war profiteering in Iraq

June 30, 2009 6:15 PM

It is fitting that today’s deadline for the withdrawal of US troops from Iraq’s cities coincides with a meeting in Baghdad to auction off some of the country’s largest oil fields to companies such as ExxonMobil, Chevron and British Petroleum. It is a reminder of the real motives for the 2003 invasion and in whose interests over one million Iraqis and 4,634 American and other Western troops have been killed. However, today's bidding was not the bonanza that was expected.

Iraqis in Baghdad celebrate the withdrawal of US troops from the country's cities and towns yesterday. Bidding war for Iraq's huge oil contracts sputters into life.

posted by nickyskye (44 comments total)

Oil sure fuels weapons of mass destruction...
posted by yeloson at 6:21 PM on June 30, 2009

I was really, really against the Iraq War. That said, I don't see how publicly televising bids for oil leases is indicative of war profiteering. How again does the US profit if it's a Chinese company transparently winning a bid? Isn't the Iraqi government presumably going to be taking a huge cut of profits, and isn't that how it should be? Even one of your links states, "but the process was immediately in trouble as some of the 32 international oil companies involved baulked at the low level of fees they would be paid by Iraq."
posted by billysumday at 6:26 PM on June 30, 2009 [2 favorites]

It is a reminder of the real motives for the 2003 invasion...

We all know by now that the Iraq war was a boondoggle of colossal proportions, but the 'it's all about oil' argument is really tiresome and intellectually lazy. Was oil a factor in the war? Certainly, but it wasn't the only one. Any critique of the war or current policies should rest on a more nuanced understanding involving the many factors that led to the war. At this point I roll my eyes and ignore the oil=war people the same way I do at pro-war folks.
posted by boubelium at 6:37 PM on June 30, 2009 [11 favorites]

billysumday, If BigOil were the agenda all along, why not simply do business, not kill "over one million Iraqis and 4,634 American and other Western troops"?

boubelium, Was oil a factor in the war? Certainly, but it wasn't the only one.

Would you mind suggesting other factors? I'd appreciate the education.
posted by nickyskye at 6:47 PM on June 30, 2009

billysumday, If BigOil were the agenda all along, why not simply do business, not kill "over one million Iraqis and 4,634 American and other Western troops"?

Well said! This point excellently refutes the argument expressed by your links.

The US would not spend billions of dollars, the lives of over 4,000 troops, and the goodwill of the world for the end purpose of allowing a neophyte government the ability to give away its oil contracts to the Chinese and Italians. If, as you seem to claim in your comment, that this war was solely a war for oil, we would have just kept it ourselves or worked an agreement with the Iraqis to the exclusion of other foreign entities. Though oil was certainly a factor in our rush to war, let us not forget that George Bush was insane and thought that God ordered him to liberate the people of Iraq just like some dude did in the Bible.
posted by billysumday at 6:53 PM on June 30, 2009 [4 favorites]

The real issue is the Kurds, who are sitting on top of a lot of that oil and think it belongs to them.
posted by Brandon Blatcher at 7:06 PM on June 30, 2009 [1 favorite]

The US would not spend billions of dollars, the lives of over 4,000 troops, and the goodwill of the world for the end purpose of allowing a neophyte government the ability to give away its oil contracts to the Chinese and Italians.

From the articles I recall reading, Bush and the oil companies weren't necessarily concerned with who benefited from the sale of the Iraqi oil, only that that it flowed on to the markets in a predictable manner and that Saddam Hussein wasn't playing ball and would occasionally stop supply and cause markets to fluctuate when he felt like it.

