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    Middle East
     Nov 3, 2005
COMMENTARY
Self-made threat to US oil and security

By Jephraim P Gundzik

The US-led occupation of Iraq, which costs about $6 billion per month, involves nearly one-half of America's total active-duty military personnel and is the primary attention of the US Department of Defense. President George W Bush and the White House produce more sound bites on what's occurring in Iraq than any other foreign country.

In addition to the obvious massive commitment of money, personnel and executive and cabinet-level attention, the Bush administration has consistently pointed to the occupation of Iraq as the centerpiece in the US "war on terrorism". Bush reiterated this in a speech to the National Endowment for Democracy in early October. Bush stated, "We must recognize Iraq as the



central front in our 'war on terror'."

Although reputed by US and British intelligence to have been flush with weapons of mass destruction, no such weapons have ever been found in Iraq. No terrorists existed in Iraq prior to the US-led invasion and occupation of the country. Iraqi insurgents, or terrorists using Washington's nomenclature, are purely a product of Iraq's occupation by foreign forces.

Without weapons of mass destruction, Washington has tried to sell the invasion and occupation of Iraq as a profoundly humanitarian gesture designed to rid Iraqis and the world of the despotic Saddam Hussein. But with anywhere between 30,000 and 100,000 Iraqi civilian deaths and economic catastrophe associated with US military action in the country since 2002, it's not difficult to argue that Iraq and Iraqis were far better off with Saddam.

Adding together the costs associated with the US-led invasion and occupation of Iraq combined with the untenable grounds used to initially justify this action, one must conclude that another motive for US military operations in Iraq existed. The one resource that Iraq possesses, and the Bush administration wants, is oil.

Though oil production remains stunted by sabotage, Iraq holds 115 billion barrels of crude oil reserves - the third largest oil reserves in the world. More importantly, Iraqi oil exploration efforts to date have only covered one-tenth of the country. Independent analysts estimate that undiscovered reserves could add between 45 billion and 100 billion barrels of oil to Iraq's already weighty reserves.

While evidence is thin supporting the notion that US military action against Iraq was economically motivated, it is probable that oil security played some role in the final decision to invade Iraq. Regardless of its pre-war role, the US-led occupation of Iraq has made oil supply and oil price security a very important issue not only for the US but for Iran, Venezuela, Russia and China as well.

Strengthening terrorists
Rather than vanquishing terrorism, the war in Iraq has become a breeding ground for terrorists. Iraq's most prominent terrorist, Abu Musab al-Zarqawi, was of slight consequence before the war, while al-Qaeda in Iraq did not even exist. Zarqawi and al-Qaeda in Iraq, which is composed largely of foreign jihadis, are behind many of the bombings, kidnappings and assassinations that have occurred in Iraq since the 2002 invasion.

According to reports issued by the US National Intelligence Council and the Central Intelligence Agency in January and June, respectively, Iraq's foreign jihadis pose an enormous future security threat to the US and its allies. Both reports highlighted the extensive urban guerilla warfare training that these jihadis are benefiting from in Iraq.

These reports also pointed out that the number of jihadis that have been attracted to Iraq since the US-led invasion was significantly higher than the number of jihadis that fought in Afghanistan against Russia. The war in Afghanistan is known to have trained thousands of foreign jihadis, including Osama bin Laden and Zarqawi. Jihadis' training in Afghanistan was limited to rural combat. By comparison, the urban-combat training that jihadis are receiving in Iraq is much more easily applied to terrorist action in other countries.

In addition to Zarqawi and his organization, the war in Iraq has also created an army of domestic insurgents or terrorists. Attacks on US-led forces by domestic insurgents were led by Saddam loyalists or Ba'athists in the initial months of the US occupation. In the past 12 months, Sunni insurgents, who seemed to have joined forces with the Ba'athists, have also been responsible for many bombings as well as attacks on US-led military forces. More recently, Sunni insurgents have stepped up attacks on Iraq's Shi'ites and Kurds, fueling a civil war.

