What About the Oil?

In the lead up to the invasion of Iraq, some critics of the Bush administration said the real reason for the invasion would be to get American hands on Iraqi oil, the second largest reserve in the world. Administration officials, particularly Dick Cheney, claimed that after the invasion, Iraqi oil revenues would be substantial. Figures they provided to Congress estimated the War cost at $100 billion and the oil revenue in the first couple years to be $50-100 billion, with a tacit implication that the oil revenue might eventually pay the US back for the financial cost of the invasion.

So far the invasion and occupation have cost the American taxpayers over $215 billion with much more expense to come even if some troop withdrawals eventually start. As I pointed out here last year in “Is Iraqi Oil Paying for the War?”, only $8 billion oil revenue was received in 2003, with $15 billion projected for 2004. So what has been happening with the Iraqi oil revenue and what does the future seem to hold?

As the Christian Aid organization reported last year in its paper, “Fuelling Suspicion: the coalition and Iraq’s oil billions”, the US dominated Coalition Provisional Authority stalled and failed to cooperate with UN investigators seeking an accounting for the Iraq oil revenues. The CPA failed in its supervision of the oil program and then abruptly turned over authority to the interim Iraqi government, without an accurate accounting, and the CPA went out of existence before it could be finally called to task by the UN.

This past July, the Christian Science Monitor published “Why Iraqi oil money hasn’t fueled rebuilding”, pointing out that in addition to sabotage by the insurgents, the oil revenue has been depleted by smuggling and theft.

In a mini-history, “Oil in Iraq”, the Global Policy Forum explains that US and UK oil companies were excluded from Iraq in 1972, when the oil fields were nationalized, and they have been trying to get back into play ever since. In the last years of the Saddam regime, oil companies from other nations made deals for Iraqi oil, but the UN sanctions, pushed primarily by the US and UK, kept those deals from going into effect. Following the invasion of Iraq, the new Iraqi Constitution, substantially influenced by the US, includes a provision guaranteeing that foreign companies will be players in the Iraq oil deals, and once the new Iraq elections take place, contracts will be awarded. Imagine how much money oil companies are using to buy influence over who gets elected, in spite of the fact the Iraqi people understandably favor keeping the oil fields nationalized.

There were no WMDs. There was no Al Quaeda connection. Saddam was overthrown and perhaps another flavor of democracy in Iraq will be added to the world collection. But the one reason for the invasion that has survived through it all is that the US and UK oil companies now have the inside track on beating the Iraqi people out of a fair deal on the Iraqi oil [see the just published “Crude Designs: the Rip-off of Iraq’s Oil Wealth”], which they can then turn around and gouge us for at the gas pump.