• Iraq: the good oil

Bpors, we've been through this debate but, for readers who didn't follow it back then, Saddam was a 'US man' in the sense that the US kept him in power, supported him when they could have overthrown him. These were the days of the palaeo-cons, the people in the US foreign policy establishment who consciously favoured keeping dictators in power in the interests of anti-communism and stability. Bush senior could have followed through with support to the Shia uprising after Saddam's defeat in Kuwait - the establishment chose not to. They chose to keep their man in power. The overthrow of such tyrants is a recent development, reflecting the influence of the neo-cons, who reckon it's better to give the dictators the boot and support democratic regimes.

 

Given your propensity for conspiracy theory, I guess US 'big oil' barons were all asleep or on vacation in the early 1990s. After all, they supposedly pull the strings of foreign policy in the US. Yet, hey, they kept Saddam in power. (Excuse the facaetiousness, readers!).

 

Had Saddam not been overthrown, he would have kept on selling oil to the US companies who imported it at the levels indicated in previous posts. The price of Iraqi oil probably would have declined, because production would have increased due to Saddam's PSAs with the Chinese, Russians and French. US big oil would have been happy to import Iraqi oil at a cheaper price. US and other foreign oil companies that were kicked out of various countries in the 1970s, when nationalization became the norm, kept on importing oil from those countries for more than three decades. It became the normal way of getting oil, though, yes, they also engaged in joint-ventures, PSAs, and other investment activities in many of those countries (and, yes, I do know that 45% of US oil needs are met by local production).

 

The Saudis recently made an idle threat to increase oil production as a way of punishing Iraq and Iran should the US withdraw from Iraq and Sunnis be subjected to 'ethnic cleansing'. The power in their threat is that more oil on the market would reduce the price of oil. Were this (unlikely scenario) to happen, it would punish Iraq through reducing the price they could realistically obtain for oil. US oil companies would prefer buying it cheaper but, according to the self-styled expert bpors, they would prefer to buy it at a higher price. In his zone, that is why they are waging war against Iraq: to increase to cost of oil.

 

If all goes well with the forthcoming Iraqi national oil law (and if the security situation can be stabilized), the Iraqi people may even end up with Bolshevik terms of 30% to Iraq and 70% to the foreign oil companies!

 

Bpors, I've got to move on.

 

Barry

 

 

 

 

 

The latest on the draft Iraqi oil law (from edinar Financial, 23 Dec 06) indicates that the draft advocates a system in which oil revenues will end up in a single national account but regions will have power to negotiate contracts within a framework set out by a national oil and gas council. http://www.edinarfinancial.net/news/?quer=&nm=&ny=&nn=471 

 

The Kurds already have negotiated a deal with a Norwegian oil company but, according to the edinar report, the government of Kurdistan has accepted that its existing contracts be reviewed in light of the forthcoming new national law.

 

It cannot be assumed that any new PSAs will go to US companies, as Oil Minister Shahristani has been actively courting Chinese and Japanese interest. It is possible that Chinese, Russian and Japanese companies will be willing to take the risks that the US majors are not willing to take in Iraq. Shahristani has even signalled the possiblity of honouring the PSA negotiated by the old regime with China's National Petroleum Company. http://www.globalpolicy.org/security/oil/2006/0927eastward.htm

 

So much for the Iraqi government as a US puppet.

 

If the new law is accepted by the Iraqi cabinet and parliament, we may be seeing the beginning of a decline in the sectarian violence as the Sunni minority, including the current rejectionists, will have an economic interest in defending the government. Twenty percent of future Iraqi oil revenues would be worth billions of dollars, and that's the percentage that would go to the 'oil-poor' Sunnis, should the new law distribute oil revenues by population.

 

Good things coming (possibly/probably), while the usual suspects look on wringing their hands.

 

Barry

 

BYORK:...the government of Kurdistan has accepted that its existing contracts be reviewed in light of the forthcoming new national law.

I was not aware that the Kurds had actually pulled out of Iraq and are calling their land "Kurdistan". But, anyway.

The deal between the Kurds and the Norwegian oil company is small potatoes and merely points to a lack of central government and structure. Also, there are plenty of small American companies up there too, horning in on the action, but not to the State Dept's approval. But its all small time stuff:

Iraq's Wildcats  http://www.forbes.com/forbes/2007/0108/118.html

Christopher Helman, 01.08.06

 

"

With violence raging, some American investors are drilling for oil in the Kurdish-controlled north. Are they nuts?

Very quietly in September, under the watchful eye of the Kurdish Oil Protection Force, a crew funded by Prime Natural Resources of Houston started drilling for crude in northern Iraq. The idea was to reach a target depth of 9,500 feet in a Bina Bawi field around New Year's and uncork what seismic studies indicate could be 500 million barrels of oil. Success would make Prime and its partners the first Americans to find new oil in post-Saddam Iraq."

 

The article goes on to say the major oil companies are standing back, waiting for the dust to settle before they move in. Norway is just cashing in its chips anyway it can. NORWAY was part of the "coalition of bandits" back in 2003, after all.

 

BYork, that you get it and out of context, and out of proportion to fit your view, is nothing new. While you try to picture the Iraqi invasion as some sort of liberation, you will continue to do so. It is obvious why the American gangster capitalists and their army are in Iraq. The same reason they set up shop in the 50's and 60's. The same reason they got kicked out by the Baathists in the 70's. The same reason they attacked Iraq in 1991. The same reason they have had a military precence larger than most other countries' entire defence forces in the Gulf for decades : to protect and grab the oil.

 

http://www.zmag.org/content/showarticle.cfm?ItemID=3224

On March 8, 1917, Lt. Gen. Stanley Maude issued a "Proclamation to the People of the Wilayat of Baghdad". Maude's Anglo-Indian Army of the Tigres had invaded and occupied Iraq - after storming up the country from Basra - to "free" its people from their dictators. "Our armies do not come into your cities and lands as conquerors or enemies, but as liberators," the British announced.

"People of Baghdad, remember for 26 generations you have suffered under strange tyrants who have ever endeavoured to set one Arab house against another in order that they might profit by your dissensions.

