Who Lost Iraq?

As the Bush administration was entering office in 2000, Donald Rumsfeld exuberantly expressed its grandiose ambitions
for Middle East domination, telling a National Security Council
meeting: "Imagine what the region would look like without Saddam and
with a regime that's aligned with U.S. interests. It would change
everything in the region and beyond."

A few weeks later, Bush speechwriter David Frum offered an even more exuberant version of the same vision to the New York Times Magazine:
"An American-led overthrow of Saddam Hussein, and the replacement of
the radical Baathist dictatorship with a new government more closely
aligned with the United States, would put America more wholly in charge
of the region than any power since the Ottomans, or maybe even the
Romans."

From the moment on May 1, 2003, when the President declared "major combat operations... ended" on the deck of the USS Abraham Lincoln,
such exuberant administration statements have repeatedly been deflated
by events on the ground. Left unsaid through all the twists and turns
in Iraq has been this: Whatever their disappointments, administration
officials never actually gave up on their grandiose ambitions. Through
thick and thin, Washington has sought to install a regime "aligned with
U.S. interests" -- a government ready to cooperate in establishing the
United States as the predominant power in the Middle East.

Recently, with significantly lower levels of violence in Iraq extending
into a second year, Washington insiders have begun crediting themselves
with -- finally -- a winning strategy (a claim neatly punctured by Juan Cole,
among other Middle East experts). In this context, actual Bush policy
aims have, once again, emerged more clearly, but so has the
administration's striking and continual failure to implement them --
thanks to the Iraqis.

In the past few weeks, the Iraqi government of Prime Minister Nouri
al-Maliki has made it all too clear that, in the long run, it has
little inclination to remain "aligned with U.S. interests" in the
region. In fact, we may be witnessing a classic "tipping point," a
moment when Washington's efforts to dominate the Middle East are
definitively deep-sixed.

The client state that the Bush administration has spent so many years
and hundreds of billions of dollars creating, nurturing, and defending
has shown increasing disloyalty and lack of gratitude, as well as an
ever stronger urge to go its own way. Under the pressure of Iraqi
politics, Maliki has moved strongly in the direction of a nationalist
position on two key issues: the continuing American occupation of the
country and the future of Iraqi oil. In the process, he has sought to
distance his government from the Bush administration and to establish
congenial relationships, if not an outright alliance, with Washington's
international adversaries, including the Bush administration's mortal
enemy, Iran.

Withdrawal Becomes an Official Issue

Perhaps the most dramatic symbol of this new independence is the Iraqi
government's resistance to a Washington proposal for a "status of
forces agreement" (SOFA) that would allow for a permanent and
uninhibited U.S. military presence in Iraq.

With
the impending expiration of the UN resolutions that gave legal cover to
the U.S. military presence in Iraq, the SOFA negotiations are crucial.
They began with a proposal that expressed the full extent of
Washington's ambitions to utilize Iraq as the base for making the U.S. "more wholly in charge of the region than any power since the Ottomans, or maybe even the Romans." The proposal first leaked to the press in June 2008 was essentially a major land grab, including provisions like the following that would not have seemed out of place in a nineteenth century colonial treaty:

*An indefinite number of U.S. troops would remain in Iraq indefinitely,
stationed on up to 58 bases in locations determined by the United
States.

*These troops would be allowed to mount attacks on any target inside
Iraq without the permission of, or even notification to, Iraqi
authorities.

*U.S. military and civilian authorities would be free to use Iraqi
territory to mount attacks against any of Iraq's neighbors without
permission from the Iraqi government.

*The U.S. would control Iraqi airspace up to 30,000 feet, freeing
the U.S. Air Force to strike as it wishes inside Iraq and creating the
basis for the use of, or passage through, Iraq's air space for planes
bent on attacking other countries.

*The U.S. military and its private contractors would be immune from
Iraqi law, even for actions unrelated to their military duties.

*Iraq's defense, interior, and national security ministries (and all
of Iraq's arms purchases) would be under U.S. supervision for 10 years.

When leaked (clearly by Iraqis involved in the negotiations), this proposal generated opposition across the political spectrum
from parliament to the streets. It was even denounced by the usually
silent Grand Ayatollah Ali al-Sistani, the most influential Shia
Ayatollah. Soon, Prime Minister Maliki made clear his own rejection
of the proposal, setting in motion a chaotic negotiating process in
which the Iraqis seem to have argued vehemently for a more modest,
briefer U.S. presence, as well as a definite deadline for full withdrawal -- a proposal that was anathema to the Bush administration.

By early August, when the details of a new proposal
endorsed by Secretary of State Condoleezza Rice began to leak out, it
was clear that U.S. negotiators had given way, granting significant
concessions to the Iraqi side. According to Iraqi insiders, the new
draft agreement called for U.S. troops to be completely withdrawn from
Iraqi cities, where most of the fighting usually takes place, by the
summer of 2009. All U.S. troops -- not just the "combat" troops usually
mentioned when Democrats talk about withdrawal timelines in Iraq --
would have to be gone by the end of 2011.

