Iraq's Council of Ministers has approved a draft hydrocarbon law establishing guidelines for foreign investment in the oil industry. The measure will now be forwarded to the Council of Representatives -- which is Iraq's parliament -- for a full vote. If approved, the law would provide a strong, modern legal basis for Iraq’s hydrocarbon sector, allowing Iraq to develop its substantial resources for the benefit of all its people.

White House spokesman Tony Snow said the draft law on oil is the "key linchpin" in Iraq's recovery because it gives everybody in the country "a shared economic interest in working together." Its approval by the Iraqi cabinet, he said, was a "hugely important step." If it is approved by the country's parliament, said Mr. Snow, then Iraqis can turn to their attention to other important issues, including constitutional and election reform.

U.S. State Department Spokesman Sean McCormack said that the law would mandate international standards for transparency, including requirements for public disclosure of contracts and revenues:

"It also would define the oil ministry's role as a primary regulatory agency as is generally the case in most countries. And under the law, oil would become a tool that would help unify Iraq and give all Iraqis a shared stake in their country's future. The draft legislation also provides a legal framework to allow international investment in Iraqi oil and gas sectors. And this is something that obviously would be very positive for all Iraqis. It holds out the promise that this government is working on behalf of all Iraqis to create an Iraq in which all Iraqis could benefit from their national patrimony, in this case, hydrocarbons."

The hydrocarbon law establishes basic principles of revenue sharing based on a specific formula to be developed in a separate revenue sharing law.