Mission Not Yet Accomplished
How Iraq figures in Big Oil’s dreams
In the lovely, historic halls of the Rayburn building on Capitol Hill, I am closing in on Dennis Kucinich. The slight, boyish-looking congressman from Ohio is walking briskly by himself, without attracting the slightest attention. As I weave my way past Congressional aides and tourists in the crowded hallway, trying to catch up with him on a hot mid-July day, I am struck by his anonymity. Dennis Kucinich may not be a household word but he is running for President of the United States, and appears in nationally televised debates – a kind of Ralph Nader, but within the Democratic Party. I finally catch up with Kucinich outside the building, just after he’s gotten into a modest car parked there waiting for him. He is settling into the front passenger seat when I tap on the window. To my surprise, he lowers it, a friendly smile spreading across his elf-like face. After I explain why I want to interview him, he readily agrees to an interview later that day. My heart pumps a little faster. He may not have a hope of winning the Democratic race, but this is surely still the closest I’ll ever get to a brush with the Presidency.
There’s a reason I’m hot on the trail of Dennis Kucinich – and it’s essentially the same reason he’s no more likely to win the Democratic nomination than Miss Saudi Arabia will be the next Miss Universe. Kucinich has been speaking out about a rather remarkable set of developments going on inside Iraq. In the midst of all the death and mayhem, there’s an extraordinary level of activity focused on Iraq’s oil. The Iraqi government is under intense pressure from Washington to implement a proposed new law that would begin the process of parceling out Iraq’s vast undeveloped reserves.
In the Western media, the proposed law has generally been described as an “oil revenue-sharing law” – that is, a law that sets out how Iraq’s potentially massive oil revenues will be shared among its warring ethnic factions, the Shiites, Sunnis, and Kurds. But the law is actually about much more than that. It’s also about creating a legal framework for foreign investment in Iraq’s oil sector, thereby potentially reviving a dominant role for the big multinational oil companies – a role they’ve been excluded from since a powerful wave of oil nationalism swept the Middle East in the 1970s, leaving the region’s bounteous reserves in the hands of national governments. Ultimately at stake is who will end up as chief beneficiaries of the immense treasure trove of black gold stored beneath Iraq’s sand: the country’s twenty-five million largely destitute citizens, or the owners of the wealthiest corporations on earth, otherwise known as Big Oil.
Dennis Kucinich suspects it’s going to be the latter, and he’s been trying to draw attention to what he calls “one of the biggest heists in the history of the world.” One clue that Kucinich may be onto something is the very high priority the Bush administration, with its notoriously close ties to Big Oil, is attaching to the Iraqi oil law. In May 2007, Vice-President Dick Cheney made a trip to Baghdad and, as media reports indicated, his central message was the urgency of passing the oil law. When a heavy hitter like Cheney goes all the way to war-ravaged Baghdad to insist on passage of an Iraqi law, it’s worth considering the possibility that he’s thinking of something other than just the welfare of Iraqis.
Yet Kucinich has had no luck stirring up opposition on this front in Washington. Even his efforts to get his fellow Democrats onside against the administration’s apparent attempt to privatize Iraq’s oil has been met with indifference, even hostility. Despite the unpopularity of the war, Democrats have been hugely reluctant to level accusations that hint at a nefarious US motive in connection with Iraq’s oil.
So even as powerful U.S. and British oil companies sit poised to take control of the largest unharvested oil bonanza left on earth -- with some 170,000 US troops standing helpfully by – the watchdogs on Capitol Hill and the media seem uninterested. The elephant stands knee-deep in oil in the middle of the room, attracting no more attention than Dennis Kucinch in the halls of the Rayburn building. The Bush administration may have botched just about everything it’s touched in connection with its misadventure in Iraq, but it has pulled off one masterstroke: it has somehow managed to banish to the margins of public debate any suggestion that it has ever cast a covetous eye on Iraq’s oil.