"This policy is abhorrent to Great Britain and her Allies for there can be neither peace nor prosperity where there is enmity or misgovernment."

 

And within a few years the Brits were dropping mustard gas on the "liberated" Iraqis. TE Lawrence was writing to the London Times what a catastrophe it all was.

 

The reason? Lies. All lies. The American and British gangsters don't want to liberate the place, any more than the British wanted to liberate it in 1917. They want to loot it. The Norway story only points this out that there is no effective government in Iraq.

 

 

Bpors, you're in an intellectual and political rut. Firstly, the US-led forces actually did overthrow Saddam Hussein's fascistic regime. Eelctions did take place, resulting in a government that was not, and is not, subservient to the US. Bush's preferred candidate was soundly defeated. Secondly, the sovereign Iraqi government is shopping around for the best deal for future oil exploration and sales. Oil Minister Shahristani's discussions with the Chinese and other non-American interests proves this. By no stretch of the imagination can Iraq's Ahdab field be regarded as 'small potatoes', and this is the field that the Chinese company was meant to develop under the old regime. Of course, US big oil wants a share of the action but this is a constant factor, a reality of economic life which can be satisfied through importation as well as foreign investment. The Iraqi government will play the competitors off against each other, but will remain in a position of weakness for as long as the insurgency and sectarian killings continue to cause havoc to Iraqi civil society.  

 

By your logic, US big oil should support the insurgency as it is an obstacle to increasing Iraqi production and this helps keep the price of oil high. And you still haven't explained why big oil did not overthrow the regime when it easily could have after Saddam's defeat in Kuwait.

 

Oil rich countries will continue to sell their oil, regardless of US military presence, because they are so dependent on exports. Iraq's economy is about 90% oil dependent. The US is the world's largest importer, and currently relies on around 60% of its supply from imports. This is why Iraq under Saddam happily sold oil to US companies (until the US stopped him through the UN sanctions) and this is why the current and future Iraqi governments will do the same. As for allowing foreign investment through joint ventures or PSAs, current indications are that the government that you regard as a 'US puppet' will consider renegotiating the old regime's contracts with the big Chinese, Russian and French companies, should they still be willing to take the investment risks. It would be perfectly legitimate for Exxon and US companies to be part of this foreign development of Iraqi oil, though I doubt that they will rush in until stability is restored. Who knows, with a more stable environment, the Iraqis may even score Bolshevik terms for their PSAs: 30% to the people, 70% to the companies.

 

Barry

 

Contrary to expectations, Iraq’s draft oil law was not presented to Cabinet or the National Assembly in December. It will probably happen this month and, if accepted, will probably create a national account for oil revenues while allowing regions to negotiate contracts subject to an overseeing national oil council. The oil law will probably allow for a range of contracts, with Production Sharing Agreements (PSAs) with overseas’ oil companies the most common type.

 

 

In November 2005, Greg Muttitt’s Crude Designs: the rip-off of Iraq’s oil wealth was published by an antiwar group called PLATFORM. It opposes the likely PSAs, believing that they form part of a US oil grab which will work against Iraq's national interests. The document takes the form of a research report. It’s Executive Summary should be read in full, as should the entire document (by those with the time), as it has spawned thousands of leaflets and on-line items by those who have argued all along that the real reason for the US led invasion of Iraq was the desire to control Iraq’s oil. The whole document is here: http://www.globalpolicy.org/security/oil/2005/crudedesigns.htm 

 

 

The key findings are that:

 

 

At an oil price of $40 per barrel, Iraq stands to lose between $74 billion and $194 billion over the lifetime of the proposed contracts (2), from only the first 12 oilfields to be developed. These estimates, based on conservative assumptions, represent between two and seven times the current Iraqi government budget.

Under the likely terms of the contracts, oil company rates of return from investing in Iraq would range from 42% to 162%, far in excess of usual industry minimum target of around 12% return on investment.

 

Crude Design's 46 pages and 101 footnotes have helped give the ‘blood for oil’ argument credibility, especially among those who want experts to do their thinking for them. However, a leftwing position is based on critical thinking. It’s a strange leftist who doesn’t challenge authority, and that includes the authority of the experts. Often, eventually, the experts are exposed as dunces.

 

 

Muttitt’s document fails in its central purpose to establish that the development of Iraq’s oil resources through foreign investment via Production Sharing Agreements would be detrimental to Iraq. His analysis does not stand up to scrutiny mainly because his approach is one-sided and not grounded in reality. In reading his document, the discussion of Hegel’s “All that is real is rational; all that is rational is real” came to mind. Muttitt tends to share with the pseudo-left a denial of the role of necessity in the development of society; a denial that each new stage in development is justified in terms of the time and conditions to which it owes its origins.

 

 

His conceptual approach is that of dependency theory: there is no interdependence between multinational investor and resource-owning government, just one-way dependency by the latter on the former. Thus, “At an oil price of $40 per barrel, Iraq stands to lose between $74 billion and $194 billion over the lifetime of the proposed contracts”. Moreover, these estimates “represent between two and seven times the current Iraqi government budget”.

 

 

What is (staggeringly) missing here is an open and clear account of the revenues to be earned by Iraq from those same contracts. Table 5:1 at page 21 (“Impact of PSAs on Iraqi state revenues”), aims to prove revenue loss under PSA scenarios (using Russian, Omani and Libyan precedents) yet really establishes the opposite: that Iraq stands to earn vast revenues from the PSAs. Using figures in 2006 prices at constant $40 per barrel oil price for the assumed PSA contract period of 30 years, the table begins with the 100% ‘state take’ under conditions of full nationalization. Muttitt estimates that $(US)971 billion would be added to Iraq’s revenues under a nationalized system. Of course, there is currently no nationalized industry capable of earning that in Iraq but the starting point for Muttitt is what he thinks should be rather than what is (and rather than what can be on the basis of the changing what is).

