Iraqi lawmakers argue for caution in shaping oil law

Iraqi lawmakers offer varying predictions for when the long-awaited oil law might pass parliament: in a month, by August, perhaps by fall.

The White House envisions passage this month of the law to share revenue among Iraq's sectarian populations and regulate foreign investment in oil. Congress wants quick approval as a sign of Iraq's seriousness about national reconciliation.

Iraqi legislators, however, have expressed strong concerns about holes in the legislation that, they say, could adversely affect the country in the long run. Most acknowledge the need for a law that will modernize an all-important industry. But, they say, they are creating a structure that will go to the heart of Iraq's future identity – and thus cannot rush the process. "It will pass, but it still takes much time and much negotiation," says Bayazid Hassan, a Kurdish member of parliament who warily predicts a late July passage. "We, too, want a law to settle this very important matter for Iraq, but it is too important for us to do this according to the schedule of others."

Still, the legislature appears to be making progress on other key benchmarks.

•The parliament's constitutional reform committee voted Tuesday to submit a set of revisions to lawmakers next week – technically meeting a constitution-imposed deadline of mid-May for presenting the draft changes. But the controversial issues still to be debated include the right of provinces to form powerful regions similar to the one the Kurds have in the north, and references to Iraq's Arab identity. The Sunnis reject the former, while the Kurds oppose the latter.

•Sunni Vice President Tariq al-Hashemi announced that proposals for revising the de-Baathification Law would be submitted to parliament next week. Approval could allow thousands of former Baathists to return to state jobs and quiet Sunni threats to pull their ministers out of Prime Minister Nouri al-Maliki's government.

Ryan Crocker, the new US ambassador to Iraq, says he sees "an awareness and a focus on the part of the Iraqi leadership" over the last week that he had not detected earlier. Citing a succession of meetings involving Iraq's top political leadership "that I'm not sure we've seen in the past," Mr. Crocker says he sees "steps in the direction" of national reconciliation.

Those include negotiations on the oil law, expected to pick up pace next week when representatives of the Kurdish Regional Government arrive in Baghdad to iron out differences with central-government authorities.

But, he adds, "the Washington clock runs a lot faster than the Baghdad clock."

And the oil law, already a repository of Iraqi sensitivities to sectarian divisions and decades of foreign exploitation, is increasingly mired in a Washington-Baghdad tug of war over Iraq's political progress.

As Congress continues its search for a way to fund the Iraq war that is not simply a blank check, the idea of setting "benchmarks" for Iraqi political action is gaining support. President Bush has spoken approvingly of war-funding legislation that calls on Iraq to move on issues the US believes would address its sectarian divisions and boost reconciliation.

Those benchmarks include revision of the de-Baathification law that has barred members of Saddam Hussein's Baath Party from employment, constitutional reforms promised to the minority Sunni population, provincial elections, and the oil law.

Republicans and Democrats are piling on Iraq's lawmakers for not moving faster. Sen. Mitch McConnell (R) of Kentucky, in a recent CNN interview, called the Baghdad government "a huge disappointment" and added, "I don't know what their problem is."

But when it comes to the oil law, their "problems" are many, Iraqi lawmakers say.

In its current form the law is ambiguous, many say, leaves too many gaping holes to fill at some later date, and fails to clearly delineate the rights and responsibilities of the central government and those of regional governments.

Then there are the ideological and sectarian misgivings. Many Sunnis – who feel vulnerable as a minority and come from a tradition of strong central government – oppose the legislation as a doorway to Iraq's dismemberment. Sunnis generally want a new Iraq National Oil Co. to be a strong federal power.

Many Kurds, meanwhile, are furious that annexes to the law would, in their view, give jurisdiction over a vast majority of oil fields to a centralized authority, with only a pittance left to regional governments like that in the Kurdish north. Some nationalists and the oil workers' union in particular tar the law as a privatization of the Iraqi people's common wealth.

Ambassador Crocker, speaking with a group of Western journalists Thursday, said sorting out such defining issues among "all of Iraq's communities ... is in its own way as important as some of these national issues we've been focused on."

The draft law could probably pass if put to a vote now, some analysts say, but its gaps and vague wording on key issues like contract-signing authority could mean big problems later and discourage essential foreign investment.

"This is an issue of great importance for every Iraqi, not just 51 percent of Iraqis, so it is important that this law be written to have the support of a wide majority," says Tariq Shafiq, a prominent Iraqi oil expert who served on a committee that wrote the oil law draft last year. "Given the present wounds in Iraq, it would not be wise to rush to something with potential to cause more difficulties later."

Mr. Shafiq says the committee he served on tried to "make the best" of often-conflicting political demands, but adds that subsequent revisions to their draft have weakened the law and made it more confusing.

The changes, he says, have added layers to the contract process and regional involvement that invite trouble. "The longer the chain of decisionmaking, particularly in areas that don't have the institutions equipped to do this, corruption becomes a bigger problem," he says.

Other issues include the division of oilfields between the Iraq National Oil Co. and regional governments, and the makeup of a national oil and gas council that would include foreign participation.

The Kurdish regional government was shocked when the central government divulged a list of operating oilfields last month that assigned more than 90 percent of them to national jurisdiction. The region's governor, Mustafa Barzani, is to visit Baghdad next week, giving Kurdish lawmakers hope that disputes can be resolved.

"Two issues remain of the highest importance to the Kurdish side: how the oil revenues will be shared and how new investment agreements will be signed with foreign companies," says Fryad Rwandzi, a Kurdish member of parliament. "The Kurdish delegation will address that ... and if the results are satisfactory, we could have passage ... soon," perhaps by mid-June.

But other lawmakers insist it will take more time – in part because the months of debate and media attention have exposed the law's shortcomings and provided fodder for opposition from all sides.

Abdel Hadi al-Hassani, a Shiite member of parliament from a branch of Mr. Maliki's Dawa Party, says that proposed "production-sharing agreements" with foreign oil firms are so tarnished that they will have to be changed.

"Like the US Congress, we wish this could all be done yesterday, but given what remains to be done it will take at least four months," says Mr. Hassani. "We appreciate any congressman trying to help, but they have to understand that we are thinking about the interests of Iraq for the long period of time."