With the dramatic victory of the Democrats in the mid-term Congressional elections in November 2006, change appeared to be in the Washington air. The American public had signaled, in that old-fashioned ballot-box way, that it had had enough of George W. Bush’s hideous little war, that it wanted the troops home. Adding to that pressure was the publication the following month of a report by the Iraq Study Group (ISG) – a bipartisan panel of senior Washington figures that included ex-secretaries of State and Defense, an ex-governor and an ex-Supreme Court judge. Co-chaired by Republican (and longtime Bush family friend) James A. Baker III and influential Democrat Lee Hamilton, the ISG brought clout to a cause that until then had been championed most notably by MoveOn.org.
Much was made of the ISG’s call for phased US troop withdrawals, and for Washington to initiate talks with the governments of Syria and Iran. Essentially this high-powered group of Washington insiders was acknowledging the extent of Bush’s debacle in Iraq and, teamed up with the American public, was about to bring the incorrigible younger Bush into line.
Or so it seemed. On closer examination, it turned out the strategy advocated by the Iraq Study Group was largely the same as that of the Bush administration: create an Iraqi army strong enough to handle security on its own, within the context of a U.S.-controlled Iraq. Indeed, the ISG report set out a vision for actually extending U.S. control over Iraq -- with U.S. soldiers embedded inside the Iraqi army, American trainers inside the Iraqi police, FBI agents inside the interior ministry, CIA agents inside intelligence operations.
Perhaps most revealing was the Iraq Study Group’s conclusion about what should be done with Iraq’s oil. Given that oil accounts for 70 per cent of Iraq’s GNP and will therefore largely determine the country’s future – any meaningful notion of sovereignty would have to include control over oil. The ISG team recognized this, and urged the White House to clarify that it wasn’t trying to gain control of Iraq’s oil. Recommendation 23 of the report plainly states: “The President should restate that the United States does not seek to control Iraq’s oil.”
Having said that, the ISG members then get down to business and set out exactly how Washington should effectively take control of Iraq’s oil. Recommendation 62 in their report, for instance, calls for the US to provide “technical assistance” to the Iraqi government to prepare a draft oil law that would, among other things, facilitate foreign investment. Recommendation 63 urges the US to “encourage investment in Iraq’s oil sector by the international community and by international energy companies,” and to “assist Iraqi leaders to reorganize the national oil industry as a commercial enterprise.” These recommendations effectively call for Washington to shape Iraq’s oil industry to re-introduce a significant role for foreign investment and the multinational energy industry.
Rather than being an attack on the policies of the Republican administration running the White House, the ISG report reveals the extent to which both Democrats and Republicans share the same vision of US control over Iraq – a vision which includes re-opening its massive oil reserves to control by the big multinational oil companies.
Yet this bipartisan consensus appears to fly in the face of what Iraqis themselves. A poll conducted last June and July for the non-profit Washington-based Institute for Policy Studies found that nearly two-thirds of Iraqis – 66 percent of Shiites, 62 percent of Sunnis and 52 percent of Kurds -- opposed plans to open their country’s oil sector to foreign investment. This Iraqi opposition is well understood in Washington circles. A senior researcher on the staff of the Iraq Study Group, who spoke on condition of anonymity, noted that the Democrats and Republicans on the panel agreed about the need for a major role for multinational oil companies in Iraq. But he also acknowledged that this approach was not popular inside Iraq, among politicians or the larger public. “The point of view [over there] is: ‘God gave us this oil. It’s for the benefit of the people of Iraq … We don’t want the foreigner to come in and take it away,’” he said. “The Iraqis are highly, highly nationalistic. They haven’t reconciled themselves to the importance of foreign investment to bring their industry up to date... The Iraqi political system doesn’t get that yet.”
What’s striking in this comment is the acknowledgement that Iraqis oppose U.S. plans for their oil – but that somehow this Iraqi opposition doesn’t matter. The notion that Iraqi resistance is simply something to be overcome – rather than something to be respected – seems to underlie much of the thinking in Washington when it comes to Iraq.
Dennis Kucinich sees a deep problem in this way of thinking. “There’s a mentality in this country that says because we have the power, we can just steal someone else’s oil.” Yet when he tried to raise objections to this approach – to suggest that the US has no business telling Iraq what to do with its oil – he ran into stiff resistance within his own party. Kucinich says that he raised the issue within the Democratic caucus a number of times last spring, when Democrats were drafting legislation that would cut off funding for the war unless certain benchmarks of progress were met. One of those benchmarks – originally proposed by the White House – was passage of the proposed oil law. Kucinich said that when he objected, arguing that the oil law amounted to an attempt to gain control of Iraqi oil, “I was shouted down several times, literally, by leading Democrats… There was broad denial that such a thing could be happening….I was attacked by some of the leaders for even raising the issue.”
