The world's petrol station: Iraq's past is steeped in oil
... and blood
Since black gold was struck in 1927, the West has guarded its supply
by keeping Baghdad in check. By Trevor Royle
The British government's position was unequivocal: there had to be regime change in Iraq. An
official government paper argued that 'Iraq will never be safe and stable, while she has an
army, until a real public pinion develops sufficiently strong to convince un scrupulous
politicians that any of them who use the army to seize power will be politically outlawed.'
The words are not Tony Blair's. The paper was written in 1941, when Britain was engaged in
the war against Nazi Germany. A precursor to Saddam, a nationalist called Rashid Ali, was
elected prime minister and began taking an anti-British and pro- German line. His claims
became more extravagant and he used oil as a weapon: if Britain wanted to continue to
benefit from Iraqi supplies it would have to promote the interests of the Arab population in
Palestine.
In a short and sharp campaign Rashid Ali was unseated and fled into exile. The use of British air
power demoralised his supporters and British and Indian land forces made short work of
securing the country and its vital oil stocks in the Mosul region. From the beginning of the
current crisis earlier this year a similar emphasis on the need for a regime change has been
played up by President George W Bush and his security and foreign affairs advisers, who have
used it as a mantra to underscore their determination to punish president Saddam Hussein and
to destroy his capacity for manufacturing weapons of mass destruction.
However, with Saddam deposed the way will be open to create a friendly government in
Baghdad, a client state that will be dependent on US support and give Washington a new
sphere of influence in the Middle East. Quite apart from the rich pickings to be gained from
Iraq's oil wealth, which the US Department of Energy puts at '112 billion barrels of proven
reserves along with 220 billion barrels of probable and possible resources' regime change could
help to realign Washington's strategic partnerships, not least with neighbouring Saudi Arabia,
increasingly seen as a loose cannon.
'In the longer term the US might be wise to extricate itself from its historic links with Saudi
Arabia,' says a US diplomatic source. 'Let's look at the matters as pragmatically as we can. The
Saudis have not been helpful to US interests in the war against terrorism, they will not offer
support in any attack on Iraq and it was Saudi money which helped to bankroll al-Qaeda.
They're not the friends they once were.'
American interest in Saudi Arabia dates back to the 1930s, when US oil companies began
exploiting the country's rich supplies. The arrangement laid the foundation for the post-war
settlement by five US companies -- Standard Oil (30%), Texaco (30%), Socal (30%) and
Socony-Vacuum (10%) -- to control production through the American Arabian Oil Company
(Aramco).
In a further carve-up Socal and Texaco controlled oil production in Bahrain while Kuwait's
supplies were divided between the US company Gulf and the British Anglo-Iran company, which
also managed production in Iran. At the same time Iraq was divided three ways amongst Anglo
Iran (British), Standard Oil and Socony-Vacuum (US) and Compagnie Francaise des Petroles
(France).
For everyone concerned it was a neat arrangement. The Western oil companies flourished, the
Arab countries' ruling families grew phenomenally rich from the royalties and the governments
of Britain, France and the US enjoyed the possession of vital spheres of influence in the Middle
East. There were blips, such as the overthrow of Iraq's Hashemite Royal family in 1958 and the
religious revolution that swept away the Shah of Persia from Iran in January 1979, but for the
bulk of their existence -- Iraq and Saudi Arabia are less than a century old -- control of oil has
meant control of power in the Middle East.
Central to that has been the relationship between the US and Saudi Arabia, an agreement
which gives the one access to the country's oil wealth and the other the protection of the
world's only super-power. To a great extent the ruling House of Saud depends on US promises
to keep it safe from internal and external threats but it comes at a price. There is a sizable
military garrison in the country and US warplanes are familiar sights at Saudi air force bases.
These are already a focus for growing discontent amongst younger Arabs, many of them
Wahhabi fundamentalists, who regard the American presence as an unpleasant infection.
The disquiet is not confined to Riyadh. In Washington's security community Saudi's links with
terrorism are an uncomfortable reminder that their closest Arab ally in the Middle East could
be a potential threat. While US military commanders would prefer to be able to use Saudi sites
for an attack on Iraq, especially the giant Prince Sultan air base with its state-of-the-art
command-and-control centre, the Bush administration has resigned itself to being denied
access to them. Not only would Saudi compliance encourage political instability but it could
inspire further acts of Saudi-backed terrorism. That intransigence alone gives the US a spur to
find new friends in the region.
