U.S. thirst for oil could send Africa on Mideast's
path
G. Pascal Zachary
Sunday, January 29, 2006
Kribi, Cameroon -- Standing on a rocky African beach, at the
base of a gorgeous waterfall, I am peppered with requests from
African men. One is peddling a canoe ride. Another wants to sell
me some polished shells. A third asks if he can be my guide. A
fourth wants me to visit his art shop. A larger group of men play
a game of cards, passing the time.
These men are poor, a condition not unusual in these parts but
made more painful by their awareness that a short distance across
the water sits a mammoth offshore oil terminal run by ExxonMobil,
The men crowd around me and ask me why does the pipeline, which
carries oil underneath their coastal village and out to sea, employ
so few people -- and none of them. They suspect, they say, that
they are members of the wrong tribe, that the government cares
nothing about them, and that ExxonMobil prefers foreign workers.
I know the truth. These men are not needed. They lack the right
skills and, anyway, very few people are needed to keep the oil
flowing.
I cannot share my rude truth with these men for I fear their
anger. When I tell them I am not an employee of ExxonMobil but
a journalist, they are unsatisfied. They crowd around me, agitated.
To them, I am simply an American, a representative from the country
consuming African oil.
I plot my escape, and, when safe in my four-wheel drive, I have
time to ponder how high a moral price are we gas-guzzling Americans
willing to pay for an uninterrupted flow of crude oil?
The question keeps popping up around the world as the United
States, which relies on foreign oil for nearly 60 percent of its
needs, scrambles to secure sources. The Faustian bargains made
by the U.S. government with repressive oil-producing Muslim states
of the Persian Gulf are well known. We now face an endless war
in Iraq; an Iran striving for nuclear technology; a Saudi Arabia
incubating anti-American terrorists and perhaps teetering on the
verge of collapse.
Can the United States avoid repeating in Africa this dangerous
pattern of first cosseting oil dictators and then suffering a
painful blowback?
That's the big question that looms over America's growing oil
dependence on tropical Africa. Depicted by rock stars and philanthropists
as mired in disease, disorder and malnutrition, Africa is nevertheless
America's fastest-rising source of imported oil. Already, three
of the top 15 foreign oil suppliers to the United States are African,
and the region could provide as much as 25 percent of U.S. imports
by 2025.
It is imperative that the United States forge a new bargain with
Africa's oil-producing countries. Africa is the poorest part of
the planet and it would be disgraceful for Americans to support
an oil system that reinforces poverty, fuels corruption and promotes
social unrest. Oil could be a boon for Africa, but if mismanaged
this precious resource will ultimately be a source of shame.
The results of America's oil dealings with Africa are troubling
so far. African governments routinely loot oil revenue. People
living closest to the oil wells, meanwhile, are often the poorest
of the poor. This is the story in Angola and Nigeria, two of America's
top seven sources of imported oil.
Trying to write a new script for African oil, international do-gooders
such as the World Bank and Oxfam concocted an innovative plan:
Help those African countries to develop an oil sector only if
they pledge to spend oil revenue wisely.
The impoverished landlocked country of Chad is the first test
of this new way of dealing with African oil. The opening went
well. Chad needed loans to build an oil infrastructure, in particular
a pipeline that would carry its oil hundreds of miles to an Atlantic
port in Kribi, Cameroon, where the oil could be exported. In exchange
for loans from the World Bank and international support for billions
of dollars of needed private investment, Chad passed a law that
bound the government to spend its oil money wisely -- on education
and health, not its military.
Oil started pumping in 2003, under the management of U.S. oil
giant ExxonMobil. Chad's share of the revenue so far is about
$300 million, two-thirds of which the government says it has spent
on social programs.
But last month, Chad's government suspended its oil law, breaking
its promise with the international do-gooders by declaring it
will spend more of its oil money on security and abolish a "future
generations fund," a savings account that was to kick in
when the country's estimated 1 billion barrels of oil are gone.
Observers expect the worst because Chad has a long history of
instability and violence. Critics are upset because there is already
evidence that the Chad government wasn't living up to the deal
anyway.
The World Bank has retaliated by banning any future loans to
Chad. More needs to be done. The U.S. government should urge ExxonMobil,
which has been silent on the Chad issue, to halt oil payments
to the Chad government.
ExxonMobil also needs to pay more attention to the resentment
building along its pipeline. The company may ultimately face the
exhausting problem afflicting Chevron, another big U.S. oil company
that has important operations in Nigeria's Delta region. Kidnappings
of Chevron's workers are routine, the company's oil platforms
and pipelines face regular assault and Chevron's community relations
are strained.
As a result, the trend in Nigeria and neighboring Cameroon is
to shift oil operations offshore as much as possible. But the
relative safety of the sea reinforces the sense that oil companies
want to reduce to a minimum their contact with ordinary Africans.
Oil companies are understandably reluctant to try to reform wayward
governments. But they can do better in Africa by adopting a common
standard in doing business, including a requirement that payments
to governments be made transparent. The trouble is that oil companies
are looking for a competitive advantage, making cooperation difficult.
Indeed, some oil companies are actually government agencies. China's
state-owned oil company, for instance, recently agreed to pay
$2.3 billion for a stake in a Nigerian oil and gas field.
Because oil companies can't be expected to monitor international
morals, the U.S. government must intervene. The Bush administration
should begin by asking Chad President Idriss Deby to reverse his
government's decision to break its oil promises. The United States
might even threaten to cut off all military aid to Chad, which
is part of a five-year $500 million Pentagon program to assist
nine African governments in expanding their military capacity,
purportedly to help in the war on terrorism.
Nigeria and Angola can also benefit from U.S. pressure. These
superstars of African oil should be asked to account completely
for their oil revenues -- and allow international inspectors to
see where these governments claim to be spending their money.
Nigeria recently released an audit of payments made to the government
from large oil companies for 2003 and 2004. The audit, while incomplete,
suggests that some Nigerians see the need for greater accountability.
The Bush administration should support a wider audit, covering
all Nigeria's revenues, which exceeded $30 billion last year.
For the foreseeable future, America can't get along without African
oil, and revenue from oil sales can help Africa in its long and
difficult climb from poverty and disorder. But America must avoid
replaying the same pattern in Africa as it has created in the
Persian Gulf. America can be a smart consumer, prodding its suppliers
to improve their behavior. That will mean tough decisions for
Americans who too often seem willing to purchase oil at any moral
price.
G. Pascal Zachary is a fellow of the German Marshall Fund,
researching African affairs. He teaches journalism at Stanford
University. Contact us at insight@sfchronicle.com.
by Jeff Cohen
Published on Monday, May 16, 2005 by CommonDreams.org
Looking for an easy way to protest Bush foreign policy week after
week? And an easy way to help alleviate global poverty? Buy your
gasoline at Citgo stations.
And tell your friends.
Of the top oil producing countries in the world, only one is a
democracy with a president who was elected on a platform of using
his nation's oil revenue to benefit the poor. The country is Venezuela.
The President is Hugo Chavez. Call him "the Anti-Bush."
Citgo is a U.S. refining and marketing firm that is a wholly
owned subsidiary of Venezuela's state-owned oil company. Money
you pay to Citgo goes primarily to Venezuela -- not Saudi Arabia
or the Middle East. There are 14,000 Citgo gas stations in the
US. (Click here http://www.citgo.com/CITGOLocator/StoreLocator.jsp
to find one near you.) By buying your gasoline at Citgo, you are
contributing to the billions of dollars that Venezuela's democratic
government is using to provide health care, literacy and education,
and subsidized food for the majority of Venezuelans.
Instead of using government to help the rich and the corporate,
as Bush does, Chavez is using the resources and oil revenue of
his government to help the poor in Venezuela. A country with so
much oil wealth shouldn't have 60 percent of its people living
in poverty, earning less than $2 per day. With a mass movement
behind him, Chavez is confronting poverty in Venezuela. That's
why large majorities have consistently backed him in democratic
elections. And why the Bush administration supported an attempted
military coup in 2002 that sought to overthrow Chavez.
So this is the opposite of a boycott. Call it a BUYcott. Spread
the word.
Of course, if you can take mass transit or bike or walk to your
job, you should do so. And we should all work for political changes
that move our country toward a cleaner environment based on renewable
energy. The BUYcott is for those of us who don't have a practical
alternative to filling up our cars.
So get your gas at Citgo. And help fuel a democratic revolution
in Venezuela.
If attack succeeds, Baghdad's
output could top kingdom's
Robert
Collier, Chronicle Staff Writer
Sunday, February 16, 2003
Ras Tanura, Saudi Arabia -- Pipes, ducts,
tanks, towers and an infinite variety of refining, storage and
shipping facilities stretch for miles along the desert seashore,
resonating with a low, almost imperceptible hum.
This is the heart of the Saudi oil empire,
an empire that has made the conservative kingdom an indispensable
U.S. ally in the Mideast.
To talk about the place is to make superlatives
seem almost banal -- Ras Tanura is the world's largest petroleum
products export facility, owned by the world's largest oil firm,
in a nation that is the world's largest petroleum producer.
But Saudis are worried that their empire
may soon be eclipsed by a powerful new challenger rising out of
the ashes of war -- Iraq.
If a U.S.-led invasion succeeds in overthrowing
Saddam Hussein's government and installing a pro-American regime
in Baghdad, Iraq's immense, largely untapped oil wealth will be
opened to foreign investment and the country could become the
major economic powerhouse in the region, casting a long shadow
over Saudi Arabia.
"If the United States takes over Iraq
and Iraqi production rises dramatically, Saudi Arabia will lose
position in the market and political influence with the United
States," said a strategic planning executive for Saudi Aramco,
the state-owned oil monopoly.
Such an outcome would be a triumph for
the growing anti-Saudi lobby in Washington, which notes that the
country produced Osama bin Laden and 15 of the Sept. 11 hijackers,
and whose religious charities have funded a variety of extremist
anti-Western groups.
"If Iraq gets a democratic government
open to foreign investment, there would be an alternate source
of oil supply to (that of) the Saudis, so we wouldn't have to
defer to their blackmail, their use of the (oil) revenues that
we give them for activities that are very jihadist and dangerous,"
said Frank Gaffney, a Pentagon adviser and president of the Center
for Security Policy, a Washington think tank.
In public declarations, Saudi officials
insist they are not worried about Iraqi competition. "We
hope there will be enough demand to absorb new production, whether
it be from the Caspian or West Africa or Iraq," said Abdulatif
Al-Othman, the executive director of Saudi Aramco. "The more
the merrier."
But privately, many Saudi officials wring
their hands.
"Saudi Aramco doesn't like this, but
of course we can't talk about it," said the company's planning
executive, who wished to remain anonymous. "Some analysts
say Iraq could eventually become No. 1."
Iraq has 113 billion barrels of proven
reserves, second only to Saudi Arabia's 262 billion barrels. Iraq's
potential remains largely unexplored because of the disruption
of the past two decades of war and economic sanctions. The U.S.
Energy Department estimates that Iraq has as much as an additional
220 billion barrels in undiscovered reserves, bringing the Iraqi
total to the equivalent of 98 years of current U.S. annual oil
imports.
FOREIGN OIL COMPANIES
It is widely assumed that U.N. economic sanctions would be quickly
lifted after the ouster of the Hussein regime and that the new
U.S.-installed government would invite foreign oil companies into
Iraq.
"Iraq cannot do without opening to
foreign investors," said Fadhil Chalabi, executive director
of the Center for Global Energy Studies, a think tank in London.
Chalabi's career includes stints as secretary-general
of the Organization of Petroleum Exporting Countries and Iraqi
deputy minister of petroleum. He is considered a leading candidate
to be installed as czar of Iraq's energy industry in a postwar
administration that is certain to be heavily influenced, if not
directly run, by the U.S. government.
Chalabi also is a leading proponent of
selling off the state-owned Iraqi oil industry to foreign investors.