 

 

Applying Russian and Omani PSA terms, he reveals that 80% of revenues would go to the Iraqi state. Or, under the Libyan PSA, 92%. Whatever the case (at the time of writing, 2 January, no-one knows what the Iraqi PSA terms will be), a reading of the very same table provides the data as to what Iraq stands to gain from PSAs, namely: between $(US)777 billion and $(US)897 billion. Muttitt is aware, and makes the most of the fact, that the theoretical ‘loss’ of $74 to $195 billion represents between two and seven times the current Iraqi government budget. Why does he not openly acknowledge (admit) that the PSA gains to Iraq (as expressed in his own table) represent twenty-one to twenty-four times the current Iraqi government budget? At page 20, he says that the “massive loss is the equivalent of $2,800 to $7,400 per Iraqi adult over the thirty-year lifetime of a PSA contract”. Current Iraqi GDP is $2,100 per person. The figures in Muttitt’s table actually indicate that with oil development via PSAs, whether at Russian, Omani or Libyan rates, the GDP per person in Iraq will expand enormously.

 

 

The paucity of dependency theory is exemplified in the above example.

 

 

I said earlier that Muttitt’s thinking is not grounded in reality: his ‘modeling assumptions’ reveal this. Obviously, a very large assumption is being made when he compares the projected PSAs to an idealized nationalized system. At page 42, he spells this out: “We assume that economic factors (including production rates, costs etc) are the same whether oil is extracted by the Iraqi National Oil Company or by foreign companies through PSAs”. Sorry, but this is just plain silly. Iraq’s nationalized industry is in crisis, in dire need of repair and rehabilitation after more than two decades of war, sanctions, mismanagement and the corruption that goes with dictatorship. The old regime was responsible for this situation – for the war with Iran, the invasion of Kuwait, and the UN sanctions that attempted to impose the terms of peace. Add to this the sabotage of oil pipelines and the smuggling of oil (a source of funds for the insurgents) and Iraq’s nationalized oil industry needs many billions invested into it just to get it functioning properly again. Yet we are supposed to accept that there’s no difference between its efficiency, level of technology and access to capital and that of the major oil companies.

 

 

The extent of the billions needed is revealed in a report by the market research resource, Research and Markets: http://www.researchandmarkets.com/reportinfo.asp?report_id=39105  Restoration of former capacity will take two years and require $5 billion to $10 billion while development of already discovered fields will require seven to ten years and cost $40 billion to $80 billion. Above all, of course, both require stability and security. The Iraqi government’s aim, expressed by PM Barham Salih, is to double oil exports by 2010 (from 1.6 million barrels per day) and to increase oil production (from 2.3 million barrels per day to 6 million).

 

 

Muttitt puts forward three ‘options for investment’. The first two again reveal a lack of reality in his approach. For instance, “Direct investment from government budget” just isn’t possible, and all the wishful thinking in the universe won’t make it a real option. The billions just aren’t there - but they are in the coffers of big oil companies like TotalFina, Lukoil, the China National Petroleum Company, Shell and Exxon. The second option – “Government/state oil company borrowing from banks, multilateral agencies and other leaders” – is equally uninspiring. Iraq needs greater debt like it needs a stronger insurgency. (Iraq inherited debts totalling around $125 billion from the old regime. http://www.jubileeiraq.org/debt_today.htm European countries and Japan are forgiving part of these debts, and the US forgave the entire $4.5 billion debt to it in 2004, but it is still an issue for a country that is not earning sufficient revenue.)

 

 

The third option recognizes the role of foreign oil companies – “Investment by international oil companies using more flexible and equitable forms of contract”. The contracts in this scenario are ‘risk service contracts’, ‘buyback contracts’ and ‘development and production contracts’. (p. 33). What they all have in common is foreign investment. Unless Greg Muttitt can wave his magic wand and create the billions required by the Iraqi government for the rehabilitation and development of the oil industry without foreign investment, and unless he can persuade the Iraqi government to go even further into debt with a view to borrowing the billions, then foreign investment of some sort is the only realistic option. For all its footnotes and for all its rhetoric about Iraqi public opinion being opposed to multinational oil companies, Muttitt’s document cannot avoid this real-world conclusion.

 

 

Muttitt’s thinking is consistent with the social democratic belief in strong central state ownership. ‘Nationalization’ is central to this outlook. Muttitt refers to Iraq’s nationalized industry as being in “public hands” (p. 5) even though it could never be owned by the Iraqi people under the former fascistic dictatorship. To suggest that PSAs will “wrench” oil “from public into private hands” (p. 5) implies surprising sympathy for the old regime, given that elsewhere Muttitt recognizes the old regime as a tyranny. Muttitt says that “None of the top oil producers in the Middle East uses PSAs” (p. 5) as though this is an argument against them. One could equally point out that none of the top oil producers in the Middle East is democratic. Iraq is paving the way in this regard, and PSAs are part of the regime/region change. Iraq’s nationalized industry merely empowered the former regime. And besides, nationalization has rarely been a measure of progress. As Engels said in Socialism: Utopian and Scientific:

 

 

     But of late, since Bismarck went in for State-ownership of
     industrial establishments, a kind of spurious Socialism has arisen,
     degenerating, now and again, into something of flunkyism, that
     without more ado declares all State-ownership, even of the
     Bismarkian sort, to be socialistic.  Certainly, if the taking over
     by the State of the tobacco industry is socialistic, then Napoleon
     and Metternich must be numbered among the founders of Socialism.

 

 

Leftists who are influenced by Marxism believe in the workers actually taking over and unleashing the productive capacities of industries and ultimately freeing themselves from wage slavery – this has nothing in common with governments of capitalist economies managing them and footing the bill on behalf of the ruling class.

