Even before the conspicuous absence of weapons of mass destruction shattered the pretext for the Iraq War, it was haunted by black gold. Whether oil motivated George W. Bush and his advisers’ decision to invade was part of the bitter political contest preceding the “shock and awe” attack on 23 March 2003. At the centre of these accusations stood Bush’s vice president, Dick Cheney, the former CEO and Chair of the Board of Halliburton, the large American oil services company that received a contract to repair Iraq’s oil infrastructure in the same month the war began.
Cheney’s involvement appeared to repeat a familiar story about the American military-industrial complex. Four decades earlier, a Halliburton subsidiary, Brown & Root, made large donations to President Lyndon Johnson before securing contracts on a naval construction programme in South Vietnam. Ironically, one of Brown & Root’s critics was a young Donald Rumsfeld, then a Republican Congressman, but in 2003 Bush’s defence secretary and a vocal cheerleader for the war.
Knowing that the oil charge coming from across the Atlantic made it harder for him to win the battle of public opinion in Britain, Tony Blair directly tried to defuse it in a Newsnight interview with Jeremy Paxman:
“Let me just deal with the oil thing because… the oil conspiracy theory is honestly one of the most absurd when you analyse it. The fact is that, if the oil that Iraq has were our concern, I mean we could probably cut a deal with Saddam tomorrow in relation to the oil. It’s not the oil that is the issue — it is the weapons, which is why the UN resolutions have gone over 12 years in relation to the weapons and why we’ve actually allowed Iraq to export oil.”
Yet the Halliburton allegations were a distraction from the actual reasons why Iraq was an oil war — not that Bush and Blair dared present it as such. After post-invasion Iraq descended into civil war, Bush came close to spelling out those motivations when, in his 2006 State of the Union address, he said: “we have a serious problem: America is addicted to oil, which is often imported from unstable parts of the world”. In that moment, Bush might have been mistaken for Jimmy Carter. Indeed, since the origins of the oil problem that the Iraq War was conceived to address lie in the Seventies, he was necessarily Carter’s energy heir. Then, the United States became the world’s largest oil importer after decades of near self-sufficiency. Unfortunately from its perspective, it acquired a direct interest in supply from the Middle East just as British imperial power crumbled in the region and post-colonial energy nationalism took hold.
Iraq was always tangled up in Washington’s ensuing geopolitical problems. The Ba’athist government — on this issue directed by Saddam Hussein — had nationalised all the foreign oil companies. During the Seventies, Iraq was also an ally of Moscow. Wanting to guard against Soviet influence in the Persian Gulf, but not wanting militarily to replace Britain, the Nixon administration made Saudi Arabia and Iran the guarantors of American energy security in the region. But the Iranian revolution in February 1979, followed by first the Soviet intervention in Afghanistan and then the Iran-Iraq War, overwhelmed this strategy while sending oil prices soaring until new output from Alaska and the North Sea appeared. In this maelstrom, Jimmy Carter made a major strategic change in American foreign policy that has never yet been reversed. Under the Carter Doctrine, the United States became publicly committed to using military force in response to “an attempt by any outside force to gain control of the Persian Gulf”.
This did not mean that American presidents would necessarily embrace a military approach to American foreign oil dependency in the Middle East. To the contrary, they still much preferred sanctions against hostile regimes and the use of regional proxies, rendering Bush’s 2003 war a radical departure in method. In the Eighties, Iraq became one of those surrogates when the Reagan administration provided support to Saddam’s regime to defeat Iran. But after its territorial ambitions in Iran were vanquished, Iraq again became a problem, even as the Cold War with the Soviet Union ended. In responding to Iraq’s invasion of Kuwait with war, George Bush senior acted on the Carter doctrine. But in deciding to stop in January 1991 at pushing Iraq out of Kuwait, and relying on sanctions on Iraq’s oil exports — policed by the US air force patrolling the Gulf — to contain a Saddam-led Iraq, he bequeathed his successors a strategic contradiction around that doctrine.
Sanctions on Iraq — on top of those in place on Iran and Libya — constrained the supply of oil out of the Persian Gulf, the defence of which was the Carter Doctrine’s whole raison d’etre. While this tension caused few problems in the Nineties, when oil supply was abundant and prices low, in the early 21st century it became an altogether different proposition. Now, output from Alaska and the North Sea was declining, while fears about the rate of depletion at the world’s largest oil field, Ghawar, in Saudi Arabia, were mounting. Meanwhile, China’s accelerating consumption, on the back of much higher growth after Beijing’s accession to the World Trade Organization, constituted a concurrent demand shock.
Undoubtedly, the George W. Bush administration was well versed in oil matters. In his second week in office, Bush set up an Energy Task Force headed by Cheney. The subsequent Cheney Report declared that the United States faced an “energy crisis” arising from the “fundamental imbalance” between the supply and demand for oil. The report concluded by recommending that the administration review the sanction regimes and make moves to reopen the Middle East to foreign energy investment.