"Without privatization, there is no hope for the oil industry
to solve the country's dire economic and social situation, "
he said in an interview with The Chronicle.
Chalabi points out that the new government
will desperately need quick cash.
The cost of rebuilding the country will
be sky-high, as much as $100 billion, according to some estimates.
So far, there's little American public
support for spending U.S. tax dollars on Iraq's reconstruction,
and it's unlikely that Arab and European nations will foot the
bill, as they did in the 1991 Gulf War, particularly if a new
war is not backed by another U.N. Security Council resolution.
As a result, analysts say, most of the
cost will have to be borne from Iraqi oil revenues.
When added to Iraq's $120 billion foreign
debt -- much of it left over from the 1980-88 war against Iran
-- the result is a huge burden.
Chalabi estimates that if the best-case
scenario holds -- a quick victory by U.S. forces and little damage
to the country's oil fields -- Iraq could raise its production
from the current level of 2.8 million barrels per day to 7 million
barrels per day by 2008. Eventually, he says, Iraqi output will
top 10 million barrels per day, more than Saudi Arabia's.
'A LOT OF FANTASY'
But Robert Mabro, director of the Oxford Institute for Energy
Studies, cautions that "there is a lot of fantasy going around"
about Iraq's oil future.
"It depends on many factors. Will
Saddam blow up the oil fields in the first days of the invasion?
Will he shoot missiles at Kuwait's oil installations? How much
damage will be done during the war, and how long will it last?
It's too speculative."
In part because of these uncertainties,
accusations that oil is a leading motive behind the Bush administration's
drive toward war are wrong, in the view of many analysts.
"If we just wanted to grab Iraq's
oil, we would just get rid of the sanctions and do business with
Saddam, who would be more than willing to sell his oil to us,"
said Gaffney. "And if we just wanted cheap oil, we'd invade
Venezuela."
What seems more certain is that in the
short term, a war with Iraq will cause at least a moderate jump
in oil prices -- although less of a jump than expected only a
month ago. At that time, Venezuela was paralyzed by anti- government
protests that shut down its oil exports, the fifth highest in
the world. If Iraq's production had been taken off the world market
at the same time as the Venezuela shutdown, prices could have
spiked to $50 per barrel or more, driving American gasoline prices
well above $2 per gallon.
Now, with Venezuela's production expected
to be back near normal next month -- assuming there are no further
political disruptions -- the "Iraq effect" will be more
moderate, oil experts say, perhaps a rise to $40 per barrel, unless
Kuwait's exports are affected.
PRICE WARS
In the long run, as increased Iraqi production enters the market,
prices could be driven down as far as the low teens by a price
war between Iraq and Saudi Arabia, according to Fareed Mohamedi,
chief economist of Petroleum Finance Co., a Washington consulting
firm.
"Rather than sticking within their
quota and give up their market share to the Iraqis and others,
the Saudis are likely to increase production to drive down prices
to push other high-cost producers off the market," Mohamedi
said.
However, such a price war is likely to
result in decreased revenues for the Saudis, which could lead
to social instability in a country that has already experienced
sharp drops in living standards since the highs of the 1980s,
along with increasing levels of joblessness. Unemployment is likely
to grow further because of the country's high birth rate and its
reliance on low-wage laborers from Pakistan, Bangladesh, India
and Yemen.
"An oil price crash would be painful
here, no matter how much the government has in foreign assets,"
said Brad Bourland, chief economist at the Saudi American Bank
in Riyadh.
Still, Saudi Arabia may be better positioned
to weather an oil price war than almost any oil-producing nation,
including Iraq, say energy analysts. Its cost of production is
believed to be less than $1 per barrel, and Saudi Aramco enjoys
a sterling reputation among buyers worldwide as reliable and quality
conscious.
"For those advocating a rapid restructuring
of the Iraqi oil sector with massive foreign investment resulting
in rapidly growing output levels, the unintended consequences
could be much lower oil prices, lower oil revenues for the new
government in Baghdad and a host of political problems around
the world," said Mohamedi.
Ironically, Saudi Arabia and its neighbors
could emerge stronger than ever from "regime change"
in Iraq. Many analysts say that because of price wars and dwindling
oil reserves in other regions, the Persian Gulf's share of the
world's crude oil supply -- currently about 25 percent -- could
rise to as much as 40 percent over the next decade.
"For those who see Iraq as a means
to lessen dependence on the Saudis, in the end the world might
become more dependent on Saudi oil," Mohamedi said. "So
much for supply diversity as a policy."
US plans to ditch industry
rivals and force end of Opec, write Peter Beaumont and Faisal
Islam
Sunday November 3, 2002
The Observer
The leader
of the London-based Iraqi National Congress, Ahmed Chalabi, has
met executives of three US oil multinationals to negotiate the
carve-up of Iraq's massive oil reserves post-Saddam.
Disclosure of the meetings in October in
Washington - confirmed by an INC spokesman - comes as Lord Browne,
the head of BP, has warned that British oil companies have been
squeezed out of post-war Iraq even before the first shot has been
fired in any US-led land invasion.
Confirming the meetings to US journalists,
INC spokesman Zaab Sethna said: 'The oil people are naturally
nervous. We've had discussions with them, but they're not in the
habit of going around talking about them.'
Next month oil executives will gather at
a country retreat near Sandringham to discuss Iraq and the future
of the oil market. The conference, hosted by Sheikh Yamani, the
former Oil Minister of Saudi Arabia, will feature a former Iraqi
head of military intelligence, an ex-Minister and City financiers.
Topics for discussion include the country's oil potential, whether
it can become as big a supplier as Saudi Arabia, and whether a
post-Saddam Iraq might destroy the Organisation of Petroleum Exporting
Countries.
Disclosure of talks between the oil executives
and the INC -- which enjoys the support of Bush administration
officials -- is bound to exacerbate friction on the UN Security
Council between permanent members and veto-holders Russia, France
and China, who fear they will be squeezed out of a post-Saddam
oil industry in Iraq.
Although Russia, France and China have
existing deals with Iraq, Chalabi has made clear that he would
reward the US for removing Saddam with lucrative oil contracts,
telling the Washington Post recently: 'American companies will
have a big shot at Iraqi oil.'
Indeed, the issue of who gets their hands
on the world's second largest oil reserves has been a major factor
driving splits in the Security Council over a new resolution on
Iraq.
If true, it is hardly surprising, given
the size of the potential deals. As of last month, Iraq had reportedly
signed several multi-billion-dollar deals with foreign oil companies,
mainly from China, France and Russia.
Among these Russia, which is owed billions
of dollars by Iraq for past arms deliveries, has the strongest
interest in Iraqi oil development, including a $3.5 billion, 23-year
deal to rehabilitate oilfields, particularly the 11-15 billion-barrel
West Qurna field, located west of Basra near the Rumaila field.
Since the agreement was signed in March
1997, Russia's Lukoil has prepared a plan to install equipment
with capacity to produce 100,000 barrels per day from West Qurna's
Mishrif formation.
French interest is also intense. TotalFinaElf
has been in negotiations with Iraq on development of the Nahr
Umar field.
Planning for Iraq's post-Saddam oil industry
is being driven by a coalition of neo-conservatives in Washington
think-tanks with close links to the Bush administration, and with
INC officials who have long enjoyed their support. Those hawks
have long argued that US control of Iraq's oil would help deliver
a second objective. That is the destruction of Opec, the oil producers'
cartel, which they argue is 'evil' - that is, incompatible with
American interests.
Larry Lindsey, President Bush's economic
adviser, recently said that a successful war on Iraq would be
good for business.
'When there is a regime change in Iraq,
you could add three to five million barrels [per day] of production
to world supply,' he said in September. 'The successful prosecution
of the war would be good for the economy.'
Analysts believe that after five years
Iraq could be pumping 10m barrels of oil per day. Opec is already
starting to implode, with member nations breaking quotas in an
attempt to grab market share before oil prices fall.
Russian concern over a future INC-inspired
carve-up of Iraq's oil to the benefit of the US has become so
intense that it recently sent a diplomat to hold talks with INC
officials. At that meeting in Washington on 29 August the diplomat
expressed concern that Russia would be kept out of the oil markets
by the US.
A model for the carve-up of Iraq's oil
industry was presented in September by Ariel Cohen of the right-wing
Heritage Foundation, which has close links to the Bush administration.
In The Future of a Post-Saddam Iraq: A
Blueprint for American Involvement, Cohen strikes a similar note
to Chalabi, putting forward a road map for the privatisation of
Iraq's nationalised oil industry, and warning that France, Russia
and China were likely to find that a new INC-led government would
not honour their oil contracts.
Cohen's proposal would see Iraq's oil industry
split up into three large companies, along the areas of ethnic
separation, with one company in the largely Shia south, another
for the Sunni region around Baghdad, and the last in the Kurdish
north.
WASHINGTON, Nov. 25 — Nearly a dozen years after the Persian
Gulf war, when reliance on Saudi supplies prompted calls for the
United States to diversify its sources of oil, America remains
as dependent as ever on the Saudis, according to government and
industry officials.
The Saudis supply about one-sixth of United
States oil imports. But what gives Saudi Arabia its considerable
political strength is its role as the only producer with the spare
capacity to replace millions of barrels a day of lost oil. That
amount could be drained from the market temporarily by an attack
on Iraq, according to the administration's internal assessments
as well as outside experts.
"The Saudis have by far the largest
amount of unused capacity," Guy Caruso, the head of the Energy
Department's Energy Information Administration said.
Relations between Saudi Arabia and the
United States have been strained since the participation of several
Saudis in the Sept. 11 attacks last year prompted close scrutiny
of the country's role in financing and otherwise supporting Islamic
radicalism. But the Bush Administration's strategic options are
clearly limited by American dependence on Saudi oil.
Saudi Arabia is now producing about eight
million barrels a day, oil executives say. Saudi officials have
said publicly that they could raise their output to 10 million
barrels a day fairly quickly and to 10.5 million within three
months. Most experts, as well as the Bush administration, accept
the Saudi assurances.
If a war halts Iraq's oil exports —
estimated at 1.5 million to 2 million barrels a day — the
situation will be manageable, Mr. Caruso said. But it would be
harder to replace a steeper decline in exports, which could occur
if oil supplies from other Persian Gulf producers were reduced
by terrorist attacks or by prohibitive insurance premiums on oil
tankers.
In an interview, Mr. Caruso said the United
States Strategic Petroleum Reserve and stocks in other countries
represented the other best defense against short-term disruptions.
Established in the 1970's as a response
to an oil embargo by the Organization of Arab Petroleum Exporting
Countries, which is based in Kuwait, the reserve now holds a record
592 million barrels, part of a Bush administration plan to reach
700 million barrels by 2005.
But because of increased American dependence
on imported oil, the length of time the reserve can compensate
for lost imports has declined from a high of 118 days in 1985
to 51 days at the end of last year. Some oil experts advocate
increasing the reserve to one billion barrels.
Alan Larson, under secretary of state for
economic affairs, went to Saudi Arabia last month to secure assurances
that Riyadh would pump extra oil if it were needed, American and
Saudi oil executives say.
Last month Mr. Caruso's office helped prepare
an "oil market contingency planning" book, based entirely
on public data. The Energy Department has restricted the book's
distribution to keep it from Congress and the public, according
to government officials.
In an interview last month, Mr. Caruso
cited a small portion of the book's contents to illustrate the
unique role of Saudi Arabia.
Because there are no reporting requirements
in the international oil industry, capacity figures vary widely.
Mr. Caruso's agency estimates that Saudi
Arabia has slightly more than half the spare production capacity
of 4.5 million to 5 million barrels a day that exists in member
nations of the Organization of the Petroleum Exporting Countries.
A group of experts led by Larry Goldstein,
president of the Petroleum Industry Research Foundation, estimates
that total spare capacity is only three million barrels, and that
the Saudis control two-thirds of that.
