BY DOUG LORIMER
On October 30, White House mouthpiece Ari Fleischer told journalists that Washington "has no interest in controlling Iraq's oil reserves if [US President George Bush's] administration decides to take military action to remove Iraqi leader Saddam Hussein".
Yet, on the same day, the petroleum industry journal Oil and Gas International reported: "The Bush administration wants to have a working group of 12 to 20 people ... to be able to recommend [to] an interim government ways of restoring the petroleum sector following a military attack in order to increase oil exports to partially pay for a possible US military occupation government — further fuelling the view that controlling Iraqi oil is at the heart of the Bush campaign to replace Hussein with a more compliant regime."
The war against Iraq that the US rulers are determined to carry out will be a war for oil — a war to ensure that the US capitalist rulers gain control over, and profit most from, Iraq's most economically significant natural resource.
At 112 billion barrels, Iraq's proven oil reserves are second only to Saudi Arabia's (at 262 billion barrels). An October 2002 assessment by the US Department of Energy estimates that additional "probable and possible" Iraqi oil reserves could amount to 220 billion barrels.
The super-rich families that own the big US oil corporations, and the government officials who defend their interests, are not worried that Hussein's regime will deprive them of access to Iraq's oil exports. In fact, for more than a decade now, most of Iraq's crude oil production has been sold to US oil companies.
Forbes magazine estimated that in 2001, 70% of Iraq's oil output was directly sold to US oil companies, and named ExxonMobil and ChevronTexaco (known as Caltex in Australia) as the biggest purchasers. According to the American Petroleum Institute, US companies imported an average of 611,000 barrels of crude oil from Iraq in the first half of 2002, making Iraq the fifth largest supplier of oil to the US.
According to a report filed on August 20 by American Broadcasting Corporation news correspondent John Cooley, oil industry sources estimated that 90% of Iraq's crude oil production of 1.8 million barrels per day is going to refineries in Louisiana and Texas.
Most of the purchases of Iraqi oil by US companies have been organised through the United Nations Oil for Food program, under which Iraq has been forced to sell its oil at below the international market price. Through this scheme, US oil companies have made billions in super-profits from the purchase of cheap Iraqi oil.
Furthermore, leading US oil service companies such as Halliburton have worked through the UN via European subsidiaries to supply equipment to Iraq's oil industry. When it was managed by Dick Cheney, who is today US vice president, Halliburton helped rebuild Iraq's oil production infrastructure, the destruction of which he supervised from the Pentagon in 1991 when he was US President George Bush senior's defence secretary.
Halliburton reportedly earned an additional US$1 billion by exporting Iraqi oil through black-market channels to circumvent the US-imposed economic blockade of Iraq.
Balance of power
Although US companies have profited handsomely from trading with Hussein's regime via the UN and the black market, their lack of direct official ties with Baghdad has enabled French and Russian rivals to sign contracts giving them exclusive rights to extract and transport oil and gas from Iraq once UN sanctions are lifted.
Writing in the December UK Corporate Watch Newsletter, Milan Rai reported that: "The contracts are generous: analysts at Deutsche Bank estimate that plausible rates of return are 'of the order of 20%'. Oil from the North Sea costs $3 to $4 a barrel to produce. According to John Teeling, head of one of the few Western companies to admit to working in Iraq, Iraqi oil could cost as little as 97 cents per barrel to produce: 'Ninety cents a barrel for oil that sells for $30 — that's the kind of business anyone would want to be in. A 97% profit margin — you can live with that', says Teeling."
In one violent stroke, a US-engineered "regime change" in Iraq would void the contracts with the French and Russians and clear the way for US oil companies to gain total control over Iraq's oil reserves.
The US rulers' goals were summarised by Robert Collier in an article in the September 20 San Francisco Chronicle: "The world's biggest oil bonanza in recent memory may be just around the corner, giving US oil companies huge profits ... for decades to come... And it may all come courtesy of a war with Iraq... oil analysts and Iraqi exile leaders believe a new, pro-Western government would prompt US ... petroleum giants to rush into Iraq, dramatically increasing the output of a nation whose oil reserves are second only to that of Saudi Arabia. Once [Iraqi] production reaches its full capacity, they say, the enormous increase in supply could ... shift the balance of power among the world's major oil producers."
While the fortunes of ExxonMobil and ChevronTexaco are not a minor concern for the political representatives of US imperialism, this does not account for the depth of their interest in securing control of Iraqi oil reserves.
Role of oil
Oil — in the form of petrol — provides the primary fuel source for transportation in modern capitalist economies. It is central to the whole system of capitalist production.
The situation is particularly acute for most of the countries of western Europe (with the exceptions of Britain and Norway) and Japan, since they do not have significant oil resources of their own; most of their oil comes from the Middle East.
Persian Gulf oilfields supply 65% of western Europe's oil and 80% of Japan's. Without access to Middle Eastern oil, the economies of Germany, France, Italy, Spain and Japan would quickly collapse. In contrast, the US is a major oil producer itself and, while heavily dependent on oil imports, less than 20% of its oil needs come from the Middle East.
While the US is not directly dependent on Middle Eastern oil, the havoc that would be created in the world capitalist economy as a whole should Europe and Japan's supply of oil be cut would have a devastating effect on the US economy.
Furthermore, the role that the US plays as the military guarantor of the supply of Middle East oil to western Europe and Japan gives Washington enormous political leverage over its major economic competitors.
Central goal
Gaining control of the Middle East's vast oil reserves has been always been central to the US capitalist rulers' drive for global economic and political domination. In his 1975 book The Seven Sisters: The Great Oil Companies and the World They Shape, Anthony Sampson gave a detailed description of how, at the end of World War I, the US State Department manoeuvred against Britain and France to maintain the already dominant position of US oil companies in the rapidly expanding world oil market.
