Israel stands to benefit greatly from US conquest of Iraq

Ed Blanche investigates the prospects of new oil deals between Iraq and Israel. Israel stands to benefit greatly from the US conquest of Iraq, primarily by getting rid of an implacable foe in Saddam Hussein. But it seems the Israelis have other things in mind that give added weight to concerns in the Middle East that, with Saddam disposed of, the Americans are determined to reshape the region they way they want it.
An intriguing pointer to one potentially significant benefit for Israel emerged in March, even before the US-led invasion of Iraq. It was reported that National Infrastructure Minister Joseph Paritzky was seriously considering the possibility of reopening the long-defunct oil pipeline from Mosul to the Mediterranean port of Haifa in northern Israel. With Israel lacking energy resources of its own and currently totally dependent on highly expensive oil from Russia, reopening the pipeline would transform its economy at a stroke.

The pipeline has been inoperative since 1948, when theflow of oil from Iraq's northern oilfields was redirected from Haifa to Syria when the British mandate in Palestine expired. According to Walid Khadduri, editor-in-chief of the respected Middle East Economic Survey (MEES) based in Cyprus, the old pipeline no longer exists.
"There's not a meter of it left," he told The Middle East. "It was cannibalised over the years and there are even built-up areas now where the pipeline used to run. So any pipeline would have to be built from scratch."

To resume supplies from Mosul to the refinery at Haifa would require the approval of whatever Iraqi government emerges following the downfall of Saddam's regime and presumably also of the Jordanian government, through whose territory it would likely run as the old one did. Israeli officials say that talks have been held with Amman on this and they are "optimistic." The Jordanians say there have been no discussions, but given the anti-US hostility sweeping the Arab world that is something they would have difficulty admitting to.
However, Amman, which depended for Iraq for heavily discounted oil with UN agreement, had been negotiating with Baghdad before the war to build a pipeline from the Kirkuk oilfields to the kingdom rather than trucking the fuel, so presumably any deal involving the Israelis as well could simply mean extending that project to Haifa.

Paritzky said that he was certain the Americans would respond favourably to the idea of resurrecting the pipeline. Indeed, according to western diplomatic sources in the region, the Bush administration has discussed this with Iraqi groups who opposed Saddam, including the Iraqi National Congress (INC). Led by Ahmad Chalabi, the INC -- the largest exile organisation -- expects to play a major role in any new Iraqi government.
Chalabi, who ironically has been wanted in Jordan for bank fraud for the last three decades, has discussed Iraq's future relations with Israel with the Americans, including efforts to secure recognition of Israel by the new government in Baghdad. It is understood from diplomatic sources that the Bush administration has insisted it would not support the lifting of UN sanctions on Iraq unless Baghdad agrees to supply Israel with oil.

James Akins, a former US ambassador to Saudi Arabia and one of the leading US Arabists, has said: "There would be a fee for transit rights through Jordan, just as there would be fees for Israel from those using what would be the Haifa terminal. After all, this is a new world order now. This is what things look like particularly if we wipe out Syria. It just goes to show that this is all about oil, for the United States and its ally."
Strategically, reopening the pipeline would free Israel from having to depend for its oil on distant suppliers and would give it a large measure of energy security. The Jewish state has not enjoyed that since the 1979 overthrow of the monarchy in Iran, a key regional ally which supplied all Israel's oil needs via a pipeline from Eilat on the Gulf of Aqaba to the Mediterranean port of Ashkelon in southern Israel. (Israel captured Egyptian oilfields -- currently worth around $ 1 bn a year -- in Sinai in 1967, but had to relinquish them when it gave up the peninsula under its peace treaty with Egypt in 1979.)

US efforts to get Iraqi oil to Israel is not particularly surprising, since it would get the Americans off a hook they would rather not be on. Under a 1975 Memorandum of Understanding (MoU) then-US Secretary of State Henry Kissinger negotiated an agreement with Israel that guaranteed to meet all Israel's oil needs in the event of a crisis. The MoU, which has been quietly renewed every five years, also committed the US to construct and stock a supplementary strategic reserve for Israel, equivalent to some $ 3 bn in 2002 dollars. Special legislation was enacted to exempt Israel from restrictions on oil exports from the US.
Moreover, the Americans agreed to divert oil from their home market, even if that entailed domestic shortages, and guaranteed delivery of the promised oil in their own tankers if commercial shippers were unwilling or unavailable to carry the crude to Israel. All of this adds up to a potentially massive financial commitment to Israel, over and above the $ 91 bn in identifiable budgeted aid the US had provided for Israel since 1949, excluding $ 10 bn as loan guarantees it has drawn to date.

The Americans have another reason for supporting Paritzky's project: a land route for Iraqi oil direct to the Mediterranean that would lessen US dependence on Gulf oil supplies. With the renewed post-9/11 emphasis on energy security in Washington, direct access to the world's second largest oil reserves (with the possibility these can be immensely expanded through so-far untapped deposits) is an important strategic objective.
Earlier efforts by Israel to plug into Iraq's oil have all foundered. In the mid-1980s the Americans and Israelis were involved in talks to develop a pipeline from Iraq across Jordan to Aqaba, a stone's throw from Eilat. Iraq, then considered aUS ally, was at that time locked in a war with Iran in which Tehran's ally Syria had cut off the flow of Iraqi oil across its territory to the Mediterranean.
Among the participants was one Donald Rumsfeld, then an adviser to Ronald Reagan, and the American Bechtel Corporation headed by future secretary of state James Baker III. Bechtel is expected to secure major reconstruction projects in the new Iraq.

Behind the scenes, the Americans are seriously pushing Iraqi recognition of Israel and the pipeline with the INC. But Washington's game plan could well be stymied by Iraq's Shiite majority, which seeks to dominate the new government and which is increasingly hostile to the US and its Iraqi surrogates like the INC, including Chalabi, even though he's a Shiite himself. Tehran's reported clandestine efforts to encourage leading Shiite clerics to dominate the new Iraq are likely to further spoil US efforts to promote Israel's interests.
Chalabi, who returned to Iraq in April after four decades in exile,is understood to have discussed recognition of Israel if he and the INC secure power. He has forged strong ties with the White House and the Pentagon in recent years. But there are many in the State Department and the Central Intelligence Agency who do not believe his largely exile organisation has enough popular support inside Iraq.

Chalabi has also built a strong following in the American Jewish community. "There's no track record of anyone else in Iraqi leadership having a relationship with the Jewish community," according to Tom Neumann, executive director of the Jewish Institute for National Security Affairs.
"Because Saddam was so anti-Israel, the hope is that all of Saddam's policies will be revisited, including his relationship with Israel and the United States," Neumann said. "There's no reason for the Iraqi people to have a problem with Israel."