Iraq Policy Floating on a Sea of Oil  

Our oil war in Iraq is one of my favourite (albeit unpleasant) topics to grumble about - there has been plenty of commentary on the subject this week, so here we go once again.

I'll start with Michael Schwartz, writing for Tom Dispatch about "Why Did We Invade Iraq Anyway ?". I wonder. From Tom Engelhardt's introduction:

History… phooey!

Or, more mildly, Americans traditionally aren't much interested in it and the media largely don't have time for it either. For one thing, the past is often just so inconvenient. On Monday, for instance, there was a front-page piece in the New York Times by Elisabeth Bumiller on Robert Blackwill, one of the "Vulcans" who helped Condoleezza Rice advise George W. Bush on foreign policy during the 2000 election campaign, Iraq Director on the National Security Council during the reign in Baghdad of our viceroy L. Paul Bremer III, and the President's personal envoy to the faltering occupation (nicknamed "The Shadow"), among many other things.

He is now -- here's a giant shock -- a lobbyist. And, among those he's lobbying for (in this case to the tune of $300,000) is Ayad Allawi, former CIA asset and head -- back in Saddam's day -- of an exile group, the Iraq National Accord. Bumiller identifies Allawi as "the first prime minister of the newly sovereign nation -- America's man in Baghdad." She also refers to him as having had "close ties to the CIA" and points out that he was not just Bremer's, but Blackwill's "choice" to be prime minister back in 2004. Now, he's Blackwill's "choice" again. Allawi is, it seems, yet once more on deck, with his own K-Street lobbyist, ready to step in as prime minister if the present PM, Nouri al-Maliki, were to fall (or be shoved aside).

But there's another rather inconvenient truth about Allawi that goes unmentioned -- and it's right off the front page of the New York Times, no less -- a piece by Joel Brinkley, "Ex-C.I.A. Aides Say Iraq Leader Helped Agency in 90's Attacks," published in early June 2004, just at the moment when Allawi had been "designated" prime minister. In the early 1990s, Brinkley reported, Allawi's exile organization was, under the CIA's direction, planting car bombs and explosive devices in Baghdad (including in a movie theater) in a fruitless attempt to destabilize Saddam Hussein's regime. Of course, that was back when car bombs weren't considered the property of brutes like Sunni extremists, al-Qaeda in Iraq, and the Taliban. (Just as, inconveniently enough, back in the 1980s the CIA bankrolled and encouraged the training of Afghan "freedom fighters" in mounting car-bomb and even camel-bomb attacks in a terror campaign against Soviet officers and soldiers in Russian-occupied Afghan cities (techniques personally "endorsed," according to Steve Coll in his superb book Ghost Wars, by then-CIA Director William Casey).

But that was back in the day -- just as, to randomly cite one more inconvenient piece of history also off the front page of the New York Times (Patrick Tyler, "Officers Say U.S. Aided Iraq in War Despite Use of Gas," August 18, 2002), years before we went into Iraq to take out Saddam's by then nonexistent weapons of mass destruction, we helped him use them. The Reagan Pentagon had a program in which 60 officers from the U.S. Defense Intelligence Agency "were secretly providing detailed information on Iranian deployments" to Saddam's forces, so that he could, among other things, wield his chemical weapons against them more effectively. ("The Pentagon 'wasn't so horrified by Iraq's use of gas,' said one veteran of the program. 'It was just another way of killing people -- whether with a bullet or phosgene, it didn't make any difference.'")

Of course, when it comes to America's oily history in Iraq, there is just about no backstory -- not on the front page of the New York Times, not basically in the mainstream. Even at this late date, with the price of crude threatening to head for the $100 a barrel mark, Iraqi oil is -- well, not exactly censored out -- just (let's face it) so darn embarrassing to write about. In fact, now that all those other explanations for invading Iraq -- WMD, freedom, you name it -- have long since flown the coop, there really is no explanation (except utter folly) for Bush's invasion. So, better to move on, and quickly at that. These last months, however, Tomdispatch has returned repeatedly to the subject as a reminder that history, even when not in sight, matters. And the deeper you go, as Michael Schwartz proves below, the more likely you are to find that gusher you're looking for.

