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While widespread ransacking was
happening in Iraq after Baghdad fell, the US moved swiftly to
secure the country’s oil facilities. But in the months since
the official end of the war, general looting and sabotage have
impeded even the oil industry, frustrating efforts to quickly
return oil production to pre-war levels.
As
of early July, the future of Iraq’s oil is still a matter of
speculation. Rehabilitating oil facilities and preparing the
ground for an expansion of output will take time. Current
projections are that, because of widespread looting, it will
take 18 months just to return to pre-war production levels of 3
million barrels per day. [Neela Banerjee, “Barrels of Oil
Exported for the First Time Since the War,” New York Times,
June 23, 2003]
The
US has broad control over the Iraqi oil industry, principally by
means of a Development Fund for Iraq, into which all of Iraq’s
oil export revenues, all funds left over from the UN’s “oil
for food” program, and all assets of the former Iraqi
government located anywhere in the world are to be transferred.
With such broad control, US corporations are well posed to reap
enormous profits and control of the oil industry.
Pre-War
Promises
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“American
oil companies will have a big shot at Iraqi oil,” says
Ahmad Chalabi, leader of the Iraqi National Congress (and
current member of the Iraqi Governing Council).
[Dan Morgan and David B. Ottaway, “In Iraqi War Scenario,
Oil Is Key Issue,” Washington Post, September 15,
2002.]
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“The
American undersecretary of commerce, Grant Aldonas, told a
business forum hungry for good economic news that a war in
Iraq ‘would open up this spigot on Iraqi oil, which
certainly would have a profound effect in terms of the
performance of the world economy for those countries that
are manufacturers and oil consumers.’”
[Michael Moran and Alex Johnson, “Oil after Saddam: All
bets are in,” MSNBC, November 7, 2002.]
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Head
of the Coalition Provisional Authority, Paul Bremer,
commented “As Iraq began shipping crude oil today for the
first time since the start of the war, the US administrator
of the country broached the politically sensitive issue of
how oil revenue should be spent, proposing that some of the
money be shared with Iraqis through a system of dividend
payments or a national trust fund to finance public
pensions.
“Iraq’s resources cannot be restricted to a lucky or
powerful few,” Bremer said. “Iraq’s natural resources
should be shared by all Iraqis.”
[“Bremer Broaches Plans for Iraq’s Oil Revenue,” New
York Times, June 23, 2003.]
Post-War
Realities
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On
May 22, 2003, the UN Security Council passed a resolution
ending sanctions on Iraq. Significantly, the resolution gave
the US decisionmaking power over how the oil funds would be
used with regard to relief, reconstruction, disarmament and
“other purposes benefiting the people of Iraq.”
[Colum Lynch, “US to Propose Broader Control Of Iraqi Oil,
Funds” Washington Post, May 9, 2003.]
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On
May 4, Philip Carroll was named to head an advisory board to
the Iraqi oil ministry. Carroll was chief executive officer
(CEO) of Shell Oil, the US arm of Royal Dutch/Shell in the
1990s, and subsequently became head of the construction
giant Fluor, a company he ran until 2002. Carroll still owns
substantial stock in both of these corporations. He is not
known as an Iraq oil specialist and apparently had never
been to the country prior to his appointment.
[Michael Renner, “The Other Looting,” Foreign Policy In
Focus, July 2003.]
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“The
Bush administration is considering a provocative idea to
pledge some of Iraq’s future oil and gas revenue to secure
long-term reconstruction loans before a new Iraqi government
is in place to sign off on the proposal. [The question is]
whether the US-led occupation administration in Baghdad has
the legal or moral authority to pledge future oil revenue as
loan collateral before the issue can be debated by elected
Iraqis.”
[Warren Vieth, “US May Tap Oil for Iraqi Loans,” Los Angeles Times, July 11, 2003.]
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After
the UN approved the Development Fund for Iraq, Bush signed
an executive order decreeing that “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 ExxonMobil or ChevronTexaco touch Iraqi
oil, anything they or anyone else does with it is immune
from legal proceedings in America.
[Steve Kretzman and Jim Vallette, “Operation Oily
Immunity,” CommonDreams.org,
July 23, 2003.]
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Sir
Philip Watts, chairman of Royal Dutch/Shell, commenting on
the lack of interest in investing in Iraq’s oil
infrastructure said, “There has to be proper security,
legitimate authority and a legitimate process… by which we
will be able to negotiate agreements that would be
longstanding for decades… When the legitimate authority is
there on behalf of the people of Iraq, we will know and
recognize it.”
[Carola Hoyos, “Oil Groups Snub US on Iraq Deals,” Financial
Times, July 24, 2003.]
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Saboteurs
blew up yet another section of a major oil pipeline to
Turkey today, the second time the route had been hit in
three days. Black smoke and flames swirled into the
cloudless sky just a few miles from where US soldiers and
Iraqi engineers had battled a fire caused by explosives
Friday. The two blasts, north of the town of Baiji, abruptly
halted crude oil exports that had begun Wednesday. The
disruption costs Iraq $7 million a day in revenue, officials
say.
[Daniel Williams and Anthony Shadid, “Saboteurs Hit Iraqi
Facilities Oil and Water Lines and Prison Targeted in New
Ambushes,” Washington Post, August 18, 2003.]
*This
report was originally published in Foreign
Policy In Focus.
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