SAN FRANCISCO, Dec 7: The Iraq Study Group has urged the US to assist in privatizing Iraq's national oil industry and dividing oil revenues on population basis among Shias, Sunnis and Kurds.

In a major far-reaching recommendation to deal with the situation in Iraq, the report released on Wednesday, called for opening Iraq to privatize foreign oil and energy companies, providing direct technical assistance for the "drafting" of a new national oil law for Iraq, and assuring that all of Iraq's oil revenues accrue to the central government.

President Bush hired an employee from the US consultancy firm Bearing Point Inc. over a year ago to advise the Iraq Oil Ministry on the drafting and passage of a new national oil law. As previously drafted, the law opens Iraq's nationalized oil sector to private foreign corporate investment, but stops short of full privatization.

The ISG report, however, further states that "the United States should assist Iraqi leaders to reorganize the national oil industry as a commercial enterprise." In addition, the current Constitution of Iraq is ambiguous as to whether control over Iraq's oil should be shared among its regional provinces or held under the central government.

The report specifically recommends the latter: "Oil revenues should accrue to the central government and be shared on the basis of population." Iraq is currently divided into three parts, Shia south, Sunni centre and Kurdish north.

If these proposals are followed, Iraq's national oil industry will be privatized and opened to foreign firms, and in control of all of Iraq's oil wealth.

Observers said the proposals should come as little surprise given that two authors of the report, James A. Baker III and Lawrence Eagleburger, have each spent much of their political and corporate careers in pursuit of greater access to Iraq's oil and wealth.

According to Antonia Juhasz, author of "The Bush Agenda: Invading the World, One Economy at a Time," "pragmatist" is the word most often used to describe Iraq Study Group co-chair James A. Baker III. It is equally appropriate for Lawrence Eagleburger. The term applies particularly well to each man's efforts to expand US economic engagement with Saddam Hussein throughout the 1980s and early 1990s. Not only did their efforts enrich Hussein and US corporations, particularly oil companies, it also served the interests of their own private firms.

In July, US Energy Secretary Bodman had announced in Baghdad that senior US oil company executives would not enter Iraq without passage of the new law. Petroleum Economist magazine later reported that US oil companies put passage of the oil law before security concerns as the deciding factor over their entry into Iraq.

Put simply, the oil companies are trying to get what they were denied before the war or at anytime in modern Iraqi history: access to Iraq's oil under the ground. They are also trying to get the best deal possible out of a war-ravaged and occupied nation. However, waiting for the law's passage and the need to guarantee security of US firms once they get to work, may well be a key factor driving the one proposal by the Iraq Study Group that has received great media attention: extending the presence of US troops in Iraq at least until 2008.

As the recommendations of the Iraq Study Group are more thoroughly considered, we should remain ever vigilant and wary of corporate war profiteers in pragmatist's clothing, Antonia Juhasz concluded.

On the current situation in Iraq, the ISG group said bluntly that President Bush's policy in Iraq "is not working," and called for prodding the administration to use diplomacy to stabilize the country and allow withdrawal of most American combat troops by early 2008.