IRAQ: Battle to plunder oil resources begins

BY
DOUG LORIMER

“Already, the international battle for Iraq's oil resources is taking
shape, as the rhetoric over who will administer post-war Iraq intensifies”,
the US Congress-funded Radio Free Europe/Radio Liberty reported on April
8.

The RFE/RL report added: “On the one side is the US, which says that
the coalition of nations now prosecuting the war should have control. On
the other side are Iraq's traditional oil partners — led by the European
Union and Russia — who are saying the United Nations must have the lead
role. Although the word 'oil' is rarely used, it lies at the heart of the
disagreement.”

The European Union — more exactly, France and Russia — wants the UN
Security Council, in which they both have veto power, to appoint the immediate
post-war Iraqi administration so as to guarantee the survival of the lucrative
contracts that French and Russian oil companies had with Saddam Hussein's
regime to explore and develop new oil fields. Paris and Moscow want UN
rule over Iraq in order to have a more “equitable” carve-up of Iraq's oil
resources.

The US, on the other hand, wants to put its own personnel in charge
of running Iraq in order to clear the way for the installation of a pro-US
Iraqi puppet regime that would allow the takeover of Iraq's oil industry
by US oil corporations.

With control of Iraq's oil reserves — the second largest in the world
after Saudi Arabia's — in their hands, ExxonMobil and ChevronTexaco (Caltex),
which already have a monopoly over the marketing of Saudi Arabia's oil
exports, would gain a significant advantage over their European competitors
within the world oil market.

Washington has already designated the Pentagon's Office of Reconstruction
and Humanitarian Assistance (ORHA) to take over the running of Iraq after
General Tommy Franks, the commander of the US invasion force, declares
the country “liberated” from Hussein's rule. The ORHA is headed by retired
US general and missile systems contractor Jay Garner, an old friend of
US war secretary Donald Rumsfeld.

Last week, key members of Garner's US occupation regime — including
retired generals Buck Walters (who is to govern southern Iraq) and Bruce
Moore (who is to govern northern Iraq), career diplomat Barbara Bodine
(who is to govern central Iraq) and Pentagon lawyer Michael Mobbs, who
will direct the Iraqi civil administration — and about 40 other ORHA officials
arrived in the southern Iraqi port of Umm Qasr.

Crook or war criminal

Under a plan drawn up by Rumsfeld and his deputy, Paul Wolfowitz, the ORHA
is to govern Iraq for at least 90 days, before handing civil authority
to an interim administration made up of Iraqis selected by Washington.

Rumsfeld and Wolfowitz strongly favour Ahmad Chalabi, the head of the
pro-US, London-based Iraqi National Congress (INC), to become leader of
this interim authority and Iraq's next president. In what was seen as a
Pentagon bid to position him for this role, Chalabi and 500 supporters
in the Pentagon-created 1st Battalion of Free Iraqi Forces were flown by
US military helicopters to a location near Nasiriya on March 30.

While Chalabi, a convicted bank embezzler who has lived outside Iraq
for 45 years, is strongly backed by Rumsfeld and Wolfowitz, the CIA and
the US state department have been keen to marginalise both him and the
INC. They believe Chalabi and his close associates in the INC will have
little credibility with the Iraqi population.

However, the CIA's favourite as a successor to Saddam Hussein — former
Iraqi general Nizar al Khazraji — is likely to have even less credibility.
Khazraji headed the Iraqi armed forces during the invasion of Kuwait in
1990. He subsequently fled to Jordan in 1995 and three years later applied
for political asylum in Denmark.

Khazraji went missing from his house arrest in Denmark on March 15.
He was being detained on charges of war crimes for carrying out chemical
weapon attacks on Iraqi Kurds and Iranian troops in the 1980s, including
the infamous attack on Halabja in 1988.

On March 31, the Danish daily Politiken cited a March 28 report
by the former head of the CIA's counter-terrorism department, a copy of
which was obtained by the paper, as saying the CIA secretly “extracted”
Khazraji from Denmark and transported him to Kuwait. The ex-CIA official
who wrote the report, Vincent Cannistraro, has declined to comment on the
document.

Despite the bureaucratic infighting over who will be Washington's Iraqi
quisling, all factions in the Bush administration are agreed that the UN's
role in Iraq should be limited essentially to humanitarian assistance.

