It's Not A War For Oil?

by Adam Khan

[Editor's note: the author sent us this as a reaction to a commentary in the Washington Post by Thomas W. Lippman.] 

A Washington Post commentary titled "It's Not a War for Oil" insists that it is the Bush team's failure to "articulate a compelling rationale" for the Iraq war that is "fostering the belief that such a war would be a 'war for oil'  and therefore an exercise in imperialism, not an exercise in security."

He essentially goes on to say that suspicious commentators in the Arab world and antiwar demonstrators who shout "No blood for oil!" are deluded because "the realities of the global oil market would indicate that the 'oil war' theory does not stand up to analysis".

(Lipmann is an adjunct scholar at the Middle East Institute and is, according to the footnote on his WP article, writing a book on U.S.-Saudi Arabian relations. As we examine his analysis, you will see that his defense basically is this: "A war for oil sounds dumb, and is beneath this administration.")

Lipmann: "First, if the United States felt compelled to increase its access to oil from Iraq, it could do so by getting the U.N. Security Council to lift the economic sanctions that restrict Iraqi output -- no bloodshed necessary. Iraq's oil would flow freely into the global market, contracts already signed with Russian and European companies would increase Iraqi production and, as a beneficial side effect, prices would decline as supplies increased."

Sounds straightforward and this has been regurgitated by many Bush apologists, including right-wing commentators Rush Limbaugh and Sean Hannity. There are a couple of major problems with this "analysis".

First, it ignores what is no longer a secret in Washington. In the early days of the current Bush administration--as was the case for much of the Clinton presidency--the powerful US oil lobby was quietly but intensely lobbying Congress for easing, even totally lifting, sanctions on Iraq and two other oil producing rogue states--Iran and Libya. But an even more influential bloc, the pro-Israel lobby consistently scuttled the move which would have allowed Washington to re-establish economic relationships with Tel Aviv's enemies.

A May 2001 piece in Business Week by Rose Brady reported that the easing of sanctions on rogue states "pits powerful interests such as the pro-Israeli lobby and the U.S. oil industry against each other. And it is sure to preoccupy the Bush Administration and Congress."

Tellingly, Brady observes, "Vice-President Richard B. Cheney, former CEO of oil equipment giant Halliburton Co., has long considered U.S. sanctions policy ineffective. Richard N. Haass, recently appointed chief of the policy planning office at the State Dept., has also called for gradually easing sanctions on Iran in exchange for better behavior."

Further, Brady notes that the Bush administration was under mounting pressure from US businesses because the sanctions regime against these countries allowed other countries to profit at the expense of US corporations: "American farmers, workers, and companies have sacrificed without any progress toward U.S. foreign policy objectives," wrote Donald A. Deline, Halliburton's director of government affairs, to Senate Majority Leader Trent Lott (R-Miss.) on Apr. 18."

So the reality is that while many in Washington were coming around to lifting sanctions on Iraq--"no bloodshed necessary"--as Lipmann says, the powerful Israeli lobby, and pro-Israel superhawks Richard Perle and Paul Wolfowitz ensured that "regime change"--bloodshed necessary--in Iraq became the Bush administration's only choice. This explains the White House's campaign to pin 9-11 on Saddam. It also explains how Israel's regional foe became America's greatest danger.

Lipmann notes that "contracts [Iraq] already signed with Russian and European companies would increase Iraqi production and, as a beneficial side effect, prices would decline as supplies increased."

Of course the adjunct scholar fails to point out that while low oil prices are good for the US economy--every $10 barrel in increase trims the GDP by 0.5%--declining prices would be disastrous for the Russian economy. Crude oil exports are a key source of income for Russia, as revenues from exports provide approximately 25% of the Russian government's income.

Analysts estimate that for each $1 change in the price of a barrel of oil, Russian GDP rises or falls 0.35%. A $6 per barrel fall in the price of oil would halve Russia's GDP growth.

Russia's recent growth--9% in 2000, 5% in 2001, and 4% in 2002--was largely due to energy exports and high global energy prices thanks partly to the sanctions on Iraq.

Moscow fears that with the American takeover of Baghdad, Iraq's full production capacity will not only be restored, but also boosted in a few years, bringing down world oil prices, currently well over $30 a barrel, down to $10 or less--devastating Russia's economy. This is exactly how Washington crippled the Soviet Union's economy in the 1980s.

Moscow has also signed extensive oil development contracts with Baghdad which can only go into effect once the UN sanctions are lifted. So Putin wants sanctions lifted, but he wants Saddam to stay in power. This way, any revenue loss stemming from Iraq's post-sanction increase in production will be offset by revenues from developing Iraq's oil infrastructure. It's a delicate game that Putin is trying to play, while Bush is attempting to swing a sledgehammer at the works.

Next, Lipmann argues that the invasion of Iraq is not motivated by fears of instability in Saudi Arabia, that the US is not seeking an alternate supplier in the event the House of Saud is toppled.

Why "alternate"? Why doesn't he consider that Washington may be looking to secure both Saudi Arabia and Iraq under US auspices?

A US-led invasion of Iraq would quickly correct any misconceptions the increasingly independent Saudi regime may have about the puppet-master arrangement. The House of Saud is an American proxy and can be deposed at any time--using, as in the case of Iraq, the cover of the "War on Terror".

The American public has ceaselessly been reminded that 15 of the 19 September 11, 2001 hijackers were Saudi-born; that Yemen-born Osama Bin Laden was also a Saudi national; that Saudi "blood money" goes to Palestinian "homicide-bombers"; that Wahabbi Islam will soon cause another 9-11. These along with anything else the Prince of Darkness and his cohorts can dream up will make the political case for Washington to dispatch the Marines to Riyadh.

