The US invasion of Iraq:  Oil, the Mother of all Factors?

By: K. Hooshiyar & S. Karimi

Even though  the prolonged contemplation of the  United States  on  consolidating its hold  over  oil resources  in Iraq   was  not  incorporated into  officially declared  reasons  for  the invasion of Iraq , oil factor was  nonetheless  one  of the primary  motives  lurking beneath  the Bush administration’s  determination to topple  Saddam  from power. Long  before  the  attack  on the  twin towers in  New York that  provided   an  auspicious  ground  for the Bush  administration  to sharpen its  sword,  removing Saddam from the seat of power  was a part and parcel of a protracted  deliberation  within the US administration  to redesign  the international order in American image.  A blueprint for U.S. global domination, entitled Rebuilding America's Defences: Strategies, Forces and Resources for a New Century, which was written in September 2000 by the neo-conservative think-tank Project for the New American Century (PNAC), called for the creation of a ''global Pax Americana.''  The PNAC document supports a ''blueprint for maintaining global US pre-eminence, precluding the rise of a great-power rival, and shaping the international security order in line with American principles and interests''. This ''American grand strategy'' must be advanced ''as far into the future as possible'', the report says. It also calls for the US to ''fight and decisively win multiple, simultaneous major theatre wars'' as a ''core mission''.

While Afghanistan was the first victim of the new “American grand strategy” for the world, Iraq was the main target even prior to George Bush’s ascendancy to power. As PNAC document reveals, George Bush and his cabinet had planned to topple Saddam’s regime even before he took power in January 2001.   A report entitled Strategic Energy Policy: Challenges For The 21st Century, commissioned before 9/11 by Vice-president Dick Cheney on ''energy security'' clearly identifies Iraq as a major “de-stabilizing influence to the flow of oil to international markets from the Middle East.”  The report furthermore concludes that “Saddam Hussein has also demonstrated a willingness to threaten to use the oil weapon and to use his own export programme to manipulate oil markets.”  It was based on such reports that President Bush's Cabinet agreed in April 2001 that “ Iraq remains a destabilizing influence to the flow of oil to international markets from the Middle East'' and because this is an unacceptable risk to the US ''military intervention'' is necessary.

Oil definitely plays a major role in the “American grand design” for the world, more so for the Middle East. The Middle East—and specifically the Persian Gulf region  which contains almost 30 percent of global oil production. But it has about 67 percent of the planet’s known reserves, and is therefore the only region able to satisfy any substantial rise in world oil demand—an increase that the Bush administration’s energy policy documents say is inevitable.  The access to oil and more so the continuous and guaranteed access to cheap oil is vital for the economies of advanced capitalist countries requires securing political control of the area. If the United States succeeds in acquiring an upper hand to play a permanent role in the Persian Gulf regional security, an objective that the US has been seeking since World War II, it will definitely consolidate its global economic, military, and political supremacy for decades to come. 

With its known oil reserves standing at 112 billion barrels, second only to Saudi Arabia, Iraq occupies a very important strategic position in the Gulf region.  Since the discovery of oil, Iraq has been a scene of imperialist rivalries for the dominance and control of its vast oil wealth. At the beginning of the twentieth century, Britain directly ruled Egypt, Sudan, and the Persian Gulf, while France was the dominant power in Lebanon and Syria.  Iran was divided between British and Russian spheres of influence. After World War I, Britain also got the mandate for Palestine and Iraq. With Germany’s defeat in the war, its stake in the Turkish Petroleum Company, which had the concession for the whole of Iraq, fell into Britain’s table.  Britain’s complete dominance, though it had the largest empire among the imperialist powers, was not unchallenged. A declining British empire, unable to compete with other industrial economies, desperately tried to use its exclusive grip over its colonies to strengthen its economy. The United States as the emerging new superpower and the leading capitalist power, however, sought an “open door” to exploit the possessions of the waning colonizing powers.

