< Back to Iraqi Dinar in the News November 3rd, 2006

Rice Says Iraq Oil Money to Be Split as Country Remains Unified

By Janine Zacharia

Nov. 3 (Bloomberg) -- Secretary of State Condoleezza Rice predicted Iraqis will divide control of the country's oil revenue along regional lines while retaining a central government to maintain political unity.

``They are not going to have such a centralized system with the use of that resource, and that's probably a good thing because we do know also that a centralized system around oil tends to produce corruption,'' Rice said today in an interview with ``Political Capital With Al Hunt'' to air this weekend on Bloomberg Television.

Iraqis ``are likely to come up with a system that may be superior to many that are used in the Middle East,'' Rice said at the State Department in Washington.

Rice's comments came as the Iraqi parliament is weighing a law to regulate the country's oil and gas industry, which she said would serve as a ``source of political unity.'' A provision of Iraq's constitution calls for sharing oil revenue ``compatible with the demographic distribution'' of the country.

The oil strategy outlined by Rice suggests a change in U.S. policy, according to Kenneth Katzman, a Middle East analyst for the nonpartisan Congressional Research Service in Washington. Up until now, ``the U.S. policy has been for a strong unified central government,'' Katzman said. ``These remarks would appear to lean more toward those advocating regional autonomy.''

While Rice encouraged oil-money sharing, she rejected calls by some U.S. politicians for Iraq to be partitioned along sectarian lines. ``Most of them are not Iraqis who are saying that,'' Rice said.

To contact the reporter on this story: Janine Zacharia in Washington at