OPEC from myth to reality.

On October 31, 2003, the General Assembly adopted the U.N. Convention against Corruption, which entered into force on December 14, 2005. (245) All OPEC members are signatories to the Convention (246) which so far has been ratified by, Algeria, (247) Indonesia, (248) Libya, (249) Nigeria, (250) and the United Arab Emirates. (251) The Convention acknowledges that corruption is a "transnational phenomenon that affects all societies" and that preventing and combating corruption is a responsibility of all states. (252) One of the Convention's purposes is to "promote integrity, accountability, and proper management of public affairs and public property." (253) State parties to the Convention agree to implement anticorruption policies that reflect the principles of the "rule of law, proper management of public affairs and public property, integrity, transparency and accountability." (254) State parties also agree to adopt the necessary mechanisms to guarantee transparency in public contracting, including "invitations to tender" and awarding of contracts. (255) The Convention requires member states to establish several corruption related criminal offenses. (256) The Convention establishes civil and criminal liability of legal persons. (257)

The G8 meeting in June 2006 confirmed in its plan of action to achieve global energy security the importance to increase transparency, predictability and stability of the global energy market. (258)

Another example of the interest to combat corruption effectively is provided by the Norwegian Pension Fund--Global a $263 billion fund established to provide for Norway's population when oil resources are exhausted--which invests with a "do good" mind set, and tries not to contribute to unethical business to "ensure that [the] money doesn't go to companies linked to such things as weapons production, human rights abuses, environmental damage or corruption." (259)

OPEC could elaborate on the Global Compact values with several purposes. First, it could review the present oil and gas marketing structure and provide transparent alternatives in which oil cost and the price paid to the producer would be clearly reflected and distinguished from price increases caused by speculation and financial pressures. Second, it could promote transparency in the management of oil and gas as state resources, part of the public patrimony, providing guidelines for the adequate exploitation of such resources, clear applicable and enforceable rules of law, objective bidding and adjudication processes, and most importantly sound investments that would enable the oil and gas industry to become a tool that could transform societies for the better. Lastly, it could even play a role in enforcing international human rights by analyzing the situation of those countries rich in hydrocarbon resources and with poor human rights compliance records. Human rights should not be used as political excuses to advance foreign policy strategies. Comparing the permanent right of sovereignty over natural resources with jus cogens provisions is required to preserve the higher values that justify any legal or state regimes. OPEC could become proactive in these matters adding its petroleum industry expertise and its "developing" world perspective to a global dialogue that needs balance and objectivity.

5. Resource Wars

The use of military force to prevent "the strangulation of the industrial world" was contemplated by Richard Nixon and Henry Kissinger in 1975 as an emergency alternative to solve an oil crisis. (260) At the time, a U.S. military intervention in the Middle East may have been prevented out of the fear that could lead to the Soviet Union reaction creating what was already referred to as a "War of Energy Resources." (261)

Such a "War of Energy Resources" is on its way. On August 2, 1990, over 100,000 Iraqi soldiers invaded Kuwait. (262) Saddam Hussein declared that Kuwait was Iraq's nineteenth province. (263) The invasion was branded as "absolutely unacceptable" by British Prime Minister Margaret Thatcher and as a "naked act of aggression" by U.S. President George H. W. Bush. (264) "In response to the news of the invasion the price of oil rose dramatically." (265) On the same date, the U.N. Security Council unanimously condemned Iraq's invasion and decided that it was a breach of international law. (266) Four days later, on August 6, 1990, the Security Council established an embargo of all exports and imports by and to Iraq and imposed economic sanctions under the U.N. Charter. (267) In November, the Security Council required Iraq to withdraw from Kuwait by January 15, 1991, and authorized the use of force if Iraq did not comply. (268) On January 16, 1991, the United Nations authorized the use of force to restore Kuwait's sovereignty. (269) Operation Desert Storm was launched to force Iraq out of Kuwait. (270) On April 14, 1995, the Oil for Food Program was established through Security Council Resolution 986 authorizing the export of Iraq's petroleum products to be sold at the price determined by the United Nations, and with payment made to Iraq through a U.N. Security council escrow account which funds would be used exclusively to meet the humanitarian needs of the Iraqi people. (271) Thus, Oil War I took place with the blessings of the "international community."

