It's (Still) The Oil, Stupid

As the Los Angeles Times says:

THE Bush administration, the media and nearly all the Democrats still refuse to explain the war in Iraq in terms of oil...

The LA Times points out that the ISG recommendations are totally consistent with previous Bush administration policy on Iraq's oil:

The report makes visible to everyone the elephant in the room: that we are fighting, killing and dying in a war for oil. It states in plain language that the U.S. government should use every tool at its disposal to ensure that American oil interests and those of its corporations are met...

For any degree of oil privatization to take place, and for it to apply to all the country's oil fields, Iraq has to amend its constitution and pass a new national oil law. The constitution is ambiguous as to whether control over future revenues from as-yet-undeveloped oil fields should be shared among its provinces or held and distributed by the central government.

This is a crucial issue, with trillions of dollars at stake, because only 17 of Iraq's 80 known oil fields have been developed. Recommendation No. 26 of the Iraq Study Group calls for a review of the constitution to be "pursued on an urgent basis." Recommendation No. 28 calls for putting control of Iraq's oil revenues in the hands of the central government. Recommendation No. 63 also calls on the U.S. government to "provide technical assistance to the Iraqi government to prepare a draft oil law."

This last step is already underway. The Bush administration hired the consultancy firm BearingPoint more than a year ago to advise the Iraqi Oil Ministry on drafting and passing a new national oil law.

Although the media is totally ignoring it, even in the wake of the ISG report, this new Iraqi oil law is critically important to any new developments in Iraq:

In July, U.S. Energy Secretary Samuel Bodman announced in Baghdad that oil executives told him that their companies would not enter Iraq without passage of the new oil law. Petroleum Economist magazine later reported that U.S. oil companies considered passage of the new oil law more important than increased security when deciding whether to go into business in Iraq.

The LA Times concludes that the ISG report has made the oil issue starkly clear, so now the people of the USA just have to decide "if we wish to spill more blood for oil". But it's not that simple, because the people of the USA are not being given that choice. They are not even being presented with the real news about Iraq's oil.

As usual, the blogs are the one's at the forefont of the information delivery system. Here's Juan Cole today:

The Iraqi government is putting the final touches on petroleum legislation, which will allow contracts to be signed by the oil majors. Up until now, legal uncertainties kept them away. My guess is that James Baker crafted the Iraq Study Group report so as to have the least possible negative impact on such petroleum negotiations.

Given that several members of the ISG, including Baker himself, are closely allied to Big Oil, that conclusion shouldn't be such a big call (but it is). A cynic (like me) might even wonder if Bush's BearingPoint man did not recommend the formation of Baker's ISG as a way to swing public opinion behind the required changes.

The Iraqi politicians involved in the new oil law negotiations are making sweet noises about how everybody in Iraq is going to just love their final draft, including separatist Kurds, disenfranchized Sunnis and greedy Shiites (who want total control of Iraq's oil-rich southern fields). But it's hard to see how they pull off such a feat of national unity in the current chaos. PM al-Maliki has already slammed the ISG report as “an insult to the people of Iraq.” Maybe he is just giving his friend Bush some room to move? OR maybe this explains why he is on his way out the door?

The latest talk is of dividing oil revenues on population basis among Shias, Sunnis and Kurds. I'll let the Neocon Propaganda Catapulters at ITM demonstrate how this might be presented to the Iraqi people (surprise, surprise, they just love the idea):

Another announcement followed soon, yesterday al-Sabah brought the news [in Arabic] that the parliament is discussing a suggestion to set aside 30% of oil sales income to distribute among the citizens of Iraq. The draft law sets 3 classes of payments according to age and subsequent needs and responsibilities; from one month to 6 years, from 6 to 18 years and the third one 19 years and older.

People who migrated from Iraq, those with salaries higher that 1 million dinars/month and convicted criminals will be excluded from the payment program, the report added.

It sounds like a typical Western election campaign plan, doesn't it? Threaten people with insecurity on the one hand, bribe them with money on the other. Just sign the oil law, folks, and nobody will get hurt. You will learn to love your Big Brother, just as Big Brother loves you. Now go fill up your SUVs.

If this new oil law does get signed, it will be interesting to see whether Iraq's government decides that the people need to approve the changes in a referendum (and if so, how that will be accomplished). If not, it will surely be illegal (although you could argue that the existing Iraqi constitution is itself illegal).

Elsewhere, Antonia Juhasz has some historical perspective on US trade with Iraq, including Baker and Kissinger dealings with Saddam Hussein.

UPDATE: Much more here: PSA are on the table!

CHENEY WINS: IRAQ OIL LAW APPROVED

Dick Cheney has just achieved victory in Iraq:

Iraq's cabinet has approved a draft of a national oil law that would share revenues from the country's vast oil reserves among its ethnic groups.

Prime Minister Nouri Maliki described the agreement as a "gift to all the Iraqi people".

Iraq's Shia majority and Sunni and Kurdish minority groups have squabbled over how to distribute oil revenues since the US-led invasion in 2003.

The draft bill must now be submitted to Iraq's parliament for a vote.

There may be some grandstanding in parliament, but it is basically just an up-and-down rubber stamp. Dick Cheney has won. Big Oil will control Iraq's oil for generations to come. The new law states that the oil belongs to "the Iraqi people" but EXTRACTION RIGHTS will belong to Big Oil. This effectively puts big Oil in control of the tap, which they can switch on or off at will. The law, which was written by Big Oil consultants to the US, UK and Iraqi governments, is also intentionally vague about revenue sharing.

This is NOT a victory for the Iraqi people, it is a tragedy, a travesty and a disgrace. Expect major protests across Iraq and neighbouring countries.

Here's Chris Floyd:

The New York Times notes (in the next-to-last paragraph) that Iraq’s oil will controlled by the iron fist of a “central body called the Federal Oil and Gas Council” which will have “a panel of oil experts from inside and outside Iraq” as part of the operation… without telling us that these “oil experts” will in fact be executives and representatives of American and other Western oil companies.

And Pepe Escobar has more at Asia Times Online:

The law was in essence drafted, behind locked doors, by a US consulting firm hired by the Bush administration and then carefully retouched by Big Oil, the International Monetary Fund, former US deputy defense secretary Paul Wolfowitz' World Bank, and the United States Agency for International Development. It's virtually a US law (its original language is English, not Arabic).

Scandalously, Iraqi public opinion had absolute no knowledge of it - not to mention the overwhelming majority of Parliament members. Were this to be a truly representative Iraqi government, any change to the legislation concerning the highly sensitive question of oil wealth would have to be approved by a popular referendum.

In real life, Iraq's vital national interests are in the hands of a small bunch of highly impressionable (or downright corrupt) technocrats. Ministries are no more than political party feuds; the national interest is never considered, only private, ethnic and sectarian interests. Corruption and theft are endemic. Big Oil will profit handsomely - and long-term, 30 years minimum, with fabulous rates of return - from a former developing-world stalwart methodically devastated into failed-state status. ..

A whole case can be made of SCIRI delivering Iraq's Holy Grail to Bush/Cheney and Big Oil - in exchange for not being chased out of power by the Pentagon. Abdul Aziz al-Hakim, the SCIRI's leader, is much more of a Bush ally than Maliki, who is from the Da'wa Party. No wonder SCIRI's Badr Organization and their death squads were never the target of Washington's wrath - unlike Muqtada al-Sadr's Mehdi Army (Muqtada is fiercely against the oil law). The SCIRI certainly listened to the White House, which has always made it very clear: any more funds to the Iraqi government are tied up with passing the oil law.

Bush and Cheney got their oily cake - and they will eat it, too (or be drenched in its glory). Mission accomplished: permanent, sprawling military bases on the eastern flank of the Arab nation and control of some of largest, untapped oil wealth on the planet - a key geostrategic goal of the New American Century.

UPDATE: The media treatment of this story has been tragic. WaPo buried it in a general report on Iraq. But a big hello to all the bleating, mindless fools who read the crap posted at RedState.com:

A big question in all of this is how the contracts with the foreign oil companies will be structured. Will there be "revenue sharing" to compensate for investment, or will investors have a clear equity stake in the industry? Given the distress of the left at the announcement of the draft law (my favorite is "CHENEY WINS!" and here's a little more from a brief visitor to our RedState community), I suspect the latter, which will have the added advantage of encouraging investment. And perhaps the left should cheer up. Economic imperialism isn't all bad. As nice as it would be for the Iraqis to harvest their oil with their own hands and not contribute a penny (or rather a dinar) to the corrupt and bloated coffers of Exxon and Halliburton, this is simply not a realistic option and Iraq desperately needs to start the flow of foreign capitol into the country...

No, the emergence of a free and independent Iraq might not be happening on our schedule or to our exact specifications, but the crafting of a viable and equitable oil law demonstrates that it is happening. For goodness' sakes, people, let's give it a chance and what the heck, we might even make a buck--not to mention foster a strong democratic ally in the heart of the middle east--in the process. Is it really just Mr. Cheney who has won here?

Redstate.com does not allow comments from non-members, so I will just say the following:

1. The theory that Iraqis are "just feckless children we are encouraging to remain dependent on us" has been coming from the right as well as the left in US politics. In either case, it is a disgraceful abdication of responsibility from an occupying power, and a wilfully misleading interpretation of the facts.

2. Saddam might have been able to channel bribes from companies like the Australian Wheat Board into his own coffers, but it was basically a decade of sanctions that stopped Iraq investing in "infrastructure and maintenance". Then the USA came along and bombed everything. And what the USA did not bomb (esp. oil pipelines) the insurgents did bomb. So to pretend that Iraq's current sorry state is all Saddam's fault is just ridiculous.

