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The War - Did We Sacrifice A Million Lives And A $Trillion Cash Just To Hand Our Jobs To China? Part III

By Nicholas C. Arguimbau

31 January, 2011
Countercurrents.org

While the Tea Partiers and the liberals squabble over important domestic issues, America’s corporate and military titans, at the expense of America’s workers and taxpayers and with the blessing of Congress and the President, are creating China’s economic miracle. The military, at a cost of over $1 trillion, has paved the way for China to acquire and the U.S. to lose access to vast mineral and petroleum resources. The oil industry, with U.S. government assistance, is building a safe haven in East Asia from the imminent crash of oil everywhere else. And foreign investment, largely American, is giving China on average nearly one million new jobs a month while American unemployment soars.

This is a four-part series. Part One discusses why and how the oil industry could create a safe haven from its own collapse, and why it might choose China for the project. Part Two discusses how East Asia became "the right market" for the world’s remaining oil reserves, endangering everyone else. Part Three discusses how the US military has turned Afghanistan and Iraq into China’s good buddies. Part Four takes a broader view of what has happened and what if anything can be done about it. Enjoy.

Part Three of Four. Our Hand-Picked Governments in Afghanistan and Iraq Snub Us and Befriend China

Also Read

Part I Thinking About The War

Part II The US and Europe Aren’t "the Right Markets."
Does "Big Oil" have the resources to carry out your plan?

Part IV What’s Really Going on Here?

Next stop, Afghanistan

After ousting the Taliban under the guise (or the reality - take your pick) of doing something about 9/11, the US put in place Hamid Karzai, a former Unocal (you remember, the company that convinced Congress that the "right markets" were in East Asia, not the West) adviser. While the specific project pushed by Unocal’s Maresca has not gone forward, the continuing significance of Maresca’s testimony is demonstrated by the signing in December, 2010 by Karzai of a multinational agreement (not including the US) to build a natural gas pipeline, to serve points East. Maresca’s vision of the "right markets" has remained alive and well.

Shortly, with the Taliban out of the way, China arrived on the scene to get involved in a variety of resource exploitation projects, and was greeted by the Karzai administration and the Afghan public with open arms. With the Taliban gone from Kabul, Afghan-Chinese business is booming on many levels. In the decade since 9/11, trade has increased tenfold, consumer markets in Kabul, like those in the US, are packed with Chinese products, often one fifth the price of similar goods manufactured in the US or Germany or Iran, and there is a continuous stream of about 30,000 traders shuttling back and forth between the two countries.1

At least equally important, and better known, is that China has won numerous industrial and resource-development contracts from the Karzai government in Afghanistan. China Railway Construction Group/China Railway Shisiju Group has won major railway-construction contracts. Chinese companies now dominate the Afghan cable and fiber optics markets. Chinese contractors have also received contracts for hospital, school, road and housing developments..

The crown jewel of it all is a 30-year contract to exploit what is said by some to be the largest and by others to be the second-largest undeveloped copper deposit in the world, Aynak, approximately 40 miles southeast of Kabul.. The deposit is said by one reporter to be valued at $30 billion and by another to be valued at "up to" $88 billion, yet China’s bid of $3.5 billion winning it the deal over several other bidders including Phelps-Dodge of the United States, reportedly surprised analysts who were not expecting a bid over $2 billion. Some have questioned the integrity of the bidding process, which also reportedly had no economic or environmental review, and question the over-involvement in favor of the Chinese proposal by Karzai’s mining minister, discussed in a Nature article in October, 2007, but the Karzai government denies any wrong-doing.2

None of this would have been possible without the United States’ military intervention, apparently immensely expensive to the people of the United States in dollars, lives, and loss of good will. Mathew Nasuti of Kabul Press writes:

"China is not merely winning the propaganda war. It is keeping a low public profile in Afghanistan, which keeps Muslim militant efforts focused on the very visible American military presence. While the United States Government spends an estimated $1 billion a day in Afghanistan and, more importantly, places its men and women in uniform in the line of fire, the country that benefits the most from that effort appears to be China. If the Americans and their NATO allies were not fighting and dying in Afghanistan, Chinese military forces would likely have to be deployed. The Beijing government seems happy to have the West take over its military responsibilities. As the Taliban and al-Qaeda focus on battling the very visible Western forces, China officials work behind the scenes preparing to benefit in the long-term from the primarily American effort."3