Ignoring Kucinich’s objections, the Democratic-controlled Congress ended up passing the bill, with the oil law as a benchmark. Kucinich says he’s not sure whether his fellow Democrats are simply unaware of what the oil law is all about, of whether there’s “complicity of some of our leaders in the administration’s plans to privatize the oil.” Are some Democrats too close to Big Oil? Kucinich hesitates before responding, and then suggests that their complicity is part of a bigger problem, that of Democrats (like Republicans) “buying into the destructive logic of resource wars. I think it’s much more serious than just being close to the oil industry. There’s a sense that America’s interests are served by maintaining control over oil in the region.”
At the root of Kucinich’s critique, then, is an idea that has been all but banned from political discourse in Washington – that oil has been a motivating factor in the U.S. invasion and occupation of Iraq. The possibility of an oil motive is almost never raised by the Democrats, nor voiced in the mainstream North American media, observes Steve Kretzmann, executive director of Oil Change International, an advocacy group for cleaner energy that operates out of a tiny house in north Washington, far from the slick lobbying scene downtown. Notes Kretzmann: “We are under a rigid doctrine in the West, a religious fanaticism, that says we must believe that the United States would have invaded Iraq even if its main product was lettuce and pickles.” Kretzmann marvels at how the Bush administration has somehow managed to make anyone pointing to a possible oil motive look so extreme or delusional that virtually no one in the mainstream has been willing to risk it. (This feat could be compared to the administration’s equally stunning accomplishment in the 2004 presidential race of turning John Kerry’s impressive Vietnam war record into a liability – even though Bush’s own service in the national guard, which kept him out of Vietnam, involved him being, at best, “absent without leave,” and at worst, an actual war deserter.)
The banning of discussion of an oil motive is significant because it means that, at worst, the Iraq war is cast as a misguided venture by a president naïve about the possibility of bringing democracy to the Middle East, rather than as an imperial venture aimed at stealing the resources of another country. This may also help explain the virtual ostracism of Dennis Kucinich. He’s not just a fierce critic of the war. He goes further. By suggesting that oil is a factor, he steps over the line into a sort of no-man’s land, marginalizing himself in Washington – even among fellow Democrats, who are anxious to keep their distance, lest they too be dismissed as conspiracy theorists.
The effectiveness of this taboo can be detected in a conversation with Robert Tomkin, a well-regarded staff writer for the Congressional Quarterly. When I ask Tomkin about the Iraqi oil law, which has been an issue in Congress as one of the Iraq benchmarks, he seems perplexed. He notes that the debate in Congress centres on how to get out of Iraq, not “the intricacies of the oil law.” When I suggest that the oil law raises broader questions about possible U.S. motives in Iraq, he becomes impatient and even a bit irritated. “Well, you’re going to get very few people who believe the war has much to do with oil … the Dennis Kuciniches of the world may say that … There may be people in Paris thinking that… Most people acknowledge that the Bush administration went into Iraq for reasons besides oil.” Then, perhaps feeling the need to provide some further guidance lest a Canadian fall under the influence of a wild man like Dennis Kucinich – or worse still, those effetes in Paris – Tomkin explains that Bush’s decision to invade Iraq had “much more to do with a psychodrama involving his father. It had virtually nothing to do with oil.”
If oil is resolutely far from the minds of those on Capitol Hill, across town there is less resistance to contemplating the impact of Iraq’s new law. Indeed, in the offices of the International Tax and Investment Center (ITIC) on Connecticut Avenue just around the corner from the White House, there is a great deal of interest in – and enthusiasm for – the proposed new law for Iraq. This isn’t surprising since the ITIC has had a hand in bringing it about.
