The oil order

RECENT revelations about an Executive Order signed by President Bush on May 22 confirm not only his administration's deep ties with Big Oil but also its motive to wage the war on Iraq. The Order, which offers sweeping protection to American oil companies operating in Iraq, has been ignored by the media. It is significant that Executive Order 13303 - Protecting the Development Fund for Iraq and Certain Other Property in Which Iraq Has an Interest - was issued barely hours after the United Nations Security Council passed Resolution 1483.

On the eve of the invasion of Iraq oil experts had warned that the lack of a "clear title" to Iraqi oil was likely to hamper trade in Iraqi oil because of the ambiguity about its ownership. Among other things, Resolution 1483 cleared this ambiguity by protecting the "initial purchase" of Iraqi oil from any claims resulting in attachment or other similar judicial processes. It turns out that the order extended the scope of protection to American oil companies, outlawing any threat of attachment of oil assets of these companies anywhere in the world as long as they deal with Iraqi oil. The order covers not only petroleum, but also its downstream products such as petrochemicals. This blanket immunity, indeed, applies to any product that contains any ingredient associated with Iraqi oil. Moreover, the order extends the cover to the back-end. It provides similar immunity to revenues that oil companies earn by virtue of their connection to Iraqi oil. More significantly, immunity is provided to "financial instruments of any nature whatsoever arising from or related to the sale or marketing thereof, and interests therein". This sweeping protection covers investments, loans or any financial instrument that has a basis in Iraqi oil revenues.

Ironically, while issuing an order that so blatantly favours the oil companies, Bush invoked the "unusual and extraordinary threat to the national security and foreign policy of the United States". Indeed, in the preamble to the Order, Bush declared "a national emergency to deal with that threat".

The Executive Order also protects the Development Fund for Iraq from the threat of attachment or other similar judicial processes. The Fund, which would consist mainly of oil revenues, is expected to finance the reconstruction of Iraq. Interestingly, the explanatory part of the Order, which defines entities and terms, points out that the Fund was "established on or about May 22, 2003". The Fund is controlled by Paul Bremer and overseen by a board of accountants, consisting primarily of representatives of multilateral institutions such as the World Bank and the International Monetary Fund. As a result of the Executive Order, the Fund now enjoys watertight protection from any claims whatsoever, insofar as they relate to claims on oil-related entities.

The appropriation of the Fund in the hands of the U.S., an occupying force in Iraq, has significant implications for the way reconstruction contracts, expected to run into billions of dollars, will be distributed. Critics of the Bush administration have pointed out that more than 20 American companies have received contracts since the official closure of the war, on non-transparent terms. (These companies have significant ties with senior members of the Bush administration.) The Order ensures protection for such contracts by protecting the Fund, which will pay for these contracts.

Although the media have ignored the Bush Order, environmental groups with an interest in energy issues have criticised it. There is also outrage in the U.S. that the Order extending protection to oil companies covers not only their operations in Iraq but also on American soil. Even U.S. statutes and laws would fail to apply to the U.S. oil corporations as long as they deal in Iraqi oil. One observer remarked: "If ExxonMobil or ChevronTexaco touch Iraqi oil, it will be immune from legal proceedings in the United States." Several public interest organisations and environmental groups have demanded a congressional investigation into the promulgation of the controversial order . The Sustainable Energy & Economy Network (SEEN), an affiliate of the Institute of Policy Studies, a Washington-based "progressive think tank", has examined the legality of the Executive Order. On July 23, representatives of the Institute for Policy Studies (IPS) and Government Accountability Project (GAP) urged Congress to investigate - and repeal - the Order. Jim Valette, sernior researcher at the IPS, said that the Order "reveals the true motivation for the present occupation: absolute power for U.S. corporate interests over Iraqi oil. This is the smoking gun that proves the Bush administration always intended to free corporate investments, not the Iraqi people."

Tom Devine, legal director of the GAP, said that the Order provides "a blank cheque for corporate anarchy, potentially robbing Iraqis of both their rights and their resources". He remarked that the Order "cancels the concept of corporate accountability and abandons the rule of the law".

EarthRights International, an organisation that specialises as a whistleblower on environmental abuses by corporations, termed the Order "outrageous".

Ominously, the sweep of the Order is so great that it protects the oil companies, which may be complicit in human rights violations in countries they operate in; provides immunity from lawsuits alleging environmental damages; and applies to workplace contracts, worker safety and many other areas of life in Iraq as well as the U.S.