Gulf Oil Spill: It Can All Happen Again

October 17, 2011

Antonia Juhasz: Deep water drilling continues as little has been done by regulation or technology to improve the situation

Antonia Juhasz: Deep water drilling continues as little has been done by regulation or technology to improve the situation


Story Transcript

PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I’m Paul Jay in Washington. And there’s a lot of debate going on in Washington about whether or not US troops really should be getting out of Iraq at the end of this year, which they’re supposed to, according to the forces agreement they have with the Iraqi government. And there’s various voices saying maybe the Iraqi government should invite the US to stay on longer, and there’s lots of discussion about maybe the US shouldn’t want to stay on longer, and including, I guess, the most obvious reason. Don’t hold your breath. It’s oil. Now joining us to talk about Iraq and just where things are with the Iraqi oil industry and who ended up owning the oil anyway is Antonia Juhasz. Antonia is the author of the book The Tyranny of Oil, and she joins us from San Francisco. Thanks for joining us again.

ANTONIA JUHASZ, AUTHOR: Thanks for having me.

JAY: So let’s–before we get into this debate in the US foreign policy circles, let’s just catch up. My last kind of recollection of following this story is that the oil law, which you’ll tell us more about, didn’t pass, but there’s a lot of oil being pumped. So who owns what’s being pumped, and where are things at with the oil law?

JUHASZ: Yeah, there’s been a long, very public fight, first started by the Bush administration, on behest of the oil companies that basically operated both within and without of the administration to utilize the invasion of Iraq as a way to open up Iraq to Western oil companies, which haven’t been able to operate in Iraq since the 1970s nationalizations. And there were two methods that were pursued to do that. One was to get the Iraqis to pass a new national law, the Iraq oil law, that would lock in guaranteed market access, under incredibly lucrative terms to foreign companies, to foreign companies–basically, transition Iraq from a nationalized oil system to an all but privatized system. The fight over that law has been very public, and there has been great opposition to it by Iraqi parliamentarians, oil workers unions, civil society groups, people all around the world. And that battle is ongoing. At this very moment, the Iraqi Parliament is still debating trying to get law through, and still has been unable to do so. While that public process has gone on, a much quieter process has proceeded, which is a contracting process, a series of rounds opening up, contract by contract, new oil fields in Iraq to foreign companies. And this process has taken place using contract terms that are essentially the same as what is in the law, but in–contract by contract.

JAY: The law that they couldn’t get passed through the Iraqi Parliament.

JUHASZ: That’s right.

JAY: They’re just doing it, they being the Maliki government.

JUHASZ: That’s right.

JAY: And under what legal basis are they signing the contracts?

JUHASZ: That the central government has always had the legal authority to sign oil contracts. This was started under Saddam Hussain and continued into the new administration, the post-Hussein administration. Certainly there are parliamentarians who argue that the contracts aren’t legal unless they go through the Parliament. But based on the existing law put in place by Saddam Hussein, the contracts seem to be legal, although there is dispute over this.

JAY: Okay. So just to be really clear for all of us, there’s kind of two basic ways a country can deal with its oil. It could have a national oil company, like in Saudi Arabia, where the national oil company goes–it pumps the oil and then sells it to whoever wants to buy it on the world market, or you let oil companies directly own the oil, and they take it to the world market. Is that right?

JUHASZ: Yes, but there’s a lot in between. And even Saudi Arabia, for example, while it has a nationalized oil company, it partners with foreign oil companies regularly on technical contracts when it needs assistance. It partners with foreign companies for two- to three-year terms whenever it feels that it needs the help. And that’s one model, and it’s certainly the model most commonly used throughout the Middle East. The model that’s now being used in Iraq is not full privatization, meaning that the private companies outright own the oil, do all the producing, own every piece of it, but rather a incredibly rare hybrid that’s really only using about 12 percent of the world’s oil, which gives the foreign oil companies a great deal of ownership, authority, and long-term twenty-year contracts, compared to the two in the technical service ones I discussed; allows them to come into the country, produce the oil themselves, and have a tremendous amount of control over profits and decision-making. Now, under those terms, ExxonMobil is now producing in Iraq for the first time in 30 years. BP is producing in Iraq, Shell, Occidental–another US oil company. And these companies gained this access, really, unknown, I think, to most Americans and most Westerners, as well as many people within Iraq.

JAY: Now, there’s–a story’s been broken in the business pages in the last few weeks about a new venture capital fund of some sort run by Nat Rothschild and Tony Hayward, the former head of BP. And they just bought into an Iraqi oil company. [Can you] tell us a bit about that deal? And is that kind of typical of what’s going on?

JUHASZ: Well, it’s sadly not surprising. Tony Hayward and BP were very aggressive in lobbying the British government to make sure that BP in particular got a slice of the pie, and worked to make sure that Iraq was open to foreign oil companies. I think some would go even further and say that BP lobbied to actually get the British to engage in the invasion. I don’t have proof of that, but people have certainly argued that. But at a minimum, we must clearly have proof–really, put forward by an amazing researcher, Greg Muttitt, in London, that executives at BP directly lobbied the British government to make sure that when contracts were handed out in Iraq, that they would get a piece of the pie. And in fact BP was the very first oil company to get a post-invasion production contract in Iraq. Now, Hayward, of course, got kicked out of BP because of his role in the largest oil spill in world history, the Gulf oil disaster, but that didn’t stop Hayward from cashing in on all his hard work while he was at BP. He simply went out and bought an oil company, a Turkish oil company that was already operating in Kurdistan, and now he’s cashing in on his work in Iraq.