'A rehabilitated Iraq is the only sound long-term strategic alternative to Saudi Arabia,' argues
the Sunday Herald's diplomatic source. 'It's not just a case of swopping horses in mid-stream,
the impending US regime change in Baghdad is a strategic necessity.'
At present the contracts to exploit Iraqi oil are controlled by two companies - France's
TotalFinaElf, which has exclusive rights to develop the potentially rich Majnoon field that
marches with the Iranian border, and Russia's LukOil, which recently entered into a $3.5 billion
deal with Saddam's government. Under US law American oil firms are prevented from entering
into contracts with Iraq but all that could change once there is a new regime in Baghdad.
Opposition groups have agreed that contracts made with Saddam would have to be revised, if
not torn up, and that the granting of new contracts could depend on the level of support given
to the regime-change operation. The Iraqi National Congress has announced it will 'cancel all
contracts that are not in the interests of the Iraqi people and will reopen bidding on them'
while its leader Ahmed Chalabi has recommended the creation of a US-led consortium to exploit
the country's untapped oil wealth.
Anyone suggesting that this is not a spur should turn to the US State Department's assessment
of Middle East oil in the post-second world war world: 'These resources constituted a
stupendous source of strategic power, and one of the greatest material prizes in world history
... probably the richest economic prize in the world in the field of foreign investment.'
It remains an enticing prospect. Second only to Saudi Arabia, Iraq contains the world's biggest
oil reserves, but years of warfare and sanctions have badly degraded the capacity to extract
the oil. Equipment is fast becoming obsolete, spare parts are impossible to find and according
to intelligence gained by the US Department of Energy there is a risk of a major breakdown in
the infrastructure. All this requires investment and expertise and there is little doubt US
companies such as Chevron-Texaco would be well-placed to exploit that need.
Small wonder that Iraq's response to President Bush's September statement to the UN General
Assembly was a robust attack on what it sees as Washington's underlying motives: 'The US
admin istration wants to destroy Iraq in order to control the Middle East oil, and consequently
control the politics as well as the oil and economic policies of the whole world.'
Reacting with equal vigour, Washington denied the allegation that an oil bonanza is around the
corner but at the same time it is not being coy about the strategic benefits that a regime
change in Baghdad would bring. In addition to creating a sphere of interest in the heart of the
Middle East at the expense of Saudi Arabia, the knock-on effect will be felt in neighbouring
countries. Jordan will be the chief beneficiary. A natural ally of Iraq, its economy depends on
heavily discounted Iraqi oil and the ability to sell goods under the UN oil-for-food programme.
Its Palestinian population supports Saddam as much out of conviction as from a dislike of US
support for Israel and these factors have put King Abdullah in an uncomfortable position.
According to Daniel Neep of the Royal United Services Institute the toppling of Saddam would
help the Jordanian king by giving him more breathing space: 'There are of course concerns
about domestic discontent and internal stability, but the choice between facing those
uncertain spectres and the more chilling prospect of being bereft of the mantle of 'US ally' is
perhaps easier to make than some might think.'
Syria and Turkey would also benefit by being freed from the invidious position of having to
make a choice between an Arab ruler, Saddam, and the US.
Reopening Iraq's oil-lines will allow the wealth to trickle down to them at a time when their
economies have been stagnant for several years. It would also bring under US influence a
country that had been created in 1921 when Britain and France had combined before the first
world war had come to an end to divide the area up into spheres of interest, which would
essentially be run from London and Paris. At one stroke the old Mesopotamian provinces of the
Ottoman Empire became Iraq in 1921, thereby putting a mixed population of Kurds, Sunni and
Shi'ite Muslims, Jews and Christians under the control of a British puppet ruler, the Hashemite
King Faisal.
One reason for the creation was strategic -- the need to protect Britain's imperial interests in
the Middle East -- but the second was oil. In 1927 oil was discovered in massive quantities at a
wadi called Baba Gurgur near Kirkus and exploitation of the wells was given to the Iraq
Petroleum Company, which was owned jointly by Royal Dutch Shell, Anglo- Persian and an
American and French consortium. Its pipeline still carries Iraq's oil through Jordan to the
Mediterranean and from the outset the Iraqi Petroleum Company's local managers acted as if
they were colonial masters and not commercial agents, a situation resented by Iraqi Arabs who
brought Rashid Ali to power.
Half a century after the British forced Rashid out of Iraq and into exile, many Arabs see the
same pattern repeating itself -- a Western desire to create a friendly client state in an
inherently unstable region and, above all, the need to manage the region's vital oil supplies. |
