May 18, 2007
The Honorable Nancy Pelosi
The Honorable Harry Reid
United States Congress
Dear Speaker Pelosi and Senator Reid,
We recognize and applaud your escalating efforts to bring peace to Iraq and to bring our troops home. However, we are concerned about the proposed Iraqi hydrocarbon law and the benchmark in the Iraq supplemental urging the Iraqi government to pass this law as soon as possible.
Americans are counting on your efforts in Congress to end the war and bring the troops home in a way that rebuilds the credibility of our nation and reaffirms America's position as a force for freedom and democracy in the world. However, if Democrats are perceived to be advocating withdrawal only after access to Iraqi oil has been assured this will do little to reassure critics.
The proposed Iraqi Oil Law will open up Iraq to international oil companies for the first time in decades, and potentially rob the Iraqis of billions of dollars. We are therefore joining Hasan Jum'a Awad, Head of the Iraqi Federation of Oil Unions urging you "not to link withdrawal with the oil law".1
As you know, Iraq has at least 115 billion barrels of known oil reserves - 10 per cent of the world total. Oil accounts for more than 70 per cent of Iraq's GDP and 95 per cent of government revenue.
There is a strong opinion among Iraqis and many Americans that control of oil resources was a major motivation for the Bush administration in going to war. Passage of an oil law that could benefit international oil companies and arguably disadvantage the Iraqi people is therefore not in the long term interests of peace and stability in Iraq.
According to a recent statement by the combined leadership of Iraqi Unions:
"Iraqi public opinion strongly opposes the handing of authority and control over the oil to foreign companies, that aim to make big profits at the expense of the people. They aim to rob Iraq's national wealth by virtue of unfair, long term oil contracts that undermine the sovereignty of the State and the dignity of the Iraqi people."2
The oil law is a critical and delicate piece of Iraq's future. It deserves time to be fully debated, and for consensus to develop. As current oil industry consultant and former Reagan Administration appointee J. Robinson West said recently on NPR’s Diane Rehm show:
"I think, frankly, it's a mistake that this be one of the benchmarks for the performance of the government. This is like saying for the United States - well why don’t you solve states rights or slavery in six-week period?"3
In sum, our concerns about this law as currently drafted are as follows:
--The details on revenue sharing, which are a central and key component, have yet to be agreed.
--The law could effectively take the majority of Iraq's oil out of the exclusive hands of the Iraqi government and open it to international oil companies for a generation or more.4
--The law sets no minimum standard for the extent to which foreign companies would not have to invest their earnings in the Iraqi economy, partner with Iraqi companies, hire Iraqi workers or share new technologies.