Taking Back Iraq’s Oil

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Oil may not be the only reason the U.S. government is rushing into war with Iraq, but it is certainly one of the main reasons. Domestic politics, arms industry sales, and other factors all play a role. But for the money-hungry oil corporations, like Exxon-Mobile, Shell, and BP, it is oil that glitters like a mountain of diamonds in the Iraqi desert.

Crude oil is the world’s most actively traded commodity, and when it comes to oil, Iraq has lots of it. With proven reserves of 112-bil bbl (barrels of oil) and probable reserves of 214-bil bbl, Iraq is second only to Saudi Arabia in crude oil reserves. Industry experts believe that Iraq’s true resource potential may be far higher, however, as years of war and sanctions have severely restricted exploration and development. At current prices of about $27 a barrel, this comes out to be a prize worth between $3 trillion and $8.1 trillion. No wonder a post WWII, U.S. State Department assessment called the gulf oil resources “a stupendous source of strategic power, and one of the greatest material prizes in world history … probably the richest economic prize in the world in the field of foreign investment.”

Buying Security Council Votes with Oil
The central role that oil is playing in this crisis was evident in recent U.S. efforts to get the support of Russia and France, who have been resisting U.S. pressure to authorize the use of force against Iraq before inspectors are allowed to return. Their backing has been crucial because they are among the five Security Council members with the power to veto a U.N. Security Council resolution authorizing force.

Why would Russia and France be so resistant to using force against Saddam Hussein? It is because both have a large stake in Iraqi oil and have already invested heavily in it.

On September 1st, the headline of a Washington Post article read “Russian-Iraqi Oil Ties Worry U.S.: Moscow’s Support for an Attack on Hussein May Depend on Economic Assurances.” The article talked about the “depth” of economic ties between Russia and Iraq, which have been long-time allies, ever since the emergence of the Ba’th party and Saddam Hussein in the late 60’s. Major Russian oil corporations such as LUKoil and Zarubezhneft have made major investments in Iraq and have been seeking to position themselves as leading exporters of Iraqi oil when economic sanctions are lifted. LUKoil currently owns 68% in a consortium that has invested a reported $6 billion in developing the 20-bill bbl West Kurna oil field; Iraq also owes Russia at least $7 billion in debt from previous decades.

In a September 9th New York Times article a senior Bush official said the arguments presented to the Russians to get their vote for war against Iraq had been “economic,” and that the U.S. “did not rule out the possibility of negotiating explicit guarantees for Russian interests, mostly oil-related.” The official also stated that “they’re a lot more likely to get their debts paid off” by supporting the U.S. policy.

France also has major investments in Iraqi oil. It, more than any other western nation, has cultivated a relationship with Iraq. France was the largest supplier of arms to Iraq during the Iran-Iraq war. In the 1970’s they helped Iraq build a nuclear power plant that was subsequently bombed by Israel in 1981. The French oil corporation TotalElfFina, the fifth largest oil corporation in the world, has a major presence in Iraq. Among other deals, TotalElfFina has negotiated with Iraq on development rights for the fabulously rich Majnoon oil field, the largest in Iraq.

A top French official candidly laid it out in a September 15th article in the New York Times. He said, “In a sense we’re trapped. Ultimately, we will want to re-engage in Iraq. We built a strategic relationship there. We have a market. We want the oil and we want to be in the game of rebuilding the country. If there were a new regime and we have not been with the Americans, where will we be?”

Actually, what is probably worrying the Russians and the French more than what might happen if they don’t go along is what might happen if they do. Will they get their “fair share” of Iraq’s oil even if they give their support, or will they be left to scramble after the crumbs left behind after U.S. and British oil corporations are allowed to sweep in and gobble up the juiciest and most lucrative fields?

Recent statements made by the U.S.-backed opposition group the Iraqi National Congress (INC) would certainly give Russia and France reason to pause. INC officials have made it clear that “they will not be bound by any of the deals” Iraq has made with Russia, France or other nations. Ahmed Chalabi, the INC leader, went even further, saying he supports the formation of a U.S.-led consortium to develop Iraq’s oil fields. “American companies will have a big shot at Iraqi oil,” he said.

Exxon and Mobil Had it First
But how did it come to be that Russia and France got the dominant position in Iraqi oil, a position they are now anxious about losing to the British and Americans? Not so long ago, before the era of Saddam and the Ba’th party, it wasn’t LUKoil and TotalElfFina that had the dominant position in Iraqi oil, but Exxon-Mobil, BP and Shell. From their perspective, ”regime change” in Iraq would give them the opportunity to reclaim what was “theirs” to begin with.

Following the collapse of the Ottoman Empire after WWI, western governments and oil corporations descended on the Persian Gulf like a pack of hungry hyenas, growling and nipping at each other as they fought for the greatest share. Britain was the main military power in the region, and pieced together Iraq from remnants of the Ottoman Empire. They placed King Faisal, a British puppet, on the throne, and proceeded to block Exxon and Mobil’s exploration efforts in Iraq while giving full support to those of British Petroleum and Royal Dutch Shell. This led to intense diplomatic pressure by the Americans. A British foreign office official complained that “Washington officials began to think, talk and write like Exxon officials.” Finally, in 1928, as part of an overall deal to divide the region’s oil between the world’s great powers, known as the “Red Line Agreement,” Exxon and Mobil were granted a 25% share in the Iraq Petroleum Company. Production began in 1934. While the oil corporations were satisfied with the arrangement, many Iraqi’s were not. To insure their control, Britain maintained bases in the area and routinely bombed and strafed rebellious Kurdish and Shia tribesmen. When the Iraqi leadership rebelled in 1940, the British were forced to send in reinforcements leading to armed conflict with Iraqi forces in 1941. The conflict was short lived, the rebellious Iraqi leadership fled the country, and Britain reestablished its authority.

