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Where does the Bush-Petraeus strategy lead?

"What the U.S. has imposed on the people of Iraq is an entirely different way of dealing with foreign oil companies through something called PSAs – Production Sharing Agreements – a method that is not used by any other country in the region."

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VOICE OF ZAA NKWETA: Senior Editor Paul Jay discusses the Petraeus report on Iraq with Phyllis Bennis.

PAUL JAY, SENIOR EDITOR: One of the questions at the core of lack of political reconciliation and perhaps the underlying issue of all the conflict in Iraq, obviously, is oil. Who’s going to own it? Who’s

going to reap the benefits of its sale? There’s been a big debate about the Iraqi oil law.

PHYLLIS BENNIS, SENIOR ANALYST, INSTT. FOR POLICY STUDIES: Well, it’s extraordinary. The part of the law that we hear about all the time is the part of the law that deals with how the oil revenues will be divided among the Iraqi people. That’s an important debate that Iraqis need to have. The problem is that’s only one tiny part of this oil law that is being imposed by the United States. The far more significant part, the part that you referred to but which almost never gets any attention in the press here or in most of the discourse deals with the question of how Iraq will allow foreign oil companies to participate in the oil exploration and oil exploitation of their country. Clearly, Iraq needs massive foreign investment for its oil industry and for the rest of its economy that has been so shredded through these years of war and sanctions. The question is who sets the terms? Every other oil-producing country in the region has a national oil company which signs contracts with the foreign oil companies that are then allowed to come in to do a certain task. So in Saudi Arabia, for example, the Saudi oil company may contract with Shell oil or with Chevron or whoever to come in and drill in a certain oil field, for instance, and they pay, they pay through the nose, they pay huge fees, but they’re paying for a specific task to be done. The oil belongs to the Saudis. What the US has imposed on the people of Iraq is an entirely different way of dealing with foreign oil companies, through something called PSAs, production sharing agreements, a method that is not used by any other country in the region.

JAY: How does it work in Saudi Arabia? What’s the relationship between the Saudi oil and foreign investors?

BENNIS: Saudi oil belongs to the Saudis. The Saudi oil company Aramco has a way of controlling its own oil. It contracts with foreign oil companies only to do specific tasks. So they’ll sign a contract with some oil company to come and drill a certain field and then go home. The US is trying to get Iraq to sign the kind of agreements that would sign over control of the oil itself to these oil companies that would privilege particular foreign oil companies.

JAY: And in the American political debate, in the political circles of Washington, is anyone advocating more of a Saudi model for Iraq oil in either of the political parties?

BENNIS: No, not in any of the political parties. In the debate within the peace movement, within the analysts, everybody knows about this and is talking about it constantly, but in the mainstream discourse this is not even on the agenda.

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