3. Many if not most major Middle East oil-producing nations have state-run industries which manage to extract and sell their oil without the need for "help" from US-based Big Oil.

4. Do you really think it is fair that Iraqi law stipulates that foreign oil companies have exclusive rights to extract oil from Iraqi sands, or that foreign oil executives should sit in judgement on all decision-making regarding Iraq's oil? How would YOU feel if a foreign nation exercised the same power over US resources? And how can you still pretend that Iraq is anything like "free and independent"? And how can you dare suggest that this reprehensible oil law is anything like positive proof of that?

5. You people are sick, stupid, dangerous and deranged. The USA's reputation has gone down the toilet and YOU are the main reason for it. Bush's incompetent, corrupt and murderous administration is a direct reflection of your own personal greed, stupidity and moral vacuity. If you don't have the intellect to see things in a more rational and humane light, or the courage to atone for your right-wing idols' murderous misdeeds, at least have the decency to admit your intellectual bankruptcy, walk away from political activism forever, and exercise your democratic right NOT to vote. The world will thank you for it.

UPDATE: It sounds like the Iraqi Cabinet pushed through a half-cooked law because the US was putting huge pressure on them and that is all the factions could agree on. Maybe my initial reaction was overly pessimistic. I certainly hope so. More here.

The Race For Iraq's Resources:

The Iraqi government is working on a new hydrocarbons law that will set the course for the country's oil sector and determine where its vast revenues will flow. The consequences for such a law in such a state are huge. Not only could it determine the future shape of the Iraqi federation -- as regional governments battle with Baghdad's central authority over rights to the riches -- but it could put much of Iraqi oil into the hands of foreign oil companies...

Nevertheless, the draft law lays the ground work for private oil companies to take large stakes in Iraq's oil. The new law would allow the controversial partnerships known as 'production sharing agreements' (PSA). Oil companies favor PSAs, because they limit the risk of cost overruns while giving greater potential for profit. PSAs tend to be massive legal agreements, designed to replace a weak or missing legal framework -- which is helpful for a country like Iraq that lacks the laws needed to attract investment.

It's also dangerous. It means governments are legally committing themselves to oil deals that they've negotiated from a position of weakness. And, the contracts typically span decades. Companies argue they need long-term legal security to justify huge investments in risky countries; the current draft recommends 15 to 20 years.

Nevertheless, Iraq carries little exploratory risk -- OPEC estimates Iraq sits atop some 115 billion barrels of reserves and only a small fraction of its oil fields are in use. By signing oil deals with Iraq, oil companies could account for those reserves in their books without setting foot in the country -- that alone is enough to boost the company's stock. And, by negotiating deals while Iraq is unstable, companies could lock in a risk premium that may be much lower five or ten years from now.

Without drastic improvements in the security situation, companies are unlikely to begin operations anytime soon. "The legislation is not a golden bullet," one industry source told SPIEGEL ONLINE. Western oil companies are happy to receive Iraqi officials in their European headquarters, but are not keen to return the visit. Firms from China, Russia and India, however, are less intimidated by Iraq's precarious security situation and actively court Baghdad on its home turf.

Russia, after all, knows first hand what's at stake. They negotiated PSAs after the fall of communism, but the terms turned out to be so disadvantageous that they've taken to nationalizing the projects in question. Not unlike Iraq today, Russia then had weak governance and needed the money.

That's why some fear Iraq is setting its course too hastily and in too much secrecy. Greg Muttitt of social and environmental NGO Platform London told SPIEGEL ONLINE: "I was recently at a meeting of Iraqi MPs (members of parliament) and asked them how many of them had seen the law. Out of twenty, only one MP had seen it."

Last week, the Iraqi Labor Union Leadership suggested the same. "The Iraqi people refuse to allow the future of their oil to be decided behind closed doors," their statement reads. "(T)he occupier seeks and wishes to secure themselves energy resources at a time when the Iraqi people are seeking to determine their own future while still under conditions of occupation."

Many worry instability would only get worse if the public feels cheated by the government and multinationals -- the Iraqi constitution says the oil belongs to the Iraqi people. The Labor Union Leadership warned: "We strongly reject the privatization of our oil wealth, as well as production sharing agreements, and there is no room for discussing the matter. This is the demand of the Iraqi street, and the privatization of oil is a red line that may not be crossed."

Peter Eigen, chairman of the Extractive Industries Transparency Initiative, a body that aims to bring improved governance in resource-rich countries, told SPIEGEL ONLINE that an open debate is crucial. "Civil society and private sector should play a role in this," he said. "If this doesn't happen, it will just be another country where the blessing of petroleum has been turned into a curse."

Why so fast?

Oil is central to Iraq's reconstruction and economic recovery, and the U.S. government is urging Iraq to develop the sector quickly. The recent Iraq Study Group report recommended the US help Iraq "prepare a draft oil law" to hasten investment. The report estimates Iraq could raise oil production from 2 million to 3 or 3.5 million barrels per day over the next three to five years.

Critics say the US is leaning on the IMF and World Bank to push Iraq into signing oil contracts fast, so western firms can secure the oil before Chinese, Indian and Russian firms do. An IMF official told SPIEGEL ONLINE that "passage of a hydrocarbon law is not a condition for financial support from the IMF." Nevertheless, Iraqi authorities found it necessary to promise the IMF a draft petroleum law by the end of this year -- this in the same letter that says "we will take whatever steps are necessary to ensure that the program remains on track."

The IMF sets the conditions for Iraq's debt relief from the so-called Paris Club countries. Eighty percent of that debt has been wiped clean, and the final 20 percent depends on certain economic reforms. With the final reduction, Iraq's debt would come to 33 percent of its GDP -- but if the reforms are not made, debt would climb to 57 percent of GDP, according to an IMF report.

Criticisms have also been levelled against the World Bank, where former US deputy defense secretary Paul Wolfowitz is in charge. Wolfowitz has been accused of pushing a US agenda after opening a World Bank office in Baghdad.

Most agree that Iraq should develop its oil -- the question is how and how fast. Apart from the law's content, Eigen stresses the drafting process must be transparent for any law to succeed: "Everything that is done behind closed doors will probably have to be renegotiated later."

The Oil Law And Dividing Iraq

So will Big Oil ever be able to sign their coveted new Oil Law, either with a central Baghdad government or with regional powers? Read this:

A new oil law could help Iraq's oil sector and its crumbling infrastructure by resolving how Iraq's Shiite, Sunni and Kurdish regions would share oil revenues and resources, and broker deals with international oil companies regarding desperately needed exploration and development.

Most of Iraq's known oil wealth is exported from the south, where majority Shiites predominate and where U.S. and Iraqi ground forces and ships work around the clock to protect Iraq's main offshore oil terminal near Basra from insurgent attacks.

In the other main area — the Kurdish north — the regional government already has signed agreements with small international oil companies, in defiance of the central government. Minority Sunnis, who mostly live in barren, war-torn central and western Iraq, worry they will be left with little or no control over the country's oil industry.

"The Kurds have submitted a draft Petroleum Act to be adopted that gives them the right to control oil, regardless of the government in Baghdad. The Oil Ministry has submitted another completely different draft that gives the authority to the ministry, not regions. It's the main issue of the conflict: oil and Kurds," said [former Iraq Oil Minister Issam] al-Chalabi.

That sounds like quite a big obstacle to the Oil Law, but it is an issue which will have to be resolved, one way or the other, in its own right.

Juan Cole's op-ed, "Breaking Iraq Apart, argues against partition:

The vagueness and, frankly, incoherence of some of the comments made about splitting up Iraq by politicians on the stump suggests that they are using the idea merely as an election-season mantra. They are putting it forward as an exit strategy. Divide the place up and get out, they say, hoping that if the Iraqis could not live with one another peacefully inside one country, they will be able to do so once they are separated.

Historically, partition has not always brought peace. The partition of Germany by the United States and the Soviet Union after World War II provoked a nuclear standoff and nail-biting tensions for 40 years. The British Empire in its waning days agreed in 1947 to partition colonial India into the nations of India and Pakistan, which went on to fight several wars and now brandish nuclear weapons at one another. The partition of Palestine in 1948 set the stage for six Arab-Israeli wars.

The purely American context of these deliberations about the fate of a whole Middle Eastern nation seems somewhat detached from reality.

Cole warns of "the dangerous shoals of religion, national identity and geopolitics in the area".

The neighbors of Iraq fear that the aftermath of an Iraq partition will be a regional conflagration. Partition is strongly rejected by U.S. allies in the region, such as Turkey (a NATO member) and Saudi Arabia. Riyadh's ambassador in Washington, Prince Turki al-Faisal, warned last week that dividing Iraq into three parts ``is to envision sectarian killing on a massive scale and the uprooting of families.'' He added emphatically that Iraqis were too intermingled to be neatly divided up, and that ``Those who call for a partition of Iraq are calling for a three-fold increase in the problems.''

Some of the Saudi uneasiness about a breakup of Iraq derives from fear that a Shiite super-province or new country in southern Iraq will fall under the influence of the ayatollahs in Tehran. The royal family is also anxious about what it will mean for the loyalties of the kingdom's own Shiites, who make up 10 percent of Saudis.

Turkey, which has a large Kurdish minority, is also nervous about the prospect of a Kurdish state on its doorstep.