Seen in these terms, the Iraq War did possess a strategic logic. Iraq had large, under-utilised oil reserves. Since all Iraq’s major fields are onshore, its production and capital costs are lower than anywhere other than Saudi Arabia and Kuwait; while compared with Venezuela, another historical under-producer, Iraq’s crude is easy to refine. Releasing that potential supply meant both regime change and attracting the international oil majors back into the country. Contrary to Blair’s deflection, there was no prospect of Iraq becoming a top-tier oil producer without technologically modernising the Iraqi oil industry. In the entire period since nationalisation began, Iraq had only once managed a yearly average of more than 3 million barrels per day (bpd) of crude output, while the years of war and sanctions had left the sector’s infrastructure dilapidated. By contrast, Russia’s output in 2003 was 8.5 million bpd and Saudi Arabia’s 10 million.
The oil rationale for the war appears to have been deemed publicly inadmissible, even as the Cheney Report implicitly had made it clear. In his memoirs, the former chair of the Federal Reserve Alan Greenspan wrote: “I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq War is largely about oil.” After facing criticism, he backtracked, claiming that it was a personal remark about why, as a central banker worried about oil prices, he had advocated for military action within decision-making circles. Absent was the brutal language about the gap between public discourse and energy manoeuvrings abroad that ends Sydney Pollack’s 1975 film Three Days of the Condor. There, the covert-operations CIA character explains to the idealistic Robert Redford character why he saw no reason to ask voters whether they supported a plot to seize Middle Eastern oil fields:
“Ask them when they’re running out. Ask them when there’s no heat in their homes and they’re cold. Ask them when their engines stop… You want to know something? They won’t want us to ask them. They’ll just want us to get it for them.”
In Beijing, there were few doubts that the war was oil-motivated. Almost immediately after Saddam fell, the Chinese President, Hu Jintao, signed an agreement with Putin to build China’s first oil pipeline with Russia. For the Chinese leadership, a world in which the United States was willing to wage war for an oil objective was one in which it needed to reassess Chinese oil security a decade after it became an oil importer. This fear crystallised in what Hu identified as the Malacca Dilemma: China’s vulnerability to an American naval blockade in the narrow Malacca Straits, through which all China’s oil imports from the Persian Gulf and Africa pass. If Xi Jinping’s Belt and Road Initiative is a hedge against the Malacca Dilemma, its strategic intent lies in the conclusions an earlier Chinese leader drew about Washington’s response to its own post-self-sufficiency oil predicament.
Yet as an attempt to militarise Washington’s Middle-Eastern oil problem, the Iraq War was also largely a failure. Iraq’s oil production in 2005 was around 20% lower than in the first year of George W. Bush’s presidency. Indeed, it did not surpass that 2001 total until 2010. Although the Iraqi government then boasted that the sector could raise production to 12 million bpd within six to seven years, it has never yet been higher than 4.8 million bpd. As for the return of the Western majors, the Iraqi government took until 2007 to draft a hydrocarbon bill setting out a legal framework for foreign investment, and then could not get the Iraqi parliament to pass the legislation. When, in 2010, it did finally award contracts, it gave access to non-Western firms as well as the majors. Notably, on Iraq’s largest field, Rumaila, the state-owned China National Petroleum Corporation became an equal partner with BP.
The country’s post-2003 political instability, at times fuelled by anger at the return of the international oil companies, has been nearly entirely un-conducive to those firms trying to transform Iraq’s oil industry. Forced by the Iraqi government to choose between its contracts with the Kurdistan regional government and its operations in southern Iraq, ExxonMobil was left to join forces with the publicly listed arm of China National Petroleum Corporation, PetroChina, on one of the two large West Qurna fields. After Isis seized control of part of Iraq in 2014, attacks on oil infrastructure became common. Even after the American military return to Iraq in 2014 allowed Baghdad to re-establish full territorial control by the end of 2017, Iran’s influence has grown.
In a near-perfect absurdity, considering the Iraq War’s purposes, most of the Western oil companies have, in recent years, either left or reduced their operations, while the Iranian Oil Ministry has set up an office in downtown Baghdad and Chinese firms are ascendant. Indeed, it was in part because PetroChina prevailed over ExxonMobil in their West Qurna partnership that the American major has sold its stake. Eventually, it fell to the American shale boom to make economic restitution for the Iraq War’s failure. Through the 2010s, the world economy relied not so much on oil from the international oil companies in southern Iraq, but that pumped by independent firms in Dakota and Texas: by 2019, US crude production was two-and-a-half times Iraq’s.
But the oil legacy of the Iraq debacle has not gone away. American shale output can no longer grow quickly enough to compensate for the stagnation in production elsewhere. When Joe Biden travelled to Riyadh last summer to meet Mohammed Bin Salman, he was in part asking the Saudi Crown Prince to allow Iraq to supply more oil in an attempt to bring prices down, even as, post-pandemic, Iraq has still not matched its output in August 2019 and the Iraqi government had said it wants oil to cost above $100 per barrel.
For now, Washington is offsetting the affordable supply problem by selling large volumes of oil from the US Strategic Petroleum Reserve. But it cannot do so indefinitely. When it stops, it will again have to address the world’s oil problem without the illusion that it can remake the Middle East by war.
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Source: UnHerd Read the original article here: https://unherd.com/