Ironically, one of the reasons for continued presence of the United States in Afghanistan is that the Aynak mining operation faces continued threats from Taliban insurgents, and the U.S. Army’s Tenth Mountain Division patrols the area for China.4

Even the Afghan-American Chamber of Commerce, folks one would expect to find allies among American Republicans and Tea-Partiers, is whistling into the wind about what’s going on: "We're giving tens of billions of dollars in assistance to Afghanistan, and we're getting no credit. We need a policy on developing mines and minerals and oil and gas in Afghanistan. Otherwise, it will be dominated by the Chinese."5

None of these stunning advances for China could have occurred without military intervention by the United States. Can they be reconciled with the Government’s asserted goal of routing out Al Qaeda in Afghanistan? No, because there are in fact under 100 Al Qaeda in Afghanistan. For this we would deploy over 100 THOUSAND US troops, spend half a trillion dollars and still find ourselves regularly outmaneuvered? Can they be reconciled with the leftperceived goal of US imperialism in the sense of capture and control of the resources of a nation with the use of military force? No, because the only imperialist interests appearing to be furthered are those of the Chinese, and if conventional imperialism is involved, we are fighting FOR those we should be fighting against. No especially because US imperialist interests cannot be reconciled with providing military security for China’s mining operations.

Has George Monbiot’s prediction that our handpicking the Taliban’s successor would "crush" China’s ambitions in Afghanistan come true? Hardly. On the other hand, if the US military has been hijacked by the oil industry and China to aid in consolidating resources in Maresca’s "right markets," then not only do the facts fit, but far from bumbling, the operation has been a tremendous success at costs that, while very high to the US taxpayer, have been negligible to the "clients."

All of this is surely at least CONSISTENT with implementation of the conjectured plan for giving oil a Chinese safe haven in which to invest its trillions as the oil-based economies of the rest of the world, including the US, collapse. It is not a pretty picture to see the US using its military might with either the effect or the intent of depriving Americans of resources and sending them to China, while China, insisting it has nothing to do with the war, reaps the benefits. That uis unquestionably the effect, but we should take a look at what’s been happening in Iraq before jumping to conclusions about intent.

On to Iraq, the One-time Home of Saddam Hussein

Iraq is in fact more of the same. The United States Government has never shown that Al Qaeda had a safe haven in Iraq or even that the US was making an attempt to rout out Al Qaeda. The same is true of the Taliban in Iraq. And the back-up claim of the US, that attempts to manufacture weapons of mass destruction in Iraq had to be halted, was never shown to have any factual support. This writer will not reiterate the evidence on this subject. So that left a "US-imperialists-are seeking-control-of-the-oil" explanation as the only apparently viable one.

Viable, that is, until the US "regime change" occurred and Saddam Hussein’s chosen successor began to parcel out contracts on its vast oil reserves, estimated at 110 billion barrels (vast at least in this day of declining oil). We shall look in vain for any signs of gratitude to the U.S. from the newly-installed "grateful pro-western government."6

Falah Aljibury, an Iraqi energy analyst who has advised several Iraqi oil ministers as well as other OPEC nations, says that the Asian nations have been at an advantage as a result of their non-participation in the military operations that secured benefits for them.7 And so it certainly appears.

In an early round of sales, four small contracts were entered into, but notably, all with Asian contractors: China, Vietnam, India and Indonesia.8

In August, 2008, without a bidding process, Iraq entered into a 20-year contract with China to develop the small Ahdab field, near the Iranian border, expected to yield 125,000 bpd. Iraq’s spokesperson, discussing the deal with the Washington Post, emphasized that Western oil compaies had thus far only been given technical services contracts, that the contract given to China was much more lucrative, and that Iraqi officials hoped the deal with China would "refute all the rumors that say the American companies are the only ones benefitting from the American occupation." 9

In 2009, again without a bidding process, Iraq gave China and its partner BP the largest contract that can or will ever be made anywhere again for oil

a 20-year contract to develop its crown jewel, the Rumaila field, said to be second only in the world to Saudi Arabia’s now-declining Ghawar field.10 Longterm contracts, unique in Iraq for the Middle East, are permitted under the Iraqi regime change’s law, the terms of which were reviewed by the Bush Administration prior to its submission to the Iraqi parliament.11 Those terms include the contractor sharing title to the petroleum with Iraq, but that particular provision has yet to be approved by Iraq’s parliament. With estimated reserves of 17 billion barrels and production at 2.85 mbpd, Rumaila makes the giant Alaskan Prudhoe Bay field, the largest in North America (total production to reach 13 billion barrels at a maximum production rate of 2 mbpd,12) look modest.