So it was more about stabilizing the market overall so that price control was easier to maintain overall through other means, I guess.
posted by peppito at 7:07 PM on June 30, 2009 [1 favorite]

Other reasons for Iraq War:

*WMD (if you believe the official line)
*A New American Century
*Another democratic ally in a region that is mostly not democratic
*Teh terrorists (Iraq sure makes a good staging area to blow other shit up)
*The rekindling of an early 1990s pissing match

These are just off the top of my head.
posted by IvoShandor at 7:14 PM on June 30, 2009 [1 favorite]

billysumday, it would seem that there was American corporate profiteering, Halliburton, private security and military contractors et al and now multinational BigOil profiteering, as well as American companies such as BearingPoint, which was brought into Iraq under a $240 million U.S. Agency for International Development (AID) sole-source contract to “facilitate Iraq’s economic recovery. Would it be unlikely the BigOil interests in the US would let other countries reap the spoils of the Iraq war without payback or strings attached?

BP, which won a big bid in today's oilfield auction is, or it says on its corporate front page, the largest investor in U.S. energy development.
posted by nickyskye at 7:15 PM on June 30, 2009

*The funneling of public money to private contractors
posted by kathrineg at 7:15 PM on June 30, 2009 [4 favorites]

That and Saddam tried to kill W's daddy.
posted by Big_B at 7:16 PM on June 30, 2009

I always thought it was to fuse the economy with money from all the war industry contracts handed out to Halliburton et al (who had their hands in the Bush admin's proverbial pants.. and vice versa). That alone seems like it's worth more than what they'd get from oil.
posted by spiderskull at 7:16 PM on June 30, 2009

Would you mind suggesting other factors? I'd appreciate the education.

I'll jump in. According to your first link, "The militarist agitation surrounding the war was used to smother public disquiet and divert discontent away from the economic inequality that wracks American society."

This is actually a reasonable FPP IMO. The World Socialist Web Site is off the wall enough to be interesting, and the Independent articles show the Iraqis as being diligent and careful in handing out contracts, and being tough negotiators with the oil companies. Good for them.

As far as the oil for war stuff, though - I could list lots of links and but at the end of the day, would you even consider the possibility that the preponderance of evidence indicated that if Hussein wasn't a threat, he would be shortly, and that President Bush did what he thought was in the best interests of national security?
posted by txvtchick at 7:17 PM on June 30, 2009

Oh, and the whole post-9/11 fear that the economy was going to collapse because of people being too scared to, uh, invest? It doesn't make sense in retrospect, but it sure felt like the market was fragile at the time.
posted by spiderskull at 7:17 PM on June 30, 2009

That's not to say that the oil* wasn't a major motivation, but not the only one.

*Same oil that was supposed to pay for this nonsense too damn it.
posted by IvoShandor at 7:18 PM on June 30, 2009

(whoops, make that "infuse the economy")
posted by spiderskull at 7:19 PM on June 30, 2009

This "World Socialist Web Site" is a doozy! The Honduran coup: another US destabilization operation could be a text book example of the paranoia of state.
posted by billysumday at 7:20 PM on June 30, 2009

Though oil was certainly a factor in our rush to war, let us not forget that George Bush was insane and thought that God ordered him to liberate the people of Iraq just like some dude did in the Bible.

So, let me get this straight; the following three factors are equivalent: (1) Bush was insane, (2) God ordered Bush the liberate Iraq, and (3) the United States has an immense economic interest in having ready access to the vast oil reserves in Iraq. I think one of these factors is more valid than the others in terms of why we went to war.

I agree that there were other factors, which included the desire to line the pockets of Halliburton, to erode our civil liberties thus centralizing power with the executive branch of the U.S. government, and to gain military access to an extremely strategic location. But oil was likely a big factor. Do not doubt that there are people who are much richer as a result of the invasion, and have no qualms over the deaths of Iraqis and U.S. soldiers, and would do it again if they could. The Iraq invasion was opportunistic and tragic.
posted by jabberjaw at 7:26 PM on June 30, 2009 [2 favorites]

That said, I don't see how publicly televising bids for oil leases is indicative of war profiteering. How again does the US profit if it's a Chinese company transparently winning a bid?

It's my understanding that the post-sanctions Hussein regime would have preferred dealing with the French and Russian oil interests, which had pre-existing financial commitments with Iraq that were suspended in the aftermath of 1990-1991 contratemps.