In the three months after Iraq's invasion
of Kuwait in August 1990, the largest oil supply disruption in
American history occurred, with the daily shortfall averaging
4.6 million barrels, government records show.
Prices doubled for a time. But the shortage
was largely offset by increased Saudi oil production, which went
from 5.8 million barrels a day in August to 8.5 million by December,
according to data in Energy Department's oil market contingency
planning book.
Some analysts question whether Saudi Arabia
actually has the spare capacity it says it has.
"We all take the Saudi assurances
for granted," said Matthew Simmons, head of Simmons &
Company International, a Houston-based energy advisory firm, but
"the last time Saudi Arabia ever got close to 9 or 10 was
in 1980. Their largest field is 55 years old, and they do not
disclose their field-by-field production data, so we really don't
know for sure."
Government and industry oil experts praise
the administration for its focus on energy security. But they
say it has been too quiet about its plans, given how openly the
issue is discussed in the oil markets and the administration's
own push for more transparent oil markets.
Administration officials say they have
adopted a cautious approach to avoid roiling the markets. "Something
said casually could be misinterpreted and influence the markets,"
said one Energy Department official, who spoke on condition of
anonymity.
More than a half-century ago, the United
States developed a close relationship with the Saudi ruling family,
tacitly if not explicitly trading support for the government for
access to oil.
But the events of Sept. 11 raised fresh
questions in the United States about Saudi Arabia: 15 hijackers
and much of Al Qaeda's finances came from the kingdom.
On the Saudi side, the American military
presence in the country is one factor in the "increasingly
open challenges" to the royal family's control, a recently
released assessment by the Central Intelligence Agency says.
Both governments insist that the relationship
is as strong as ever. But the Pentagon has developed regional
alternatives to the use of Saudi military installations, and a
draft of a secret Congressional report has criticized the Saudis
for not cooperating with Americans investigating the Sept. 11
attacks.
Still, the prospects of a war with Iraq
show how oil continues to bind Saudi Arabia's relationship with
the United States.
The countries' dealings have always been
marked by quiet diplomacy. But according to Bush advisers and
officials, the fear that critics would, perhaps unfairly, link
the administration's policies to the oil industry has added another
layer of secrecy.
"If you are trying to talk about Iraq
and if you were not encumbered by the fear that your actions would
be linked to Exxon Mobil or the oil industry," said one Bush
adviser, who spoke on condition of anonymity, "you'd be talking
about oil issues."
Vice President Dick Cheney tackled the
issue of energy security in the administration's National Energy
Policy report. The report noted that Saudi Arabia's policy of
"investing in spare oil production capacity" had lessened
the impact of oil supply disruptions in any region.
But the report also called for greater
"diversity of world oil production." to avoid possible
instability due to "concentration of world oil production
in any one region of the world."
After Sept. 11, President Bush decided
to increase the American strategic reserve to 700 million barrels.
But some experts say more is needed, in part to reduce the importance
of Persian Gulf producers like Saudi Arabia.
"You want to make it politically impossible
for the Saudis to use their swing capacity as a political club,"
said James Woolsey, President Clinton's first C.I.A. director
and one of the advocates of increasing the reserve to one billion
barrels.
President Bush's national security strategy,
released in September, proposed to "enhance energy security"
by working with allies to "expand the sources and types of
global energy supplied, especially in the Western Hemisphere,
Africa, Central Asia and the Caspian region."
The strategy did not mention the Persian
Gulf, the source of most of the world's known oil reserves and
virtually all of the world's spare oil capacity.
Energy security issues were front and center
two weeks ago in Washington at a conference on the economic consequences
of an attack on Iraq. The conference was sponsored by the Center
for Strategic and International Studies in Washington.
Panel members called for more complete
and understandable data on oil markets, a position supported by
the Bush administration. Energy Secretary Spencer Abraham backed
a Saudi initiative in that area during a forum in Japan.
Experts on the panel said Saudi Arabia's
stated intention to fill in the supply gaps made the outlook for
oil markets more favorable than it was after the sudden Iraqi
invasion of Kuwait in 1990. Moreover, the loss of Iraqi oil exports
would be far less than the loss of 4.5 million barrels a day that
occurred as a result of Iraq's invasion, which halted Kuwait's
production, too.
But the center's analysis included some
new problems and a few unknowns. Commercial petroleum stocks are
much tighter today than in 1990, and there is less ability to
substitute other fuels.
Furthermore, no one knows what President
Saddam Hussein of Iraq might do to his own or his neighbors' oil
fields, or whether sympathetic terrorists might hit oil targets
in the region.
At a time
when the world's attention is focused on the threat of war in
oil-rich Iraq, there's upheaval ahead in another major petroleum-producing
nation: Venezuela.
The stakes are unusually high for the Bush
administration, because any major violence in Venezuela could
cause a sharp rise in world oil prices.
In recent days, the conflict between leftist
President Hugo Chavez and an opposition coalition of political
parties, business groups and labor unions has reached the boiling
point.
Bomb explosions have rocked newspaper offices,
hundreds of thousands of people have clogged city streets, and
more than 100 army officers have camped out in a major plaza of
Caracas, the capital, declaring it liberated territory and calling
on the military to overthrow Chavez.
On Monday, Chavez's allies in the army
high command took the unprecedented step of grabbing control of
the Caracas police, which was loyal to Mayor Alfredo Pena, a fierce
Chavez opponent.
On Thursday, opposition leaders called
for a general strike and lockout by employers to begin Dec. 2.
Although they gave no details, many leaders
said the shutdown will be indefinite, a repeat of the quasi-insurrectionary
stoppage in April that brought about a civilian-military coup
that temporarily ousted Chavez.
Observers in Washington and Venezuela warn
that large-scale bloodshed -- even a civil war -- is not out of
the question.
"Venezuela clearly has crossed a threshold
of violence in the past three or four days," said Riordan
Roett, director of the Western Hemisphere program at Johns Hopkins
University's School of Advanced International Studies in Washington.
"Venezuela is more deeply, bitterly
divided than any other nation in recent memory except for Central
America in the 1980s and Chile in 1973," when the military
overthrew leftist President Salvador Allende. "This is an
extraordinary event for Latin America."
Venezuelan unrest could also set off seismic
waves across the U.S. economy. Venezuela is the fourth-largest
source of imported oil for the United States, and the government
owns several major U.S. refineries and the Citgo chain of gasoline
stations.
Any interruption in Venezuela's shipments
would cause a sudden spike in international oil prices.
Most petroleum experts believe an Iraq
war will push prices temporarily to at least $40 per barrel, so
a meltdown in Venezuela at the same time could send them soaring
much higher.
In August, a poll by the Venezuelan firm
Keller and Associates showed 62 percent of the 1,000 people questioned
believed the country was heading toward civil war, and 25 percent
said they would be willing to fight in that war -- 13 percent
against Chavez and 12 percent on his side. Since then, most observers
believe that passions have grown hotter.
The opposition, which generally represents
the middle and upper classes, claims that Chavez is leading Venezuela
toward a Cuban-style dictatorship.
Chavez, a former army officer who was elected
in 1998 and re-elected in 2000, enjoys strong support from the
poor because he has increased spending on anti-poverty programs.
The opposition demands that Chavez resign
and allow new elections. He refuses to quit and points out that
the Venezuelan Constitution only allows a new election after the
midpoint in his six-year term, or August 2003.
For the past two weeks, Organization of
American States Secretary-General Cesar Gaviria has been overseeing
negotiations between the government and the opposition, but Thursday's
strike call appeared to deal a severe blow to the hopes for peace.
"I'm very, very afraid that a decision
so drastic (the general strike) will not allow us to continue
our efforts with the negotiations, especially to find an electoral
solution to the crisis," Gaviria said.
Opposition hard-liners appear eager for
confrontation and accuse Gaviria of being too soft on Chavez.
"We have told Mr. Gaviria that his
mission's lack of resolve will make civil war almost inevitable,
and that will weigh on his conscience," said Rafael Poleo,
publisher of El Nuevo Pais, a fiercely anti-Chavez Caracas newspaper,
after a recent meeting with the OAS leader.
Roett calls the negotiations useless, and
adds: "This is going to be settled in the street. That's
the best solution we can hope for right now.
"What I think it will come down to
is that Chavez will try to take total power, and the military,
backed by civil society, will move first and take him out."
While the Bush administration has no love
for Chavez, the fears of oil supply disruptions have prompted
U.S. diplomats to warn the opposition to back away from the brink.
On Monday, the U.S. Embassy in Caracas
issued a loud and clear call for moderation: "The United
States again reiterates its rejection of illegal actions, especially
against people or property, with the intent of altering the constitutional
order -- either to overthrow the government or keep it in power
unconstitutionally."
Most Venezuelans believe Washington's focus
on Iraq is key to Chavez's survival.
"The Bush administration isn't interested
in fighting with Chavez now because it needs Venezuela's supply
of oil," said Margarita Lopez Maya, a history and economics
professor at the Central University of Venezuela. "The administration
will wait until it finishes with Iraq, then it will see if Chavez
is making problems."
Trying to make the best of his advantage,
Chavez has offered to sign a treaty with Washington that would
guarantee an unlimited supply of oil to the United States for
20 years at a fixed price.
He also has emphasized that Venezuela will
do its best to keep oil prices down during an Iraq war -- "an
extremely important signal to Washington and to the oil markets,"
according to Mazhar Al-Shereideh, the director of Petroanalysis,
a consulting firm for the oil industry.
"Historically, Venezuela
has always been a steady and reliable source of oil in times of
war and peace. Now, the United States needs Venezuela more than
ever."
1) Introduction: Energy Policy=Foreign
Policy?
2) One Link: Axis of Oil
3) Consumption and Production
4) The Bush Administration and Energy Policy
5) The "War on Terrorism"
6) Iraq
7) Alternatives
8) Credits
9) About the MoveOn bulletin and MoveOn.org
1) INTRODUCTION: ENERGY
POLICY=FOREIGN POLICY?
"Together, oil and coal constitute
the biggest single industry in history."
- Ross Gelbspan, in his book, The
Heat is On
Energy is the keystone of the quality of
life characteristic of much of the modern industrialized world.
It makes our technology possible. It touches our lives in thousands
of ways each day--from the heat we use in our homes, to the materials
that make up the many products we use, to the types of medical
services we enjoy, to the ways we communicate and travel.
Yet we take energy largely for granted.
We treat it as though it will always be available. And we underestimate
its importance in our everyday lives.
Most of our energy comes from oil, gas,
and petroleum products. These non-renewable resources not only
fuel our cars, but they are also used in literally thousands of
ways to support our industrialized lifestyle. They are the key
to the current world economy. But they will not last forever.
By some estimates, oil production may reach its peak as soon as
2003; by other estimates, 2010. Either way, oil production will
most certainly peak within the lifetimes of most people around
today. Meanwhile, we have done little to reduce our dependence
on this source of energy, thereby assuring that the demand will
remain. Once the oil resources of the world begin to diminish,
the price of oil will inevitably rise quite high.
This may explain why oil is important enough
to fight over.
Oil may not be the only reason for a new
Gulf War, but there is little doubt a successful military seizure
of Iraq would have the end result of giving the US control over
Iraq's oil reserves. Not only would this immediately put money
into the pockets of US oil companies, it would also ensure that
Iraq's oil reserves don't fall into the hands of a US competitor
such as China.
Still, at best, this type of power-grab
will only be beneficial to some, and only in the short-term. Burning
oil and gas pollutes our collective environment, no matter who
controls the oil reserves. Once oil reserves begin to decline,
competition for them will become even more intense, and may result
in conflicts that we can't yet foresee, all with their attendant
environmental and humanitarian consequences. After that, even
those oil reserves that we have today will dwindle and go dry,
and the cost of finding more oil and extracting it will continue
to rise, until it outweighs potential profits, and the amount
of energy needed to recover the oil is equal to or exceeds the
energy in the recovered oil. In the meantime, unless the population
has found some more sustainable way to produce energy, our quality
of life will deteriorate. Experts worry that the lack of availability
of oil could cause the global human population to actually decline.