Cole cites Senator Joe Biden's (D-Del) plan for "three big ethnically homogeneous provinces under a fairly weak federal government, which would nevertheless try to hold the country together by keeping control of petroleum receipts and sharing them with the provinces".

Interestingly, the Bush White House is also against the idea of partitioning Iraq.

On the other hand, here's Peter W. Galbraith in TIME:

The case for the partition of Iraq is straightforward: It has already happened...

In the December 2005 national elections, Shi'ites voted overwhelmingly for Shi'ite religious parties, Sunni Arabs for Sunni religious or nationalist parties, and the Kurds for Kurdish nationalist parties. Fewer than 10% of Iraq's Arabs crossed sectarian lines. The Kurds voted 98.7% for independence in a nonbinding referendum.

Iraq's new constitution, approved by 80% of Iraq's voters, is a road map to partition. The constitution allows Iraq's three main groups to establish powerful regions, each with its own government, substantial control over the oil resources in its territory and even its own regional army. Regional law supersedes federal law on almost all matters. The central government is so powerless that, under the constitution, it cannot even impose a tax.

It seems to me that the Iraqis must decide for themselves which way to go - split or not - and Big Oil will be waiting and ready when they do. In fact, Big Oil will be holding out bribes and contracts to get the partition (or not) deals done. Profits are the bottom line. Victory in Iraq is still not lost.

Blood For Oil

Part Two of Josh Holland's great work at Alternet, Bush's Petro-Cartel Almost Has Iraq's Oil, looks closely at the IMF's involvement:

The IMF agreement was announced in December of 2005, along with a new $685 million IMF loan that was to be used, in part, to increase Iraq's oil output. The announcement came a month after Iraqis went to the polls to vote for their first government under the new Constitution in order, according to the Washington Post, to spare Iraqi "politicians from voters' wrath." That was a wise idea; immediately following the agreement, gas prices skyrocketed and Iraqis rioted.

The icing on the cake is that the deal James Baker negotiated with the Paris Club refers to Iraq as an "exceptional situation"; no precedent was set that would allow other highly indebted countries saddled with odious debt from their own past dictators to claim similar relief.

The deadline the Iraqi government must meet for the completion of its final oil law in December is a "benchmark" in the IMF agreement.

In an investigation for the Nation, Naomi Klein discovered that Baker had pursued his mission with an eye-popping conflict of interest. Klein discovered that a consortium that included the Carlyle Group, of which Baker is believed to have a $180 million stake, had contracted with Kuwait to make sure that the money it was owed by Iraq would be excluded from any debt-relief package. When Baker met with the Kuwaiti emir to beg forgiveness for Iraq's odious debt, he had a direct interest in making sure he didn't get it.

Another major creditor was Saudi Arabia. The Carlyle Group has extensive business dealings with the kingdom and Baker's law firm, Baker Botts, was representing the monarchy in a suit brought by the families of the victims of 9/11.

Ah, James Baker, the man who is now mysteriously softening up the US electorate by promising some kind of unspecified change in US policy towards Iraq... just around the corner... beyond November 7th! (Clap your hands and say it: "I believe!").

Here's is another interesting excerpt:

According to Platform, just weeks after the invasion, in a meeting with oil company execs and Australian Foreign Minister Alexander Downer in London, former British Foreign Secretary Sir Malcolm Rifkind promised to personally lobby Dick Cheney for contracts on behalf of several firms, including Shell.

The link leads to a PLATFORM article which says:

Rifkind, who was director of international strategy at BHP Billiton, made the promise when he met with oil company executives and Australian Foreign Minister Alexander Downer in London in May 2003. The minutes of the meeting have now been published by Australia’s Cole Inquiry into corruption in the Oil for Food Programme...

The Australian oil and mining company BHP Billiton had “substantially agreed” commercial terms for developing the Halfaya oilfield with the Saddam Hussein government in 1997, but had not proceeded with the project due to international sanctions. The company had later entered an agreement with oil supermajor Shell, in which the two companies would each take 40 percent of the deal.

Following the war and the end of sanctions, the companies looked to obtain a contract for the field. With up to five billion barrels of reserves, this single field in the south of Iraq contains more oil than the whole of the UK North Sea.

The meeting notes also reveal that Australian Foreign Minister Alexander Downer agreed to raise the issue with US administrator Paul Bremer and with Iraqi officials.

As regular readers know, BHP Billiton is likely to escape any serious criticism in the Cole whitewash. Alexander Downer also looks set to stay afloat politically, for now at least, despite a barrage of circumstantial evidence that he knew all about the AWB's bribes to Saddam.

It's enough to make a man cynical, watching the same old dirty players strut the stage, again and again and again:

Early on, in 2003, USAID commissioned BearingPoint, Inc. -- the new name for the scandal-plagued Arthur Anderson Consulting -- to submit recommendations for the development of Iraq's oil sector. BearingPoint was the firm that designed the country's economic transformation under a previous USAID contract, so it was no surprise that its report reinforced the preference for PSAs that "everybody [kept] kept coming back to" during meetings of the State Department's "Future of Iraq Project."

In February, just months after the Iraqis elected their first constitutional government, USAID sent a BearingPoint adviser to provide the Iraqi Oil Ministry "legal and regulatory advice in drafting the framework of petroleum and other energy-related legislation, including foreign investment." According to Muttit, the Iraqi Parliament had not yet seen a draft of the oil law as of July, but by that time it had already been reviewed and commented on by U.S. Energy Secretary Sam Bodman, who also "arranged for Dr. Al-Shahristani to meet with nine major oil companies -- including Shell, BP, ExxonMobil, ChevronTexaco and ConocoPhillips -- for them to comment on the draft."

All of these points of pressure are only what we can see in the light of day. There is certainly much more occurring under the table...

The good news (if you want to see it that way) is that Big Oil has not been able to complete their stitch-up of Iraq just yet:

The same day that the U.N. legitimized the occupation, George Bush signed Executive Order 13303 providing full legal immunity to all oil companies doing business in Iraq in order to facilitate the country's "orderly reconstruction."

Yet, despite a five-year effort, Big Oil still sits on the sidelines, wary of the disorder and violence that's plagued the country...

At this point, the situation is very fluid...

It's possible that the administration and its partners badly overplayed their hand. Iraq's new government stands on the verge of a complete meltdown, faced with a crisis of legitimacy based largely on the fact that it is seen as collaborating with American forces... The passage of a sweetheart oil law could prove to be a tipping point.

In conclusion:

What is clear is that the future of Iraq ultimately hinges to a great degree on the outcome of a complex game of chess -- only part of which is out in the open -- that is playing out right now, and oil is at the center of it. It's equally clear that there's a yawning disconnect between Iraqis' and Americans' views of the situation. Erik Leaver, a senior analyst at the Institute for Policy Studies in Washington, told me that the disposition of Iraq's oil wealth is "definitely causing problems on the ground," but the entire topic is taboo in polite D.C. circles. "Nobody in Washington wants to talk about it," he said. "They don't want to sound like freaks talking about blood for oil." At the same time, a recent poll asked Iraqis what they believed was the main reason for the invasion and 76 percent gave "to control Iraqi oil" as their first choice.

Rice Grilled On Iraq Oil Law

Well, maybe not grilled... Lightly toasted? From WaPo:

Testifying before the Senate Foreign Relations Committee on U.S. President George W. Bush's plan to send more troops to Iraq, Rice tried to assure impatient U.S. lawmakers that Iraqi officials are making progress on the hydrocarbon law.

"You referred to the oil law as a remarkable law," Sen. John Sununu, New Hampshire Republican, told Rice. "Well, it's the most remarkable law that no one has ever really seen." ...

Sununu said he had been briefed on the oil law recently by members of the White House National Security Council, and had received a top-secret briefing from individuals he did not identify.

"What we can gain is that there has been some agreement on investment issues, and even ownership, but not on distribution," Sununu said. "And from where I sit, it's distribution that really matters."

"Distribution has actually been less of a problem than the question of who gets to sign contracts," Rice said. "That's frankly been the one that they've been hung up on."

Sununu bemoaned a lack of clear information from the White House on oil law progress.

"Senior National Security Council staff was able to tell me and others in the room nothing about distribution methodology," he said.

"Oil of course is the critical asset in Iraq"

A roundup from the Institute for Public Accuracy. It quotes this Dow Jones article which confirms the dreaded PSA's are on the table:

"Iraq's first postwar draft hydrocarbon law recommends the government sign production sharing agreements and other service and buyback contracts ... An Iraqi oil ministry official told Dow Jones Newswires Wednesday the new law proposes allowing -- for the first time -- local and international companies to carry out oil exploration in Iraq."

I liked this quote from Greg Muttitt:

"The Baker-Hamilton report says very clearly that an oil law is needed for foreign investment -- this is shorthand for PSAs. Elsewhere the report says that Bush should emphasize that the U.S. is not interested in oil in Iraq. These are two recommendation of the report that Bush will follow.

"The Bush administration had been calling for a new oil law. It had been claiming that such a law was necessary because foreign investment is needed. More recently, the administration has been claiming such a law would help solve sectarian problems. But this is a Trojan Horse..."

See, Bush puts on his Uncle Sam hat and says "the U.S. is not interested in oil in Iraq". Then he puts on his New World Order hat and signs Iraq's oil over to Big Oil.

We want foreign investment in Iraq, and we just happen to be close friends of the foreigners who are ready to invest.

US Democrats Still Want to Win "Economically" In Iraq

So US Senator Harry Reid told Bush yesterday that the Iraq War is lost:

"This is the message I took to the President, I believe myself that this war is lost and that the surge is not accomplishing anything, as indicated by the extreme violence in Iraq yesterday," Mr Reid said.

