Time to Do the Math in Iraq
In 1532, after capturing the Inca emperor Atahualpa, the Spanish conquistador Francisco Pizarro issued an unprecedented demand: fill a room, 22 feet long, 17 feet wide, and 8 feet tall, with gold. The Incas complied, but Pizarro executed Atahualpa anyway and promptly shipped the tribute to Spain. At today's prices of gold, the value of the ransom (3,000 cubic feet of gold at $10 million per cubic foot) would be approximately $30 billion.
That's a lot of money, and it confirms that as conquerors the Spaniards had a clear vision of what they were up to. Conversion of heathens was fine. Conversion plus precious metals was even better.
Applied to the Iraq War, the traditional logic of imperial conquest clears out the rhetorical cobwebs and clarifies the mind. After all, when you rule out "senseless violence," there are really only two reasons that human beings fight. One has to do with abstract things-honor, dignity-as in "My family's venerable name has been besmirched. Scoundrel, we meet at dawn." The other has to do with concrete things-stuff-as in the actions that typically follow upon a sentence like, "Give me your shoes, punk."
But most compelling of all is a conjoining of the abstract and the concrete, as in: "We're spreading democracy-oh, and by the way, there's a lot of oil in Iraq."
Of course, everyone is aware of that oil, but it's fair to guess that if pressed to calculate its actual value, most Americans would probably plead for mercy.
That number, however, can hardly be lost on the leadership of the United States. Bush, Cheney, and Rice, of course, all hail from the oil industry. They do know the value of a barrel, and they know how to measure a reserve. Though Bush may claim to dislike "fuzzy math," it's doubtful that he's lost in the zeros on this one.
For the rest of us, it's time to do the math.
According to a 2002 estimate by the Energy Department, the quantity of proven, probable, and possible reserves in Iraq is approximately 330 billion barrels. At today's $64 per barrel, that's $21 trillion dollars worth of oil.
By the way, that's $70,000 per U.S. citizen or $200,000 per household (according to population estimates for 2007). Certainly enough to solve most people's credit card issues.
Maybe this "war for oil" wasn't such a bad idea after all!
But wait a minute. Are we really in Iraq to grab the oil? After all, America may be an empire, but is it really just like those ancient empires where the victor returned to parade through the streets with legions of captured slaves, tied together at the neck, and wagons obscenely piled with tribute?
Donald Rumsfeld, for one, denied the accusation in no uncertain terms. When asked by NBC's Steve Kroft his response to those who claimed it was a war for oil, Rumsfeld retorted: "Nonsense. It just isn't. There are certain things like that, myths, that are floating around. I'm glad you asked. It has nothing to do with oil, literally nothing to do with oil. ... Oil is fungible, and people who own it want to sell it, and it will be available."
Rumsfeld was correct in saying that whether or not the U.S. invaded Iraq, it would in all likelihood still have access to Iraq's oil over the long term, simply by buying it on the open market. But the comment was disingenuous in that it ignored the immense potential for whoever controlled the resource to extract profit-today's equivalent of slaves and glory wagons. And Iraq's oil, which ranks among the cheapest in the world to pump ($.50 to $1.00 per barrel), is nothing if not profitable.
More telling than such disavowals are actual pieces of legislation currently pending in both the United States and Iraq. On the U.S. side, a little-reported portion of both the Senate and the House versions of the current appropriations supplemental, currently headed for conference committee, is a "benchmark" requiring the Iraqi Parliament to pass a new statutory framework for its oil industry known as the Iraq Oil Law.
Meanwhile, in Iraq, after years of behind-the-scenes drafting directed by the occupation authorities, the text of the Iraq Oil Law was leaked to the media shortly before being sent to Parliament by Prime Minister Maliki's cabinet. The most notable feature of the law is a revival of an exploitive type of contract widely used prior to the rise of Arab nationalism in the 1960s, known as a production sharing agreement. Although the Oil Law uses an alternative term, "exploration and production contract," the effect is the identical. The new arrangement would allow the bulk of Iraq's reserves to be controlled by outside oil companies, privatizing what has until now been a nationalized resource under the auspices of the Iraq National Oil Company. It specifies the royalty that will be paid to Iraq: "12.5 percent of gross production, measured at the entry flange to the main pipeline." And as if the rest of the law were not already explicit enough, Article 35(A) reiterates: "Holders of exploration and production rights may transfer any net profits from petroleum operations to outside Iraq after paying taxes and fees owed."
If the law is passed, Iraq will part ways with the other major Middle Eastern oil producers, including Saudi Arabia, Kuwait, Libya, and Iran. Those countries all maintain national control over oil, bringing in foreign corporations only as needed using technical service contracts, under which control is not relinquished and there is no sharing of profits.
Significantly, the Democratic leadership brushed off suggestions by Congressman Dennis Kucinich that the Oil Law benchmark be deleted from the supplemental. Thus, when it comes to supporting the privatization of Iraqi oil, it's hard to find even a crack of daylight between the positions of the Bush Administration and the Democratic Party leadership.
Why are we in Iraq? Sometimes the simplest explanations are the best. Philosophers call that the lex parsiminiae principle; others call it horse sense.
It really is the oil, stupid.
And by the way, stand back Pizarro. Your ransom doesn't look so fantastic any more. You brought home $30 billion. We're on the verge of $21 trillion. That room full of gold was a nice start. Let's see: according to my arithmetic you only need to fill up 699 more rooms like that and you'll tie our new record for spoils of war.
Ted Nace is the author of Gangs of America: The Rise of Corporate Power and the Disabling of Democracy (Berrett-Koehler, 2003, 2005).