Naomi Klein on Iraq

Author Naomi Klein writes about the deal signed between the Iraqi government and foreign oil companies in a piece titled "Big Oil's Iraq deals are the greatest stick-up in history" in today's Guardian.

Basically the Iraqi government signed contracts with five oil companies (Exxon Mobil, Chevron, Shell, BP and Total) to develop the nation's oil fields. For their efforts, the oil companies will receive 75% of the value of the contracts, while the Iraqis will keep the remaining 25%. Klein calls this an example of "disaster capitalism" - making a profit off of an engineered crisis, a key thesis behind her recent book "Shock Doctrine".

Full disclosure here - I haven't read her latest, but I did read her earlier book "No Logo". She is a good researcher and a talented writer, but I didn't think that the arguments she made in "No Logo" backed up her thesis, just like I don't think she makes her case in this Guardian piece.

For one, she says that "we" are heisting Iraq's oil. By "we" I assume she means the United States. But only two of the five oil companies listed are American. Even if you extend "we" to include the Brits (our main Iraq coalition partner), that ads BP to the mix, but still leaves out Shell (a Dutch company) and Total (French). If the goal of the Iraq war was for us to seize control of Iraq's oil, then why include these foreign companies? Especially Total when the French were opponents of the war?

Klein also cites the 75/25% split as another sigh of the Iraqi's oil being stolen. Of course that ignores the fact that Iraq's oil industry is in a shambles and needs an enormous investment to get it working at full capacity. After years of war and decades of mismanagement under Saddam Hussein, the Iraqi government simply does not have the billions and billions of dollars needed to invest in their oil sector. Is giving these foreign companies such a large share of their future oil revenues a perfect solution? No. But if the Iraqi government doesn't bring in foreign firms (and their resources), Iraq will never be able to exploit its oil wealth (this is the situation going on now in Mexico, where the Mexican government is refusing to allow foreign investors in, yet the national oil company does not have the financial resources to make needed improvements to their oil facilities).

Am I sure I'm right? No. But Naomi hasn't convinced me she's right about Iraq either.