And from the article itself (I love that Wolfowitz quote - its a great one to use on those remaining deluded morons still babbling about weapons of mass destruction and the war on terror):

That these justifications for invading, or remaining, are unsatisfying is hardly surprising, given the reluctance of American politicians to mention the approximately $10-$30 trillion of oil lurking just beneath the surface of the Iraq "debate" -- and not much further beneath the surface of Iraqi soil. Obama, for example, did not mention oil at all in his speech, while Clinton mentioned it twice in passing. President Bush and his top officials and spokespeople have been just as reticent on the subject.

Why then did the U.S. invade Iraq? Why is occupying Iraq so "vital" to those "national security interests" of ours? None of this makes sense if you don't have the patience to drill a little beneath the surface – and into the past; if you don't take into account that, as former Deputy Secretary of Defense Paul Wolfowitz once put it, Iraq "floats on a sea of oil"; and if you don't consider the decades-long U.S. campaign to control, in some fashion, Middle East energy reservoirs. If not, then you can't understand the incredible tenaciousness with which George W. Bush and his top officials have pursued their Iraqi dreams or why -- now that those dreams are clearly so many nightmares -- even the Democrats can't give up the ghost.

The Rise of OPEC

The United States viewed Middle Eastern oil as a precious prize long before the Iraq war. During World War II, that interest had already sprung to life: When British officials declared Middle Eastern oil "a vital prize for any power interested in world influence or domination," American officials agreed, calling it "a stupendous source of strategic power and one of the greatest material prizes in world history."

This led to a scramble for access during which the United States established itself as the preeminent power of the future. Crucially, President Franklin Delano Roosevelt successfully negotiated an "oil for protection" agreement with King Abdul Aziz Ibn Saud of Saudi Arabia. That was 1945. From then on, the U.S. found itself actively (if often secretly) engaged in the region. American agents were deeply involved in the overthrow of a democratically elected Iranian government in 1953 (to reverse the nationalization of Iran's oil fields), as well as in the fateful establishment of a Baathist Party dictatorship in Iraq in the early 1960s (to prevent the ascendancy of leftists who, it was feared, would align the country with the Soviet Union, putting the country's oil in hock to the Soviet bloc).

U.S. influence in the Middle East began to wane in the 1970s, when the Organization of the Petroleum Exporting Countries (OPEC) was first formed to coordinate the production and pricing of oil on a worldwide basis. OPEC's power was consolidated as various countries created their own oil companies, nationalized their oil holdings, and wrested decision-making away from the "Seven Sisters," the Western oil giants -- among them Shell, Texaco, and Standard Oil of New Jersey -- that had previously dominated exploration, extraction, and sales of black gold.

With all the key oil exporters on board, OPEC began deciding just how much oil would be extracted and sold onto international markets. Once the group established that all members would follow collective decisions -- because even a single major dissenter might fatally undermine the ability to turn the energy "spigot" on or off -- it could use the threat of production restrictions, or the promise of expansion, to bargain with its most powerful trading partners. In effect, a new power bloc had emerged on the international scene that could -- in some circumstances -- exact tangible concessions even from the United States and the Soviet Union, the two superpowers of the time.

Though the United States was largely self-sufficient in oil when OPEC was first formed, the American economy was still dependent on trading partners, particularly Japan and Europe, which themselves were dependent on Middle Eastern oil. The oil crises of the early 1970s, including the sometimes endless gas lines in the U.S., demonstrated OPEC's potential.

It was in this context that the American alliance with the Saudi royal family first became so crucial. With the largest petroleum reserves on the planet and the largest production capacity among OPEC members, Saudi Arabia was usually able to shape the cartel's policies to conform to its wishes. In response to this simple but essential fact, successive American presidents strengthened the Rooseveltian alliance, deepening economic and military relationships between the two countries. The Saudis, in turn, could normally be depended upon to use their leverage within OPEC to fit the group's actions into the broader aims of U.S. policy. In other words, Washington gained favorable OPEC policies mainly by arming, and propping up a Saudi regime that was chronically fragile. ...

The second Bush administration ascended to the presidency just as American influence in the Middle East looked to be on the decline. Despite victory in the first Gulf War and the fall of the Soviet Union, American influence over OPEC and oil policies seemed under threat. That sucking sound everyone suddenly heard was a tremendous increase in the global demand for oil. With fears rising that, in the very near future, such demand could put a strain on OPEC's resources, member states began negotiating ever more vigorously for a range of concessions and expanded political power in exchange for expanded energy production. By this time, of course, the United States had joined the ranks of the energy deficient and dependent, as imported oil surged past the 50% mark.