"I know I was like the odd guy out yesterday at the White House, but at least I told him what he needed to hear, not what he wanted to hear," he added.

Sounds good, right? But wait a minute:

"The war can only be won diplomatically, politically and economically, and the President needs to come to that realisation," Mr Reid said.

Say what? How is the USA ever going to "win" this war in any way whatsoever? This is utterly abyssmal stuff from the Dems.

No doubt Harry and his friends in Washington are still thinking about the new Iraq Oil Law, which is due to be presented in parliament next week:

Al Shahristani said the draft law would be presented in a bundle that would include the oil and gas law, a law outlining the functions of the ministry of oil, another for Iraq National Oil Company and a fourth for oil revenue management. The future role of foreign oil companies in Iraq has caused controversy but Al Shahristani said such concern was unfounded.

The Democrats should be loudly telling the people of the USA (and Iraq) that this war was all about oil, that it was designed from the start as a greedy, violent oil-grab by Dick Cheney's Big Oil backers, and that the oil that lies under the sands of Iraq belongs to the Iraqi people and nobody else. Anything less is transparent nonsense, and I do not see how any good will come of it.

Winners Are Grinners

Chris Floyd explains Why Bush Smiles:

The fact that every new day sees a hundred or more mutilated bodies dumped on the nation's streets, and pitched battles between sectarian militias, and multiple deaths of American troops, and mass flights of anguished Iraqi civilians running in fear for their lives is not a matter of any urgent concern to Bush and his warmakers. Indeed, there is much evidence that one of the prime instigators of the wanton killing is a group created and long nurtured by the Bush Administration itself: the Facilities Protection Service, an army of uniformed freebooters nearly 150,000 strong. (I'll be writing more on this later.) Of course, the violence is a political headache for the Bushists, because it generates bad press; but they don't care about it – it has no intrinsic meaning or emotional impact on those who are already responsible for the deaths of more than half a million Iraqis and more than 2,700 Americans.

No, what will likely bring on the coup [in Iraq] is the December deadline for crafting a new oil law, which was imposed on Iraq by the International Monetary Fund, as part of the deal to write off some – but by no means all – of the nation's crushing debt. Given the current level of intense anti-American feeling in Iraq, and the overwhelming majority support among every sector of society for ending the occupation, and the overwhelming belief among Iraqis that the chief reason behind the invasion was to steal their oil, it is almost inconceivable that Maliki will be able to sign the new law, which essentially opens up Iraq's oil wealth to decades of despoliation by U.S. and European energy conglomerates. The Maliki government – already weak, incompetent and despised, as are all puppet regimes – could not possibly survive the political backlash that such a move would provoke.

Therefore, Maliki will either refuse to sign the law – in which case he would doubtless be removed immediately one way or another; perhaps even by some act of "terrorist violence" – or else he will seek to postpone the deadline and buy himself a little more time. If it's the latter case, then he and his government might last out the year after all, assuming the Potomac Potentate deigns to extend his temporary mercy. But sooner or later the law will be signed: it is the reason for the war, it is why all of these people have died, it is the sign and substance of the true victory that Bush has been working for all these years.

Indeed, once it is signed, we may in fact see a partial withdrawal of occupation troops begin, under the cover of the recommendations of the "bipartisan" panel headed by Bush Family consigliere James Baker. It will look like Bush has finally "listened to reason," that he has wisely "changed course;" but if it happens, it will only be because he has gotten what he came for: crony control of Iraq's vast oil reserves. Baker meanwhile will have accomplished his own multi-faceted mission: keeping Iraq in IMF bondage by holding the whip of the remaining debt over its head, while simultaneously ensuring that Iraq continues its onerous, back-breaking payments of arrears and "reparations" to Baker's private lobbying clients (and longtime Bush Family business partners), the Saudi and Kuwaiti royals.

For as Joshua Holland of Alternet.com points out, the new Iraqi oil law will lock in succeeding governments, while the "sovereign debt" will also stay on the books no matter what kind of state follows the inevitable demise of the puppet regime installed by Bush...

You wonder why Bush and his minions maintain the seemingly irrational belief that "things are going well" in Iraq, that "we're making progress," etc.? That's because things are going well in the war they are fighting: the war for money and power. What happens to the human beings caught up in this war – Iraqi civilians, or American citizens at ever-greater risk from the terrorism spawned by the war – is, again, no concern of the Bush gang. In fact, the worse things are from that standpoint, the better it is for the Bushists. The war profits (and stolen swag) they and their corporate cronies have accrued from the Iraq War (and the "War on Terror" as well) have given them unimaginable wealth with which to continue their overall dominance of American society – no matter who wins the elections in 2006 or 2008, or for decades beyond. As I've stated often before, no matter what happens, Bush and his cronies have already won the war.

They've won even if Iraq collapses into perpetual anarchy, or becomes an extremist religious state; they've won even if the whole region goes up in flames, and terrorism flares to unprecedented heights – because this will just mean more war-profiteering, more fear-profiteering. And yes, they've won even if they lose their majority next month or the presidency in 2008, because war and fear will still fill their coffers, buying them continuing influence and power as they bide their time through another interregnum of a Democratic "centrist" – who will, at best, only nibble at the edges of the militarist state – until they are back in the saddle again. The only way they can lose the Iraq War is if they are actually arrested and imprisoned for their war crimes. And you know and I know that's not going to happen.

So that confident strut of the Bush gang, their incessant upbeat pronouncements about the war, their complacent smirks, their callous indifference to the unspeakable horror they have unleashed upon the world – these are not the hallmarks of self-delusion, or wilful ignorance, or a disassociation from reality. They know full well what the reality is – and they like it.

Floyd cites two excellent articles from Josh Holland for further reading: Bush's Petro-Cartel Almost Has Iraq's Oil and The U.S. Takeover of Iraqi Oil.

Bush: The Oil Man's Friend

[UPDATED BELOW]

This may be an exercise in the blatantly obvious, but what the hey - someone's gotta do it!

First, a bit of background. This is from late September:

Earlier this year, news of record oil profits led many US consumers to believe that energy companies had deliberately kept prices artificially high to improve their bottom line.

Now gas prices have fallen for several consecutive weeks, and recent polls show that consumers have a new suspicion -- that the price break is meant to give a boost to a US president and Republican Congress who had fallen out of favor with voters.

A USA Today/Gallup poll last week found that 42 percent of the roughly 1,000 adults surveyed across the United States believed President George W. Bush's administration had "deliberately manipulated the price of gasoline so that it would decrease before this falls elections."

White House spokesman Tony Snow addressed -- and summarily dismissed -- the speculation at a press briefing earlier this week.

"I have been amused by ... the attempt by some people to say that the president has been rigging gas prices, which would give him the kind of magisterial clout unknown to any other human being," he told reporters.

"It also raises the question, if we're dropping gas prices now, why on earth did we raise them to 3.50 dollars before?" he said.

That's a stupid question from a stupid man. Obviously, if the oil industry is supporting Bush, it is expecting massive profits in return. And that is just what they are getting.

Which is no surprise, given that Dick Cheney launched his Presidency (err, sorry, I mean Vice Presidency, or course) with a secret summit of oil executives.

More than three-quarters of the variation in W's approval rating since he took office in January 2001 can be explained by movements in the numbers diplayed on pumps nationwide. Let's look at a graphic comparison (NB the gas price is inverted):



Pundits say today's cheap gas can be explained by such things as "the end of the summer driving season (what's a driving season???), a mild Atlantic hurricane season, healthy US energy stockpiles and lessening tensions over the Iranian nuclear crisis". But is it that simple?

There's no precedent for this tight relationship. Approval ratings for Clinton and Reagan were mildly influenced by gas prices, but Bush 41's seems not to have been at all. That may mean that the gas-dependency of W's popularity may actually be a reflection of other things: the war in Iraq has driven up gas prices, as did Hurricane Katrina. So the approval rating, rather than being "caused" by gas itself, may just be reflecting growing public dissatisfaction with the war and the stunning incompetence in handling Katrina. But it's remarkable how closely the approval line follows almost every quiver in the price of gas.

If the gas price at the pump in Bush's USA is being manipulated, given that much of the control of global petroleum is outside of US hands, the big question is: how do they do it?

Well, a recent New York Times article described how Goldman Sachs sold-off of more than $6 billion in gasoline futures contracts. Now why would they do that?

President George W. Bush nominated Henry M. Paulson, Jr. to be the 74th Secretary of the Treasury on June 19, 2006. The United States Senate unanimously confirmed Paulson to the position on June 28, 2006 and he was sworn into office on July 10, 2006. Before coming to Treasury, Paulson was Chairman and Chief Executive Officer of Goldman Sachs. So what does Goldman do just weeks after Paulson is sworn in as Treasury Secretary? It announces a subtle move that drives down gasoline prices, short-term. Nice move, coming just months before the election.

This analysis at Lew Rockwell (via Peter Evans at John Quiggin's blog) is well worth reading:

In traders jargon, it’s called painting the tape. Indeed, the Washington Post has revealed that the government has formed something that is casually known as the Plunge Protection Team. PPT is supposed to jump in and buy stocks when things are unruly. Ronald Reagan formed the PPT when he signed Executive Order 12631. It’s just another way of painting the tape (Using your tax money, or newly printed Federal Reserve dollars, of course). Goldman is a member of the secretive PPT...

