Tuesday, June 24, 2008

There Has Been Blood

In an interview with Newsweek last fall, the former chief executive of Exxon, Lee Raymond, praised Iraq’s potential as an oil-producing country and added that Exxon was in a position to know. “There is an enormous amount of oil in Iraq,” Mr. Raymond said. “We were part of the consortium, the four companies that were there when Saddam Hussein threw us out, and we basically had the whole country.”
"...the whole country." Gentle reader, hear in that phrase the lacrimose longing of a dream deferred. "The Whole Country," when it comes to Iraq, represents perhaps the largest un-tapped oil reserves in the world. Untold black gold, lying beneath the sands -- wasted, if you happen to value it (word is, some do).

As conservative commentator Kevin Phillips has detailed,
From the 1930s to the 1960s, in the words of oil historian Anthony Sampson, the reorganized Middle East had "two kinds of maps: some showing the names and outlines of nations, most of them comparatively new; and others showing the region cut up into squares along the coast, marked with the initials -- IPC, KOC, ARAMCO, AOC -- representing the consortia of oil companies, nearly always including some of the Seven Sisters. To the companies, it was these squares which were the real geography: Saudi Arabia was Aramco-land; Iran meant all seven; Kuwait was Gulf and BP.

The oil maps, in short, had long been the ones that mattered. For the US and British oil companies, losing these concessions to the nationalizations of the 1970s was infuriating. The irony with respect to Iraq was that for one reason or another, the 1970s were the only decade of heavy pumping and large oil revenues. Production had been kept low during the glutted thirties, and it then stagnated during WWII. ...Over the last decade or so this chronology of Iraq's surprisingly limited oil production had become relevant again for a simple reason: given that relatively little of Iraq's oil has been pumped, most of it is still in the ground. "American Theocracy, pp. 75-76
"The whole country." Rivers, oceans of oildollars, buried treasure in the sand, now obscured by the clamour of war. Yet fear not, o countryman, for the honor of our purpose. There's no chance whatsoever that we're there to get the oil. As Donald Rumsfeld has said:
if anyone looks at the history of the United States of America, they would know that we don’t want Iraqi oil. That oil belongs to the Iraqi people. ... Our interest is not the oil, and it will be clear that that is the case. The money and revenues from that oil belong to Iraqi people and they will have that.

Colin Powell
the one thing I can assure you of is that it will be held in trust for the Iraqi people, to benefit the Iraqi people. That is a legal obligation that the occupying power will have.
Rummy again:
The President has also requested funds ... to help with emergency fire fighting and repair of damage to oil facilities. It is important that we have these resources available.

But let me be clear: when it comes to reconstruction, before we turn to the American taxpayers, we will turn first to the resources of the Iraqi government itself and the international community. ...Once Saddam Hussein is gone, the U.S. will work with the Iraqi Interim Authority that will be established to tap Iraq’s oil revenues...
Paul Wolfowitz exercising strong message discipline:
the oil revenues of that country could bring between $50 and $100 billion dollars over the course of the next two or three years. ... We are dealing with a country that can really finance its own reconstruction and relatively soon.

...time passes...

...like 5 or 6 years...

June 19, 2008:
Exxon Mobil, Shell, Total and BP — the original partners in the Iraq Petroleum Company — along with Chevron and a number of smaller oil companies, are in talks with Iraq’s Oil Ministry for no-bid contracts to service Iraq’s largest fields, according to ministry officials, oil company officials and an American diplomat.
That story also says:
The revenue would be used for reconstruction, although the Iraqi government has had trouble spending the oil revenues it now has, in part because of bureaucratic inefficiency.
See if you can find the missing phrase. Here's a hint: It goes between "reconstruction," and "although" and it goes like this: "after paying the contract fee to these western oil companies.

