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Oil and the Empire
The oil men of the Bush administration are trying to set up one of the biggest swindles in history–the great Iraq oil robbery.
The cabinet of the new Iraqi government–under pressure from the U.S. occupiers who put them in power–approved a law that would undo Iraq’s nationalized system and give Western oil giants unparalleled access to the country’s vast reserves.
The oil companies would be guaranteed super-profits–on a scale unknown anywhere else in the Middle East–for a period of 20 to 35 years from oil pumped out of two-thirds or more of Iraq’s oilfields. Meanwhile, Iraqis would continue to endure poverty and the devastation of war while sitting atop what is estimated to be the third-largest supply of the world’s most sought-after resource.
The great Iraq oil robbery isn’t a done deal. Even if the law is finalized by May as expected, the major oil companies say they won’t have anything to do with production in Iraq until "security" is established–and that would mean a success for the occupiers and their Iraqi puppets that the U.S. hasn’t been able to achieve over the past four years since the invasion.
Still, the law underlines the importance of the scramble for oil to the U.S. empire–no matter how much George Bush and his administration deny it with claims about spreading "democracy" and making the world safe from terrorism.
The U.S. government’s thirst for oil isn’t only about profits–and still less about securing supplies of a commodity that ordinary Americans depend on–but is also about power. In a world in which the economic and military might of nations depends significantly on access to oil, more control for the U.S. means less control for its rivals.
These dual calculations–securing access for its own needs and controlling the access of others–have been central to the history of oil and the U.S. empire, from the end of the 19th century, to the start of the 21st.
* * *
During the opening months of the Bush administration in 2001, Dick Cheney chaired a task force to set a new course for U.S. energy policy.
Cheney and the White House invited a showdown with Congress by refusing to respond to even routine requests for information about the task force–like who served on it, and what their recommendations were.
Most people assumed this meant the task force was made up of energy industry executives, and their "deliberations" were organized around plotting new ways to line their pockets. This turned out to be completely accurate–and certainly not unexpected, given the makeup of the new administration.
"It isn’t so much under the sway of Big Oil as it is, well, infested top to bottom with oil operatives, starting with the president and vice president," left-wing journalist Jeffrey St. Clair wrote on the CounterPunch Web Site.
"Eight cabinet members and the National Security Advisor came directly from executive jobs in the oil industry, as did 32 other Bush-appointed officials in the Office of Management and Budget, Pentagon, State Department and the departments of Energy, Agriculture and–most crucially in terms of opening up what remains of the American wilderness to the drillers–Interior."
But Cheney and the task force had more on their minds than further deregulation or drilling in the Artic National Wildlife Refuge.
They were also laying out the strategic aims of the "war on terror" to come.
It wasn’t called the "war on terror" yet. The September 11 attacks would take place half a year later, but ultimately, they were only the pretext for carrying out long-held plans for a more aggressive U.S. imperialism.
Oil was at the heart of that agenda. Cheney’s energy task force concluded that declining resources and the rise of potential rivals such as China meant the U.S. needed to tighten its grip–most of all, in the Persian Gulf region, which sits on more proven reserves of oil than the rest of the world combined.
The task force recommended that the U.S. press allies like Saudi Arabia and Kuwait to "open up areas of their energy sectors to foreign investment."
But another focus was Iraq–where oil production remained in a shambles after the first Gulf War, and exports were restricted by U.S.-backed United Nations sanctions. The task force reportedly examined maps of Iraqi oilfields–and the Pentagon produced a memo on "Foreign Suitors For Iraqi Oilfield Contracts" that analyzed contractors from dozens of countries and their intentions toward exploiting Iraqi’s oil if Saddam Hussein’s government was overthrown.
The interest in Iraq’s oil wasn’t new. A Pentagon document made the case that an "oil war" was a "legitimate" military option back in 1999–while Bill Clinton was still president.
At that time, Dick Cheney was still lurking in the private sector, as the CEO of Halliburton, but he clearly agreed with the Democratic administration about the importance of oil. "The Middle East, with two-thirds of the oil and the lowest cost, is still where the prize lies," he said in a 1999 speech.
Of course, Cheney’s industry colleagues lusted after Iraqi oil as a source of profits. "Iraq possesses huge reserves of oil and gas…[that] I’d love Chevron to have access to," Chevron CEO Kenneth Derr said in 1998.
But Cheney and like-minded "hawks" from previous Republican administrations had their minds on a bigger picture. By the end of the 1990s, the newly formed Project for a New American Century provided a soapbox for the "neoconservatives" who would populate the Bush administration–such as Paul Wolfowitz, John Bolton and future Cheney aide Lewis "Scooter" Libby.
"While the unresolved conflict with Iraq provides the immediate justification, the need for a substantial American force presence in the Gulf transcends the issue of Saddam Hussein," the PNAC hawks declared in a report issued not long before the 2000 election. War with Iraq would be part of a plan of "maintaining global U.S. pre-eminence…and shaping the international security order in line with U.S. principles and interests."
The PNAC dogma became the outline of the Bush Doctrine promoted by the administration after the "war on terror" was launched–aggressive use of U.S. power to prevent the development of any rivals to the U.S., now and into the future.
Pre-emptive war and an expanded U.S. military presence worldwide would be necessary to "dissuade potential adversaries from pursuing a military buildup in hopes of surpassing, or equaling, the power of the U.S," according to the White House’s National Security Strategy document issued in 2002.
In this context, oil is a dominant factor–because as important as it is to the economic fortunes of any country, it is even more so to their military might.
