Global Policy Forum

By Khaled Yacoub Oweis

Iraq's Kurds want at least partial control over northern oil resources in a post-war political system that ends uneven distribution of wealth, Planning Minister Barham Salih said on Friday. The Kurds, who emerged as a powerful faction in postwar Iraq along with the Shi'ite majority, are lobbying for a new constitution being drafted to allow all provinces, including southern oil centers, to participate in oil decision making, Salih, who is a leading Kurdish politician, told Reuters.

If this succeeds, foreign oil firms will have to negotiate about developing fields in the country with the second largest reserves in the world with provincial governments eager to raise their share of oil revenue, as well as with central government.

"We call for allowing the provinces to participate in managing the oil sector because the strict central system of managing it has proved its failure," said Salih, who was in Amman after meeting British Prime Minister Tony Blair in London. Salih said negotiations to decentralize power over the economy, allowing more say for northern Kurdish provinces and the mostly Shi'ite south, were crucial for the success of the new federal constitution. "There are different opinions in the constitutional committee about ownership of resources. Some are demanding (local) ownership and others are demanding general national ownership," he said.

"We must not repeat the past monopoly by a few of resources," he said, referring to Saddam's Tikriti clan.

Devolution

A copy of a draft constitution being discussed by the parliamentary committee was published in the state-owned al-Sabah newspaper this week. It said regional governments can strike agreements with foreign governments that "do not contradict the rights and interests of the federal union or other provinces." Salih did not say how much authority regional governments would have to negotiate oil deals versus the central government.

A senior Shi'ite official, who declined to be named, told Reuters the oil devolution scheme was likely to succeed, although there was concern it could increase the politicization of the sector and rob it of direction.

Scores of foreign companies have been in contact with the American-backed central government since the U.S.-led invasion that removed Saddam Hussein and his Baath party from power in 2003 about the potential for oilfield development. Some have been also talking with Kurdish officials in Arbil and Suleimaniya, the Kurdish capitals of the north, oil executives said.

"The federal structure should guarantee balanced development. One of the vices of the oppressive central system is unjust distribution of wealth and resources," Salih said. "Go to the southern Amara province, which is an important source of oil, and you see miserable basic services. Go to Kirkuk, this city rich with oil, and you see low living standards and appreciate the size of the problem in Iraq," he added. The north has major oil and gas fields, including Kirkuk, an ethnically mixed province that Kurds demand as part of their federal region and whose status is expected to be decided after general elections due at the end of this year.

Sabotage against oil facilities has contributed to limiting Kirkuk's output to 400,000 barrels per day (bpd). The rest of Iraq's 1.8 million bpd output comes mainly from the south. The country's oil planners hope to raise output to five million bpd in a few years if Iraq stabilizes and its oilfields are developed after decades of wars and crushing U.N. sanctions that caused economic collapse.