It could be argued that these contracts are simply the thanks of a grateful Iraqi nation. After all, these companies had been providing (free of charge!) "advice" to the Iraqi government (still peopled with American policy-makers) on how to develop the very fields for which they were awarded contracts. Well, at least for most of the fields for which they were awarded contracts:
In all cases but one, the same company that had provided free advice to the ministry for work on a specific field was offered the technical support contract for that field, one of the companies’ officials said.The exception is the West Qurna field in southern Iraq, outside Basra. There, the Russian company Lukoil, which claims a Hussein-era contract for the field, had been providing free training to Iraqi engineers, but a consortium of Chevron and Total, a French company, was offered the contract. A spokesman for Lukoil declined to comment.
Russian Go Home! Your charity will not be rewarded here!
These no-bid contracts are simply to help the Iraqis to extract the oil. They are not a license to the oil itself. But it is as plain as the sun that the "free advice" was never free--that it was, in fact, merely the nose of the camel. Soon, the entire dromedary, and its spit and its shit, will be inside the tent.
“The bigger prize everybody is waiting for is development of the giant new fields,” Leila Benali, an authority on Middle East oil at Cambridge Energy Research Associates, said in a telephone interview from the firm’s Paris office. The current contracts, she said, are a “foothold” in Iraq for companies striving for these longer-term deals.
"Giant new fields." Actually, they're ancient. They're waiting for us -- well, some of us. Derrick Z. Jackson of the Boston Globe made many of these connections in his editorial of today, linked in the headline, and inspired me to dig up the old quotes from Phillips' book. I don't know why. I've written about this before, extensively. It's pretty clear that the camel has been inside the tent for some time now. I guess I'm still seduced by the crazy liberal notion that you can put 1,2 and 3 in order next to 5,6 and 7, and expect people to see that #4 is in the middle.


Adam said...

Over 3/4 of the oil in the world is pumped by nationalized oil companies like Amramco and PDSVA. With the iraqi government going through its growing pains, aren't western oil companies in the best position to exploit the large oil fields in iraq? Don't cry for Lukoil and Putin. Their role in helping Hussein circumvent food-for-oil is criminal. It's too bad most of the world has ignored it.

If this was a war for oil, the Bush administration has done a pretty bad job getting the oil out of the ground. I see their priorities as this right now,
1. Security
2. Stable Government
3. Oil

If Iraq didn't sit on a huge bed of oil, we probably wouldn't have invaded when we did. I do have a hard time saying this is a war for oil. I've been more inclined to believe we went there because we thought he had WMD, President Bush & Co. thought we could bring "peace and stability" to the middle east, and Iraq sits on a big bed of oil. The western oil companies will get their oil and make a nice profit, but the Iraqi government will make a tity sum as well.

BTW-I hate arguing with lawyer types because you have such good factual recall. It takes me forever to formulate a half-decent argument with proper citations.

Jim said...


Hope your trip is still going well.

[I got to the end of this comment and realized I had maybe run on a little long. But if you can stomach it, then check out my post of May 28, 2007. Inspired by Sgt. PetrieMax, it goes into greater detail with source materials, etc.]

I agree there are a multitude of reasons for our presence in Iraq, and I pretty much agree with your order of current priorities.

But the WMD thing is rubbish. And I'll go along with "peace and stability" (incidentally, not a success), as long as by that you mean "democracy will flow like a river and all we have to do to make that happen is kill the right people." Which by itself is pretty incredibly naive on their part.

Almost every last person involved in the administration who is not currently in the administration has admitted that the Pres, V-P, then-SecDef Rummy and Wolfie conspired to cook the intelligence to make the case for war. Almost every shred of evidence--including the "mobile weapons labs" that were part of the slideshow C.Powell gave at the UN--were ginned up from single-source informants with an ax to grind, and in one case, an international reputation as a con-man. The only people not admitting to this are still gainfully employed by the White House.

I haven't written a comprehensively sourced blog on this since a year ago because, frankly, it depresses the shit out of me.

The "peace and stability" canard is a true beauty of selective sociology combined with a religious (small "r") -- not factual -- view of democracy and how successful democratic institutions coalesce from human populations. The idea itself is not the crystallizing agent the neoconservatives wish that it was. For more reading on how they began to convince themselves of these theoretical underpinnings for the policy of "oil-forward" and "aggressive democracy" dig into information about "The Project for a New American Century," or PNAC.