In the meantime, key ally Saudi Arabia was further weakened by the rise of al-Qaeda, which took as its main goal the overthrow of the royal family, and its key target -- think of those unintended consequences -- the American troops triumphantly stationed at permanent bases in the country after Gulf War I. They seemed to confirm the accusations of Osama bin Laden and other Saudi dissidents that the royal family had indeed become little but a tool of American imperialism. This, in turn, made the Saudi royals increasingly reluctant hosts for those troops and ever more hesitant supporters of pro-American policies within OPEC.

The situation was complicated further by what was obvious to any observer: The potential future leverage that both Iraq and Iran might wield in OPEC. With the second and third largest oil reserves on the planet -- Iran also had the second largest reserves of natural gas -- their influence seemed bound to rise. Iraq's, in particular, would be amplified substantially as soon as Saddam Hussein's regime was freed from severe limitations imposed by post-war UN sanctions, which prevented it from either developing new oil fields or upgrading its deteriorating energy infrastructure. Though the leaders of the two countries were enemies, having fought a bitter war in the 1980s, they could agree, at least, on energy policies aimed at thwarting American desires or demands -- a position only strengthened in 1998 when the citizens of Venezuela, the most important OPEC member outside the Middle East, elected the decidedly anti-American Hugo Chavez as president. In other words, in January 2001, the new administration in Washington could look forward to negotiating oil policy not only with a reluctant Saudi royal family, but also a coterie of hostile powers in a strengthened OPEC.

It is hardly surprising, then, that the new administration, bent on unipolarity anyway and dreaming of a global Pax Americana, wasted no time implementing the aggressive policies advocated in the PNAC manifesto. According to then Secretary of the Treasury Paul O'Neill in his memoir The Price of Loyalty, Iraq was much on the mind of Defense Secretary Donald Rumsfeld at the first meeting of the National Security Council on January 30, 2001, seven months before the 9/11 attacks. At that meeting, Rumsfeld argued that the Clinton administration's Middle Eastern focus on Israel-Palestine should be unceremoniously dumped. "[W]hat we really want to think about," he reportedly said, "is going after Saddam." Regime change in Iraq, he argued, would allow the U.S. to enhance the situation of the pro-American Kurds, redirect Iraq toward a market economy, and guarantee a favorable oil policy.

The adjudication of Rumsfeld's recommendation was shuffled off to the mysterious National Energy Policy Development Group that Vice President Cheney convened as soon as Bush took occupancy of the Oval Office. This task force quickly decided that enhanced American influence over the production and sale of Middle East oil should be "a primary focus of U.S. international energy policy," relegating both the development of alternative energy sources and domestic energy conservation measures to secondary, or even tertiary, status. A central goal of the administration's Middle East focus would be to convince, or coerce, states in that region "to open up areas of their energy sectors to foreign investment"; that is, to replace government control of the oil spigot -- the linchpin of OPEC power -- with decision-making by multinational oil companies headquartered in the West and responsive to U.S. policy needs. If such a program could be extended even to a substantial minority of Middle Eastern oil fields, it would prevent coordinated decision-making and constrain, if not break, the power of OPEC. This was a theoretically enticing way to staunch the loss of American power in the region and truly turn the Bush years into a new unipolar moment in the Middle East.

Having determined its goals, the Task Force began laying out a more detailed strategy. According to Jane Mayer of the New Yorker, the most significant innovation was to be a close collaboration between Cheney's energy crew and the National Security Council (NSC). The NSC evidently agreed "to cooperate fully with the Energy Task Force as it considered the 'melding' of two seemingly unrelated areas of policy: 'the review of operational policies towards rogue states,' such as Iraq, and 'actions regarding the capture of new and existing oil and gas fields.'"

Though all these deliberations were secret, enough of what was going on has emerged in these last years to demonstrate that the "melding" process was successful. By March of 2001, according to O'Neill, who was a member of both the NSC and the task force:

"Actual plans.... were already being discussed to take over Iraq and occupy it -- complete with disposition of oil fields, peacekeeping forces, and war crimes tribunals -- carrying forward an unspoken doctrine of preemptive war."

