DISPATCHES FROM
AMERICA Mission accomplished for Big
Oil? By Greg Muttitt
In
2011, after nearly nine years of war and
occupation, US troops finally left Iraq. In their
place, Big Oil is now present in force and the
country's oil output, crippled for decades, is
growing again. Iraq recently reclaimed the number
two position in the Organization of the Petroleum
Exporting Countries (OPEC), overtaking
oil-sanctioned Iran. Now, there's talk of a new
world petroleum glut. So is this finally mission
accomplished?
Well, not exactly. In fact,
any oil company victory in Iraq is likely to prove
as temporary as George W Bush's triumph in 2003.
The main reason is yet another of those stories
the mainstream media didn't quite find room for:
the role of Iraqi civil society. But before
telling that story, let's look at what's happening
to Iraqi oil today, and how we got from the "no
blood for oil" global protests of 2003
to the present moment.
Here, as a start, is a little scorecard of
what's gone on in Iraq since Big Oil arrived
two-and-a-half years ago: corruption's
skyrocketed; two Western oil companies are being
investigated for either giving or receiving
bribes; the Iraqi government is paying oil
companies a per-barrel fee according to wildly
unrealistic production targets they've set,
whether or not they deliver that number of
barrels; contractors are heavily over-charging for
drilling wells, which the companies don't mind
since the Iraqi government picks up the tab.
Meanwhile, to protect the oil giants from
dissent and protest, trade union offices have been
raided, computers seized and equipment smashed,
leaders arrested and prosecuted. And that's just
in the oil-rich southern part of the country.
In Kurdistan in the north, the regional
government awards contracts on land outside its
jurisdiction, contracts that permit the government
to transfer its stake in the oil projects - up to
25% - to private companies of its choice. Fuel is
smuggled across the border to the tune of hundreds
of tankers a day.
In Kurdistan, at least
the approach is deliberate: the two ruling
families of the region, the Barzanis and
Talabanis, know that they can do whatever they
like, since their Peshmerga militia control the
territory. In contrast, the Iraqi federal
government of Prime Minister Nouri al-Maliki has
little control over anything. As a result, in the
rest of the country the oil industry operates,
gold-rush-style, in an almost complete absence of
oversight or regulation.
Oil companies
differ as to which of these two Iraqs they prefer
to operate in. BP and Shell have opted to rush for
black gold in the super-giant oilfields of
southern Iraq. Exxon has hedged its bets by
investing in both options. This summer, Chevron
and the French oil company Total voted for the
Kurdish approach, trading smaller oil fields for
better terms and a bit more stability.
Keep in mind that the incapacity of the
Iraqi government is hardly limited to the oil
business: stagnation hangs over its every
institution. Iraqis still have an average of just
five hours of electricity a day, which in
130-degree heat causes tempers to boil over
regularly. The country's two great rivers, the
Tigris and Euphrates, which watered the cradle of
civilization 5,000 years ago, are drying up. This
is largely due to the inability of the government
to engage in effective regional diplomacy that
would control upstream dam-building by Turkey.
After elections in 2010, the country's
leading politicians couldn't even agree on how to
form a government until the Iraqi Supreme Court
forced them to. This record of haplessness, along
with rampant corruption, significant repression,
and a revival of sectarianism can all be traced
back to American decisions in the occupation
years. Tragically, these persistent ills have
manifested themselves in a recent spate of
car-bombings and other bloody attacks.
Washington's yen for oil In the
period before and around the invasion, the Bush
administration barely mentioned Iraqi oil,
describing it reverently only as that country's
"patrimony". As for the reasons for war, the
administration insisted that it had barely noticed
Iraq had one-tenth of the world's oil reserves.
But my new book reveals documents I received,
marked SECRET/NOFORN, that laid out for the first
time pre-war oil plans hatched in the Pentagon by
arch-neoconservative Douglas Feith's Energy
Infrastructure Planning Group (EIPG).
