Iraq leaders broker oil deal

 Newsday.com:

WASHINGTON - Just in time for next week's Bush administration report to Congress on Iraq, most of the top leadership council in Iraq has reached a breakthrough agreement on a new oil law -- the thorniest of the political issues blocking political compromise in that cauldron of a country.

A Kurdish official predicted Friday to Newsday that if a final agreement can be announced to coincide with Army Gen. David Petraeus' testimony to Congress on Monday, it would be a major boon to President George W. Bush's argument that progress is being made in Iraq.

In recent days, Democrats in Congress have focused on the lack of political progress to counter Bush's claims that military progress is being made on the ground.

It was not clear Friday whether Iraqi Sunnis had approved the agreement yet, but it has been the Kurds -- not the Sunnis -- who have blocked progress. The Sunnis, who have little or no proven oil deposits in their region of Iraq, have long argued for central control of Iraq's oil and equitable distribution of the revenues by population.

Without it, experts on the region say, the country is likely to break apart.

According to one Middle Eastern source, the agreement would allow centralized control of the oil by the government in return for a larger share of the profits for the Kurds than originally proposed. Significantly, the agreement would cover future discoveries of oil deposits in addition to known oil fields, contrary to the vague provisions in the Iraqi constitution that seemed to leave such oil totally to the regions.

The Kurdish official confirmed the agreement, but said it calls for the central government and the regions to set policy together. Under the agreement, a federal council -- with both regional and federal government membership -- would be in charge of all the oil and gas in Iraq, he said.

Kurdish leaders had wanted Kurdish oil fields to be totally under their control. The Kurdish official, who asked not to be identified but was involved in the discussions, said Kurdistan, in northern Iraq, would continue to control contracts for oil exploration in their region, a major sticking point, but in coordination with the new council and its policies. The main point, the official said, is that "the center (Baghdad) cannot prohibit development in the North," as it did in the days of Saddam Hussein.

The deal was hammered out in recent days between the leaders of the two main Kurdish factions and two main Shia factions, with the Sunnis, who have been boycotting the government, not yet represented.