Spoils of War:
U.S. considers seizing revenues
to pay for occupation
By Knut Royce
WASHINGTON - Bush administration officials are seriously considering
proposals that the United States tap Iraq's oil to help pay the cost
of a military occupation, a move that likely would prove highly inflammatory
in an Arab world already suspicious of U.S. motives in Iraq.
Officially, the White House
agrees that oil revenue would play an important role during an occupation
period, but only for the benefit of Iraqis, according to a National
Security Council spokesman.
Yet there are strong advocates
inside the administration, including in the White House, for appropriating
the oil funds as "spoils of war," according to a source who
has been briefed by participants in the dialogue.
"There are people in
the White House who take the position that it's all the spoils of war,"
said the source, who asked not to be further identified. "We [the
United States] take all the oil money until there is a new democratic
government [in Iraq]."
The source said the Justice
Department has urged caution. "The Justice Department has doubts,"
he said. He said department lawyers are unsure "whether any of
it [Iraqi oil funds] can be used or has to all be held in trust for
the people of Iraq."
Another source who has worked
closely with the office of Vice President Dick Cheney said that a number
of officials there too are urging that Iraq's oil funds be used to defray
the cost of occupation.
Jennifer Millerwise, a Cheney
spokeswoman, declined to talk about "internal policy discussions."
Using Iraqi oil to fund an
occupation would reinforce a prevalent belief in the Mideast that the
conflict is all about control of oil, not rooting out weapons of mass
destruction, according to Halim Barakat, a recently retired professor
of Arab studies at Georgetown University.
"It would mean that
the real ... objective of the war is not the democratization of Iraq,
not getting rid of Saddam, not to liberate the Iraqi people, but a return
to colonialism," he said. "That is how they [Mideast nations]
would perceive it."
The Congressional Budget
Office estimates that the cost of an occupation would range from $12
billion to $48 billion a year, and officials believe an occupation could
last 1 1/2 years or more.
And Iraq has a lot of oil.
Its proven oil reserves are second in the world only to Saudi Arabia's.
But how much revenue could be generated is an open question. The budget
office estimates Iraq now is producing nearly 2.8 million barrels a
day, with 80 percent of the revenues going for the United Nations Oil
for Food Program or domestic consumption. The remaining 20 percent,
worth about $3 billion a year, is generated by oil smuggling and much
of it goes to support Saddam Hussein's military. In theory that is the
money that could be used for reconstruction or to help defer occupation
costs.
Yet with fresh drilling and
new equipment Iraq could produce much more. By some estimates, however,
it would take 10 years to fully restore Iraq's oil industry. Conversely,
if Hussein torches the fields, as he did in Kuwait in 1991, it would
take a year or more to resume even a modest flow. And, of course, it
is impossible to predict the price of oil.
Laurence Meyer, a former
Federal Reserve Board governor who chaired a Center for Strategic and
International Studies conference in November on the economic consequences
of a war with Iraq, said that conference participants deliberately avoided
the question of whether Iraq should help pay occupation or other costs.
"It's a very politically sensitive issue," he said. "...
We're in a situation where we're going to be very sensitive to how our
actions are perceived in the Arab world."
Meyer said officials who
believe Iraq's oil could defer some of the occupation costs may be "too
optimistic about how much you could increase [oil production] and how
long it would take to reinvest in the infrastructure and reinvest in
additional oil."
An administration source
said that most of the proposals for the conduct of the war and implementation
of plans for a subsequent occupation are being drafted by the Pentagon.
Last month a respected Washington think tank prepared a classified briefing
commissioned by Andrew Marshall, the Pentagon's influential director
of Net Assessment, on the future role of U.S. Special Forces in the
global war against terrorism, among other issues. Part of the presentation
recommended that oil funds be used to defray the costs of a military
occupation in Iraq, according to a source who helped prepare the report.
He said that the study, undertaken
by the Center for Strategic and Budgetary Assessments, concluded that
"the cost of the occupation, the cost for the military administration
and providing for a provisional [civilian] administration, all of that
would come out of Iraqi oil." He said the briefing was delivered
to the office of Paul Wolfowitz, the deputy secretary of Defense and
one of the administration's strongest advocates for an invasion of Iraq,
on Dec. 13.
Steven Kosiak, the center's
director of budget studies, said he could not remember whether such
a recommendation was made, but if it was it would only have been "a
passing reference to something we did."
Asked whether the Pentagon
was now advocating the use of Iraqi oil to pay for the cost of a military
occupation, Army Lt. Col. Gary Keck, a spokesman, said, "We don't
have any official comment on that."
NSC spokesman Mike Anton
said that in the event of war and a military occupation the oil revenues
would be used "not so much to fund the operation and maintaining
American forces but for humanitarian aid, refugees, possibly for infrastructure
rebuilding, that kind of thing."
But the source who contributed
to the Marshall report said that its conclusions reflect the opinion
of many senior administration officials. "It [the oil] is going
to fund the U.S. military presence there," he said. "... They're
not just going to take the Iraqi oil and use it for Iraq's purpose.
They will charge the Iraqis for the U.S. cost of operating in Iraq.
I don't think they're planning as far as I know to use Iraqi oil to
pay for the invasion, but they are going to use it to pay for the occupation."