Estimates of the size of insurgent forces in Iraq, including foreign jihadis aligned with Zarqawi, range from 30,000 by US intelligence sources to 200,000 by Iraqi intelligence sources. Undoubtedly, the majority of these forces are composed of Sunni and Ba'athist insurgents. Unlike the foreign jihadis, these insurgents are bent on retaking control of Iraq's government. It is in their interest to intensify the country's civil war in order to further destabilize the US-supported regime.

The progression of the insurgency in Iraq toward civil war has already allowed foreign jihadis to leave Iraq in order to undertake terrorist actions in other countries. The deeper Iraq slides into civil war the greater the exodus of foreign jihadis will be. As these jihadis continue to spread around the region and around the world terrorist attacks will become more frequent and deadly.

According to the US State Department's most recent report on global terrorism, issued in April, the number of terrorist attacks tripled in 2004 from 2003. The number of terrorist attacks in Iraq increased nine-fold in the same period. While new guidelines now prevent the State Department from publishing its tally on terrorism, these statistics were widely disseminated in the US Congress. In the future such statistics are not expected to be revealed to either the public or the Congress.

Elusive Iraqi oil
The ability of the US to exploit Iraqi oil reserves is dependent on the creation of pro-US government in Iraq. Even more important to this exploitation is the stabilization of Iraq. Though Iraq now has a pro-US government, its capacity for governing the country is extremely limited as evidenced by the security vacuum despite the presence of nearly 160,000 US troops.

The insurgency in Iraq has steadily grown in the past two years. Instead of slowing the insurgency, as hoped by the US Department of Defense and the White House, political developments in Iraq, such as the country's elections and constitutional referendums, have fueled the insurgency and hastened the country's slide into civil war.

With insurgents uninterested in participating in Iraq's political process and given the vast amount of armaments in the country, it is extremely improbable that Iraq's insurgency will fizzle. It is more likely to escalate further in the months ahead as many US allies, including Britain, begin to withdraw troops from Iraq. The inevitable withdrawal of US troops will further escalate the insurgency.

Iraq's own military is woefully unprepared to assume security responsibilities from US forces. In addition to weak training, Iraq's military has been widely infiltrated by insurgents making it all but impossible to counter the insurgency domestically. The insurgency has already prevented any meaningful rebuilding of infrastructure damaged during the initial US-led invasion.

Most of the country remains subject to daily 10-hour to 14-hour power blackouts, while access to clean water has declined. In addition to running short of money for infrastructure rebuilding due to the escalation of Iraq's insurgency, the lack of security in the country has also scuppered many military and civilian projects. Chaotic conditions in Iraq will prevent the US from exploiting the country's oil reserves for many years at best.

Insecure US oil supply
In addition to sowing chaotic conditions in Iraq, the unilateral nature of the US-led invasion and occupation, which came without a UN mandate, has proven extremely problematic for US foreign relations. Many countries have become highly suspicious of the Bush administration and its military doctrine of preemptive first strike, which formed the foundation for US military action in Iraq.

In essence, the doctrine of preemptive first strike empowers the United States president to order a unilateral attack on any country deemed to pose a threat to US national security. Iraq posed such a threat due to its now disproved weapons of mass destruction stocks and ties to international terrorist organizations. Two other countries that pose a similar threat to US national security are Iran and Venezuela - both of which also have very large oil reserves.

Iran is being painted by the US and its allies as a threat to global security. The country's yet unproven military nuclear program and reputed support for Palestinian and Iraqi insurgents makes a strong case, in the eyes of Washington, for US military action against Iran. As in the lead up to the war in Iraq, the Bush administration is giving Iran very little diplomatic leeway to disprove US allegations against it.

