The question raised by the foregoing denouement is whether the crisis in Iraq is simply an oil-grab. The evidence points to an affirmative answer; but it is by no means a question of “simply” since private prospects -- to the extent they are actually urged by the oil companies -- must be pieced into and justified by an over-arching national strategy and it is not entirely clear that a national strategyhas been coherently resolved upon.
At the end of 2002, leading oilmen, exiled Iraqis and lawyers met behind the closed doors of the Royal Institute of International Affairs, in London. The meeting was entitled "Invading Iraq: dangers and opportunities for the energy sector".
According to the Guardian which ran the story, “One delegate said the entire day could be summarized with: "Who gets the oil?" If America changes the regime you might expect US companies to get it.” But, as the Guardian noted, “it maybe more complicated than that.”
The Iraqi oil industry was built up by Iraq Petroleum Co. (IPC) a consortium owned by BP, Exxon/Standard Oil, Mobil, Shell, and Partex. In 1972, IPC was nationalized by the revolutionary Iraqi regime. Negotiations over nationalization were fierce. Negotiators for IPC team had some extraordinary clashes with Saddam Hussein and Iraq's vice-president, wh0 threatened “any battle with the companies that was necessary" The Iraqis also threatened IPC with loss of Saudi Arabian and Kuwaiti oil due to Arab solidarity. In February 1973, the IPC finally signed the nationalization agreement. IPC was compensated for its lost oil-fields, and by 1975 operations were taken over by the Iraq National Oil Co and the Northern Petroleum Organization.
Normally, IPC’s compensation would be deemed to terminate its rights. It is also a rule of international law that valid contracts survive regime changes. "The majority opinion is that if a government creates a [legal] title, it survives a change of government," Prof. Thomas Wäld told the Guardian. Doak Bishop, vice-chair of the Institute of Trans-national Arbitration agreed: "Regime change does not change the acquired rights companies have in the area. If the Russians and the French have legal rights in those fields, then a regime change would not oust them of those rights, but it could well get pretty messy."
The Americans, apparently, are of another view. Former CIA director James Woolsey, who is close to the Iraqi opposition groups, recently told the Washington Post: "It's pretty straightforward. France and Russia have oil companies and interests in Iraq. They should be told that if they are of assistance in moving Iraq towards decent government, we'll do the best we can to ensure the new government and American companies work closely with them. If they throw in their lot with Saddam, it will be difficult, to the point of impossible, to persuade the new Iraqi government to work with them."
In light of such belligerence, French complaints about “unilateralism” acquire a new accent.
No one, not even an upstanding oil company, could be expected to toss away manna from heaven (or from the bowels of the planet, as the case may be.) But it seems to be a characteristic of corporate culture that companies are as cautious as they are avaricious. American oil companies certainly understand that a destructive war would make it more expensive to rebuild Iraq’s oil facilities. They also understand that an unstable peace would make it more problematic to pump and transport it. Lastly, oil companies are not adverse to dealing with whatever regime it happens to be easiest to deal with be it Maoist Chinese, Fascist Chileans, Fundamentalist Muslims or Saddam Hussein. That unspecified “oilmen” might have met in London to discuss hypotheticals does not prove that oil companies are pushing the present policy.
Part of the difficulty in figuring out qui bono, is figuring out how to contextualize President Bush’s thuggish pronouncements. The one group to whom Bush’s public tantrums (“I’ve had it” “The Game is Up” “Saddam is finished” etc.) will not sound shocking is that class of American lawyer that deals in what is known as “settlement negotiations”. The claims of super-human patience, the feigned exasperation, the two-hour ultimatum coupled with an angry threat -- these are all the sorts of antics that go on behind the highly polished brass on front doors of “blue chip” law firms. The half of the conversation which the public hears sounds like some kind of “settlement negotiation” is taking place.... But with whom? The difficulty in assessing Bush’s ridiculous antics is that one does not know what offers and counter-offers have been made and rejected. It is a near certainty that the conversation we hear has nothing to do with weapons inspections which is little more than a noisy side-show, employing many, urged with earnestness and signifying nothing. That leaves us in the unenviable Thomist position of “knowing God by saying what he is not.”
While the anecdotal and symptomatic evidence points to the conclusion that the Bush Administration is resolved on war for the sake of oil, that same evidence also points to the bizarre fact that the Administration is at something of a loss as to what to do with the oil once it gets it. Complicating matters is the curious backward way the Administration as well as the Press speak about things.
