The West's battle for oil

by Neil Mackay

“Strategic energy policy challenges for the 21st century” describes how America is facing the biggest energy crisis in its history. It targets Saddam as a threat to American interests because of his control of Iraqi oilfields and recommends the use of “military intervention” as a means to fix the US energy crisis.
The report is linked to a veritable who's who of US hawks, oilmen and corporate bigwigs. It was commissioned by James Baker, the former US Secretary of State under George Bush Sr, and submitted to Vice-President Dick Cheney in April 2001 -- a full five months before September 11. Yet it advocates a policy of using military force against an enemy such as Iraq to secure US access to, and control of, Middle Eastern oil fields.

One of the most telling passages in the document reads: “Iraq remains a destabilising influence to... the flow of oil to international markets from the Middle East. Saddam Hussein has also demonstrated a willingness to threaten to use the oil weapon and to use his own export programme to manipulate oil markets. This would display his personal power, enhance his image as a pan-Arab leader... and pressure others for a lifting of economic sanctions against his regime. The United States should conduct an immediate policy review toward Iraq including military, energy, economic and political/diplomatic assessments.”
“The United States should then develop an integrated strategy with key allies in Europe and Asia, and with key countries in the Middle East, to restate goals with respect to Iraqi policy and to restore a cohesive coalition of key allies.”

At the moment, UN sanctions allow Iraq to export some oil. Indeed, the US imports almost a million bpd of Iraqi oil, even though American firms are forbidden from direct involvement with the regime's oil industry. In 1999, Iraq was exporting around 2.5 mm bpd across the world.
The US document recommends using UN weapons inspectors as a means of controlling Iraqi oil. On one hand, “military intervention” is supported; but the report also backs “de-fanging” Saddam through weapons inspectors and then moving in to take control of Iraqi oil.
“Once an arms-control program is in place, the US could consider reducing restrictions [sanctions] on oil investment inside Iraq,” it reads. The reason for this is that “Iraqi [oil] reserves represent a major asset that can quickly add capacity to world oil markets and inject a more competitive tenor to oil trade”.

This, however, may not be as effective as simply taking out Saddam. The report admits that an arms-control policy will be “quite costly” as it will “encourage Saddam Hussein to boast of his 'victory' against the United States, fuel his ambition and potentially strengthen his regime”.
It adds: “Once so encouraged, and if his access to oil revenues was to be increased by adjustments in oil sanctions, Saddam Hussein could be a greater security threat to US allies in the region if weapons of mass destruction, sanctions, weapons regimes and the coalition against him are not strengthened.” The document also points out that “the United States remains a prisoner of its energy dilemma”, and that one of the “consequences” of this is a “need for military intervention”.

At the heart of the decision to target Iraq over oil lies dire mismanagement of the US energy policy over decades by consecutive administrations. The report refers to the huge power cuts that have affected California in recent years and warns of “more Californias” ahead.
It says the “central dilemma” for the US administration is that “the American people continue to demand plentiful and cheap energy without sacrifice or inconvenience”. With the “energy sector in critical condition, a crisis could erupt at any time [which] could have potentially enormous impact on the US... and would affect US national security and foreign policy in dramatic ways.”
The main cause of a crisis, according to the document's authors, is “Middle East tension”, which means the “chances are greater than at any point in the last two decades of an oil supply disruption”. The report says the US will never be “energy independent” and is becoming too reliant on foreign powers supplying it with oil and gas. The response is to put oil at the heart of the administration – “a reassessment of the role of energy in American foreign policy”.

The US energy crisis is intensified by growing anti-American feeling in the oil-rich Gulf states. “Gulf allies are finding their domestic and foreign policy interests increasingly at odds with US strategic considerations, especially as Arab-Israeli tensions flare,” says the report. “They have become less inclined to lower oil prices... A trend towards anti-Americanism could affect regional leaders' ability to co-operate with the US in the energy area. The resulting tight markets have increased US vulnerability to disruption and provided adversaries undue political influence over the price of oil.”
Iraq is described as the world's “key swing producer... turning its taps on andoff when it has felt such action was in its strategic interest”. The report also says there is a “possibility that Saddam may remove Iraqi oil from the market for an extended period of time”, creating a volatile market.

While the report alone seems to build a compelling case that oil is one of the central issues fuelling the war against Iraq, there are also other, circumstantial pieces of the jigsaw that show disturbing connections between “black gold” and the Bush administration's desire to wage war on Saddam.
In 1998 the oil equipment company Halliburton, of which Dick Cheney was CEO, sold parts to Iraq so Saddam could repair an infrastructure that had been terribly damaged during the 1991 Gulf war. Cheney's firm did £ 15 mm of business with Saddam -- a man Cheney now calls a “murderous dictator”. Halliburton is one of the firms thought by analysts to be in line to make a killing in any clean-up operation after another US-led war on Iraq.

All five permanent members of the UN Security Council -- the UK, France, China, Russia and the US -- have international oil companies that would benefit from huge windfalls in the event of regime change in Baghdad. The best chance for US firms to make billions would come if Bush installed a pro-US Iraqi opposition member as the head of a new government.
Representatives of foreign oil firms have already met with leaders of the Iraqi opposition. Ahmed Chalabi, the London-based leader of the Iraqi National Congress, said: “American companies will have a big shot at Iraqi oil.”