If the experts are right, we need more
of a solution than squabbling over whatever oil is left. And we
need more of a solution than reducing our dependence on Middle
Eastern oil. We need to start reducing our dependence on oil,
period. We may even need a radical change, a new revolution on
the scale of the industrial revolution, in order to completely
end our use of oil.
It isn't really that controversial of an
idea, after all, that the oil will eventually run out. The controversial
part comes when deciding what to do with that knowledge. The Bush
administration's ties to the oil industry will likely mean that
new policies aimed at ending dependence on oil won't be coming
from the government. So new ideas and environmentally concerned
action will have to come from the grassroots level. It will take
a lot of effort, but it could help ensure a much better future
for many generations to come.
If the experts are right, the sooner we
start, the better.
2) ONE LINK: THE AXIS OF OIL
Cheney, Bush, and the industry form a kind
of "axis of oil" which serves US corporate interests.
In fact, based on consultations with energy industry leaders such
as the CEO of Enron, the Bush administration has determined that
the basis of the US national security is access to oil. Not surprising
then that Iraq is the new target in the "war on terrorism." http://www.commondreams.org/views02/1113-08.htm
Dependence on foreign oil is a result of
this high rate of consumption. In June 2002, Under Secretary of
State Alan Larson testified before the House of Representatives
International Relations Committee that US dependency on foreign
sources of oil will be an "unavoidable component of the energy
supply mix." According to Larson, "We are virtually
self-sufficient in all energy resources except oil, of which we
import 52 percent of our needs. Estimates indicate that over the
next 20 years, U.S. oil consumption will increase by 33 percent
or more than 6 million barrels a day. Depending on many factors,
including the policies we adopt, the Energy Information Administration
estimates that imported oil could grow to 62 percent of our total
oil consumption by 2020." Thus the energy security policy
of the US must "ensure that our economy has access to energy
on terms and conditions that support economic growth and prosperity"
and "ensure that the United States and its foreign policy
can never be held hostage by foreign oil suppliers." http://www.usembassy.it/file2002_06/alia/a2062007.htm
4) THE BUSH ADMINISTRATION AND ENERGY POLICY
The Bush administration is as oil-drenched
as they come, as this article takes care to demonstrate. But what
does this mean? According to the article, "George W.'s ties
to oil don't prove that the industry decides our every foreign
policy move. But they do just about guarantee, for all practical
purposes, that nothing significant will change in American energy
policy. With Bush-Cheney in power, oil addiction is here to stay." http://www.globalresearch.ca/articles/CAV111A.html
This is an excellent overview of a report
on the campaign contributions made by various energy companies
to Democratic and Republican candidates over the past ten years.
Not surprisingly, President Bush was the number one recipient
of campaign contributions from the oil and gas industry in the
last election. Enron was the number one campaign contributor in
this industry, while Exxon Mobil came in second. Bush also received
a large amount of money from the utilities industry. In fact,
his two-year fund-raising total was more than any other federal
candidate has received from electric utilities in the past decade.
There is lots of detailed information here, especially if you
have a little time to explore the charts. http://www.opensecrets.org/pressreleases/energybriefing.htm
Confused by all of the information out
there about Enron? Never fear--here, in point form, is "Enron
at a Glance." Along with other useful information, this list
notes that Enron CEO Kenneth Lay "was appointed to the Bush
transition team where he worked directly with Vice President Cheney
to develop the administration's national energy policies,"
and that "no fewer than 52 former Enron executives, lobbyists,
lawyers or significant shareholders ended up working for the Bush
administration." http://www.thedailyenron.com/enron101/glance.asp
Now that the Republicans have won full
control of both Congress and the Senate, it is far more likely
that they will pass a controversial energy bill which includes
drilling in the Arctic National Wildlife Refuge. http://www.adn.com/front/story/2095762p-2192708c.html
MSNBC takes a look at the Republicans who
will be taking over the environment and energy committees, and
how this is likely to affect policy in 2003, including the energy
bill. http://www.msnbc.com/news/831973.asp
This website offers a critical analysis
of the energy bill, breaking it up section by section with links
and pro/con summaries provided for the various topics covered.
A very useful resource if you have a little time to browse. http://www.energyjustice.net/energybill/
5) THE "WAR ON TERRORISM"
Why do so many people outside of the US
seem to think that the war on Afghanistan is related to oil? This
article gives an overview of a number of sources that examine
the many links between oil policy and events in Afghanistan, and
gives the gist of their arguments on subjects such as the rise
and fall of the Taliban. http://www.afgha.com/
article.php?sid=13313&mode=thread&order=0
Appointments to the region since the war
are also indicative of an oil connection. For example, Zalmay
Khalilzad was appointed as envoy to Afghanistan in January of
2002. Khalilzad is a former aide to the Texas-based oil company
Unocal. He drew up Unocal's risk analysis on its proposed trans-Afghan
gas pipeline. Hamed Karzai, the president of Afghanistan, is also
a former consultant for Unocal. http://www.corpwatch.org/news/PND.jsp?articleid=1149
Unocal formed the CentGas consortium in
the mid-90s with the intent of building the trans-Afghan pipeline.
Unocal then withdrew from the pipeline project in 1998, after
the US bombed Afghanistan. At the time, the statement issued by
the company said that "Unocal will only participate in construction
of the proposed Central Asia Gas Pipeline when and if Afghanistan
achieves the peace and stability necessary to obtain financing
from international lending agencies for this project and an established
government is recognized by the United Nations and the United
States." http://www.unocal.com/uclnews/98news/082198.htm
The conditions Unocal wanted currently
exist. So is the trans-Afghan pipeline project going through?
You bet--it is the major Afghan "reconstruction" project.
Other sources estimate that building could begin in mid-2003. http://www.afgha.com/
article.php?sid=14728&mode=thread&order=0
Although earlier reports suggested that
Unocal was the top company being considered to build the pipeline,
currently it appears that Unocal will not have any direct involvement.
In fact, thus far the company has made a point of distancing itself
from the project, especially in response to reports that have
highlighted Unocal's former attempts to court the Taliban in order
to pave the way for the pipeline. http://www.unocal.com/uclnews/98news/centgas.htm
A number of countries with interests in
oil have reason to worry about what a new US presence in Central
Asia and possibly the Persian Gulf could mean for them. This US
presence could also trigger more terrorist attacks aimed at disrupting
the world economic system. http://www.yellowtimes.org/article.php?sid=853
US dependence on Saudi oil has forced te
Bush administration to maintain an alliance with the country that
may be interfering with the goals of the "war on terrorism."
This article quotes Edward L. Morse, former deputy assistant secretary
of state for international energy policy under President Ronald
Reagan, who has said, "The stark truth is that we're dependent
on this country that directly or indirectly finances people who
are a direct threat to you and me as individuals." This is
apparently why the US government has remained fairly silent about
the obvious Saudi connection to the Sept. 11 terrorist attacks. http://www.gasandoil.com/goc/news/ntn14772.htm
6) IRAQ
"Oil is much too important a
commodity to be left in the hands of the Arabs."
- Henry Kissinger, US Secretary
of State under Presidents Nixon and Ford
Whether or not the key members of the Bush
administration would personally profit from the spoils of a war
on Iraq, their ties to the industry are still a conflict of interest.
This is an excellent overview of Dick Cheney's
http://www.commondreams.org/headlines02/0915-04.htm
"Strategic Energy Policy Challenges
for the 21st Century" is a report that was given to Dick
Cheney in spring of 2001. It highlights how likely an energy crisis
is, and the fact that the US will need to create a long-term plan
for maintaining access to energy. According to the report, "As
the 21st century opens, the energy sector is in critical condition.
A crisis could erupt at any time from any number of factors and
would inevitably affect every country in today’s globalized
world. While the origins of a crisis are hard to pinpoint, it
is clear that energy disruptions could have a potentially enormous
impact on the U.S. and the world economy, and would affect U.S.
national security and foreign policy in dramatic ways."
The basic conclusions of the report are
that the US must develop a comprehensive and long-term energy
policy aimed at dealing with the energy crisis, and that this
must be done immediately.
Progressives may not always agree with
exactly how the report recommends doing this (for example, the
report cites environmental policies as restrictions on the market
and is positive about the effects of drilling in the Arctic National
Refuge, but also lists ensuring the protection of the eco-system
as a priority). Yet it certainly makes it clear that addressing
the complex topic of energy is one that needs to be given top
priority. It's a long report, but if you have the time to read
it, it's very worthwhile. http://bakerinstitute.org/Pubs/workingpapers/
cfrbipp_energy/energytf.htm
According to this article in the Sunday
Herald, "Strategic Energy Policy Challenges For The 21st
Century" could be read as a call for war against Iraq. This
article may not be exactly fair to the authors of the report,
who seem to be open to more possibilities than simply direct military
intervention, but it is probably at least accurate in that the
emphasis the report places on Iraq could easily be used as justification
for war. http://www.sundayherald.com/28224
The Global Policy Forum (GPF) is a New
York-based NGO (non-governmental organization) that has consultative
status at the UN. This excellent short article by GPF's executive
director clearly demonstrates the connection between the vast
oil reserves of Iraq and US policies in the region. http://www.globalpolicy.org/security/oil/2002/08jim.htm
In this more detailed article, which has
been published in a number of places including Alternet and Zmag,
Rahul Mahajan examines each publicized reason for a new war on
Iraq and explains why they don't "hold water." Mahajan
argues that the only reasonable explanation for a new war is oil;
US desire for oil also explains why the sanctions against Iraq
have remained in place for so long, despite the tragic effect
these sanctions have had on Iraq's civilian population. According
to Mahajan, "The sanctions have turned the Iraqi regime permanently
against the United States. If they were lifted, the government
would make oil exploration deals with French and Russian companies,
not American ones. Continuation of the sanctions is a constant
political burden for the United States. The Bush administration
wants a war to extricate itself from this stalemate, by replacing
Saddam with a U.S.-friendly dictator who will make deals with
American companies and follow American dictates." http://www.rahulmahajan.com/iraqoil.htm
7) ALTERNATIVES
This article by a controversial geologist
lists the pros and cons of various alternative energy sources.
As he sees it, the reality is that the many options we are currently
exploring are not enough to replace our dependence on oil. The
author concludes that a revolution on the scale of the industrial
revolution will be needed to reduce our dependence on oil. The
tone of the article is not exactly optimistic, and not everyone
may agree with its conclusions, but it's included here so you
can decide for yourself. http://www.oilcrisis.com/youngquist/altenergy.htm
We don't have the space here to cover all
of the various alternative forms of energy and methods of conservation.
So we are providing the following websites as a kind of introductory
resource.
The GrassRoots Recycling Network provides
analyses of alternative sources of energy. It also provides many
link to organizations that already practice alternative forms
of energy consumption, as well as reducing landfill waste. http://www.grrn.org
The Global Alliance for Incineration Alternatives
(aka Global Anti-Incineration Alliance) provides links and examples
from around the world to alternatives to incineration as a means
of ridding the planet of waste. It has an active email list that
provides volumes of information about laws, companies, activist
strategies, standards, country requirements, alternatives, etc. http://www.noburn.org
These sites from the US and New Zealand
stress the necessity of ending the production of waste, rather
than simply managing waste. They provide many governmental and
private reviews of cities, counties and businesses that have found
alternative means to prevent waste and to encourage environmentally
sound methods of alternative energy production. http://www.zerowasteamerica.org http://www.zerowaste.co.nz
EnergyJustice has an entire section of
its website dedicated to alternative energy. It provides statistics,
examples, and methods for implementing solar and wind energy in
a profitable way. http://www.energyjustice.net
Research team:
Susan Bunyan, Lita Epstein, Terry Hackett, Sharon Hametz, Matthew
Jones, Linda Langness, Cameron McLaughlin, Janelle Miau, Vicki
Nikolaidis, Sarah Jane Parady, Kim Plofker, Jesse Rhodes, Ora
Szekely, Bland Whitley, and Mary Williams.