By 1928, two American oil companies, Jersey Standard and Socony  (known today as the merged Exxon and Mobil) with active backing of the US government, got a 23.75 %  share in the Turkish Petroleum Company, later renamed the Iraq Petroleum Company (IPC).  The rest of the shares were held by the British, French, and Royal Dutch-Shell oil companies.  Britain continued its direct and indirect rule over Iraq in the turbulent period 1925–1958.  During this period, growing opposition to colonial rule forced Britain to grant Iraq “independence” in 1932. But Britain managed to continue its colonial rule indirectly and through installed puppet kings and regimes.

With the overthrow of national government of Dr. Muhammad Mosaddeq in Iran in 1953, who nationalized the British Petroleum in 1951, through a CIA-led coup, the United States signalled its emergence as the new imperial force in the region, gradually replacing the British predominance.  The main task of this new gendarme and ruler of  the Gulf region was to ensure capitalist expansion, back the interests of U.S. multinational corporations, and suppress any agitation against imperialism and its client states.  Since then, the United States has steadily increased  its influence in keeping the Gulf region in its geopolitical orbit—and maintaining its claim on the region’s most valuable resources-oil. The increasing American investments to advance its interests have included direct and indirect forms of intervention, massive arms transfers to allies, and the acquisition of military bases.

After Iran, Iraq was the second country that became the target of direct US imperial policy, when its pro-Western, British-installed monarchy was overthrown in 1953 - the first puppet regime to be overthrown in an oil-producing country. In July 1958 an army faction led by Abdul Karim Qasim seized power in Iraq, executed the king and declared Iraq a republic. Fearing that Iraq might turn communist under the new military regime and worrying about its oil interests, the United States delivered an ultimatum to the new regime by threatening to invade Iraq.  In order to corroborate the credibility of its threat, U.S. stationed its troops in Jordan and Lebanon and did not pull them backed until it got assurances from the new regime in Baghdad that U.S. oil interests will not be jeopardized.

The anti-colonial sentiments of the Iraqi people and their high expectations from the new government, however, posed a growing danger to U.S. interests in Iraq. Under rising tide of public pressure, Qasim’s regime undertook several anti-imperialist measures contrary to its previous assurances. The most important of which were: limiting IPC’s concession area by issuing “law 80” in 1961 and the subsequent formation of a new Iraqi owned oil company in 1963; withdrawing Iraq from the Baghdad Pact; ordering British forces out of Iraq; signing an economic and technical aid deal with the Soviet Union;  and cancelling the American aid program. These measures proved detrimental not only to the US interests in Iraq, but also to his own regime.

In a temporary alliance of convenience with the Ba’ath (Renaissance) Party, the United States actively backed a successful coup against Qasim’s regime. The coup was staged only four days after the announcement of the formation of the Iraq National Oil Company (INOC) to develop the non-concession lands in 1963. CIA agents provided critical logistical information to the coup plotters and supplied lists with the names of hundreds of suspected Communists to be eliminated. The first act of the new government was the granting of more concession areas to the IPC, including the rich Rumaila field, and allowing the IPC to engage in joint oil exploration with the INOC.

The Ba’ath party which was removed from the government soon after the 1963 coup, returned to power in a 1968 coup. The Ba’ath regime signed a treaty of friendship and cooperation with the Soviet Union soon after it nationalized the IPC in 1972. The Iraqi government turned to Moscow both for weapons and for help in deterring any U.S. reprisals for nationalizing the Iraq Petroleum Company, which had been owned by Royal Dutch-Shell, BP, Exxon, Mobil, and the French firm CFP.  Iraq was the first Gulf country to successfully nationalize its oil industry during the early 1970s struggles of oil exporting countries against the Western multinational corporations that had ruled the industry.  By shunning  the  western powers  such  as US and U.K  and   developing a  close  relationship with the Soviet Union,  Iraq  succeeded in  depriving US and UK companies from having access to  lucrative oil resources  in Iraq.  Before the nationalization of oil in Iraq, US and UK oil giants held “three quarter share of the Iraqi petroleum company, including Iraq’s entire national reserves”. 