Going in it was probably assumed that Chalabi and the INC would be able to patch things together for us to "win" at least some of the auctions.

Would you mind suggesting other factors? I'd appreciate the education.

AFAICT we went in because we could. Charitably to the neocons, the alternative was to allow Saddam out of his box and have all of the Axis of Evil running around screwing things up with their anti-americanism. The policy is complicated and long-term but going in I knew it was going to be more expensive and more bloody (thanks to my study of the Vietnam conflict I understood some of the asymmetrical advantages any insurgency enjoys in taking on the US on its own turf).

Trivia: BP can trace its corporate history back to . . . . the Anglo-Persian Oil Company, which owned ~50% of the Iraq Petroleum Company, which the Baathists ended up nationalizing by 1972.
posted by @troy at 7:34 PM on June 30, 2009 [1 favorite]

but it sure felt like the market was fragile at the time.

checked a stock ticker lately? The Bush Bubble of 2004-2006 is long gone, and in its aftermath we're precariously perched not much over the 2002-2003 market lows still.
posted by @troy at 7:41 PM on June 30, 2009

Would you mind suggesting other factors? I'd appreciate the education.

"Daddy couldn't do it. I'll show him what a big grownup boy I am!"
posted by dirtynumbangelboy at 7:47 PM on June 30, 2009 [1 favorite]

Other reasons for Iraq War:

*WMD (if you believe the official line) ... You already discounted this one.
*A New American Century... What does this even mean?
*Another democratic ally in a region that is mostly not democratic ... Bombing a country into Subordination? Hell, it worked in Vietnam!
*Teh terrorists (Iraq sure makes a good staging area to blow other shit up) ... Stopping terrorism by discarding sovereignty ... this makes sense.
*The rekindling of an early 1990s pissing match ... This I can get behind, except the pissing match goes back much farther than the 1990's .. and has to do with the exact reason you are attempting to discount: oil.

These are just off the top of my head ... as are my responses.

C'mon. I'm going with Occam's Razor.
posted by clearly at 7:48 PM on June 30, 2009 [1 favorite]

*A New American Century... What does this even mean?

See PNAC, Project for the New American Century.
posted by dirtynumbangelboy at 7:55 PM on June 30, 2009

Posted too soon. The general thing about them, apparently, is that they wrote the blueprint for invading Iraq, including all the dog-wagging that had to happen first.
posted by dirtynumbangelboy at 7:55 PM on June 30, 2009

Ignoring the discussion of why the invasion occurred...you have to be heartened that the Iraqi regime appears to be setting prices as high as possible for the assets they are selling off. If the fix were really in you'd see guys jumping all over the place to get involved. Has anyone seen a piece on how the Iraqi's did the pricing math?
posted by JPD at 7:59 PM on June 30, 2009

I've posted this before but it's still very good: Blood for Oil?
posted by stammer at 8:21 PM on June 30, 2009 [1 favorite]

At this point I roll my eyes and ignore the oil=war people the same way I do at pro-war folks.

I have trouble reading this without laughing. Count me as also waiting for you to post those other reasons.
posted by peppito at 8:26 PM on June 30, 2009

The U.S.'s desire to control Iraq (which dates back decades and first achieved fruition in the 80s) arises entirely from our lust for their oil. The decision to re-establish this control through war rather than through some other means was made by Bush, Wolfowitz, Cheney, Rumsfeld, and the rest of that crew. Religious zealotry, arrogance, and general stupidity may have played a role.

Wars are always about power. Oil is power. Controlling Iraq's oil allows the U.S. control over countries that depend on that oil. No country can mount a major military offensive (or defend against one) without adequate supplies. Even if it were possible to operate aircraft on alternative fuels, they'd still need a lot of petroleum based lubricants.

If this were 1800, we'd be fighting over colonies, timber, cotton, and maybe access to China or something. Your country's military power would be determined largely by the size of your naval armada. It's the same shit, different century.