Proofreading team:
Madlyn Bynum, Eileen Gillan, Mary Anne Henry, Kendra Lanning,
Mercedes Newman, Dawn Phelps, Rebecca M. Sulock and Rita Weinstein.
9) ABOUT THE MOVEON BULLETIN & MOVEON.ORG
The MoveOn Bulletin is a free, biweekly
email bulletin providing information, resources, and news related
to important political issues. The full text of the MoveOn Bulletin
is online at : http://www.moveon.org/moveonbulletin/
MoveOn.org does not necessarily endorse
all of the views espoused on the pages that we link to, nor do
we vouch for their accuracy. Read them at your own risk.
The MoveOn Bulletin is a project of MoveOn.org.
MoveOn.org is an issue-oriented, nonpartisan, nonprofit organization
that gives people a voice in shaping the laws that affect our
lives. MoveOn.org engages people in the civic process, using the
Internet to democratically determine a non-partisan agenda, raising
public awareness of pressing issues, and coordinating grassroots
advocacy campaigns to encourage sound public policies.
To be kept informed about actions and campaigns,
many of which are related to bulletin topics, you can sign up
for MoveOn's action updates, at:
http://www.moveon.org/keepmeposted/
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Oil,
war and the future of Iraq
Washington
finds a novel
wayto use the
‘oil weapon’
This satirical anti-war
message comes from DemocracyMeansYou.Com, an activist group that opposes U.S. military action
against Iraq.
By Michael Moran
MSNBC
NEW YORK, Oct. 10, 2002 — Oil: the ultimate conspiracy theory.
Forget “wag the dog” electoral explanations for George
W. Bush’s determination to go to war in Iraq; put aside the
idea that he is “avenging his father’s honor,”
or the alleged al-Qaida bigwigs in Baghdad, or even the need to
divert public attention away from Osama bin Laden’s next
move. Nothing animates Bush’s critics more effectively than
the suggestion that our Texas oilman president and his ex-Halliburton
CEO sidekick are plotting to turn Iraq into America’s strategic
petroleum reserve.
LIKE ALL good conspiracy theories, this one is only about half
true. Colonizing Middle Eastern nations, in the classic European
sense of the word, is the last thing the current administration
desires. After all, they want out of Afghanistan even before they
have determined whether or not bin Laden still walks the earth.
The CPR gang — Cheney, Powell, Rumsfeld — are not imperialists,
at least not in that sense.
But neither is oil irrelevant, and at the
very least the administration’s current actions suggest that
the United States will use the prize of Iraq’s oil and gas
— the world’s second-largest proven reserves —
to get what it wants before the war and afterward, as well. If
anyone still wonders whether America will succeed in getting the
resolution it wants out of the United Nations Security Council,
let me assure you below that Washington’s diplomats fully
understand how oil relates to this game.
SUBTLE AND FRANK
Many nations and corporations — some
of them American — have signed oil deals with Saddam Hussein’s
regime in the hope that, once U.N. sanctions are lifted, they
will reap lucrative benefits. The three nations whose contracts
are most at risk should Saddam somehow disappear are China, Russia
and France.* Coincidentally, these same three nations — along
with the United States and Britain — control the U.N. Security
Council by virtue of their power to veto any resolution they dislike.
The job of persuading these nations to
sign onto a tough new U.N. resolution on Iraq involves two distinct
campaigns: one public and somewhat subtle, the other behind the
scenes, where frank talk between diplomats is possible.
Consider the public, subtle approach this
week of Ahmed Chalabi, a leader of the U.S.-backed Iraqi opposition
whose aides have been meeting with Russian officials. Speaking
of Russia’s oil contracts, the Iraqi National Congress leader
says: “People in Iraq will be more amenable if Russia does
not obstruct the liberation of Iraq.”
Russia’s current financial exposure
in Iraq — the amount Baghdad owes to Moscow — is thought
to be on the order of $8 billion.
But that is chump change next to what Russian
oil companies might earn if they can begin exploiting oil and
gas reserves currently assigned to them.
In the post-Saddam world, who’s to
say that Moscow’s contracts with the Butcher of Baghdad will
be honored? Why, America will say, that’s who.
James Woolsey, the former CIA director
and a hawkish advocate for regime change, put it this way in The
Washington Post recently: “France and Russia have oil interests
in Iraq. They should be told that if they are of assistance in
moving Iraq toward decent government, we’ll do the best we
can to ensure that the new government and American companies work
closely with them.”
Woolsey is not the kind of guy who speculates
about such things. When his type says publicly “here’s
what we should do,” you can bet it is already being done.
Along those lines, it should strike no
one as odd that the French, with enormous concessions to their
oil giant Total at stake, have taken the lead in forging a diplomatic
compromise with the U.S. at the Security Council.
‘THE BEST WE CAN’
Now take a leap of faith with me and assume
that Saddam, by hook, crook or Tomahawk, is removed from power
in Baghdad by a U.N.-sanctioned operation and the U.S.-led coalition
installs the Iraqi National Congress (INC) in his place. Does
this mean that Exxon-Mobil, BP, Amoco, Chevron-Texaco and the
rest split the country up the way the Allied Powers divided Germany
after World War II?
Not necessarily. First of all, the INC
studiously has avoided taking a stance on post-war oil spoils,
in part because the oil issue — like slavery at the American
Continental Congress — is so sensitive that it could destroy
the fragile coalition that opposes Saddam. Furthermore, with help
from Washington, the leadership of the Iraqi opposition has come
to recognize the value of uncertainty in the oil realm. Leaving
open the possibility that Saddam-era contracts will be honored
not only helps the American diplomatic cause; it also may make
it easier to deal with remnants of Saddam’s inner circle
if it is they, rather than an international coalition, who effect
“regime change.”
An invasion scenario, however, clearly
favors the United States and by extension its oil companies. Given
the enormous potential for civil conflict within a post-Saddam
Iraq — Shiites taking revenge on Sunnis, ethnic Kurds and
ethnic Turkmens battling for the oil capital of Kirkuk, remnants
of Saddam’s Tikritis causing trouble here and there —
American post-war scenarios all envision an occupation force lasting
years.
That puts America’s military in the
cat-bird seat when it comes to enforcing oil claims. You can be
sure that, whatever France’s Total or China’s state
oil company may say they are due, this particular administration
is more naturally inclined to see U.S. oil firms in a position
of dominance, and the Iraqi opposition figures who are installed
Karzai-like in Baghdad will need a friendly superpower to protect
them for some time.
SO, CHEAP OIL?
Here we come to the $64 trillion question:
Does an American-led invasion that topples Saddam and puts Iraq
in the hands of a friendly government leave America with the world’s
largest strategic petroleum reserve?
Not really. For 30 years now, the price
of oil has been controlled primarily by Saudi Arabia. The way
the Saudis do this is part carrot, part stick. OPEC members are
required to produce only an agreed quota of oil to keep the price
high enough to make a good profit but not high enough to force
the West to seek other suppliers, or, God forbid, to conserve.
Even though most producers cheat, Saudi
Arabia holds the other OPEC members roughly to their pledges by
threatening renegades with bankruptcy. In essence, if OPEC doesn’t
heel, Saudi Arabia, which has far more capacity than it is using
in terms of production, can flood the market with its own oil,
causing prices to plummet.
Because of this power, the United States
protects the Saudi royals and overlooks their abusive regime.
In return, America gets a $1 discount on every barrel it buys
from the kingdom.
Theoretically, Iraq’s oil industry
— now producing 2.2 million barrels per day (bpd) —
is capable of far higher production and could break the Saudi
hold on OPEC. If Iraq were under western occupation, this could
allow the big consuming countries — the United States, Japan
and Western Europe — to call the shots.
But Iraq’s oil industry is in a shambles
and likely to worsen after any bombing campaign. Current assessments
suggest it would take up to a decade before production could increase
significantly, and this in the most optimistic post-Saddam political
scenarios.
Furthermore, there are powerful interests
both within the United States and outside who don’t want
to see oil prices collapse. The aforementioned American oil giants,
prominent butterers of the Bush administration’s bread, are
exploring new fields in remote regions of Alaska, Colombia and
Central and Southeast Asia that will only be profitable to exploit
at prices above about $22 per barrel.
Then there is Russia, suddenly a non-OPEC
oil power in its own right. The Soviet oil industry collapsed
just before the USSR did, but Russia’s is now back and already
sparring with the Saudis because they have no use for OPECs quotas.
Yet Russian oil is located in some of the most unforgiving regions
of the planet: northern Siberia, the frozen Arctic and Barents
seas, and it takes world prices of $25 per barrel and above for
this to be commercially feasible.
Too many voices right now — in America,
Europe and especially the Middle East — see oil behind each
and every word the Bush administration utters on Iraq. That is
far too simplistic, and worse, it sets up a straw man that this
administration takes great joy in knocking down. But oil is an
issue — in a complex, long-term and very real way. To deny
it is to deny reality.
*Other nations that have signed contracts with
Saddam Hussein’s government since 1991 include India, Italy,
the Netherlands, Algeria, Singapore, Malaysia and Vietnam. Among
this group, only Singapore is on the council as one of the 10
“rotating” members until the end of 2002.
Oct. 4, 2002 — Saddam Hussein is sitting
on a gold mine — the second-largest oil reserve in the world
— and everyone wants a piece of it.
Oil is a consideration for nations considering joining in the
fight if the United States goes to war in the Persian Gulf, because
the day after Saddam is removed, the Iraqi oil industry is up
for grabs.
Of all of the reasons offered for removing Saddam, from terrorism
to terrible weapons, oil is seldom mentioned. Yet critical to
the American agenda is the fear an Iraq armed with nuclear weapons
could dominated, or hold hostage a region through which flows
an estimated 30 percent of the world's oil and natural gas.
Similar worries about the world's oil supply
figured heavily in the 1991 Gulf War, and before that, concerns
Iran might capture critical oil fields led the United States to
support Iraq in the war between those two countries.
And now, oil is a consideration in the
continuing drama at the United Nations. France and Russia, both
with veto power in the Security Council, have extensive oil interests
in Iraq.
Paying a ‘Fear Premium’
In the oil economy, talk of war is already
driving prices up. A barrel of crude costs about $30, up 25 percent
since August. And some analysts say the market is anticipating
a crisis.
"The price is telling us right now
that people think on balance that a military solution is more
likely than a diplomatic solution," says oil analyst Sara
Emerson.
"We see already in the oil price a
sort of fear premium," adds Daniel Yergin, author of The
Prize, a history of the oil industry. "Things can come together
to really frighten a market."
The same happened 12 years ago, after Saddam's
surprise invasion of neighboring Kuwait. When the shooting started,
the oil exports stopped from the Gulf's two big producers, Iraq
and Kuwait. In the three months after the invasion, oil prices
went up significantly.
It was not until the air war began in January
of 1991, and images of its destruction flashed around the world,
that oil markets immediately calmed and prices fell by $7 to $8
a barrel.
"I think we definitely learned something
last time," says Emerson. "We learned that the market
gets spooked by uncertainty, and when you have a certain resolution,
whether it's diplomatic or military, there is a little bit of
relaxation of the uncertainty and that allows the market to come
down."
Sitting on a Sea of Oil
But the lesson, experts say, is that critical
to market stability is the availability of other sources of oil.
"The whole market would have its eyes
and ears on what's happening to alternative supply," says
Yergin. "And as long as the alternative supply was not interrupted
in any serious way, probably at that point the price would start
coming down again."
On that score, the oil market of today
is very different from that of a decade ago. The United States
and other industrialized countries have more stockpiles of oil.
The Gulf states are keeping oil supplies in reserve offshore,
and new producers have come online in Africa, in Central Asia,
and in Russia.