The Pentagon would ideally like to get done with Saddam quickly and establish the mother of all military bases in Iraq--increasingly necessary given the hostility from the Turks and the Saudis to staging US missions on their soil.

Iraq would then become the staging post to implement, or threaten to implement, "regime change" in nations hostile to Israel (and by association, the US)--Syria, Iran, Jordan, and perhaps even Saudi Arabia.

If there is an uprising in Riyadh following which, as Lipmann puts it, "militant anti-American extremists seize control of the government" the US armed forces in American-occupied Iraq will quickly move in to "restore" the Al-Sauds.

Conversely, if the Saudi regime starts misbehaving, Washington could have a change of heart and sponsor an uprising of its own. On cue, the US armed forces next door will then swoop in to install a more compliant proxy entity, most likely one with pseudo-democratic credentials.

More Lipmann: "Finally, an American takeover of Iraq would not, in the long run, give the United States guaranteed access to Iraqi oil. A democratic Iraq might well decide that its future prosperity would be best served by a supply relationship with, say, China, now an importer of oil with rapidly growing demand. The days when industrialized countries acquired ownership of oil in producing countries are decades in the past." 

This is another of his "sounds dumb, and is beneath this administration" defenses. 

History reveals that both London and Washington invoked “regime change”  in Iran and Iraq to replace pro-Soviet nationalist leaders--Mossadegh in Iran (1953), and General Kasim in Iraq (1963) with regimes through whom American corporations controlled over 50 percent of Middle East oil reserves, and provided Europe with over 90 percent of its oil imports. A joint CIA-British operation toppled Mossadegh and "restored" the Shah, a brutal dictator, subsequently backed by Washington for nearly three decades.

Kasim, suspected of taking Iraq into the Soviet Camp, was ousted in a Ba'ath coup, which according to some sources, was aided by the CIA.

Anglo-American oil conglomerates controlled 75% of Iraq's production before Baghdad nationalized its oil sector in the early 70s and tilted towards Russia for development assistance.

Installing a U.S. client regime in Baghdad would give American and British companies (ExxonMobil, Chevron-Texaco, Shell, and BP) a good shot at direct access to Iraqi oil for the first time in 30 years.

So just because an "oil war" sounds anachronistic to the rest of us, this doesn't mean that is how the war cabal in Washington sees it. A solipsistic oil man turned unilateralist President, his hawkish VP--the former CEO of US oil giant, Halliburton, and prior to that the Secretary of Defense of the United States--and the assortment of pro-Israeli think tanks and big business lobbyists tugging at the strings of this administration are just the bunch to think military force could bring back the glory days when the largest Middle East oil reserves belonged to Anglo-American corporations.

So just how do you "control" Iraq's oil?

By using American tax dollars to fund a military action to affect "regime change" in Iraq. Next, you  "encourage" the new regime you just installed to void the outgoing regime's deals with the competition (especially Russia, France, China) and give you preferential access to the best projects. Then you use more American tax dollars to outbid the competition on new infrastructure projects--money that will flow into the hands of a select few corporations, and wind smoothly into party coffers just in time for Campaign 2004.

There is also talk of the US using Iraqi oil revenues to reimburse the cost of war and post-conflict reconstruction.

Even the strident global antiwar lobby cannot raise a persuasive objection to capitalism in action.

Overwhelming US investment in Iraq's infrastructure, funded by the US taxpayer, will quell the competition, giving Washington tremendous control over Iraq's oil resources, and thus influence over global oil prices.

Russia, China, and France fear that Washington will gain leverage over nations who export oil—such as Russia--as well as those who depend heavily on oil imports, such as China, India, North Korea, Germany and Japan.

China expects to import 80% of its oil from the Middle East and it fears that an American-backed regime in Baghdad would give Washington too much control over Beijing's energy future.

Of course, in a PR-driven gesture, Washington may deliberately stay out of certain projects in Iraq, allowing the sulking Russian, Chinese, and French companies to mingle on the American-dominated floor.

But we can fully expect the rest of the world to hate us even more for such tactics.

Finally, Lipmann throws out this gem: "A fragmented Iraq, breaking up along ethnic lines, might produce less oil than currently, rather than more."

Well, that's exactly what the US doesn't want happening after war. But these fears work to Washington's advantage, a master at using scare tactics and money to get its way.

By raising the specter of a splintering Iraq while promising heavy US financial investment and military aid, Washington may succeed in convincing its new puppet regime into allowing extended American military presence on Iraqi soil.

This, Lipmann shrewdly ignores, is how the British entrenched themselves in Iraq in 1921. London used the Kurdish and Shiite fear factor to get King Faisal, the malleable Sunni monarch they installed in Baghdad, to allow the British army to linger in Iraq.

Following Gulf War 1, Washington leveraged the Iraqi threat to get the Saudis to host US forces. And we all know how these experiments turned out.

Experts warn that Iraqis will not tolerate occupation under any guise. Indeed, as bitterly fragmented as Mesopotamia has always been, it has also always united to oust a common enemy.

The Ottomans couldn't wrestle this nation to the ground. Nor could the British. It took someone like Saddam to hold it together.

But while Iraqis of all stripes want Saddam--their common enemy--removed and may even initially welcome and assist a US-led military action against the dictator, soon, perhaps within months rather than the years anticipated by administration officials, Iraqis would begin to ask the "liberating" powers to take their leave.

This still gives the Bush administration a narrow window of opportunity--between Saddam's dismissal and their own departure from Iraq--to sink a few economic roots in the country.

In pursuit of short-term economic and political benefits however, Bush could jeopardize the long-term geopolitical and financial costs to the United States of invading Iraq.


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