O'Neill also reported that, by the time of the 9/11 attacks on the World Trade Center and the Pentagon, the plan for conquering Iraq had been developed and that Secretary of Defense Rumsfeld indeed urged just such an attack at the first National Security Council meeting convened to discuss how the U.S. should react to the disaster. After several days of discussion, an attack on Iraq was postponed until after al-Qaeda had been wiped out and the Taliban driven from power in Afghanistan. It took only until January 2002 -- three months of largely successful fighting in Afghanistan -- before the "administration focus was returning to Iraq." It wasn't until November 2002, though, that O'Neill heard the President himself endorse the invasion plans, which took place the following March 20th. ...

Revealingly enough, Greenspan saw the invasion of Iraq as a generically conservative action -- a return, if anything, to the status quo ante that would preserve unencumbered American access to sufficient Middle Eastern oil. With whole new energy-devouring economies coming on line in Asia, continued American access seemed to require stripping key Middle Eastern nations of the economic and political power that scarcity had already begun to confer. In other words, Greenspan's conservative urge implied exactly the revolutionary changes in the political and economic equation that the Bush administration would begin to test out so disastrously in Iraq in March 2003. It's also worth remembering that Iraq was only considered a first pit stop, an easy mark for invasion and occupation. PNAC-nurtured eyes were already turning to Iran by then as indicated by the classic prewar neocon quip, "Everyone wants to go to Baghdad. Real men want to go to Tehran."

And beyond this set of radical changes in the Middle East lay another set for the rest of the world. In the twenty-first century, expanding energy demand will, sooner or later (probably sooner), outdistance production. The goal of unfettered American access to sufficient Middle Eastern oil would, if achieved and sustained, deprive other countries of sufficient oil, or require them to satisfy U.S. demands in order to access it. In other words, Greenspan's conservative effort to preserve American access implied a dramatic increase in American leverage over all countries that depended on oil for their economic welfare; that is, a radical transformation of the global balance of power.

Notice that these ambitions, and the actions taken to implement them, rested on a vision of an imperial America that should, could, and would play a uniquely dominant, problem-solving role in world affairs. All other countries would, of course, continue to be "vulnerable to economic crises" over which they would have "little control." Only the United States had the essential right to threaten, or simply apply, overwhelming military power to the "problem" of energy; only it had the right to subdue any country that attempted to create -- or exploit -- an energy crisis, or that simply had the potential and animus to do so. ...

As worldwide demand for hydrocarbons soared, the United States was left with three policy choices: It could try to combine alternative energy sources with rigorous conservation to reduce or eliminate a significant portion of energy imports; it could accept the leverage conferred on OPEC by the energy crunch and attempt to negotiate for an adequate share of what might soon enough become an inadequate supply; or it could use its military power in an effort to coerce Middle East suppliers into satisfying American requirements at the expense of everyone else. Beginning with Jimmy Carter, five U.S. presidents chose the coercive strategy, with George W. Bush finally deciding that violent, preemptive regime change was needed to make it work. The other options remain unexplored.

Now wouldn't the first option be a lot better (and cheaper) ?

Gilles d'Aymery also has a few words about Iraq and oil in his latest column at Swans.

SO, HOW MUCH IS THE IRAQ WAR about the four freedoms and how much is it about oil? Former Federal Reserve Chairman Alan Greenspan wrote in his recently published memoir that, "the Iraq War is largely about oil." General John Abizaid (ret.) -- a Visiting Fellow at the Hoover Institution, and former CENTCOM big brass in Iraq -- said in a round table, "Courting Disaster: The Fight for Oil, Water and a Healthy Planet," at the Freeman Spogli Institute, Stanford University, on October 13, 2007, "Of course it's about oil, we can't really deny that." Jim Holt, a regular contributor to The New York Times Magazine and The New Yorker, submits a coherent explanation in "It's the Oil" (London Review of Books, October 18, 2007). Writes Holt:

Iraq has 115 billion barrels of known oil reserves. That is more than five times the total in the United States. And, because of its long isolation, it is the least explored of the world's oil-rich nations. A mere two thousand wells have been drilled across the entire country; in Texas alone there are a million. It has been estimated, by the Council on Foreign Relations, that Iraq may have a further 220 billion barrels of undiscovered oil; another study puts the figure at 300 billion. If these estimates are anywhere close to the mark, US forces are now sitting on one quarter of the world's oil resources. The value of Iraqi oil, largely light crude with low production costs, would be of the order of $30 trillion at today's prices. For purposes of comparison, the projected total cost of the US invasion/occupation is around $1 trillion.