Venezuela is seen by Washington as a more immediate threat to US national security. The Bush administration claims that the Hugo Chavez government is supporting the insurgency in Colombia and has played an integral role in fomenting social and political instability in Bolivia and Ecuador. Chavez's highly publicized military arms purchases, ranging from light arms to attack aircraft and submarines, have escalated Venezuela's threat to US national security.

Though US military action against Iran and Venezuela may be improbable, the risk of such action has increased substantially from the perspective of Tehran and Caracas. This has compelled Iran and Venezuela to strengthen both their diplomatic and commercial relations with each other. Both countries have also built strong diplomatic and commercial relations with Russia.

Though Russia does not pose a direct threat to US national security, Moscow has a very dim view of Washington's preemptive first-strike doctrine. Russia did not support US military action in Iraq and backs Iran's right to master the nuclear fuel cycle in order to produce civilian nuclear power. Russia is also Iran's primary military-equipment supplier.

Russia also dominates Venezuela's rapidly growing military trade. Almost all of Venezuela's new military equipment is being supplied by Russia. Russia is becoming a significant investor in Venezuela's natural gas sector. In addition to commercial ties, diplomatic ties between Venezuela and Russia are close, as evidenced by Chavez's meetings with Russia's President Vladimir Putin in Moscow in 2001 and 2004.

The Iran-Venezuela-Russia alliance poses a significant threat to US economic security. Combined, these three countries account for 30% of global oil exports. By comparison, the Organization of Petroleum Exporting Countries, of which both Iran and Venezuela are members, accounts for about 50 % of global oil exports. In addition to substantial oil exports, oil production in all three countries is now government controlled. While this has always been the case in Iran, this change has only recently occurred in both Russia and Venezuela.

By colluding with each other over oil production and exports, these three countries can dictate international oil prices. By extension, these three countries can also dictate inflation and economic growth rates in the world's largest oil-consuming countries, which are enormously dependent on oil imports. While relations between the Iran-Venezuela-Russia alliance and the US, the world's largest oil importer, are acrimonious to say the least, this is not the case between this cartel and China - the world's second-largest oil importer.

China has become a major investor in oil and natural gas production in all three countries. All four countries are dependent on strong economic growth for ensuring political and social stability. Iran, Venezuela and Russia need high oil prices to ensure continued strong economic growth, while China needs guaranteed oil supplies to prevent an economic slowdown. The mutually supportive political, social and economic relationship between these four countries provides a strong foundation for international oil prices.

National security policy without security
Washington's national security policy is making Americans less secure. Personal security is being undermined by the rising threat of terrorist strikes against US interests at home and abroad. The risk of terrorist attacks against the US is increasing as a result of US military action in Iraq and the shift in the country's insurgency toward civil war. Escalating civil war in Iraq, and a hasty US exit from the country, will disengage foreign jihadis from Iraq, dispersing them around the world.

As with any threat, perception is the key to the growing threat to Americans' personal security arising from terrorism. It will take a spectacular terrorist attack to change the perception of Americans from weak awareness of a terrorist threat to outright concern for personal safety. Such is not the case for the threat to Americans' economic security from rising international oil prices.

In the past two years, the price Americans pay for gas at the pump has doubled. Other energy prices, such as those for electricity and heat, have mirrored the increase in gasoline prices. This winter energy prices are very likely to rise further as energy demand has remained strong in the face of declining oil and natural gas supplies.

The resultant upward push in US inflation is of major concern to the US Federal Reserve, which will continue pushing official interest rates higher in 2006. Rising inflation and interest rates will inspire a sharp slowdown in US economic growth over the next several quarters. The growing insecurity of Americans will have a major impact on US mid-term elections next year.

Jephraim P Gundzik is president of Condor Advisers, Inc. Condor Advisers provides emerging markets investment risk analysis to individuals and institutions globally. Please visit for further information.

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Where chaos is king
(Oct 28, '05)

Iraq: Name that war (Oct 26, '05)

 
 



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