But none of them can compare with Iraq.
The country sits on a sea of oil — with known reserves of
more than 112 billion barrels.
"The fundamental issue is, the day
after Saddam is removed, the Iraqi oil industry is open for grabs,
and it will depend upon the government of Iraq to decide how it
will dispense that resource," says oil consultant Rob Sobhani,
a professor at Georgetown University in Washington. "Certainly,
American companies would be in a very, very strong position to
compete for the right."
Oil is such a huge prize, it could become
a consideration as countries decide whether to join the fight.
All five permanent members of the U.N. Security Council —
Russian, China, France, Britain and the United States — have
oil companies with a stake in who rules Iraq.
"Once the fighting starts, you have
to be involved or you are irrelevant," says Emerson. "And
it's not just because of the Iraqi oil. It's because of the oil
in the entire region. You want to be part of the postwar world
in the Persian Gulf."
Don't Be in the Wrong Business
Demonstrating the concern was a surprise
visit this summer to the Washington office of the Iraqi National
Congress — a U.S.-backed opposition group — by a Russian
diplomat interested in Iraqi oil. It was the first such high-level
contact in years.
"He basically told me that 'Russia
is an old friend to Iraq and we have culture, and industrial bonds
and we think we should talk,'" recalls Entifad Qanbar, who
heads the opposition group's office.
"I think money was on his mind,"
says Qanbar. "Oil is money. Money, I mean, because Iraq has
an abundance of oil … It represents a way of making money."
Who will make that money? Over the last
decade, companies from more than a dozen nations have been in
Baghdad signing deals to develop Saddam's oil reserves. Among
them are TotalFinaElf, a French company developing the oil field
near the Iranian border, and Lukoil, a Russian company developing
another oil field in the Iraqi desert.
Both deals are dependent on the end of
U.N. sanctions against the Saddam regime. But will the same contracts
be honored after a war if Saddam is gone? Not if the Iraqi National
Congress has anything to say about it.
"I wouldn't worry if I was doing right
business," warns Qanbar. "But if I'm doing wrong business,
I should worry."
With war plans on the president's desk
and a war resolution before the United Nations, the future of
Iraqi oil is one factor that may be on the table with allies in
Paris and Moscow.
"If we play our cards right, I think
we can get them to see that it is not wise for them to continue
to back a loser," says James Woolsey, a former CIA director.
"And I think Saddam is going to lose."
Billions in Investment Needed
Oil analysts say things aren't so simple.
"This notion that somehow this is
going to become an American oil lake and other countries are going
to be excluded, I don't think that's the way the world will work,"
says Yergin. "If you come in by yourself, you're going to
have to write the big check by yourself. You want other people
to share the risk with you."
That's because it will take years before
Iraq's oil industry can pump more than it is today — 1.7
million barrels a day, now 3 percent of world production. Pipelines
are rusty and oil fields are in disrepair. After 20 years of neglect,
it will take billions in investments to reap the returns on Iraq's
reserves.
"People are not going to just whip
out their checkbooks and start writing checks with nine zeros,"
says Yergin. "What a company needs to know is, is there going
to be some political stability? How vulnerable are they going
to be? They're also going to want to know, are their terms going
to be stable? Are the rules of the game going to change?"
And there are other sensitive questions
about the outcome of a U.S.-led invasion in the heart of the Middle
East.
"The governments are the way they
are, in part, because we haven't pushed democracy, and one of
the reasons we haven't pushed democracy is we've just been willing
to go along with whoever would sell the cheapest oil, however
bad the government was," says Woolsey.
Even without Saddam, instant democracy
is not likely. For one thing, Saddam's iron rule has kept Iraq
united — the real fear is that Iraq will splinter into rival
groups once he is gone.
In contrast, the hope: A democratic Iraq
would be an oil-rich ally with a government friendly to Washington.
The world's
biggest oil bonanza in recent memory may be just around the corner,
giving U.S. oil companies huge profits and American consumers
cheap gasoline for decades to come.
And it all may come courtesy of a war with
Iraq.
While debate intensifies about the Bush
administration's policy, oil analysts and Iraqi exile leaders
believe a new, pro-Western government -- assuming it were to replace
Saddam Hussein's regime -- would prompt U.S. and multinational
petroleum giants to rush into Iraq, dramatically increasing the
output of a nation whose oil reserves are second only to that
of Saudi Arabia.
"There already is a stampede, with
the Russians, French and Italians already lined up," said
Lawrence Goldstein, president of the Petroleum Industry Research
Foundation, a New York think tank funded by large oil companies.
Until now, debate over the economic impact
of a U.S.-led attack on Iraq has focused mostly on short-term
dangers. Pundits have worried that just as during the Gulf War,
a new Iraq war would disrupt oil exports from the Persian Gulf
and cause a sharp spike in petroleum prices.
If Hussein attacks oil facilities in neighboring
gulf states, for example, or Arab oil producers institute a boycott,
Americans could wind up paying more than $2 per gallon for gasoline,
some experts predict.
The long term, however, looks radically
different, according to oil analysts.
In their view, a new Iraq oil boom could
begin within two years of the war's end -- roughly the time it
took to repair damaged facilities in Kuwait after the 1991 Gulf
War. Once production reaches its full capacity, they say, the
enormous increase in supply could weaken OPEC, the oil producers'
cartel led by Saudi Arabia, lower international oil prices for
the foreseeable future and shift the balance of power among the
world's major oil producers.
"OPEC is already significantly fractured,
and this would already add to its internal frictions," said
Reuel Marc Gerecht, a fellow at the American Enterprise Institute
who formerly was a U.S. diplomat and CIA agent in the Mideast.
"It would definitely diminish the
Saudis' influence (over the United States) and would cause the
Iranian regime a lot of trouble."
WORLD'S SECOND-LARGEST RESERVES
Iraq has 113 billion barrels of proven
reserves, second worldwide only to Saudi Arabia, which has 262
billion barrels. But because of its two decades of war, Iraq's
oil potential remains relatively unexplored. The U.S. Energy Department
estimates that Iraq has as much as 220 billion barrels in undiscovered
reserves, bringing the Iraqi total to the equivalent of 98 years
of current U.S. annual oil imports.
American firms are barred by U.S. law from
making contracts with Iraq and have had to watch as the rival
firms of other nations sign contracts with the Iraqi dictator
to pump oil after U.N. sanctions are lifted. Assuming Hussein
is overthrown and U.S. and U.N. sanctions are lifted, Goldstein
said, "you'll see the U.S. companies will be very, very interested."
Muhammad-Ali Zainy, a former Iraqi government
oil official, estimates that after an overthrow of Hussein, oil
production would rise from its current output of about 2.5 million
barrels per day to as much as 7 million barrels per day by the
end of the decade.
"Given Iraq's dire financial situation,
any Iraqi government after Saddam Hussein will need massive amounts
of money and will try to produce as much as it can," said
Zainy, now a senior energy analyst at the Center for Global Energy
Studies in London.
Just how low prices could go as a result
of increased Iraqi production is unclear. Some analysts have predicted
that oil could plummet from its current level of about $30 per
barrel -- a price that includes a $5 "war premium" caused
by short-term jitters -- to as low as the level of late 1998 and
early 1999, when it briefly hit $10 per barrel.
For domestic oil producers, however, such
a collapse could be unwelcome.
"I don't think it's really in the
interest of the United States to have OPEC disintegrate and have
a crash in oil prices," Zainy said. "The United States
is a large (oil) producer; there are interest groups, oil corporations
and independent oil producers that want a reasonable price level."
WHITE HOUSE, FIRMS KEEP MUM
The Bush administration and U.S. oil firms
have stayed quiet on the subject of Iraqi oil, perhaps leery of
accusations that an attack on Iraq is motivated by U.S. desires
to have greater control of world oil. A spokesman for oil giant
Chevron-Texaco, based in San Francisco, declined to comment whether
the company is interested in postwar Iraq, saying the issue is
"too speculative."
The Iraqi government has taken the propaganda
bull by the horns, accusing Washington of waging an imperialist
grab for oil.
"The U.S. administration wants to
destroy Iraq in order to control the Middle East oil, and consequently
control the politics as well as the oil and economic policies
of the whole world," said a letter from Hussein read to the
U.N. General Assembly on Sept. 19.
Some domestic U.S. critics, while reluctant
to appear sympathetic to Hussein, partially echo his claims.
"The administration doesn't want oil
to be part of the war discussion because it undercuts the reasoning
that the rush to war is because of an imminent (Iraqi) military
threat," Michael Klare, professor of peace and world security
studies at Hampshire College in Amherst, Mass., and author of
"Global Petro-Politics," wrote in the March issue of
Current History magazine.
"If the real motives were made clear
-- that this is a grab for oil and an attempt to break the back
of OPEC -- it would make our motives look more predatory than
exemplary."
The oil card is clearly a factor in the
current tug-of-war between Baghdad, Washington and key members
of the U.N. Security Council that oppose the Bush administration's
push for a military move on Iraq. In recent years, seeking to
curry favor, Hussein has given huge contracts to oil firms from
France, Russia and China, which all have veto power in the Security
Council.
FRENCH HEAVILY INVOLVED
The French oil giant TotalFinaElf has the
largest position in Iraq, with exclusive negotiating rights to
develop Majnoon, a field near the Iranian border with estimated
reserves of 10 billion barrels. Moscow has a $3.5 billion, 23-year
agreement for several huge Iraqi fields that gives a lead position
to a Russian oil consortium led by LukOil.
While that may partly explain those countries'
reluctance to sign on to the Bush administration's drive for a
"regime change," some observers warn that such resistance
could backfire.
Iraqi opposition leaders suggest that unless
France, Russia and China support the U.S. line in the Security
Council, their oil companies may find themselves blacklisted.
"We will examine all the contracts
that Saddam Hussein has made, and we will cancel all those that
are not in the interest of the Iraqi people and will reopen bidding
on them," said Faisal Qaragholi, operations officer of the
Iraqi National Congress, the opposition coalition based in London
that plays a central role in the American anti-Hussein strategy.
Ahmed Chalabi, the INC leader, has gone
even further, proposing the creation of consortium of American
companies to develop Iraq's oil fields.
Once again
the world now waits with fear and trepidation regarding the threat
of a US attack on Iraq.
The President provides as justification
for this impending attack the Iraqi refusal to comply with UN
resolutions regarding weapons inspections, the alleged Iraqi threat
to its neighbors and the Iraqi government's mistreatment of its
own citizens.
The American people are being called upon
to send their young sons and daughters to go and kill young Iraqi
sons and daughters. This war, like all wars, will be brutal and
will leave many American and Iraqi families mourning the loss
of their children.
We're not allowed to publicly question
the Bush Administration for fear of being called unpatriotic.
Aren't we entitled to really know why we're being urged to go
to war? Aren't we entitled to be confident that the Administration
is telling the truth?
We know that this Administration has some
trouble with telling the truth.
You might recall that the White House had
a kind of amnesia a few months ago and didn't tell the truth about
September 11 until I asked some pretty straightforward questions.
In so doing, it seems I helped them remember that they had in
fact received a whole raft of reports warning of terrorist attacks
against this country.
And this is the same Administration, which
stole the 2000 election in Florida and then lied about it.
There have been so many times I wished
our country could use its massive military resources for such
noble goals as protecting civilians and enforcing UN Security
Council Resolutions. I'd be their greatest supporter. But I've
sat upon this committee for 10 years and I have seen our country
repeatedly refuse to use to its military to save civilians from
slaughter.
I need only remind you of our country's
shameful failure to intervene in Rwanda in 1994 and in so doing
we allowed 1,000,000 Rwandan men, women and children to be butchered
with axes and machetes in 100 days.
