Reidblog [The Reid Report blog]

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Sunday, August 03, 2008
The war for Iraqi oil
Check out this "secret history of the war over oil in Iraq." It's a fascinating presentation of the tug of war between the neocons who used to run George W. Bush's government, and the James Baker-led "realists" who literally represented the interests of Big Oil in U.S. foreign policy, and who attended those secret energy policy meetings organized by Dick Cheney (who apparently has favored both sides at different points in history, according to the author, investigative journalist Greg Palast.)

The bottom line: the Bush administration sought the invasion of Iraq from the time they stepped into office, and initially drafted a plan, in secret meetings with oil industry giants, and including "the late" Ken Lay, which included staging a coup to replace the inconvenient dictator of Iraq with an oil industry favorite, and maintaining the nationalized Iraqi oil industry under the control of U.S. and European firms. After 9/11, the neocons rolled out their own, alternative plan: to privatize Iraqi oil and use direct control over oil output to cut the throat of OPEC. The "secret history" outlines how the "realists" eventually came roaring back, scuttling the neocons plans and maintaining Iraq's state-run oil system, under American control, of course, including direct viceroyship by former U.S. oil executives, who were tapped to run Iraq's oil ministries, and boosting oil prices through the roof in the process. In the end, the U.S. sided with OPEC, including the Saudis and the Iranians, to let everyone get fat off U.S. leverage over Iraqi oil.

Meanwhile, Palast wrote this back in May:
In a hotel room in Brussels, the chief executives of the world’s top oil companies unrolled a huge map of the Middle East, drew a fat, red line around Iraq and signed their names to it.

The map, the red line, the secret signatures. It explains this war. It explains this week’s rocketing of the price of oil to $134 a barrel.

It happened on July 31, 1928, but the bill came due now.

Barack Obama knows this. Or, just as important, those crafting his policies seem to know this. Same for Hillary Clinton’s team. There could be no more vital difference between the Republican and Democratic candidacies. And you won’t learn a thing about it on the news from the Fox-holes.

Let me explain.

In 1928, oil company chieftains (from Anglo-Persian Oil, now British Petroleum, from Standard Oil, now Exxon, and their Continental counterparts) were faced with a crisis: falling prices due to rising supplies of oil; the same crisis faced by their successors during the Clinton years, when oil traded at $22 a barrel.

The solution then, as now: stop the flow of oil, squeeze the market, raise the price. The method: put a red line around Iraq and declare that virtually all the oil under its sands would remain there, untapped. Their plan: choke supply, raise prices rise, boost profits. That was the program for 1928. For 2003. For 2008.

Again and again, year after year, the world price of oil has been boosted artificially by keeping a tight limit on Iraq’s oil output. Methods varied. The 1928 “Redline” agreement held, in various forms, for over three decades. It was replaced in 1959 by quotas imposed by President Eisenhower. Then Saudi Arabia and OPEC kept Iraq, capable of producing over 6 million barrels a day, capped at half that, given an export quota equal to Iran’s lower output.

In 1991, output was again limited, this time by a new red line: B-52 bombings by Bush Senior’s air force. Then came the Oil Embargo followed by the “Food for Oil” program. Not much food for them, not much oil for us.

In 2002, after Bush Junior took power, the top ten oil companies took in a nice $31 billion in profits. But then, a miracle fell from the sky. Or, more precisely, the 101st Airborne landed. Bush declared, “Bring’m on!” and, as the dogs of war chewed up the world’s second largest source of oil, crude doubled in two years to an astonishing $40 a barrel and those same oil companies saw their profits triple to $87 billion.

In response, Senators Obama and Clinton propose something wrongly called a “windfall” profits tax on oil. But oil industry profits didn’t blow in on a breeze. It is war, not wind, that fills their coffers. The beastly leap in prices is nothing but war profiteering, hiking prices to take cruel advantage of oil fields shut by bullets and blood.

I wish to hell the Democrats would call their plan what it is: A war profiteering tax. War is profitable business – if you’re an oil man. But somehow, the public pays the price, at the pump and at the funerals, and the oil companies reap the benefits.

Indeed, the recent engorgement in oil prices and profits goes right back to the Bush-McCain “surge.” The Iraq government attack on a Basra militia was really nothing more than Baghdad’s leaping into a gang war over control of Iraq’s Southern oil fields and oil-loading docks. Moqtada al-Sadr’s gangsters and the government-sponsored greedsters of SCIRI (the Supreme Council For Islamic Revolution In Iraq) are battling over an estimated $5 billion a year in oil shipment kickbacks, theft and protection fees.

The Wall Street Journal reported that the surge-backed civil warring has cut Iraq’s exports by up to a million barrels a day. And that translates to slashing OPEC excess crude capacity by nearly half.

Result: ka-BOOM in oil prices and ka-ZOOM in oil profits. For 2007, Exxon recorded the highest annual profit, $40.6 billion, of any enterprise since the building of the pyramids. And that was BEFORE the war surge and price surge to over $100 a barrel.
Actually, during the second quarter of 2008, the profits swelled to an even higher $51,5 billion for the six biggest OilCos -- the highest EVER. Meanwhile, John McCain's flip-flop on oil drilling, and his almost obsessive promotion of "the surge," which again, is keeping oil profits high, has paid huge dividends for him:
Campaign contributions from oil industry executives to Sen. John McCain rose dramatically in the last half of June, after the senator from Arizona made a high-profile split with environmentalists and reversed his position on the federal ban on offshore drilling.

Oil and gas industry executives and employees donated $1.1 million to McCain last month - three-quarters of which came after his June 16 speech calling for an end to the ban - compared with $116,000 in March, $283,000 in April and $208,000 in May.

McCain delivered the speech before heading to Texas for a series of fund-raisers with energy industry executives, and the day after the speech he raised $1.3 million at a private luncheon and reception at the San Antonio Country Club, according to local news accounts.

"The timing was significant," said David Donnelly, the national campaigns director of the Public Campaign Action Fund, a nonpartisan campaign finance reform group that conducted the analysis of McCain's oil industry contributions. "This is a case study of how a candidate can change a policy position in the interest of raising money."
What's interesting, is that McCain has surrounded himself with the neocons, including Joe Lieberman, whose oil policy lost out in Bush and Cheney's Iraq. Does that mean that as president, he would return to their "Plan A" for the country: privatizing its oil fields and attempting to cut OPEC out of the picture? With McCain's belligerence toward OPEC-member Iran, and the neocons' hatred for all things Arab, it's an important question, which the media unfortunately will never ask.

SIDEBAR: I think it's clear to most people who are not aparatchiks of the GOP that what we're seeing in Iraq is the future of global resource wars -- a push for direct corporate control over entire governments, whether it's Dole in Latin America or Big Oil in LatAm, Africa and the Middle East, complete with private or government armies to maintain corporate interests. It may sound far fetched, but that's what's happening today, in Iraq, Colombia and elsewhere (the Bushies tried to make it happen in Venezuela, too, and would love to do so in Iran.) Americans aren't vigilant enough to ask questions, and the national security state is growing so quickly here, without much opposition from a public that's become accustomed to the existence of cameras and "reality show" surreal lives, that perhaps in the near future, many, if not most, will be unable -- or afraid -- to do so. (Those who do pay attention are frequently written off as paranoids or kooks, or even "un-American" by those on the right.)
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