Anbar’s Brewing Gas Revolt?

October 21, 2010

There is conflict brewing anew in Iraq’s Anbar province, which once acted as the crucible of the Sunni insurgency against the U.S.-led occupation and the government(s) that it inserted.

Once again, the conflict revolves around hydrocarbon resources. When does it not in Iraq? But this time, local people are expressing their grievances in advance, in measured, yet defiant terms. And there is no over-arching American military presence as there was before, at least not in Anbar.

What there has been though, are contracts signed between Baghdad and foreign companies to exploit the region’s hydrocarbon resources. A South Korean firm, the Korean Gas Corp, and a Kazakh firm, KazMunai are now waiting to begin the exploitation of the Akkaz gas field after winning contracts on Wednesday. But there’s a catch.

Locals are adamant that the practices of the Baath era are not to be repeated. They want a fair share of the revenues and better services. As Mukhles Ibrahim, a businessman from Qaim, told AFP, “the population could…create trouble preventing companies from working if the gas is not used to feed electricity stations and give work to residents.”

Nawaf Ghada, also from Qaim, says that “We reject these contracts because the government never respects the promises made to Iraqis. In Qaim we still have no electricity, no sewage system, no roads, and 80 percent unemployment…If the companies come to invest in Akkaz, they must cooperate and serve the people of the region.”

Some have taken to the streets to protest in advance. “Dozens of tribal chiefs and schoolchildren” protested in Ramadi, the provincial capital, this week, chanting “We will cut off the hand of anyone who tries to steal our wealth.”

Local pressure has forced the Ramadi council to issue an ultimatum to Baghdad, demanding fairer revenue sharing mechanisms. But the central government remains intransigent. The Oil Minister Hussein Shahristani insists ominously that “The development of gas and oil is the responsibility of the government and no-one else. We will not allow anybody to delay the implementation of contracts and we will punish those who harm the national economy.”

This sets up an obvious antagonism between the imperatives of local and “national” development. But this need not be so. What the Anbar protesters desire is a fair share. They expressly want the same terms as agreed in Kurdish or Shiite areas. In some places, firms have committed to paying $7.50 per barrel to the local government. In Anbar, the rate is just $5.50.

That’s big money when you consider that Akkaz is thought to contain 5.6 trillion cubic feet of gas. At 400 million barrels per day, the province would lose almost $50m per year.

Local people understandably feel cheated by the national government which claims to represent the whole nation, yet can’t negotiate fair deals for all regions. As Sadoun Obeid, deputy head of the Anbar council, told Reuters, “Anbar is rich with huge resources of oil and gas, but the oil ministry preferred to start exploration works in other provinces and ignore us for no convincing reason.”

There is huge discontent at corruption and incomptence in Baghdad (Iraq still lacks a government 7 months after elections). As one Baghdad shopkeeper puts it, “When a country gets high oil revenues, infrastructure has to be a priority, but … this is not happening. They are too busy stealing money.”

But the problems in Anbar are exacerbated by tension between Sunnis and Shia. Anbar has experienced a wave of bombings this year already, and renewed violence is a possibility. But if this happens, the root cause is oil and gas. People know that the wealth beneath their feet is to be exported by foreign firms, using foreign labour, as agreed by a national government which will siphon of its share, leaving an uncertain portion for Anbar. This has long been the game plan.

Akkaz has become an important link in the Nabucco system, which transports gas to Europe, via Syria, Turkey and the Balkans. Nabucco is not just a corporate venture. Far from it, Anbar has become a pawn in a geostrategic game whereby European powers are trying to create a means of bypassing (or offsetting) their dependence upon Russian gas supplies.

The importance of this scheme makes it very unlikely that Baghdad will relent and consider local demands, unless it is forced. There is a great deal riding on the gas reserves of Iraq, as if we didn’t know.

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