 

 

When workers have taken over, as in the regime change in Russia facilitated by the Bolshevik Revolution in 1917, they have had to confront similar issues of economic development as Iraq today. Having taken over ownership of the resources, the people were then free to do with them whatever they saw fit in their own interests. In the Soviet Union, Lenin opposed those trade unionists who (as in Iraq) opposed foreign investment as a way of developing the oil industry. In his Report on Concessions to the Communist Group of the All-Russia Central Council of Trade Unions in April 1921, he advocated a 60% to 70% share of oil in agreements with foreign capitalists, with the state receiving 40% to 30%. As for profitability, he said "We shall not grudge the foreign capitalist even a 2000% profit". Full text: http://www.marxists.org/archive/lenin/works/1921/apr/11.htm This is because he wanted to develop the economy, using the best available, most advanced, techniques, with a view to improving the standard of living of the people. I doubt whether either the rate of profitability or the 70/30 sharing arrangement will apply to Iraq's PSAs (the Iraqi PSAs will probably have a bigger share for the state), though their objective is the same.

 

 

According to Muttitt’s table 5.1, current Russian and Omani PSA terms allow the investor (foreign capitalist) to take 20% and the Libyans allow them to take 8%.

 

 

It makes perfect sense for countries that want to develop their economic life-lines to enter PSAs. The days of insular nationalism are long gone and the era of global interdependence is a reality pregnant with great oportunities for people everywhere. The Iraqi government would be negligent in its duty not to allow private foreign investors to develop the resource that accounts for more than 95% of its revenues. In addition to significant revenues to be earned from the PSAs, there is a huge saving to the national government because the investor company “provides the capital investment, first in exploration, then drilling and the construction of infrastructure”. Greg Muttitt recognizes this fact, at page 12, somewhat undermining his own argument against the PSA system.

 

 

While Muttitt is an expert oil analyst who has completed a lot of research, his theoretical approach and politics lead him to a position that is reactionary and antithetical to Iraq’s interests. Readers with an interest in another expert study (one that was published prior to the 2003 invasion) may like to consult an even weightier (93 pages) document: Kirsten Bindemann’s Production Sharing Agreements: an Economic Analysis, published by the Oxford Institute for Energy Studies in October 1999. It is on-line at: http://www.oxfordenergy.org/pdfs/WPM25.pdf 

 

 

While opponents of the likely Iraqi PSAs create the impression that PSAs are something unusual (even sinister), Bindermann’s study is based on 268 PSAs that were entered into by 74 countries between 1966 and 1998. Appendix 5.1 (“Dataset Information”) at page 63 reveals that seven countries in the Middle East had 41 PSA contracts between 1966 and 1998, including Iraq (with 2). In her introduction, Bindermann points out that “Production Sharing Agreements are among the most common types of contractual agreements for petroleum exploration and development”. (p. 1) Further, she describes the features of the PSA that distinguish it from other contracts. It's really necessary to understand what the PSAs are about (as there's a lot of misinformation 'out there'). She points out that,

 

First, the FOC (foreign oil company) carries the entire exploration risk. If no oil is found the company receives no compensation. Second, the government owns both the resource and the installations. In its most basic form a PSA has four main properties. The foreign partner pays a royalty on gross production to the government. After the royalty is deducted, the FOC is entitled to a pre-specified share (e.g. 40 percent) of production for cost recovery. The remainder of the production, so called profit oil, is then shared between government and FOC at a stipulated share (e.g., 65 percent for the government and 35 percent for the FOC). The contractor then has to pay income tax on its share of profit oil. (p. 1)

 

 

It will be impossible for the remnant anti-war movement to launch a campaign against the new Iraqi oil law because most people, including most of those who marched in scores of thousands against the war in March 2003, want Iraq to have a democratic future and realize that oil has a big part to play in that process.

 

 

I have written in a previous post about the potential of the likely new oil law in terms of assisting reconciliation within Iraq. It will all take a very long time: to rehabilitate the oil industry and then to expand production while also healing the human wounds arising from sectarian violence. But both are possible and I believe will happen eventually.

 

 

Barry

 

 

 

 

 

 

 

 

BYORK,

I’m a nut? OK. But I see some of your more gung-ho posts as something akin to John Wayne circa the 60’s trying valiantly to defend Murka’s little escapade in Vietnam. If you made a movie about Iraq, I’m sure it would have the same flavour as Mr Wayne’s “Green Berets”. And the same grip on reality too. Ha ha!

 

Democratic revolution in Iraq, my backside! Only the seriously deluded still  believe that.

 

Hitchens claimed this democracy gobblegook furphy back at the start. I think he claimed insiders like Wolfowitz told him this. If Hitchens was genuine, what a gullible fellow! But he has told so many bald faced lies since, its hard to believe it. Wolfowitz, btw,  is now one of the many rats deserting the ship. It wasn’t his idea at all, dontcha know? And he (Wolfowitz) hates being called the "architect of the Iraq war". Not that he said he hated being called that back in 2002/2003.

 

America is not the superpower it once was. Back in the Vietnam days they got to pretend South Vietnam was a democracy. Now all they have is the Green Zone. Their puppet government’s power extends only that far. There are no U.S. soldiers walking freely around Iraq, let alone Baghdad, ever. Hell! They don’t even do that in the Green Zone. Its like one long Tet Offensive over there.

 

Read the various polls. Nearly all  of the Iraqis want the occupation troops out. Most of them approve attacking occupation troops. Four years on, and your  can-do Murkan heroes can’t even supply electricity and fuel!

Only the puppets inside the Green Zone want them to stay. None of these puppets - who you call democratically elected - would dare show their hides outside the American-built fortress. Yes, the Iraqi citizens voted in good faith. But they did not achieve the goals of ending the occupation, or gaining a democratically functioning government. They did not want to replace Saddam with the Mullahs and their death squads. But that is what they got. And as the latest video (the one with voices) of Saddam’s excecution shows, nothing has changed. Except for the worse.

 

Without sovereignty there can be no democracy. And no country can have a functioning sovereign government while it is still under occupation. So the elections turn out to be a ruse; a cheat to give validity to American occupation. Just as in Vietnam.

 

What does it matter if Vietnam and Iraq are two different wars or they aren’t? George (Idiot Boy) Bush sees the parallel. Your Vietnam-War-supporting leader hero said this recently:

 

http://www.rawstory.com/news/2006/Video_Olbermann_corrects_Bushs_Vietnam_lesson_1121.html

On his recent trip to Vietnam, President Bush explained the lessons the United States learned in its war with Vietnam by asserting that "we'll succeed unless we quit."