Again without a bidding process, in May, 2010, Iraq signed a contract with China and the Turkish Petroleum Corporation (TPAO) to develop the Maysan oilfield complex, which contains 2.5 billion barrels. The complex is expected to yield 450,000bpd (remember that only a decade ago, that alone would have been 10% of China’s demand), and the stakes are divided 64% China, 11% Turkey, and 25% retained by Iraq. 13.

The American companies by appearances got their main chance in Iraq with an open auction on numerous large fields in December, 2009. The American companies were, however, according to the press, "noticeably absent."14 Despite a very flashy televised show of transparency in the bidding process,15 the die had already been cast - the American companies had apparently already decided either that they did not want to develop Iraq’s huge oil reserves, or that they could not win on the terms Iraq was offering. The fields auctioned off16 included

Rajnoon - another "Prudhoe Bay" field, its total reserves 13 billion barrels and projected output 1.8 mbpd- successful bidder Malaysia.

Halfaya (4.1 billion barrels of reserves, projected output of 535,000 barrels per day (bpd)) - successful bidder China (50%), along with partners Total from France (25%) and Petronas from Malaysia (25%).

Gharaf (reserves of around 860 million barrels, projected output of 230,000 bpd) - successful bidder a partnership (Malaysia 60%, Japan 40% )

West Qurna Phase 2(about 12 billion barrels of reserves; projected production of 1.8 mbpd) - successful bidder Russia.

US company Exxon-Mobil, partnering with Royal Dutch Shell, had been awarded one month earlier a significant 20-year development contract for West Qurna Phase 1 (estimated reserves of 8.5 billion barrels, with an output target of 2.1 mbpd),17 but that is the only major contract awarded to a U.S. company, and there are not expected to be additional major auctions for decades. As discussed in Part Two, Exxon is actively investing in China, so the oil it obtains from Iraq may ultimately go to China rather than to the U.S.

Here in summary are the fields parceled out by Iraq in 2009 alone:

Asia Rumaaila.............2.85mbpd...............primary holder China

Maysan........................... 0.45 ...............................primary holder China

Rajnoon............................ 1.80............................ primary holder Malaysia

Halfaya.............................. 0.535......................... primary holder China

Gharaf ..................................0.230............................. primary holder Malaysia

Total Asia......................... 5.865

Russia..................... W. Qurna...................... Ph 2 1.80

Exxon/U.S...................... W. Qurna ..................Ph 1 2.10

France ...........................Halfaya (25%)...................... 0.134

Malaysia is a small player in the world of oil relative to the above contracts, producing approximately 693,000bpd and consuming 536,000 bpd, with reserves of about 4 billion barrels,18 so Malaysia is likely standing in for someone else in Iraq.

Oh, yes. Part of what the US is doing in Iraq is the same as in Afghanistan: serving as security forces for the primarily-Asian and particularly Chinese oil contractors, which is apparently a major reason the Commander-in-Chief doesn’t seem to be in much hurry to fulfill his commitment to bring the troops home.19

------------------------------

The author is a California-licensed lawyer residing in Massachusetts (e-mail narguimbau@earthlink.net). He wishes to thank Ted Cady, Peter Goodchild, Peter Hollings, Lance Rodgers and Emily Spence for encouragement and valuable input. All rights reserved, in particular for republicatiion.

NOTES

1. Tini Tran, AP News Service, "As U.S. fights, China spends to gain Afghan foothold ," US Independence Day, July 4, 2010, http://www.msnbc.msn.com/id/38076136/ns/world_news-south_and_central_asia/

2. Mathew Masuti, "US Losing Afghanistan to China," Kabul Press July 19,2010, http://www.kabulpress.org/my/spip.php?article19517; Radio Free Europe / Radio Liberty, November 24, 2007, "Afghanistan: China's Winning Bid For Copper Rights Includes Power Plant, Railroad," http://www.afghan-web.com/economy/china_copper.htm land ; Tini Tran, AP News Service, "As U.S. fights, China spends to gain Afghan foothold ," US Independence Day, July 4, 2010, http://www.msnbc.msn.com/id/38076136/ns/world_news-south_and_central_asia/

3. Mathew Masuti, "US Losing Afghanistan to China," Kabul Press July 19,2010, http://www.kabulpress.org/my/spip.php?article19517.

