Of Note: Geography and Oil Politics in Iraq

A peculiar geography lies at the center of Iraq's oil politics. Iraq was until recently dominated by Sunnis, but most of its oil is located in Shia and Kurdish-dominated regions. Oil has acted mostly as a centripetal force, making the country stay together because splitting apart was unacceptable to the Sunnis who were both Iraq's rulers and its only group not to reside in territory with substantial oil reserves. In that sense, Iraq's oil geography resembled that of Saudi Arabia and Iran, where oil is found in areas populated by minorities, Shia in the case of Saudi Arabia, Arabs in the case of Iran. In all three countries, this geography has complicated efforts to decentralize and give more autonomy to regions or more rights to minorities; and it has also bred resentment from those who live on top of the oil but who benefit so little from it.

As Iraq started moving to reconstruction,¹ it was faced with a dilemma that emerged from the incompatibility between federation, which would be a logical democratic structure for a country with Iraq's diversity and history of suppression of Kurds and Shia by Sunnis and uneven geographical distribution of oil. A decentralized state would keep oil revenues to the provinces and would impoverish the part of the country with lots of insurgents and no oil. The attempt to deal with this predicament produced a constitutional concession: the Iraqi constitution adopted in October 2005 declares that "oil and gas are the ownership of all the people of Iraq in all the regions and governorates." The text pledges that revenues will be distributed in a "fair manner in proportion to the population distribution in all parts of the country," and that the purpose of oil and gas will be to assure "balanced development" in different areas of the country.² Ahmed Chalabi, then Deputy Prime Minster of Iraq, explained the significance of this provision: "This is a revolutionary idea in the Middle East with oil-producing countries. Because rather than the government owning the oil and giving handouts to the people, it is the people who own the oil and fund the government through taxation approved by their representatives. It changes the whole dynamic of the relationship between the people and the government."³

All the same, the future is not all promising; oil can prove a divisive force in practice just as it has proved uniting in theory. According to the Iraqi constitution, "the regions have the right to amend federal law 'in manners that do not pertain to the exclusive powers of the federal authorities.' Quite what this would mean in practice is unclear, but the regions could interpret it as a way to exercise greater control over the oil fields on their territory."⁴ The fear that despite the promise of centralization, the provinces might try to preserve their oil wealth is acute: "oil ministry officials are already noticing a creeping decentralization of the industry, with the Shia-dominated south, in particular, taking more power into its hands and seeking a greater role in managing its oil fields."⁵ The news from the north also reinforces the idea that oil might act centrifugally rather than centripetally: the Kurdish regional government announced in December 2005 that it was drilling in the Tawke well in the Dohuk province near the border with Turkey. The reaction was immediate; Hussein al-Fallji, a Sunni lawyer, complained that "this shows that the Kurdish administration in the north is not interested in safeguarding resources for all of the Iraqi people….If they do not reverse their position we will fight this through diplomatic and political channels."⁶