In mid December 2002, about the same time oilmen and lawyers were meeting behind the closed doors of the Royal Institute, the U.S. State Department issued a communique stating that, the first session of the “Future of Iraq project working group on Oil and Energy” would convene on December 20-21, 2002 in Washington, DC. At this session, the State Department’s Bureau of Near Eastern Affairs would be hosting approximately 15 “Free Iraqis” for discussions regarding the current state of Iraq’s oil and energy sectors, scenarios for the restoration and modernization of Iraq's oil fields and other essential energy infrastructure; and management of the energy sector to meet the needs of the Iraqi people in the post-Saddam era. The meeting would be closed to the press.
A month later, at the beginning of January, the Houston Chronicle circulated a New York Times article on the Administration’s plans for the occupation of Iraq which, it said, “would amount to the most ambitious American effort to administer a country since the occupations of Japan and Germany at the end of World War II.” Although many elements of the plans were classified or still being debated, the occupation had two objectives: "preserve Iraq as a unitary state, with its territorial integrity intact," and "prevent unhelpful outside interference, military or nonmilitary.”
Buried in the middle of the long report, dealing with a pot-pourri of military and social issues, the article noted: "There is no more delicate question for the administration than how to deal with Iraq's oil reserves ... and how to raise money from oil sales for rebuilding without prompting charges that control of oil, not disarming Iraq, is Bush's true aim.”
One would think that the primary “story” was whether one should make war for oil not how the administration has to deal with a “delicate” appearance Nevertheless, in this oblique and almost buried way, the article went on to disclose that “Administration officials have been careful always to talk about Iraqi oil as the property of the Iraqi people.” At the same time, the White House was haunted by the nightmare that Saddam Hussein might deprive them of the desired prize, by destroying the fields. Administration officials were quoted as saying, “It's a big source of concern, and we are trying to take account of it as we plan how to use our military forces.”
Indeed. Speaking on 29 December, Secretary of State Collin L. Powell stated, "If coalition forces go into those oil fields, we would want to protect those fields and make sure that they are used to benefit the people of Iraq, and are not destroyed or damaged by a failing regime on the way out the door."
Once again, as almost every day, one has to pause to make sense out of the Administration’s extremely bizarre way of speaking. “If coalition [i.e. predominantly American] forces go into the oil fields” would they want to blow them up? Hardly. But if one “would want to protect those fields” going into them would not be a matter of possibly happening to be there (“if”). Why does Powell speak as if American forces might stumble into custody of oil fields and then have to do their fair and honest best to be good custodians? He speaks that way in order to avoid speaking truthfully, that the “true aim” of the Administration is to make a bee-line to those oil fields and seize possession of them. Hussein, apparently understood it that way, because in January the Iraqi government stated publicly it had plans to blow the fields up. Of course it was “a big source of concern.”
Once it is seen that the administration (and its echoes in the press) speak backwards, it is understood that seizing the oil fields is not the result of happening to have occupied Iraq, which is the result of going to war; rather, seizing the oil fields is the reason for occupying Iraq which is why the U.S. would go to war. Nevertheless, still talking as if control of oil is one of those collateral “effects” of war which would have to be managed somehow, as best one could, the Houston Chronicle/New York Times article continued “it is unclear how the administration plans to finesse the question of Iraq's role in the OPEC countries and who would represent occupied Iraq at the organization's meetings. [¶] The administration is already anticipating that neighboring Arab nations may accuse occupied Iraq of pumping oil beyond OPEC quotas. One official said Washington "fully expects" that the United States will be suspected of undermining the oil organization, and it is working on strategies, which he would not describe, to allay those fears.
One reason the official might not have described these strategies is that the administration is again deadlocked by a split that has plagued it since it took office. According to a 22 December 2002 story by the Los Angeles Times,the administration’s hawks want the United States to militarily seize, possess and control the oil fields whereas its doves “believe that it should be up to the Iraqis to decide how to rebuild their battered industry -- and which foreign oil companies will get to take part.”