 

 

George is saying that America gave up in Vietnam against the commies. That is his lesson from Vietnam. And he assures us that won’t be the case in Iraq against the terrorists.  You see, even though you say there is no connection, Bush says there is. And George Bush WAS and IS pro the Vietnam war.

 

 

The Shiites, under Sistani, forced Bush’s hand to allow full elections. The Shiites won the election, but the Shiites lost the country. They have ended up with a fractured country in a state of civil war. Partly due to Bush’s insistence that the occupation continues no matter what. And he insists on staying this year to fight the war he caused.

You ask me why didn’t Big oil invade Iraq all the way back in 1991 and take over. Better to note that when the major oil companies interests in Kuwait were to be taken over by a dictator with a history of nationalizing their assets, American military muscle was swung into action.

America had the support of the UN to kick Saddam out of Kuwait. And that’s as far as it went. There was no 9/11 back then. There was no Zionist/Neocon influence within the Whitehouse to give it a push along.  Up until that time America had made no case against Iraq with WMDs. OPEC was not strong like it was becoming again from 2000. The price of oil was not on the march upwards like it was in 2000-2003. Bush Snr was a more cautious operator, and not a dribbling moron like his namesake son who would believe any political nutcase or lobby that whispers in his ear.

 

 

The elected government of Iraq hides in the American-built Green Zone. Don’t tell me they are not subservient and beholden, especially when we see them call on Bush to keep occupation troops in Iraq and nearly collectively fainted when the Baker Report came out suggesting a U.S. withdrawal. The same tune the South Vietnamese government played.

 

The American navy control and patrol the world’s oil shipping routes. They rule the waves.

 

America did deals with countries like China and Russia over Iraq’s oil assets prior to the invasion. Whether all those promises were kept, no-one knows. So Iraq talking to the Chinese is no big deal. The five deadly sisters intend to get the lion’s share. U.S. military bases will ensure they control the flow. China has big deals with Iran, that bought forward by the 2003 invasion. A case can be made that Washington is tempting China away from Iran:

http://www.washingtonpost.com/wp-dyn/content/article/2005/07/12/AR2005071201546_pf.html

“Last year, China signed a $70 billion oil and gas purchase agreement with Iran, undercutting efforts by the United States and Europe to isolate Teheran and force it to give up plans for nuclear weapons.”

 

Trying to isolate Iran is certainly the case with Washington’s nuclear deals with India. Remember, I said the major driving force behind the war was oil and the big oil companies. And it still plays the major role. Whether major oil companies win or lose at every turn after that, does not alter that.

 

But it is just talk so far. So don’t get too excited.

 

 

You say: “Saddam happily sold oil to US companies (until the US stopped him through the UN sanctions)…”  Glad to see you recognize that.

America is not the superpower it once was.

Wow! What an amazing insight.

I feel so let down that the managers of this site have not seen fit to recognise this crucial fact and, say, incorporate it in the name of the website. But that's cool, I do enjoy coming here to Americawillruletheworldforverandneverfalter.net

Read the various polls.

Link?

(note from keza; In order to maintain the integrity of this thread,  most of the discussion about Iraqi polls has now been moved to a new thread which can be viewed by clicking here)

Nearly all  of the Iraqis want the occupation troops out.

In the next twelve months, not immediately. Do you have a link to a poll that shows otherwise?

Most of them approve attacking occupation troops.

No they don't. I have dealt with this untruth here.

Its like one long Tet Offensive over there.

If you take the date of the Gulf of Tonkin resolution (August 1964) as the date of the start of 'major combat' in Vietnam, and February 1968 as the end of the Tet offensive, there are 42 months.

The invasion of Iraq began in March 2003. 42 months after that is September 2006.

Using the bottom part of this search engine, between August 1964 and February 1968, we find the following death figures for US servicemen in Vietnam:

August - Dec 1964 - 112
1965 - 1 930
1966 - 6 349
1967 - 11 366
Jan - Feb 1968 - 3804

In Iraq, the USA has just suffered its 3 000th deaths of a soldier in the entire 46 months up to now.

Jan and Feb 1968 - the Tet Offensive you so proudly compare to bombing by the Iraqi fascists - killed more US servicemen than the entire Iraq war up until this date.

If the Iraqi people were really trying as a whole to drive out the US tomorrow, casualty rates would match the Vietnam ones I have quoted above. They would be killing a lot more Americans if they were united in using force to oppose them.

I also enjoy your implicit support for Bush Snr, a friend, colleague and ally of the most evil 'realist' thinkers in US foreign policy. Once again, we have a so-called leftist arguing on the side of those who preach 'stability'.

It is precisely because of people like Bush Snr that the USA propped up Middle Eastern dictators for 60 years. And you are supporting him:

Bush Snr was a more cautious operator, and not a dribbling moron like his namesake son who would believe any political nutcase or lobby that whispers in his ear.

George is saying that America gave up in Vietnam against the commies. That is his lesson from Vietnam. And he assures us that won’t be the case in Iraq against the terrorists.  You see, even though you say there is no connection, Bush says there is. And George Bush WAS and IS pro the Vietnam war.

Thank you for pointing out that for people like those at this site, Bush 43 can only be a temporary ally, whose shortcomings we need to remember, and whose sense of freedom will run out long before ours.

Touchdown!

Bpors, I said you were in an intellectual and political rut, not that you are a nut! (Though your talk about Zionists/Neo-Cons and suspicion that this site's consistent contributors are really secret Zionist sympathizers does sound the alarm bells for me). Your posting above really does show just how much in a rut you are - you just repeat the same stuff, fail to respond directly and fail to convince. You then become angry and erratic - two sure signs of frustration and self-doubt. A line such as You say: “Saddam happily sold oil to US companies (until the US stopped him through the UN sanctions)…”  Glad to see you recognize that. is just bizarre, as it has been part of my argument that Saddam would have kept selling oil to the US companies were it not for the US government stopping him and them via the sanctions.

