President Bush's Cabinet agreed in April 2001 that 'Iraq remains a destabilizing influence to the flow of oil to international markets from the Middle East' and because this is an unacceptable risk to the US 'military intervention' is necessary.

Vice-president Dick Cheney, who chairs the White House Energy Policy Development Group, commissioned a report on 'energy security' from the Baker Institute for Public Policy, a think-tank set up by James Baker, the former US secretary of state under George Bush Sr.

The report, Strategic Energy Policy Challenges For The 21st Century, concludes: 'The United States remains a prisoner of its energy dilemma. Iraq remains a de- stabilizing influence to ... the flow of oil to international markets from the Middle East. Saddam Hussein has also demonstrated a willingness to threaten to use the oil weapon and to use his own export program to manipulate oil markets. Therefore the US should conduct an immediate policy review toward Iraq including military, energy, economic and political/ diplomatic assessments.

'The United States should then develop an integrated strategy with key allies in Europe and Asia, and with key countries in the Middle East, to restate goals with respect to Iraqi policy and to restore a cohesive coalition of key allies.'

Baker who delivered the recommendations to Cheney, the former chief executive of Texas oil firm Halliburton, was advised by Kenneth Lay, the disgraced former chief executive of Enron, the US energy giant which went bankrupt after carrying out massive accountancy fraud.

The other advisers to Baker were: Luis Giusti, a Shell non-executive director; John Manzoni, regional president of BP and David O'Reilly, chief executive of ChevronTexaco. Another name linked to the document is Sheikh Saud Al Nasser Al Sabah, the former Kuwaiti oil minister and a fellow of the Baker Institute.

President Bush also has strong connections to the US oil industry and once owned the oil company Spectrum 7.

The Baker report highlights massive shortages in world oil supplies which now leave the US facing 'unprecedented energy price volatility' and has led to recurring electricity black-outs in areas such as California.

The report refers to the impact of fuel shortages on voters. It recommends a 'new and viable US energy policy central to America's domestic economy and to [the] nation's security and foreign policy'.

Iraq, the report says, 'turns its taps on and off when it has felt such action was in its strategic interest to do so', adding that there is a 'possibility that Saddam Hussein may remove Iraqi oil from the market for an extended period of time' in order to damage prices.

The report also says that Cheney should integrate energy and security to stop 'manipulations of markets by any state', and suggests that Cheney's Energy Policy Group includes 'representation from the Department of Defense'.

'Unless the United States assumes a leadership role in the formation of new rules of the game,' the report says, 'US firms, US consumers and the US government [will be left] in a weaker position.'

www.rice.edu/projects/baker/

©2002 smg sunday newspapers ltd

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