Iraq and Gulf Analysis

Archive for September 14th, 2011

The Oil-Law Showdown

Posted by Reidar Visser on Wednesday, 14 September 2011 19:18

If the restart of oil exports from the Kurdish Regional Government area in February served as an indication of an evolving axis of political friendship between the Kurds and Prime Minister Nuri al-Maliki’s State of Law bloc, developments in Iraq during the past month have pointed in the opposite direction.

Perhaps the first sign that something was wrong came in August when Kurdish peshmerga troops entered areas in Diyala that they had previously agreed with the central government to stay out of. Whereas similar actions in Kirkuk earlier in late February and March had prompted a surprisingly muted reaction from Maliki (and hence seemed to suggest that the alliance between Maliki and the Kurds could be deepening at a time when Maliki was worried about increasing public anger on Iraq’s streets), this time the Kurdish moves have been followed by a heated verbal exchange between Maliki and Kurdistan’s president, Masud Barzani.

Of course, altercations between the Kurds and Maliki are nothing new. They were prominent in the 2006–2009 period as well, when they often focused on the so-called “disputed territories” claimed by the Kurds and the implementation of article 140 of the constitution related to these areas. This time around, however, it is the oil and gas law that has moved to the forefront of the debate.

In a recent statement, the Kurds promised to “boycott parliament and government” if the oil and gas law presented to parliament by the government is indeed passed by parliament. The Kurds say they object to new changes to the draft, which include giving the prime minister a somewhat stronger role in the projected oil and gas council, but also involves a slightly different decision-making mechanism on contracts: In the latest version of the bill, contracts signed by regional authorities are invalid unless they are specifically approved by the oil and gas council with a two-thirds majority; conversely, in the old draft, such contracts would automatically be valid unless they were actively struck down by the council, again with a two-thirds majority. In other words, the ability of regional authorities to push through their own contracts is more restricted in the newest draft. Last, but certainly not least, the latest draft indicates a stronger role for the ministry of oil in arranging licensing rounds also in the regional-government areas, which was seen as an exclusive competency of the regional authorities in the previous draft.

Constitutionally speaking, then, the latest “Maliki draft” (as it is already referred to by its opponents) is not that much different from the previous version. The creation of the federal oil and gas council recurs in all versions of the draft, albeit with a slightly stronger prime ministerial role in the latest one. True, there are real differences in article 18 second regarding the procedure of approving contracts, but again this is a gradual change from the last version. Perhaps the most dramatic intrusion on what some see as regional rights is the designation of a role for the oil ministry in arranging licensing rounds for the regional entities (article 14), which pro-federal politicians no doubt will see as infringement on the implicit residual right for the regions (and governorates) to sign deals for “future” fields in the constitution (only “existing” fields are specifically mentioned as falling within the exclusive jurisdiction of the central government). Of course, article 112 second of the constitution can be construed as giving the right to the ministry to get involved in all fields one way or another as far as “strategic policy” is concerned, but critics will probably argue that the involvement of the central government both at the contracting stage as well as at the decisive review stage in the oil and gas council means excessive interference.

It is unsurprising that the Kurds should react angrily to these changes. Somewhat more unexpected is the latest rush of visitors to Arbil in an apparent demonstration of loyalty to the Kurds in the oil and gas dispute, including Iraqiyya leader Ayad Allawi and the Jordanian prime minister. Iraqiyya, in particular, go quite far in some of their latest comments on the oil and gas law. Yesterday Maysun al-Damluji thundered that the latest draft was not only “unconstitutional” but also gave the oil ministry too much power! Apparently, Iraqiyya have already forgotten the outcry from Iraqi technocrats when the first oil and gas law was presented in 2007 and especially the criticism of the powerful oil and gas council headed by politicians at the expense of the ministry and the technocrats.  Had Iraqiyya been loyal to its own electorate of past bureaucrats, it would have been more logical to attack the oil and gas council as such (and restore the ministry as the chief power broker) instead of spending so much energy promoting the rights of regional entities. But by exploiting personal animosities between Allawi and Maliki, the Kurds have effectively managed to transform Iraqiyya to a pro-federal party.

For their part, Iraqiyya seems to be justifying what they are doing with reference to imaginary mathematics. Supposedly, the goal of it all is to create some kind of opposition alliance aimed at toppling Maliki. Except that the numbers just don’t add up. Even Iraqiyya, the Kurds and minority friends of the Kurds are unable to muster more than around 145 votes, which falls short of the required 163. The Kurds know this and are probably merely exploiting the show of support by Iraqiyya and Jordan to heap pressure on Maliki in order to get a better deal with him bilaterally. Perhaps the best indication of the tactics of the Kurds in this case is their sponsorship of an alternative oil and gas bill which, despite what many press reports say, in fact is not that much different from the government version. Exactly like the Maliki draft, the parliamentary version also provides for a federal commission with veto rights on regional oil contracts, albeit on slightly different terms. But the Kurds know that the parliamentary version is unlikely to go anywhere due to procedural objections by the federal supreme court, and may be co-sponsoring the bill just in order to get Iraqiyya on their side to put pressure on Maliki. 

It can be argued that if Iraqiyya cannot work with Maliki, they should seriously consider reverting to a more honest, purely opposition role from which they could speak their mind instead of producing convoluted statements of the kind presented by Damluji yesterday. If not, Iraqiyya and indeed the Kurds should be aware of an alternative scenario that is probably on Maliki’s mind every now and then: Building a majority with all of the Shiite Islamists (currently around 158) plus White Iraqiyya (10) and defector elements from Iraqiyya and then pretend to act as Iraqi nationalists and centralists. A sort of Shiite-led version of the old regime perhaps.

The more Iraqiyya continues to stultify itself with statements like the recent ones on the oil and gas bill, the greater the probability for  defections from within their own ranks. In turn, Maliki’s alternative plan, without the Kurds and Iraqiyya, could gradually become less and less utopian. Maliki may well be hoping that as time passes by, such an alternative will emerge and will eventually allow him to take a more centralist position vis-à-vis the Kurds on disputed territories and not least on the symbolically important city of Kirkuk. The Kirkuk issue is more immediately understood by the Iraqi public than complex legal oil issues and is a question where neither Maliki nor Allawi may be able to give the Kurds all they want.

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Posted in Iraqi constitutional issues, Kirkuk and Disputed Territories, Oil in Iraq | 25 Comments »