The experience of federalism in both Sudan and Iraq is running into immense difficulties, especially in what regards the oil industry and the distribution of oil revenues, in addition to what pertains to political affairs. Such difficulties and disputes between the centre and the federal states in both cases mentioned above have negative political effects for both the future of the country and the regional situation; this is not to mention their impact on the perceptions of the public regarding the nascent federal experience in the Arab region. In Sudan, Global Witness, a non-governmental civil association, issued a report at the end of September that addressed the problems of the distribution of oil revenues between the North and the South. The report stressed the lack of transparency and credibility in the numbers and statistics released by the federal government, and tackled the issue of the allegations that the oil revenues are not being equally distributed between the North and the South, as per the agreement in 2005 which ended 22 years of civil war, and which killed nearly two million Sudanese. The report also pointed out the lack of the necessary means by the Government of Southern Sudan or the Sudanese civil society groups to verify the data published by Khartoum, something that raises many doubts and questions. It should be mentioned here that according to the 2005 agreement, the latter will expire in two years from now, and thus the sharing of oil revenues will end, and a referendum on southern independence will be held. Furthermore, the report cited the contradictions between the information released by the central government and those of the foreign companies operating the oil wells, with many instances having been provided in this regard. What is important is that the continued lack of confidence and transparency will gradually exacerbate doubts and disputes between the two parties, which will in turn negatively affect the referendum scheduled in two years. In the meantime, the Sudanese oil minister questioned the credibility of the information detailed in the report. In Iraq, the situation is different. As the Kurdish factions were strongly involved in the political process, they managed to influence the Constitution to take into account the interests of the federal states at the expense of the [central] government. For instance, the Constitution stipulates that in the event of a dispute between a federal state and the central government, precedence is given to the laws of the first. As such, the Constitution gave the regional governments the right to directly negotiate and sign agreements with the foreign oil companies, even without the knowledge of the central government. Such provisions that are unfair to the state have caused the immense problems that the Iraqi oil industry is experiencing at the present time. In order to continue to be able to sign contracts with foreign companies without Baghdad's knowledge, the Kurdish bloc in the Iraqi parliament is blocking the vote on the oil and gas law which the government has proposed and referred to the parliament in February, 2006. This dispute between the two parties has led to a fundamental disagreement between Baghdad and Erbil, as the former prohibited any foreign company operating in Kurdistan-Iraq from operating in the rest of Iraq. Then in the interest of both parties, Baghdad and Erbil agreed around the middle of the year on using the Kirkuk-Ceyhan line for exporting oil from Kurdistan-Iraq to the global market, and through the Iraqi State Oil Marketing Organization (SOMO). Consequently, Baghdad benefited from this agreement in increasing the country's exports, while Erbil was forced to sign this agreement to satisfy the companies operating in their territories, and which requested the abovementioned exportation agreement in order to be able to receive the price for their oil. Nonetheless, dispute erupted as soon as this agreement was reached: What happened is that Erbil insisted that Baghdad directly pay the foreign companies the price for their exports, instead of depositing them in the treasury of the central government, in addition to paying 17 percent of the total oil revenues of Iraq to the Kurdistan Regional Government (KRG). Baghdad, on the other hand, insisted on its own stance since it has no direct contacts with the companies operating in Kurdistan, and is subsequently not aware of the particulars of these companies' agreements with the KRG. In turn, this dispute resulted in Erbil requesting the foreign companies in the past few weeks to reallocate oil exports into domestic consumption within Kurdistan. There are many common facets to both experiences in Sudan and Iraq. The first aspect is the conflict between the centre and the provinces over oil revenues, which in most cases constitutes about 80 to 90 percent of the country's - or the province's- official financial revenues, and the corruption this entails in light of the lack of transparency and accountability and the ensuing fierce disputes. The second aspect is the lack of transparency regarding information or agreements, which raises many suspicions, not to mention constitutional disputes. The third aspect is the blatant foreign intervention in both countries, to impose international interests and other individual/local interests, which involve stakes in the millions of dollars. Finally, there is a link between the idea of federalism in both countries and the possibility of independence or secession, which raises further questions regarding the relation between this and oil. All these issues comprise the new problems facing the region today, and which more than one Arab country will face in the future, especially when we see the strife taking place in many of the region's countries and its neighbouring countries. For this reason, further instability and weakness are expected to be seen on the regional level in the future. *. Mr. Khadduri is an energy expert
