American and the Oil Grab

This is an interesting article from the following newspaper. However the oil law mentioned in the article passed only the Iraqi cabinet. It has not been passed by parliament as yet and it is not clear when or if it will in its present form.

Editorial: America and the Iraq ‘oil grab’

Former head of the US Federal Reserve and economic guru commanding bipartisan reverence for his grasp of the national economy, Mr Alan Greenspan has put the cat among the pigeons in Washington by saying in his latest book The Age of Turbulence: Adventures in a New World that “the Iraq war was about oil”. His exact words were: “I’m saddened that it is politically inconvenient to acknowledge what everyone knows — the Iraq war is largely about oil”.

When the Administration reacted angrily, Mr Greenspan himself found it “politically inconvenient” to stick to his clear pronouncement, but his “verdict” has gone and mixed with the vortex of opinion complaining about the Bush Administration’s “oil barons” falling on Iraq for its oil. To count just the people at the top, President George W Bush himself, Vice-President Dick Cheney and Secretary of State Condoleezza Rice, have close links to the American oil industry, also called the Big Oil.

Mr Cheney, the most hawkish member of the Bush cabinet, had said in 1999: “By 2010 we will need [a further] 50 million barrels a day. The Middle East, with two-thirds of the oil and the lowest cost, is still where the prize lies”. Iraq was invaded under false pretences only to have a large US army bogged down there, after more than half a trillion dollars spent and perhaps half a million Iraqis killed. The central political knot in Iraq today is the privatisation of Iraqi oil, recommended on the basis of the abuse of oil income by Saddam Hussein. In the latest poll, the Iraqi people have rejected privatisation and have voted for state control, clearly to prevent the American Big Oil from walking away with the bonanza.

This happened as the Iraqi prime minister Nuri Al-Maliki — a favourite of President Bush despite his deep involvement in the country’s anti-Sunni militia wars — passed a law in February this year about the control of 115 billion barrels of proven reserves, third in the world after Saudi Arabia and Iran, by a Federal Oil and Gas Council boasting “a panel of oil experts from inside and outside Iraq”. Observers think the “oil experts” mentioned in the law will be predominantly US Big Oil executives!

While it is true that oil-producing Arab states have not made the best use of their oil resource — and the enabling condition in this abuse was nationalisation — what is now on the cards could be more dangerous. The new oil deal to be agreed among Iraq’s three communities will bring in the US Big Oil and help it make profits at the estimated rate of 75 percent from 65 of the 80 known oilfields. The law that seeks to redistribute this privatised oil has reportedly been drafted — behind locked doors — “by a US consulting firm hired by the Bush administration and then carefully retouched by Big Oil, the International Monetary Fund, former US Deputy Defence Secretary Paul Wolfowitz’s World Bank, and the United States Agency for International Development”.

The “oil deal” among the three communities of Iraq — the Kurds the Shiites and the Sunnis — is supposed to be equitable on the basis of the known oilfields, but each party is free to give out contracts on new strikes and keep the revenue. It is here that one begins to understand why the US has been backing the breakaway Kurdish enclave in the north of Iraq. Most of the new strikes are expected to happen in the Kurdish region. The pro-US Kurds will have “all the power to sign oil contracts with whatever companies they want”. And the contracts will be awarded on the advice of the US-dominated Federal Oil and Gas Council!

The case of “oil grab” made out by suspicious journalists against Bush and Big Oil has been greatly bolstered by the sentence in the Greenspan book. President Bush’s family has always been in the oil business, and it was greatly helped by Father Bush’s political career when it came to landing contracts among the Arab sheikhs in the Middle East. Bush Junior was not lucky in his adventures in Arab oil and the companies he joined as an executive kept going under including one Harken Energy Corporation which made a shipwreck in Bahrain in 1990. Junior Bush suddenly offloaded 60 percent of his Harken stock, but was let off by the Securities and Exchange Commission (SEC) which investigated the case. The chairman of SEC had been appointed by Father Bush! Now President George W Bush is in Iraq with troops; is the oil there for the taking? Mr Greenspan thinks it is. *