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Endgame for Iraqi Oil?
The Sovereignty Showdown in Iraq
Jack Miles, TomDispatch
The oil game in Iraq may be almost up. On September 29th, like a landlord serving notice, the government of Iraq announced that the next annual renewal of the United Nations Security Council mandate for a multinational force in Iraq — the only legal basis for a continuation of the American occupation — will be the last. That was, it seems, the first shoe to fall. The second may be an announcement terminating the little-noticed, but crucial companion Security Council mandate governing the disposition of Iraq’s oil revenues.
By December 31, 2008, according to Foreign Minister Hoshyar Zebari, the government of Iraq intends to have replaced the existing mandate for a multinational security force with a conventional bilateral security agreement with the United States, an agreement of the sort that Washington has with Kuwait, Saudi Arabia, and several other countries in the Middle East. The Security Council has always paired the annual renewal of its mandate for the multinational force with the renewal of a second mandate for the management of Iraqi oil revenues. This happens through the “Development Fund for Iraq,” a kind of escrow account set up by the occupying powers after the overthrow of the Saddam Hussein regime and recognized in 2003 by U.N. Security Council Resolution 1483. The oil game will be up if and when Iraq announces that this mandate, too, will be terminated at a date certain in favor of resource-development agreements that — like the envisioned security agreement — match those of other states in the region.
The game will be up because, as Antonia Juhasz pointed out last March in a New York Times op-ed, “Whose Oil Is It, Anyway?”
“Iraq’s neighbors Iran, Kuwait and Saudi Arabia…. have outlawed foreign control over oil development. They all hire international oil companies as contractors to provide specific services as needed, for a limited duration, and without giving the foreign company any direct interest in the oil produced.”
By contrast, the oil legislation now pending in the Iraqi parliament awards foreign oil companies coveted, long-term, 20-35 year contracts of just the sort that neighboring oil-producers have rejected for decades. It also places the Iraqi oil industry under the control of an appointed body that would include representatives of international oil companies as full voting members.
The news that the duly elected government of Iraq is exercising its limited sovereignty to set a date for termination of the American occupation radically undercuts all discussion in Congress or by American presidential candidates of how soon the U.S. occupation of Iraq may “safely” end. Yet if, by the same route, Iraq were to resume full and independent control over the world’s third-largest proven oil reserves — 200 to 300 million barrels of light crude worth as much as $30 trillion at today’s prices — a politically incorrect question might break rudely out of the Internet universe and into the mainstream media world, into, that is, the open: Has the Iraq war been an oil war from the outset?
Jack Miles is senior fellow for religious affairs with the Pacific Council on International Policy and professor of English and religious studies at the University of California, Irvine. He is the author of the Pulitzer Prize-winning God: A Biography, among other works.
[This article first appeared on Tomdispatch.com, a weblog of the Nation Institute, which offers a steady flow of alternate sources, news, and opinion from Tom Engelhardt, long time editor in publishing, co-founder of the American Empire Project and author of The End of Victory Culture (University of Massachusetts Press), which has just been thoroughly updated in a newly issued edition that deals with victory culture’s crash-and-burn sequel in Iraq.]
(26 October 2007)
In an introduction to this article, Tom Engelhardt points out the obvious:
Here’s the strange thing about the Iraq oil “debate” in our media world. Call me crazy, but if you were going to invade Iraq and oil wasn’t right at the forefront of your brain, you would be truly derelict, even if you hadn’t run a major energy services corporation or hadn’t had a double-hulled oil tanker named after you.
-BA
How secure are Middle East oil supplies?
Bassam Fattouh, Spero News
High oil prices, threats of terrorist attacks, instability in many oil-exporting countries and the rise in so-called ‘oil nationalism’ have raised serious concerns about the security of oil supplies.
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During the 1980s and 1990s, energy security declined in importance as oil prices fell and spare capacity stood at high levels. This was reversed in the decade that followed and once more energy security became a priority in policy agendas of most oil importing countries.
High oil prices, threats of terrorist attacks, instability in many oil-exporting countries and the rise in so-called ‘oil nationalism’ have raised serious concerns about the security of oil supplies. In the background, there are fears that the world may be running out of oil with many observers predicting an imminent oil supply crunch (Campbell and Laherrère, 1998) and raising doubts about the size of proven oil reserves in the Middle East and elsewhere (Simmons, 2005).
These doom laden predictions about the availability of oil supplies and the size of reserves are gaining popular credence at times when oil market conditions are tight. Many international agencies, such as the Energy Information Administration (EIA) and International Energy Agency (IEA), are also predicting a healthy growth in global oil demand in the next 20-25 years, driven primarily by high growth rates of non-OECD Asian economies.1
Given that the Middle East is endowed with the bulk of the worlds’ oil reserves and is responsible for a large share of global oil production, security of Middle East oil supplies is central to the oil security debate. In fact, some analysts consider that the most important facet of energy security is “limiting vulnerability to disruption given rising dependence on imported oil from an unstable Middle East” (Martin et al., 1996). Others equate the improvement of energy security with reducing dependency on Middle East oil. In his State of the Union Address in 2004, US President George Bush declared that “America is addicted to oil, which is often imported from unstable parts of the world” and that breakthroughs in technology will help the US “reach another great goal: to replace more than 75% of our oil imports from the Middle East by 2025”.
