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November 22, 2002
Iraq’s Oil Wealth
Armed with an unambiguous Congress authorization for war with Iraq, a UN Security Council resolution worded ambiguously to admit of Iraq being accused of its “material breach”, and his remarkable success in mid-term elections to win majorities for his party in both houses of Congress, President Bush finds himself in an ideal position now to launch an attack on Iraq.
The UN resolution does not specifically authorize a US attack unilaterally or in concert with Britain, but it does not prohibit one either. While the opponents of a US invasion of Iraq - France, Russia and China - are free to interpret the language as they see fit, while the other Security Council members are free to keep discussing its linguistic niceties, the US and Britain are free to go ahead and invade Iraq.
Some opposition to the US intent to attack and occupy Iraq came from sections of American media and some eminent citizens, including a few leading Democrats. But generally the agenda behind the move - capture of oil wells and elimination of Iraqi threat to neighboring Israel - was kept deliberately blurred and unclear by the ruckus over the fears of a threat to the US by Iraqi chemical and biological weapons, advisability of pre-emptive strikes to stop that, and accusations that the Saddam regime was hand-in-glove with Osama’s Al-Qaeda. Iraq’s defiance of UN sanctions was mentioned repeatedly in this welter.
Arab neighbors of Iraq, who opposed the US plan, confined their fears to the possibilities of their own regimes becoming unstable by a forceful change of regime in Iraq.
Daunting objections, however, came from France, Russia and China, permanent and veto-holding members of the Security Council.
All of them had interest in Iraqi oil. Their interests lay below the surface of the talks at the United Nations and delayed the passage of the US-Britain sponsored resolution. Interestingly enough, the thorny issue of who would control the Iraqi oil and to what extent was not even on the official agenda of these talks. This was tackled by quiet diplomacy. Evidently some agreement and understanding has finally been achieved; the resolution could not have been otherwise passed unanimously.
All the five permanent members of the Security Council - US, Britain, France, Russia, and China - are home to the world’s leading energy companies as well as industrial complexes which are largely dependent on oil. All five of them, therefore, entered into intense parleys for satisfying their claims. The unanimous resolution shows that this has been achieved.
The Iraqi issue thus revolves around the divergent claims of these five powers. The CEO of a Russian company involved in Iraqi oil since 1967 said bluntly: “The only reason for the crisis over Iraq is the US desire to establish full control over the oil-gas complex of Iraq.”
Then there are concerns of France, Russia and China as to whether the new government in Iraq would honor the existing agreements with these countries. Russia’s Lukoil, for instance, has a $3.5 billion agreement for the development of West Qurnah oil field. France’s Totalfina Elf has negotiated exploration of Majnoon field, and China’s Petroleum Corporation has contracted to work on Rumalia field with reserves exceeding 20 billion barrels.
The Bush administration has vehemently denied that it is planning a US-led division of Iraqi oil reserves to benefit American multinational oil companies. Iraq has under its soil some 11% of world’s known oil reserves - about 112 billion barrels. And, it is comparatively cheaper - about $1,50 a barrel - to produce Iraqi oil
The Gulf War and the UN sanctions have reduced considerably production of Iraqi wells. The sanctions allow the sale of Iraqi oil for food and medicines. The sanctions will have to be lifted and an amount of $5 billion invested in the rehabilitation of old wells and pipeline merely to take production up to earlier level of 3.5 million barrels a day. For a possible three-fold increase in production, another 10 billion dollars would be needed.
Once Iraq enters the oil market in a big way, the prices will fall benefiting greatly major consumers - the US, China, Singapore and several other industrial states. . Losers will be Syria, Turkey and Iran that are at present bypassing the UN sanctions and providing outlets for Iraqi oil. Saddam and his immediate family members too have received enormous kickbacks in the devious deals.
Reverting to the UN resolution on arms inspections in Iraq, it may be noted that the timetable for compliance could theoretically stretch to February, 2003 when the inspectors have to submit their first report to the UN. The Security Council would then decide on the advisability or otherwise of an attack on Iraq.
Considering the vague wordings of the resolution, Bush administration believes that it has been provided with a cover for war and that it does not have to seek Security Council approval before launching attacks unilaterally or in concert with the UK and others.
One cannot avoid the sneaking fear that it would be a futile proposition for the inspectors - irrespective of their expertise - to wander about a country looking for what has been deliberately concealed. The inspections carried out by the UN teams from 1981 to 1998 showed that the Iraqi regime had done a far better job of keeping track of the inspectors than the inspectors had of keeping track of the facilities. A recent analysis of 280 inspections revealed that hardly 6 of them were surprise visits catching off-guard the Iraqi minders of the sites.
The Bush administration might not wait till the receipt of the inspectors’ report. An opportunity for US action may come sooner, on December 8, when the Iraqi authorities have to give to the UN a full accounting of not only all of their weapons programs, but also of all civilian chemical, biological and nuclear production and research activities in the country. Even the UN inspectors regard this deadline as harsh, if not unrealizable.
The US authorities have been for quite some time working on a list of their own based on earlier inspections and reports from their own sources. The Iraqi report is unlikely to cover all the sites. It might thus be declared as false and deceptive. The US may decide to start bombing at that point. The weather will also be conducive then for a war in that region.
To place the issue in a historical perspective, one may recall that industrialization and capitalism had led in the 18th and 19th centuries to the emergence of colonialism. The two World Wars were fought for colonial markets by those industrial states - Germany, Italy and Japan - who had been left behind in the scramble for colonies. Their productions had reached a stage where they had to export to survive. But, the heavy import duties on their products made it impossible for them to compete in the colonies of the already established imperial powers. They raised the slogan of “a place under the sun” meaning a share in world markets. That was not heeded and the ensuing WWII led to the end of colonialism and emergence of independent nation states.
Over the past half a century a new world economic order has emerged which is dominated by multinational corporations. Called “globalization”, it admits of the occupation and exploitation, direct or indirect, of sources of raw material and of manpower. The cause of the imminent war in Iraq becomes clearer if seen in this perspective.
Dr. Henry Kissinger, who believes that oil is too precious a commodity for the industrialized countries to be left at the discretion of the volatile Arab states, wrote as follows in October 1998 on the implications of globalization:
“Just as the reckless laissez faire capitalism of the 19th century spawned Marxism, so the indiscriminate globalism of the 1990s may generate a worldwide assault on the very concepts of free financial markets.”
Arifhussaini@hotmail.com
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