Goldman doesn’t lose money. This is a managed commodity index. Goldman manages the index, but the actual money put up comes from institutions, hedge funds and other unlucky saps that trusted Goldman to manage the commodity index as a hedge against inflation – not to bail out of $6 billion in contracts over a few weeks. The result: Unlucky saps – Major losses. Goldman – Zero losses and their man running the Treasury. Which side of this trade would you want to be on?

..Goldman had to know they were going to plunge gasoline prices short-term with this type of trading. This smells to me like a Paulson operation all the way.

UPDATE: In Bob Woodward's new book, Bush himself confirms the manipulation of oil prices for US domestic political purposes:

During a meeting in the Oval Office, according to Woodward, Bush personally thanked Bandar because the Saudis had flooded the world oil market and kept prices down in the run-up to the 2004 general election.

UPDATE 2: Much, much more from Joshua Holland at AlterNet:

The Iraqi government faces a December deadline, imposed by the world's wealthiest countries, to complete its final Oil Law. Industry analysts expect that the result will be a radical departure from the laws governing the country's oil-rich neighbors, giving foreign multinationals a much higher rate of return than with other major oil producers, and locking in their control over what George Bush called Iraq's "patrimony" for decades, regardless of what kind of policies future elected governments might want to pursue.

Iraq's energy reserves are an incredibly rich prize...

But even "untold riches" don't tell the whole story. Depending on how Iraq's petroleum law shakes out, the country's enormous reserves could break the back of OPEC, a wet dream in Western capitals for three decades...

Both independent analysts and officials within Iraq's Oil ministry anticipate that when all is said and done, the big winners in Iraq will be the Big Four -- the American firms Exxon-Mobile and Chevron-Texaco, and the British BP-Amoco and Royal Dutch-Shell -- that dominate the world oil market...

Chafing at the idea that the Chinese and Russians might end up with what is arguably the world's greatest energy prize, industry leaders lobbied hard for regime change throughout the 1990s. With the election of George W. Bush and Dick Cheney in 2000 -- the first time in U.S. history that two veterans of the oil industry had ever occupied the nation's top two jobs -- they would finally get the "greater access" to the region's oil wealth after which they had long lusted...

It's clear that the U.S.-led invasion had little to do with national security or the events of September 11. Former Treasury Secretary Paul O'Neill revealed that just 11 days after Bush's inauguration in early 2001, regime change in Iraq was "Topic A" among the administration's national security staff, and former Terrorism Tsar Richard Clarke told 60 minutes that the day after the attacks in New York and Washington occurred, "[Secretary of Defense Donald] Rumsfeld was saying that we needed to bomb Iraq." ...

In February of 2001, just weeks after Bush was sworn in, the same energy executives that had been lobbying for Saddam's ouster gathered at the White House to participate in Dick Cheney's now infamous Energy Taskforce. Although Cheney would go all the way to the Supreme Court to keep what happened at those meetings a secret, we do know a few things thanks to documents obtained by the conservative legal group JudicialWatch. As Mark Levine wrote in The Nation($$):

… a map of Iraq and an accompanying list of "Iraq oil foreign suitors" were the center of discussion. The map erased all features of the country save the location of its main oil deposits, divided into nine exploration blocks. The accompanying list of suitors revealed that dozens of companies from thirty countries--but not the United States--were either in discussions over or in direct negotiations for rights to some of the best remaining oilfields on earth.

Levine wrote, "It's not hard to surmise how the participants in these meetings felt about this situation."

According to The New Yorker, at the same time, a top-secret National Security Council memo directed NSC staff to "cooperate fully with the Energy Taskforce as it considered melding two seemingly unrelated areas of policy." The administration's national security team was to join "the review of operational policies towards rogue states such as Iraq, and actions regarding the capture of new and existing oil and gas fields."

At the State Department, planning was also underway. Under the auspices of the "Future of Iraq Project," an "Oil and Energy Working Group" was established. The full membership of the group -- described by the Financial Times as "Iraqi oil experts, international consultants" and State Department staffers -- remains classified, but among them, according to Antonia Juhasz's The Bush Agenda, was Ibrahim Bahr al-Uloum, who would serve in Iyad Allawi's cabinet during the period of the Iraqi Governing Council, and later as Iraq's Oil Minister in 2005. The group concluded that Iraq's oil "should be opened to international oil companies as quickly as possible after the war."

But the execs from Big Oil didn't just want access to Iraq's oil; they wanted access on terms that would be inconceivable unless negotiated at the barrel of a gun. Specifically, they wanted an Iraqi government that would enter into Production Service Agreements (PSAs) for the extraction of Iraq's oil.

PSAs, developed in the 1960s, are a tool of today's kinder, gentler neocolonialism; they allow countries to retain technical ownership over energy reserves but, in actuality, lock in multinationals' control and extremely high profit margins -- up to thirteen times oil companies' minimum target... PSAs often have long terms -- up to 40 years -- and contain "stabilization clauses" that protect them from future legislative changes.

It's a stitch-up, see? People often think of the Iraq invasion as an attempt by AMERICA to seize control of Iraq's oil, but nothing could be further from the truth. AMERICA just supplied the troops and the strident voices at the UN so that BIG OIL could seize control of Iraq's oil. The AMERICAN tax-payers just funded the project, they don't profit from it.

The big deal is finally about to go down...

People think Bush is a bumbling incompetent, but that is because they judge him as a representative of the US public. Bush's masters are actually the richest of the rich, and they think he is doing a fine job, a fine job indeed. As Bush told a charity dinner crowd in 2000:

This is an impressive crowd — the haves and the have-mores. Some people call you the elites; I call you my base.

We have lost control of our government, now we are losing control of our planet.

How Bush's Friends Manipulated Oil Prices For The '06 Mid-terms

"I mean if anybody says there's some magical solution to the high price of petrol in Australia, will you please ring the Lodge and I'll spend an hour all-ears listening to them."
- Australian Prime Minister John Howard, August 1st, 2006

It was August 1st, 2006, when Howard made this disingenuous remark. The oil market had soared to record highs (over $US78 a barrel) in mid-July. There was widespread consumer anger at ever-rising bowser prices and record oil company profits.

And yet, by the time US mid-term elections came around three months later, the oil price had fallen a massive 20 percent.

And now, with the US elections over, oil prices are on the rise again.

Surprised? You shouldn't be. The big question is, how did it happen, and why?

First, let's look closely at what happened. Here, courtesy of Blogging Stocks, are the average weekly U.S. average price for Super Unleaded for that period (based on data from the Energy Information Administration):

Aug 21, 2006: $3.08
Aug 28, 2006: $3.01
Sep 04, 2006: $2.90
Sep 11, 2006: $2.79
Sep 18, 2006: $2.67
Sep 25, 2006: $2.54
Oct 02, 2006: $2.48
Oct 09, 2006: $2.43
Oct 16, 2006: $ 2.40
Oct 23, 2006: $2.39
Oct 30, 2006: $2.41
Nov 06, 2006: $2.39
Nov 13, 2006: $ 2.42
Nov 20, 2006: $2.42

Note the low point of $2.39, achieved in the week just prior to the US mid-term elections, and held to the very day before the election. This fine tuning by US oil retailers was no accident, either. Can you say "price gouging"?

Specifically, on November 6th, the ratio of the price/barrel of gasoline at the pumps and price/barrel of crude oil fell to 167% -- significantly lower than the weekly average of 174% between August 21st and November 20th.

The conventional wisdom holds that the US government cannot significantly influence world oil prices, except through manipulation of the US strategic reserve. But in a globalized world, that sort of thinking is sorely out-dated:

During a meeting in the Oval Office, according to [Bob] Woodward, Bush personally thanked Bandar because the Saudis had flooded the world oil market and kept prices down in the run-up to the 2004 general election.

The remarkable link between the price of oil and Bush's popularity has already been well documented:

Many people reading this article will not be surprised by such data. A USA Today poll in September showed that a massive 42% of Americans thought the Bush administration "deliberately manipulated the price of gasoline so that it would decrease before this fall's elections." White House spokesman Tony Snow was forced to address the mounting speculation at a press briefing:

"I have been amused by ... the attempt by some people to say that the president has been rigging gas prices, which would give him the kind of magisterial clout unknown to any other human being. It also raises the question, if we're dropping gas prices now, why on earth did we raise them to 3.50 dollars before?"

Well, that was a stupid question from a stupid man. Obviously, if the oil industry is supporting Bush, it is expecting massive profits in return. And that is exactly what they have been getting. Well over a quarter of a trillion dollars, in fact.

The real question is not why they manipulate oil prices for political profit, but how do they do it?

In the case of the '06 mid-terms, it was a two-pronged attack. On the one hand, we had the Saudis and other pro-US players in the Middle East playing a delicate balancing game by promising their OPEC friends that they would cut production, but then failing to commit to the cuts and even raising production slightly instead. The market reaction was an interesting and significant factor here: none of the experts actually believed that OPEC would cut production before the US mid-terms, so the price never went up.

On the other hand, we had Goldman Sachs dumping more than $6 billion in gasoline futures contracts. This move was like a clarion call to the markets: when the big funds change their weighting, smaller funds quickly follow suit. Even if the move is actually contrary to market realities, it doesn't matter. As Lew Rockwell explains, what Goldman Sachs did is called "painting the tape":

Goldman doesn’t lose money. This is a managed commodity index. Goldman manages the index, but the actual money put up comes from institutions, hedge funds and other unlucky saps that trusted Goldman to manage the commodity index as a hedge against inflation – not to bail out of $6 billion in contracts over a few weeks. The result: Unlucky saps – Major losses. Goldman – Zero losses and their man running the Treasury. Which side of this trade would you want to be on?

