The Backfire in Baghdad

How ExxonMobil's God Pod beat Iraq's oil chieftains at their own game.

BY BEN VAN HEUVELEN

Foreign Policy
OCTOBER 26, 2012

In 2006, an Iraqi technocrat named Tariq Shafiq was charged with crafting an oil law. A Berkeley-trained engineer, he began his career in the 1950s, rising through the consortium of foreign firms that comprised the Iraq Petroleum Company -- until the Baathists nationalized the oil sector and sentenced him to death, in 1970, for conspiring with the imperialists. Luckily, Shafiq had been out of Iraq at the time, and he didn't return for decades. But now he would again find himself at the center of controversy. In a country that receives 95 percent of its revenue from oil, his oil law would not only shape the management and regulation of the national economy but also determine the extent to which power would be centralized in Baghdad. It was the centerpiece of Iraq's own version of the Federalist Debates.

On the federalist side, Iraq's minority Kurds -- who had already gained significant political and military independence in their semi-autonomous northern region -- argued that dispersing state power could prevent the kind of oppression that had been fueled by Saddam Hussein's complete, unwavering control of oil revenues. It would be a safeguard against tyranny. The centralists, on the other hand, argued that a Balkanization of the oil sector would lead to conflict, with local governments fighting over cross-border oil fields; moreover, they said, it would be a bad value for Iraq. If different parts of the country were bidding to partner with the same top companies, they would inevitably undercut one another. Shafiq had suffered at the hands of oppressors in Baghdad, but he still took the centralist view.

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