What Does Iraq’s New Oil Law Say About an Invasion?

Iraq’s new oil-hydrocarbon law, and the push to see it quickly passed, has begun to raise serious questions among observers and critics.

The Iraqi cabinet approved the hydrocarbon law on Feb. 26 and sent it on to parliament where it now sits. If fully approved, Iraq’s oil reserves would be opened to investment from foreign multinational oil companies. The current legislation would also provide oil companies the option for long-term contracts of up to 30 years. The laws would set up Profit Sharing Agreements, or PSAs, where revenue is based on the profit after oil companies’ deduct their production costs. Reportedly, the remaining profits would then be divided among the Iraqi provinces.
Critics charge that the law offers excessive and unfair profits to the oil companies. Others worry that since Iraq is now a country experiencing horrific turmoil, the time is not right to debate such important economic legislation.

Supporters of the oil law disagree. They say the regulatory, legal and tax structure the oil law sets up, will invite the necessary outside investment the country needs to jumpstart its economy. They see the law as an enabler of market-based economic infrastructure that will produce streams of revenue, helping restore stability and prosperity for the Iraqi people.

In the background, outspoken opponents of the war say the push for such a law is evidence that the war had more to do with gaining access to oil than what the public was told.

“This story raises so many more questions than it answers,” said Dr. Louay Bahry, adjunct scholar of public policy at the nonpartisan Middle East Institute in Washington D.C.

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