It's worth noting here that Henry M. Paulson Junior, the 74th Secretary of the Treasury, appointed by Bush in June, 2006, was the former Chairman and Chief Executive Officer of Goldman Sachs. In Wall Street slang, he's now a big part of the US government's Plunge Protection Team.

If you want to understand how such people think, I recommend you read this speech by Dick Cheney in 1999, when he was still CEO of Halliburton. Here's an appetiser:

"I'm often asked why I left politics and went to Halliburton and I explain that I reached the point where I was mean-spirited, short-tempered and intolerant of those who disagreed with me and they said "Hell, you'd make a great CEO", so I went to Texas and joined the private sector."

Ha ha. But Cheney never took his eyes off the political ball:

Frankly the focus in today's economy on globalisation and emerging markets is old news to the oil industry. Ours are global companies investing outside the industrialised companies at the turn of the last century. People need to realise that the energy industry often represents the largest foreign investment in many parts of the world and its interest, insights and experience need to be considered. Oil is the only large industry whose leverage has not been all that effective in the political arena.

Cheney was effectively putting up his hand and shouting:

"You want political leverage? Pick me! Pick me!"

Cheney and Bush later became the first ex-CEO double act to control the White House, and both oil men to boot. One of Cheney's first acts was the convening of highly secretive Energy Task Force meetings with major Big Oil players. Bush then invaded Afghanistan, launched a failed coup in Venezuela, and occupied Iraq. Surprised? You shouldn't be.

People in the know do not seriously expect the USA to ever withdraw US forces from Iraq and lose control of that oil. Ever. All that talk about a military withdrawal was just window dressing for the electorate. Just like the oil prices. When you hear Bush talking about closing down the USA's permanent military bases and handing the Green Zone over to the Iraqis, let me know.

Many people criticize Bush as a bumbling incompetent, because they judge him as a supposed representative of the US public's interests. But Bush's masters are actually the richest of the rich, a global elite who flitter from country to country in private jets, and they think he is doing a fine job, a fine job indeed. As Bush famously told a charity dinner crowd in 2000:

This is an impressive crowd — the haves and the have-mores. Some people call you the elites; I call you my base.

In the same way, people often think of the Iraq invasion as an attempt by the USA to seize control of Iraq's oil, but in fact the USA just supplied the troops, the Big Media spin and the strident voices at the UN. The US tax-payers funded the project, but they will never really profit from it.

It was Global Big Oil who sought control of Iraq's oil. And the big deal is finally about to go down. When the Iraqi puppet government signs the Oil Law later this year, US-based Big Oil companies will be assured massive profits for generations to come. For more on this, read Joshua Holland's excellent two-part article at AlterNet.

Of course, the oil-price-fixing ploy was not 100% successful this time around: Bush was "thumped" in the mid-terms and his GOP party lost control of both the Senate and the House. With Democrats finally back in control, maybe we will finally get to see the minutes of Cheney's Energy Task Force meetings. But don't hold your breath. Big Oil has deep pockets and many friends in high places.

UPDATE: Joshua Holland points out that the Bush administration, with it's close links to Big Oil, can easily influence prices with a few quiet words over a few whiskeys at lunchtime. Then you have things like the White House's abrupt decrease in anti-Iran rhetoric, which eased market fears. And then there's this sort of thing:

The Foundation for Taxpayer and Consumer Rights (FTCR) today exposed internal oil company memos that show how the industry intentionally reduced domestic refining capacity to drive up profits...

The three internal memos from Mobil, Chevron, and Texaco (Click here to read the memos.) show different ways the oil giants closed down refining capacity and drove independent refiners out of business.

And this Senate report (PDF) about collusion on the refining end has been going nowhere fast since 2001.

UPDATE 2: Someone at Australia's Department of Defence takes an interest in this story:

UPDATE 3: India's Finance Minister calls for a global solution to Big Oil's price-fixing:

"We could have actually grown by 9-9.5 per cent, but for the increase in oil prices," he said at the India Economic Summit, organised by the Confederation of Indian Industry (CII) and the World Economic Forum, here today.

"There has been no change in demand and supply. How did prices fall from $78 to $58 per barrel? We must come to terms with the fact that oil producing countries are exploiting developing countries. The world needs to come to a sort of understanding on this issue," he felt.

WaPo disgracefully ignores his pointed remarks.

Update 4: Also getting hits now from the US government departments of Health, Agriculture, Air Force and Army. Am I on some kind of list, or does this indicate a new culture of open-minded knowledge-seeking?

Blood And Oil

As the Iraq Oil Law negotiations continue, the US government appears united on the way forward:

"They've got to pass an oil law. They've got to amend their constitution so that all segments of that society feel that the government is for them," Bush said Saturday at an issues conference in Williamsburg, Va., to applause from House Democrats in attendance.

Interestingly, most Americans now think President George W. Bush invaded Iraq at least partly because of its oil.

The question is, are US citizens prepared to force their government to walk away from that oil? Or will they turn a blind eye to the continued suffering of the Iraqi people, complicitly condoning this wholesale thievery?

If so, they will be sorely disappointed in the long run. The thing is: that oil will NOT be going directly into the tanks of SUVs across the USA. It will be going into the hands of corporate Big Oil, who will ensure US citizens pay a high price for it indeed.

Like I said before, Bush may nominally be the captain of TEAM USA, but he is not really on your team. He is winking to his buddies in the corporate boxes. The game is fixed. You are all being screwed.

The Oil War Wages On

Join the dots:

1. Increasing rumours that Team Bush is getting ready to drop support for Iraqi Prime Minister Nuri Kamal al-Maliki, perhaps replacing him with a "strong man" like Allawi.

2. al-Maliki increasingly outspoken and at odds with US statements: now blaming the United States-led coalition for Iraq's chaos and faulting its military strategy. Says Iraqis can fend for themselves within 6 months.

3. al-Maliki's still has not signed the IMF-imposed oil law, which would turn over Iraq's oil reserves to mainly American oil companies on punitive terms.

I think al-Maliki and his fellow puppets are refusing to sign the Oil Law, either because they fear they will be strung up by angry mobs, or because they think they can manipulate the US out of Iraq and take control of the oil for themselves, or maybe a bit of both.

Iraq Becomes A Shiite-Sunni Sandwich

Things just got a whole lot worse for ordinary Iraqis, and maybe the whole world.

Bush's USA looks set to back a strongarm Shiite government in Baghdad, and now Saudi Arabia is preparing "financial" (i.e. military) backing for the Sunni minority:

One Arab diplomat in Washington said: "If things become so bad in Iraq, like an ethnic cleansing, we will feel we are pulled into the war." ...

In its policy review, the [Bush] Administration is focusing on the "80 per cent solution", which would bolster the political centre of Iraq and in effect leave in charge the Shiite and Kurdish parties that won elections a year ago and account for 80 per cent of Iraq's 26 million people.

Well, that explains why the Saudi Ambassador abruptly resigned and left Washington yesterday. Behind the scenes, things seem to be moving quickly.

I saw this Daily Kos story when I woke up at 4:30 am this morning (I thought it would be top story on the TV news but it's still not even front paging at Kos). The map is all the evidence you need to see how Iraq is set to become the sandwich between Shiite-dominated Iran and Sunni-dominated Saudi Arabia.



Some folk are criticizing Bush for putting off his response to the Iraq Study Group recommendations until January, claiming his lack of engagement at this critical time is unpardonable. But I think it is actually a reflection of how sidelined Bush the Cheerleader has become, and just how volatile the situation in Iraq now is.

Make no mistake: international diplomacy is racing ahead on multiple fronts, many of the ISG recommendations were already being implemented before they were announced, and all parties concerned are desparately searching for a way out of the impasse. The best thing Bush can do right now is STFU.

Juan Cole is talking about a New Middle East Cold War: Saudi/Israel/Lebanon versus Iran/Syria/Iraq/Hizbullah. His map of a potential regional conflagration is even more terrifying:



Cole points out that Saudi millionaires are already funding Sunni guerrillas in Iraq. He says the fact that Saudi leaders are leaking stories like this to the New York Times suggests "their hair must be on fire with anxiety".

Meanwhile, a de facto Israeli-Saudi alliance appears to be building against Iran and the Shiites... I have been told that the Israeli leadership is extremely anxious about Iran becoming a nuclear power, and sullen about the outcome of the Lebanon war. They are further demoralized by the Baker-Hamilton Commission report, which calls for US talks with Iran. The Israeli leaders interpret this passage as a surrender by Washington to Iran's nuclear ambitions, and are preparing for the possibility that they might have to take on Iran themselves...

Saudi Arabia is equally frantic about the possibility of a nuclear Iran, and is moreover apoplectic that the US delivered Baghdad into the hands of Iraqi Shiite fundamentalists allied with Iran...

Israel, Jordan, Saudi Arabia and (de facto) the 14 March Bloc in Lebanon are ranged against Iran, Shiite Iraq, Syria, Hizbullah and Hamas. Neither Israel nor Saudi Arabia can openly admit to the tacit alliance for fear of anger from their own publics because of objectionable parties to it. But this is how things are shaking out.

Now the Saudis are openly saying that this new Cold War in the region could turn hot. If you don't own a bicycle, I'd buy one, because a regional war of the sort Saudi Arabia said it feared would potentially cut off 20 percent of the world's petroleum.

Read Cole's full post for more analysis.

