Internal war for Iraq's oil

New Greg Palast story based in part on USAID Iraq contract language that Deep Blade Journal first cited 16 months ago.


This language concerning the ``Comprehensive Privatization Program'' for Iraq appeared in a US Agency for International Development solicitation available to the public since the summer of 2003.

In January 2003, then US Secretary of State Colin Powell sought to assuage fears that the United States was planning its assault on Iraq in order to steal the country's oil. Powell at that time claimed Iraq's oil revenue would be held ``in trust'' for ordinary Iraqis.

``The oil of Iraq belongs to the Iraqi people ... Whatever form of custodianship there is ... it will be held for and used for the people of Iraq. It will not be exploited for the United States' own purposes,'' Powell said.

Another statement by high Pentagon official and principle US war planner Paul Wolfowitz reflected pre-conquest American thinking,

There’s a lot of money to pay for this that doesn’t have to be U.S. taxpayer money, and it starts with the assets of the Iraqi people ... and on a rough recollection, the oil revenues of that country could bring between $50 and $100 billion over the course of the next two or three years ... We’re dealing with a country that can really finance its own reconstruction, and relatively soon.'' [Source: House Committee on Appropriations Hearing on a Supplemental War Regulation, 3/27/03]

Now this morning, Greg Palast greeted my email box with notice of a new BBC Newsnight investigation to be broadcast this evening, March 17, at 7:00pm EST: SECRET U.S. PLANS FOR IRAQ'S OIL.

A major article on the topic appears in the new issue of Harpers (April 2005). I am looking forward to receiving that in the mail, and watching the BBC Newsnight story over the internet tonight. The upshot of the story is that a secret policy battle raged inside the US government prior to and immediately after the invasion of Iraq, and that there was a lot more desire for firm US control of Iraqi oil than either Powell or Wolfowitz let on. Palast reports,

...there were two conflicting plans, setting off a hidden policy war between neo-conservatives at the Pentagon, on one side, versus a combination of "Big Oil" executives and US State Department "pragmatists."

"Big Oil" appears to have won. The latest plan, obtained by Newsnight from the US State Department was, we learned, drafted with the help of American oil industry consultants....The industry-favoured plan [earlier] was pushed aside by yet another secret plan, drafted just before the invasion in 2003, which called for the sell-off of all of Iraq's oil fields. The new plan, crafted by neo-conservatives intent on using Iraq's oil to destroy the Opec cartel through massive increases in production above Opec quotas.

Palast butresses the story with insider interviews.

Powell obviously was aware in January 2003 that USAID intended to explore the total and rapid privatization (on the post-Soviet Russian "shock therapy" model) of all Iraqi industry, including oil. The UN Security Council, in its wisdom, was happy to give the US total control over Iraqi oil in UNSCR 1483 passed in May 2003. President Bush pre-absolved all private entities of liability for any malfeasances they may committ through Executive Order 13303. Deep Blade explored these machinations and called Powell on his earlier misdirection in an August 22, 2003 posting.

Deep Blade intensified coverage of the economic shock therapy plan for Iraq when it was announced on September 24, 2003 that an organization called the US-Iraq Business Alliance with the ``Doing Business in Iraq'' conference in Scarborough, Maine. The Deep Blade website contains extensive research and detailed archive postings that tell the entire story of protest against and the demise of the conference. (Many links to the Bangor Daily News are now broken. Our ``widely read op-ed piece'' that ran in the BDN on November 8, 2003 remains available here.)

Central to the story are former US Iraq viceroy L. Paul Bremer's infamous decrees. Order 39, for example, allowed foreign investors to own 100 percent of any Iraqi asset (except oil and real estate) and to remit profits and royalties when they choose. Other orders reduced import tariffs to 5 percent, allowed foreign banks to take over Iraq's banking system creating ``one of the most open countries in the world'' for the huge corporations.

From Palast's report, we gain new insight into the struggle over those oil assets -- and a possible explanation for why full-blown privatization of Iraqi oil assets was delayed in September 2003. Big oil companies evidently were concerned that ``shock therapy'' could leave them as out of control of Iraq's oil fields as the Iraqi people would be after oligarchs seized the assets in the manner of the Russian experience of ten years ago. Furthermore, if the object was to break the ability of the OPEC cartel to set oil prices, Big Oil was not exactly enthusiastic. The majors clearly are profiting handsomly from the windfall of recent price run-ups.

Not only that, the Iraqi people were not keen on the impending sell-off as their employment situation became desperate. Is it any coincidence that resistance to the occupation ramped up rapidly during the fall of 2003 after Bremer's orders were promulgated?

Documents Palast cites
I am curious about the internal State Department "Iraqi economic plan" from February 2003 that Greg Palast displays. The language found in Palast's document image is pretty much identical to that which I first reported about on November 3, 2003 in the Privatization section in the Business of Iraq Reference File. I think Palast's angle is that these are still ``secret'' documents. The fact that this was all in the works long before President Bush announced he had decided to go to war is quite interesting, but the language Palast cites has been public since at least the summer of 2003.

A planning contract called ``Economic Recovery, Reform and Sustained Growth in Iraq'' was awarded to BearingPoint, Inc. of McLean, Virginia on July 25, 2003. This firm is now under fire (please refer to this catalog of stories on BearingPoint from the Washington Post) for a litany of ``accounting irregularities.'' According to the Center for Public Integrity page on BearingPoint, the company's taxpayer revenue over the potential 3-year contract period for its Iraq work is over $240 million.

I do not have a current update on BearingPoint's Iraq projects.

Theft of Iraq oil revenue?
It is rather comical to watch Fox News and like-minded wingers monger the Oil-for-Food Program ``scandal.'' A huge American-grown cleptocracy concerning Iraq's oil is right under their noses.

According to the governments own Special Inspector General for Iraq Reconstruction (SIGIR),

The CPA (Coalition Provisional Authority) provided less than adequate controls for approximately $8.8 billion of Development Fund for Iraq (DFI) funds provided to Iraqi ministries through the national budget process. The CPA did not establish or implement sufficient managerial, financial, and contractual controls to ensure that DFI funds were used in a transparent manner. Consequently, there was no assurance that the funds were used for the purposes mandated by United Nations Security Council Resolution 1483 (UNSCR 1483).

So much for that ``trust'' for the Iraqi people Colin Powell was so keen to discuss two years ago.