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Iraq compromise on draft oil law apparently collapses

Kurdish, Shi'ite officials clash over legislation

BAGHDAD - A carefully constructed compromise on a draft law governing Iraq's rich oil fields, agreed to in February after months of arduous talks among Iraqi political groups, appears to have collapsed. The apparent breakdown occurs just as Congress and the White House are struggling to find evidence that there is progress toward reconciliation and a functioning government here.

Senior Iraqi negotiators met in Baghdad yesterday in an attempt to salvage the original compromise, two participants said. But the meeting came against the backdrop of increasingly strident disagreements over the draft law that have broken out in recent days between Hussain al-Shahristani, the Iraqi minister of oil, and officials of the provincial government in the Kurdish north, where some of the nation's largest fields are located.

Shahristani, a senior member of the Arab Shi'ite coalition that controls the federal government, negotiated the compromise with leaders of the Kurdish and Arab Sunni parties. But since then the Kurds have pressed forward with a regional version of the law that Shahristani insists, much to the irritation of the Kurds, is illegal.

Many of the Sunnis who supported the original deal have also pulled out in recent months.

The oil law is one of several crucial pieces of legislation and wider political agreement that the Bush administration has been pressing for to show progress toward creating a functioning government and healing the country's sectarian divide.

One of the participants in yesterday's meeting, Deputy Prime Minister Barham Salih, who has worked for much of the past year to push for the original compromise, said some progress had been made at the meeting, but that he could not guarantee success.

"This has been like a roller coaster. There were occasions where we seemed to be there, where we seemed to have closure, only to fail at that," said Salih, who is Kurdish.

The legislation has already been presented to the Iraqi parliament, which has been unable to take virtually any action on it for months.

Contributing to the dispute over the draft law is the decision by the Kurds to begin signing development and service contracts with international oil companies before the federal law is passed. The most recent instance, announced last week on a Kurdish government website and first reported by The Wall Street Journal, was an oil exploration contract with the Hunt Oil Co. of Dallas.

The Sunni Arabs who removed their support for the deal did so, in part, because of a contract the Kurdish government signed earlier with a company based in the United Arab Emirates, Dana Gas, to develop gas reserves.

The Kurds maintain that their regional law is in fact consistent with the Iraqi Constitution, which grants substantial powers to the provinces to govern their own affairs.

But Shahristani believes that a sort of Kurdish declaration of independence can be read into the move.

Kurdish officials dispute that contention, saying that they are doing their best to work within the constitution while waiting for the Iraqi parliament to consider the legislation.

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