Sunday, January 07, 2007

Lessons Unlearned

This story has been making the rounds a bit -- apparently, the Iraqi Parliament is about to vote on the new national Oil Law, and it's effectively a giveaway to the usual suspects.

(But remember children, the invasion of Iraq had NOTHING TO DO WITH OIL.)

It's important not to overstate the likelihood of these agreements actually lasting. A "30-year contract" isn't likely to last 30 years, and frankly I'd be surprised if they last 30 months. Based on the experience of the oil majors in Russia, I expect the story will go something like this:

  • Negotiate sweetheart deals while the government is in no position to bargain.
  • The government is in a cruddy position up to the moment it begins to regain effective control of its borders and people.
  • The old deals are "renegotiated" as the reinvigorated government takes control.

Honestly, I don't think this law will last longer than it takes for one side to win the civil war post-US departure. Any company that stakes its profitability on these ventures is just throwing away money.

Then there's the other thing -- the frankly queasy sight of the American government pushing this law (though Washington's fingerprints are being laundered through the IMF and World Bank) on Iraq in the middle of a bloodletting. Maybe the Iraqi Parliament has other things it could pay attention to?

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