The country’s invaders should be paying billions in reparations not using the war as a reason to pillage its richest resource
Once oil passed $140 a barrel, even the most rabidly rightwing media
hosts had to prove their populist credibility by devoting a portion of
every show to bashing Big Oil. Some have gone so far as to invite me on
for a friendly chat about an insidious new phenomenon: “disaster
capitalism.” It usually goes well – until it doesn’t.
For
instance, “independent conservative” radio host Jerry Doyle and I were
having a perfectly amiable conversation about sleazy insurance
companies and inept politicians when this happened: “I think I have a
quick way to bring the prices down,” Doyle announced. “We’ve invested
$650bn to liberate a nation of 25 million people, shouldn’t we just
demand that they give us oil? There should be tankers after tankers
backed up like a traffic jam getting into the Lincoln Tunnel, the
stinkin’ Lincoln, at rush-hour with thank-you notes from the Iraqi
government … Why don’t we just take the oil? We’ve invested it
liberating a country. I can have the problem solved of gas prices
coming down in 10 days, not 10 years.”
There were a couple of
problems with Doyle’s plan, of course. The first was that he was
describing the biggest stick-up in world history. The second that he
was too late. “We” are already heisting Iraq’s oil, or at least are on
the brink of doing so.
It started with no-bid service contracts
announced for Exxon Mobil, Chevron, Shell, BP and Total (they have yet
to be signed but are still on course). Paying multinationals for their
technical expertise is not unusual in itself. What is odd is that such
contracts almost invariably go to oil service companies – not to the
oil majors, whose work is exploring, producing and owning carbon
wealth. The contracts only make sense in the context of reports that
the oil majors have insisted on the right of first refusal on
subsequent contracts handed out to manage and produce Iraq’s oilfields.
In other words, other companies will be free to bid on those future
contracts, but these companies will win.
One week after the
no-bid service deals were announced, the world caught its first glimpse
of the real prize. After years of backroom arm-twisting, Iraq is
officially flinging open six of its major oilfields, accounting for
half of its known reserves, to foreign investors. According to Iraq’s
oil minister, the long-term contracts will be signed within a year.
While ostensibly under the control of the Iraq National Oil Company,
foreign corporations will keep 75% of the value of the contracts,
leaving just 25% for their Iraqi partners.
That kind of ratio is
unheard of in oil-rich Arab and Persian states, where achieving
majority national control over oil was the defining victory of
anti-colonial struggles. According to Greg Muttitt, a London-based oil
expert, the assumption up until now was that foreign multinationals
would be brought in to develop new fields in Iraq – not to take over
those which are already in production and therefore require minimal
technical support. “The policy was always to allocate these fields to
the Iraq National Oil Company,” he told me. “This is a total reversal
of that policy, giving the Iraq National Oil Company a mere 25% instead
of the planned 100%.”
So what makes such lousy deals possible in
Iraq, which has already suffered so much? Paradoxically, it is Iraq’s
suffering – its never-ending crisis – that is the rationale for an
arrangement that threatens to drain Iraq’s treasury of its main revenue
source. The logic goes like this: Iraq’s oil industry needs foreign
expertise because years of punishing sanctions starved it of new
technology, while the invasion and continuing violence degraded it
further. And Iraq needs to start producing more oil urgently. Why? Also
because of the war. The country is shattered and the billions handed
out in no-bid contracts to western firms have failed to rebuild it.
And
that’s where the new contracts come in: they will raise more money, but
Iraq has become such a treacherous place that the oil majors must be
induced to take the risk of investing. Thus the invasion of Iraq neatly
creates the argument for its subsequent pillage.
Several of the
architects of the Iraq war no longer even bother to deny that oil was a
major motivator for the invasion. On US National Public Radio’s To the
Point, Fadhil Chalabi, one of the primary Iraqi advisers to the Bush
administration in the lead-up to the invasion, recently described the
war as “a strategic move on the part of the United States of America
and the UK to have a military presence in the Gulf in order to secure
[oil] supplies in the future”. Chalabi, who served as Iraq’s oil
undersecretary of state and met with the oil majors before the
invasion, described this as “a primary objective”.
Invading
countries to seize their natural resources is illegal under the Geneva
conventions. That means the huge task of rebuilding Iraq’s
infrastructure – including its oil infrastructure – is the financial
responsibility of Iraq’s invaders. They should be forced to pay
reparations, just as Saddam Hussein’s regime paid $9bn to Kuwait in
reparations for its 1990 invasion. Instead, Iraq is being forced to
sell 75% of its national patrimony to pay the bills for its own illegal
invasion and occupation.