From tuk tuks to tanks

I've just got back from a couple of weeks in Thailand. Great times with great friends and the small matter of my birthday too. I've been in Baghdad 6 months now and it strikes me how it's the kind of place I shudder at the thought of when I'm away but don't mind it so much when I'm here. Especially at the moment as well, with all the changes due to take place from the summer onwards. Due to the land in the IZ being transferred back to Iraqis, a lot of people are going to be leaving the IZ and moving out to a military camp near the airport. We'll not be able to do that as we are independent, but we do rent off an Iraqi landlord so we don't necessarily have to leave. It will be more a question of whether it's safe enough to stay if/when they knock down the outer walls to the IZ and open up the roads again. It used to stress me out but now I'm not too worried. I'll go with the flow, stay here as long as it's safe and hit the road when it's looking like getting dangerous.

I've never said what I do here but may as well spit it out. I'm a lawyer working for a small independent company that was set up in 2003 here in Baghdad. We do all sorts of stuff, from registering companies, helping PSCs get their operating licences, advising international and Iraqi banks on issues arising from Iraq debt and guarantees, some corporate work such as advising on joint ventures or share transfers, litigation advice and representation, plus some oil and energy related work, and advice to various governments.

Since I've been here I've noticed the commercial climate get increasingly difficult. Petty corruption within government departments is rife and getting worse. We don't pay bribes which makes it hard but our clients appreciate that we do things the right way rather than the easy way. It's a hell of an eye opener but it makes me really angry to see these people all on the take rather than helping to get their country back on its feet. To be fair, though, I can also see it from the Iraqis' point of view. The US and UK steamed in here nearly 4 years ago and re-wrote a bunch of laws to open the country up to foreign investment. The Iraqis can be forgiven for thinking that the rug has been pulled from under their feet. But we are where we are. The same can be said of the security situation.

Whatever your views on the invasion and the manner of occupation, we're at a point now where it is the responsibility of the Iraqi government to deal with the violence that has escalated since last February when a shrine in Samarra was bombed. There have been some interesting comments from various places about whether this is or is not a civil war. It seems that the violence has all the hallmarks of a civil war, not least the massive displacement of people, but what is really happening is a bunch of mini civil wars. There's violence between Shia and Sunni, between each of them and the Coalition/occupation forces and, more recently, within competing Shia factions and within Sunni factions that are for or against the insurgency. The last of those seems to be a very recent trend. A lot of Sunni tribal leaders, particularly towards the west (Anbar province) have had enough and want to rid the country of terrorists streaming in from the Syrian border, Al Qaeda in Iraq in particular. That's an encouraging sign.

While I was away, the new clampdown started to take effect. It seems to have had instant results. From a selfish point of view, there seems to be a lot less rockets and mortars landing in the IZ now. Bombings and killings in the red zone are significantly down on what they were in December and January. There have been a couple of high profile, very lethal attacks, but still I think overall the results have so far been very good. The best thing is, the full force level hasn't even arrived yet. From March 11 we won't be able to eat at the dining facility we usually go to because there will be 1,000 more troops in that base alone. Which is a pain in the arse for me food-wise but must mean that more troops are coming to back up those already on the ground. A lot of arms caches have been found which is good news. Many of those contain materials for the relatively new and vastly more lethal weapon - EFPs ("explosively formed penetrators") which are like the common or garden roadside bomb (IED or "improvised explosive device") but can penetrate armoured vehicles. EFPs are said to originate in Iran, which doesn't help the political situation between Iran and the US.

However, a couple of days ago, the US agreed to come to the table with Iran and all other neighbours and the UK among others, to discuss ways to fix Iraq's problems. It can't be underestimated how significant this is. We did a major project advising the US Government on something, and whenever we mentioned Iran you could see body language stiffen and lips tighten. Iran was taboo and the thought of anything that could be considered an overture towards it was implicitly if not expressly forbidden. So let's see how that pans out.

Further potentially good news was that last week a final draft hydrocarbon law was approved by the the Iraqi Cabinet and will be referred to Parliament for a vote. This has been long-awaited and was supposed to be produced by the end of 2006. It could change everything. Basically, the issue is that the oil rich south of Iraq is populated mostly by Shiites, and the oil rich north is populated mainly by the Kurds. There's a referendum soon on whether the oil-rich city of Kirkuk will be brought within Kurdistan or remain in Iraq. I understand the expected result is that it will go Kurdish. All of which could leave the Sunnis with little or no revenue from the oil, as the middle of Iraq (which they mainly populate) hasn't got oil fields that are ready for drilling. So the primary issue the hydrocarbon law had to address was revenue sharing. And the draft seems to have done the right thing: all revenue from Iraqi oil gets pooled, and then shared out on the basis of population. In other words, all Iraqis will benefit, whether they live on an oil field or out in the desert. So far, so good. There is a potential significant problem, however, with the manner in which it (the oil) can be exploited. Production Sharing Agreements ("PSAs") are permitted by the draft law. This basically means that foreign companies can come in, produce the oil and take around 70% of the revenue. This report from globalsecurity.org sets out why PSAs might be considered inappropriate for Iraq, and the gist of it will be why the draft law may not be approved. Even if it is approved, there may be continued violence in objection to it. With any luck, though, it will be accepted and people will get on with rebuilding their lives and society.

So, all in all, very interesting times right now. Some days I am optimistic, others I am not. Today's a "glass half full" day.