Saddam Hussein, a strongman of the Ba’ath regime who formally took over as President in 1979, gradually shifted the regime to a more pro-Western policy. As Saddam Hussein later revealed, “the United States and Iraq decided to re-establish diplomatic relations—broken off after the 1967 war with Israel—just before Iraq’s invasion of Iran in 1980.” Saddam’s decision to re-establish ties with U.S. was a calculated measure and in response to such important events and factors as the fall of the Shah in Iran, Khomeini’s  expansionist ideas and practices, and Iraq’s desperate  need for advanced technology and goods to implement its modernization policies. 

Even though  the  USA  and  Saddam  engaged in a  strategic  alliance  during the Iran –Iraq war, each  sought different objectives in their newly established cooperation. Saddam’s primary intention was to modernize his country and strengthen Iraq’s position in the region by replacing Iran as a proxy after the collapse of the Shah’s regime, a task that neither Saudi Arabia nor any of the smaller Gulf States had the capacity to perform.  A victory in the war would have weakened the regime in Tehran and would have equally given Saddam the needed prestige and public boost in the Arab world to revive the pan-Arabist ideology.  Under this scenario, a victorious Saddam would have emerged as the new Jamal Abdul Nasser of the Arab world.  Saddam’s political calculation not only had dire consequences for the US- friendly states in the region, but was also a direct challenge to the Western countries in so far as the access to cheap oil was concerned.

 The  culmination  of  Saddam’s  political ambition  was  the  invasion of Kuwait  that  provided  a  golden  opportunity  for the US  to escalate its military presence in the gulf region which  eventually led to the first Gulf War.   Subsequent to the  expulsion of Iraq  from Kuwait,   rival oil companies in France, Russia and China were  in an enhanced strategic position vis-a vis  their  giant rivals  in US and UK  to conclude  lucrative production sharing agreements  with the Iraqi government .  During the 1980s and the 1990s,   rival oil companies in Russia, France, China and Japan found a ground to aggrandize their market capacity through acquiring a large potential share of Iraq’s oil resources.  To counter the  economic inroads  of rival oil  companies in Iraq, the US and  UK   employed the sanction regime  as a tool to  frustrate  these agreements and  thus  protecting  the  future stakes of  their own  oil companies  which  had  been  deprived  from  having access to Iraqi oil resources.

It is now evident that the Bush administration had no credible evidence that Saddam Hussein’s regime possessed any WMDs and/or was in any way linked to the events of September 11, 2001. However, the terrorist attacks on US soil provided the neo-cons in Washington with the most favourable and a much needed pretext to implement the “American grand strategy” through the Bush doctrine of preventive war. Toppling Saddam’s government and Installing a U.S. client regime in Baghdad would serve American interests in different ways: (1) provide them with permanent military installations in the region; (2) give American and British companies (Exxon Mobil, Chevron-Texaco, Shell, and BP) a good shot at direct access to Iraqi oil for the first time in 30 years;  (3) exclude possible rivals from access to the vast Iraqi oil reserves  and development projects in Iraq; (4) create lucrative jobs for the oil service industry, including Vice President Cheney’s former company, Halliburton, to rebuild and rehabilitate the Iraqi oil industry which had ran down by years of war and sanctions; and (5) if  the puppet regime opens the way  for the oil multinationals to return, “it is possible that a broader wave of de-nationalization could sweep through the world’s oil industry, reversing the historic changes of the early 1970s.”  

