Great Iraq Oil Robbery
By Alan Maass
31 March, 2007
oil men of the Bush administration are trying to set up one of the biggest
swindles in history--the great Iraq oil robbery.
The cabinet of the new Iraqi
government--under pressure from the U.S. occupiers who put them in power--approved
a law that would undo Iraq's nationalized system and give Western oil
giants unparalleled access to the country's vast reserves.
The oil companies would be
guaranteed super-profits--on a scale unknown anywhere else in the Middle
East--for a period of 20 to 35 years from oil pumped out of two-thirds
or more of Iraq's oilfields. Meanwhile, Iraqis would continue to endure
poverty and the devastation of war while sitting atop what is estimated
to be the third-largest supply of the world's most sought-after resource.
The great Iraq oil robbery
isn't a done deal. Even if the law is finalized by May as expected,
the major oil companies say they won't have anything to do with production
in Iraq until "security" is established--and that would mean
a success for the occupiers and their Iraqi puppets that the U.S. hasn't
been able to achieve over the past four years since the invasion.
Still, the law underlines
the importance of the scramble for oil to the U.S. empire--no matter
how much George Bush and his administration deny it with claims about
spreading "democracy" and making the world safe from terrorism.
The U.S. government's thirst
for oil isn't only about profits--and still less about securing supplies
of a commodity that ordinary Americans depend on--but is also about
power. In a world in which the economic and military might of nations
depends significantly on access to oil, more control for the U.S. means
less control for its rivals.
These dual calculations--securing
access for its own needs and controlling the access of others--have
been central to the history of oil and the U.S. empire, from the end
of the 19th century, to the start of the 21st.
* * *
During the opening months
of the Bush administration in 2001, Dick Cheney chaired a task force
to set a new course for U.S. energy policy.
Cheney and the White House
invited a showdown with Congress by refusing to respond to even routine
requests for information about the task force--like who served on it,
and what their recommendations were.
Most people assumed this
meant the task force was made up of energy industry executives, and
their "deliberations" were organized around plotting new ways
to line their pockets. This turned out to be completely accurate--and
certainly not unexpected, given the makeup of the new administration.
"It isn't so much under
the sway of Big Oil as it is, well, infested top to bottom with oil
operatives, starting with the president and vice president," left-wing
journalist Jeffrey St. Clair wrote on the CounterPunch Web Site.
"Eight cabinet members
and the National Security Advisor came directly from executive jobs
in the oil industry, as did 32 other Bush-appointed officials in the
Office of Management and Budget, Pentagon, State Department and the
departments of Energy, Agriculture and--most crucially in terms of opening
up what remains of the American wilderness to the drillers--Interior."
But Cheney and the task force
had more on their minds than further deregulation or drilling in the
Artic National Wildlife Refuge.
They were also laying out
the strategic aims of the "war on terror" to come.
It wasn't called the "war
on terror" yet. The September 11 attacks would take place half
a year later, but ultimately, they were only the pretext for carrying
out long-held plans for a more aggressive U.S. imperialism.
Oil was at the heart of that
agenda. Cheney's energy task force concluded that declining resources
and the rise of potential rivals such as China meant the U.S. needed
to tighten its grip--most of all, in the Persian Gulf region, which
sits on more proven reserves of oil than the rest of the world combined.
The task force recommended
that the U.S. press allies like Saudi Arabia and Kuwait to "open
up areas of their energy sectors to foreign investment."
But another focus was Iraq--where
oil production remained in a shambles after the first Gulf War, and
exports were restricted by U.S.-backed United Nations sanctions. The
task force reportedly examined maps of Iraqi oilfields--and the Pentagon
produced a memo on "Foreign Suitors For Iraqi Oilfield Contracts"
that analyzed contractors from dozens of countries and their intentions
toward exploiting Iraqi's oil if Saddam Hussein's government was overthrown.
The interest in Iraq's oil
wasn't new. A Pentagon document made the case that an "oil war"
was a "legitimate" military option back in 1999--while Bill
Clinton was still president.
At that time, Dick Cheney
was still lurking in the private sector, as the CEO of Halliburton,
but he clearly agreed with the Democratic administration about the importance
of oil. "The Middle East, with two-thirds of the oil and the lowest
cost, is still where the prize lies," he said in a 1999 speech.
Of course, Cheney's industry
colleagues lusted after Iraqi oil as a source of profits. "Iraq
possesses huge reserves of oil and gas...[that] I'd love Chevron to
have access to," Chevron CEO Kenneth Derr said in 1998.
But Cheney and like-minded
"hawks" from previous Republican administrations had their
minds on a bigger picture. By the end of the 1990s, the newly formed
Project for a New American Century provided a soapbox for the "neoconservatives"
who would populate the Bush administration--such as Paul Wolfowitz,
John Bolton and future Cheney aide Lewis "Scooter" Libby.
"While the unresolved
conflict with Iraq provides the immediate justification, the need for
a substantial American force presence in the Gulf transcends the issue
of Saddam Hussein," the PNAC hawks declared in a report issued
not long before the 2000 election. War with Iraq would be part of a
plan of "maintaining global U.S. pre-eminence...and shaping the
international security order in line with U.S. principles and interests."
The PNAC dogma became the
outline of the Bush Doctrine promoted by the administration after the
"war on terror" was launched--aggressive use of U.S. power
to prevent the development of any rivals to the U.S., now and into the
Pre-emptive war and an expanded
U.S. military presence worldwide would be necessary to "dissuade
potential adversaries from pursuing a military buildup in hopes of surpassing,
or equaling, the power of the U.S," according to the White House's
National Security Strategy document issued in 2002.
In this context, oil is a
dominant factor--because as important as it is to the economic fortunes
of any country, it is even more so to their military might.