If the leaked draft were implemented, the U.S. would leave behind those 58 bases, including the five massive "enduring" bases
into which the Bush administration has poured billions of dollars.
Moreover, the unhindered scope of action Washington had originally
demanded for its forces would be dramatically limited:
The U.S. would not have the right to attack other countries from Iraqi
soil, its ability to conduct operations within Iraq would be
circumscribed, and immunity from prosecution would be restricted to
U.S. military personnel (and then only when they were participating in
approved military actions).

Symptomatic of the loosening U.S. grip on its Iraqi client government
were the reactions of the two sides to the leaked provisions of the new
version of the agreement. Secretary of State Rice declared it
"acceptable" and explained uneasily that the timeline proposed was not
the sort of fixed withdrawal date that the Bush administration had long
adamantly rejected, but an "aspirational" "time horizon" that would depend on "conditions" in Iraq.

Maliki, in all likelihood responding to the fervor of public protests
to Rice's comments, immediately declared the agreement unacceptable
unless the deadline for withdrawal was time-based and unconditional. In
a well publicized speech to a gathering of tribal sheiks, he said that
any agreement must be based on the principle that "no foreign soldier
remains in Iraq after a specific deadline, not an open time frame." In
further clarifying his remarks, a key aide told the Associated Press that "the last American soldiers must leave Iraq by the end of 2011, regardless of conditions at the time."

The latest reports suggest that a further round of secret negotiations
had restored some U.S. demands, including full immunity for American
soldiers (but not mercenary fighters), and application of the
withdrawal deadline to combat troops only. Such concessions by Maliki,
however, appeared certain to trigger another round of protest and
resistance in the streets and in the Iraqi Parliament.

Whatever their outcome, the still-unfinished negotiations point to
something quite new in the relationship between the two governments.
Until recently, the Iraqi leadership faithfully sought to enact
whatever policies the Bush administration favored (though its capacity
to implement them was always in question). With the proposed SOFA, this
posture disappeared, replaced by a clear antagonism to Washington's
desires. With its formidable weapons (including 146,000 soldiers on the
ground), Washington is bound to win at least some of these
confrontations, but what we may be seeing is the end of the dream of a
regime "closely aligned" with U.S. policies.

The Re-emergence of Oil Nationalism

Nothing better highlights this transformation than oil policy. From the
beginning of its occupation of Iraq, the Bush administration sought to
quadruple Iraqi oil production by delivering control of the industry to
the major international oil companies. Once given free rein to act on
their own discretion, Washington policymakers believed that the oil
majors would invest vast sums in modernizing existing fields, activate
undeveloped reserves using the most advanced technology available, and
discover major new fields utilizing state-of-the-art exploration and
extraction methods.

Up until 2007, the Iraqi government was an active ally in this
enterprise, even though the vast majority of Iraqis -- including the
powerful oil workers union, the religious leadership, and a majority of
Parliament -- vehemently opposed these plans, demanding instead that
control of the industry remain in government hands. In 2004, the
U.S.-appointed Iraqi government enthusiastically endorsed an
International Monetary Fund agreement that mandated the development of
major Iraqi oil reserves by international oil companies. When those
companies found the legal basis for such investment too fragile to risk
vast sums of capital, the Iraqi government (surrounded by American
advisors) immediately began work on an oil law that would presumably
provide a more secure foundation for their investment. In the meantime,
informal advice was accepted from the oil majors, whose technicians
were placed in charge of various engineering operations within the
country.

In 2007, when the oil law was finally delivered to the Iraqi
Parliament, it met with unremitting opposition. The always strong oil
unions immediately began a ferocious resistance campaign that stalled the law.

None of these developments altered the Bush administration's
determination to push the law through. They did not, however,
anticipate that the Maliki administration itself would become a further
source of opposition. As Charles Ries told
journalists on leaving his position as U.S. Economic Ambassador to Iraq
in August 2008 after a year of failure, "When I got here... I was quite
optimistic it was only a month or two [before the petroleum bill would
be passed, but the] more I understood what the real issues were... it was
clear this was going to be a major political challenge."

While Ries was on the job, even the leadership of the Ministry of Oil,
until then a pro-American bastion, went into opposition. One symptom of
this was its failure to complete five no-bid contracts
(that did not include either investment or extraction rights) with oil
consortia led by the usual suspects -- Exxon Mobil, Royal Dutch Shell,
BP, Total, and Chevron -- designed to increase Iraqi production by
500,000 barrels per day. Oil Minister Hussein al-Shahrastani told the Wall Street Journal
that a key reason for the faltering negotiations was the desire of the
oil companies for "preferential treatment for future oil-exploration
deals." This comment, like the faltering negotiations, hinted at the
abandonment of the Bush administration's long-desired version of Iraqi
oil policy.