JAY: So where is this likely to go now? I mean, is this quasi-limbo of the law going to continue, and, in other words, they continue privatization without a law to do it? What’s happening in the Iraqi Parliament about all of this?

JUHASZ: Well, there’s two things that are happening right now. In January, there is a new negotiating round that is going to take place for new contracts in Iraq. This is going to be a massive negotiating round. Every oil company in the world is set to participate. It’s a massive selloff of Iraqi oil. That is set to happen, of course, in January, which is just at the same time when the US occupation is technically supposed to end. It’s one of the reasons why few of us think that the occupation actually will end, and why, you know, even if a sizable amount of US troops do actually leave, that the large–enormous number, 100,000-plus, of private military contractors will stay. But at the same time, as this contracting round is getting ready to take place, the fight over the oil law is still taking place. And one of the places where this fight is most aggressive is between the Kurds in the north and the central Iraqi government, because the Kurds want to control their oil, and the central Iraqi government wants to control the oil. It’s a lot of oil. And the Kurds have really played a strong role in stopping the oil laws, as currently drafted, from going through. So, you know, all of this, the fight over the law, the contracting negotiation rounds, is, of course, all playing into the discussion of whether US troops will stay or they will go. And certainly one reason why some would argue that they should stay is to protect US and Western oil companies and their interests.

JAY: Well, in a piece you–an op-ed you wrote, or a letter to The Washington Post, you quote Meghan O’Sullivan, a former adviser to the Bush administration, who wrote a piece straightforwardly saying US should stay in order to secure Iraqi oil. What was that argument she gives, and how did you respond to it?

JUHASZ: Yeah. Meghan O’Sullivan was one of the key Bush administration officials in Iraq throughout the war. One of the things that she did was work on the oil law and on the oil sector in Iraq. And she wrote a very lengthy op-ed in The Washington Post which made several arguments for maintaining the occupation beyond the deadline, which is supposed to be at the end of this year. But she said, you know, but probably the most important reason why US troops should stay is because of Iraq’s oil and maintaining security and access to that oil. And I was fairly astounded, personally, to see that argument just–the honesty on–you know, to have in The Washington Post [incompr.] finally just written, you know, this is the reason why we think troops should be in Iraq, and to have that level of honesty put forward was very refreshing. And so in response I wrote a letter to be editor, which The Post published, thanking Ms. O’Sullivan for her honesty, and then saying, you know, this may be a reason why some think troops should be in Iraq, but frankly, the American public doesn’t buy that argument and never has. We have never thought that we should have our troops kill and die for oil. And beyond that, it’s illegal. There’s no international law that supports the idea of a military being utilized in a foreign country to control access to that country’s oil. There’s only very strict guidelines under legal occupation, and that’s if you’re direct–for self-defense, immediate self-defense of your country from another.

JAY: Now, some people have suggested that in spite of all the–what they call blood and treasure, which is a phrase that always makes the hair stand up on the back of my neck, that you can compare people’s lives with the funds to fund the war. But at any rate, that–in fact, the US oil companies have done nearly as well, both in terms of not getting the oil law they wanted, and getting the contracts they wanted, that a lot of the major early contracts went to China, and that there’s such anti-American sentiment in Iraq right now that that may continue. What’s the state of that?

JUHASZ: Well, the major Western companies that have gotten contracts have partnered with Chinese companies. That’s how they got them. And so ExxonMobil is partnering with CNPC, the Chinese national oil company, with its contract. And that’s typical, that we’re seeing the Western companies partnering with companies from countries that are more friendly and on better relations with Iraq, so that they could get in, and that there were many Western oil companies that were shut out of these early negotiating rounds. And I think the reason for that is, as you say, there is a tremendous anti-Western sentiment, and in particular a sentiment against Western oil companies producing in Iraq, because that’s what the circumstances were before the nationalizations [incompr.] the Western oil companies owned Iraq’s oil and controlled it very much to the detriment of Iraq and its own economic development. That’s why the nationalizations took place and the companies were kicked out. And so there’s a tremendous opposition within Iraq to the war being a means through which those companies come back in. That said, several of those companies are now back in. The biggest, in fact, are back in–Exxon, BP, Shell–and the rest of the companies are trying to get back in. And we’ll see what happens in this next negotiating round. But I think the reason why the contracts went–didn’t go to many of the Western oil companies is also because the terms of the contracts, as I said, are so favorable to the foreign companies, to the detriment of Iraq’s economic development, that I think a way for the central government to try and gain sway or, you know, get this process through without too much internal upset was to give the contracts to companies from countries that have a better relationship with Iraq.

JAY: Like China, and who acts a bit like a stalking horse, then, for the Western oil companies.


JAY: Thanks very much for joining us.

JUHASZ: Thanks for having me.

JAY: And thank you for joining us on The Real News Network.

End of Transcript

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