WASHINGTON, March 28 (UPI) -- Iraqi parliamentarians are set to debate a law governing oil and natural gas resources, though backroom negotiations on the measure haven't concluded yet. Both the deliberation and the deal may be futile, however, if Iraq's oil unions don't give their consent.
And the blessing of the more than 26,000-strong workers is far from guaranteed.
"We think that to reserve sovereignty of Iraq is to be able to control the oil wealth," Hassan Jumaa Awad, president of the Iraqi Federation of Oil Unions, told United Press International.
The IFOU is an umbrella group of Iraq's oil sector workers who pump the nation's 2 million barrels per day, but, to Awad's dismay, was not party to negotiations over the law.
"Since we are working to make progress in production, we need a real participation in all the laws that are related to the oil policy," Awad said, speaking from his mobile phone in the south port city of Basra, where most of Iraq's 1.6 million bpd are sent to market. "We are the sons of this sector and we have the management and technical capability and we have the knowledge on all the oil fields. That is why we demand that our participation should be in such a level."
That "demand" is rhetorical now, hoping to influence the legislation before a final version is written. It could reach a point where the IFOU shuts down production. Oil sales fund 93 percent of Iraq's budget, giving the union's major bargaining power. If that doesn't work, violence could follow, though unions are likely not to join the ranks of insurgents.
"Like most other unions in state-owned enterprises, they are very much against anything that sounds like privatization or private ownership," said Greg Priddy, analyst for the business risk firm Eurasia Group. "That would be more of a long term impact than a short term impact given that the hydrocarbons law doesn't envision privatizing existing oil fields, it envisions private stakes in future development. But it's still something that generally labor in Iraq opposes."
The unions have halted production before -- when they weren't being paid, when their salaries were decreased, when foreign companies were given control of facilities -- and succeeded.
"The oil workers union is very powerful," said Mohamed Zine, regional manger of Middle East at the global energy analyst IHS. Iraqis are proud of their 115 billion barrels of proven oil reserves, the third-most in the world. The sector has been nationalized for four decade, which the public still supports.
"It will be easy to convince people ... if you explain to them 'our oil is no longer national,'" Zine said.
Certain model contracts in the draft law are seen as a threat to that.
"Some will grant the foreign companies considerable control, some will give them no kind of control," said Robert Ebel, chairman of the energy program at the Center for Strategic and International Studies.
If it's the first model, "then I think we could expect some rather drastic action on the part of the unions," Ebel said, adding he doubts it will reach that point.
"The government would be too sensitive to that kind of charge, that 'look you've signed a contract that ultimately gives away our national heritage and you shouldn't have done that,'" Ebel said.
Baghdad will be forced to weigh pressure put on it by the Kurds and others who forged the compromise on control over the oil and revenue sharing, two tenets of the laws framework, though other sticking points remain.
And Washington is applying pressure, too. A U.S. firm was contracted to privatize the oil sector and the draft law, which the firm assisted in writing, has been applauded.
Ambassador David Satterfield, senior adviser to Secretary of State Condoleezza Rice and U.S. State Department coordinator for Iraq, was optimistic when asked about opposition to the measure, including union threats.
"I think there are countervailing pressures within Iraq's government structures and political leadership that would argue against a shutdown of southern oil production or export," he said.
"Hassan Juma'a is a very, very serious guy," said Michael Eisenscher, national coordinator of U.S. Labor Against the War, which has organized U.S. speaking tours for Iraqi union leaders. "When he says something, people tend to take him pretty much at his word."
"I suspect if they wanted to they could create quite a bit of havoc," he said.
Awad said foreign companies would be welcome to supply technical assistance, but much further "is a red line the companies must not think to cross."
"We say that there is a reaction for every action," Awad said. "We have promised that we will be responsible for protecting the oil sector, and we will do whatever that is to do so."
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(Hiba Dawood in New York and Adil Matloob in London contributed to this story.)
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