Eager to Tap Iraq’s Vast Oil Reserves, Industry Execs Suggested Invasion

July 2nd, 2009 7:30:45 AM 

Jason Leopold

http://www.thepeoplesvoice.org/TPV3/Voices.php/2009/07/02/eager-to-tap-iraq-s-vast-oil-reserves-in-1#more4707
http://tinyurl.com/nkcrbh

Two years before the invasion of Iraq, oil executives and foreign policy
advisers told the Bush administration that the United States would
remain “a prisoner of its energy dilemma” as long as Saddam Hussein was in
power.

That April 2001 report, “Strategic Policy Challenges for the 21st Century,”
was prepared by the James A. Baker Institute for Public Policy and the U.S.
Council on Foreign Relations at the request of then-Vice President Dick
Cheney.

In retrospect, it appears that the report helped focus administration
thinking on why it made geopolitical sense to oust Hussein, whose country
sat on the world’s second largest oil reserves.

“Iraq remains a de-stabilizing influence to the flow of oil to international
markets from the Middle East,” the report said. “Saddam Hussein has also
demonstrated a willingness to threaten to use the oil weapon and to use his
own export program to manipulate oil markets. Therefore the U.S. should
conduct an immediate policy review toward Iraq including military, energy,
economic and political/diplomatic assessments.”

The advisory committee that helped prepare the report included Luis Giusti,
a Shell Corp. non-executive director; John Manzoni, regional president of
British Petroleum; and David O’Reilly, chief executive of ChevronTexaco.

James Baker, the namesake for the public policy institute, was a prominent
oil industry lawyer who also served as Secretary of State under President
George H.W. Bush and was counsel to the Bush/Cheney campaign during the
Florida recount in 2000.

Ken Lay, then chairman of the energy-trading Enron Corp., also made
recommendations that were included in the Baker report.

At the time of the report, Cheney was leading an energy task force made up
of powerful industry executives who assisted him in drafting a
comprehensive “National Energy Policy” for President George W. Bush.

A Focus on Oil

It was believed then that Cheney’s secretive task force was focusing on ways
to reduce environmental regulations and fend off the Kyoto protocol on
global warming.

But Bush’s first Treasury Secretary, Paul O’Neill, later described a White
House interest in invading Iraq and controlling its vast oil reserves,
dating back to the first days of the Bush presidency.

In Ron Suskind’s 2004 book, The Price of Loyalty, O’Neill said an invasion
of Iraq was on the agenda at the first National Security Council. There was
even a map for a post-war occupation, marking out how Iraq’s oil fields
would be carved up.

O’Neill said even at that early date, the message from Bush was “find a way
to do this,” according to O’Neill, a critic of the Iraq invasion who was
forced out of his job in December 2002.

The New Yorker ’s Jane Mayer later made another discovery: a secret NSC
document dated Feb. 3, 2001 – only two weeks after Bush took office –
instructing NSC officials to cooperate with Cheney’s task force, which
was “melding” two previously unrelated areas of policy: “the review of
operational policies towards rogue states” and “actions regarding the
capture of new and existing oil and gas fields.” [The New Yorker, Feb. 16,
2004]

By March 2001, Cheney’s task force had prepared a set of documents with a
map of Iraqi oilfields, pipelines, refineries and terminals, as well as two
charts detailing Iraqi oil and gas projects, and a list titled “Foreign
Suitors for Iraqi Oilfield Contracts,” according to information released in
July 2003 under a Freedom of Information Act lawsuit filed by the
conservative watchdog group, Judicial Watch.

A Commerce Department spokesman issued a brief statement when those
documents were released stating that Cheney’s energy task force “evaluated
regions of the world that are vital to global energy supply.”

There has long been speculation that a key reason why Cheney fought so hard
to keep his task force documents secret was that they may have included
information about the administration’s plans toward Iraq.

‘Conspiracy Theory’

However, both before and after the invasion, much of the U.S. political
press treated the notion that oil was a motive for invading Iraq in March
2003 as a laughable conspiracy theory.

Generally, business news outlets were much more frank about the
real-politick importance of Iraq’s oil fields.

For instance, Ray Rodon, a former executive at Halliburton, the oil-service
giant that Cheney once headed, said he was dispatched to Iraq in October
2002 to assess the country’s oil infrastructure and map out plans for
operating Iraq’s oil industry, according to an April 14, 2003 story in
Fortune magazine.
“From behind the obsidian mirrors of his wraparound sunglasses, Ray Rodon
surveys the vast desert landscape of southern Iraq’s Rumailah oilfield,”
Fortune’s story said. “A project manager with Halliburton’s engineering and
construction division, Kellogg Brown & Root, Rodon has spent months
preparing for the daunting task of repairing Iraq’s oil industry.”

“Working first at headquarters in Houston and then out of a hotel room in
Kuwait City, he has studied the intricacies of the Iraqi national oil
company, even reviewing the firm’s organizational charts so that
Halliburton and the Army can ascertain which Iraqis are reliable
technocrats and which are Saddam loyalists.”

