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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: stockman_scott who wrote (70430)	1/31/2003 1:52:49 AM
From: Karen Lawrence	Respond to of 281500

Oil is not the fuel driving Bush to war By Robin Shepherd in Moscow timesonline.co.uk AS CONSPIRACY theories go, the suggestion from anti-war protesters that America’s “real” ambitions in Iraq are driven by oil is as unconvincing as it is common. Tony Blair made short work of it at Prime Minister’s Question Time in mid-January. If oil concerns were really behind US policy on Iraq, he pointed out to a dissident Labour backbencher, the United States could achieve all its purported aims by simply offering President Saddam Hussein a deal: we scrap UN sanctions, you slash world oil prices by turning on the taps, our oil companies get all the development contracts. Saddam, the Prime Minister said, would be delighted to oblige. As it happens, oil really is a factor — but it is one motivating the countries most strongly opposed to US policy towards Iraq. First up is France. Gallic pride and a fear of American unilateralism notwithstanding, France stands to lose hard cash. For much of the 1990s, French companies were falling all over themselves to cut multi-billion dollar deals with the Iraqi oil industry. TotalFinaElf, for example, has long been pushing for the rights to get its hands on the Majnoon field which has estimated reserves of 10 to 30 billion barrels. A regime change could spell disaster. If French oil interests would be threatened by the demise of the Iraqi regime, the consequences for Russia, another vocal sceptic with a Security Council veto, could be positively catastrophic. Lukoil and other Russian oil companies almost lost a multi-billion dollar contract with Baghdad last year amid Iraqi fears that Moscow was caving in to American pressure. In a blatant attempt to harden Russian attitudes against a war two weeks ago, Baghdad quietly resolved the dispute and offered several other major contracts to Russian oil and gas firms. But Russian concerns go further than that. Russia is one of the world’s top two oil producers. High oil prices have been crucial in underpinning three years of rapid economic growth. Moscow knows that a regime change in Iraq would eventually have dramatic consequences for world prices because the lifting of sanctions would lead to an oil glut. “Our view is that the most likely outcome of a war is that oil prices will just about collapse, by 20 per cent or so as soon as it looks as though the US will win,” said Hania Farhan, head of the Middle East Department at the Economist Intelligence Unit. “We’re expecting prices to drop to around $19 a barrel in 2004 from 30ish now. From then on prices go lower and lower down to $15-16 a barrel in 2007.” With the Russian Government calculating that for every $1 drop in the price of oil its economy loses as much as $2 billion a year, Moscow can only view such a scenario with alarm. President Putin can ill-afford to see economic growth collapse a year before he comes up for re-election. “US concerns about Iraqi oil mostly centre on trying to reassure France and Russia that they won’t lose out too badly if Saddam goes,” said one Western diplomat in Moscow. “Behind the scenes, Paris and Moscow are frantically trying to protect their oil interests. The Americans probably wish Saddam didn’t have a drop of oil. It complicates their efforts to get grudging allies on side.” Of course, Russia and France do not object to the prospect of war with Iraq solely because of their oil interests. Both countries fear regional instability in the event of a conflict and both are uncomfortable with US hegemony and its consequences. It is also true that the United States is desperately keen to see a diminution in Saudi dominance of the global oil industry. The thought of a coup by anti-Western hardliners in Saudi Arabia is a Washington policymaker’s worst nightmare. A pro-Western Iraq would be a valuable prize. But oil politics surrounding Iraq are far more complex and contradictory than the “It’s all about oil” brigade would have it.