If China ends up with a significant degree of control over Iraq's oil, it will most likely be because the U.S. has failed to beat Iraq completely into submission. Bush was forced to have the first set of elections several years before he wanted to. He hadn't had a chance to completely crush all signs of democracy in the country, the way the U.S. did in places like Viet Nam and Nicaragua. Ever since that election, there have been indications that, in small ways, the Iraqi government was responding to the will of the population rather than the will of the U.S. government. Remember when they tried to kick Blackwater out of the country? Oh, and all those protests against the occupation? And then there's the Iraqi government actually asking for the troop draw down. (It's not a withdrawal, not by a long shot). Of course, if the government were truly democratic, they would have kicked the U.S. out completely and done it years ago, nationalized the oil industry, begun a massive rebuilding effort, and possibly formed an alliance with Iran. Iraq is not independent or democratic, but they're a lot less subservient than the U.S. would like them to be. If they sell oil rights to China, you can bet Obama will be pissed.

As for Saddam being or becoming a threat to the U.S, per txvtchick:

He wasn't a threat. To suggest otherwise is a complete joke. Could he have become a threat? Well, let's see...

We were crushing his country with sanctions because he wouldn't turn over control of his oil to us. Yeah, under those circumstances, one might reasonably expect a dictator to turn belligerent, if he had any means by which he could do it. Evidence has shown, of course, that he didn't. (The idea that he would fund 9-11 style terrorists to strike at us is ridiculous; those people hated him and, besides, we'd eventually discover that he did it, yielding retaliation of Biblical proportions). But supposing he could have acquired some weapons, through one means or another. We'll even suppose that they were big and bad enough to pose a threat to the U.S. (which is really reaching, but never mind that.) Would we have been justified in overthrowing his government? If you answer yes and if you don't consider yourself a hypocrite, then you've just argued that it's okay for Venezuela to overthrow the government of the U.S. I mean, we are a threat to Venezuela. We've made that very clear. They don't have to wait for us to acquire weapons of mass destruction; we've already done it. They don't have to wait for evidence that we're plotting against them; they already have that. So you wouldn't object to Hugo Chavez dropping some Daisy Cutters on the White House and lobbing a bunch of thermite at the Pentagon, would you? Of course you wouldn't. Unless you're a hypocrite.

If Iraq was doing something they shouldn't have been doing, there were ways of dealing with it peacefully. Saddam made offers to negotiate. The U.N. inspections were effective. War is not acceptable until peaceful means have been exhausted. Even the U.S. imposed sanctions - as brutal as they were - should not have been dealt with through violence. The U.S. should have been dissuaded from such actions by internal protests.
posted by Clay201 at 8:43 PM on June 30, 2009 [4 favorites]

... or as a friend wrote me a few weeks before the bombs started falling, and for some strange reason, I kept the email:

Of course, I would argue that the war is about oil, and it's about the right wing American political elite clarifying a profound point for all the world to see, hear, smell, feel.

WE HAVE THE POWER TO DO WHATEVER THE FUCK WE WANT!!!

And it's about weird Bush Admin Christian extremist Apocalyptic notions, and STUPID entertainment (you can't tell me the cable networks won't be making a killing) … and all kinds of other stupid stuff as well. In other words, this war is about many things, yet ultimately one thing (and here, I am pretty much paraphrasing your friend and mine, Arthur Sand):

THE UPCOMING WAR IS ALL ABOUT WAR!!!

It's about keeping the evil fucking beast alive and kicking and profoundly real as this fresh millennium struggles to define itself ... because war is very good business if your well-positioned and who can stand in the way when there's a dollar to be made?
posted by philip-random at 9:34 PM on June 30, 2009 [1 favorite]

Prof. Paul Rogers has been covering this in his Global Security column at openDemocracy for years. I think this from March seems like a good summary:

