Deals in the making?

The deadline for a Status of Forces deal between Iraq and the United States was to have been at the end of July. According to the International Herald Tribune, "The need for an agreement is dictated by the expiration at the end of this year of the United Nations mandate under which American troops operate in Iraq, and the planned shift from United Nations authorization to an arrangement between Iraq and the United States." To quote further from the IHT (8/21/08) headlined, "Draft is set to keep U.S. forces on Iraqi soil":

Iraqi and American negotiators have agreed to a draft of a long-awaited security agreement to govern the presence of American troops in Iraq, American and Iraqi officials confirmed Wednesday night. The agreement remains subject to approval by the political leaders in each country.

. . . The main sticking points, in fact, are also the most delicate: setting a timeline for American troops to leave and declaring whether American forces would be granted immunity from Iraqi prosecution.

There are currently around 147,000 US troops in Iraq. The United States is making it clear that there is, 'No agreement yet' -- But one may be closer due to current meetings between leaders. A headline from BBC News (8/21/08) announces: "Rice in surprise visit to Baghdad." To quote further:

Ms Rice is holding talks with Iraqi leaders including Prime Minister Nouri Maliki during the unannounced visit. It comes after 10 months of difficult negotiations between Washington and Baghdad about the status of US troops on Iraqi soil. . . .

Negotiations have been held up by disagreement over the timing of the final withdrawal of US forces from the country and the immunity of US soldiers from prosecution under Iraqi law, says the BBC's Crispin Thorold in Baghdad.

Included in a draft Status of Forces Agreement being considered is a commitment that US troops will start to withdraw from cities across the country from next summer, moving to large bases, out of public view, our correspondent reports.

. . . Ms Rice said she was visiting Baghdad to hear from Iraqi officials about concerns they may have on the long-term strategic framework agreement between the two countries. . . Iraqi officials have said they would like to see US forces end routine patrols of Iraqi towns by the middle of next year, and withdraw all combat troops in the next couple of years.

Settling the status of Iraq's production of oil remains the key to solutions for both the United States and Iraq, as well as for the third interested party, China. It is still "all about the oil." This from the Financial Times (8/20/08) explains: "Political rifts slow Iraqi oil recovery." To quote:

Political gridlock has overtaken security risks as the primary hurdle facing the rehabilitation of Iraq’s oil industry, according to oil executives and analysts.

Cabinet disagreements and unrealistic expectations from Baghdad are already threatening to scupper the oil ministry’s plans to sign short-term technical-support agreements with international oil companies.

. . . Oil executives said the deals had been mired in confusion. Some said the agreements on offer had lost much of their appeal when Iraq reduced the contracts’ lengths from two years to one, and when it became clear Iraq would not give companies that signed short-term contracts preferential treatment for the more sought-after long-term deals.

. . . But companies are still concerned at the lack of new legislation governing the industry. Moves to agree on a new law have been derailed amid disagreements between the Kurdish minority and the Arab majority.

Meanwhile, China National Petroleum Corporation, the state-owned oil company that is the parent of the listed Petrochina group, may be the first foreign company to sign an oil deal with Baghdad since the fall of Saddam Hussein: a service contract to develop the Ahdab field.

To get the perspective of China on the Rice Iraq visit/negotiations, here is the current story from The China Daily, headlined, "Rice Discusses Troop Withdrawals With Iraqis." To quote its conclusion:

Late Wednesday a second senior US official, speaking on condition of anonymity, said the two sides have come up with a draft agreement that addresses the issue of the timing of future US troop withdrawals, but the official would not say whether the two sides had agreed on 2011 for a final pullout. The official suggested there would be a series of timelines set, linked to conditions on the ground, . . .

An Iraqi official who was involved in the protracted negotiations said a compromise had been worked out on the contentious issue of whether to provide US troops immunity from prosecution under Iraqi law, but he did not give details. In Washington, the senior military official said the draft agreement reflects the US position that the United States must retain exclusive legal jurisdiction over its troops in Iraq.

While Iraqi negotiators signed off on the draft, another official close to al-Maliki said the country's political leadership objected to parts of the text, including the immunity provision. He would not elaborate and spoke on condition of anonymity because of the sensitivity of the issue.

The only real deal that has a chance seems to be one about oil production between Iraq and China. According to the New York Times, "Despite United Nations-imposed economic sanctions, Iraq had contracts with five foreign oil companies — from China, Russia, Indonesia, India and Vietnam — before the American-led invasion in 2003. Since then, Iraqi officials have been considering how those contracts should be honored." This NYT article explains this complicated situation: "Iraq Poised to Revive Oil Contract With China" To quote an extended segment:

Iraq is on the verge of reviving an 11-year-old contract with China worth $1.2 billion, its largest oil deal since the invasion in 2003, an Oil Ministry official said Tuesday. The deal sets new terms for an agreement reached between China and Iraq under Saddam Hussein in 1997. Unlike that agreement, which included production-sharing rights, the new one is a service contract, under which China would be paid for its work at the Ahdab oil field southeast of Baghdad but would not be a partner in the profits.

Hussein al-Shahristani, Iraq’s oil minister, is expected to complete the negotiations when he is in China late this week or early next week, said a ministry official who declined to be identified because he was not authorized to speak to the news media. Mr. Shahristani was in Poland with other ministry officials to study its oil industry, the official said.

. . . The other contracts are being discussed, Mr. Ghadban said, but the agreement with China was the most pressing. Iraq wants the oil from the Ahdab field — expected to produce around 90,000 barrels a day — to supply a planned power station in the province that is expected to be one of the largest in Iraq.

. . . Six other service contracts — with ExxonMobil, Shell, Total, BP, Chevron and some smaller oil companies — were scheduled to be announced by the end of June, but have been stalled in negotiations. The duration of those contracts, which drew international criticism for being awarded without competitive bidding, has been shortened to one year from two, causing some of the interested companies to reconsider.

"Deals in the making" are only that right now for the USA. China had an earlier deal with Iraq that is now being quietly revived. Our year 2002 (and probably earlier) deal was to go into Iraq to secure the oil for the West. After seven years, 4000+ American lives lost, and over half a trillion dollars spent, that still has not happened. And the time for a deal by our inept and lame-duck administration is fast disappearing. We need brand new deal that does not extend U.S. dependency on the Middle East for its energy supply. That deal needs to be made by much wiser heads that those currently negotiating. Forget "McSame." I would recommend the Democrats.

View my current slide show about the Bush years -- "Millennium" -- at the bottom of this column.

(Cross-posted at The Reaction.)

My “creativity and dreaming” post today is at Making Good Mondays.

Technorati tags: news news and politics politics energy middle east iraq china condoleezza rice war