It will hardly come as a surprise that the “hawks” are led by Deputy Secretary of Defense, Paul Wolfowitz, along with Richard Perle, among the chief protagonists of unilateral pro-consularity of American foreign policy. A report prepared by the Center for Strategic and Budgetary Assessments, in December 2002, and delivered to Wolfowitz’s office, concluded that “the cost of the occupation, the cost for the military administration and providing for a provisional [civilian] administration, all of that would come out of Iraqi oil.” Another source told the press that a number of officials in Cheney’s officer were also urging that Iraq's oil funds be used to defray the cost of occupation. Yet another unnamed source stated that many senior administration officials were of the view that "It [the oil] is going to fund the U.S. military presence there. .... They will charge the Iraqis for the U.S. cost of operating in Iraq. I don't think they're planning as far as I know to use Iraqi oil to pay for the invasion, but they are going to use it to pay for the occupation."
Nor will it surprise that the doves are headed by Collin Powell who reflects the views of the Council on Foreign Relations and Rice University's Baker Institute which, the Los Angeles Times states, “is believed to represent the thinking of many U.S. officials.” One of said “officials” is Baker Institute energy analyst Amy Myers Jaffe, who told the Times that "A lot of us have confidence in people who were professionals in the Iraqi oil industry and left the country, and in people who are still there." In other words, these so-called “U.S. officials” are really the oil-company folks who want to be left alone to their own free-market devices dealing with “capable” neo-liberal Iraqi “counterparts”.
Also arrayed against the hawks are bureaucrats in the National Security Council, Justice Department and Federal Reserve banking system. Mike Anton, a National Security Council spokesman denied the existence of any plan to use oil funds to pay for occupation stating that the oil revenues would be used “not so much to fund the operation and maintaining American forces but for humanitarian aid, refugees, possibly for infrastructure rebuilding, that kind of thing.”
Justice Department lawyers are unsure whether any of the oil funds could legally be used to defray occupation costs or whether, on the contrary, they had to be held in trust for the people of Iraq. Laurence Meyer, a former Federal Reserve Board governor, who chaired a Center for Strategic and International Studies conference in November on the economic consequences of a war with Iraq, said that conference participants deliberately avoided the question of whether Iraq should help pay occupation or other costs. "It's a very politically sensitive issue," he said. Meyer did say however, that those officials who believed Iraq's oil could defer some of the occupation costs may be "too optimistic about how much you could increase [oil production] and how long it would take to reinvest in the infrastructure and reinvest in additional oil."
Indeed, a CFR-Baker report estimated that even if Iraq emerged from war with no additional damage to its oil infrastructure, its annual oil revenues probably wouldn't exceed $12 billion a year whereas the Congressional Budget Office estimates that the cost of an occupation would range from $12 billion to $48 billion a year, lasting for one and half years or more. In other words while the bureaucratic infighting continues, Bush continues to speak publicly of administering Iraqi oil “in trust” for the Iraqi people.
It is astonishing to think that at this late date the increasingly belligerent pronouncements of the administration doves might in fact mask a continuing split over what to do with the oil once it is seized -- in other words, what the objective of an invasion is in the first place. And yet it the public symptoms bespeak an internal confusion. It will be remembered that, last Summer and Fall, along with Jim Baker and other former Bush I advisors, Brent Scowfcroft took the unusual step of publicly criticizing Bush Jr.’s reckless unilateralism. In August 2002, Scowcroft weighed in against the war whoops of the Rumsfeld-Kristol- Wolfowitz-Perle crowd arguing that a unilateralist attack would “turn the whole region into a cauldron” and that, with nothing left to lose, Saddam might unleash his weapons of mass destruction and attack Israel. Since this latter option was somewhat far fetched, Scowcroft might have meant to say that Saddam that a unilateral attack might result in Hussein blowing up his own fields. Whatever the case, Scowcroft was adamant that the Administration’s policy should be built on a multilateral focus on terrorism ...not a unilateral war with Iraq
The Administration heeded at least half the advice and, as a result, it administration deviated back to the Security Council chamber where it labored to achieve Resolution 1441. In a joint interview this Friday (2/14), with former Secretary of State Madeleine Albright, on Public Television, Scowcroft was asked whether, in view of the unprecedented applause which greeted the French Foreign Minister’s remarks to the Council, he was “receiving any heat from within the administration”. What was interesting was not Scowcroft reply (he refused any)but rather the little squeak-like “Ha!” that involuntarily emitted from Albright.
©WCG, 2003
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