In
November 2002, four months before the invasion,
that planning group came up with a novel idea: it
proposed that any American occupation authority
not repair war damage to the country's oil
infrastructure, as doing so "could discourage
private sector involvement". In other words, it
suggested that the landscape should be cleared of
Iraq's homegrown oil industry to make room for Big
Oil.
When the administration worried that
this might disrupt oil markets, EIPG came up with
a new strategy under which initial repairs would
be carried out by KBR, a subsidiary of
Halliburton. Long-term contracts with
multinational companies, awarded by the US
occupation authority, would follow. International
law notwithstanding, the EIPG documents noted
cheerily that such an approach would put
"long-term downward pressure on [the oil] price"
and force "questions about Iraq's future relations
with OPEC" - the Organization of the Oil Exporting
Countries.
At the same time, the Pentagon
planning group recommended that Washington state
that its policy was "not to prejudice Iraq's
future decisions regarding its oil development
policies". Here, in writing, was the approach
adopted in the years to come by the George W Bush
administration and the occupation authorities: lie
to the public while secretly planning to hand Iraq
over to Big Oil.
There turned out,
however, to be a small kink in the plan: the oil
companies declined the American-awarded contracts,
fearing that they would not stand up in
international courts and so prove illegitimate.
They wanted Iraq first to have an elected
permanent government that would arrive at the same
results. The question then became how to get the
required results with the Iraqis nominally in
charge. The answer: install a friendly government
and destroy the Iraqi oil industry.
In
July 2003, the US occupation established the Iraqi
Governing Council, a quasi-governmental body led
by friendly Iraqi exiles who had been out of the
country for the previous few decades. They would
be housed in an area of Baghdad isolated from the
Iraqi population by concrete blast walls and
machine gun towers, and dubbed the Green Zone.
There, the politicians would feast, oblivious to
and unconcerned with the suffering of the rest of
the population.
The first post-invasion
oil minister was Ibrahim Bahr al-Uloum, a man who
held the country's homegrown oil expertise in open
contempt. He quickly set about sacking the
technicians and managers who had built the
industry following nationalization in the 1970s
and had kept it running through wars and
sanctions. He replaced them with friends and
fellow party members. One typical replacement was
a former pizza chef.
The resulting damage
to the oil industry exceeded anything caused by
missiles and tanks. As a result the country found
itself - as Washington had hoped - dependent on
the expertise of foreign companies. Meanwhile, not
only did the Coalition Provisional Authority (CPA)
that oversaw the occupation lose US$6.6 billion of
Iraqi money, it effectively suggested corruption
wasn't something to worry about. A December 2003
CPA policy document recommended that Iraq follow
the lead of Azerbaijan, where the government had
attracted oil multinationals despite an atmosphere
of staggering corruption ("less attractive
governance") simply by offering highly profitable
deals.
Now, so many years later, the
corruption is all-pervasive and the multinationals
continue to operate without oversight, since the
country's ministry is run by the equivalent of
pizza chefs.
The first permanent
government was formed under Prime Minister Maliki
in May 2006. In the preceding months, the American
and British governments made sure the candidates
for prime minister knew what their first priority
had to be: to pass a law legalizing the return of
the foreign multinationals - tossed out of the
country in the 1970s - to run the oil sector.
The law was drafted within weeks,
dutifully shown to US officials within days, and
to oil multinationals not long after. Members of
the Iraqi parliament, however, had to wait seven
months to see the text.
How temporary
the victory of Big Oil? The trouble was:
getting it through that parliament proved far more
difficult than Washington or its officials in Iraq
had anticipated. In January 2007, an impatient
president Bush announced a "surge" of 30,000 US
troops into the country, by then wracked by a
bloody civil war. Compliant journalists accepted
the story of a gamble by General David Petraeus to
bring peace to warring Iraqis.
