'Regime Change' & Oil Reserves
By Conn Hallinan
posted to Portside
Feb 6, 2003
The one word President George Bush II never uttered in
his State of the Union is the one that will launch the
war against Iraq sometime in the next six weeks: oil.
There was much talk of weapons of mass destruction, the
World Trade Towers, and evil. But what most Americans
don't know is that the decision to invade Iraq was made
long before 9/11 and that the coming war has little to
do with democracy and a great deal to do with oil
The planning for this war even pre-dates this
administration. Back in 1997, former Defense Secretary
Donald Rumsfeld and former White House Chief of Staff
Dick Cheney cooked up the Project for a New American
Century and lobbied the Clinton Administration for a
"regime change" in Iraq to "protect our vital interests
in the Gulf."
The members of the Project read like a "who's who" in
the Bush Administration: Under Secretaries of state John
Bolton and Richard Armitage; PaulWolfowitz, Assistant
Secretary of Defense; Richard Perle, Chair of the
influential Science Board; Elliot Abrams, National
Security Council; and Zalmay Khalilzad, Special Envoy
to Iraq and former Unocal Oil Company employee.
Clinton took a pass but these guys and the energy
companies they represent don't give up.
Four months after Bush took the oath of office,
Cheney's National Energy Policy Development Group
recommended that the President "make energy security a
priority of our trade and foreign policy," arguing that
control of the Middle East was the key.
When you crunch the numbers, it's hard to argue with
the logic. Oil production in the U.S., Mexico, and the
North Sea is declining, while U.S. consumption will
increase by one-third in the next 20 years. By 2020,
two-thirds of our oil will be imported, and since 65
percent of the world's remaining reserves are in the
Middle East, that is where it will come from.
Some 62 percent of U.S. energy is generated by oil or
While the U.S. is also interested in developing oil
fields in the Caspian Sea, Africa and Latin America,
these areas are dwarfed by the proven reserves of Saudi
Arabia (264 billion barrels); Iraq (112 billion
barrels); United Arab Emirates (97.8 billion barrels);
and Kuwait (96.5 billion barrels).
The U.S. is pouring money (and troops) into the Caspian
Sea area, and either building or planning pipelines
from Turkey to Pakistan. But Caspian Sea reserves are
at most 22 billion barrels, roughly the same as North
Sea or Prudhoe Bay, Alaska. The real gold lies in the
Gulf, and that is why we are headed there.
Back in the 1970s, when the Organization of Petroleum
Exporting Countries (OPEC) was formed, most of the big
western oil companies lost control of Middle East oil
reserves. While the "big five"-Exxon-Mobil, Chevron-
Texaco, Royal Dutch Shell, British Petroleum, and
TotalFinaELF-continue to drill, pump and sell 29
million barrels a day, they only control 4 percent of
world's total reserves. That's about 12 years of
But if a "friendly" regime is inserted in Iraq, the
door will swing open, particularly for American and
British oil companies. Ahmed Chalabi of the Iraq
National Congress, and Rumsfeld's candidate to take
over post-Hussein Iraq, says "American companies will
have a big shot at Iraq oil" and companies from nations
who don't support the war---read Russia, France and
China---may be sidelined.
According to a recent article in the Wall Street
Journal, the Pentagon and the State Department are
debating how to control the oil, and the U.S. Energy
Department's "oil and natural gas working group" has
already met with the Iraqi opposition.
Most people in the industry think it's pretty straight-
forward." If you turn up and it's your tanks that
dislodged the regime, then you're going to get the best
deals. That's the way it works," says Credit Suisse
First Boston analyst Mark Flannery.
Indeed, if there is anything that will eventually drag
a reluctant Russia, France and China along, it will be
the fear of being frozen out of the oil. Russia's
LUKOIL has been developing Iraq's West Qurna oil field,
China's National Petroleum Company has a 50 percent
stake in the al-Ahdab field, and France's TotalFinaELF
has its eyes on the huge Majnoon field.
The Russians are particularly concerned. "Do Americans
need us in Iraq?" asks Nikolai Tokarev, general
director of Zarubezhneft, a state-owned oil company,
"Of course not. Russian companies will lose the oil
forever if the Americans come."
Oil analysts say that Iraq could eventually pump up to
8 million barrels a day, plummeting oil prices
worldwide. That would be good for us, but not for
countries that rely on oil as a major source of income.
Aleksei Arbatov, deputy chair of the Russian Defense
Committee, says if the price of oil falls below $24 a
barrel-it is $30 now-"our budget will collapse."
Iran and Saudi Arabia, with their exploding populations
and falling living standards, will also find themselves
Cheap gas for Americans and huge profits for western
oil companies may end up destabilizing international
finance and measurably increasing instability in the
Middle East, Central Asia and Russia.
The dominoes are endless.