 

Also worrying is your response to my question as to why, if big oil controlled US foreign policy and had wanted to overthrow Saddam since the nationalization policy of the 1970s, they did not overthrow him (rather than keep him in power) when they could have easily done so in 1991. Your reply is an irrational rant. You reply to that question with: Better to note that when the major oil companies interests in Kuwait were to be taken over by a dictator with a history of nationalizing their assets, American military muscle was swung into action. America had the support of the UN to kick Saddam out of Kuwait. And that’s as far as it went. There was no 9/11 back then. There was no Zionist/Neocon influence within the Whitehouse to give it a push along.  Up until that time America had made no case against Iraq with WMDs. OPEC was not strong like it was becoming again from 2000. The price of oil was not on the march upwards like it was in 2000-2003. Bush Snr was a more cautious operator, and not a dribbling moron like his namesake son who would believe any political nutcase or lobby that whispers in his ear.        

 

You're all over the place. I don't feel any need to respond to this. As I've said before, I want to move on. (And how strange that you can say, after mocking me for pointing out that US big oil has no interest in higher oil prices, that a reason for not overthrowing him in the early 1990s was that The price of oil was not on the march upwards like it was in 2000-2003. You are too erratic to continue to attempt to debate, and this time I mean it).    

 

I'm assuming that there are people who have followed this debate from the beginning and they will understand why I am taking this position with bpors.

 

Also, I'd really appreciate some critical coment/feedback, from friend and foe alike, on the article I posted in response to Greg Muttitt's Crude Designs document. It took a long time to do the research and to write it for the site and I'm hoping to write something for wider distribution once a new oil law is passed. Anything I write will be used to promote the site, too, so please comment and don't forget it's there! It seems to have been quickly overtaken by what I regard as an inane post by bpors.

 

Barry

 

 

 

Latest news on the oil law is that the Iraqi cabinet is in its final stages of the process of accepting it. According to the most current report I could locate, the new law will allocate oil revenues to the provinces according to the number of residents.  Further info: http://www.iraqdevelopmentprogram.org/idp/news/new1447.htm  

 

Barry

BYork: Latest news on the oil law is that the Iraqi cabinet is in its final stages of the process of accepting it. According to the most current report I could locate, the new law will allocate oil revenues to the provinces according to the number of residents.  Further info: http://www.iraqdevelopmentprogram.org/idp/news/new1447.htm  

 

I'm not sure what that means. The country is in the middle of a civil war. The Iraqi government is hiding in the American occupation-made bunker. The article only refers to money that would be allocated back into Iraq. American occupation is currently thieving billions off the Iraqis to help fund their occupation-loving lifestyle. Perhaps the Iraqi government should recoup the billions stolen by American gangster capitalism:

 

EXCERPT: Officially, Iraq exported $10bn worth of oil in the first year of the American occupation. Christian Aid has estimated that up to $4bn more may have been exported and is unaccounted for. If so, this would have created an off-the-books fund that both the Americans and their Iraqi allies could use with impunity to cover expenditures they would rather keep secret - among them the occupation costs, which were rising far beyond what the Bush administration could comfortably admit to Congress and the international community.

In the few weeks before Bremer left Iraq, the CPA handed out more than $3bn in new contracts to be paid for with Iraqi funds and managed by the US embassy in Baghdad. The CPA inspector general, now called the Special Inspector General for Iraq Reconstruction (Sigir), has just released an audit report on the way the embassy has dealt with that responsibility. The auditors reviewed the files of 225 contracts totalling $327m to see if the embassy "could identify the current value of paid and unpaid contract obligations".

It couldn't. "Our review showed that financial records ... understated payments made by $108,255,875" and "overstated unpaid obligations by $119,361,286". The auditors also reviewed the paperwork of a further 300 contracts worth $332.9m: "Of 198 contract files reviewed, 154 did not contain evidence that goods and services were received, 169 did not contain invoices, and 14 did not contain evidence of payment."

Clearly, the Americans see no need to account for spending Iraqis' national income now any more than they did when Bremer was in charge. Neither the embassy chief of mission nor the US military commander replied to the auditors' invitation to comment. Instead, the US army contracting commander lamely pointed out that "the peaceful conditions envisioned in the early planning continue to elude the reconstruction efforts". This is a remarkable understatement. It's also an admission that Americans can't be expected to do their sums when they are spending other people's money to finance a war.

http://www.guardian.co.uk/Iraq/Story/0,2763,1522983,00.html

 

All these billions, and yet still no reconstruction. Which begs the question: shouldn't they try and bring about peace before they carve up the oil rights? Whats the point of all that money floating around if it gets thieved by Bush and can't be used for reconstruction because of all the violence and insecurity?

 

And what happened to democracy? Bush has replaced "democracy" with "freedom" now in all his speeches. Bush is about to do a Lyndon Johnson and escalate the war by sending in 30,000 extra troops to Baghdad. Well, they already have about 140,000 occupation troops, plus another 100,000 employed as private contractors, plus over 230,000 Iraqi troops. So yeah, that'll work; that will make all the difference. The Iraqi people are crying out for more occupation troops. If the zionist/neocon Kristol and his buddies say it will work, then Bush and all his followers must agree.

 

 

 

 

 

Youngmarxist, the extent of bpors' dishonesty and disconnection from reality is also apparent in his statement that "The origins of this thread was about oil. But no-one answered me on my posts about that".    I did a big double-take on that, as I have spent much time and effort responding to his posts about oil in this thread. Yet he, perhaps genuinely, believes that "no-one answered" him.

 

There's much better ways of expending energy and time on this site and, hopefully, other sites that contributors here also join and debate with. This site can be good for posting and discussion of draft articles (letters, opinion pieces, whatever) for submission elsewhere, including mainstream media. The fact that bpors can become a distraction does point to the problem of 'huddling' that was raised a while ago.

 

From now on, he should be ignored - at least until such time as he takes advantage of the new thread I've started, titled "Polls that show 90% of Iraqis want an immediate withdrawal". He should be happy to present the polls (not reports about them but links to the polls themselves) there. If he doesn't do that, I think it can safely be assumed that such polls do not exist and he should be taken as seriously as any other Rightwing fantasist.