"The immediate battlefield for post-war oil diplomacy", Sampson noted, "was the disintegrating Ottoman Empire. Turkey was paying the price for defeat [in WWI] by having her dwindling possessions carved up between Britain and France. Both countries, while pretending that oil was not foremost in their minds, were especially concerned with two regions along the river Tigris in Mesopotamia (soon to become Iraq), the regions of Baghdad and Mosul which were suspected of containing huge oil reserves."
Sampson described how, in 1914, a syndicate known as the Turkish Petroleum Company had been formed to explore and exploit these oil reserves. It was half-owned by British Petroleum (BP), with the other two quarters equally divided between the Anglo-Dutch Shell company and the German Deutsche Bank, which had financed the Baghdad railway. The agreement went into abeyance during the war, but in December 1919 it was revised at the conference at San Remo, convened to draw up the peace treaty with Turkey" with the German quarter-share being given to French investors.
"It was a classical European horse-trade, and it deliberately excluded the United States, on the semi-plausible grounds that America had not declared war on Turkey and was not therefore concerned with the peace treaty. But the Americans were outraged when the agreement came to light. The American ambassador in London delivered a strong note to the Foreign Office implying that Britain was trying to corner the world' oil and recalling (in stately language) that America had helped to win the war and was entitled to share in the spoils. Lord Curzon, the British Foreign Secretary, replied that oil from the British Empire and Persia amounted to 4.5 per cent of the world's production, whereas the United States controlled (with Mexico) about 82 per cent.
"By August 1922, under sustained pressure from Washington, the British offered the Americans first 12 per cent of the Turkish Petroleum Company, and eventually 20 per cent, which they accepted. The State Department had gradually pushed open the door into Iraq..."
During World War II, Washington secured a monopoly for the four big US oil companies over the extraction and transportation of oil from the vast new oil reserves in Saudi Arabia. Through the CIA-organised coup in Iran in 1953, Washington broke BP's 40-year monopoly over Iranian oil and transformed Iran from a British to a US protectorate.
As a result of these manoeuvres, US companies increased their control of the Middle East's oil supply from less than 13% at the beginning of World War II to 60% by the end of the 1950s.
Iranian revolution
Far more populous than Saudi Arabia, Iran was allotted a key role in policing the entire area around the Persian Gulf for imperialist oil interests after the British rulers decided to withdraw their armed forces from the Arab side of the Gulf in the early 1970s. As the New York Times noted in July 1971: "By 1975, when the present program of military deliveries and training is completed, Iran is expected to be a major Middle Eastern power and an element of stability in the volatile Gulf region, American officials say."
During the 1970s, Washington built up the tyrannical shah of Iran's army into one of the largest and best equipped in the Third World, with some 200,000 troops. To crush internal opposition, the CIA built up the shah's secret police into a massive network of 60,000 agents and torturers.
However, in February 1979, Washington's strategy was dealt a massive blow, when a year-long wave of strikes and street protests culminated in a mass insurrection in Tehran and other Iranian cities which led to the expulsion of the shah and his 20,000 US "advisers".
The Iranian revolution brought home to the US rulers the political consequences of the defeat they had suffered in Vietnam four years earlier, and their subsequent inability to build a national consensus behind the protracted use of US troops in defence of imperialist interests in the Third World.
"At the risk of being melodramatic", declared the Wall Street Journal on February 21, 1979, "today we see the world order coming apart... The spiral into disorder can be averted only if the US starts to assert itself again."
Unable to use its own troops to restore a reliable pro-imperialist regime in Iran, Washington turned to Saddam Hussein's capitalist regime in Iraq for help — a regime that had been consolidated in power following a CIA-assisted military coup in 1963, which beheaded the vanguard of the 1958 anti-monarchist, anti-landlord revolution.
For eight years, Washington provided encouragement, financial assistance and arms via its French and British allies to Hussein's murderous war against Iran, which began with a massive Iraqi invasion of southern Iran in 1980, aimed at seizing control of Iran's oilfields, its refineries and its tanker ports.
At the end of the war, which was one of the bloodiest of the 20th century — with hundreds of thousands of deaths and injuries on both sides — Hussein's regime gained only a tiny strip of land on its southern border with Iran and the US rulers found themselves no closer to their goal of installing a subservient, pro-imperialist regime in Iran.
Iraq's invasion and annexation of Kuwait in August 1990 not only convinced the US rulers that Hussein's regime was an unreliable vehicle for defending imperialist interests in the Middle East, it provided an ideal pretext for launching a war aimed at toppling Hussein's regime.
Washington's six-week bombing campaign against Iraq and 100-hour invasion of southern Iraq in January-February 1991, however, failed to produce the result the US rulers had hoped for — a move by a section of the Iraqi officer corps to depose or assassinate Saddam Hussein and replace him with another military thug prepared to be more accommodating to US imperialism's interests.
While the Bush gang denies that securing control of Iraq's oil fields is a central goal of Washington's drive for violent "regime change" in Iraq, US oil industry officials tell a different story.
Asked by CBS 60 Minutes correspondent Steve Kroft in mid-December if oil was one of the reasons Washington wants to overthrow Saddam Hussein's government, US defence secretary Donald Rumsfeld replied: "Nonsense. It has nothing to do with oil, literally nothing do with oil."
Asked the same question by 60 Minutes on December 15, Phillip Ellis, head of global oil and gas operations at the Boston Consulting Group, replied, "Of course it is".
From Green Left Weekly, February 12, 2003.
Visit the Green Left Weekly home page.