Iraq Slips Through Britain’s Fingers
In 1958, the British again lost control when an Iraqi revolution led by an army faction known as the Free Officers, under the leadership of Abd al-Karim Qasim, overthrew and executed the British puppet King Faisal II. This time, however, reestablishing British control would not be so easy. The Cold War was in full swing. Qasim soon established diplomatic relations between Iraq and Moscow, signed an extensive Iraqi-Soviet economic agreement, and the Soviets began supplying arms to Iraq. At the same time, Qasim was cautious in dealing with the western oil corporations, and only sought increased revenues rather than complete nationalization. Qasim also sought to keep his distance from the Soviets, first embracing and then later repressing the Iraqi Communist Party (ICP).

Internal division within the army soon led to Qasim’s overthrow and a series of internal coups. In 1968, the Iraqi Ba’th party, under the leadership of Ahmad Hasan al Bakr and Saddam Hussein, emerged as the dominant faction. Some claim that the CIA played a role in the successful 1968 coup that brought the Ba’th party to power. This may well have been, but as events turned out, it would have been a gamble that didn’t pay off. The Ba’th turned away from the U.S. and sought improved relations with the ICP. In April of 1972, Iraq signed a 15-year treaty of Friendship and Cooperation with the Soviet Union and agreed to cooperate in political, economic, and military affairs. The Soviets agreed to supply Iraq with arms. Bakir also nationalized Iraq’s entire oil industry, including Exxon and Mobil’s 25% share in the Iraq Petroleum Company (a share worth today upwards of a trillion dollars). The Soviet Union, and later France, among others, provided Iraq critical technical skill and capitol needed to exploit the oil fields. And thus it happened that U.S., British, and Dutch oil corporations lost their hold on Iraq.

This is not to say that Iraq became part of the Soviet sphere. While the Ba’th turned to the Soviets for protection from British and U.S. imperialists, they maintained their independence, and did not allow the soviets to penetrate their security apparatus to the point of allowing them to ‘reach’ the inner leadership. In the mid-seventies, as had happened in the mid-sixties under Quasim, when it was felt the communists were getting too powerful, the Ba’th cracked down on the ICP and moved to distance themselves from the Soviets. During the Cold War period the Iraqi government, like other revolutionary governments at the time, was able to find a space to exist independently within the balance of power between the U.S. and the Soviet empires.

Strange Bedfellows
Neither should the temporary strategic alliance between the U.S. and Iraq during the Iran-Iraq war be overstated, as some progressives have mistakenly done. Iraq under Saddam was never a “client state” of the U.S., though the U.S. did provide crucial military and political support for Iraq during the latter stages of the war (a time when Iraq was repeatedly using chemical weapons against Iran, with U.S. knowledge and support).

Both Iraq and the U.S. found themselves in conflict with Iran after the 1979 Islamic revolution that brought Ayatollah Khomeini to power, but for completely different reasons. The Ayatollah Khomeini promoted the spread of Islamic revolution across the Middle East, including revolution in Iraq to overthrow Saddam and the Ba’th party, who were secular nationalists that tended toward authoritarian socialism. The U.S., on the other hand, had just lost another oil rich nation to a revolution, and was intent on not letting the revolutionary fever spread.

The Prize and the Price
The collapse of the Soviet Union in 1990 and end of the Cold War radically changed the global power arrangement. No longer can nations like Iraq play the superpowers off one another to maintain independence. So after more than 30 years, with no one to stop them, the U.S. and Britain, with Exxon-Mobil, BP, Shell, UNOCAL, and Chevron waiting in the wings, are moving in to reclaim their lost Iraqi prize. Impotent militarily, all France and Russia will likely do is sell their Security Council vote for the highest price they can get, which probably won’t be much.

The highest price of all, of course, is being paid by Iraqi children, innocent civilians, and young American troops. It is they, and not the oil company stockholders, executives, and political elites who die and suffer as the result of continued sanctions and the bloody horror that is war.

Jeff Sowers and his family recently moved to Urbana from Olympia, Washington for his wife’s graduate work in African Studies. He is currently working as a substitute public school teacher. He graduated from the University of Washington with a degree in Physics in 1988 and then spent six months living in India, an experience that he says made the rest of the world much more real and human. He then came across the work of Noam Chomsky, which completely transformed his understanding of the world and the U.S. government. When the first Gulf war took place in 1991, he became very involved with the anti-war movement in Seattle. Since then he has been involved in a variety of issues and projects, including Pastors for Peace, the Green Party, sweatshop issues, and the promotion of Direct Democracy. He has also traveled to Haiti, Cuba, Mexico, and Tanzania. He is currently a working member at the Common Ground Food co-op and an active member of AWARE.

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