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It’s the Oil
By Jim Holt
10/20/07 "London
Review Of Books"
-- -- Iraq is ‘unwinnable’, a ‘quagmire’, a ‘fiasco’: so
goes the received opinion. But there is good reason to think
that, from the Bush-Cheney perspective, it is none of these
things. Indeed, the US may be ‘stuck’ precisely where Bush et al
want it to be, which is why there is no ‘exit strategy’.
Iraq has 115 billion barrels of known oil reserves. That is more
than five times the total in the United States. And, because of
its long isolation, it is the least explored of the world’s
oil-rich nations. A mere two thousand wells have been drilled
across the entire country; in Texas alone there are a million.
It has been estimated, by the Council on Foreign Relations, that
Iraq may have a further 220 billion barrels of undiscovered oil;
another study puts the figure at 300 billion. If these estimates
are anywhere close to the mark, US forces are now sitting on one
quarter of the world’s oil resources. The value of Iraqi oil,
largely light crude with low production costs, would be of the
order of $30 trillion at today’s prices. For purposes of
comparison, the projected total cost of the US
invasion/occupation is around $1 trillion.
Who will get Iraq’s oil? One of the Bush administration’s
‘benchmarks’ for the Iraqi government is the passage of a law to
distribute oil revenues. The draft law that the US has written
for the Iraqi congress would cede nearly all the oil to Western
companies. The Iraq National Oil Company would retain control of
17 of Iraq’s 80 existing oilfields, leaving the rest – including
all yet to be discovered oil – under foreign corporate control
for 30 years. ‘The foreign companies would not have to invest
their earnings in the Iraqi economy,’ the analyst Antonia Juhasz
wrote in the New York Times in March, after the draft law was
leaked. ‘They could even ride out Iraq’s current “instability”
by signing contracts now, while the Iraqi government is at its
weakest, and then wait at least two years before even setting
foot in the country.’ As negotiations over the oil law stalled
in September, the provincial government in Kurdistan simply
signed a separate deal with the Dallas-based Hunt Oil Company,
headed by a close political ally of President Bush.
How will the US maintain hegemony over Iraqi oil? By
establishing permanent military bases in Iraq. Five
self-sufficient ‘super-bases’ are in various stages of
completion. All are well away from the urban areas where most
casualties have occurred. There has been precious little
reporting on these bases in the American press, whose dwindling
corps of correspondents in Iraq cannot move around freely
because of the dangerous conditions. (It takes a brave reporter
to leave the Green Zone without a military escort.) In February
last year, the Washington Post reporter Thomas Ricks described
one such facility, the Balad Air Base, forty miles north of
Baghdad. A piece of (well-fortified) American suburbia in the
middle of the Iraqi desert, Balad has fast-food joints, a
miniature golf course, a football field, a cinema and distinct
neighbourhoods – among them, ‘KBR-land’, named after the
Halliburton subsidiary that has done most of the construction
work at the base. Although few of the 20,000 American troops
stationed there have ever had any contact with an Iraqi, the
runway at the base is one of the world’s busiest. ‘We are behind
only Heathrow right now,’ an air force commander told Ricks.
The Defense Department was initially coy about these bases. In
2003, Donald Rumsfeld said: ‘I have never, that I can recall,
heard the subject of a permanent base in Iraq discussed in any
meeting.’ But this summer the Bush administration began to talk
openly about stationing American troops in Iraq for years, even
decades, to come. Several visitors to the White House have told
the New York Times that the president himself has become fond of
referring to the ‘Korea model’. When the House of
Representatives voted to bar funding for ‘permanent bases’ in
Iraq, the new term of choice became ‘enduring bases’, as if
three or four decades wasn’t effectively an eternity.
But will the US be able to maintain an indefinite military
presence in Iraq? It will plausibly claim a rationale to stay
there for as long as civil conflict simmers, or until every
groupuscule that conveniently brands itself as ‘al-Qaida’ is
exterminated. The civil war may gradually lose intensity as
Shias, Sunnis and Kurds withdraw into separate enclaves,
reducing the surface area for sectarian friction, and as
warlords consolidate local authority. De facto partition will be
the result. But this partition can never become de jure. (An
independent Kurdistan in the north might upset Turkey, an
independent Shia region in the east might become a satellite of
Iran, and an independent Sunni region in the west might harbour
al-Qaida.) Presiding over this Balkanised Iraq will be a weak
federal government in Baghdad, propped up and overseen by the
Pentagon-scale US embassy that has just been constructed – a
green zone within the Green Zone. As for the number of US troops
permanently stationed in Iraq, the defence secretary, Robert
Gates, told Congress at the end of September that ‘in his head’
he saw the long-term force as consisting of five combat
brigades, a quarter of the current number, which, with support
personnel, would mean 35,000 troops at the very minimum,
probably accompanied by an equal number of mercenary
contractors. (He may have been erring on the side of modesty,
since the five super-bases can accommodate between ten and
twenty thousand troops each.) These forces will occasionally
leave their bases to tamp down civil skirmishes, at a declining
cost in casualties. As a senior Bush administration official
told the New York Times in June, the long-term bases ‘are all
places we could fly in and out of without putting Americans on
every street corner’. But their main day-to-day function will be
to protect the oil infrastructure.