And, yes, we are the same country that
abandoned the people of Afghanistan to the Taliban, that abandoned
the people of the Democratic Republic of Congo to the invading
Rwandans and the Ugandans, that abandoned the people of East Timor
to the invading Indonesians, that abandoned the people of Sierra
Leone to the brutal hand chopping killers of the RUF, that abandoned
the people of Chechnya to the brutal Russian Army, that abandoned
the people of the Philippines to brutalities of Ferdinand Marcos,
that abandoned the people of Chile to monstrous crimes of General
Pinochet and so on and so on.
But the President would have us believe
that this time things are different for once, he says, we're going
to war to save people's lives.
However, just last Sunday, September 15,
2002, the Washington Post's lead story carried the banner headline
"In Iraqi War Scenario, Oil is the Key Issue." The article
then went on to describe how US oil companies were looking forward
to taking advantage of the oil bonanza, which would follow Saddam
Hussein's removal from office.
Apparently, so the article says, CIA Director
James Woolsey, indicated that non-US oil companies who sided with
Hussein would most likely be excluded from sharing in Iraq's massive
oil reserves a*" reserves said to be second only to Saudi
Arabia.
And I find the current Bush fervor and
alleged urgent justifications for attacking Iraq startling because
I recall reading an article from the London Guardian on December
2, 2001 last year, which had a banner headline "Secret US
Plan for Iraq War." The article, almost a year old now, is
interesting because it reports that the President had already
ordered the CIA and his senior military commanders to draw up
detailed plans for a military operation against Iraq. The operational
commander was General Tommy Franks working out of the US Central
Command at McDill air force base in Florida. Apparently, other
key players were, low and behold, the CIA Director James Woolsey
and the Deputy Defense Secretary, Paul Wolfowitz.
What I found most incredible about the
article, especially after reading this week's Washington Post
article, was the last sentence which said:
"The most adventurous ingredient in
the anti- Iraqi proposal is the use of US ground troops . . .
significant numbers of [US] troops could also be called on in
the early stages of any rebellion to guard oil fields around the
Shia port of Basra in southern Iraq."
Isn't it amazing the London Times didn't
refer to US troops guarding the new parliament, or the schools
or hospitals full of ravaged civilians, or saving the men, women
and children brutalized under years of Hussein's rule.
I wonder why the President hasn't talked
about these plans, which were being cooked up nearly a year ago.
I learned this week from the Times of London
that Bush Administration plans to spend some $200m on convincing
a skeptical American and world public that the war on Iraq is
justified. I didn't realize that telling the truth would be so
expensive.
And surely if we were really interested
today in the truth about whether Iraq has weapons of mass destruction
wouldn't this Committee want to hear from Scott Ritter. I just
cannot believe that he's not here today.
Before we send our young men and women
off to war, we need to really make sure that we're not sacrificing
them so that rich and powerful men can prosecute a war for oil.
Iraq has the second largest
oil reserves in the world
Magid Tehranian
September 18, 2002
The Iranian
If and when it happens, an invasion of
Iraq will be the seventh oil war in some 50 years. Wars are largely
violent struggles for material and symbolic resources. They also
demonstrate the failure of human imagination to find peaceful
solutions to their problems. Resorting to war is easy. Peace building
is difficult.
The first oil war happened when Iran nationalized
its oil industry in 1951. Two and a half years of struggle led
to an Anglo-American boycott of Iran's nationalized oil. In 1953,
a CIA supported coup replaced a democratically elected government
with the Shah's dictatorship.
In the meantime, the nationalist virus
passed on from Iran to Egypt. In 1956 President Nasser of Egypt
nationalized the Suez Canal. An Anglo-French-Israeli invasion
of Egypt ensued. But a Soviet-American opposition to that invasion
led to the withdrawal of invading forces. It also led to the rise
of Nasser's prestige in the Arab world.
The second oil war occurred in 1967 when
Egypt, Syria, and Jordan pre-emptively invaded Israel. They were
roundly defeated. Israel conquered the West Bank, Sinai, Gaza
Strip, Golan Heights, and East Jerusalem.
The third oil war came in 1973. Egypt's
Anwar Sadat took Israel by surprise on Yom Kippur and made advances
in the Sinai. However, the Israelis soon pushed back the Egyptian
forces close to Cairo. Some lessons were learned by Egypt and
Israel leading to the Camp David Accords of 1979. Egypt and Israel
reached a peace treaty in which the latter withdrew from Sinai
in return for the Egyptian recognition of Israel.
The fourth oil war began in 1979 with the
Islamic revolution in Iran. Fearful of its spread to the rest
of the region, Iraq with the support the West, Soviet Union, and
the conservative Arab states invaded Iran. A bloody war ensued
lasting for eight years from 1980 to 1988. Nearly 1 million were
killed; another million were maimed. Saudi Arabia and Kuwait paid
some $60 billion to support Iraq.
When a tanker war erupted in the Persian
Gulf and Iraq seemed to be on the losing end, the United States
sent its Seventh Fleet to the region and bombed Iranian oil installations
at Khark. U.S. forces also shot down an Iranian civilian plane,
killing over 280 passengers.
The fifth oil war resulted from the changing
balance of power between Iran and Iraq. With the support of the
West, Saudi Arabia, and Kuwait, Saddam Hussein became a Frankenstein
monster during this war. The ratio of armed forces between Iran
and Iraq was radically reversed from 4:1 to 1:4.
Saddam thus considered the end of the Cold
War in 1989 a propitious moment to reclaim Kuwait as Iraq's province.
This led in 1990 to Iraq's invasion of Kuwait and the second Persian
Gulf War of 1991. Iraq's defeat led to UN economic sanctions,
U. S. imposed no-fly zones in southern and northern Iraq, and
a protracted war of nerves between the Anglo-American and Iraqi
forces.
The sixth oil war was fought in Afghanistan.
It began with the Soviet invasion of that country in 1979 and
the Mujahedin resistance movement. Supported by the United States
arms, Saudi petrodollars, and Pakistan military leadership, the
Mujahedin finally drove the Soviets out in 1989.
In the meantime, however, another Frankenstein
in the form of the fanatical Taliban had been created. Organized
and led by the Pakistan secret service, the Taliban conquered
90 percent of Afghanistan by 1995. A multi-ethnic country thus
came under a Pushtun tribal force dedicated to imposing medieval
Islamic laws on a historically tolerant society. Moreover, Afghanistan
became the base for the Al Qaida, a Wahabi Islamic movement committed
to terrorism against its enemies in the United States and the
Saudi regime.
September 11, 2001 terrorist attacks on
the United States were the most dramatic outcome of the sixth
oil war. The United States invasion of Afghanistan and the fall
of the Taliban regime largely destroyed the terrorists' base.
But it also ensured a route other than Iran for the transport
of Central Asian oil to the sea.
A Bushist proposed invasion of Iraq must
be considered a seventh oil war. After Saudi Arabia, Iraq has
the second largest oil reserves in the world. For U.S. oil interests,
conquest of Iraq would be a good insurance policy against a possible
loss of Saudi Arabia.
However, with a total control of oil reserves
in Saudi Arabia, Iraq, and the other Persian Gulf states, the
United States can drive the revolutionary regime in Iran out of
the markets and possibly out of power.
If this account ignores other factors such
as class conflicts, Palestinian-Israeli confrontation, and religious
tensions, it is not because they are not important. However, oil
politics has played a critical role in the Middle East's bloody
history. Other factors only have a supporting role.
In the present propagandistic American,
Arab, and Israeli accounts, the oil factor is often left out or
under-emphasized. If oil constitutes such an important factor,
then, a peaceful resolution of the conflicts would have to focus
on that factor.
Less dependence on fossil fuels and Middle
Eastern dictatorships, as well as more support for human rights
and moderate forces, can win the United States both more durable
security and lasting friends.
Just why is Iraq so important? The short
answer is not Saddam Hussein and his alleged weapons of mass destruction,
but "oil." There is no doubt that Saddam and his regime
are truly dreadful, and that they pose a very real threat to their
neighbors, if not to the United States. Saddam demonstrated his
intentions once before when he invaded Kuwait.
But there is more at work here than defense
and the politics of defense. Petrel Resources, a Dublin-based
company with extensive interests in Iraq, says, "No mineral
has better economics than oil and no country has better oil economics
than Iraq." The long-term potential for peaceful Iraqi development
is enormous, which is the primary reason why such countries as
France and Russia have been reluctant to take a strong stand against
Baghdad. They may well have genuine reservations about the legitimacy
of a U.S.-led attack against Iraq, but their fundamental objections
lie in their own economic self-interest, specifically the roles
they could play in Iraqi economic development. Moreover, the old
Soviet Union helped to build Iraq's military forces, for which
a lot of money is still owed. Moscow closely followed the progress
of the 1991 Gulf War. That military connection is thought to give
Russia a significant leg-up in Iraqi development once U.N. sanctions
are lifted.
Is Iraq that big and important? Consider:
Iraq has 15 percent of the world's known oil reserves: some 115
billion barrels of proven reserves and up to 300 billion barrels
of possible reserves. That's a lot of oil. Only Saudi reserves
are greater. But other factors make Iraqi oil even more desirable
than Saudi black gold. Ninety percent of the possible oil fields
in Iraq are as yet unexplored, a golden opportunity for foreign
investment and development -- and profit. Only 2,000 wells have
been drilled in Iraq compared to one million in Texas. By way
of comparison, eight out of 10 wells drilled in Iraq have struck
oil; in Saudi Arabia the rate is less than half. Moreover, Iraq
is the world's lowest-cost producer; it costs less than $1 a barrel
to produce.
As the world is now consuming more oil
than it is replacing through discoveries, Middle Eastern oil,
and especially Iraqi oil, is growing more and more important.
There is nothing necessarily wicked here, only old-fashion economics.
But Iraqi oil is curiously absent from the heated discussion over
going to war with Baghdad.
The world's major oil companies, however,
including U.S. companies, are intensely interested in Iraqi oil.
John Teeling, chairman and founder of Petrel Resources, says that
most of the big U.S. companies maintain a "watching brief,"
using their European offices to maintain their Iraqi contacts.
None of this, of course, is unknown to
President George W. Bush and Vice President Dick Cheney, both
of whom have deep roots in the oil industry. There are even suggestions
that because of their oil background, it is Iraqi oil that is
driving Bush and Cheney in their determination to get rid of Saddam.
That strikes me as just a little too cynical; there is enough
in Saddam's record to justify a move against him, oil or no oil.
But it is also true that much of the Iraqi oil exported under
the U.N.'s strict oil-for-food program ends up in U.S. refineries.
Clearly, oil is strongly connected to the current debate over
what to do about Iraq.
While oil remains a constant factor in
the debate over Iraq, the debate itself has undergone a remarkable
evolution. For several months, the steady drumbeat of war was
maintained by such administration hard-liners as the vice president
and Secretary of Defense Donald Rumsfeld, disturbing not only
America's friend and allies but many Americans as well.
In the past few weeks, however, much has
changed. House Majority Leader Dick Armey, a bluer-than-blue conservative,
spoke out against any unilateral U.S. action against Iraq unless
the White House presented a better case. Other Republican members
of Congress made similar noises.
Then Brent Scowcroft, national security
adviser to both President Gerald Ford and the first President
Bush, advised against unilateral action. Not by accident did he
choose The Wall Street Journal, the ultimate redoubt of high republicanism,
to voice his opinion. Scowcroft was followed by former Secretary
of State James A. Baker III in The New York Times, expressing
similar views. Then Secretary of State Colin Powell finally spoke
out in a BBC interview in South Africa urging the reintroduction
of U.N. weapons inspectors to Iraq, an action opposed by the vice
president.
By the time Congress reconvened last week
after a summer recess, it was clear that the momentum toward war
had run into massive domestic opposition. The president wasted
no time in assembling key Republican and Democratic members of
Congress for a session in the Cabinet Room at the White House.