 

In the bigger scheme of things, bpors is unimportant, as are "we", but unlike him we do have the potential to 'get out there' and express views that are challenging, progressive and optimistic.

 

I'll post again here on oil in the near future, with a view to getting the thread back on track.

 

Barry

note from keza : I've moved almost all of the material about Iraqi polls that was originally posted to this thread  to the new thread created by Barry ( Polls that show 90% of Iraqis want an immediate withdrawal)

 

The Turkish Daily News (Monday 8th January) has run a report claiming that, after more than three months of intense debate, Kurdish, Shiite Arab and Sunni Arab factions in Iraq have agreed to Iraq's draft oil law. http://www.turkishdailynews.com.tr/article.php?enewsid=63446  The report suggests that the (anti-war) Independent on Sunday published a leaked copy of the draft law but I would n ot find it anywhere. The IoS article rather discusses portions of the (leaked) draft, which may not be the final draft. http://news.independent.co.uk/world/middle_east/article2132574.ece The Turkish source states that the draft law allows for oil companies to take 75% of annual income until production costs are covered; thereafter, they receive 20% per annum. (Iraq then receives 80% of the revenues). The report says that experts point out that this is double the normal rates; though Greg Muttit's Crude Designs document reveals a range of between 80% and 92% received by the oil-producing country in the Production-Sharing Agreements used in his tables. Iraq is in a weak bargaining position so long as the insurgents and sectarian violence continue, but an eventual 80% share would mean (using figures in Muttitt's document) a windfall of around $(US)777 billion (that's billion not million) over an assumed 30 year PSA period. Also, Iraq gets itself a repaired, rehabilitated, and greatly expanded oil industry and infrastructure.

 

I'll post again when the law is debated/passed in the National Assembly.

 

Barry

 

Similiar take to byork's posted at dailykos :

 http://www.dailykos.com/story/2007/1/7/113935/9122

Thanks for the link GuruJane. I was surprised to see a non-hysterical take at DailyKos.

My eyebrow too was raised! If sanity is returning can the Huffington Post be far behind?

To youngmarxist,

here is a few articles regarding the theft of the Iraqi people's wealth by the American/British occupiers. My view is nothing has changed since the Iraqis voted a parliament into the Green Zone which is under even tighter control than the occupied towns of Iraq. One must wonder what Bush really means when he expects Milaki to keep his promise.

http://www.wsws.org/articles/2003/aug2003/preo-a19_prn.shtml

Bush grants permanent legal immunity to US corporations looting Iraqi oil

By Rick Kelly
19 August 2003

Excerpt: An extraordinary Presidential Executive Order, signed into law by President Bush on May 22 but kept out of the pages of the US media, further underscores the real motivations behind the illegal US-led invasion and occupation of Iraq.

Ostensibly drawn up in order to protect Iraq’s oil wealth, Executive Order (EO) 13303, “Protecting the Development Fund for Iraq and Certain Other Property in Which Iraq Has an Interest”, provides unlimited authority for US corporations to loot Iraqi oil and grants them permanent immunity from any legal actions over the consequences.

EO 13303 begins with a declaration that the possibility of future legal claims on Iraq’s oil wealth constitutes “an unusual and extraordinary threat to the national security and foreign policy of the United States.” It goes on to state that “any ... judicial process is prohibited, and shall be deemed null and void” with regard to the Development Fund for Iraq, as well as for any commercial operation conducted by US corporations involved in the Iraqi oil industry.

Section 1(b) of the EO eliminates all judicial process for “all Iraqi petroleum and petroleum products, and interests therein, and proceeds, obligations or any financial instruments of any nature whatsoever arising from or related to the sale or marketing thereof, and interests therein, in which any foreign country or a national thereof has any interest, that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of United States persons.”

Condemning it as a “blank check for corporate anarchy”, Tom Devine, legal director for the non-profit legal firm, the Government Accountability Project (GAP), issued a damning assessment of Bush’s EO on July 18. “In terms of legal liability,” Divine’s report began, “the Executive Order cancels the concept of corporate accountability and abandons the rule of law.”

Devine noted that section 1(b) of the EO protects “all corporate activities with roots or any connection to Iraqi oilcovers everything from extraction through transportation, advertising, manufacture, customer service, corporate records and payment of taxes. It covers compliance with contractual obligations involving Iraqi oil that industry enters with the US government in post-war Iraq. The scope can be further expanded to virtually all oil-related commerce, by blending Iraqi oil with domestic supplies for any given commercial transaction.”

The EO means that American oil companies operating in Iraq are now completely immune from legal accountability. If they carry out environmental destruction, oil spills or labour rights violations, no one affected will have any legal recourse. In addition, the EO eliminates the potential for any future Iraqi government to sue US oil companies for compensation and damages. The GAP report describes it as “a licence for corporations to loot Iraq and its citizens”.

The EO exempts US oil companies operating in Iraq not only from international law, but from American civil and criminal liability as well. It renders any commercial activity within the US involving Iraqi oil exempt from judicial accountability. Devine notes that this legal exemption covers everything from laws concerning workplace safety, minimum wage requirements, environmental protection and consumer fraud.

http://www.lrb.co.uk/v27/n13/harr04_.html

Where has all the money gone?
Ed Harriman follows the auditors into Iraq

US House of Representatives Government Reform Committee Minority Office
| Link: http://www.democrats.reform.house.gov/

US General Accountability Office
| Link: http://www.gao.gov/

Defense Contract Audit Agency
| Link: http://www.dcaa.mil/

International Advisory and Monitoring Board
| Link: http://www.iamb.info/

Coalition Provisional Authority Inspector General
| Link: http://www.cpa-ig.com/

Special Inspector General for Iraq Reconstruction
| Link: http://www.sigir.mil/

Excerpt: On 12 April 2004, the Coalition Provisional Authority in Erbil in northern Iraq handed over $1.5 billion in cash to a local courier. The money, fresh $100 bills shrink-wrapped on pallets, which filled three Blackhawk helicopters, came from oil sales under the UN’s Oil for Food Programme, and had been entrusted by the UN Security Council to the Americans to be spent on behalf of the Iraqi people. The CPA didn’t properly check out the courier before handing over the cash, and, as a result, according to an audit report by the CPA’s inspector general, ‘there was an increased risk of the loss or theft of the cash.’ Paul Bremer, the American pro-consul in Baghdad until June last year, kept a slush fund of nearly $600 million cash for which there is no paperwork: $200 million of this was kept in a room in one of Saddam’s former palaces, and the US soldier in charge used to keep the key to the room in his backpack, which he left on his desk when he popped out for lunch. Again, this is Iraqi money, not US funds.

