Amid all the near-hysterical hype about Iranian nuclear development and the possibility of a U.S. attack on Irans atomic installations, such bombast is looking more and more like nothing but saber rattling and hot air.
While the U.S. press is doing its best to alarm the American public, the Bush administration is quietly and secretly meeting with Iranian officials to resolve the two nations differences. In short, there is not going to be any attack on Iran, barring complete insanity by the administration.
All this pre-emptive strike jabber is merely a distraction. Asia Times, a Far East newspaper, writes of an analysis of big oils plans to enter 40-year, Production-Sharing Agreements (PSAs) with Iraq. The international oil companies propose to develop Iraqs oilfields in return for 40 years worth of crude oil production at favorable at cost prices. That would mean profits beyond anyones wildest imagination. And these outrageous profits would only benefit Bush and his base.
When the contracts are signed, global institutions (backed by U.S. military power) will guarantee they are honored, no matter what happens later in Iraq and no matter what countries are able to affect Iraqi policy.
No rational person would seriously believe that U.S. leaders would intend a bombing campaign that would almost certainly result in crude oil at $150 U.S. per barrel, no matter if it suited big oil or not.
The U.S. business community may well be ready to sit back and let big oil rip off Iraq with PSAs as it intends, but the business sector definitely would not risk an oil crisis that boosts its energy costs and would see the average American paying $6 or more a gallon to fill his SUV.
PSAs are viable only if there is a stable government in Iraq. None exists in Baghdad today, and guess what country has the power to prevent one being formed? Yes, Iran.
President George W. Bush has until his term ends in 2009 to complete the Sale of the Century, and that is why we hear all this noise about the need to determine and control Irans nuclear ambitions before that time.
Chris Cook, Asia Times writer, said he believes Iran holds the power to bring about a creative solution to stability in the region and at the same time, highlight the shortcomings of the Western form of free enterprise as exemplified by the proposal to stimulate investment through PSAs.
Iran and its Arab neighbors in the Gulf Cooperation Council could pool some of the profits of recent oil sales and invest as capital partners in Iraqi crude oil production. They could create what is known as an open corporation, where Iraq is the capital user member, and the other investor members recoup their investments not in cash, but in crude oil at the current price. In other words, a forward sale of Iraqi crude oil.
To raise the $2.5 billion-per-year investment it needs, Iraq would each year sell a sufficient portion of its future production at the current price per barrel. At $75 per barrel, for example, it would sell 75 million barrels.
That is a fairer method than the typical production-sharing arrangement. Such revenue-sharing partnerships have been used for eons and are still a key part of Islamic finance. It is not a complex idea, but it makes much more sense than bombing Iran.
At the same time, if unforeseen developments occur and if ideology takes control over common sense, then all common-sense bets are off.
From the April 26-May 2, 2006, issue