Oil, Power and Empire

The U.S. government has mustered a dizzying and often shifting assortment of “reasons” for invading and occupying Iraq. At one time or another–sometimes in the next breath–it cited weapons of mass destruction and imminent threats to America, links to terrorism and al Qaeda, liberating the Iraqi people, and transforming the entire Middle East. Yet, as it was going on ad nauseam about such nonexistent threats, phantom connections, and hollow promises, there was one real issue that the Bush team adamantly refused to discuss at all: oil. Before the war, Rumsfeld even told CBS News that the U.S. conflict with Iraq “has nothing to do with oil, literally nothing to do with oil.”

Bush II officials studiously avoided even mentioning the ‘o-word.’ At one White House briefing on October 9, 2002, a reporter asked press spokesman Ari Fleischer, “how much does oil have to do with the assessment of the threat from Saddam Hussein? President Bush didn’t mention it.” Fleischer first claimed not to “follow” the question, then said it was “not a factor.” He wouldn’t even utter the word “oil” in the back-and-forth. Two days later, The New York Times reported that the Pentagon had plans to occupy Iraq and take control of its oil fields.

Behind closed doors, Bush was giving top U.S. corporate heads and financiers a different message: according to Bob Woodward’s recent book Bush At War, in October 2001, on the eve of war with Afghanistan and as planning was beginning for invading Iraq, he told a private New York meeting of business leaders, “I truly believe that out of this will come more order in the world-real progress to peace in the Middle East, stability with oil-producing regions.” In his paean to his former boss, Bush speech writer David Frum laid it out more directly: America’s new global “war on terror,” he wrote, was designed to “bring new freedom and new stability to the most vicious and violent quadrant of the earth-and new prosperity to us all, by securing the world’s largest pool of oil.”

Overthrowing Saddam Hussein, creating a client state in Iraq, and opening up Iraq’s economy are key components of a much larger, multi-faceted global agenda in which energy resources play a crucial role. The point is not that the Bush inner circle waged war simply to secure Iraq’s oil for American profit or consumption. Yet petroleum was a central and major objective–if understood in the larger context of global empire. Most broadly, the 2003 invasion and occupation were designed to solidify American political/military domination of the energy heart of world — the Middle East/Central Asian region, and are part of broader efforts to secure control of global energy sources and use that control to ensure the smooth functioning of U.S. capitalism, strengthen its competitive position in world markets, and increase U.S. leverage against potential rivals. In short, oil is a powerful instrument of hegemony, which is what the new Bush II National Security Strategy is all about.

Controlling Persian Gulf oil and dominating world energy markets has been a prime U.S. strategic objective for over 60 years, as examined in previous chapters. However, the global energy picture does not remain constant: the tension between supply and demand evolves, and new dynamics and problems arise. Two trends stand out today: the precarious nature of the global economy and the possibility that growing energy demand will outstrip the global capacity to meet it.

A look at these concerns and how the capitalist political elite is approaching them opens a window on some of the deep compulsions and potential opportunities that drove the 2003 war on Iraq and continue to drive the Bush II global agenda.

U.S. Strategists Declare: “It’s the Oil, Stupid”

A key element of the new Bush doctrine is leveraging current U.S. military supremacy into economic supremacy and dealing with various difficulties confronting the global economy. Oil and natural gas play an important part in this grand design.

The 1991 collapse of the Soviet Union was a geopolitical earthquake, but it did not lead to U.S. economic dominance. In his 1995 brief for global supremacy, current Bush II official Zalmay Khalilzad worried that rivals were gaining ground: “economic growth under way in Asia…will produce important changes in relative economic power-with important potential geopolitical and military implications” and “intensified international economic competition.”

Nor did the fall of the Soviet empire usher in an era of sustained economic growth; instead, the global economy has remained fragile. “The world economy is in trouble,” wrote Jeffrey Garten, a former government official and now dean of the Yale School of Management, in early 2003. “Corporate investment and trade are slowing, factories are producing more than they can sell, and deflation is threatening many regions. The two potential economic engines besides the United States – Germany and Japan – are stagnating. Big emerging markets, from Indonesia to Brazil, are in deep trouble.”

The new National Security Strategy promises to ignite “a new era of global economic growth through free markets and free trade,” and to use American preeminence to promote an “efficient allocation of resources, and regional integration.” In other words, the U.S. seeks to use its military power to secure favored access to markets, raw materials, and human labor across the planet.

Joseph Nye, dean of the Kennedy School at Harvard, compares the Bush II strategy to a three-dimensional chessboard: “The top board is the military and we can do pretty much what we want. The middle board is economics, and is not a world America controls.” Cheney and Rumsfeld are focusing on the “top board,” he argues, in order to parlay U.S. military power into greater economic and political power. Nye’s “bottom level” consists of factors beyond Washington’s control — anti-U.S. movements, weapons proliferation, the spread of infectious disease, etc. He warns, “The Cheney-Rumsfeld focus on the top board may win in the short run, but will cause lots of problems in the long run.”

This is where oil ties in: global capitalism remains dependent on a steady flow of low-priced petroleum, making oil both vital to the health of the world economy and key to the competitive position of rival nations. “The single best cyclical indicator for the world economy is the price of oil,” one economist told The New York Times, “Nothing moves in the world economy without oil in there somewhere.”

Despite a shift from manufacturing to services and increases in energy efficiency, the U.S. still relies on petroleum products for 40 percent of its energy needs and remains the world’s biggest energy glutton, devouring 19 million barrels of oil a day. With a mere three percent of the world’s population, it consumes over 25 percent of the global output of crude. “The price shocks from a serious disruption in oil supplies would course through every quarter of the United States economy,” The New York Times notes. “The drain on people’s incomes and companies’ revenue would further sap a weakened economy.” One Goldman-Sachs analyst told Forbes Magazine, “Any [oil] price increase has devastating effects on the U.S. economy.”

On the other hand, in 1991 economics lecturer Alan Freeman estimated that each $1 fall in the price of a barrel of oil transferred roughly $5 billion a year from Third World producing countries to North America, and the difference between oil at $20 and oil at $25 a barrel meant the transfer of $70 to $100 billion from the impoverished south to the industrialized north. These figures are no doubt even more staggering today given the rise in world oil consumption.

Former Clinton official Kenneth Pollack, echoing Kissinger’s words from two decades earlier, is blunt about the oil connection:

It’s the Oil, Stupid–The reason the United States has a legitimate and critical interest in seeing that Persian Gulf oil continues to flow copiously and relatively cheaply is simply that the global economy built over the last 50 years rests on a foundation of inexpensive, plentiful oil, and if that foundation were removed, the global economy would collapse.

Oil, Power and Empire is now available at bookstores (distributed by Consortium and Ingram) or through Common Courage Press: 800.497.3207
To purchase online or contact author LARRY EVEREST: www.larryeverest.com

ISBN: 1-56751-246-1 paper $19.95
390 pages, appendix, chronology, index

* LARRY EVEREST will be discussing the oil connection on KPFA’s Flashpoints (94.1 FM, 5-6 pm) this Monday, Dec. 8

* Book Launch: Author Signing, Conversation, Refreshments
Thursday, December 11, 2003–7:00 PM
Revolution Books
2425 Channing Way, Berkeley


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