surefire sign of its political maturity. And that would make it easier for the United States to declare Iraq a success story and for U.S. troops to move on.

The oil bill isn't the only major deal to run into the barriers created by Iraq's political discord. Provincial elections, also cited by U.S. officials as necessary to Iraq's long-term stability, are looking doubtful this year because of political leaders' disagreements over balloting issues. They were supposed to have been held Oct. 1.

On Thursday, there were reminders of another major and as-yet unresolved issue that could lead to future problems in Iraq and headaches in Washington: an agreement on the future of U.S. forces in this country. The deal has to be reached by the end of the year, when the U.N. mandate governing American troops here expires.

But a visit by U.S. Secretary of State Condoleezza Rice apparently did not lead to any breakthroughs on what appear to be the main sticking points: immunity for U.S. forces here, and a timetable for their withdrawal. The Iraqis want one thing, the U.S. wants another.

Lengthy meetings between Rice and Iraqi government leaders appear to have done little to close the gaps, and Rice used a news conference to dismiss news reports suggesting a final agreement was imminent. 

"We'll have an agreement when we have agreement," she said.

The same could be said for the oil bill, and for Iraq's provincial elections.

-- Tina Susman in Baghdad