This stance has also put Washington in conflict with its closest ally,
London, which favours a greater role for the UN — alongside the invader
coalition — in the running of an interim administration in Iraq, in order
to give such a regime greater international legitimacy, particularly within
the Arab world.

London is also more inclined than Washington to try to coopt the existing
Iraqi state apparatus into an interim administration. The Bush administration,
on the other hand, wants to hand over the management of essential services
in Iraq to private US contractors.

An illustration of this difference was the issue of who should manage
the port at Umm Qasr. While the local British military commander in Umm
Qasr favoured retaining its Iraqi management, Washington awarded the running
of the port to the union-busting Stevedore Services of America.

UN food for oil program

With Iraq under US occupation, it may not seem that Paris and Moscow have
much bargaining power to defend their interests there. However, Washington
wants to use the revenues from the UN-administered “food for oil” program
to fund the reconstruction contracts it will dish out to various US companies.

After Iraq's invasion of Kuwait in 1990, the UN Security Council imposed
a total embargo on the export of Iraq's oil, as part of a wider economic
sanctions regime. The US insisted in maintaining this embargo, enforced
by US and allied naval patrols in the Persian Gulf, in the hope that it
would lead to a military coup against Saddam Hussein.

However, in 1995, in response to complaints about the terrible health
consequences of the sanctions for the Iraqi people, oil sales and food
imports, in gradually increasing amounts, were permitted by the Security
Council.

The food for oil program, the April 9 New York Times observed,
has been authorised for six months at a time; the current period ends on
June 3. “But even if the authorisation lapses”, the NYT reported,
“according to a senior United Nations official, the underlying legal requirements
— the United Nations approve oil sales and the proceeds go into a United
Nations-controlled account — remain in force.”

In other words, Washington cannot use the program to fund reconstruction
contracts without getting the Security Council's — and thus France's and
Russia's — approval.

In the longer term, Washington also needs the Security Council to lift
the economic embargo on Iraq and to have a pro-US regime in Baghdad that
is internationally recognised as the legal government of Iraq in order
to implement the Bush administration's plans to open up the nationalised
Iraqi oil industry to foreign investment.

“Any potential American oil company investing in the modernising of
these [Iraqi] oil fields will need legal assurance that the concessions
that it had been granted are secure for a 10- or 20-year horizon, the kind
of payback period for the industry”, UN Development Program director Mark
Malloch-Drown told the NYT.

Oil industry privatisation

The Bush administration finds it impolitic to openly discuss its plans
to sell off the Iraqi oil industry to the US oil “majors”. It's left that
job to the former Iraqi oil industry officials who are “advising” it —
Fadhil Chalabi, a relative of Ahmad Chalabi and executive director of the
London-based Centre for Global Energy Studies, and Muhammad Ali Zainy,
who worked at the centre before he began consulting with Washington on
“rebuilding” Iraq's oil industry.

On April 5, Reuters reported that at a conference sponsored by the US
state department in London, “Iraqi exiles and senior US officials agreed
... that international oil companies should take a leading post-war role
in reviving Iraq's oil industry”.

Briefing papers to the April 5 meeting, obtained by Reuters, showed
a clear consensus among the attendees favouring production-sharing agreements
to attract the oil majors. “That is likely to thrill oil companies harbouring
hopes of lucrative contracts to develop Iraqi reserves that rank second
only in size worldwide to Saudi Arabia's”, the Reuters report observed.

It added: “Some had thought post-war nationalism would prevent early
access to oilfields that, apart from those in Saudi Arabia and Mexico,
are the only significant reserves not yet open to commercial capital. Production-sharing
is the type of deal favoured by the oil industry because it guarantees
companies a healthy profit margin, even at low world oil prices. Alternative
royalty schemes are weighted toward government revenues and can penalise
investors at low prices.”

According to the Reuters report, Phillip Carroll, the former head of
Shell in the US, is said to be the leading candidate to oversee oil policy
under Garner's US occupation regime, with Zainy in the running as his number
two.

“We need to have a huge amount of money coming into the country”, Chalabi
told the April 3 Christian Science Monitor. “The only way is to
partially privatise the industry.”

His comments indicate that Washington's invasion and occupation of Iraq
is not aimed at liberating the Iraqi people from tyranny but at “liberating”
— more accurately, plundering — Iraq's oil resources from the Iraqi people.

From Green Left Weekly, April 16, 2003.

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From GLW issue 534