* * *
No one would doubt the critical
importance of oil to the global economy. It accounts for 39 percent
of global energy consumption, including 95 percent of energy used in
ground, sea and air transportation. Petroleum is also a basic component
in a range of products, like plastics and paints, that we take for granted
"But just as important,"
as Saman Sepheri wrote in the International Socialist Review, "every
tank, every airplane--from the B-52 to the stealth bomber--every Cruise
missile and most warships in the U.S. or any other nation's military
arsenal rely on oil to wage their terror."
The decisive relationship
of war and oil first emerged in the First World War. Britain, with its
colonial control over Iranian oil, had a decisive advantage over the
German-led Axis powers, allowing the Allies to "[float] to victory
on a wave of oil," in the words of Britain's Foreign Secretary
By the Second World War,
the scramble for oil was a strategic priority on all sides. "The
Japanese attacked Pearl Harbor to protect their flank as they grabbed
for the petroleum resources of the East Indies," author Daniel
Yergin wrote in his history of oil titled The Prize. "Among Hitler's
most important strategic objectives in the invasion of the Soviet Union
was the capture of the oil fields in the Caucasus. But America's predominance
in oil proved decisive, and by the end of the war, German and Japanese
fuel tanks were empty."
The U.S. emerged from the
war as the dominant world superpower, and a central part of its postwar
strategy depended on maintaining control over oil resources, particularly
the vast reserves discovered in the Middle East--"a stupendous
source of strategic power, and one of the greatest prizes in world history,"
the State Department said in a document.
U.S. companies had been decisive
in establishing Saudi Arabia--the first "fundamentalist" Islamic
state built around the Saud clan. Texaco and Standard Oil of California
formed the Arab American Oil Company (ARAMCO) to share its concessions
for exploration and marketing of Saudi oil. ARAMCO and the U.S. government
ended up creating much of the Saudi state machine from scratch to serve
During the early 1950s, in
Iran, the other crucial pillar of Middle East oil production, Prime
Minister Mohammad Mossadeq nationalized the British-controlled Anglo-Iranian
Oil Company. The CIA organized a coup to overthrow Mossadeq, restoring
the brutal regime of the Shah to serve as a regional strongman guaranteeing
Western oil interests.
The other important surrogate
for the U.S. was Israel. Without oil resources itself, Israel was a
colonial settler state funded with tens of billions of dollars in U.S.
aid to serve as a military watchdog against any threat to Western interests
by Arab nationalist regimes.
U.S. power over the region
suffered a blow with the 1978-79 revolution that toppled the Shah. President
Jimmy Carter ordered the creation of a Rapid Deployment Force to stop
"any attempt by any outside force to gain control of the Persian
Gulf region [which] will be regarded as an assault on the vital interests
of the United States."
Meanwhile, the U.S. encouraged
neighboring Iraq, under the dictatorship of Saddam Hussein and his Baath
Party, to invade Iran--and quietly backed the decade-long war that followed,
at a cost of more than 1 million lives.
When Hussein threatened to
slip the leash, invading Kuwait in 1990, George Bush Sr. organized a
coalition of "the bullied and the bribed" for a war that killed
hundreds of thousands.
The same priority--on protecting
and extending U.S. control over the flow of Middle East oil--has continued
through the rush to exploit newly available oil reserves in the Caspian
Sea region, the scheming for a pipeline through Afghanistan and beyond.
* * *
The question of who controls
the oil is made even more intense by the threat that it is drying up.
Depending on how pessimistic or optimistic the estimate, world production
of oil will peak in either the next few years or next few decades--at
which point, the cost of extracting the remaining oil is expected to
This end-of-oil scenario
is emerging as worldwide demand for oil is growing at a faster pace
The U.S. continues to claim
the lion's share, accounting for 25 percent of oil consumption with
just 5 percent of the world's population. But the big increases in demand
are coming from the developing world's economic powerhouses China and
India--precisely the nations that sections of the U.S. establishment
fear could develop into rivals over the coming century.
The stage is thus set for
oil to play the same central role in the imperialist competition--economic,
political and military--between nations in the 21st century as it did
in the 20th.
In this light, the Bush administration's
motivations in pushing for the new Iraq oil law are clearer.
For one thing, Iraqi oil
production has been hampered by two decades of war and sanctions--its
reserves will be an important unexploited source as oil becomes more
U.S. companies would love
to take advantage of the super-profits guaranteed by the production-sharing
agreements (PSAs) that the Iraqi government would sign under the law.
PSAs are usually used in
situations where the oil is difficult to extract, so the company's investment
in production is substantial. But the opposite is the case in Iraq--the
cost of extraction is about $1 per barrel, and the selling price on
the world market is around $60 a barrel. And under the PSA, foreign
oil companies would be guaranteed 70 percent of the profits--seven times
the typical share under other contracts in the Middle East.
But that's assuming they
get away with it. The Iraqi government is expected to approve the oil
law, but getting Western oil companies to come in under circumstances
of a civil war and widespread opposition to the U.S. military presence
is another matter.
The other aim of the oil
law, as left-wing Iraq expert Michael Schwartz put it in a recent interview
with Socialist Worker, is to give U.S. companies "control over
the spigots"--so that the U.S. will "get to decide how much
is going to get pumped at any particular moment, and who it will be
sold to." But the crisis of the occupation has frustrated this
aim as well.
Meanwhile, rather than being
intimidated by U.S. power, Iran has benefited from Washington's crisis
in Iraq, and is more willing than ever to strike out on its own. One
consequence has been Iran's deeper ties with China--the very country
the U.S. hoped to force into line with its tightened grip on Persian
Washington's rulers aren't
about to give up, however. For the last century, the world's governments
have been ready to go to war over oil--and they will again, until a
new society that places priorities on democracy, freedom and justice
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