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 comes 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 on Wednesday in an attempt to salvage the original compromise, two participants said. But the meeting came against the backdrop of a public series of increasingly strident disagreements over the draft law 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 country's largest fields are located.
Shahristani, a senior member of the Shiite Arab coalition that controls the federal government, negotiated the compromise with leaders of the Kurdish and Sunni Arab 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 Wednesday's meeting, Deputy Prime Minister Barham Salih, who has worked for much of the past year to push for the original compromise, said that 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.
"Given the seriousness of the issue, I don't want to create false expectations, but I can say there is serious effort to bring this to closure," he said.
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 Web site and first reported by The Wall Street Journal, was an oil exploration contract with Hunt Oil 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 the provinces substantial powers to govern their own affairs. But Shahristani believes that a sort of Kurdish declaration of independence can be read into the move.
"This to us indicates a very serious lack of cooperation that makes many people wonder if they are really going to be working within the framework of the federal law," Shahristani said in a recent interview, before the Hunt deal was announced.
Kurdish officials dispute that contention, saying that they are doing their best to work within the Constitution while the Iraqi Parliament, which always seems to move at a glacial pace, continues to consider the legislation.
"We reject what some parties say - that it is a step towards separation - because we have drafted the Kurdistan oil law depending on Article 111 of the Iraqi Constitution which says oil and natural resources are properties of Iraqi people," said Jamal Abdullah, spokesman for the Kurdistan Regional Government. "Both Iraqi and Kurdish oil laws depend on that article," Abdullah said.
The other crucial players are the Sunnis and Prime Minister Nuri Kamal al-Maliki. The main Sunni party, Tawafuq, which insists on federal control of contracts and exclusive state ownership of the fields, bolted when it became convinced that the Kurds had no intention of following those guidelines.
But the prime minister's office believes there is a simpler reason the Sunnis abandoned or at least held off the deal: signing it would have given Maliki a political success that they did not want him to have.
"I think there is a political reason behind that delay in order not to see the Iraqi government achieve the real agreement," said Sadiq al-Rikabi, the senior political adviser to Maliki. Rikabi was at Wednesday's meeting.
Ali Baban, who as a senior member of Tawafuq negotiated the compromise, said that allegation was untrue. "I have a good relationship" with Maliki, Baban said.
"This is an issue of Iraqi unity," Baban said. "This could cause a split in this country."
Maliki has suggested returning to the original language agreed to in February and attempting once again to push the law through the Parliament. Salih says there is basic agreement on returning to that language, but conceded that Sunni participants in Wednesday's meeting might insist on a deal that includes changes to the Iraqi Constitution to safeguard their interests in the distribution of revenues.
A law on how the revenue should be shared is being developed as a critical companion piece of legislation to the draft law.
"There remains debate on the revenue sharing law," Salih said.
Ahmad Fadam, Ali Hamdani and Khalid al-Ansary in Baghdad and an Iraqi employee of The New York Times in northern Iraq contributed reporting.