THIS IS THE STRATEGIC PRIZE that has been heralded by Dick Cheney. Holt, who I suppose could not have had his piece published in the American media, asserts that from the perspective of this formidable wealth to be conquered, "The costs -- a few billion dollars a month plus a few dozen American fatalities (a figure which will probably diminish, and which is in any case comparable to the number of US motorcyclists killed because of repealed helmet laws) -- are negligible compared to $30 trillion in oil wealth, assured American geopolitical supremacy and cheap gas for voters. In terms of realpolitik, the invasion of Iraq is not a fiasco; it is a resounding success."

"NEGLIGIBLE COSTS" COMPARED to the potential wealth the war will create. Americans are known, and often envied, for their pragmatic optimism and for their ways to devise solutions based on careful cost analysis. The war has already been a "resounding success" for the military-industrial-congressional complex whose profits and stocks have soared in the past six years (e.g., GE's shares have more than doubled; Halliburton went from $5 to $40; Top executives are paid in the tens of millions -- our taxes at work, folks). Profits remain the central nervous system of the American experiment, and for the few who indeed profit immensely from the policies they put in place and fully control in total disregard of the well-being of the vast majority, the second Gilded Age has finally dawned upon them. Ben Stein, who writes the "Everybody's Business" column in the business section of The New York Times most Sundays, lamented recently that "socially responsible investors shun companies that do military contracting." (NYT, September 30, 2007: "Is It Responsible to Shun Military Contractors?"). Says Stein: "We are currently in a war that is about creating a better, more dignified planet and we are fighting enemies who openly say they want to kill everyone who is not their slavish follower." Apparently, Stein has been drinking the Kool-Aid that is so prevalent and liberally dispensed in the corridors of power. He goes on to flatly contradict the assessment of Alan Greenspan and John Abizaid. It's not about oil. We only import 20 percent of our needs from the Middle East. We should be thankful for the great prosperity oil has brought us thanks to the oil companies. His column stirred me enough to trigger a letter of mine:

Dear Mr. Stein,

I am an avid reader of your regular column in the business section of the Sunday NYT. I find them often pertinent and quite instructive. They seem to come from a conservative background, but one that has never forgotten its human soul, sense of fairness, and compassion.

In your last column, "Is it Responsible to Shun Military Contractors?" (NYT, 09/30/2007), you asked whether someone could explain why socially responsible investors refrain from investing in military contractors, and you went on to brush aside one portent reason behind the current conflict(s) in the Middle East -- namely oil -- by positing that only about 20% of the oil we import comes from that region. The vast majority of our imports, you asserted, is delivered to our shores thanks to the diligent work of the oil companies, without the intervention of the US military.

I've worked for many years in the oil industry (France -- my country of origin -- Bermuda, and the U.S.) and see no reason to bash it, except for the obscene compensation of its executives (but this latter point is not limited to that industry). Indeed, as you stated, "The staggering prosperity of this country, of the whole developed world, floats on oil."

However, I respectfully submit to you that your facts are slightly twisted and your premises incorrect. You ignore the "staggering" amount of waste associated with our material prosperity. You appear to disregard the projections of the DOE that show how much more dependent our economy will become on Mideastern hydrocarbon resources (oil and natural gas) in the next two or three decades -- the "strategic prize," according to Mr. Cheney. Furthermore, you appear to miss the significance of this mere 20% and its substantial growth in the future (again, please refer to the DOE's projections). Imagine that amount diverted to Japan, India, and China and you will quickly measure the negative consequences on our economy. Finally, you do not even broach the currency issue. What happens to the value of the dollar if Mideastern producers switch to the Euro or the Yen, as Saddam Hussein was planning, and Iran is implementing, is another reason for our military intervention in that region. Black gold and greenbacks!