The ITIC describes itself as a “non-profit research and education foundation.” But it would be more meaningful to describe it as a lobby group for corporate interests, particularly oil interests. Its president, Dan Witt, would vigorously contest such a description. “We don’t represent anyone,” the personable, energetic Witt insists. And it’s true that the ITIC doesn’t represent any individual or particular company. Rather, one could say that it represents the interests of a group of companies -- particularly, big oil companies. Among its sponsors (and among those holding seats on its board) are representatives from Exxon, Chevron, Shell, BP, ConocoPhillips and Halliburton. ITIC is also well connected politically. Also on its board, as honourary co-chairmen, are George P. Shultz, (former Secretary of State under Richard Nixon and Secretary of State under Ronald Reagan), and Paul Volcker, the influential former Chairman of the U.S. Federal Reserve Board. And Witt, who worked in the Reagan White House, clearly prides himself in his own political connections. Prominently placed above his desk is a photograph of himself as a young man with President Reagan, with the signed inscription, To Dan Witt, with best wishes, Ronald Reagan. Among the other political figures featured in photographs with Witt on his wall is the elder George Bush.
After his years in the White House and in right-wing and corporate lobbying, Witt founded ITIC in 1993, with the idea of using it to push the former Soviet republics to open up their economies to foreign investment. With strong corporate backing, Witt and the ITIC were able to score some quick successes during the following decade, shaping tax and investment policies in Russia and Kazakhstan in ways highly favourable to foreign investors. When the U.S. invaded Iraq in March 2003, another opportunity to pry open a long-shut land rich in resources seemed to present itself.
In May 2003, just after Bush declared “Mission Accomplished” in Iraq, Witt assembled a team of oil and tax experts to come up with a plan for opening Iraq’s oil to foreign investment. Led by Brian O’Connor, a former economist for British oil giant BP, the ten-member team also included Philip Daniel, a tax expert with the consulting firm Transborder, as well as Muhammad-Ali Zainy, a former Iraqi oil official who also worked as an executive in the US oil industry.
By the fall of 2004, the ITIC team produced a report recommending that Iraq turn to foreign investors to develop its oil sector, rather than concentrate on maintaining and developing an independent oil industry. The report stressed that Iraq’s heavy debt obligations would make it difficult to go the independent route, since it would need its revenues to pay debt-servicing charges and also to pay for badly-needed services for its citizens.
Most significantly, the ITIC report recommended that Iraq adopt “Production Sharing Agreements” (PSA) to attract foreign investors. While the report reads as though this is simply the most pragmatic approach, PSAs are highly controversial, because they hand over important decision-making powers and the lion’s share of profits to foreign oil companies, rather than national governments. PSAs are in many ways reminiscent of the arrangements that existed between Big Oil and the oil-producing nations for many decades from the early 1900s through the 1960s – an era when a small consortium of multinational companies, dubbed the Seven Sisters, operated a worldwide oil cartel through which they controlled all aspects of the international oil market.
Today, PSAs are typically used in situations where the bargaining power of the country is weak -- where oil reserves are small or unproven. The oil company shoulders a significant part of the risk and, accordingly, is given a significant stake in the profits. But Iraq would seem an unlikely candidate then for PSAs. It has massive, known reserves – as well as an impressive crew of oil engineers (although many of these professionals have joined the exodus of Iraqis fleeing the violence in their country).
In many ways, it seems logical for Iraq to stick with the nationalized model, which it adopted fully in the early 1970s. The nationalized model – in which a country’s oil industry is controlled by the publicly-owned company -- is the norm among the major oil-producing nations of the world, notes Greg Muttitt, co-director of a grassroots British organization called Platform, which monitors the oil industry. “If you look at the top seven countries, with three-quarters of the world’s known oil reserves, only the seventh – Russia – has signed PSAs,” says Muttitt, adding that Russia’s three PSAs have proved so unpopular with the Russian public that Moscow has tried to renegotiate them.
