March 2, 2007

Dividing the Tar Baby

Hatched by Dafydd

Or, the text and subtext of black gold

This AP story amazes; it manages to encapsulate, in a very few words, the essence of what is happening overall in Iraq; what America's role in the transmutation; and even points to the challenges and achievements still to come.

This is a tale of shrinking the Non-Integrating Gap, one country at a time; and this is exactly how it will be done:

The Iraqi Cabinet approved draft legislation Monday to manage the country's vast oil industry and divide its wealth among the population, a key U.S. benchmark for progress in this country. The legislation now goes to parliament for approval....

All major parties [of the Shia, the Kurds, and the Sunni] have agreed to work for approval of the measure by May, but there are no guarantees in Iraq's fractious, sectarian political system.

There it is in a nutmeg: Representatives of the entire country of Iraq have finally agreed that their own economic and political interests are best served by constructing a national rule-set for divvying up the oil leases, oil contracts, and oil revenue -- rather than every Arab for himself.

We all hope it will pass parliament; but even if it does not, the impetus is there: The government will simply amend the bill to take the objections into account and try again, and eventually it will pass.

That's not Gap thinking; that's Core thinking. And it's beautiful to see.

But wait, what exactly is the deal? Is it really fair and just to every province?

Under the measure, revenues will be distributed to all 18 provinces based on population size -- a concession to the Sunnis whose central and western homeland has relatively few proven reserves. Most of Iraq's oil is in the Kurdish north and Shiite south, and many Sunnis fear they would be cut out of a fair share....

Under the oil legislation, regional administrations will be empowered to negotiate contracts with international oil companies. The contracts will be reviewed by a central government committee in Baghdad headed by the prime minister.

Note the strong appeal to an almost American-style Federalism: the central government does not control how the provinces or regions distribute their oil revenues, nor is the ultimate power to negotiate held close by parliament. Instead, the regions or provinces can negotiate deals, subject only to a veto by the national government. This is a huge improvement from the traditional parliamentary system, which is Nationalist, not Federalist (the central government decides everything and tells the states, provinces, or prefectures what to do).

All Iraqi provinces get a per-capita share of the revenue, whether they actually produce oil or not. This represents the long-awaited recognition by Iraqis that they'll all in this game together. The Sunni may not have any oil, but they carry out other services (anything high tech, for example) that enables the oil to flow... and without the cohesion of a unified national state, there would be no oil to pump or sell.

But why is it so important to come up with a new economic rule-set for oil revenues and contract negotiation? Why don't the majority Shia just seize all the oil revenues from the southern fields and let the Kurds keep all the revenue from the north? Why not just have warlords and tribal leaders control everything, using oil as a way to bribe the West, as Saddam always did?

Because they desperately want foreign investment, which further integrates Iraq into the global economy:

A new law is needed, most outside experts believe, to encourage international companies to pour billions into Iraq to repair pipelines, upgrade wells, develop new fields and begin to exploit the country's vast petroleum reserves, estimated at about 115 billion barrels.

According to Iraqis familiar with the deliberations, the draft law would offer international oil companies several methods to invest, including production-sharing agreements. Those would give U.S. and other international companies a substantial share of the oil revenues to recover their initial investments and then allow them big tax breaks.

The correlation is absolute: Iraq needs the huge Western companies, with their staggering financial and engineering resources, to heavily invest in the oil fields in order to fully exploit their potential value. But such companies as Exxon-Mobile and Royal Dutch Shell will not invest any significant money at all -- unless they are assured that there is a just, fair, and predictable rule-set that will ensure Iraq doesn't treat them like Hurricane Hugo in Venezuela:

  • There must be strict rules governing who gets what from each deal;
  • The rules must be in writing and known in advance;
  • The interpretation of rules must be consistent from contract to contract; you cannot have a tax of 10% suddenly become a tax of 30% because a creative judge decided the government needed more revenue;
  • There must be a civil-court system that has actual teeth and will treat all litigants with fairness and justice;
  • Above all else, business wants stable growth: they hate surprises... and a system like Iraq had under the late and unlamented dictator was full of 'em. Every time Saddam's mood changed, so would change the contracts, like a weathervane.

This new law -- when passed by parliament -- will go a long, long way towards reassuring "big oil" that they will make a profit, that they will be able to predict the profit, and that the profit (or even the original investment) won't be "nationalized" away from them, and that they won't be forced to pay a bribe at the drop of a turban.

But did the United States have anything to do with this? Are we doing anything in Iraq besides killing people and breaking things? I'm glad you asked:

The tortuous negotiations are reminiscent of the intense American arm-twisting, public pressure and backroom dealmaking that have pushed nearly every step in Iraq's political transformation since the U.S.-led invasion nearly four years ago.