The new attitude was underscored when the Oil Ministry revived a
Saddam-era agreement with the China National Petroleum Corporation,
which was now granted a $3 billion contract
to develop the Ahdab oil field. Given the growing U.S.-China rivalry
over the control of foreign oil sources, the symbolism of this act
couldn't have been clearer -- especially since the earlier contract had
been unceremoniously canceled by the United States at the beginning of
the occupation in 2003. No less important, this was a "service
contract" whose terms did not follow U.S. guidelines calling for the
reduction or elimination of Iraqi government control of the oil
industry.

Soon after announcing this new agreement, Oil Minister Shahrastani offered what might be seen as a declaration
of oil policy independence. "[Global] oil supplies," he declared, "meet
and may slightly exceed current world demand." The world, that is, had
plenty of oil, and so there was, he insisted, no global need to rush
pell-mell into oil development agreements that might not, in the long
run, be of use to Iraq.

This represented an attack on the fundamental premise of U.S. oil policy -- that, as Vice President Cheney told an oil industry gathering back in 1999,
"By 2010 we will need on the order of an additional fifty million
barrels a day. So where is the oil going to come from? While many
regions of the world offer great oil opportunities, the Middle East,
with two-thirds of the world's oil and the lowest cost, is still where
the prize ultimately lies."

Significantly, back in 2001 -- and before 9/11 -- the Cheney Energy
Task Force, working with the National Security Council, would make this
commitment the centerpiece of administration Middle Eastern policy,
defining the world situation as one in which the supply of oil must be
drastically increased to meet the demand for an "additional fifty
million barrels a day."

Oil-producing countries of the Middle East never embraced Cheney's
analysis and consistently resisted U.S. efforts to encourage, induce,
or coerce dramatic increases in oil production. Instead, they viewed
the "shortage" of oil as a natural result of market forces, beneficial
to their own economies.

With the success of the U.S. invasion, the Iraqi government threatened
to become a maverick among the Organization of the Petroleum Exporting
Countries (OPEC), endorsing U.S. supported plans that, theoretically,
would have quadrupled Iraqi production within 10 years. So
Shahrastani's comments were a signal that Iraq was rejoining OPEC's
ranks and potentially opening a new era in post-invasion Iraqi politics
in which the government he represented would no longer be a reliable
ally of the United States.

A Nail in the Coffin of American Defeat?

Implicit in these actions is a new attitude toward, and assessment of,
the U.S. presence in Iraq. Prime Minister Maliki and his cohorts appear
to have adopted the viewpoint of journalist Nir Rosen
that "the Americans are just one more militia," just the most powerful
of the rogue forces that they have to manage and eventually eliminate.

As the Iraqi government accumulates an expanding lake of petrodollars
and finds ways to shake them loose from the clutches of U.S. banks and
U.S. government administrators, its leaders will have the resources to
pursue policies that reflect their own goals. The decline in violence,
taken in the U.S. as a sign of American "success," has actually
accelerated this process. It has made the Maliki regime feel ever less
dependent for its survival on the American presence, while
strengthening internal and regional forces resistant or antagonistic to
Washington's Middle East ambitions.

The respected Iraqi newspaper Azzaman
pointed to one of these forces in a recent editorial: "Iran has emerged
as the country's top trading partner. Its firms are present in the
Kurdish north and southern Iraq carrying out projects worth billions of
dollars. Iranian goods are the most conspicuous merchandise in Iraqi
shops. Iraq, though occupied and administered by America, has grown to
be so dependent on Iran that some analysts see it as a satellite state
of Tehran."

To support this contention, Azzaman asserted: "The Ministry
of Oil and other key portfolios such the Ministry of Interior and
Finance are in the hands of pro-Iran Shiite factions." Citing Oil
Ministry sources, it suggested that recent changes in oil policy
actually reflected Iranian pressure to "exclude U.S. oil majors from
contracts to develop the country's massive oil fields."

Azzaman may be overemphasizing Iranian influence, since there
are myriad internal Iraqi influences that continue to press against
Washington's desire for a client regime. Parliament, the Sunni and Shia
religious leaderships, powerful unions, and the Sunni and Shia
insurgencies have all registered broad opposition to continued U.S.
presence and influence.

As all this occurs, U.S. leverage over the Iraqi government, though
still formidable, is in decline. The Bush administration -- or its
soon-to-be elected successor --- may face a difficult dilemma: whether
to accept some version of the withdrawal demands of the Iraqi
government or re-escalate the war in yet one more attempt to create a
government that is "aligned with U.S. interests." The recent
declaration by the Pentagon that only the most modest of troop reductions
is militarily feasible in the foreseeable future may be a symptom of
this dilemma. Without a full complement of U.S. troops, after all, it
will be increasingly difficult to convince the Maliki regime to
re-embrace policies favored by Washington.

The question remains: Can anything reverse the centripetal forces
pulling Iraq from Washington's orbit? Will the President's "surge"
strategy prove to have been the nail in the coffin of its hopes for
U.S. dominance in the Middle East?

If this turns out to be the case, then watch out domestically. The
inevitable controversy over "who lost Iraq" -- an echo of those earlier
controversies over "who lost China" and "who lost Vietnam" -- is bound
to be on the way.