What's the bright side? Well, if there is one, it is that we can HOPE AND PRAY that such a major realignment in the Middle East might lead to a real solution to the Palestinian tragedy, as all sides involved realize they too much to lose from all-out military engagement. But that's far from certain at this stage. (And, of course, if such a miracle solution did somehow unfold, you can be sure Bush and the Neocons would immediately take full credit for bringing it about).

UPDATE: Pepe Escobar keeps it real:

There can be no firm timeline for a complete US withdrawal because it all depends on Iraq's new oil law being passed and US troops being able to defend Big Oil's investment.

Once again, it's the oil. The Bush-Cheney system by all accounts went to Iraq to grab those fabulous reserves. The only way for an overall solution to the Iraqi tragedy would be for the Bush administration to give up the oil - with no preconditions, turning the US into an honest broker. Realpolitik practitioners know this is not going to happen.

Escobar comes to much the same conclusions as Cole (above), but sees another potential player who could swing the game:

The crucial development in the next few weeks is Muqtada's fine-tuning of a stunning Shi'ite counterpunch to demolish once and for all the US-created pro-sectarian strategy: a nationalist, pan-Islamist, anti-occupation coalition of the Sadrists and the neo-Ba'athists, plus any other religious or secular anti-occupation group.

Transcending the Sunni/Shi'ite divide, this would preempt any threat of all-out civil war - not to mention decide the fierce Shi'ite family feud between Hakim and Muqtada in the Sadrists' favor. No wonder US Senator John McCain wants to "take out" Muqtada as much as the Pentagon does...

The neo-conservative hallucination of a puppet Iraqi regime as the centerpiece of a US-driven Greater Middle East - loads of cheap oil, Israel-friendly, anti-Iran - may have been derailed by a Mesopotamian sandstorm. But even with the defeat of the occupation, the US - or "the snake", as Muqtada defines it - still is not going anywhere. The "snake" will redeploy. Sunni Arab US ally/client regimes fear that a US withdrawal would lead to a whole new regional ball game tilting toward pro-Iran or pro-al-Qaeda regimes.

Not even a long-drawn civil war - Arabs killing one another - may save Bush and Cheney. And Iraq won't succumb to "divide and rule" and break up - because its identity as the eastern flank of the Arab nation is a geopolitical fact. So the real tragedy is how much longer millions of Iraqis caught in the crossfire will be paying with their own blood for the United States' cataclysmic folly.

Oil was the real reason why the USA went into Iraq, and you can bet those big oil reserves will now become a major motivation for all the other players involved. There needs to be a wholesale agreement that the oil belongs to the Iraqi people, whatever their tribal or religious affiliations, and everybody else - Big Oil included - needs to just walk away. Can they do it? The alternatives are not pretty, with or without a regional solution to the Palestinian's plight.

UPDATE 2: Professor Sadiq Wasfi and his daughter Dahlia put things in a more hopeful perspective:

The divisions between the Sunni and Shia sects of Islam are more than 1400 years old, and throughout that history, there has never been armed warfare between them until U.S. forces invaded. It is American forces who are directing and arming the Iraqi police and army, and it is American forces who by law are responsible for maintaining law and order. The Iraqi police are largely composed of militiamen from the private armies of former CIA operatives Ahmed Al-Chalabi (Iraqi National Congress), Iyad Allawi (Iraqi National Accord), and Nuri Al-Maliki (Hezb’Dawah). There are also Iraqi Police Commando Units—aka death squads—who are being trained by American Special Forces...

The recently released report of the Iraq Study Group echoes the military assessment that the status quo in Iraq is hopeless. But their proposals are non-starters, since our history of occupation in the Arab World from Palestine to Iraq shows our bias for outside interests and our lack of credibility to take part in negotiations. The time for diplomacy was March 2003. After the death and utter destruction that “liberation” has brought to Iraq, we have no choice but to exit and exit now.

Our obligation to the people of Iraq, to the people of America, and to the rest of the world is the immediate and unconditional withdrawal of troops and mercenaries (including over 100,000 mostly U.S. private contractors) from Iraq. Ideally, a large multi-national force that excludes all neo-colonialist European countries should be created to establish law and order—a job we failed to do—and disarm the aforementioned militias within the context of a political consensus. A new Iraqi government will emerge as it has historically following centuries of invasions of Mesopotamia, likely comprised of representatives whose groups are now vying for power. We are responsible for bringing chaos and atrocity to Iraq. It is up to Iraqis—and Iraqis alone—to shape their future.

UPDATE 3: Joshua Holland has more. He suggests the violence in Iraq should be seen in terms of Persian versus Arab, rather than Sunni versus Shiite.

My conversation with Terje:

# gandhi Says:
October 31st, 2006 at 10:34 am

... There is a stark air of unreality surrounding talk of a withdrawal from Iraq, because our leaders have yet to acknowledge anything more vague than “mistakes were made”. Iraqis deserve not only financial reparations but also whole-hearted apologies from Bush, Blair and Howard, not to mention all those who supported and enabled them.

I do not see how we can have anything like a viable exit strategy when we still have no accountability for the reasons why we went to war in the first place.

The best thing, it seems to me, would be a quick exit followed by a Royal Commission (in Australia) which would include the role of the media, intelligence agencies, government, business and the military.

This is the single greatest disgrace in modern Australian history, on a par with the slaughter of our original indigenous inhabitants. Shame on all of us who have lived to see it.

# Terje Says:
October 31st, 2006 at 2:25 pm

To suggest that we leave and then compensate them seems a little odd. Surely if one of the things they want from us (as expressed by their democratically elected government) is assistance in re-establishing internal security then this is surely the most obvious first form of charity (or compensation) we should extend. If after that they expect further forms of charity (or compensation) then that is a separate matter.


# gandhi Says:
October 31st, 2006 at 3:40 pm

Terje,

Are you being serious, or quite deliberately obtuse? The Devil has many advocates, bro’ - he don’t need no more!


# Terje Says:
October 31st, 2006 at 4:05 pm

Gandi,

If they ask for help in this regard then why should it be refused? I would think that in terms of moral obligations this ranks pretty high.

Regards,
Terje.


# gandhi Says:
November 1st, 2006 at 11:15 am

Terje,

When you invade and occupy another country, you have a moral obligation to its citizens to provide security. That is not charity, it’s responsibility under international law.

Sadly, the US-led coalition has never been able to provide this security. Perhaps if (in the very beginning) they had given clear indications that they were going to leave one day (instead of securing oil pipelines and building massive military bases), things might have been different. But now over 90% or Iraqis now want us out of their country.

It’s time to go.

This nonsense about providing security is a lie, and the talk of withdrawal is just designed to placate the voters short-term, while Big Oil completes its oil-grabbing plans.


Terje (say tay-a) Says:
November 1st, 2006 at 4:02 pm

Ghandi,

Bush was clear early on (at least in his public statements) that they did not intend occupying the place long term. That may have been a lie but who can be sure. At least the rhetoric was correct.
Don’t forget that Bremer cooked up a democratisation strategy that spanned 3-4 years and first Rumsfield and then the president said no because they wanted to exit more quickly (ie some time in 2004). Bremer may have been right but it is hard to argue that Bush was keen for a long stay. It is more realistic to observe that they had to stay longer because circumstances on the ground made their timetable for withdrawing less tennable.

I agree that if 90% of Iraqis want the coalition to get out then we should leave. However I have not seen any poll that says they want us to leave this week. Most seem to refer to a six month timeframe. And I do still think it is the Iraqi government that should make the decision given that it will be the one to assume responsibility for security.

As far as international law goes I accept your point however I think you perhaps missed that I was using the word “charity” in a deliberately loose manner.

Broadly speaking I don’t think we disagree on the Iraq war or on how to proceed. And if we do disagree I would say it is only on minor tactical issues and timing.

Regards,
Terje.


# gandhi Says:
November 2nd, 2006 at 6:27 am

Terje,

Bush has never - NEVER - made an unambiguous commitment to a full withdrawal, and neither has anyone else in his administration, nor the US military, nor even the US Democrats. Even today, the talk of withdrawal remains ominously lacking in specifics.

It is quite clear to Iraqis and neighbouring countries that the huge military bases around Iraq, and the massive Green Zone “embassy”, are here to stay. Nobody has ever even discussed handing them over to Iraqis. Likewise, the Iraqi army still lacks heavy armoured weaponry and there is no sign of them getting anything soon. In such circumstances, the Iraqi government will always remain puppets.

I also think your reading of Bremer’s intentions may be clouded by your own perceptions at the time. The fact that his CPA was so incoherent and inept may also have contributed to any misunderstanding. Their plan was always simple: install puppets, secure the oil for the USA, build a military foothold in the ME, and then declare victory and move on to the next war. It just didn’t pan out right for them.


# Terje (say TAY-A) Says:
November 2nd, 2006 at 4:43 pm

This is what Bush said in May 2004:-

Iraqis are proud people who resent foreign control of their affairs, just as we would. After decades under the tyrant, they are also reluctant to trust authority. By keeping our promise on June 30th, the coalition will demonstrate that we have no interest in occupation.

I saw a recent interview with Bremer and he said he was very frustrated with the different view of things that Rumsfield and the President had at the time. He said they were pushing him hard for a quick hand over of government and he thought it should be done over a longer timeframe. I agree with your assertion that there was a lot of ineptitude at the time. And I can’t find anything to contradict your claim that Bush has never made an unambiguous commitment to a full troop withdrawal, so you are probably correct on that point.