Only thirteen years later, Oil War II was declared. In April 2002 Iraq called other Arab producers to stop oil supplies to the United States. (272) Iran considered this proposal "effective" as long as all Muslim countries backed such decision. (273) The possibility of once more using oil as a weapon was such that on April 4, 2002 OPEC's secretary general formally dismissed such possibility. (274) Four days later, Ayatollah Ali Khomeini expressed his views on the paralyzing effect on the global economy of an embargo on oil exports from the Islamic world, stating "[i]f [the Western countries] do not receive oil their factories will come to a halt. This will shake the world." (275) U.S.-Saudi relationships were particularly tense at this time since a majority of the September 11 high-jackers were Saudis. (276) At a meeting toward the end of April 2002, Saudi Crown Prince Abdulla complained that "[i]f the U.S. doesn't do more to reduce the violence [in the Middle East] there will be grave consequences for the U.S. and its interests." (277)

Further, Iraq had been announcing since 2000 its threat to suspend all oil exports unless the United Nations allowed it to receive payments in euros instead of dollars. (278) Iraq succeeded in this effort, and since October 2000, Iraqi exports could only be paid in euros. (279)

With all that pressure built, finally Carter's pledge became effective, and in 2003, the United States invaded Iraq. (280) Saddam Hussein referred to the U.S. goal as an "imperialistic quest for oil." (281) Kofi Annan, the U.N. Secretary General, considered that the invasion was illegal and a breach of the U.N. Charter. (282) However, less than two months after the invasion the United Nations lifted international sanctions against Iraq legalizing international negotiations of Iraq's crude. (283) According to a U.S. Department of State report:

U.S. projects have helped Iraq stabilize its oil production, and

recover from decades of neglect under the previous regime. In 2002,

UN Oil for Food data show[ed] that Iraq produced 2.0 million

barrels a day, and exported 1.3 million barrels per day.... In June

[2005], Iraq averaged 2.3 million barrels a day of production, and

1.6 million barrels a day in exports.... Iraq's overall production

target (for both production and capacity) is 2.8 million barrels a

day, which [is expected] by September 30, 2007. Iraq hopes to

average a total of 1.65 million barrels a day of exports in 2006.

(284)

The revenues for 2005 and 2006 oil production and exports reached $23.5 billion and $27.5 billion up to November 6, 2006. (285) Notwithstanding the above, only a year after the invasion the Department of State reported that Iraq's oil infrastructure was already producing 2.5 million barrels of oil per day. (286)

In 1997, Saddam Hussein's Iraq signed agreements to develop important Iraqi oil fields with Lukoil (Russia) and China National Petroleum Corporation (China), and later it negotiated an agreement with Total-Fina-Elf (France). (287) With the U.S. invasion, it is unclear what will be the future of previous negotiations and whether American companies will benefit from the U.S.-led military operation. How an upgraded Iraqi infrastructure will increase the country's production causing severe impact on OPEC's output remains to be seen. (288) Amendments to such oil and gas contracts in place, and/or new oil and gas investment laws in Iraq, will reveal one of the consequences of this resource war. In November 2006, the newly appointed U.S. Secretary of Defense responding to inquiries about a U.S. withdrawal from Iraq declared: "It seems to me that the United States is going to have some kind of presence in Iraq for a long time." (289)

Amazingly when the hostilities in Iraq commenced in March 2003, OPEC did not call for an extraordinary meeting notwithstanding the fact that a major breach of international law was affecting one of its Founding members. (290) OPEC's secretary general issued a statement:

reiterating OPEC's resolve to make up for any supply shortfall

resulting from developing events. To this end, Member countries

have pledged to use, in the interim, their available excess

capacities to ensure continued supply. In taking such measures,