OIL CONTROL

U.S. Corporate Interests in Controlling Middle East's Oil

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Selling the War> Powell Lies

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It may be comforting to pretend that our enemies "hate our freedoms," as President Bush stated, but it is a mistake to ignore the truth.

President Bush is not the first to ask: "Why do they hate us?" In a staff discussion 44 years ago, President Eisenhower asked his National Security Council about "the campaign of hatred against us [in the Arab world], not by the governments but by the people".

His National Security Council outlined the basic reasons: the US supports corrupt and oppressive governments and is "opposing political or economic progress" because of its interest in controlling the oil resources of the region.

"Democratization is not on the American agenda in the Middle East. The reason? Because Washington finds it more efficient to support a range of dictators across the Arab world as long as they conform to U.S. foreign policy needs."- Graham E. Fuller former CIA 8/24/98

Those policy "needs" are actually the demands of powerful corporations. It is the undermining of democracy that people in the Middle East hate. The people in the Middle East hate the fact that the United States is supporting oppressive harsh governments which block democracy and development and that the U.S. is doing it because we want control of their oil resources. You can find the same things when the Wall Street Journal does analyses of opinion there today.

This is not an issue of access, it is primarily about control. U.S. corporate interests in control of Middle East's oil.

From the middle of last century Washington's foreign policy priority in the Middle East was to establish U.S. control over what the State Department described as "a stupendous source of strategic power and one of the great material prizes in world history", namely the region's vast reserves of crude oil. Middle Eastern oil was regarded in Washington as "probably the richest economic prize in the world in the field of foreign investment", in what President Eisenhower described as the most "strategically important area in the world".

Control could be most easily maintained via a number of despotic feudal oligarchies in the Gulf which ensured the extraordinary wealth of region would be shared between a small number of ruling families and US oil companies, rather than European commercial competitors or the population of these states. Until recently the US has not required the oil for itself though it needed to ensure that the oil price stayed within a desirable range or band - not too low for profit making or too high to discourage consumption and induce inflation. A side benefit of this control over such a vital industrial resource is the influence it gives the US over economic development in rival countries such as Japan.

The greatest threat to this control has always been independent economic nationalism, especially nationalist politicians within the oil-producing region who, unlike the feudal oligarchies of the Gulf states, would channel wealth into endogenous development priorities rather than to US transnationals.

The US wants to secure reliable access to the world's second largest oil reserves, 112 billion barrels already known with possibly double that figure still to be mapped and claimed, thus depriving France and Russia of commercial advantages they have developed in Iraq over the last decade when US companies have been excluded. Just as importantly, access to Iraqi oil would also make the US less reliant upon - and therefore less supportive of - the regime in Saudi Arabia. The geo-political dynamics of the Middle East would be transformed.

If Russia and France maintain their inside track on Iraqi oil, then US corporations will be partially shut out from an enormous resource prize. No US administration is likely to accept that scenario. Meanwhile, Iraqi dissidents close to Washington have promised to cancel all existing oil contracts awarded to firms which do not assist the US to remove Saddam Hussein from power. Regime change in Baghdad could therefore be a bonanza for US oil companies and a disaster for Russian and French companies which have painstakingly built up their relations with the Iraqi dictator since the Gulf war. When Iraq's oil comes fully back on stream, as many as 5 million barrels of oil (or 6.5%) could be added to the world's daily supply. The implications of this for existing suppliers, the global spot price, economic growth, OPEC and the world's consumers are enormous.

This is not an issue of access, it is primarily about control. The US was just as concerned to control Middle East oil producing regions when it didn't depend on them at all. Until about 30 years ago, North America was the largest producer and the US scarcely used Middle East oil at all. Since then Venezuela has normally been the largest oil exporter to the United States. US intelligence projections suggest that in coming years the US will rely primarily on Western Hemisphere resources: primarily the Atlantic basin - Venezuela, Mexico, Brazil, probably Colombia, but also possibly Canada, which has huge potential reserves if they become economically competitive. Imported supplies accounted for 50% of US oil consumption in 2000 and by 2020 the figure is expected to rise to 66%.

Control over the greatest concentration of energy resources has two goals: (1) economic: huge profits for energy corporations, construction firms, arms producers, as well as petrodollars recycled to US treasury, etc; and (2) it's a lever of global geo-political control. For those trying to understand the motives behind US behaviour towards Iraq, it is impossible to underestimate the importance which oil has in the minds of Washington's strategic planners.

Attempts to discredit arguments about US access to Iraqi oil by claiming that it if it is interested in access to supplies it could more easily strike a deal with Saddam to satisfy its "thirst for oil" rather than overthrow him, entirely miss the crucial issue - control.