Which brings me to your premise regarding the quagmire we have willfully created: We are not at war with people who want to destroy us and kill us all. That's an ideological battle that cannot be solved through military means. A few thousands crazies (if they are) won't defeat the West. Like all crazies (if they are) they will dissolve in times. Waging war on flimsy and mostly fabricated evidence can only bring more despair and devastation. Your analogy with WWII, which mirrors the rhetoric advanced by the media and government officials, confuses the actualities that rational and reasonable people must face. There was no Mesopotamian Hitler and there is no Iranian Hitler. Remember FDR's saying about fear?

Socially responsible investors refuse to support the purveyors of the industrial-military-congressional complex because we have long reached the conclusion that war was not the answer to the many challenges humanity confronts. You sold your tobacco shares long ago, and you note that they have done very well ever since. I never invested in them, as I have not invested in the shares of military contractors, which have done extremely well too in the past six years.

And I am a smoker!

Yours sincerely,

NOW, I CAN UNDERSTAND the profit motive and the alluring $30 trillion prize, but that someone of Ben Stein's caliber can posit that the Iraq War is about a "better, more dignified planet" truly boggles the mind. Perhaps Stein should go and read Bill Safire's "On Language" column in the NYT Magazine of October 7, 2007, to grasp the meaning of a "willing suspension of disbelief." What kind of a dignified planet has Mr. Stein in mind? One that has seen one million Iraqis, half children, killed during a dozen years of ignoble economic sanctions? One that has seen over one million Iraqis killed and over 4 million internally or externally displaced since March 2003? One that cannot even feed its own poor and the wretched masses -- according to the UN Food and Agricultural Organization, over 854 million people worldwide? Or is it a planet in which the dominant player cannot provide universal health care to its citizenry and whose president just vetoed a bill (S-CHIP) that would have insured an additional 5 out of 9 million uninsured American kids -- for whom insurance means a trip to the Emergency Room, in the thinking of the Decider?

There is a small rash of posts amongst the centre left - Atrios, Matt Yglesias, John Quiggin, Joseph Romm - wondering what the fuss about peak oil is. Don't hybrids solve the problem, they ask ? While I'm far from doomerish in my assessment of the peak oil challenge, I think these guys are oversimplfying things (which is a typical reaction when confronted with Kunstler's outlandish predictions).

There are 3 intertwining effects (4 if you consider global warming) :

1. Oil and gas production will decrease basically continuously over a long period of time
2. A large percentage of the world's population is getting richer as it industrialises
3. The world's population will increase by around 50% over the next 40 years

These mean that per capita oil consumption rates in the West will drop dramatically - we won't get the lions share of the world's oil as we become less economically dominant, and the reduced volume of oil will be shared between more and more people.

Thus a (maybe) 50% gain in fuel efficiency - assuming the entire vehicle fleet turns over and is converted into hybrids at a rapid rate (which is a pretty big assumption) - won't be enough of an adjustment. We need a huge investment in renewable energy sources, smart grids to distribute the electricity and an electric transport system (both cars and rail) to supercede the existing one that is nearing obsolesence.

I don't believe that industrial civilisation will collapse, but I don't believe everyone going out and buying a hybrid (assuming the manufacturers can scale up fast enough) will be enough to solve the problem either.

Links:

* Stirling Newberry - It's All Downhill From Here
* David Strahan - Oil reserves over-inflated by 300bn barrels – al-Huseini
* Huffington Post - No blood for no oil
* Seattle Times - Iraq's oil: the plot thickens
* Peak Energy - The Greatest Prize Of All ?
* Jerome a Paris - It's no longer 'oil', it's 'liquids'
* Jeff Vail - Geopolitical Feedback Loops in Resource and Oil Depletion
* Energy Bulletin - Peak oil news
* Energy Bulletin - Middle east news
* Alternet - U.S. Stands in the Way of International Pipeline Deal Between Iran and India
* Mainstream (India) - Russia Bolsters its Ties with Iran
* Glenn Greenwald - Hitlers, Hitlers and more Hitlers
* TOD ANZ - Australia and New Zealand news
* AP - Immunity deal hampers Blackwater inquiry
* Jeremy Scahill - State to Blackwater: Nothing You Say Can and Will Be Used Against You in a Court of Law
* The Guardian - US soldier's family brings legal action against British private security firm
* Alternet - Low Morale Has U.S. Troops in Iraq Pretending to Patrol
* The Feral Metallurgist - Election Q & A