Three Monkeys Online

A Curious, Alternative Magazine

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

That leads me to a very obvious question – what difference, if any, would the election of John Kerry to the presidency make?

Well, John Kerry has recently been arguing that the United States needs to send more troops to Iraq. He's also said that the turnover of sovereignty, which of course is not a very serious turnover of sovereignty, but nevertheless has a certain symbolic importance – should be postponed. In short, Kerry is ta
king positions more hawkish on this conflict than Bush, so I'm not hearing in Mr Kerry a voice that is substantially different to the current administration in terms of Iraq. Nor do I hear from him any criticism whatsoever of the oil industry and its possible role in this war. So my answer to you is: no – I don't see John Kerry making a substantial difference.

Prior to the invasion, the oil issue was very much in the public sphere, with people arguing and denying its relationship to the conflict. Now that the war is technically over, the discussion on oil seems to have dissappeared. What's actually happening to Iraq's oil production currently?

Well, oil in Iraq is currently being produced by the Iraq National Oil Company, which has been in charge of production since nationalization in 1972. The company is selling its oil to foreign buyers and they are loading about 1.5 million barrells a day. The production rate is restricted because of the rather dilapidated state of the industry in Iraq. There's been very little rebuilding of the industry by the occupiers, and also some sabotaging of the oil pipelines. The net result of this is that the production and export rate hasn't been below the rather low rate during the final years of the sanctions under Saddam.

Because of the security situation, there hasn't really been any serious discussion inside Iraq, or inside the US occupation authority, about the medium term re-organization of the industry. To do this now would be political dynamite, so even Bremer has left it alone. I've always said, that I expect the Iraq National Oil Company will continue to be nominally in control of Iraq's oil resources, as a gesture to nationalist sentiment. But the company probably will enter into what are called ‘production sharing agreements’, or PSA's, that will allow foreign companies to explore for and produce oil in some of the new fields, like Majnoun. PSAs allow the companies to bring these Iraqi resources into their own balance sheets. We know from the recent fuss over the Shell that a company's stated reserves are very, very important to its profitability and to its market valuation. In the Shell case, the chief executive officer and two other senior officers resigned because of an overstatement of the company's reserves of somewhat under three billion barrels. I want to point out that the estimated reserves in the Majnoun field in Iraq, one major super-giant field that hasn't really been exploited so far, is something like twenty five billion barrels. So imagine just for a minute that Shell would gain control over that particular field. That field alone has reserves eight times bigger than the amount that put the company into turmoil. This is why the companies are crazy to get their hands on the Iraqi oil.

Post 9/11, with the more credible links to Al-Qaeda, and the world's largest oil reserves – if the issue is oil, why wasn't the war in Saudi?

Well, (hesitates) I don't think this war was about terrorism really. You could certainly argue that the Saudi oil is now outside the control of the companies, and they might want to get back into Saudi as well. It seems to me that the real thing that was going on here was that there was a challenge to the Anglo-American companies, because the French, Russian, Chinese and other companies were about to get there hands on the Iraqi oil. There was not this type of situation in Saudi at all. The Saudis were not privatizing their oil and didn't give any signs of wanting to do that, so you could imagine the companies wishing to set the US and UK military in motion to regain the Saudi oil fields, but there was no immediate cause for something like this.

The perception that Tony Blair was a somehow unwilling partner in the Iraq invasion is something you wouldn't support then?

That's correct. I believe that Tony Blair was a very willing partner, acting on behalf of the British oil interests. However, he was after all a junior partner, and there is some concern on the part of the big British companies (Shell and BP) that they'll receive only second pick in terms of Iraqi oil resources. The US will obviously say – we sent most of the troops, we spent most of the money, so why should you get first pick?

What about the other coalition partners – Italy and Spain for example?

I'm arguing for the primacy of oil in the equation, but I'm not going so far as to say that absolutely everything in this war is connected to oil. We know that there were two very conservative governments in those countries, that value their relationship with the United States, that were perhaps easier to persuade to join this thing than if there'd been slightly different governments in power. So it's not necessarily the case that oil was at issue in Italy and Spain. However, I would mention that Italian oil companies over the last century have been very interested in having a share of the Iraqi oil. When the Brits and their partners distributed the shares in the Turkish Petroleum Company, which became the Iraq Petroleum Company, the Italian interests were very keen to have a stake. If you read the history of it, you see how much the Italian government worked at the time to get an Italian share. The UK and France however refused Italy a share. The US forced its way in and managed to get approximately a quarter share in the company, but Italy failed to get anything. So it's not impossible that the Italian government may have gotten some promises in relation to oil – I just don't know. I don't know for example whether in Italy today there even is an independent specifically Italian oil company.

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