Today Iraq remains under occupation, and the gulf between those who profess to rule and those who are ruled is filled with blood. The government is beholden to the occupation forces that are responsible for a humanitarian catastrophe and a political impasse. While defenceless citizens are killed at will, the government carries on with its business of protecting itself, collecting oil revenues, dispensing favours, justifying the occupation, and presiding over collapsing security, economic wellbeing, essential services and public administration. Above all, the rule of law has all but disappeared, replaced by sectarian demarcations under a parliamentary facade. Sectarianism promoted by the occupation is tearing apart civil society, local communities and public institutions, and it is placing people at the mercy of self appointed communal leaders, without any legal protection.

The Iraqi government is failing to properly discharge its duties and responsibilities. It therefore seems incongruous that the government, with the help of USAid, the World Bank and the UN, is pushing through a comprehensive oil law to be promulgated close to an IMF deadline for the end of last year. Once again, an externally imposed timetable takes precedence over Iraq's interests. Before embarking on controversial measures such as this law favouring foreign oil firms, the Iraqi parliament and government must prove that they are capable of protecting the country's sovereignty and the people's rights and interests. A government that is failing to protect the lives of its citizens must not embark on controversial legislation that ties the hands of future Iraqi leaders, and which threatens to squander the Iraqis' precious, exhaustible resource in an orgy of waste, corruption and theft.

Government officials, including the deputy prime minister, Barham Salih, have announced that the draft oil law is ready to be presented to the cabinet for approval. Salih was an enthusiast for the US-led invasion of Iraq, and the Kurdish militia-led administration he represents has signed illegal oil agreements that it is now seeking to legalise. Given that parliament has not been meeting regularly, it is likely that legislation will be rushed through after a deal brokered under the auspices of the US occupation.

Iraq's oil industry is in a parlous state as a result of sanctions, wars and occupation. The government, through the ministry of oil's inspector general, has issued damning reports of large-scale corruption and theft across the oil sector. Many competent senior technical officials have been sacked or demoted, and the state oil-marketing organisation has had several directors. Ministries and public organisations are increasingly operating as party fiefdoms, and private, sectarian and ethnic perspectives prevail over the national outlook. This state of affairs has negative results for all except those who are corrupt and unscrupulous, and the voracious foreign oil corporations. The official version of the draft law has not been published, but there is no doubt that it will be designed to hand most of the oil resources to foreign corporations under long-term exploration- and production-sharing agreements.

The oil law is likely to open the door to these corporations at a time when Iraq's capacity to regulate and control their activities will be highly circumscribed. It would therefore place the responsibility for protecting the country's vital national interest on the shoulders of a few vulnerable technocrats in an environment where blood and oil flow together in abundance. Common sense, fairness and Iraq's national interest dictate that this draft law must not be allowed to pass during these abnormal times, and that long-term contracts of 10, 15 or 20 years must not be signed before peace and stability return, and before Iraqis can ensure that their interests are protected.

This law has been discussed behind closed doors for much of the past year. Secret drafts have been viewed and commented on by the US government, but have not been released to the Iraqi public - and not even to all members of parliament. If the law is pushed through in these circumstances, the political process will be further discredited even further. Talk of a moderate cross-sectarian front appears designed to ease the passage of the law and the sellout to oil corporations.

The US, the IMF and their allies are using fear to pursue their agenda of privatising and selling off Iraq's oil resources. The effect of this law will be to marginalise Iraq's oil industry and undermine the nationalisation measures undertaken between 1972 and 1975. It is designed as a reversal of Law Number 80 of December 1961 that recovered most of Iraq's oil from a foreign cartel. Iraq paid dearly for that courageous move: the then prime minister, General Qasim, was murdered 13 months later in a Ba'athist-led coup that was supported by many of those who are part of the current ruling alliance - the US included. Nevertheless, the national oil policy was not reversed then, and its reversal under US occupation will never be accepted by Iraqis.

· Kamil Mahdi is an Iraqi academic and senior lecturer in Middle East economics at the University of Exeter This email address is being protected from spambots. You need JavaScript enabled to view it.

http://www.guardian.co.uk/commentisfree/story/0,,1991320,00.html

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