Muttitt argues that the choice between PSAs or a nationalized model has huge financial implications for Iraq. He scoffs at Witt’s argument that Iraq’s indebtedness restricts its ability to develop its own industry, noting that Iraq could easily borrow whatever it needed, using its massive reserves as collateral. Muttitt insists that any money Iraq invests in its oil sector will pay off handsomely over time. He and British energy expert Ian Rutledge have calculated that using PSAs, instead of the nationalized model, would result in Iraq losing up to $194 billion – and that’s only on the twelve of Iraq’s sixty undeveloped oil fields that have been prioritized for development. Muttitt notes that this calculation is based on oil at $40 a barrel (about half the price, as this article goes to print). If oil prices remain high and more oil fields are brought into the equation, Muttit says the loss of revenue for Iraq could reach well into the hundreds of billions of dollars over the next few decades: “It could be as much as six times Iraq’s current gross domestic product.”
Muttitt isn’t the only one pointing out that PSAs are a particularly good deal for Big Oil. The same view is expressed by Robert Ebel, a senior oil analyst at the Center for Strategic and International Studies, an influential Washington think tank. Unlike Muttitt, an activist dedicated to ensuring Iraqis control their own future, Ebel is a former oil company executive who works closely with industry, administration and Congressional officials to advance U.S. strategic interests. Yet even the soft-spoken, distinguished-looking Ebel concedes that PSAs are more in the interests of the multinational industry, than the people of Iraq. “If I were an oil company, that’s what I would want,” he said in an interview in the center’s large, well-appointed offices. “If you are living in Iraq, you’d want most of the money to stay in Iraq. That’s not going to happen under PSAs.”
While the actual terms of PSAs vary, the fragile Iraqi government would be in an extremely vulnerable position to be negotiating any such deals with the big multinational oil companies. Indeed, Iraq would be negotiating the terms of its PSAs – which typically last for three decades -- while under U.S. military occupation.
Nevertheless, Witt and his ITIC insist that PSAs in the best interests of Iraqis. Witt even suggests that the ITIC is as interested in helping Iraqis as it is in helping its corporate sponsors. He speaks of his organization’s “dual loyalties” -- to its oil company sponsors and to Iraqis -- and of Iraq as “the client.” It’s not clear, however, in what sense Iraq is the client. Iraq pays nothing for ITIC’s advice. Why would it? ITIC is sponsored by corporations intent on getting access to Iraq’s oil on the most favourable terms. They potentially have a completely different set of interests then than the people of Iraq, who presumably want their oil developed on the most favourable terms for themselves. For ITIC to suggest that it is simply offering its helpful services to its “client” Iraq is a bit like the fox insisting it is simply offering its helpful services to its client, the henhouse.
The irony of the situation is only increased by the fact that ITIC has tax-exempt status as a charitable organization. Witt points out that each corporate sponsor contributes what it wants (“some give us $5,000; some give us $50,000”), with no expectation of a benefit in return. But is there really no benefit? ITIC is trying to put in place in Iraq a legal framework for oil development that is in the interests of all oil companies. Even though it is advancing the interests of Big Oil as a group, rather than helping Exxon or BP individually, its work is still enormously valuable to the companies. The fact that they also get a charitable receipt for their “donation” to ITIC, only makes it all the more delicious -- like the fox getting a tax receipt for his henhouse-guarding services.
For all its professed concern about the people of Iraq, the ITIC and its corporate sponsors seem to have no qualms about taking full advantage of Iraq’s heavy indebtedness to help make their case that Iraq should open up its oil sector. Relying on foreign investment would “avoid the government diverting spending to oil development that is sorely needed for other programs,” the ITIC report argues. Of course, another option would be for the corporations that sponsor the ITIC to use to use their enormous clout with Western governments to argue for Iraq’s loans to be reduced, so the country isn’t in such a financial bind.
There’s a strong case for the West to forgive Iraq’s debts, since many of them were incurred when Iraq was a dictatorship. Certainly debt forgiveness would greatly help
Iraq make the transition to democracy – supposedly the US goal in Iraq. But the West’s key lending agency, the International Monetary Fund (IMF) has shown a willingness to reduce Iraq’s debt -- only in exchange for changes in Iraq’s laws favourable to Western corporate interests, particularly oil interests.
