Three Monkeys Online

A Curious, Alternative Magazine

The Smoking Gun? Oil in Iraq as a motive for war.

You mention in one of your essays, a presidential Executive Order 13303 giving immunity to oil companies for all activities in Iraq and deals involving Iraqi oil. – what does this mean, and what signifcance does it have?

This was a special presidential decision, not a law that was passed by Congress, but a decision taken by the President that has the force of law. The reason it was issued, the argument that was given, was that, unless the oil companies operating in Iraq were freed of possible legal complications and lawsuits, they might refuse to buy any oil from Iraq, drying up this important source for financing the occupation and reconstruction of the country. The companies feared that they may be sued by some other agency or company claiming that oil bought during the occupation was not legal, that the occupation authorities were not acting legally under international law. The oil companies argued that they might be tied up in legal action for a very long time.

So the President decided to free the oil companies from fear of action of this sort, allowing them to go right in and start buying Iraqi oil, in hopes that this would help get the economy going. That's the argument for it. But of course, a sweeping decision of this kind taken by the President, has all sorts of other implications – freeing the companies from legal responsibilities, and we have no idea what they might be up to, and in what ways this law might protect them and aid them in legally dubious activities in Iraq.

But is there any evidence that US-UK oil companies have profited out of the Iraqi invasion?

I think the goals are not short term, so we can't really look at this immediate period and expect to see the evidence straight away. There's been a lot of discussions and maneuvering between companies. For instance, companies from Russia, France and China have been trying to affirm their legal right to the contracts and arrangements they already had with the former government. At the same time, the US and UK companies have been seeking to minimise those claims and argue that they are null and void.

But I think the US-UK companies and their host governments expected that thin
gs would turn out very differently than they have. They doubtless hoped that by this time there would have been a stable new Iraqi government under US-UK influence that would already have assigned them production sharing agreements or begun negotiations to do so. That hasn't happened, so the companies are not in a position to do much right now. The resistance forces them to keep an extremely low profile. But if you look at the battles that took place over Iraq's oil back in the first world war period, you'll notice that there was tremendous activity going on, huge diplomatic efforts, and even military action, but there wasn't any oil produced in Iraq until 1927. And even when the companies started to produce oil there, they didn't produce a lot – they kept it in the ground, because they didn't want to flood the marketplace. They were operating a global cartel. So I would say that the activities of the companies are relatively invisible at this stage, and we're not seeing any contracts or arrangements yet. When the security and political situation stabilizes, there will be more public action.

What about the paper on the internet circulating, suggesting the transactional currency used in the oil market was a major factor in the outbreak of war – that the possible change to the Euro was the provokation for the war. Do you give this any credence?

The author of that paper sent it to me very early on, and I've had conversations with him. I don't find the paper very persuasive. My main objection is that the war weakened the dollar vis a vis the Euro, rather than strengthening it. The idea that gaining control over Iraq's oil the US would somehow manage to strengthen the dollar – I just don't buy that at all.

You'll notice that both before the war broke out and after, the dollar has been pretty consistently weak. If you listen to the warnings given by the International Monetary Fund and so on, you'll know that there's a lot of concern among the financial gurus and bankers that the dollar is going to continue to go down. The weakness of the dollar has been exacerbated by the war which has only added to the federal deficit and the deficit in the US balance of payments, so it just doesn't make sense that the war has been fought over the dollar.

For the future – what do events in Iraq say to other oil producing nations?

Well, it's always been dangerous to be an oil producing country. There's a very extensive literature on the oil industry, and if you look at Daniel Yergin’s book (The Prize: the epic quest for oil, power and money), which is not a radical book in any way, it tells the details of the oil industry from the beginning – it's very clear that oil and war have always been very tightly linked up, so whether it's the US interventions in Mexico, or Venezuela, or Indonesia, wherever there's been oil, there have been threats of conflict.


Related articles by James Paul, on oil in Iraq, at the Global Policy Forum Website.

Paper on the Euro vs Dollar, and the war in Iraq, by William Clark


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