Paul Krugman released a bombshell editorial today that exposes the flaming carcass of the "nation" of Iraq for what it is. There is no nation of Iraq. There are three major ethnic groups fighting for control of resources and a number of smaller groups fighting to survive.

Given that there is no nation of Iraq and the U.S. still needs Iraqi oil the fall back position for big oil is to cut separate regional deals with the regional governments. That is exactly what has happened. Paul Krugman reveals:

What’s particularly revealing is the cause of the breakdown. Last month the provincial government in Kurdistan, defying the central government, passed its own oil law; last week a Kurdish Web site announced that the provincial government had signed a production-sharing deal with the Hunt Oil Company of Dallas, and that seems to have been the last straw. Now here’s the thing: Ray L. Hunt, the chief executive and president of Hunt Oil, is a close political ally of Mr. Bush. More than that, Mr. Hunt is a member of the President’s Foreign Intelligence Advisory Board, a key oversight body.

The surge, the Petraeus speech and Bush's latest speech are all political Kabuki theater. They all know that there is no nation of Iraq. The surge in Baghdad provided cover for ethnic cleansing of Sunnis - as intended. The arming of Sunnis in Anbar encouraged the formation of Sunni enclaves. The nation formerly known as Iraq is now close to complete ethnic cleansing. And Bush's closest friends and allies are profiting.