Opinion (David R. Francis): Why Iraq's new oil law won't last

An Iraqi soldier stands guard at a refinery

With considerable fanfare, Iraq's cabinet last week announced approval of a draft law that would permit foreign investment in the nation's oil industry and provide for distribution of oil revenues among the regions and thus the country's main sectarian blocs.

Details of the draft are tricky. Revenues from current oil fields are to be shared according to population. Yet no recent census has been taken. The Kurdish region in the north and the provinces can sign new oil contracts, but these must be reviewed by an independent federal committee, not yet appointed. There is concern that foreign oil companies might try to get better terms by playing the provinces against one another.

But some oil experts are skeptical of the significance of the measure.

"It will not mean anything on the ground," says A.F. Alhajji, an oil economist at Ohio Northern University in Ada. As long as Iraq suffers from political instability, major oil companies will shy away. "The situation is so bad no one in his right mind wants to go there to be attacked or nationalized a second time."

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