THE US REPORT

Sen. Barack Obama often contrasts the billions in reserve in Iraqi revenues with what the war costs the U.S. But not a single reporter has asked the senator about a key economic decision on Iraq by some of Obama’s staunchest supporters, a decision that might have strengthened Iraq’s economy as well as our own. I’m not the only one who wants an answer. Frederick W. Kagan, a resident scholar at the American Enterprise Institute and a contributing editor for a conservative magazine, said members of Congress wanted answers too. Kagan testified recently about Iraq before the House Budget Committee. Kagan said members asked a question: “Why, after all the assistance we've given to Iraq over the past five years, was the first major Iraqi oil deal signed with China and not with an American or even a western company?”

Writing in the Weekly Standard, Kagan offers a simple answer. “[t]hree Democratic senators intervened in Iraqi domestic politics earlier this year to prevent Iraq from signing short-term agreements with Exxon Mobil, Shell, Total, Chevron, and BP.”

The Iraqis were about to sign no-bid contracts with these companies—improvements on Iraq’s oil infrastructure could begin immediately, leading to investment from other countries, an increase in Iraqi oil money and of course an increase in supply for the global market including the U.S. But Sen. John Kerry (D-Mass.), Chuck Schumer (D-N.Y.) and Claire McCaskill (D-Mo.) intervened, sending a letter to Secretary of State Condoleezza Rice and issuing a news release, both of which Kagan says created a media “hooraw” in Iraq.

These three senators killed the deal despite the fact the Iraqi government wanted to go ahead with it. Kagan wrote, “Iraq’s central government has defended the award process, saying Exxon Mobil, Shell, Total and BP have provided free advice and support over the past two years, enabling the companies and the government to build a close relationship.”

Incidentally, Schumer will long be remembered by IndyMac employees—his official letter of inquiry to the bank was leaked to media, leading to a run on the bank. Some believe this was key to the bank’s failure. Hopefully, Obama won't let Schumer near the economy if we elect a Democratic president. Kerry is the richest man in Congress, successful with his own economics. Kerry's individual wealth totals $230.98 million. That's aside from the billions in wealth his wife claims.

Even though the Bush administration refused to intervene in the Iraq deal, the senators persisted, saying there wasn’t a plan to share oil revenues among different factions in Iraq. Kagan further notes, “[t]he central government has been sharing oil revenues equitably and there is no reason at all to imagine that signing the deals would have generated increased violence (and this was certainly not the view of American civilian and military officials on the ground in Iraq at the time). It is certain that killing the deals has delayed the maturation of Iraq's oil industry without producing the desired hydrocarbons legislation.”

Hydrocarbons aside, China inked the deal quicker than a meter can tally the bucks for what we put in our U.S. tanks. Media outlets pushed headlines about China getting the deal, but not a word was said about HOW China got that deal. No one apparently thought to ask. And who could blame China for being astute about economic matters?

So if I were there tonight at Belmont University in Nashville where the music runs to country and the hills are topped with hardwoods, I’d ask, “Sen. Obama, why did some of your key supporters kill a deal that might have benefited Iraq and the U.S.? Was this a good decision for the U.S. economy? And I respectfully ask for the answer in prose, not poetry.”
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Sources for  'Why did three US senators boot Iraqi oil to China?'

'No oil for blood ' by Frederick W. Kagan
The Weekly Standard, 9-16-08

'China gets $3 billion oil deal with Iraq'  by Anderson Cooper
ac360 at CNN, 9-2-08

'Richest members of Congress' by Paul Singer, Jennifer Yachnin and Casey Hynes
Roll Call, 9-22-08

*Tip of the hat to a Red State blogger for bringing this story to the forefront.