12 month government, 30 year contracts

The Independent reports that the Maliki government in Iraq is soliciting bids on '30 year' contracts to exploit Iraq's oil.

In doing so the government is almost certainly guaranteeing the fall of both the government and the constitution.

The long lease on the rights to exploit natural resources has long been the favored prize of colonial occupation. It has also been a prime causus belli. The UK and the US replaced the democratically elected government in Iran with the bloody dictatorship of the Shah, a tyrant who was despised by his people as much as Saddam who eventually replaced him with the Mullahs. The dispute began when the democratically elected government demanded an audit of the oil royalties to determine whether they were being paid even the pittance due under the unequal contracts imposed during the collonial era.

The Maliki government is facing a civil war. It is a weak force both politicaly and militarily. Any bidders for the leases have to take into account a substantial probability that the leases will be repudiated by a future government. The terms of the deal will not be favorable.

The pressure on future governments to repudiate the deal will be enormous. But this would inevitably bring protest from the US as the US companies were robed of their prize in the same way that French companies did after the fall of Saddam.

The justification given for the repudiation of the French contracts was force of arms. The US is creating an incentive for factions on both sides in the civil war to repudiate the constitution. Even if the terms of the deal are fair the opposite will be assumed by most Iraqis. Insurgents have a new incentive to fulminate.

This will not be seen as a sign of confidence in the Iraqi government, rather the reverse. At the beginning of the war it was widely assumed that the real war aims of the Bush administration were to control Iraq's oil, establish permanent military bases to protect Israeli and US interests and revenge. Signing a 30 year deal at this time looks like a last gasp attempt to grab the oil even if nobody seriously expects the attempt to succeed.