Oil distribution shows hope for Iraqi reform

By Freedom Newspapers

An agreement by the Iraqi cabinet on a draft of a new law to govern the distribution of oil revenues could be the most hopeful long-term sign in Iraq in a long time. The pact might reduce a great deal of the tension and resentment that feeds violence in that country, even though it is unlikely to end sectarian violence soon and final passage is not assured.

The problem has been known for a long time. Sunni Iraqis, who make up about 20 percent of Iraq’s population, ran the country while Saddam Hussein was in power, and fear for their future in a Shia-dominated Iraq. Shia comprise about 60 percent of the population. Not only do the Shia have reason to be bitter about the way they were treated during the Saddam era, but Iraq’s major producing oil fields are in the Shia south and the Kurdish north. So Sunnis fear repression and not getting their “fair share” of oil revenues, two factors that feed the Sunni insurgency.

The draft agreement calls for the central government to distribute oil revenues to provinces or regions based on population. It also allows regional oil companies or governments to sign contracts with foreign companies for the exploration and development of fields. Foreign experts have recently increased their estimates of unexploited oil and natural gas deposits in Sunni regions. If those estimates prove out, the Sunnis could have their own sources of oil revenues.

The cabinet passed the draft agreement unanimously after almost a year of tense negotiation, but the parliament still has to approve it. As Marina Ottaway, who studies emerging democracies for the Carnegie Endowment for International Peace warned, nobody knows how much the Iraqi government really controls oil production; much is lost to diversion and smuggling.

While the Kurds signed on to the agreement, Ottaway notes, they haven’t renounced their desire for more autonomous control over oil in their regions than the agreement contemplates. And a good deal of the sectarian violence isn’t about oil revenues or allocation of money, but about sectarian hatreds that go way beyond economic grievances.

It’s also far from a sure thing that foreign oil companies will want to enter agreements while violence is so prevalent. Oil fields can be notably vulnerable to sabotage.

Even with all those caveats, however, this is a sign that the Iraqi government is capable of constructive compromise, a key first step toward gaining more credibility, which is key to controlling violence. Color us guardedly optimistic.