National Commentary

Helen Thomas: Iraqis Wrangle Over Their Oil Reserves

WASHINGTON — Iraq's politicians are trying to figure out how to share the country's oil wealth, estimated to be the second or third largest petroleum cache in the world.

The Bush administration has made passage of a new oil law a key milestone for the success — or failure — of the Shiite-led government in Baghdad.

So far, progress has been slow.

It's tough to talk about Iraq without quickly getting to the topic of oil. This resource was the basis for the 1990 dispute between Iraq and Kuwait that led to the first Gulf war after Saddam Hussein complained that Kuwait was "slant drilling" into Iraqi oil fields. The Iraqi leader also claimed at the time that the U.S. was using its influence to keep oil prices low, thus hurting the Iraqi economy.

The Iraqi cabinet has approved a draft version of a new oil law but the Iraqi Parliament is balking, reportedly because the proposal would de-nationalize the country's oil industry and allow chunks of it to be taken over by private companies like Exxon, Chevron, BP and other international petroleum giants

The plan would divvy up oil revenue among the three major religious-ethnic sectors in Iraq: The Shiites, Sunnis and the Kurds. There is concern that such an approach could lead to the splitting of Iraq into three separate states, a possibility that has won support among some American officials — including Sen. Joe Biden, D-Del. — as a way of ending civil and sectarian strife.

Most of Iraq's oil fields lie in the north, which is dominated by the Kurds, and in the south, where the Shiites prevail. This means that the Sunnis who are centered in the Baghdad region are closely watching to see what they would get out of any plan to share oil revenues.

Iraq's 112 billion barrels of proven oil reserves were nationalized in 1972. Iraqi economists credited nationalization of the oil industry with creating a middle class in their country and providing revenue for the infrastructure, education, health care and other citizen benefits.

It is not clear whether Iraq will remain in OPEC, the Organization of Petroleum exporting Countries.

Oil exports are Iraq's major source of foreign revenue.

While President Bush has denied that oil motivated his decision to attack Iraq, this precious energy source is the elephant in the living room as the U.S. anxiously awaits progress by the Baghdad government in setting its own house in order.

              

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