In fact,
those troops spearheaded a strategy with rather
less altruistic objectives: first, broker a new
political deal among US allies, who were the most
sectarian and corrupt of Iraq's politicians
(hence, with the irony characteristic of American
foreign policy, regularly described as
"moderates"); second, pressure them to deliver on
political objectives set in Washington and known
as "benchmarks" - of which passing the oil law was
the only one ever really talked about: in
president Bush's bi-weekly video conferences with
Maliki, in almost daily meetings of the US
ambassador in Baghdad, and in frequent visits by
senior administration officials.
On this
issue, the Democrats, by then increasingly against
the Iraq War but still pro-Big Oil, lent a helping
hand to a Republican administration. Having failed
to end the war, the newly Democrat-controlled
congress passed an appropriations bill that would
cut off reconstruction funds to Iraq if the oil
law weren't passed. Generals warned that without
an oil law Prime Minister Maliki would lose their
support, which he knew well would mean losing his
job. To ramp up the pressure further, the US set a
deadline of September 2007 to pass the law or face
the consequences.
It was then that things
started going really wrong for Bush and company.
In December 2006, I was at a meeting where leaders
of Iraq's trade unions decided to fight the oil
law. One of them summed up the general sentiment
this way: "We do not need thieves to take us back
to the Middle Ages." So they began organizing.
They printed pamphlets, held public meetings and
conferences, staged protests, and watched support
for their movement grow.
Most Iraqis feel
strongly that the country's oil reserves belong in
the public sector, to be developed to benefit
them, not foreign energy companies. And so word
spread fast - and with it, popular anger.
Iraq's oil professionals and various civil
society groups denounced the law. Preachers railed
against it in Friday sermons. Demonstrations were
held in Baghdad and elsewhere, and as Washington
ratcheted up the pressure, members of the Iraqi
parliament started to see political opportunity in
aligning themselves with this ever-more popular
cause. Even some US allies in parliament confided
in diplomats at the American embassy that it would
be political suicide to vote for the law.
By the September deadline, a majority of
the parliament was against the law and - a
remarkable victory for the trade unions - it was
not passed. It's still not passed today.
Given the political capital the Bush
administration had invested in the passage of the
oil law, its failure offered Iraqis a glimpse of
the limits of US power, and from that moment on,
Washington's influence began to wane.
Things changed again in 2009 when the
Maliki government, eager for oil revenues, began
awarding contracts to them even without an oil law
in place. As a result, however, the victory of Big
Oil is likely to be a temporary one: the present
contracts are illegal, and so they will last only
as long as there's a government in Baghdad that
supports them.
This helps explain why the
government's repression of trade unions increased
once the contracts were signed. Now, Iraq is
showing signs of a more general return to
authoritarianism (as well as internecine violence
and possibly renewed sectarian conflict).
But there is another possibility for Iraq.
Years before the Arab Spring, I saw what Iraqi
civil society can achieve by organizing: it
stopped the world's superpower from reaching its
main objective and steered Iraq onto a more
positive course.
Many times since 2003,
Iraqis have moved their country in a more
democratic direction: establishing trade unions in
that year, building Shi'ite-Sunni connections in
2004, promoting anti-sectarian politicians in 2007
and 2008, and voting for them in 2009.
Sadly, each of these times Washington has
pushed it back toward sectarianism, the atmosphere
in which its allies thrive. While mainstream
commentators now regularly blame the recent
escalation of violence on the departure of US
troops, it would be more accurate to say that the
real reason is they didn't leave far sooner.
Now, without its troops and bases, much of
Washington's political heft has vanished. Whether
Iraq heads in the direction of dictatorship,
sectarianism, or democracy remains to be seen, but
if Iraqis again start to build a more democratic
future, the US will no longer be there to obstruct
it. Meanwhile, if a new politics does emerge, Big
Oil may discover that, in the end, it was mission
unaccomplished.
Greg Muttitt is
the author of Fuel
on the Fire: Oil and Politics in Occupied Iraq
(New Press), just published, and described
by Naomi Klein as "nothing short of a secret
history of the war." Since 2003, he has worked
with Iraqi trade unions campaigning against the
privatization of Iraq's oil, most of that time as
co-director of the British charity Platform.
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