The ‘reconstruction’ of Iraq is the largest American-led occupation programme since the Marshall Plan. But there is a difference: the US government funded the Marshall Plan whereas Donald Rumsfeld and Paul Bremer have made sure that the reconstruction of Iraq is paid for by the ‘liberated’ country, by the Iraqis themselves. There was $6 billion left over from the UN Oil for Food Programme, as well as sequestered and frozen assets, and revenue from resumed oil exports (at least $10 billion in the year following the invasion). Under Security Council Resolution 1483, passed on 22 May 2003, all of these funds were transferred into a new account held at the Federal Reserve Bank in New York, called the Development Fund for Iraq (DFI), so that they might be spent by the CPA ‘in a transparent manner . . . for the benefit of the Iraqi people’. Congress, it’s true, voted to spend $18.4 billion of US taxpayers’ money on the redevelopment of Iraq. But by 28 June last year, when Bremer left Baghdad two days early to avoid possible attack on the way to the airport, his CPA had spent up to $20 billion of Iraqi money, compared to $300 million of US funds.

The ‘financial irregularities’ described in audit reports carried out by agencies of the American government and auditors working for the international community collectively give a detailed insight into the mentality of the American occupation authorities and the way they operated, handing out truckloads of dollars for which neither they nor the recipients felt any need to be accountable. The auditors have so far referred more than a hundred contracts, involving billions of dollars paid to American personnel and corporations, for investigation and possible criminal prosecution. They have also discovered that $8.8 billion that passed through the new Iraqi government ministries in Baghdad while Bremer was in charge is unaccounted for, with little prospect of finding out where it went. A further $3.4 billion earmarked by Congress for Iraqi development has since been siphoned off to finance ‘security’.

http://www.amconmag.com/2005/2005_10_24/cover.html

Excerpt: The American-dominated Coalition Provisional Authority could well prove to be the most corrupt administration in history, almost certainly surpassing the widespread fraud of the much-maligned UN Oil for Food Program. At least $20 billion that belonged to the Iraqi people has been wasted, together with hundreds of millions of U.S. taxpayer dollars. Exactly how many billions of additional dollars were squandered, stolen, given away, or simply lost will never be known because the deliberate decision by the CPA not to meter oil exports means that no one will ever know how much revenue was generated during 2003 and 2004.

Some of the corruption grew out of the misguided neoconservative agenda for Iraq, which meant that a serious reconstruction effort came second to doling out the spoils to the war’s most fervent supporters. The CPA brought in scores of bright, young true believers who were nearly universally unqualified. Many were recruited through the Heritage Foundation website, where they had posted their résumés. They were paid six-figure salaries out of Iraqi funds, and most served in 90-day rotations before returning home with their war stories. One such volunteer was Simone Ledeen, daughter of leading neoconservative Michael Ledeen. Unable to communicate in Arabic and with no relevant experience or appropriate educational training, she nevertheless became a senior advisor for northern Iraq at the Ministry of Finance in Baghdad. Another was former White House Press Secretary Ari Fleischer’s older brother Michael who, though utterly unqualified, was named director of private-sector development for all of Iraq.

The 15-month proconsulship of the CPA disbursed nearly $20 billion, two-thirds of it in cash, most of which came from the Development Fund for Iraq that had replaced the UN Oil for Food Program and from frozen and seized Iraqi assets. Most of the money was flown into Iraq on C-130s in huge plastic shrink-wrapped pallets holding 40 “cashpaks,” each cashpak having $1.6 million in $100 bills. Twelve billion dollars moved that way between May 2003 and June 2004, drawn from accounts administered by the New York Federal Reserve Bank. The $100 bills weighed an estimated 363 tons.

Once in Iraq, there was virtually no accountability over how the money was spent. There was also considerable money “off the books,” including as much as $4 billion from illegal oil exports. The CPA and the Iraqi State Oil Marketing Board, which it controlled, made a deliberate decision not to record or “meter” oil exports, an invitation to wholesale fraud and black marketeering.

Thus the country was awash in unaccountable money. British sources report that the CPA contracts that were not handed out to cronies were sold to the highest bidder, with bribes as high as $300,000 being demanded for particularly lucrative reconstruction contracts.

 

 

http://www.christianaid.org.uk/indepth/310iraqoil/index.htm

 

To youngmarxist,

The above link is the Christian Aid article you could not find with the reports in PDF.

Gurujane, good to see some sensible analysis on an anti-war site (Dailykos). It reinforces my feeling that  

It will be impossible for the remnant anti-war movement to launch a campaign against the new Iraqi oil law because most people, including most of those who marched in scores of thousands against the war in March 2003, want Iraq to have a democratic future and realize that oil has a big part to play in that process.

      

I think most people understand why the Iraqi government will opt for foreign investment that earns them between $(US)777 and 897 billion over 30 years.  

 

The Sunni-Kurd-Shia committee drafting the new oil law has reached agreement and so it should be presented to the Iraqi parliament very soon.

 

The die-hard reactionaries will be even more isolated - in Iraq and elsewhere.

 

Barry

 

 

   

youngmarxist,

 

after you get through the articles in my previous post, you might want to read this article. I would be interested in your comments on the corruption articles.

 

http://www.guardian.co.uk/commentisfree/story/0,,1991320,00.html