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Sunday, December 22, 2002

By Warren Vieth, Los Angeles Times

WASHINGTON -- Sentiment is growing in the Bush administration and global energy circles to place Iraqi professionals in charge of their country's oil production after any war, despite a push by some officials for the United States to seize control of the lucrative oil fields.

With many critics convinced that oil is the ultimate objective of U.S. war planning, pressure is growing to give the United Nations an oversight role over the Iraqi oilmen. Many experts believe that it should be up to the Iraqis to decide how to rebuild their battered industry -- and which foreign oil companies will get to take part.

That view was emphatically endorsed by a panel of experts in a report issued recently by the Council on Foreign Relations and Rice University's Baker Institute, and it is believed to represent the thinking of many U.S. officials.

"A lot of us have confidence in people who were professionals in the Iraqi oil industry and left the country, and in people who are still there," said Baker Institute energy analyst Amy Myers Jaffe, who contributed to the report.

But that conclusion is not unanimous. According to sources familiar with the discussions, some Bush administration officials have proposed that the United States assume control of Iraq's war-ravaged petroleum industry to make sure the oil continues to flow and the money it brings in -- some $30 million a day -- isn't misspent.

The deliberations over oil reflect a fundamental fault line within the Bush administration, officials say.

One one side is a hawkish group of civilians at the Pentagon led by Deputy Defense Secretary Paul D. Wolfowitz, sources say. That group has suggested that the United States assert control of Iraqi oil fields during any transition to democracy. Besides providing physical protection and financial oversight, U.S. supervision would give the United States a bigger role in determining global oil production and prices, reducing the clout of Saudi Arabia and other OPEC nations.

The other group, associated with Secretary of State Colin L. Powell and the Pentagon's military leadership, has countered that the United Nations should oversee Iraqi oil production until a new government is firmly in place. Putting Washington in charge would alienate the Iraqi people, this group contends, and could trigger a political backlash throughout the Arab world and in other foreign capitals.

Although Iraq sits atop an underground ocean of crude -- its reserves are second only to Saudi Arabia's -- experts say there won't be nearly enough oil revenue to cover even the expenses of reviving the industry, at least not initially.

If Iraq manages to emerge from war with no additional damage to its oil infrastructure, an uncertain proposition at best, its annual oil revenues probably wouldn't exceed $12 billion a year, according to the CFR-Baker report.