This is the ‘mess’ that Bush-Cheney is going to hand on to the
next administration. What if that administration is a Democratic
one? Will it dismantle the bases and withdraw US forces
entirely? That seems unlikely, considering the many
beneficiaries of the continued occupation of Iraq and the
exploitation of its oil resources. The three principal
Democratic candidates – Hillary Clinton, Barack Obama and John
Edwards – have already hedged their bets, refusing to promise
that, if elected, they would remove American forces from Iraq
before 2013, the end of their first term.
Among the winners: oil-services companies like Halliburton; the
oil companies themselves (the profits will be unimaginable, and
even Democrats can be bought); US voters, who will be guaranteed
price stability at the gas pump (which sometimes seems to be all
they care about); Europe and Japan, which will both benefit from
Western control of such a large part of the world’s oil
reserves, and whose leaders will therefore wink at the permanent
occupation; and, oddly enough, Osama bin Laden, who will never
again have to worry about US troops profaning the holy places of
Mecca and Medina, since the stability of the House of Saud will
no longer be paramount among American concerns. Among the losers
is Russia, which will no longer be able to lord its own energy
resources over Europe. Another big loser is Opec, and especially
Saudi Arabia, whose power to keep oil prices high by enforcing
production quotas will be seriously compromised.
Then there is the case of Iran, which is more complicated. In
the short term, Iran has done quite well out of the Iraq war.
Iraq’s ruling Shia coalition is now dominated by a faction
friendly to Tehran, and the US has willy-nilly armed and trained
the most pro-Iranian elements in the Iraqi military. As for
Iran’s nuclear programme, neither air strikes nor negotiations
seem likely to derail it at the moment. But the Iranian regime
is precarious. Unpopular mullahs hold onto power by financing
internal security services and buying off elites with oil money,
which accounts for 70 per cent of government revenues. If the
price of oil were suddenly to drop to, say, $40 a barrel (from a
current price just north of $80), the repressive regime in
Tehran would lose its steady income. And that is an outcome the
US could easily achieve by opening the Iraqi oil spigot for as
long as necessary (perhaps taking down Venezuela’s oil-cocky
Hugo Chávez into the bargain).
And think of the United States vis-ŕ-vis China. As a consequence
of our trade deficit, around a trillion dollars’ worth of US
denominated debt (including $400 billion in US Treasury bonds)
is held by China. This gives Beijing enormous leverage over
Washington: by offloading big chunks of US debt, China could
bring the American economy to its knees. China’s own economy is,
according to official figures, expanding at something like 10
per cent a year. Even if the actual figure is closer to 4 or 5
per cent, as some believe, China’s increasing heft poses a
threat to US interests. (One fact: China is acquiring new
submarines five times faster than the US.) And the main
constraint on China’s growth is its access to energy – which,
with the US in control of the biggest share of world oil, would
largely be at Washington’s sufferance. Thus is the Chinese
threat neutralised.
Many people are still perplexed by exactly what moved
Bush-Cheney to invade and occupy Iraq. In the 27 September issue
of the New York Review of Books, Thomas Powers, one of the most
astute watchers of the intelligence world, admitted to a degree
of bafflement. ‘What’s particularly odd,’ he wrote, ‘is that
there seems to be no sophisticated, professional, insiders’
version of the thinking that drove events.’ Alan Greenspan, in
his just published memoir, is clearer on the matter. ‘I am
saddened,’ he writes, ‘that it is politically inconvenient to
acknowledge what everyone knows: the Iraq war is largely about
oil.’
Was the strategy of invading Iraq to take control of its oil
resources actually hammered out by Cheney’s 2001 energy task
force? One can’t know for sure, since the deliberations of that
task force, made up largely of oil and energy company
executives, have been kept secret by the administration on the
grounds of ‘executive privilege’. One can’t say for certain that
oil supplied the prime motive. But the hypothesis is quite
powerful when it comes to explaining what has actually happened
in Iraq. The occupation may seem horribly botched on the face of
it, but the Bush administration’s cavalier attitude towards
‘nation-building’ has all but ensured that Iraq will end up as
an American protectorate for the next few decades – a necessary
condition for the extraction of its oil wealth. If the US had
managed to create a strong, democratic government in an Iraq
effectively secured by its own army and police force, and had
then departed, what would have stopped that government from
taking control of its own oil, like every other regime in the
Middle East? On the assumption that the Bush-Cheney strategy is
oil-centred, the tactics – dissolving the army, de-Baathification,
a final ‘surge’ that has hastened internal migration – could
scarcely have been more effective. The costs – a few billion
dollars a month plus a few dozen American fatalities (a figure
which will probably diminish, and which is in any case
comparable to the number of US motorcyclists killed because of
repealed helmet laws) – are negligible compared to $30 trillion
in oil wealth, assured American geopolitical supremacy and cheap
gas for voters. In terms of realpolitik, the invasion of Iraq is
not a fiasco; it is a resounding success.
Still, there is reason to be sceptical of the picture I have
drawn: it implies that a secret and highly ambitious plan turned
out just the way its devisers foresaw, and that almost never
happens.
Jim Holt writes for the New York Times Magazine and the New
Yorker.
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