IRAQ: The politics of oil

BY ELIZABETH SCHULTE

CHICAGO — Iraq is one of the largest oil resources in the world —
with proven reserves of 112 billion barrels of oil, second only to Saudi
Arabia. This simple fact has shaped Iraq's relationship with the rest of
the world.

Iraq was carved out by Britain and France, which came together before
the end of the first world war to divide their spheres of interest in the
Middle East. The former Mesopotamian provinces of the Ottoman Empire became
Iraq in 1921, under the control of a British puppet ruler, King Faisal.
A line was drawn on the southern border to create Kuwait, making Iraq virtually
landlocked. These borders would fuel future conflicts, as Iraq vied for
waterways to transport goods in and out of the country.

With the discovery of massive quantities of oil in 1927, the right to
exploit the wells was given to the Iraq Petroleum Company, which was jointly
owned by Royal Dutch-Shell, Anglo-Persian and an American and French consortium.

From the start, Iraq Petroleum's local managers acted more like colonial
masters than managers of a private company. This situation fed widespread
resentment among Iraqi Arabs, resulting in the king's overthrow in 1941.
Britain, of course, would have none of this, taking out the new nationalist
government of Rashid Ali with a pounding air bombardment.

At the end of the second world war, a critical part of the US government's
plans to dominate the postwar world included control over oil resources.
Believing that its main oil sources in the US south-west, Mexico and Venezuela
weren't enough, the State Department initiated an intensive study to find
others.

According to the department's economic adviser, Herbert Feis, only one
place would do. “In all surveys of the situation”, Feis noted (in a statement
quoted by Daniel Yergin in his book The Prize), “the pencil came
to an awed pause at one point and place — the Middle East.”

So US President Franklin Roosevelt met with Saudi King Abd al-Aziz Ibn
Saud on a US warship in the Suez Canal following the February 1945 conference
in Yalta between Roosevelt, Winston Churchill and Joseph Stalin. It's there
that Roosevelt gave the king a promise of US protection in return for privileged
access to Saudi oil. This deal is at the centre of the US-Saudi relationship
to this day.

In Iraq, whenever access to oil was threatened, Western powers intervened.
In 1972, when Ba'ath Party leader General Ahmad Hasan al-Bakr nationalised
the oil industry, the US was quick to act — as it was in 1951 when Iran
nationalised its oil.

US President Richard Nixon armed opposition among Iraqi Kurds to overthrow
Al-Bakr. But when then-vice president Saddam Hussein agreed to give up
the important Shatt-al-Arab waterway in the Persian Gulf to the US-controlled
Shah of Iran, US arms to the Kurds dried up.

Two decades later, when Iraq invaded oil-rich Kuwait in 1990, the US
responded by organising the most intensive bombing campaign in history
— even after Iraq had begun to withdraw. As many as 200,000 Iraqis were
killed in the war, and one million more have died over the last 10 years
because of crippling economic sanctions.

Long before the September 11, 2001, terrorist attacks in the US gave
the Bush administration the green light for its never-ending War on Terror,
Iraqi oil was already on the agenda. In April 2001, Dick Cheney, chairperson
of the White House Energy Policy Development Group, commissioned a report
on “energy security”.

“The US remains a prisoner of its energy dilemma”, the report concludes.
“Iraq remains a destabilizing 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 program to
manipulate oil markets.

“Therefore the US 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.”

It looks like Cheney is getting what he wanted — a war for oil.

Washington is already using the promise of Iraqi oil flowing from a
post-Saddam Iraq to buy support from its European allies, and Russia as
well. And if they don't go along, they might not get a cut of the action.

The Iraqi National Congress, one opposition group that might be part
of a new government in Iraq, has already announced that it plans to look
into existing oil contracts, noting who supported the overthrow of Saddam.

This has left Russian oil companies such as Lukoil scrambling to save
their oil deals. “We're against this war”, said Dmitry Dolgov of Lukoil,
which signed an exploration contract in 1997. “We don't know about the
US, [but] we know that our government and our president promised to back
all our interests in Iraq under any possible event.”

But whatever happens, you can be sure that the US will be calling the
shots. And with control over Iraq's vast oil resources, the US will be
positioned to undercut Saudi Arabia — the top oil producer.

“This could prove to be the biggest oil grab in modern history, providing
hundreds of billions of dollars to US oil firms — many linked to senior
officials in the Bush administration — and helping to avert a future energy
crunch in the US”, Michael Klare wrote in the Nation magazine. “But
is oil worth spilling the blood of American soldiers and Iraqi civilians
who get caught in the way?”

[From Socialist Worker, weekly paper of the US International
Socialist Organization. Visit <http://www.socialistworker.org>.]<|>n

From Green Left Weekly, October 30, 2002.

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From GLW issue 514