* * *
No one would doubt the critical importance of oil to the global economy. It accounts for 39 percent of global energy consumption, including 95 percent of energy used in ground, sea and air transportation. Petroleum is also a basic component in a range of products, like plastics and paints, that we take for granted today.
"But just as important," as Saman Sepheri wrote in the International Socialist Review, "every tank, every airplane–from the B-52 to the stealth bomber–every Cruise missile and most warships in the U.S. or any other nation’s military arsenal rely on oil to wage their terror."
The decisive relationship of war and oil first emerged in the First World War. Britain, with its colonial control over Iranian oil, had a decisive advantage over the German-led Axis powers, allowing the Allies to "[float] to victory on a wave of oil," in the words of Britain’s Foreign Secretary Lord Curzon.
By the Second World War, the scramble for oil was a strategic priority on all sides. "The Japanese attacked Pearl Harbor to protect their flank as they grabbed for the petroleum resources of the East Indies," author Daniel Yergin wrote in his history of oil titled The Prize. "Among Hitler’s most important strategic objectives in the invasion of the Soviet Union was the capture of the oil fields in the Caucasus. But America’s predominance in oil proved decisive, and by the end of the war, German and Japanese fuel tanks were empty."
The U.S. emerged from the war as the dominant world superpower, and a central part of its postwar strategy depended on maintaining control over oil resources, particularly the vast reserves discovered in the Middle East–"a stupendous source of strategic power, and one of the greatest prizes in world history," the State Department said in a document.
U.S. companies had been decisive in establishing Saudi Arabia–the first "fundamentalist" Islamic state built around the Saud clan. Texaco and Standard Oil of California formed the Arab American Oil Company (ARAMCO) to share its concessions for exploration and marketing of Saudi oil. ARAMCO and the U.S. government ended up creating much of the Saudi state machine from scratch to serve their needs.
During the early 1950s, in Iran, the other crucial pillar of Middle East oil production, Prime Minister Mohammad Mossadeq nationalized the British-controlled Anglo-Iranian Oil Company. The CIA organized a coup to overthrow Mossadeq, restoring the brutal regime of the Shah to serve as a regional strongman guaranteeing Western oil interests.
The other important surrogate for the U.S. was Israel. Without oil resources itself, Israel was a colonial settler state funded with tens of billions of dollars in U.S. aid to serve as a military watchdog against any threat to Western interests by Arab nationalist regimes.
U.S. power over the region suffered a blow with the 1978-79 revolution that toppled the Shah. President Jimmy Carter ordered the creation of a Rapid Deployment Force to stop "any attempt by any outside force to gain control of the Persian Gulf region [which] will be regarded as an assault on the vital interests of the United States."
Meanwhile, the U.S. encouraged neighboring Iraq, under the dictatorship of Saddam Hussein and his Baath Party, to invade Iran–and quietly backed the decade-long war that followed, at a cost of more than 1 million lives.
When Hussein threatened to slip the leash, invading Kuwait in 1990, George Bush Sr. organized a coalition of "the bullied and the bribed" for a war that killed hundreds of thousands.
The same priority–on protecting and extending U.S. control over the flow of Middle East oil–has continued through the rush to exploit newly available oil reserves in the Caspian Sea region, the scheming for a pipeline through Afghanistan and beyond.
* * *
The question of who controls the oil is made even more intense by the threat that it is drying up. Depending on how pessimistic or optimistic the estimate, world production of oil will peak in either the next few years or next few decades–at which point, the cost of extracting the remaining oil is expected to rise rapidly.
This end-of-oil scenario is emerging as worldwide demand for oil is growing at a faster pace than ever.
The U.S. continues to claim the lion’s share, accounting for 25 percent of oil consumption with just 5 percent of the world’s population. But the big increases in demand are coming from the developing world’s economic powerhouses China and India–precisely the nations that sections of the U.S. establishment fear could develop into rivals over the coming century.
The stage is thus set for oil to play the same central role in the imperialist competition–economic, political and military–between nations in the 21st century as it did in the 20th.
In this light, the Bush administration’s motivations in pushing for the new Iraq oil law are clearer.
For one thing, Iraqi oil production has been hampered by two decades of war and sanctions–its reserves will be an important unexploited source as oil becomes more scarce.
U.S. companies would love to take advantage of the super-profits guaranteed by the production-sharing agreements (PSAs) that the Iraqi government would sign under the law.
PSAs are usually used in situations where the oil is difficult to extract, so the company’s investment in production is substantial. But the opposite is the case in Iraq–the cost of extraction is about $1 per barrel, and the selling price on the world market is around $60 a barrel. And under the PSA, foreign oil companies would be guaranteed 70 percent of the profits–seven times the typical share under other contracts in the Middle East.
But that’s assuming they get away with it. The Iraqi government is expected to approve the oil law, but getting Western oil companies to come in under circumstances of a civil war and widespread opposition to the U.S. military presence is another matter.
The other aim of the oil law, as left-wing Iraq expert Michael Schwartz put it in a recent interview with Socialist Worker, is to give U.S. companies "control over the spigots"–so that the U.S. will "get to decide how much is going to get pumped at any particular moment, and who it will be sold to." But the crisis of the occupation has frustrated this aim as well.
Meanwhile, rather than being intimidated by U.S. power, Iran has benefited from Washington’s crisis in Iraq, and is more willing than ever to strike out on its own. One consequence has been Iran’s deeper ties with China–the very country the U.S. hoped to force into line with its tightened grip on Persian Gulf oil.
Washington’s rulers aren’t about to give up, however. For the last century, the world’s governments have been ready to go to war over oil–and they will again, until a new society that places priorities on democracy, freedom and justice is established.