SPEAKING
FREELY Sweet
deals: Behind the Iran 'crisis' By Chris Cook
Speaking Freely is
an Asia Times Online feature that allows guest
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On reading the
recent wave of stories concerning US readiness to
bomb Iran back to the Stone Age unless it gives up
efforts to produce nuclear weapons, my first
reaction was to be "shocked and awed". But then a
realization sank in. All this noise concerning
Iranian nuclear preparations was, as William
Shakespeare had it, "a tale ... full of sound and
fury, signifying nothing".
As a former
director of an oil exchange with recent experience
in Iran due to my involvement in a proposed
Iranian oil bourse, it has
been
clear to me for some time that the nuclear issue
is a red herring. But I confess that it had
puzzled me for some time why everything except oil
is going to be privatized in Iraq.
"It's
good for the US," I thought.
Well, I did
until I recently read an analysis by Greg Muttitt
of the plans by Big Oil to enter 40-year
Production-Sharing Agreements (PSAs) with Iraq.
The deal is this: we develop your oilfields, and
in return we get - for 40 years - a major share of
your crude-oil production at favorable "at cost"
prices. The outcome will be profits beyond the
dreams of avarice.
Once these contracts
are signed, of course, global institutions (backed
by US policing) will ensure that they are honored,
whatever happens subsequently in Iraq, and
whatever countries are able to influence policy in
Iraq. The fact that there is still a US base in
Cuba, for instance, illustrates how rigorously
international treaties and the rule of law may
apply despite differences in ideology.
Does anyone seriously believe that
decision-makers in the US would countenance a
bombing campaign that would almost inevitably lead
to crude oil at US$150 per barrel, whether or not
that suited Big Oil?
While the business
community at large in the US may be prepared to
sit back and let Big Oil pillage Iraq with PSAs as
planned, it would certainly not risk an oil crisis
of an order that massively increased its energy
costs and saw Joe Six-Pack having to pay $6 a
gallon ($1.60 a liter) or worse to fill his
sport-utility vehicle.
To enter credible
PSAs, there has to be a legitimate government in
Iraq. There is none in Baghdad now by any stretch
of the imagination, and which country has the
power to to prevent one from being formed? That's
right, it's Iran.
Simply put, US President
George W Bush's chance of pulling off the Sale of
the Century runs out with his term of office in
2009, and that is why we are hearing all about the
need to sort out Iran's "nuclear ambitions" before
then.
I concede that this is a cynical
critique, but I believe Iran has in its power the
potential for formulating a constructive solution
in the region, which would demonstrate the
shortcomings of the "Western" form of the
free-enterprise model exemplified by the
astonishing proposal to promote "investment"
through PSAs.
Alternatively, Iran and its
Arab neighbors in the Gulf Cooperation Council
might pool some of the proceeds of recent energy
sales and use them by investing as "capital
partners" in Iraqi crude-oil production.
To do this they could simply create a
quasi-partnership known as an "open" corporation -
legal forms exist enabling this - where Iraq is
the "capital user" member, and the capital
provider members/investors take their investment
back not in cash but in crude oil at the current
price. That is, it amounts to a forward sale of
Iraqi crude oil.
So to raise the
$2.5-billion-per-year investment it needs, Iraq
would simply sell each year a sufficient portion
of its future production at the prevailing price
per barrel. That is, at $50 per barrel it would
sell 50 million barrels.
This mechanism is
far more equitable than the typical PSA and, in
fact, such revenue-sharing "capital partnerships"
have been used for thousands of years and remain
at the heart of Islamic finance, notwithstanding
the best efforts of the global banking system to
subvert them.
You won't hear about it from
a financial establishment accustomed to using the
toxic combination of debt - "deficit-based" -
funding - and "equity" in the form of the joint
stock corporation. But it is not rocket science
and is far more sensible than bombing Iran.
Chris Cook is a former director
of the International Petroleum Exchange. He is now
a strategic market consultant, entrepreneur and
commentator. Reprinted with permission from
www.energybulletin.net.
(Copyright
2006 Chris Cook.)
Speaking Freely is
an Asia Times Online feature that allows guest
writers to have their say. Please click hereif you are interested in
contributing.
