21st century Oil Wars: 02- PNAC & Iraq

This is the second part of the Oil Wars of 21st century.

Iraq

The Project for a New American Century, a D.C.-based political think tank funded by archconservative philanthropies and founded in 1997, is the source of the Bush Administration’s imperialistic urge for the U.S. to dominate the world. Our nation should seek to achieve a “…benevolent global hegemony,” according to William Kristol, PNAC’s chairman. The group advocates the novel and startling concept of “pre-emptive war” as a means of doing so.

On January 26, 1998, the PNAC, sent a letter to President William Clinton urging the military overthrow of Saddam Hussein in Iraq. The dictator, the letter alleged, was a destabilizing force in the Middle East, and posed a mortal threat to “…the safety of American troops in the region, of our friends and allies like Israel and the moderate Arab states, and a significant portion of the world’s oil supply…” The subjugation of Iraq would be the first application of “pre-emptive war.”

The unprovoked, full-scale invasion and occupation of another country, however, would be an unequivocal example of “the use of armed force by a state against the sovereignty, territorial integrity, or political independence of another state.” That is the formal United Nations definition of military aggression, and a nation can choose to launch it only in self-defense. Otherwise it is an international crime.

President Clinton did not honor the PNAC’s request.

But sixteen members of the Project for a New American Century would soon assume prominent positions in the Administration of George W. Bush, including Dick Cheney, Lewis “Scooter” Libby, Donald Rumsfeld, Paul Wolfowitz, Richard Armitage and John Bolton.

The “significant portion of the world’s oil supply” was of immediate concern, because of the commanding influence of the oil industry in the Bush Administration. Beside the president and vice president, eight cabinet secretaries and the national security advisor had direct ties to the industry, and so did 32 others in the departments of Defense, State, Energy, Agriculture, Interior, and the Office of Management and Budget.

Within days of taking office, President Bush appointed Vice President Cheney to chair a National Energy Policy Development Group. Cheney’s “Energy Task Force” was composed of the relevant federal officials and dozens of energy industry executives and lobbyists, and it operated in tight secrecy. (The full membership has never been revealed, but Enron‘s Kenneth Lay is known to have participated, and the Washington Post reported that Exxon-Mobil, Conoco, Shell, and BP America did, too.)

During his second week in office, President Bush convened the first meeting of his National Security Council. It was a triumph for the PNAC. In just one hour-long meeting, the new Bush Administration turned upside down the long-standing focus of U.S. foreign policy in the Middle East. Over Secretary of State Colin Powell’s objections, the goal of reconciling the Israel-Palestine conflict was abandoned, and the overthrow of Saddam Hussein was set as the new priority. Ron Suskind’s book, The Price of Loyalty, describes the meeting in detail.

The Energy Task Force wasted no time, either. Within three weeks of its creation, the group was poring over maps of the Iraqi oilfields, pipelines, tanker terminals, and oil exploration blocks. It studied an inventory of “Foreign Suitors for Iraqi Oilfield Contracts” — dozens of oil companies from 30 different countries, in various stages of negotiations for exploring and developing Iraqi crude.

Not a single U.S. oil company was among the “suitors,” and that was intolerable, given a foreign policy bent on global hegemony. The National Energy Policy document, released May 17, 2001 concluded this: “By any estimation, Middle East oil producers will remain central to world security. The Gulf will be a primary focus of U.S. international energy policy.”

That rather innocuous statement can be clarified by a top-secret memo dated February 3, 2001 to the staff of the National Security Council. Cheney’s group, the memo said, was “melding” two apparently unrelated areas of policy: “the review of operational policies toward rogue states,” such as Iraq, and “actions regarding the capture of new and existing oil and gas fields.” The memo directed the National Security Council staff to cooperate fully with the Energy Task Force as the “melding” continued. National security policy and international energy policy would be developed as a coordinated whole. This would prove convenient on September 11, 2001, still seven months in the future.

The Bush Administration was drawing a bead on Iraqi oil long before the “global war on terror” was invented. But how could the “capture of new and existing oil fields” be made to seem less aggressive, less arbitrary, less overt?

During April of 2002, almost a full year before the invasion, the State Department launched a policy-development initiative called “The Future of Iraq Project” to accomplish this. The “Oil and Energy Working Group” provided the disguise for “capturing” Iraqi oil. Iraq, it said in its final report, “should be opened to international oil companies as quickly as possible after the war … the country should establish a conducive business environment to attract investment in oil and gas resources.”

Capture would take the form of investment, and the vehicle for doing so would be the “production sharing agreement.”

Under production sharing agreements, or PSAs, oil companies are granted ownership of a “share” of the oil produced, in exchange for investing in development costs, and the contracts are binding for up to 30 years. What would happen, though, if the companies’ investments were only minimal, but their shares of the production were obscenely, disproportionately large?

This is hardwired. According to a UK Platform article titled “Crude Designs,” production sharing agreements have now been drafted in Baghdad covering 75 percent of the undeveloped Iraqi fields, and the oil companies, waiting to sign the contracts, will earn as much 162 percent on their investments. And the “foreign suitors” are not quite so foreign now: The players on the inside tracks are Exxon-Mobil, Chevron, Conoco-Phillips, BP-Amoco and Royal Dutch-Shell.

The use of PSAs will cost the Iraqi people hundreds of billions of dollars in just the first few years of the “investment” program. They would be far better off keeping in place the structure Iraq has relied upon since 1972: a nationalized oil industry leasing pumping rights to the oil companies, who then pay royalties to the central government. That is how it is done today in Saudi Arabia and the other OPEC countries.

Production sharing agreements, heavily favored by the oil companies, were specified by George Bush’s State Department. Paul Bremer’s Coalition Provisional Authority drafted an oil law privatizing the oil sector, and American oil interests have lobbied in Baghdad ever since then for the PSAs. Apparently successfully: The Oil Committee headed by Deputy Prime Minister Barham Salih is said currently to be “leaning” toward them.

With the capture of Iraqi oil resources prospectively disguised, the Halliburton company was then hired, secretly, to design a fire suppression strategy for the Iraqi oil fields. If oil wells were to be torched during the upcoming war (as Saddam did in Kuwait in 1991), the Bush Administration would be prepared to extinguish them rapidly. The contract with Halliburton was signed in the fall of 2002. Congress had yet to authorize the use of force in Iraq.

So a line of dots begins to point at Iraq, though nothing illegal or unconstitutional has yet taken place. We are still in the policy-formulation stage, but two “seemingly unrelated areas of policy” — national security policy and international energy policy — have become indistinguishable.

more to come, or read:

http://www.alternet.org/waroniraq/47489/

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