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US Can't Hide Concern For Iraq's Oil
Published on Thursday, October 2, 2003 by the Seattle Post-Intelligencer
U.S. Can't Hide Concern For Iraq's Oil
by Robert Fisk
 

Oil is slippery stuff but not as slippery as the figures being peddled by Iraq's U.S. occupiers. Up around Kirkuk, the authorities are keeping the sabotage figures secret -- because they can't stop their pipelines to Turkey from blowing up. Down in Baghdad, where the men who produce Iraq's oil production figures are beginning to look like the occupants of Plato's cave -- drawing conclusions from shadows on their wall -- the statistics are being cooked.

L. Paul Bremer, the U.S. administrator here, is "sexing up" the figures to a point where even the oilmen are shaking their heads. Take Kirkuk. Only when the television cameras capture a blown pipe, flames billowing from its wounds, do the occupation powers report sabotage.

This they did, for example, on Aug. 18. But the same Turkish pipeline has been hit before and since. It was blown up again on Sept. 17 and four times again the following day. U.S. patrols and helicopters now move along the pipeline but, in the huge ravines and tribal areas through which it passes, long sections are indefensible.

European oilmen in Baghdad realize now that Iraqi officials in the oil ministry -- one of only two government institutions that the Americans defended from the looters -- knew very well that the sabotage was going to occur. Earlier, Americans took the quiet and unwise decision to rehire many Baathist oil technocrats, which means that a large proportion of ministry officials are still ambivalent towards the Americans. Thus the only oil revenues the Americans can get are from the south.

In mid August, Bremer gave the impression that daily production stood at around 1.5 million barrels. But the real figure then was 780,000 barrels and rarely does production reach a million. In the words of an oil analyst visiting Iraq, this is "an inexcusable catastrophe."

When Americans attacked Iraq in March, the country was producing 2.7 million barrels a day. It now also transpires that in the very first hours after they entered Baghdad April 9, U.S. troops allowed looters into the oil ministry. By the time senior officers arrived, they had destroyed billions of dollars of irreplaceable data. While the major U.S. oil companies stand to cream off billions of dollars if oil production resumes in earnest, many of their executives were demanding to know from the Bush administration -- long before the war -- how it intended to prevent sabotage.

In fact, Saddam Hussein had no plans to destroy the oil fields themselves, but plenty of plans for blowing up the export pipes. The Pentagon got it the wrong way round, racing its troops to protect the fields but ignoring the vulnerable pipelines.

Anarchy is now so widespread in postwar Iraq that it is almost impossible for international investors to work. There is no insurance for them, which is why occupation administrators have secretly decided that well over half the U.S. $20 billion earmarked for Iraq will go toward security for its production infrastructure.

Even during the war, Yahya Sadowski, a professor at the American University of Beirut, suggested that repairing wells and pipes in postwar Iraq would cost $1 billion, that raising oil production to 3.5 million barrels a day would take three years and cost another $8 billion investment and another $20 billion for repairs to the electrical grid that powers the pumps and refineries. Bringing production up to 6 million barrels a day would cost a further $30 billion, perhaps $100 billion.

In other words, assuming only $8 billion of the $20 billion can be used on industry, the Bush overall budget of $87 billion that horrifies Congress is likely to rise toward a figure of $200 billion. Ouch.

Since the 1920s, only around 2,300 wells have been drilled in Iraq and those are in the valleys of the Tigris and Euphrates. Its deserts are almost totally unexplored. Officially, Iraq contains 12 percent of the world's oil reserves -- two-thirds of the world's reserves are in just four other countries -- Saudi Arabia, Iran, Kuwait and the Emirates -- but it could contain up to 25 percent.

It's possible to argue it was Saddam's decision to switch from the dollar to the euro in 2000 that made regime change so important to the United States. When Iran threatened to do the same, it was added to the "axis of evil." The defense of the dollar is almost as important as oil.

But the real irony lies in the nature of the United States' new power in Iraq. U.S. oil deposits are increasingly depleted and by 2025, U.S. oil imports will account for perhaps 70 percent of total domestic demand. It needs to control the world's reserves -- and don't tell me that the United States would have invaded Iraq if its chief export was beetroot -- and it now has control of perhaps 25 percent of the world's reserves.

But it can't make the oil flow. The cost of doing that could produce an economic crisis in the United States. And it is this -- rather than the daily killing of young U.S. soldiers -- that lies behind the administration's growing sense of panic.

Washington has got its hands on the biggest treasure chest in the world but it can't open the lid. No wonder they are cooking the books in Baghdad.

Robert Fisk writes for The Independent in Great Britain.

©1996-2003 Seattle Post-Intelligencer

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