IRAQ - Focusing On The Non-Oil Sector - Part 17 - Iraqi Complications & 'Saddam Curse'.

Spending almost $1 trillion in efforts on all fronts - including cash, with the war bill now exceeding $2 bn/week - and having lost so many American lives, the Iraq project seems to be the costliest thing Washington has undertaken since World War II. Yet the complications in Iraq keep multiplying as if the so-called "curse of Saddam" is embracing all the parties concerned, not even sparing any of Iraq's neighbours - with special focus on the Iran-led axis of anti-US forces including Syria, on Turkey, and on a US-led anti-Tehran alliance including Egypt, Jordan, Saudi Arabia and most of the latter's Gulf Co-operation Council (GCC) partners.

The US has launched big military offensives on Sunni and Shi'ite insurgents in Iraq, with emphasis on the Neo-Salafi groups whose suicide bombings have terrorised Iraqis and thwarted political reconciliation (see Part 16 in ood6-IraqUSoffensiveJun25-07). But the results so far have been mixed (see rim1-IraqTacklingNeo-SalafisJul23-07). The Iranian challenge keeps growing (see news4SyriaShi'ismJul23-07), creeping regionally to include Bahrain and Lebanon (see news5IranReclaimingBahrainJul30-07).

The Petroleum Complication: To the US, as well as to a weakened Iraqi government unable to fix the most vital sector of the economy, the proposed petroleum law faces a big obstacle. After strong opposition from many MPs and objections from the Kurds in the north, Iraq's oil unions now say the draft petroleum law is a threat and have vowed to "mutiny" if parliament approves the bill.

Despite pressure from Washington and PM Maliki, Iraq's parliament this week appeared poised to adjourn for the month of August, with debate on critical laws including draft petroleum legislations delayed until September. US politicians have often expressed anger that Iraq's parliament might take a summer break while US troops are fighting and dying, and the decision to adjourn might cause a political backlash. Officials have urged the MPs not to adjourn.

Several MPs have expressed frustration that most big decisions are hammered out by the heads of the main blocs behind closed doors, rather than by parliament in open session. Independent Kurdish MP Mahmoud Othman says there is no point in parliament's remaining in session "when you have no laws, when things are not agreed upon among the main factions, when there's no amendment to the constitution coming in, when there is no de-Ba'athification law, when there is no [petroleum] law". He was referring to several key pieces of legislation as well as a reform of the law to partially reverse a purge of the former ruling Ba'th Party from public life and several changes to the constitution.

Washington hoped those reforms would help ease sectarian tensions and, possibly, persuade more mainstream Sunni nationalist insurgent groups to throw in their lot with the existing political process. Of these, the petroleum law is the subject of disagreements between the main ethnic and sectarian blocs. Some MPs say they have yet to see a draft of the law, while others claim to have received contradictory versions.

Al-Sharqiyah TV station on July 20 quoted Subhi al-Badri, head of the Iraqi Federation of Union Councils, as saying: "This law cancels the great achievements of the Iraqi people". He was referring specifically to laws under which Saddam's Sunni/Ba'thist dictatorship in 1972 nationalised Iraq's petroleum sector.

Iraq holds 115 bn barrels of proven oil reserves, the third largest in the world, and is likely to have more than 325 bn barrels if the country is fully explored. It could produce far more than the 2m b/d it is now pumping, and many are pushing the petroleum law as a means of solidifying investment in the sector. The law, as drafted and more recently amended, allows for foreign access to the petroleum resources, a line which the oil unions say must not be crossed.

The unions have threatened to strike in the past - and made good on the threat as recently as in June - and claim that workers of all sectors support them. That was reiterated by Badri. He said: "If the Iraqi parliament approves this law, we will resort to mutiny. This law is a bomb that may kill everyone. Iraqi oil does not belong to any certain side. It belongs to all future generations". The law is stuck in negotiations with various parties demanding either a strong regional/local control over the sector, versus a strong federal government control.

More than 75 MPs who had boycotted parliament over disputes with the government returned on July 19. But the largest Sunni bloc, the Iraq Accordance Front (IAF) which holds 44 of parliament's 275 seats, on July 25 threatened to continue boycotting the cabinet. The Shi'ite movement of young mullah Muqtada al-Sadr, with 32 seats, also returned but it indicated it was still frustrated with Maliki, in part because of lax reconstruction of the bombed al-Askari shrine in Samarra'.

MPs opposed to the petroleum law may still block the measure if it is taken up. Nawal al-Majeed, a female MP from the IAF, on July 25 was quoted as saying the petroleum law was "not suitable for us". She said: "Iraq now does not need a petroleum law. We need other things". The IAF, like others, says the draft weakens the federal government and is too friendly to IOCs. Its current version is less than clear, as is its status. Negotiations between the Kurdistan Regional government (KRG) and Baghdad have been ongoing for a year.

The KRG and Baghdad reached a tentative deal in February, which the KRG blocked when Baghdad revealed its breakdown of oilfield control, citing its interpretation of the 2005 constitution. The KRG says changes made to the draft earlier in July, when the cabinet approved the law and sent it to parliament, are a no-go. (This should not be confused with the revenue-sharing law, which would redistribute the oil proceeds).

The Kurds are trying to move past the isolation and brutality inflicted by Saddam's dictatorship by demanding regional power. Sunnis, on the other hand, fear they will miss out on investment if regions are strong. And Kurds want to capitalise on the economically evolving and relatively violence-free autonomous region they have developed; from that standpoint they are negotiating on a stalled law.

KRG Natural Resources Minister Ashti Hawrami was on July 20 quoted as saying; "Unfortunately, right now we are only talking at cross purposes". He said amendments to the law adopted earlier this year "changed the originally agreed document beyond recognition", adding: "We are trying to recover from that unauthorised intervention, but the progress is very slow. This was a calculated attempt by those involved to bury the agreed document and prevent the law from being passed".

Earlier in July, 108 Iraqi oil, economic and legal experts wrote a letter to parliament urging it to retain a strong federal role and to put the law on hold until potential amendments to the constitution were dealt with. An un-named "senior Iraqi official" was on July 20 quoted as saying: "I think it's a legitimate call. This law is going to affect our lives; it's going to affect the lives of our children". The law's inclusion is part of President Bush's and Congress' benchmarks for Iraq's government. MPs doubt it will be approved soon.

MP Mustafa al-Hiti, with the secular Sunni National Dialogue Front (NDF) which has 11 seats in parliament, says his party will not attend the session devoted to the petroleum law, adding: "What's the point of going to parliament if you are doing nothing or cannot do anything for your people? Nothing is working in Iraq. It is paralysed completely. So the country is really in chaos". He says Maliki's ruling coalition - dominated by Shi'ites with links to Iran and Kurds - was trying to consolidate power in parliament as a means of evading dissidents.

Hiti says: "Instead of parliament addressing the government and controlling the government, I feel the government is controlling the parliament". His NDF is working with other opponents of the petroleum law in their backing of the central government's role and limited foreign involvement, adding: "Many members of parliament share our attitude. We are working now outside the parliament to get all these groups together in order to vote against this when the time comes". He says parliament's prerogative should address the security situation, adding: "The militia is the only people who are in the street. The fear is just covering the faces of the people...There are no services". There had been no electricity for three straight nights at the al-Rashid Hotel, where he was staying, in the "green zone".

Hiti says even the US-protected "green zone" - a supposedly secure haven for government which has taken on such an increase in attacks that the US State Department has ordered its employees to wear flak jackets at zone restaurants - is no longer safe. He adds: "So what do you expect for the other parts of Baghdad and what about the state of the people outside?"