Iraq Oil Riches to "Reward the Cronies and Allies" of the U.S.?

The front of Sunday Week in Review's featured economics reporter Peter Goodman's "For Iraq's Oil Contracts, a Question of Motive." The paper's resident economic gloom-meister cast a suspicious left eye on American motives in Iraq, although the text box attributed those suspicions to convenient "critics":

Officially, Iraqis are in control. Critics suspect that Americans pull the strings.

Goodman began with a survey of the situation from a paranoid perspective reminiscent of anti-war documentarian Michael Moore:

From the first days that American-led forces took control of Iraq, the conquering army took pains to broadcast that it was there to liberate the country, not occupy it, and certainly not to cart off its riches. Nowhere were such words more carefully dispensed than on the subject of Iraq's oil.

As they surveyed facilities in the weeks after Saddam Hussein's government fell, American officials said they were merely advising Iraqis on how to increase production to finance the democratic nation being erected across desert sands that, conveniently, held the third-largest oil reserves on earth.

Many critics of the invasion derided that characterization. In Arab countries and among some people in America, there was suspicion that the war was a naked grab for oil that would open Iraq to multinational energy giants. President Bush had roots in the Texas oil industry. Vice President Cheney had overseen Halliburton, the oil services company. Whatever else happened, such critics said, energy players with links to the White House would surely wind up with a nice piece of the spoils.

Behind those competing conceptions was a fundamental reality that forms the wallpaper for American engagement in the Middle East: oil, and its critical importance to the American economy, has for decades been a paramount interest of the United States in the region. Almost everything the United States has tried to do there - propping up autocrats or seeking democracy, fighting terrorism or withstanding Soviet influence, or, in this case, toppling the dictator Saddam Hussein - could affect the availability of oil for American markets and therefore entailed some calculation about it.

Today, the question hanging over Iraq is whether its natural endowment will be used to help create a sustainable new state, or will instead be managed in ways that reward the cronies and allies of the country whose army toppled Mr. Hussein. Or perhaps both at the same time.

That basic question was yanked back to the fore recently when word emerged from Baghdad, in a report in The New York Times, that the Iraqi oil ministry was close to awarding contracts to service its oil fields to some of the largest Western oil companies. While relatively small, these contracts could serve as a foot in the door for much more lucrative licenses to explore widely for Iraqi oil.

Russian and Chinese oil companies are among the alleged victims in Goodman's telling - the same countries that tried through the UN Security Council to ease U.S.-sponsored sanctions against Hussein's Iraq.

Iraqi officials said the no-bid deals reflected nothing more than pragmatic stewardship. Iraq needs to get more oil out of the ground to finance reconstruction, they said, and the oil giants getting the contracts have the skill to make that happen.

But those most suspicious of the Bush administration's motives fixed on the contracts as validation. They accused the administration of pulling strings and shelving concerns about preserving Iraqi sovereignty, in favor of expedient deal-making in a time of exploding oil prices.


Five years later, the Iraqi oil ministry is about to hand out secretly negotiated contracts to a few companies that Saddam Hussein removed, while excluding firms from the countries that had better relations with the dictator.

In an interview last week,[Iraqi oil advisor Phillip] Carroll said he assumed critics would assert unsavory motives, but he said that missed the point.

"These companies are long familiar with Iraq and have wonderful technology and loads of money," he said. "The Iraqis could develop their own skills by learning from the international oil companies."

But energy experts argue that Iraq is one of the easier places on earth to summon oil from the ground, making the pedigree of the companies less significant.

Given that Saddam Hussein is no longer in charge, is it really that "unsavory" to excludecountries that tried to keep him in power?