Indeed, the IMF, which is ultimately controlled by Washington, is notorious for using its leverage over indebted countries to get them to redesign their economies to suit Western corporate interests. Certainly, the IMF played hardball with Iraq over oil. In a “standby agreement” signed with the IMF in December 2005, the Iraqi government agreed to “restructure oil sector operations into fully commercial enterprises ….[and] draft a new petroleum law in line with the new constitution and international best practices, thereby defining the fiscal regime for oil and establishing the contractural framework for private investment in the sector.” In the agreement, which Iraq had to sign in order to get debt relief, the IMF underscores that these oil-related measures are among the reforms needed “most urgently,” and sets a deadline of December 31, 2006 for their implementation.
Dan Witt was only too happy to use the IMF’s tough stance to increase the ITIC’s leverage in pushing Big Oil’s agenda on Iraq. When the IMF and World Bank met with Iraqi officials in Beirut in January 2005, the ITIC arranged to have its own meetings with Iraqi officials at the same location immediately following the IMF and World Bank meetings. “We were able to conserve on airplane tickets and stuff like that,” explained Witt, apparently suggesting that saving on airplane tickets is an important consideration for organizations sponsored by multinational oil companies. Of course, another advantage was that, in the eyes of the Iraqi officials attending, it would appear that the ITIC and the IMF were working together, thereby giving added clout to the ITIC campaign for opening up Iraq’s oil – including the adoption of the controversial PSAs.
In case there was any doubt inside Iraq about what the U.S. and Britain wanted in the way of a new oil regime, Washington announced in April 2006 that it was providing a “petroleum advisor” for Iraq. The “advisor” was actually a team of advisors, working under contract for the giant U.S. consulting firm BearingPoint Inc., which was charged with “providing legal and regulatory advice in drafting the framework of petroleum and other energy-related legislation, including foreign investment,” according to a US State Department release. The “petroleum advisor” was to work with officials in the U.S. Embassy in Baghdad, as well as lawyers affiliated with the U.S. Department of Commerce and the U.S. Department of Energy. All this U.S. input was to “assist” the Iraqis in developing their own law.
The Iraqi government quickly sprung into action. On July 26, 2006, barely four months after the appointment of the U.S. “petroleum advisor,” Iraqi Oil Minister Hussein al Shahristani flew to Washington for a meeting – held at the U.S. Department of Energy – in which he presented executives of nine multinational oil companies with a confidential draft of the new petroleum law.
But as severe tensions developed among the various Iraqi political factions over the division of revenues under the new law, Iraq failed to meet the IMF deadline. Meanwhile, the Iraqi oil workers’ union came out strongly against any move to privatize the nation’s oil, as did a growing chorus of Sunni, Shiite and Kurdish politicians. Under renewed pressure from Washington, the Iraqi Cabinet approved the oil law in February 2007, but encountered fierce opposition the following month when it submitted it to the Iraqi Parliament. Among the measures Parliamentarians considered objectionable was the proposed establishment of a Federal Oil and Gas Council, which would include foreign oil experts and have the power to sign long-term agreements with foreign oil companies.
Even the visit of a stern Dick Cheney in May 2007 proved insufficient to prod the Iraqi parliamentarians to sign the law. By mid-August, some 419 prominent Iraqi oil experts, economists and intellectuals had signed a petition expressing grave concerns about the law. By mid-September, with the Kurds passing their own oil law in defiance of the Iraqi government, efforts to find a compromise on a new national oil law had, for the time being at least, collapsed.
Even in its bombed-out, blood-spattered, barely functioning state, Iraq had proved surprisingly resistant to U.S. plans to secure some sort of control over its oil. Until that particular mission is accomplished, it seems hard to imagine that US troops will be coming home.
As the revered, long-serving chairman of the U.S. Federal Reserve Board – a perch that gave him almost God-like powers over the world economy -- Alan Greenspan was typically described as inscrutable, visionary, brilliant. With the publication of his long-awaited memoirs in the fall of 2007, another adjective could be added to that list: quack.
At least, that might be the view of some in reading Greenspan’s lengthy new tome, The Age of Turbulence, in which he writes: “I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil.” Good thing he’s not planning to apply for a job as a Congressional assistant.
In fact, Greenspan isn’t the first mainstream commentator to acknowledge a possible oil motive in Iraq. New York Times foreign affairs columnist Thomas Friedman posed the oil question in a column in January 2003 and then answered: “My short answer is yes. Any war we launch in Iraq will certainly be – in part – about oil. To deny that is laughable.” (Curiously, Friedman went on in the same column to write: “I have no problem with a war for oil, if we accompany it with a serious program of energy conservation.”)
