The Iraq Oil Law: The Long Game

This is a somewhat shorter variation of an article published in the March/April edition of The Humanist magazine. I serve it up here as both background and prelude to a follow-on article (the idea prompt by a previous comment by Mentarch regarding Iraq oil refinery privatization) about recent developments surrounding the Iraq Oil Law and other privatization plans of Iraqi infrastructure now underway.

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The Long Game

A racket is best described, I believe, as something that is not what it seems to the majority of the people. Only a small "inside" group knows what it is about. It is conducted for the benefit of the very few, at the expense of the very many. Out of war a few people make huge fortunes.

-- Maj. Gen. Smedley Butler,
USMC,
War is a Racket

If it has not already done so [Ed. to date, it has not], the Iraqi parliament is expected to pass a new National Oil Law. This is probably not something many Americans have heard much about and generally most US media outlets have portrayed the law as a good and necessary thing. The law appears designed to reinvigorate the dilapidated oil industry in a country with vast oil wealth but which has been punished by wars and sanctions for decades. I say "appears" because, while the law is designed to spur Iraq's oil production, there are also other purposes for which it is designed: enrich western oil companies to new and lofty heights and, more importantly, to secure Middle Eastern oil deposits for American interests and against those of competing world powers. Twenty years of "realist" foreign policy, which has overseen the deaths of millions, along with the current mayhem, has finally culminated in Western interests citing those very policies as the rationale for taking control of Iraqi oil fields for the first time since 1972. This is what is known as "the long game."

Encouraged by both the White House and the Baker Commission report, the National Oil Law was originally drawn up by the White House and its surrogates. One of those surrogates was US consultant firm, Bearing Point Inc., which was contracted by the Bush administration over a year ago to aid the Iraq Oil Ministry -- the one ministry that US forces did guard during the looting that ensued after the fall of Baghdad -- in drafting the new oil law. This law is widely seen as highly unusual in the Middle East, where they are often constitutionally prohibited, and will grant major western oil companies so called Production Sharing Agreements (PSA) for up to 30 years and, in at least the first few years, permit them up to 75% of the profits from both developed and undeveloped oil fields. Key to thesePSAs is that they are "locked in," regardless of the government in power.

To understand the magnitude of potential profits, it is important to know that only 17 of 80 potential oil fields in Iraq have ever been touched and it is estimated that pumping light sweet crude out of Iraq's oil fields could cost as little as one dollar per barrel. Up to 3 million barrels per day are the expected output and, at $50/bbl, this amounts to a profit potential of $100 million per day for participating oil companies. There will be plenty of interested oil companies. None of this can be realized, of course, with the current state of violence in Iraq. It is from this perspective that we can understand why there are no plans, nor have there ever been, for a withdrawal of US troops any time soon.

The Bush administration offered myriad reasons for attacking Iraq before for the invasion. All have proved illusory. These pre-invasion justifications had one thing in common, however: they all encouraged immediate military action. Weapons of mass destruction, ties to 9/11, ties to al Qaeda, yellow cake. Oh, the terrible yellow cake! Mushroom clouds loomed on our horizon. Compared to these, a program of "spreading democracy" would hardly have seemed imperative. But when all of the "reasons" for invasion proved fallacious, White House rhetoric veered onto the ex post facto yet primrose path of freedom and democracy. If the shifting sands of justification demonstrated one thing it was that none of the reasons proffered bore any resemblance to the actual reasons for the invasion of Iraq. While many people raised the issue of oil both before and after the invasion, administration officials insisted and continue to insist that the industrialized world's most important resource was of no interest to this White House, a White House piled high with former oil industry executives. Though Colin Powell explicitly said that, "we did not do it for oil," the new Oil Law casts a very long, very dark shadow across those words.

Despite the common refrain that errors in "intelligence" resulted in the invasion of Iraq, the invasion was not a mistake. Mistake implies some level of accident or inadvertence, something that might have been avoided if only other things were known. But it obvious now that the invasion of Iraq was an orchestrated, deliberate action and merely the last of many policy prescriptions that have been exacted upon that country for the last twenty five years. Since the fall of the Shah in the Iranian revolution, United States foreign policy has remained absolutely consistentvis-à-vis Iraq and Iran. From agitating for and illegally supplying arms to both sides during the Iran-Iraq war, to the destruction of military and civilian infrastructure and the criminal rout of the Iraqi army in the first Gulf War, to the draconian, deadly sanctions levied on Iraq through the nineties, these policies have had one clear purpose: reassert control of Middle East oil supplies. And it is not by accident that, having taken out Saddam Hussein, the Iranian regime is next in the cross-hairs.

As mentioned earlier, it is the extant violence in Iraq that is the real impediment to immediate action in the oil fields. Hence, the desperation on the part of the White House to try anything they can to calm the situation and make it comfortable for western oil interests, which have stated that they are unlikely to invest "until the violence in Iraq abates." Whether troop escalation will deliver this need remains to be seen but what is clear is that withdrawal is not and never has been an option, for that would leave oil and strategic interests high and dry. The mid-term elections suggested that the highly ridiculed "stay the course" policy was finally meeting wide disapproval. The so-called "surge" was really the only option George Bush had that would make it look like he was changing policy when, in effect, he is not changing policy at all. And Bush has stated quite clearly that troops will not be withdrawn while he is in office. This is perhaps the most believable statement he has ever made.

What is likely to be the eventual role for US troops is to garrison existing and future oil infrastructure, much as they served the Oil Ministry during the looting of Baghdad. This also explains the presence of fourteen permanent US military bases -- some close to oil fields -- scattered throughout Iraq, their construction occurring almost immediately after the post-invasion dust had settled. Garrison outposts guarding valuable assets in a hostile foreign land. Now what does that sound like?

The history of civilization is practically equivalent to the history of empires, which itself is a vast chronicle of crimes against humanity. Until recently, empires were very honest about their imperial designs. Since America became the world's preeminent military and economic power, however, honesty about the imperial prerogative has been subjugated by the rhetoric of humanitarianism. Yes, Americans have strong ideals of freedom, democracy and human rights and much of the American public believes this country should be the beacon of these values, here and everywhere. Sadly, this has not been the case and furthermore, far too many Americans remain blithely unaware of just what has been exacted in our name. Despite lofty talk of freedom and democracy, the true nature of the Iraq war has finally been revealed by the Iraqi oil law, written by us for us, with little regard for the needs of Iraq and her people. US foreign policy has exacted a tremendous human toll around the world. Most certainly this is true in Iraq. Perhaps this is the single biggest reason why we must now be told that this is a dangerous world.

It is time for a serious reevaluation of the way we comport ourselves on this small globe, which grows smaller each day. Just as it has been for empires of the past, our government's reckless behavior, beholden as it is to power and profit, is a doomed paradigm. We must engage people in the world in a truly humanitarian way, withequinamity and honesty. I think we would discover then just how many of those "enemies" might disappear. So long has our brutal and careless hegemony been dominant, however, my only fear is that any behavioral change might be entirely too late.