Their plan was always simple: install puppets, secure the oil for the USA, build a military foothold in the ME, and then declare victory and move on to the next war.

I would agree that they wanted a sympathetic government but I am not sure when you would call that a puppet. Does the USA have a puppet government in Australia? As for building a military foothold in the ME they already had that in Saudi Arabia.

In terms of “secure the oil for the USA” what does this statement really mean? Do you mean that the USA was going to then be able to buy Iraqi oil below the world price?


# gandhi Says:
November 5th, 2006 at 5:39 am

Terje,

It's a symantic minefield, isn't it, discussing these issues? When I said "secure the oil for the USA" I should have said "secure the oil for Dick Cheney's US-based Big Oil friends" but even that is a gross over-simplification.

It's a global game of oil control. Obviously, a main aim is to keep oil trading in US dollars. Another is to be able to control global oil prices, as well as the voracious US market on which they feed. If China and India are also forced to buy oil in US dollars, so much the better for Cheney's friends. It's not a question of selling below the market in the USA, but feeding the US economic beast - perhaps ultimately at the expense of others who do play ball with the White House & friends.

I think some in the US government believe they are pursuing the noble goal of securing US economic intests for generations to come, but those who really control things are just chasing money and power however they can get them. Bush told Rush Limbaugh the other day that terrorists could "blackmail" the USA (eg into abandoning Israel) if they controlled Iraq's oil. Bush & Co want to be doing the blackmailing, and the profiteering. It's the ugly side of economic globalization at its worst.

As for Saudi Arabia, it's seldom mentioned that one of Osama's main demands after 9/11 was removal of US forces from that country. This demand was quickly and quietly met, largely because Bush & Co thought Iraq would be a slam dunk (certainly easier than fighting off angry mobs in Saudi, which would further destabilize their House of Saud oil partners).

Victory In Iraq Looms Ever Closer

.. for Big Oil. Latest news from Gulf Daily News:

A policy committee hammering out a draft oil law for Iraq now has only one key issue left to resolve and the legislation should be enacted by year-end, Deputy Prime Minister Barham Salih said yesterday.

He also said that projections of a doubling by 2010 of Iraqi oil exports, now at 1.6 million barrels per day (bpd), and of output to 6m bpd from 2.3m bpd were "conservative figures" in his view.

Oil revenues are critical to the economy of Iraq, which sits on the world's third largest crude reserves.

Salih said the way they were distributed in the country would spell the difference between a united country or its violent break-up.

The committee, which he expected to meet again in a couple of weeks, still had to agree on crucial provisions governing whether development contracts with oil companies could be signed at regional or national level.

Salih chairs a government committee on oil and energy policy composed of key ministers which had struggled to overcome deep differences on a new law to replace provisions dating from Saddam Hussein's rule.

But he said a three-day "retreat" at his residence in Baghdad's fortified Green Zone six weeks ago had overcome four of the five critical issues.

So the only question remaining is whether US pawns at the local or national level get the loot from Big Oil contracts.

SOTUS

Eschaton has the full SOTUS. Here are a few bits I noticed, and thoughts along the way:

In all of this, much is asked of us. We must have the will to face difficult challenges and determined enemies — and the wisdom to face them together...

[blah blah blah lots of stuff about initiatives that will probably never get through Congress, so who cares?]

For too long our Nation has been dependent on foreign oil. And this dependence leaves us more vulnerable to hostile regimes, and to terrorists — who could cause huge disruptions of oil shipments … raise the price of oil … and do great harm to our economy.

It is in our vital interest to diversify America’s energy supply — and the way forward is through technology... Tonight, I ask Congress to join me in pursuing a great goal. Let us build on the work we have done and reduce gasoline usage in the United States by 20 percent in the next 10 years — thereby cutting our total imports by the equivalent of 3/4 of all the oil we now import from the Middle East.

To reach this goal, we must increase the supply of alternative fuels, by setting a mandatory Fuels Standard to require 35 billion gallons of renewable and alternative fuels in 2017 — this is nearly 5 times the current target. At the same time, we need to reform and modernize fuel economy standards for cars the way we did for light trucks — and conserve up to 8.5 billion more gallons of gasoline by 2017.

Achieving these ambitious goals will dramatically reduce our dependence on foreign oil, but will not eliminate it. So as we continue to diversify our fuel supply, we must also step up domestic oil production in environmentally sensitive ways. And to further protect America against severe disruptions to our oil supply, I ask Congress to double the current capacity of the Strategic Petroleum Reserve.

Ooooh, yes! Dick's Big Oil Buddies are going to love that one! So on the one hand he is asking the USA to cut their dependency on oil, on the other hand he wants to double the strategic reserve. Who says this administration doesn't make contingency plans, eh?

Now for the obligatory 9/11 reference:

Five years have come and gone since we saw the scenes and felt the sorrow that terrorists can cause. We have had time to take stock of our situation. We have added many critical protections to guard the homeland. We know with certainty that the horrors of that September morning were just a glimpse of what the terrorists intend for us — unless we stop them.

With the distance of time, we find ourselves debating the causes of conflict and the course we have followed. Such debates are essential when a great democracy faces great questions. Yet one question has surely been settled — that to win the war on terror we must take the fight to the enemy.

Err, George? One more time: the people who attacked the USA on 9/11 were NOT from Iraq. M'kay?

Our success in this war is often measured by the things that did not happen. We cannot know the full extent of the attacks that we and our allies have prevented — but here is some of what we do know...

I always tell my parole officer, "Don't get stressed about all the bad things I have done, think about all the bad things I could have done but didn't do!"

The evil that inspired and rejoiced in 9/11 is still at work in the world. And so long as that is the case, America is still a Nation at war. [ie: forever]

In the minds of the terrorists, this war began well before September 11, and will not end until their radical vision is fulfilled. And these past 5 years have given us a much clearer view of the nature of this enemy. Al Qaeda and its followers are Sunni extremists, possessed by hatred and commanded by a harsh and narrow ideology. Take almost any principle of civilization, and their goal is the opposite.

What??? Did he just declare war on Sunnis?

In recent times, it has also become clear that we face an escalating danger from Shia extremists who are just as hostile to America, and are also determined to dominate the Middle East. Many are known to take direction from the regime in Iran...

OK, so now he's at war with the Shiites as well, and Iran by proxy.

The Shia and Sunni extremists are different faces of the same totalitarian threat. But whatever slogans they chant, when they slaughter the innocent, they have the same wicked purposes. They want to kill Americans … kill democracy in the Middle East … and gain the weapons to kill on an even more horrific scale.

Gosh, they sound like evil aliens, don't they?!

Free people are not drawn to violent and malignant ideologies — and most will choose a better way when they are given a chance. So we advance our own security interests by helping moderates, reformers, and brave voices for democracy. The great question of our day is whether America will help men and women in the Middle East to build free societies and share in the rights of all humanity.

But George, those people are all Sunnis and Shiites! And they want your soldiers out of their country, by the way. So if you respect the democratic wishes of free people... err???

Bush then gives a revisionist history of last year's war in Lebanon. In his version, Israel is not even involved. It's not even mentioned!

This is not the fight we entered in Iraq, but it is the fight we are in. Every one of us wishes that this war were over and won. Yet it would not be like us to leave our promises unkept, our friends abandoned, and our own security at risk. Ladies and gentlemen: On this day, at this hour, it is still within our power to shape the outcome of this battle. So let us find our resolve, and turn events toward victory.

We are carrying out a new strategy in Iraq — a plan that demands more from Iraq’s elected government, and gives our forces in Iraq the reinforcements they need to complete their mission. Our goal is a democratic Iraq that upholds the rule of law [whose rules? whose law?], respects the rights of its people [what rights?], provides them security [against whom?], and is an ally in the war on terror [what "war on terror"?].

If i had been watching this on TV, this would be about the point where I switch off or flick channels in disgust.

If American forces step back before Baghdad is secure, the Iraqi government would be overrun by extremists on all sides. We could expect an epic battle between Shia extremists backed by
Iran, and Sunni extremists aided by al Qaeda and supporters of the old regime. A contagion of violence could spill out across the country — and in time the entire region could be drawn into the conflict.

Remind me again, George - who got us into this mess?

This is where matters stand tonight, in the here and now. I have spoken with many of you in person. I respect you and the arguments you have made. We went into this largely united — in our assumptions, and in our convictions. And whatever you voted for, you did not vote for failure. Our country is pursuing a new strategy in Iraq — and I ask you to give it a chance to work. And I ask you to support our troops in the field — and those on their way.

The war on terror we fight today is a generational struggle that will continue long after you and I have turned our duties over to others.

Yeah, the US military-industrial complex will never die. Let's throw them even more money, and even more lives:

Tonight I ask the Congress to authorize an increase in the size of our active Army and Marine Corps by 92,000 in the next 5 years. A second task we can take on together is to design and establish a volunteer Civilian Reserve Corps. Such a corps would function much like our military reserve. It would ease the burden on the Armed Forces by allowing us to hire civilians with critical skills to serve on missions abroad when America needs them.

Bush then moves on to feelgood issues like tackling the military regime in Burma and ending global poverty, as if anything is going to come of such waffle from this man. Then he nods to a few hand-picked propaganda stooges in the gallery. Then it's a rather defensive-sounding sign-off:

This is a decent and honorable country — and resilient, too. We have been through a lot together. We have met challenges and faced dangers, and we know that more lie ahead. Yet we can go forward with confidence — because the State of our Union is strong … our cause in the world is right … and tonight that cause goes on.

Thank you.

Zzzzzzzzz...