Indeed, there’s been little reluctance to admit that Washington would go to war over oil, as long as the cause is made to sound worthy. Protecting America’s access to energy, for instance, is often cited as a vital national interest, and a legitimate ground for U.S. military intervention – even though no such ground exists in international law. In the wake of the 1970s Arab oil embargo, Jimmy Carter declared the Carter Doctrine: “An attempt by any outside force to gain control over the Persian Gulf region will be regarded as an assault on the vital interests of America, and such an assault will be repelled by any means necessary, including military force.”
For that matter, what if an unpredictable dictator like Saddam Hussein were to jeopardize America’s right of access to the region’s oil? With this scenario in mind in the late 1990s, a group of prominent Republicans, including Dick Cheney, Donald Rumsfeld and Paul Wolfowitz, wrote a public letter to then-president Bill Clinton urging him to overthrow Saddam in order to protect America’s vital interests, including “a significant portion of the world’s supply of oil.”
The fact that Saddam had been busy in the late 1990s negotiating oil development deals with Russian, French and Chinese companies – and not US companies – no doubt also raised concerns among Republicans when they took control of the White House a few years later. As James Paul, of the New York-based Global Policy Forum, notes: “All those other companies would get the prize deals. That was the whole future of the oil industry.” While Big Oil had been immensely profitable, its future profitability hinged on being able to find new reserves to replace its depleted ones. Iraq offered an unusually good opportunity to do so.
In addition to concerns about gaining access to Iraq’s oil (and the billions of dollars at stake in this for U.S. oil companies), there has perhaps been a broader set of oil-related goals in Iraq for both the companies and Washington. Iraq has traditionally been an important leader among oil-producing nations, and is therefore seen as a possible catalyst for bringing about change, for reshaping the oil world along lines favoured by the West.
Amy Jaffe, a U.S. oil expert who advised the Iraq Study Group, emphasizes the leadership role that Iraq has played over four decades in promoting oil nationalism, noting that Iraq was a founding member of the Organization of Petroleum-Exporting Countries (OPEC) and was one of the first to nationalize its oil fields. “[Iraq’s] oil export policy has been a critical element in setting international oil supply and pricing for over 30 years,” notes Jaffe, who works for the James A. Baker III Institute at Rice University.
Iraq’s militancy and influence among other oil-producing nations was a concern to the West, which wanted to dampen nationalistic aspirations among oil-rich nations, according to Greg Muttitt, from the group Platform. “The big concern for oil giants like Exxon and Shell – and the U.S. government – has been the growth of demands for sovereignty over natural resources, particularly oil.”
Certainly, the rise of oil nationalism and OPEC has removed Big Oil from its former position of almost totally controlling the world oil market. The big oil companies still do exploration and production under contract in the oil-producing nations, but they’ve been reduced to the role of developers rather than owners – a transformation they’ve always hoped to reverse.
Jaffe points to the pivotal role Iraq could play in the future. She notes the dangers if Iraq were to once again “become a leader in working together with other OPEC countries to restrain future investment in oil resources and to limit output to achieve high oil prices.” On the other hand, she suggests Iraq could play a positive leadership role by reopening itself to foreign investment, which could “lead to more competitive structures for global oil markets in general and thereby lower energy prices over time” – something of great importance to the world economy.
Of course, Big Oil has clearly thrived in the age of OPEC and high energy prices. Even so, there’s no question that both Washington and the oil companies would prefer that the world’s oil system – the lifeline of the global economy – was once again under the control of U.S. oil interests, rather than under the thumb of a bunch of tin-pot Middle Eastern dictators.
So, as Jaffe’s comments suggest, at stake in Iraq is not only billions of dollars in oil revenues but also control over the commodity that ultimately determines the health of the world economy. Of course, the notion that any of this played on the minds of those who planned the invasion of Iraq is just more delusional thinking on the part of the Dennis Kuciniches and Alan Greenspans of the world.
Linda McQuaig is a journalist and author of It’s the Crude, Dude: Greed, Gas, War and the American Way, published by St. Martin’s Press.