Led by "liberal" New York Times, no newspapers or reporting agencies asked hard questions (or even follow-up questions to their own softballs) during the run-up to the invasion. Reporter Judith Miller beat the war drum most loudly. It was later revealed that her only significant source was Ahmad Chalabi and that she didn't do any fact-checking. (She was later compelled to quit her job, but not before covering for I. Scooter Libby.)

There was, and is, a lot of complicity on both sides of the aisle to either use public fear to get what they wanted (Patriot Act, AUMF) or to stay out of the way of the zeitgeist lest they be voted out of office or *gasp* labeled un-American or traitorous (see, John Kerry, Hillary Clinton, e.g.). Of course, they were too naive to understand that they'd get that label anyway, as Democrats.

The use of fear continues. The recent "compromise" on the FISA legislation is a response to that fear--again either a willingness to exploit it or an unwillingness to stand up to it and make a principled case. Now FISA (which worked just fine, by the way) has been greatly expanded and the only assurance that the government won't spy on you is their say-so. And the telecommunications companies that broke 4th Amendment law in order to help the government spy on you are no longer subject to accountability.

Finally, I cry for no oil companies--those run by Russian oligarchs least of all (we have plenty of our own, anyway). But they had plenty of help in subverting oil-for-food. According to the CIA, the list includes Chevron, ExxonMobil, Shell and BP, to name a few off the top of my head. Chevron alone admitted to paying over 30million in kickbacks (while Condi Rice was on its board of directors, no less). It's too bad that we in the west have ignored that.

I pointed out that the Russians lost out on the contract to indicate that the pay-to-drill arrangement involved the deaths of US Soldiers, not Russian ones, and the regime in Iraq understands that.

In a war of straight policy, the first preemptive war fought by the US since before WWI, reasons are paramount. Like Ellerby, Alec Baldwin's character in "The Departed," it makes sense to ask "Qui bono? Who benefits?"

In the case of the Iraq invasion, the press and congress and many Americans' response was Matt Damon's: "Qui gives a shit? It's got a fucking bow on it!"

But who has benefited? Certainly not our over-deployed and under-supplied military. Certainly not our economy, strapped with the largest deficit in its history (both as a raw number and as a percentage of GDP) as a result of a war habit that costs $430 million per day [CNNMoney 6/12/08]. According to the President and Congress, we aren't any more secure--that was their main argument for renewing the Patriot Act and the new FISA "compromise."

According to the AP, on the other hand:

Chevron Corp. put yet another exclamation point on the oil patch's long run of prosperity Friday with a first-quarter profit of $5.17 billion, or $2.48 per share. That was up 10 percent from net income of $4.72 billion, or $2.18 per share, last year.

The performance exceeded the lofty expectations of analysts, helping lift Chevron shares 38 cents to $95.32.

It was the second-highest quarterly profit in the company's 129-year history and marked the most money that it has ever made during the January-March period. That puts the No. 2 U.S. oil company on track for its fifth straight year of record earnings.
AP report, 5/2/08.

The same goes for their buddies around the world. These companies have benefited from an energy policy -- literally a secret energy policy -- formulated by Dick Cheney and their own board members behind closed doors. I'm not trying to be hyperbolic--you can't make this shit up. He literally met in secret with oil industry executives to lay out our energy policy in 2001. When newspapers and interest groups sued to see non-classified documentation of the meetings to understand how our official oil use and development policy was crafted, the case was thrown out of court.

Now we're occupying the largest untapped oil reserves in the world with American soldiers (pretty successfully) policing a religious civil war that we set loose. About the only people set to gain from this situation are American oil companies: I ask again, "Qui bono?"

The answer may have a bow on it, but if you're a taxpayer, the box itself is full of a big shit sandwich. Nom nom nom ... tastes great! Thanks, George!