Neo Cons Lose Control of Iraqi Oil

( – For the past few years I have been documenting how Washington’s neo-conservatives have been pushing to remove Saddam Hussein from power and in doing so, take control of Iraq’s oil. For the sake of new readers, let me just recap that this agenda has been around well before 9/11 and even before George W. Bush was elected President.

The viewpoint of these extreme right wingers is that ultimately the security of the United States rests on the free flow of oil. And without it, the American way of life – the free enterprise economy, health and welfare, the maintenance of the world’s most powerful armed force and so on – would quickly grind to a halt.

When George Bush Jr. came to power in January 2001, the White House and the Pentagon were at once populated with hard line hawks in positions of power. With the likes of Dick Cheney, Donald Rumsfeld, Richard Perle, and Paul Wolfowitz – it was game on to accomplish the vision.

The neo conservatives now had the right people in place to go after their number one objective – Iraqi oil.

Just days after the Bush administration took control of the White House, Vice President Dick Cheney headed up the new energy task force. Their acute awareness of the tightening U.S. oil supply was revealed when Cheney confirmed that U.S. production had peaked in 1970 and by 2000 output was 39% below the peak. Cheney pointed out that “dependence on foreign sources of oil is at an all-time high and is expected to grow…the U.S. and global economies remain vulnerable to a major disruption of oil supplies. The Gulf will be a primary focus of U.S. international energy policy.”

In those early days just after Bush moved into the White House the National Security Council held their first meeting where plans to overthrow Iraq where at the top of the agenda.

Revelations of these meetings where gathered by Wall Street Journal reporter Ron Suskind and documented in his book: The Price of Loyalty: George W. Bush, the White House, and the Education of Paul O’Neill.

The book reports that former U.S. treasury secretary Paul O’Neill told of his surprise when he found out that getting rid of Saddam and a proposal for military action in Iraq were the administration’s number one priority.

O’Neill recalled that at the next National Security Council meeting just two days later, Rumsfeld had rejected an idea from Colin Powell that targeted sanctions should be brought against Saddam. Rumsfeld instead was pushing hard for an outright overthrow of the Iraqi government.

According to O’Neill, Rumsfeld reportedly stated “Imagine what the region would look like without Saddam and with a regime that’s aligned with U.S. interests.”

Then September 11th came along. You know the terrible story. The next day, Bush links al Qaeda with Saddam. The following weekend the group meets again. O’Neill recalls that Wolfowitz is urging military action against Iraq.

O’Neill’s recollections are further confirmed by Richard Clarke who served as the top counter-terrorism expert in the White House before he resigned last year. Clarke stated in his book Against All Enemies that he was shocked to discover that on the day after the 9/11 attacks, he showed up for work at the White House expecting to discuss al-Qaeda but instead the conversation centered on Iraq. Clarke states he “realized with almost a sharp physical pain that Rumsfeld and Wolfowitz were going to try and take advantage of this national tragedy to promote their agenda about Iraq.”

The Bush administration are no dummies when it comes to the global oil economy. They know U.S. oil production has peaked and is now on a downward plunge.

With the U.S. having a growing dependency on oil imports which are estimated to hit 90% by 2020, the economic future of the U.S. is very much dependant on the supply of oil – most of which comes from the Mid East.

Before the invasion of Iraq took place, a plan was already in place on how to deal with Iraq’s oil. The neo con’s guide book for governing the occupied nation of Iraq was titled “Moving the Iraqi Economy from Recovery to Sustainable Growth.” This action plan had the seal of approval of Paul Wolfowitz and the other hard liners in Washington.

Aside from securing Iraqi oil fields, the neo conservative agenda had another specific objective in mind. After the successful invasion, the next order of business was to privatize Iraqi oil assets which would allow for the free flow of oil into the open market. The idea here was to crush OPEC’s strangle hold on world supplies and pricing by flooding the oil market with millions of barrels of excess capacity.

In order to accomplish this objective however, the power brokers first needed to privatize Iraqi oil assets. Once Baghdad fell, Washington thought their plan to sell off Iraqi oil assets to friendly hands would be a slam dunk. The neo cons thought everyone was on the same page- literally. But that was not the case.

In an interview with Newsnight of London, Robert Ebel, a former CIA and Energy oil analyst said he flew to a secret meeting in London at the request of the State Department to strategize the reorganization of Iraqi oil assets.

The man selected to implement the plan was Philip Carroll, a former CEO of Shell Oil. Carroll’s job was to take control of Iraq’s oil facilities and production while the paperwork for the sale of Iraqi oil assets was drawn up by the puppet interim governing council of Iraq.

However the neo-cons dream was about to be shattered when they learned that the power brokers behind the scenes in the State Department had no desire to sell off Iraqi oil assets.

This was made clear by their front man, Carroll who stated in May of 2003 that “There was to be no privatization of Iraqi oil resources or facilities while I was involved.”

It seems the State Department had their own influential group who had much different plans – Big Oil Inc.

The evidence of these new plans were obtained from the State Department by way of the U.S. Freedom of Information Act and reported by Newsnight and Harper’s Magazine.

The new plan was completed in January 2004 under the direction of Amy Jaffe of the James Baker Institute. This is the same James Baker who was the former U.S. Secretary of State but is now practicing law. His firm, Baker Botts just happens to represent the world’s largest oil company, ExxonMobil and the Saudi Arabian government. AKA – Big Oil Inc.

What a tangled web THEY weave.

As you can imagine, Big Oil Inc. wasn’t too happy about the prospects of Iraqi oil diluting the highly structured quotas set by OPEC and thus forcing the price of oil to drop – and with it record breaking profits.

Ms Jaffe revealed to Newsnight that the oil industry prefers state control of Iraq’s oil over a sell-off because it fears a repeat of Russia’s energy privatization where U.S. oil companies were locked out.

Jaffe said “There is no question that an American oil company … would not be enthusiastic about a plan that would privatize all the assets with Iraq companies and they (US companies) might be left out of the transaction.”

Philip Carroll concurs, “Many neo-conservatives are people who have certain ideological beliefs about markets, about democracy, about this that and the other. International oil companies without exception are very pragmatic commercial organizations. They don’t have a theology.”

Well you can forget about low oil prices. The balance between increasing world oil demand and stagnant supplies is destined to be under the control of OPEC for the foreseeable future.

On the upside, we as investors are destined to reap the benefits of greater profits from select oil and gas stocks going forward as well. The neo cons plan of cheaper oil, for now at least, is history. With Big Oil Inc. now influencing the destiny of Iraqi oil, you can now bet high prices will be with us for some time to come.

William Ridley



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Marion Mueller

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