Iraqis face the prospect of losing up to US$200 billion ($290 billion) of the wealth of their country if a US-inspired plan to hand over development of its oil reserves to US and British multinationals comes into force next year.
A report produced by American and British pressure groups warns Iraq will be caught in an "old colonial trap" if it allows foreign companies to take a share of its vast energy reserves.
The report is certain to reawaken fears that the real purpose of the 2003 war on Iraq was to ensure its oil came under Western control.
The report claims that multinationals entering the Iraqi oil business will expect high returns on any investment - and Iraq will lose between US$127 billion and US$194 billion over a 40-year period.
Iraq has announced plans to seek foreign investment to exploit its oil reserves after next month's election. Iraq has 115 billion barrels of proven reserves, the third largest in the world.
According to the report Crude Designs (see link below), from groups including War on Want and the New Economics Foundation, the new Iraqi constitution opened the way for greater foreign investment. Negotiations with oil firms are already under way before oil laws are passed, it said.
The groups said they had amassed details of pressure from the US and UK Governments on Iraq to look to foreign firms to rebuild its oil industry.
It claimed a British Foreign Office code of practice issued in the northern summer of last year said at least US$4 billion would be needed to restore production to the levels before 1990-91.
"Given Iraq's needs it is not realistic to cut Government spending in other areas and Iraq would need to engage with the international oil companies to provide appropriate levels of foreign direct investment," it said.
The report said the use of production sharing agreements (PSAs) was proposed by the US before the invasion and adopted by the Coalition Provisional Authority.
"The current Government is already negotiating contracts with oil firms in parallel with elections and passage of a Petroleum Law," it said.
Earlier this year a BBC Newsnight report claimed to have uncovered documents showing the Bush Administration made plans to secure Iraqi oil even before the September 11 terrorist attacks on the US.
Based on its analysis of PSAs in seven countries, it said multinationals would seek rates of return on their investment from 42 to 162 per cent, far in excess of typical 12 per cent rates.
Taking an assumption of US$40 a barrel, below the current price of almost US$60, and a likely contract term of 25 to 40 years, it said that Iraq stood to lose between US$127 billion and US$194 billion.
Andrew Simms, the NEF's policy director, said: "Over the last century, Britain and the US left a global trail of conflict, social upheaval and environmental damage as they sought to capture and control a disproportionate share of the world's oil reserves.
"Now it seems they are determined to increase their ecological debts at Iraq's expense. Iraq is caught in a very old colonial trap."
Louise Richards, chief executive of War on Want, said: "People have increasingly come to realise the Iraq war was about oil, profits and plunder. Despite claims from politicians that this is a conspiracy theory, our report gives detailed evidence to show Iraq's oil profits are well within the sights of the oil multinationals."
A spokesman for Britain's Foreign Office said Iraq's oil industry needed investment after years of stagnation, UN sanctions, vandalism by Saddam Hussein and sabotage.
"Iraq has made it clear that the decision is a matter for its authorities but they understand that it would require a lot of investment."
He said it was not surprising that Iraq should look to outside experts.
The report named several companies, including the Anglo-Dutch Shell group, as jockeying for position before a new government is elected.
In 2003, the then head of exploration said investors would need "some assurance of future income".
The group said the involvement of foreign oil companies would be determined by the new Iraqi Administration. "We aspire to establish a long-term presence in Iraq and a long-term relationship with the Iraqis.
* The world's four oil giants - BP, Exxon, Chevron and Shell - have been desperate to get back into Iraq.
* They were kicked out in the nationalisation of 1972.
* Iraq sits on the world's third largest proven oil reserves - 115 billion barrels.
* Lucrative oil contracts will be worth hundreds of billions of dollars over many decades.
* Iraq's new constitution guarantees a major role for foreign companies.
* Production Sharing Agreements would hand over control of dozens of oil fields