China Oil Deal Is New Source of Strife Among Iraqis

COMMENT: Here in Canada we're making a big to-do out of China's recent $1.9 billion investment in the tar sands.

But that's not what this article is about. It talks about an emergent citizen movement to retrieve some of the value of oil removed from Iraq's Wasit Province and apply it to badly needed local infrastructure. The China National Petroleum Corporation in Iraq, Chevron/Texaco in Ecuador, Shell in Nigeria, EnCana in northeastern BC - they're not so different.

By TIMOTHY WILLIAMS
New York Times
September 5, 2009

WASIT PROVINCE, Iraq — When China’s biggest oil company signed the first post-invasion oil field development contract in Iraq last year, the deal was seen as a test of Iraq’s willingness to open an industry that had previously prohibited foreign investment.

A Chinese guard at the Ahdab oil field southeast of Baghdad. (Thaier al-Sudani/Reuters)

“We get nothing directly from the Chinese company, and we are suffering,” said Mahmoud Abdul Ridha, head of the Wasit provincial council, whose budget has been cut in half by Baghdad in the past year because of lower international oil prices. “There is an unemployment crisis. We need roads, schools, water treatment plants. We need everything.”

The result has been a local-rights movement — extraordinary in a country where political dissent has historically carried the risk of death — that in the past few months has begun demanding that at least $1 of each barrel of oil produced at the Ahdab field be used to improve access to clean water, health services, schools, paved roads and other needs in the province, which is among Iraq’s poorest.

The ripples are traveling far beyond this province, too. Frustrations have spilled over into sabotage and intimidation of Chinese oil workers, turning the Ahdab field into a cautionary tale for international oil companies seeking to join the rush to profit from Iraq’s vast untapped oil reserves.

Wasit Province is among the poorest provinces in Iraq. (The New York Times)

The Iraqi government has so far rejected the locals’ demands, but people here are clearly beginning to feel that something new is possible.

“No one would have dared to ask for such a thing during Saddam’s regime; if he did, he would definitely be executed,” said Ghassan Ali, a 43-year-old farmer who lives near the oil field. “But now we are a democratic country, so we have the right to ask for our rights like any other province in Iraq.”

The basis of the complaints here is that, aside from the hiring of a few hundred residents as laborers and security guards at salaries of less than $600 a month, the Ahdab field — a roughly $3 billion development project — has provided no local benefit.

Some local farmers began reacting by destroying the company’s generators and severing electrical hoses, angry because they believed that their fields were being unfairly handed over to the company. Other residents began expressing outrage that very few jobs were being opened to them.

China National Petroleum says it needs relatively few workers because it is still in the exploration phase of its 23-year project at the Ahdab field. Oil production is not scheduled to begin for two and a half years.

Now, the field’s 100 or so Chinese workers rarely leave their spartan compound for fear of being kidnapped, the company said, even though the Iraqi government recently deployed extra security to the area.

But the Iraqis’ anger has been increasingly channeled into an above-board labor movement, expressing concerns about workers’ rights, local government authority, pollution, transparent hiring practices and public accountability, among other issues.

Ghassan Atiyyah, executive director of the nonprofit Iraq Foundation for Development and Democracy, said the nascent activism in Wasit Province was part of a broader shift in a society that had until recently been resistant to such demands because of years of dictatorship, economic sanctions, war and a culture that retains a strong tribal influence.