4. As reported in the Asia Times, citing the Economist magazine. Syed Fazl-e-Haider "Afghan cash starts going to China, " http://www.atimes.com/atimes/South_Asia/KK11Df04.html.

5. As reported in the Asia Times, citing an NBC News interview of Donald Ritter, president of the Afghan-American Chamber of Commerce. Syed Fazl-e-Haider "Afghan cash starts going to China, " http://www.atimes.com/atimes/South_Asia/KK11Df04.html.

6. Cf. observations of George Monbiot in October 2001, quoted above.

7. Steve Hargreaves, CNNMoney.com staff writer, April 5 2007: "And Iraq's big oil contracts go to ... Companies from China, India and other Asian nations are seen getting the first contracts. But don't write off Big Oil just yet." http://money.cnn.com/2007/04/05/news/international/iraq_oil/index.htm

8. Steve Hargreaves, CNNMoney.com staff writer, "And Iraq's big oil contracts go to ... Companies from China, India and other Asian nations are seen getting the first contracts. But don't write off Big Oil just yet.’ April 5 2007. http://money.cnn.com/2007/04/05/news/international/iraq_oil/index.htm

9. Amit R. Paley, Washington Post Foreign Service, Friday, August 29, 2008, "Iraq and China Sign $3 Billion Oil Contract: Deal Is First of Its Kind Since Invasion," http://www.washingtonpost.com/wpdyn/content/article/2008/08/28/AR2008082802200.html

10. Friday, 24 September 2010, Jay Ruskin, "NEWS: 'Surge of interest' in Iraq oil contracts as BP prepares to develop Rumaila field." http://www.ufppc.org/us-a-world-news-mainmenu-35/9930-news-surge-ofinterest-in-iraq-oil-contracts-as-bp-prepares-to-develop-rumaila- field.html. Note that the Prudhoe Bay field has had 13 billion barrels of "recoverable" oil but 25 billion barrels total. Press reports for Rumaila have not made the distinction, so there is some possibility that its "recoverable" oil is no more than Prudhoe Bay’s.

11. Steve Hargreaves, CNNMoney.com staff writer, April 5 2007: "And Iraq's big oil contracts go to ... Companies from China, India and other Asian nations are seen getting the first contracts. But don't write off Big Oil just yet." http://money.cnn.com/2007/04/05/news/international/iraq_oil/index.htm

12. Wikipedia, Prudhoe Bay Oil Field, http://en.wikipedia.org/wiki/Prudhoe_Bay_Oil_Field

13. "Iraq signs oilfield deals with CNOOC, TPAO," Maktoob News, 5/17/2010 http://en.news.maktoob.com/20090000470398/Iraq_signs_oilfield_deals_with_C NOOC_TPAO/Article.htm

14. Jane Arraf, Global Post, December 12, 2009, "Iraq's giant oil fields go on auction block. Royal Dutch Shell and Malaysia’s state-owned oil company win the biggest prize, the super-giant Majnoon Field," http://www.globalpost.com/dispatch/iraq/091211/oil-auction

15. The auction "was conducted like a high-stakes game show. To ensure transparency, oil company representatives brought their bids to the stage in sealed envelopes. The figures were then put up on giant screens with the winner announced to polite applause." Jane Arraf, Global Post, December 12, 2009, "Iraq's giant oil fields go on auction block. Royal Dutch Shell and Malaysia’s state-owned oil company win the biggest prize, the super-giant Majnoon Field," http://www.globalpost.com/dispatch/iraq/091211/oil-auction

16. Pepe Escobar, "Iraq’s oil auction hits the jackpot," Asia Times On Line, December 16, 2009, http://www.atimes.com/atimes/Middle_East/KL16Ak02.html

17. Alarabiya.net, Thursday, 05 November 2009, "W.Qurna a prized oilfield with 8.7 bln bbls of reserves. Exxon-led group clinches Iraq's W.Qurna contract." (The article alternatively refers to the field as having 8.5 and 8.7 billion barrels.) http://www.alarabiya.net/articles/2009/11/05/90303.html

18. EIA, "Malaysia Oil," http://www.eia.doe.gov/cabs/Malaysia/Oil.html

19. See, e.g., Ben Lando, "Major oil export development highlights security questions, July 13, 2010, http://www.iraqoilreport.com/security/energy-sector/major-oil-export-developmen t-highlights-security-questions-4814/





 


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