Greg Muttitt: 'Big oil firms are still in the driving seat when it comes to the resource war' - Business Analysis & Features - Business - The Independent

Greg Muttitt: 'Big oil firms are still in the driving seat when it comes to the resource war'

This week, The Independent revealed how big oil firms influenced the invasion of Iraq. Greg Muttitt, who uncovered the story, exposes the lengths to which the occupying powers went to prise the country's oil production out of the control of the Iraqi government and into the hands of international oil companies.

I would say the most surprising thing about my book is that someone else hasn't written it in the past eight years. It's an obvious question to ask, 'what happened to the oil?' "

Published yesterday, Greg Muttitt's explosive new history of post-occupation Iraq has been pulled together from hundreds of documents released under the Freedom of Information act – both here and in the US – as well as from numerous first-hand interviews. Muttitt was the source of The Independent's front-page revelations on Tuesday that both BP and Shell had meetings with government officials in the run-up to the invasion of Iraq.

With more revelations inside, his book is set to turn our understanding of the war on its head. As well as documenting just how highly oil figured in the thinking of those who led what is widely thought to have been an illegal invasion, Fuel on the Fire exposes the lengths to which the occupying powers went to prise the country's oil production out of the control of the Iraqi government, and into the hands of international oil companies, against the wishes of the Iraqi people.

It's an absorbing account of what is a much more complex story than many pundits might prefer. "I didn't feel it would be helpful to just chuck ammunition to one side in a polarised debate," he explains. "I wanted to explore how this really works. I think it's important to understand the nature of a resource war in the 21st century."

For many years Muttitt worked as a researcher and campaigner on the social and environmental impacts of the oil industry as a co-director of campaign group Platform, and in recent weeks he has been appointed campaigns and policy director for War on Want. After eight years of piecing this all together, including three visits to Iraq and several visits to Jordan, Muttitt is confident about some of his core findings. "Oil was the most important strategic interest behind the war and it shaped the decisions of the occupying powers," he tells me. "The primary strategic interest for the US and Britain is to have a low and stable oil price. A secondary interest is for their own corporations to do well."

Bringing international oil companies back into Iraq, after 30 years of nationalised production, would put the country at odds with neighbouring producers such as Saudi Arabia, Kuwait and Iran, whose oil production has also been in the public sector since the 1970s. Part of the strategy seems to have been about changing that political culture.

"In some of the documents I got hold of for the book it becomes quite clear," says Muttitt. "The British government talks about using Iraq as a strong exemplar for the region and the International Tax and Investment Centre – the oil companies' lobbying organisation – even described it as a beach-head for broader expansion of the oil companies into the Middle East."

One of the great achievements of Muttitt's book is to have restored an Iraqi voice to a narrative from which it had largely been erased. The fact that the Iraqi people held a strong view that oil production should stay in their hands did not deter the occupying powers and international oil companies from pursuing their privatisation agenda relentlessly. But at some point it all had to come unstuck. At the heart of Fuel on the Fire is the story of the Iraqi peoples' fight against the Oil Law – a law which would have removed the need for parliamentary approval of contracts with oil companies.

It was a fight in which Muttitt himself played a role. At a meeting with Iraqi unions in Amman in Jordan in 2006, following his work on a report called Crude Designs, he helped make the law's implications accessible. Although initiated by the unions, the two-year campaign which followed was joined by oil experts, religious and civil society groups, intellectuals and professionals.

Iraq's own oil experts, who had worked in the industry for decades, made the case against foreign investment. As Muttitt notes: "The industry was at its most effective in the 1970s immediately after nationalisation and before Saddam took the country into a series of wars."

Despite all the pressure brought to bear on the Iraqi government from outside the country – including aid and debt relief being made conditional on passing an oil law, direct briefings by

oil companies, linking the surge strategy to passage of the oil law, and a threat to remove Prime Minister Nouri al-Maliki from office – the campaign proved too popular for parliament to pass the law.

You might think that was enough to force a rethink, but the Iraqi government went ahead and auctioned off 60 per cent of the country's proven reserves anyway, under contracts of dubious legality, to companies such as BP, Shell and Exxon. In what was the biggest sell-off in the history of oil, some analysts believe the financial returns for the oil companies will be 20 per cent or more.

Iraqi MP Shatha al-Musawi attempted to bring a legal case against the first contract: BP's joint deal with the China National Petroleum Corporation for the Rumaila field. But the Supreme Court said this would cost her $250,000. Her fellow parliamentarians were supportive and promised to help raise the money, but that commitment fell apart as parties jostled for position after the March 2010 elections. After she decided not to re-stand for election, al-Musawi told Muttitt: "Most of the governing institutions are working without law and violating the constitution every day because they decided not to have an effective parliament. We really have a dictatorship."

Muttitt worries about the lack of effective political oversight at a time of massive outside investment in Iraq's oil resources. Studies of the "resource curse", including the World Bank's Extractive Industries Review show that effective governance is needed before you bring in tens of millions of dollars. "Unless you manage it effectively you get a distortion of the economy, you get corruption and you get investors that don't serve national interests."

The Iraqi street worries about it, too. On 25 February people across the country protested against corruption and for better services in a "day of rage" where a number of people were killed by security forces. The slogans included: "The people's oil is for the people not the thieves." Sami Ramadani, a London-based Iraqi exile who writes regularly about the occupation, told me: "The general feeling is that Iraq's oil is being given away and whatever is being retained in terms of income is being squandered by the regime. In terms of services, wherever you turn there is a very sharp deterioration – health, education, employment, clean water and so on."

The legitimacy of the post-Saddam regime is coming increasingly into question. After a "million person march" against the occupation led by the Sadrists on 9 April in Baghdad (Ramadani estimates the turnout was in the hundreds of thousands), a new military order was issued that decrees that demonstrations can only take place within designated football fields. One demonstrator who defied the ban one week later quipped: "Are we going to play a football match with the police?"

Last week oil minister Abdul-Karim al-Luaibi announced another auction, this time for 12 "exploration and production" contracts, which are expected to go under the hammer in November. "Iraq has the greatest unexplored potential of any country in the world," says Muttitt. "Most geologists reckon there's about as much still to be found as currently exists in proven reserves. So this would tie up another chunk of Iraq's future economic potential for 20-30 years."

This is on top of the massive planned increase in production from 2.5 million barrels per day to 12 million bpd, already implied by the existing contracts. Even the small number of Iraqi oil experts who supported privatisation are now arguing that such a rapid increase is not in Iraq's interest as it will likely lead to a crash of the oil price.

Muttitt says the government has been very effective in breaking organised opposition to the oil law. "The oil workers trade union still exists [although, like all trade unions in Iraq, is illegal] but has come under enormous pressure. The large group of oil experts that opposed the oil law, meanwhile, have been co-opted and broken apart. A lot of them have been offered very lucrative roles with multinationals and so on."

Nevertheless, he still has faith in ordinary Iraqis to deal with their problems. After all, it was civil society that won the fight against the oil law and it was a coalition of civil society groups that forced Iraq's politicians to finally form a government after five months of post-election wrangling last December. "This struggle is not over and there is hope for the future. If Iraqi civil society is given the chance and the right kind of international support, these issues are still up for being contested. In spite of the politicians, there is cause for hope in Iraq."

'Fuel on the Fire – Oil and Politics in Occupied Iraq' by Greg Muttitt is published by The Bodley Head (£14.99). To order a copy for £13.49 (free P&P) call Independent Books Direct on 08430 600 030, or visit www.independentbooksdirect.co.uk

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