The process sometimes has produced agreements that enabled Washington to declare success but ultimately created a new set of problems -- such as a divisive 2005 election that invigorated the Sunni insurgency, and a new constitution that the U.S. now acknowledges must be amended substantially to bring peace.

Hey, how about that? Is this perhaps the first time that the Associated Press has admitted that America has been working just as hard to build a nation, where once there was only a criminal state, as we have to kill the bad guys?

And notice now negatively AP sees this process: How else do they expect a nascent country like Iraq to make the painful transition from tribalist, traditionalist Gap state to Core state but by being dragged, kicking and screaming all the way? And that "new set of problems" they worry about is akin to the new challenges faced by a child when he transitions to being a teenager.

We are giving Iraq a future; we are slowly raising them to Core status. In a generation, Iraq will be a free, stable democracy with a very significant per-capita GDP... and they will be our allies. How do I know this? Because fellow Core nations always end up allied against states and transnationals in the Gap.

(Yes, even France: they're not doing any fighting in Iraq or Afghanistan because they're incapable of doing so, due to decades of neglect of their military obligations. But they are helping us in many other ways, from intelligence gathering to police training to helping with technological upgrades.)

There are problems; traditionalists (religious and nationalist) will fight against Iraq integrating with the global economy, the global legal assumptions, and most especially the global communications grid. They'll scream and lash out against internet porn and trashy Hollywood movies. Heck, Tipper Gore did a pretty good job lashing out herself against smutty rap lyrics, right here in the United States.

And as far as amending constitutions, of course Iraq will have to do so! As major problems or challenges arise, they must change their operating system to take them into account. For heaven's sake, we ourselves have amended our own Constitution twenty-seven times -- the last time as recently as 1992. (We even used one Genie wish to unwish a previous wish.)

This is a spectacular breakthrough... but AP is so mired in Bush Derangement Syndrome and so terrified that a Republican might win the presidency in 2008 that they don't even recognize what is happening right under their collective proboscises. (Or worse: They do, but they hope that we don't!)

This single act is just as important as our security operation, the enactment of the Iraqi constitution, and the parliamentary vote... because it's the first really big example demonstrating that the constitution and the government actually work to benefit the Iraqi people, all of them, in "real time." Their rule-sets are not purely ornamental, as with the "constitution" of the old Soviet Union (whose only function was to serve as a Potempkin document.)

Similarly, in our own history, the four "Organic Laws of the United States of America" comprise four documents:

  • The Declaration of Independence;
  • The Articles of Confederation;
  • The Constitution;
  • And the Northwest Ordinance of 1787.

Why that last? Because that act of Congress created the Northwest Territory... the first expansion of the United States beyond the foundational thirteen states. The Northwest Ordinance was the first real demonstration that America was to be a real country, not simply a historical quirk, stifled in its cradle by the inability to grow and eventually reabsorbed back into Mother England.

For a country to thrive (or even exist) in actuality, it needs not only an intellectually rigorous set of rules; it must also demonstrate that those rules can actually operate for the good of its citizens in the crucible of the real world. Because of the Nothwest Ordinance, and because of the new oil-sharing law (when it's finally approved), we can honestly say that the United States and Iraq are more "real" than the United Nations -- which consists of unbridled intellectualism deliberately divorced from any real-world application.

I say that's a hell of an achievement by our "decider" in la Casa Blanca, one with which he is not generally credited, even by Republicans.

Hatched by Dafydd on this day, March 2, 2007, at the time of 4:05 AM

Trackback Pings

TrackBack URL for this hissing:


The following hissed in response by: Big D

It's hard out there for a pres.

Look, Iraq hasn't come out great, but then again, I don't think it has been nearly the disaster opponents have painted it to be. I would love to compare the time line (and casualties) for WWII Germany and Japan to Iraq.

The above hissed in response by: Big D [TypeKey Profile Page] at March 2, 2007 9:44 AM

The following hissed in response by: SDN

Big D

The realistic comparison is the time line for WWII plus the Marshall Plan and NATO being formed with (West?) German participation.

The above hissed in response by: SDN [TypeKey Profile Page] at March 4, 2007 6:29 AM

The following hissed in response by: TBinSTL

I anticipate that the left will, when progress becomes undeniable, declare that, "It only happened because the American People, in their infinite wisdom, elected a Democrat Congress". The fact, to my mind, is that the MSM is only willing to acknowledge progress at this time because they expect to be able to deny POTUS any credit for it.

hmmm...Back in college, unbridled cynicism was cool. I might be reverting a bit here.

The above hissed in response by: TBinSTL [TypeKey Profile Page] at March 5, 2007 3:24 AM

Post a comment

Thanks for hissing in, . Now you can slither in with a comment, o wise. (sign out)

(If you haven't hissed a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Hang loose; don't shed your skin!)

Remember me unto the end of days?

© 2005-2009 by Dafydd ab Hugh - All Rights Reserved