      The neo-conservative administration of Bush moved quickly to ensure U.S. corporate control over Iraqi resources, at least through the year 2007. The first part of the plan, created by the United Nations under U.S. pressure, is the Development Fund for Iraq, which is being controlled by the United States and advised by the World Bank and the International Monetary Fund (IMF). The second is a recent Bush executive order that provides absolute legal protection for U.S. interests in Iraqi oil. According to Bush Executive Order 13303, “any attachment, judgment, decree, lien, execution, garnishment, or other judicial process is prohibited, and shall be deemed null and void," with respect to the Development Fund for Iraq and "all Iraqi petroleum and petroleum products, and interests therein." In other words, if Exxon Mobil or Chevron Texaco torches Iraqi oil, it will be immune from legal proceedings in the United States. 

 Bush, with a stroke of the pen, signed away the rights of the people of Iraq and imposed a legal restriction on the political manageability of even an emerging popular Iraqi government in future. Bush's order unilaterally declares Iraqi oil to be the unassailable province of U.S. corporations. In the short term, through the Development Fund and the Export-Import Bank programs, the Iraqi people's oil will finance U.S. corporate entrees into Iraq. In the long term, Executive Order 13303 protects anything those corporations do to seize control of Iraq's oil, from the point of production to the gas pump -- and places oil companies above the rule of law.

Following the invasion of Iraq, the  Coalition Authority  abruptly proceeded  to implement the neo-conservative strategy  of  privatizing  Iraqi oil resources which  engendered a climate  of resentment among   Iraqi people.   Popular indignation at attempted privatization of Iraqi oil resources manifested itself in a wave of demonstration in several Iraqi cities.   On May 25, 2005, Iraqi trade unionists and civil society activists will gather at the Oil Institute of Basra for a two-day conference aimed at fighting the privatization of Iraqi oil. The organizers of the conference,  the General Union of Oil Employees,  is a union resolutely opposed to the Occupation, the former regime and current plans to privatize Iraq's oil industry.

The independent Basra Oil Union has been a powerful force in Iraq's largest industry, representing more than 23,000 workers in the oil industry. It grew out of the South Oil Company (SOC) Union, and now combines ten trade union councils in nine Iraqi oil companies in Basra, Amara and Nassiriyah. The union has organized several demonstrations and strikes since the beginning of the occupation, putting pressure on the Governing Council (GC) to better the working conditions and halt privatization efforts. According to one of the organizers:

The opinion of all [Iraqi] oil workers is that they are against privatization. We see privatization as economic colonialism. The authorities are saying that privatization will develop our sector and be useful. But we do not see it as development at all; we view any plan to privatize the oil sector as a big disaster. Sovereignty over its oil reserves is key to Iraq’s future development. Oil must stay in the hands of Iraqis, because oil is the only national resource that we have which is of great value, and our economy depends on it. The struggle over the control and ownership of Iraq’s oil continues.

With growing  working  class  militancy against  privatization  of  oil industry  and  the  fear  that  privatization would  galvanize  insurgency,  the  Coalition Authority put the privatization on hold. Oil industry is now a sector that has so far been excluded from the mass privatizations imposed by the Coalition Provisional Authority in 2003 and 2004.  An alternative to privatization  crusaded  by  the neo-conservative  wing  of the  Bush  administration  but resented  by  some elements  within oil industry in the  US and  UK  that is being considered  by  the  occupying  powers is  to  cement the  installation of  a  complaisant  government in Iraq  which would provide  a preferential treatment  to  US and UK  oil companies.

By entrenching  its  strategic position in the  Gulf region through establishing a friendly and compliant  government  in Iraq, the  US  would be in a position to  not only  check the maneuverability of  OPEC  but  also  to influence  conduct of  other powers around  the globe.  The  accomplishment of all these strategic goals contemplated  by the  US necessitates enthroning  a powerful  pro-US government in Baghdad  which would in turn require a prolonged  American military  presence on  Iraqi soil. But the continuation of military occupation of Iraq by the US   provides a legitimate ground for Iraqi resistance. This is the  most  perplexing  dilemma  that  the  United States  has  confronted  in Iraq.

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