In the Middle East, the major concern was (and remains) the incomparable energy reserves of the region, primarily in the Arabian peninsula. These were to be incorporated within the U.S.-dominated system. As in Latin America, it was necessary to displace traditional French and British interests and to establish U.S. control over what the State Department described as "a stupendous source of strategic power, and one of the greatest material prizes in world history," "probably the richest economic prize in the world in the field of foreign investment." Later, President Eisenhower described the Middle East as the most "strategically important area in the world."82

After the war, U.S. corporations gained the leading role in Middle East oil production, while dominating the Western hemisphere, which remained the major producer until 1968. The United States did not then need Middle East oil for itself. Rather, the goal was to dominate the world system, ensuring that others would not strike an independent course. Despite the general contempt for the Japanese and disparagement of their prospects, some foresaw problems even here. George Kennan proposed in 1949 that U.S. control over Japanese oil imports would help to provide "veto power" over Japan's military and industrial policies. This advice was followed. Japan was helped to industrialize, but the U.S. maintained control over its energy supplies and oil-refining facilities. As late as 1973, "only 10 per cent of Japan's oil supply was developed by Japanese companies," Shigeko Fukai observes. By now, Japan's diversification of energy sources and conservation measures have reduced the power of the "veto" considerably, but it is still a factor not without weight.83

It is, furthermore, misleading simply to assert that the U.S. has sought to keep oil cheap, though that has generally been the case. Oil prices declined (relative to other commodities) from the 1940s until the sharp rise of the early 1970s brought them back into line. This was a major boon to the Western industrial powers, though extremely harmful to the long-term interests of the Arab world; and reduction in the real cost of oil was also of critical importance for the Reaganite veneer of prosperity. But cheap oil is a policy instrument, not an end in itself. There is good reason to believe that in the early 1970s, the U.S. was by no means averse to the increase in the price of oil, harmful to its industrial rivals, but beneficial to U.S. energy corporations and exporters. Control over energy is a lever for global dominance; the actual price and production levels gain significance within this context, and the economic effects of fluctuations are not a straightforward matter.84

U.S. interest in the Philippines derives in part from similar concerns. U.S. bases there form part of the military system surrounding the Middle East region from the Indian Ocean to Israel, Turkey, Portugal and beyond, designed to ensure that there will be no threat to control over its resources by the United States and dependable local elites. The United States is a global power, and plans accordingly.

Subsequent developments in the Middle East keep to the pattern just outlined, including the deepening relations with Israel as a "strategic asset" and mercenary state; the U.S. rejection of a broad international consensus on a political settlement of the Arab-Israel conflict for many years85; and Israel's sale of U.S. arms to Iran in the 1980s, which, as high-level Israeli sources reported in the early 1980s (long before there were any hostages), was carried out in coordination with the U.S. government to encourage a military coup, which would restore the Israel-Iran-Saudia Arabia alliance on which U.S. policy had been based under the Nixon Doctrine -- one of many features of the Iran-contra affair suppressed in the congressional-media damage control operation. The same model of overthrowing an unwanted civilian government had been pursued successfully in Indonesia, Chile, and other cases.86

The major policy imperative is to block indigenous nationalist forces that might try to use their own resources in conflict with U.S. interests. A large-scale counterinsurgency operation in Greece from 1947 was partially motivated by the concern that the "rot" of independent nationalism there might "infect" the Middle East, Acheson warned. Greece was regarded as an outpost of U.S. power, protecting Middle East oil for the U.S. and its allies. A CIA study held that if the rebels were victorious, the U.S. would face "the possible loss of the petroleum resources of the Middle East." A Soviet threat was concocted in the usual manner. The real threat was indigenous nationalism, with its feared demonstration effects elsewhere.

Similar factors led to the CIA coup restoring the Shah in Iran in 1953. Nasser became an enemy for similar reasons. Later, Khomeini was perceived as posing another such threat, leading the U.S. to support Iraq in the Gulf War. The Iraqi dictator Saddam Hussein then took over the mantle, shifting status overnight from favored friend to new Hitler when he invaded Kuwait in an effort to displace U.S.-British clients. The primary fear throughout has been that nationalist forces not under U.S. influence and control might come to have substantial influence over the oil-producing regions of the Arabian peninsula. Saudi Arabian elites, in contrast, are considered appropriate partners, managing their resources in conformity to basic U.S. interests, and assisting U.S. terror and subversion throughout the Third World.

http://www.smh.com.au/articles/2003/01/13/1041990224220.html

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