By all accounts he made a strong plea for removing Saddam Hussein
but presented no new evidence to support his case. At the same
time, he announced a diplomatic blitz that included a Camp David
visit this weekend with Prime Minister Tony Blair ("War Summit"
screamed the British headlines), a Monday meeting with Canadian
Prime Minister Jean Chretien, telephone calls to the leaders of
Russia, France and China, and a UN address later this week. There
seemed little doubt that the White House was back in the business
of trying to build a consensus, something his father would applaud,
but his hard-line advisers despise. Stay tuned.
U.S. Refiners Reportedly
Buying Most of Iraq's Oil
By John K. Cooley
July 20, 2002 — Even as Saddam Hussein
vows to use his country's oil as a weapon in the Middle East conflict,
American companies are buying most of Iraq's U.N.-approved oil
exports, oil industry sources tell ABCNEWS.com
An authoritative Iraqi source says that as much as 90 percent
of the actual amount of Iraq's estimated 1.8 million barrels per
day (bpd) are going to U.S. Gulf coast refineries.
"Most of Iraq's oil exports in July are destined to the U.S.,
with a few going to Europe," reported the authoritative oil
journal Middle East Economic Survey.
There's such demand for Iraqi crude in
the United States, the report says, that Saddam is banking on
it to mitigate the Bush administration's enmity toward his dictatorship
in Iraq, and therefore, any attempts to oust him.
Works Great, Less Taxing
Sources say American refiners prefer the
Iraqi Kirkuk and Basrah oil varieties, because of their low sulfur
content. When they can remove the sulfur more easily, refiners
can make higher profits.
Many refiners have been investing heavily
in special equipment to remove sulfur from crude oil, after the
Environmental Protection Agency and the Justice Department reached
agreements with nine refineries last March to reduce air pollution.
As part of the deal, they also agreed to
collectively pay a $9.5 million civil penalty under the Clean
Air Act and spend $5.5 million on environmental projects in communities
affected by the refineries' pollution, the newsletter Alexander's
Gas and Oil Connections reported.
The companies are required to spend an
estimated $400 million for installing pollution controls.
American refiners' thirst for Iraqi oil
has been ongoing. Reuters reported on May 12, 2000, that since
1998, U.S. imports of Iraqi crude oil have doubled to 750,000
bpd, 9 percent of total U.S. oil imports.
Oil industry sources tell ABCNEWS that
the U.S. companies most heavily involved at present are Chevron,
Exxon-Mobil, Bayoil and Koch Petroleum, which use it in their
refineries in Louisiana and Texas.
Getting it to Market
The U.S. refiners largely obtain their
crude oil from Russian firms, or middlemen working through Russian
firms.
"Everyone makes a commission or gets
a rakeoff at every step between the Iraqi oil fields and the U.S.
refineries, mostly in [the] southern U.S. states," said a
knowledgeable oil industry source.
Most of the U.N.-authorized oil sales have
gone to Russian private trading firms as a reward for Moscow's
pro-Iraqi positions in the U.N. Security Council, MEES editors
said.
"Large volumes of crude are being
taken away from previous customers and assigned to new [Russian]
ones," MEES reported July 16.
This month, Russia stymied a U.S. attempt
to revise U.N. sanctions against Iraq to focus on blocking military
imports by vetoing it in the Security Council.
Watching the Money Trail
Iraq's preference for Russian traders is
becoming evident from the region's oil tanker traffic, sources
say.
Of the two main ports used by Iraq to exports
its "legal" oil, the one used by Russian traders has
been seeing much more use.
America's refiners are getting most of
their Iraqi oil from Ceyhan, Turkey, the terminus of a pipeline
between Kirkuk and Ceyhan, because loading Iraqi crude oil there
cuts out the need for supertankers to steam all the way around
the Arabian Peninsula.
The other port, Mina-al-Bakr, a big offshore
loading platform in the Persian Gulf off the Iraqi port of Basrah,
has seen use decline sharply in recent months.
That port is mainly used by supertankers
bound for Asia. Iraq's main customers using this port include
India, China, Japan and Malaysia, oil industry sources say.
By Gopal Dayaneni
and Bob Wing
June, 2002, War Times
War—what is it good for?
President Bush says war will stamp out
terrorism. But to map the “war on terrorism” is to map
the world’s oil.
In the Middle East, the administration
has announced that its top priority is a massive invasion of Iraq
to remove Saddam Hussein. Hussein is a ruthless leader, but the
U.S. supports many dictators. Washington has him in its gunsights
because he is the chief opponent to U.S. control over the vast
oil wealth of the Persian Gulf. The new policy is meant to intimidate
perceived U.S. foes, especially Iraq, which President Bush openly
vows to attack. Coupled with the massive investment in missile
defense, it reveals the official ascendancy of an aggressive U.S.
military posture advocated by the far right since long before
Sept. 11.
In Afghanistan, the "war on terrorism"
has produced a pro-U.S. government--and U.S. military bases in
the nine surrounding countries. Those Central Asian countries
are rich in oil and natural gas. By military action, the U.S.
is trying to clear the way to lay pipelines to the West and to
the growing Asian markets--with Afghanistan at the crossroads.
In the Caspian Sea basin, the U.S. has
been building new military bases and training local defense forces
in the wake of Sept. 11. The former Soviet Republics of Turkmenistan
and Uzbekistan are bursting with an estimated five trillion dollars
worth of unexploited oil and natural gas. After the Persian Gulf,
this is the largest reservoir of petroleum in the world.
Oil is also at the center of recent U.S.
actions to export its Ïwar on terrorismÓ to Latin
America and Africa. In Colombia, the U.S. is ready to give $98
million to government forces to guard against rebel disruption
of Occidental PetroleumÌs oil pipeline. In Venezuela, the
U.S.Ìs third largest supplier of oil, the U.S. met with
and helped fund the leaders of a failed coup against the democratically
elected president.
In Africa, the U.S. has recently increased
military aid to Nigeria, the continentÌs largest supplier
of oil to the U.S.
THE CHENEY-ENRON PLAN
The petroleum industry is the most powerful
in the world. It fuels modern industry, agriculture and transportation.
Its capital flows shape the global financial system.
Big Oil also dominates the Bush administration.
The President, Vice President Dick Cheney and almost all the top
ranking officials in the administration have been top corporate
oil executives or have longstanding ties to the industry. (See
ÏBushÌs Oil Machine,Ó) The exceptions, like
Secretary of State Colin Powell, are linked to the military and
defense industries.
The administrationÌs oil strategy
was set forward in the national energy plan drawn up last year
by Cheney with notorious assistance from executives from Enron
and other energy giants. Not surprisingly, the plan opposes an
increase in the fuel efficiency of U.S. motor vehicles. And it
calls for exploitation of the pristine Alaska National Wildlife
Refuge even though such drilling would make no significant difference
in the larger energy situation.
Professor Michael Klare, writing for Pacific
News Service, summarizes the Cheney report in three points:
~ The U.S. is increasingly dependent on
foreign oil. Currently the U.S. imports about 10 million barrels
of oil per day, 53 percent of total consumption. By 2020 daily
U.S. oil imports will climb to 17 million barrels, 65 percent
of consumption.
~ Therefore the U.S. must add new foreign
oil sources to its current suppliers, Saudi Arabia, Venezuela
and Canada. The plan looks to the Caspian states, Russia and Africa
to meet its future oil needs and to end its dependence on the
Organization of Petroleum Exporting Countries (OPEC).
~ The U.S. cannot gain access to this oil
through market forces alone--foreign resistance to U.S. energy
companies is longstanding. As the report states, Ïforeign
powers do not always have AmericaÌs interests at heart."
This is why Washington seized upon the
September 11 tragedy to expand its military presence in oil-producing
countries throughout the world.
THE WAR BUSINESS
This is why Washington seized upon the
Sept. 11 tragedy to expand its military presence in oil-producing
countries throughout the world. Pepe Escobar, columnist for Asia
Times, observes: ÏThereÌs no business like war business.
Thanks to war against Iraq, the U.S. has its military bases in
the Persian Gulf. Thanks to war against Yugoslavia, the U.S. has
its military bases in Bosnia, Kosovo and Macedonia. Thanks to
war against the Taliban, the U.S. is now in Turkmenistan, Uzbekistan,
Pakistan, Afghanistan,Ó Turkey, Georgia and Azerbaijan.
Escobar believes that even larger stakes
are involved in the U.S.'s wars to control world oil. "If
the U.S. controls the sources of energy of its rivals—Europe,
Japan, China and other nations aspiring to be more independent—they
win." Control of oil is key to control of the world economy.
Bush calls his war program Enduring Freedom. But Escobar believes
it is more likely geared to produce Everlasting Profits.
~~~~~~~~~~~~~~~
Gopal Dayaneni is oil campaign coordinator
for Project Underground (www.moles.org).
The Russians got into their Vietnam right after we got out of
ours? Isn't that strange?
We supported Bin Laden and the Taliban for years, and viewed them
as Freedom fighters against the Russians. Isn't that strange?
As late as 1998 the US was paying the salary of every single Taliban
official in Afghanistan? Isn't that strange?
There is more oil and gas in the Caspian Sea area than in Saudi
Arabia, but you need a pipeline through Afghanistan to get the
oil out. Isn't that strange?
UNOCAL, a giant American Oil conglomerate, wanted to build a 1-000-mile
long pipeline from the Caspian Sea through Afghanistan to the
Arabian Sea. Isn't that strange?
UNOCAL spent $10 billion on geological surveys for pipeline construction,
and very nicely courted the Taliban for their support in allowing
the construction to begin. Isn't that strange?
All of the leading Taliban officials were in Texas negotiating
with UNOCAL in 1998. Isn't that strange?
1998-1999 - The Taliban changed its mind and threw UNOCAL out
of the country and awarded the pipeline project to a company from
Argentina. Isn't that strange?
John Maresca, vice president of UNOCAL, testified before Congress
and said no pipeline until the Taliban was gone and a more friendly
government was established. Isn't that strange?
1999-2000 - The Taliban became the most evil people in the world.
Isn't that strange?
Niaz Naik, a former Pakistani Foreign Secretary, was told by senior
American officials in mid-July that military action against Afghanistan
would go ahead by the middle of October. Isn't that strange?
Sept. 11, 2001 - WTC disaster. Bush goes to war against Afghanistan
even though none of the hijackers came from Afghanistan. Isn't
that strange?
Bush blamed Bin Laden but has never offered any proof saying it's
a "secret." Isn't that strange?
Taliban offered to negotiate to turn over Bin Laden if we showed
them some proof. We refused; we bombed. Isn't that strange?
Bush said: "This is not about nation building. It's about
getting the terrorists." Isn't that strange?
We have a new government in Afghanistan. Isn't that strange?
The leader of that government formerly worked for UNOCAL. Isn't
that strange?
Bush appoints a special envoy to represent the US to deal with
that new government, who formerly was the "chief consultant
to UNOCAL." Isn't that strange?
The Bush family acquired their wealth through oil? Isn't that
strange?
Bush's secretary of interior was the president of an oil company
before going to Washington. Isn't that strange?
George Bush Sr. now works with the "Carlysle Group"
specializing in huge oil investments around the world. Isn't that
strange?
Condoleeza Rice worked for Chevron before going to Washington.
Isn't that strange?
Chevron named one of its newest "supertankers" after
Condoleezza. Isn't that strange?
Dick Cheney worked for the giant oil conglomerate Haliburton before
becoming vice president. Isn't that strange?
Haliburton gave Cheney $34 million as a farewell gift when he
left the company. Isn't that strange?
Haliburton is in the pipeline construction business. Isn't that
strange?
There is $6 trillion worth of oil in the Caspian Sea area. Isn't
that strange?
The US government quietly announced on Jan 31, 2002 that we will
support the construction of the Trans-Afghanistan pipeline. Isn't
that strange?
President Musharraf (Pakistan), and interim leader Karzai, (Afghanistan
- UNOCAL) announce agreement to build proposed gas pipeline from
Central Asia to Pakistan via Afghanistan. (Irish Times 02/10/02)
Isn't that strange?
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