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Commentary: Control of Oil Fields in a Post-Saddam Iraq an Often Unspoken Issue

All Things Considered: December 18, 2002

The Oil Card

MICHELE NORRIS, host

President Bush has serious problems with Iraq's weapons declaration, which asserts that it has no weapons of mass destruction. But US officials say the administration will be careful before deciding on its next step. News analyst Daniel Schorr says one major factor influencing the thinking on Iraq often goes unspoken. That factor, he argues, is oil.

DANIEL SCHORR reporting:

War with Iraq appears to be coming closer. Already in progress is the war about who will control the oil fields of Iraq when the war is over. Russia, which has been perhaps Iraq's best friend in the international community, was stunned when the Baghdad government served notice last week that it was canceling a long-standing, several-billion-dollar contract with Russian oil companies to develop Iraqi oil fields once sanctions were lifted. Deputy Prime Minister Tariq Aziz said the reason for the cancellation was that Lukoil, the biggest of the Russian companies involved, discussed the future of a major oil field with opponents of Saddam Hussein and also with an American official in Washington.

According to The New York Times, the meeting with an Energy Department undersecretary, unnamed, took place before President Bush met with President Vladimir Putin in Russia last month. There, Bush, while not saying the Russian contracts would be honored, did say that America understood Russia's interests and these interests will be taken into account.

Still to be determined is whether and for how long an American-led coalition will control the world's second-biggest reserves of petroleum. That issue was discussed at the recent meeting of Iraqi opposition groups in London. Today, a panel of experts assembled by the James Baker Institute at Rice University in Houston and the Council on Foreign Relations recommended that Iraqis form their own post-Saddam government and control their own oil industry. `A heavy American hand,' the report says, `will only convince them and the rest of the world that the operation against Iraq was undertaken for imperialist rather than disarmament reasons.'

The report says that there'll be need for 30 to $40 billion in new foreign investment to rehabilitate existing wells and to develop new fields. And it calls for a level playing field for all international players to participate in future repair, development and exploration efforts. How level a playing field, if and when American-led forces are occupying Iraq, that remains to be seen. Standing in line are Russia, other foreign interests, the American oil industry and, not to be forgotten, a new Iraqi government waiting to be born. This is Daniel Schorr.

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