July 4, 2007 | By Tina Susman and Saif Hameed | Times Staff Writers

The Cabinet OKs a key bill, but factional disagreements pose a hurdle. A second measure still requires approval.

BAGHDAD — Legislation to manage Iraq's oil industry won Cabinet approval Tuesday and could go before the parliament for ratification within days, but political wrangling raised the possibility of delays in passing the long-stalled measure.

The legislation is the less controversial of two measures covering Iraq's oil wealth. The second measure would set up the mechanism for ensuring that oil profits are distributed properly. It still requires passage by the Cabinet, which is expected to consider it this week, government spokesman Ali Dabbagh said.

The reform of Iraq's oil industry is considered the most important of several benchmarks that Washington says are crucial to proving that Iraqi politicians can overcome religious and sectarian divisions to pass laws beneficial to all Iraqis. With the parliament due to begin its monthlong recess at the end of this month and U.S. officials scheduled to present an Iraq progress report to Congress in September, time is running short for the measure to become law.

Hopes pinned on passage

The two oil measures together are considered the only benchmark likely to be met, and officials involved in drafting the legislation have made no secret of its importance. Passage would be "a platinum-level sign that these guys can in fact make decisions," said a U.S. Embassy official.

At a news conference Tuesday, Prime Minister Nouri Maliki described it as the "most important" piece of legislation in Iraq.

But the effort has languished since February, when the Cabinet approved an early version. Differences quickly arose among Kurdish, Shiite and Sunni political blocs over the early draft. Many of those differences surfaced again Tuesday.

After the first draft passed in February, the Kurds objected to what they considered an attempt by the government to take away regional control of oil field management. Much of Iraq's oil is in the Kurdish north, where the semi-autonomous region of Kurdistan has enjoyed freedom to make contracts without central government involvement. Kurds charged that proposals in the early draft violated constitutional guarantees of regional autonomy.

Sunni Arab and Kurdish parties also wanted better guarantees that the Shiite Muslim-led government would distribute oil proceeds fairly and quickly among all regions.

Recently, leaders of the main political blocs said they had overcome their differences.

But in a statement released late Tuesday, the Kurdish regional government said it had not seen the latest draft approved by the Cabinet, which has not been published, and might fight the legislation.

"We hope that the Cabinet is not approving a text with which the KRG disagrees, because this would violate the constitutional rights of the Kurdistan region," the Kurdish government stated on its website.

A member of the main Sunni bloc in parliament, the Iraqi Accordance Front, indicated that Sunni lawmakers also might try to block passage. The lawmaker, Ammar Wajeeh, said the legislation should not be passed until agreement was reached on constitutional amendments dealing with regional powers. But a parliamentary committee tackling proposed constitutional revisions is not expected to finish work until September.

List of conflicts

Wajeeh said the Sunni bloc also worried that the law would infringe on Iraq's sovereignty by opening the oil industry to foreign investment. "It will make it easy for these companies, especially American companies, to control it," he said of Iraq's oil.

Another problem is the boycott of parliament sessions by the 44-member Iraqi Accordance Front. Lawmakers walked out of the assembly last month to protest other legislators' efforts to replace the Sunni speaker, Mahmoud Mashadani. He was voted out last month for rude behavior.

Sunni politicians also are angry about the criminal investigation of a Sunni Cabinet minister, and their six Cabinet ministers are boycotting meetings. They were not present for Tuesday's approval of the oil draft.

Without their participation in either the Cabinet or parliament, Sunnis may view the legislation as illegitimate even if it passes, undermining the reconciliation that the law is supposed to help achieve.

Wajeeh said there were no plans for the Sunni bloc to return to the parliament. "If we see that the oil law will be against the interest of Iraqi people, we will work against it whether we are attending parliament or boycotting it," he said.

Their comments contrasted with those of Dabbagh, the government spokesman, who said the legislation was all but sealed.

"I don't find that there is anything that is going to block or stop this law from passing," he said in remarks that underscored the disconnect among Iraq's feuding political blocs.

Carnage continues

The political squabbling coincided with a violent day in Baghdad, when at least 36 people died or were found slain. Eighteen people were killed in the northeastern neighborhood of Shaab when a car bomb exploded on a street near a market. The bodies of 18 men believed to have been victims of sectarian death squads were found across the capital.

Earlier, the U.S. military said one of its helicopters had been shot down south of Baghdad but that the two crew members escaped with minor injuries. The Air Force then used two 500-pound bombs to destroy the downed craft to prevent hostile forces from recovering it, the military said.

The military also said two Marines died in a noncombat-related accident in the western province of Al Anbar. Their deaths, which occurred Sunday, brought to 3,586 the number of American troops killed in Iraq since the war began in March 2003, according to the website icasualties.org, an independent monitoring group.

Also in Al Anbar, the military said at least 23 suspected insurgents had been killed in two days of fighting south of the provincial capital, Ramadi. A military statement said the battle began after security forces got word that insurgents loyal to the group Al Qaeda in Iraq had gathered on Ramadi's outskirts to stage attacks. Their intent was to reclaim the area as a base of operations, months after Sunni leaders in Ramadi switched loyalties from the insurgency to U.S.-led forces.

Special correspondents in Baghdad contributed to this report.