The IMF, the World Bank and Iraqi oil (one reason why Wolfowitz is/was at the World Bank)

(this is a bit lengthy, but stick with me...)

is it any wonder the white house is still, as of this morning, fighting to keep wolfowitz in his job...? read on...

The White House said on Tuesday the World Bank could continue to be effective with embattled World Bank President Paul Wolfowitz in charge.

"We believe that the World Bank can continue to be an effective development institution with Paul Wolfowitz as president," White House spokesman Tony Fratto said.

i've posted several times on the pending iraq oil law (here, here, here, here, here, and here), as we guessed and now confirmed by its becoming the leading iraq "benchmark," one of the principal reasons for initiating the illegal war... i've also been posting on the ways the world bank and the international monetary fund programs conspire to keep the people in non-industrialized nations in poverty (here, here, here, here, here, and here)... michael schwartz, writing in tomdispatch via alternet, provides a comprehensive history of oil in iraq from saddam's days to the present, and lays bare the secretive behind-the-scenes maneuvering to bring iraqi oil under the control of the global oil giants, using the imf and the world bank as leverage...

schwartz outlines a "typical" imf agreement and how such an agreement, presented in the context of forgiving massive iraqi national debt, has been used to force iraqi compliance with the pressures from the u.s. and the global oil companies...

The resulting agreement immediately forgave $12 billion, but left $28 billion on the books. A second $12 billion would be abrogated when the Iraqi government signed onto "a standard International Monetary Fund program," and a further $8 billion three years later, after the IMF confirmed Iraqi compliance. Even if "successful," almost $8 billion would still be outstanding to the Paris Club -- together with $80 billion not covered by the agreement.

The "standard International Monetary Fund program," not surprisingly, included the now familiar American policies regarding Iraqi oil, as well as the use of Profit Sharing Agreements and a host of other provisions that would open the Iraqi economy as a whole, and the oil sector in particular, to investment by multinational corporations.

Among the most punitive of the provisions was a demand for an end to the economic breadbasket that guaranteed all Iraqi families low prices for fuel and food staples. In a country with, by 2005, somewhere between 30% and 70% unemployment, average wage levels under $100 per month, and escalating inflation, these Saddam-era subsidies meant the difference between basic subsistence and disaster for a large proportion of Iraqis.

both the uk independent and the inter press service news agency did thorough exposés back in february and highlighted production sharing agreements, perhaps the most significant feature of the proposed iraq oil law, which schwartz details here...

[The production sharing agreements - PSAs] envisioned by the Iraqi petrochemical law contained extremely favorable provisions for the oil companies, in which they would be entitled to 70 percent of profits until development expenses were amortized and 20 percent afterwards. This would have guaranteed them at least twice the typical profit margin over the long run and many times that figure during the initial years.

There are other elements in the law (and the possible PSA contracts) that have also roused resistance inside Iraq. Among the most controversial:

* Insofar as PSAs or their legal equivalent were enacted, Iraq would lose control over what levels of oil the country produced with the potential to substantially weaken the grip of OPEC on the oil market.

* The law would allow the oil companies to fully repatriate all profits from oil sales, almost insuring that the proceeds would not be reinvested in the Iraqi economy.

* The Iraqi government would not have control over oil company operations inside Iraq. Any disputes would be referred instead to pro-industry international arbitration panels.

* No contracts would be public documents.

* Contacting companies would not be obliged to hire Iraqi workers, and could pursue the current policy of employing American technicians and South Asian manual laborers.

Several African countries with vast mineral riches have been subjected to these sorts of conditions, with large multinational companies extracting both minerals and profits while returning only a tiny fraction of the proceeds to the local population. As the resources are taken out of the ground and the country, the local population actually becomes poorer, while the potential for future prosperity is drained.

however, is it any wonder the bush administration wanted wolfowitz at the world bank and is it any wonder he made iraq a bank priority...?

Both staff and management [of the World Bank] also have raised concerns over what several described as Wolfowitz's insistence that the bank accelerate its lending to Iraq and open an office there.

A principal architect of the Iraq war as deputy defense secretary during President Bush's first term, Wolfowitz has pressed the issue in the bank against strong concerns about security and poor governance in Iraq. "He was pretty aggressive about it, given that he's generally a mild-mannered person. He was really quite hard," said one source with first-hand knowledge of internal bank discussions on Iraq. "I don't know how much of it was flogging for the [Bush] administration rather than his own ghosts and convictions."

Although the bank eventually opened a $500 million loan program for Baghdad, the board took the unusual step of asking to be "regularly updated" on developments, according to internal documents obtained by the Government Accountability Project, a Washington-based whistle-blower group that tracks World Bank activities. Bank interests in Iraq have been managed from its regional headquarters in Jordan.

there may still be some reason to hope that the iraqis can come together to resist this shameful effort to exploit a people and their resources... again, michael schwartz...

The petrochemical law is hardly assured of successful passage, and -- even if passed -- is in no way assured of successful implementation. Resistance to it, spread as it is throughout Iraqi society, has already shown itself to be a formidable opponent to the dwindling power of the American occupation.

oh, the tangled webs those with power and money can weave...!

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