At about the same time as Rodon’s trip to Iraq – October 2002 – Oil and Gas
International, an industry publication, reported that the State Department
and the Pentagon had put together pre-war planning groups that focused
heavily on protecting Iraq’s oil infrastructure.

The next month, November 2002, the Department of Defense recommended that
the Army Corps of Engineers award a contract to Kellogg, Brown & Root to
extinguish Iraqi oil well fires.

The contract also called for “assessing the condition of oil-related
infrastructure; cleaning up oil spills or other environmental damage at oil
facilities; engineering design and repair or reconstruction of damaged
infrastructure; assisting in making facilities operational; distribution of
petroleum products; and assisting the Iraqis in resuming Iraqi oil company
operations.”

In January 2003, as President Bush was presenting the looming war with Iraq
as necessary to protect Americans, the Wall Street Journal reported that
oil industry executives met with Cheney’s staff to plan the post-war
revival of Iraq’s oil industry.

“Facing a possible war with Iraq, U.S. oil companies are starting to prepare
for the day when they may get a chance to work in one of the world’s most
oil-rich countries,” the Journal reported on Jan. 16, 2003.

“Executives of U.S. oil companies are conferring with officials from the
White House, the Department of Defense and the State Department to figure
out how best to jump-start Iraq’s oil industry following a war, industry
officials say.

“The Bush administration is eager to secure Iraq’s oil fields and
rehabilitate them, industry officials say. They say Mr. Cheney’s staff
hosted an informational meeting with industry executives in October [2002],
with Exxon Mobil Corp., ChevronTexaco Corp., ConocoPhillips and Halliburton
among the companies represented.

“Both the Bush administration and the companies say such a meeting never
took place. Since then, industry officials say, the Bush administration has
sought input, formally and informally, from executives and industry experts
on how best to overhaul Iraq’s oil sector.”

Guarding the Oil Ministry

Despite the Bush administration’s denials about oil as a motivation for war,
the Bush administration’s focus on Iraqi oil was firmly set.

On April 5, 2003, Reuters reported that the State Department’s “Future of
Iraq” project headed by Thomas Warrick, special adviser to the Assistant
Secretary of State for Near Eastern Affairs, held its fourth meeting of the
oil and energy-working group.

Documents obtained by Reuters showed that “a clear consensus among expert
opinion favoring production-sharing agreements to attract the major oil
companies.”

“That is likely to thrill oil companies harboring hopes of lucrative
contracts to develop Iraqi oil reserves,” the news agency
reported. “Short-term rehabilitation of southern Iraqi oil fields already
is under way, with oil well fires being extinguished by U.S. contractor
Kellogg Brown and Root …

“Long-term contracts are expected to see U.S. companies ExxonMobil,
ChevronTexaco and ConocoPhillips compete with Anglo-Dutch Shell, Britain’s
BP, TotalFinaElf of France, Russia’s LUKOIL and Chinese state companies.”

After U.S. troops captured Baghdad in April 2003, they were ordered to
protect the Oil Ministry even as looters ransacked priceless antiquities
from Iraq’s national museums and stole explosives from unguarded military
arsenals.

Unacceptable Options

In April 2001, the report laid out a series of unacceptable options,
including helping Iraq under Saddam Hussein extract more oil by easing
embargoes that were meant to hem Hussein in.

“The U.S. could consider reducing restrictions on oil investment inside
Iraq,” the report said. But if Hussein’s “access to oil revenues was to be
increased by adjustments in oil sanctions, Saddam Hussein could be a
greater security threat to U.S. allies in the region if weapons of mass
destruction, sanctions, weapons regimes and the coalition against him are
not strengthened.”

Iraq is a “key swing producer turning its taps on and off when it has felt
such action was in its strategic interest,” the report said, adding that
there even was a ”possibility that Saddam Hussein may remove Iraqi oil from
the market for an extended period of time” in order to drive up prices.

“Under this scenario, the United States remains a prisoner of its energy
dilemma, suffering on a recurring basis from the negative consequences of
sporadic energy shortages,” the report said. “These consequences can
include recession, social dislocation of the poorest Americans, and at the
extremes, a need for military intervention.”

The report recommended Cheney move swiftly to integrate energy and national
security policy as a means to stop ”manipulations of markets by any state”
and suggested that his task force include “representation from the
Department of Defense.”

“Unless the United States assumes a leadership role in the formation of new
rules of the game,” the report said, ”U.S. firms, U.S. consumers and the
U.S. government [will be left] in a weaker position.”

Two years after the Baker report, the United States – along with Great
Britain and other allies – invaded Iraq. Now, more than six years after
that, the U.S. oil industry finally appears to be in a strong position
relative to Iraq’s oil riches.

However, the price that has been paid by American troops, Iraqi civilians
and the U.S. taxpayers has been enormous.

-- 
Facts are sacred ... but comment is free