BAGHDAD — After months of contentious negotiations over the postwar spoils of Iraq's most valuable natural resource, the government announced Monday night that it had approved a draft plan to ramp up oil production and share the proceeds.
The agreement by the Iraqi Cabinet was touted as a major breakthrough. It must still be approved by parliament, but because all of Iraq's vested ethnic and regional interests are represented in the Cabinet, the deal was viewed as having overcome a significant hurdle.
The United States has long wanted to capitalize on Iraq's oil, especially as a means of paying for the country's reconstruction. Oil's importance was reiterated in the Iraq Study Group report released in December.
The agreement would open the door to international investment in Iraq's oil industry -- a bonanza for foreign companies -- and produce revenue for a nation badly in need of money to rebuild.
Iraq's oil riches lie predominantly in the Kurdish-controlled north and the Shiite-controlled south. Reaching an agreement essentially required both factions to be willing to share their bounty with Sunnis in the middle -- a particularly painful prospect as Sunnis under Saddam Hussein controlled the entire government.
But there were also more complex questions of provincial sovereignty versus centralized national power.
Kurds, who are pushing a referendum on withdrawal from Iraq, wanted more control over their ability to strike contracts with foreign firms and spend the profits as they see fit.
According to U.S. Ambassador Zalmay Khalilzad's office, all revenue from oil sales would go into a single national account, but all regions and provinces would have a seat on an energy policymaking body, and provinces would receive shares of revenue and have control over how they spent it.
"This is a significant political achievement because leaders representing all of Iraq's communities have demonstrated that they can pull together to resolve difficult issues of vital national importance," Khalilzad said in a statement.
In Washington, White House spokesman Tony Snow called a new oil law the "key linchpin" in Iraq's recovery.
During a visit to Baghdad this month, Secretary of State Condoleezza Rice urged Iraqi leaders to pass the law, saying "it's really critical" to show signs of national reconciliation.