The fact that high dependence on Middle East oil creates serious grounds for concern should come as no surprise. The region has experienced a relatively large amount of disruption, some causing large losses of supplies such as that which followed the Iraqi invasion of Kuwait resulting in a cumulative loss of 420 million barrels during the period 1990-1991 (see Table 1 at end of article). The region has witnessed wars, civil conflicts, invasions, revolutions and terrorist acts.
…Despite this robust performance, there is unease and sometimes a sense of mistrust in relying on Middle East oil. It is very unfortunate that the oil security agenda is still driven by the events surrounding the 1973 oil shock and the embargo imposed by Arab countries, despite the facts that the oil cuts were for a short duration and that this event represents an exception rather than the rule in the long history of oil.
In light of the Middle East’s record as a reliable supplier, the argument that consuming countries should reduce dependency on Middle East oil may prove unrealistic, costly and counter-productive. In this paper, we argue that a more useful approach is to assess under which circumstances the region would cease to act (willingly or unwillingly) as a reliable supplier, the chances of these events occurring and, in the event of a disruption, how big the impact is likely to be on oil supplies and productive capacity. This approach would help refocus the debate regarding Middle East supplies by reconsidering certain concerns that seem to shape energy security policies. On the other hand, one can identify some factors that may have a long lasting impact on energy security but which do not receive the appropriate attention.
Dr Bassam Fattouh is a Reader in Finance and Management in the Department of Financial and Management Studies, School of Oriental and African Studies, University of London and Senior Research Fellow at Oxford Institute for Energy Studies. The contents of this paper are the author’s sole responsibility. This article was published by Oxford Institute for Energy Studies
(26 October 2007)
The site that published this article, Spero News does not have an “About Us” page. It looks like news from a Catholic perspective.
A PDF of the original article was published by The Oxford Institute for Energy Studies (About Us). Their homepage has this description:
The OXFORD INSTITUTE FOR ENERGY STUDIES, a Recognized Independent Centre of the University of Oxford, is a centre for advanced research into the social science areas of energy issues. Our aim is to promote dialogue between consumers and producers, government and industry, and academics and decisions makers in order to gain a more informed understanding of the factors that influence international energy markets. Research carried out encompasses the economics of petroleum, oil, gas, nuclear power, solar and renewable energy; the politics and sociology of energy; international relations of producing and consuming nations; and the economics and politics of the environment in its relationship with energy.
-BA
Energy War (PDF)
Stan Goff, Insurgent American
Energy War is a compilation, with a very little post-publication commentary, of a number of essays I have written over the past four years about the relationship between nature, society, and war at the beginning of the 21st Century. Special emphasis is placed on energy production and political conflict.
Politically determined patterns of energy production and consumption are bringing the increasingly destabilized trends of international political economy into collision with the inherent limitations of the planet’s energy substrates in extremely significant yet unpredictable and dangerous ways.
That relation between social power and the biosphere is not a one-way determination. The escalating disunion between the demands of world capitalist accumulation and the material availability of industrial energy is a recursive relation. Diminishing availability is factored directly and consciously into the decision-making processes of the world’s most influential political actors. So there is a powerful dialectical dynamic at work between social power and the material environment. That dynamic can metaphorically be described as a runaway train. Where that train might be headed is one of the speculations of this book. The other contention of this book is that this train has an engine, and that to stop the train, we will have to stop the engine and the people who are protecting and operating it.
The Energy War – which I argue has already started – will take many forms, strategically, but also many forms culturally and ideologically. It was the patron saint of dying British imperial rule, Winston Churchill, who said that “In war every truth has to have an escort of lies.”
(2006, but just recently posted)
The book had been on sale as a PDF, but is now available free online. Stan Goff has written about Peak Oil and related themes in articles like Capitalism is Against the Law (The 2nd Law of Thermdynamics) Part 1. His blog is Feral Scholar.
From Stan Goff’s About Me page:
My first career was in the Army. My second career is writing. I am married, with four children – one biological. I am a grandfather.
The central preoccupation in my life outside of family is politics.
My politics is heavily influenced by Marxism, feminism, ecology, and revolutionary Black nationalism, and I am opposed to dogma in any of these.
I am also strongly influenced by my military experience, where I learned a deep distrust of abstractions and a keen appreciation for the fact that social power is acted out on living human bodies.
-BA
Re-visiting “Petrodollar Warfare” in light of Bush moves against Iran
Marc Strassman, Etopia News Channel
In light of the moves taken against Iran today by the Bush Administration, it might be worthwhile to re-visit the 30-minute video interview with Petrodollar Warfare author William R. Clark, recorded October 24, 2006, at Scripps College in Claremont, California, in which he raises the specter of a move by Iran (and others) to move their oil-generated currency reserves out of dollars and into euros or a global basket of currencies, as well as using these alternative approaches for denominating their reserves and for selling their rapidly-depleting petroleum stocks, possibly leading to dire consequences for the U.S. dollar and the fragile U.S. and world economies.
Watch the program at:
link.brightcove.com/services/player/bcpid932411100
or
www.etopiamedia.net
Marc Strassman
Reporter-Producer
Etopia News Channel
(25 October 2007)
