Iraq oil contracts revisit sore topic

From the first days that U.S.-led forces took control of Iraq, the military took pains to broadcast that it was there to liberate the country, not occupy it, and certainly not to cart off its riches. Nowhere were such words more carefully dispensed than on the subject of Iraq's oil.

As they surveyed facilities in the weeks after Saddam Hussein's government fell, U.S. officials said they were merely advising Iraqis on how to increase production to finance the democratic nation being erected across desert sands that, conveniently, held the third-largest oil reserves on earth.

Many critics of the invasion derided that characterization. There was suspicion that the war was a grab for oil that would open Iraq to multinational energy giants. President Bush had roots in the Texas oil industry. Vice President Dick Cheney had overseen oil services company Halliburton. Whatever else happened, such critics said, energy players with links to the White House would surely wind up with a nice piece of the spoils.

Today, the question hanging over Iraq is whether its natural endowment will be used to help create a sustainable new state, or will instead be managed in ways that reward the cronies and allies of the country whose army toppled Saddam. Or perhaps both at the same time.

That basic question was yanked back to the fore recently when word emerged that the Iraqi oil ministry was close to awarding contracts to service its oil fields to some of the largest Western oil companies. While relatively small, these contracts could serve as a foot in the door for much more lucrative licenses to explore widely for Iraqi oil.

Some 40 companies from around the world had jockeyed for the contracts, but they were being awarded without competitive bids, the report said. Those about to land the deals – Exxon Mobil, Shell, BP and Total – had held oil rights in Iraq before Saddam nationalized the fields and kicked them out more than three decades ago. They all came from countries that had either been stalwart allies of the Bush administration or – in the case of France, which is home to Total – had lately increased their support for the U.S.-led campaign to isolate Iran.

Iraqi officials said the no-bid deals reflected nothing more than pragmatic stewardship. Iraq needs to get more oil out of the ground to finance reconstruction, they said, and the oil giants getting the contracts have the skill to make that happen.

But those most suspicious of the Bush administration's motives fixed on the contracts as validation. They accused the administration of pulling strings and shelving concerns about preserving Iraqi sovereignty, in favor of expedient deal-making in a time of exploding oil prices.

In the days after word of the deals leaked out, three senators, including Charles Schumer, D-N.Y., demanded that the Bush administration somehow cancel the contracts, arguing that they would damage U.S. credibility.

The White House disowned any role and said the senators were being hypocritical. Here they were, in effect, accusing the administration of orchestrating the deals, while calling for orchestration to make them disappear.