U.S., al Qaeda Converge on Iraqi Oil

WASHINGTON, D.C.—Consider this week's two propaganda speeches, one from President George Bush and one from al Qaeda deputy Ayman al-Zawahiri. President Bush, speaking on the Iraq economy Wednesday before the Council on Foreign Relations, painted an upbeat economic picture-of a country increasingly under local police control, rebuilding its infrastructure, developing more small business opportunities, preparing for a revived tourist business. People are once more shopping without fear, Bush said. Bush conveniently left out meaningful talk about the only real source of economic value for Iraq: the country's oil. This is about as close as he came:

“Iraq's a nation with the potential for tremendous prosperity. The country has a young and educated workforce. They've got abundant land and water. And they have among the largest oil resources in the world.”

In a video posted this week, al Qaeda leader al-Zawahiri spoke a little more directly about that oil. Reports the Australian Age, in an article headlined Bin Laden war on West just starting: deputy:

"I call on mujahideen to concentrate their attacks on Muslims' stolen oil, most of the revenues of which go to the enemies of Islam while most of what they leave is seized by the thieves who rule our countries," al-Zawahiri said.

Beyond the obvious nihilist imperative to bomb, bomb, bomb, al-Zawahiri is getting at a real piece of news about Iraq's oil.

There have been numerous stories about Iraq's antiquated oil industry and the attacks on its pipeline system. But there has been little or no press on the biggest economic event in the nation's recent history: privatization of the once nationalized industry. Privatization is due to occur after next week's parliamentary elections in Iraq. While Iraq will remain in control of a few oil fields, the bulk of them will be licensed out in so-called production agreements-tantamount to selling oil under long-term leases. In addition, the plan calls for regionalizing the oil, placing control of one part of the industry in Sunni hands, another in Kurdish hands and one in Shiite control. That effectively ends the nationalized industry and it points towards carving up the country into three parts, giving each part at least the semblance of economic viability.

The oil riches will probably go to the Big Oil companies, which can participate in the production sharing agreements, and can also control processing and distribution.

A report called “Crude Designs: the Rip-Off of Iraq's Oil Wealth,” issued late last month, details the situation. It's worth reading, because it shows that no matter how Bush tries to play the situation in Iraq, it's all about the oil.

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