A number of earlier columns in this series have focused on the relationship of the Persian Gulf oil reserves to US security policy in the region, although they have emphasised that there were other (geopolitical and ideological) considerations behind the policy (see for example, "The war for Gulf oil" [26 May 2004]; and "It's the oil, stupid" [24 March 2005]). The fact that Iraq has around four times as much oil as the entire United States (including Alaska) underlines the country's importance, but the wider regional context is even more vital.
...
The US military has long recognised the strategic importance of Gulf oil. The 1973-74 oil-price shocks provided most of the impetus for establishing the Rapid Deployment Joint Task Force (RDJTF) in March 1980; this was expanded into US Central Command by the Ronald Reagan administration in January 1983 (see "Oil and the War on Terror", in Why We're Losing the War on Terror [Polity Press, 2007]). It is important to emphasise that while the US does not import huge amounts of oil from the Gulf at present, its strategy and thinking is predicated on an enduring belief that preserving military dominance in the region is key to its aim of remaining the world's superpower.

Iraq is crucial here. From a Pentagon perspective, a complete withdrawal from Iraq would leave the United States dangerously exposed, especially to an unwelcome growth in Iranian influence. It is often forgotten that all the major US military contingents that were retained in Saudi Arabia after the Iraq war of 1991 have now had to be withdrawn. The US facilities at its last major air installation (the Prince Sultan air base in the desert eighty kilometres south of Riyadh) were put on care and maintenance, and the base returned to Saudi control, in September 2003; 4,500 troops were redeployed to Qatar as the Saudi authorities found it too dangerous to have them remaining in their country. In such circumstances, keeping control of Iraq - and that includes a direct military capability - remains essential.
...
An earlier column in this series, written in the second week of the first phase of the Iraq war in 2003, spoke of the risk of a thirty-year war. It concluded:
"Gulf oil will be the dominant energy source for the world for upwards of thirty years. If the US neo-conservatives establish a paradigm of clear-cut western control of the region, then the stage is set for a conflict that lasts just as long.
The Iraq war may be over within three months or it may take longer; in either case it has the potential to signal the development of a much more sustained conflict. Whether this occurs depends in turn on a key variable: the endurance and success of the Bush administration's conception of international security, the essential requirement for the New American Century.
If this conception does succeed, a thirty-year war is in prospect. If, by contrast, a saner approach to international security develops, the beginnings of a peaceful order could be shaped. What happens in the next few months may determine which route is taken" (see "A thirty-year war", 4 April 2003).
In the event, the war did intensify; George W Bush won a second term; and six years have passed before even the beginning of a change can be glimpsed. But if the Obama administration proves that it has the capacity to develop a "saner approach" in the middle east and greater west Asia - one that addresses the wider issues of oil dependency and climate change - then the chances of shortening the timescale of war might at last arrive.

posted by Abiezer at 9:37 PM on June 30, 2009

One of his more recent columns is interesting too:

...[I]t is striking that defence industries are being largely shielded from the global financial crisis that is affecting almost everyone else. Frida Berrigan, an arms and security expert at the New America Foundation, comments: "The only winners from increases in global military spending are [US-based] weapons manufacturers like Lockheed Martin, Raytheon and Northrop Grumman". Almost every other sector of the economy is affected by the recession, but "thanks to the fact that nations around the world are putting more and more of their precious (and ever more scarce) resources into the coffers of their militaries, the weapons industry continues to report regular profit" (see Thalif Deen, U.N. Big Powers World's Top Military Spenders, IPS/Terra Viva, 9 June 2009).

posted by Abiezer at 9:45 PM on June 30, 2009

I was really, really against the Iraq War. That said, I don't see how publicly televising bids for oil leases is indicative of war profiteering. How again does the US profit if it's a Chinese company transparently winning a bid? Isn't the Iraqi government presumably going to be taking a huge cut of profits, and isn't that how it should be? Even one of your links states, "but the process was immediately in trouble as some of the 32 international oil companies involved baulked at the low level of fees they would be paid by Iraq."

My guess is that BP, Exxon Mobil and China will win the bids. How do we profit from China? I am guessing that they will be a little more flexible on the billions of dollars we owe them once they secure this contract.
posted by Mr_Zero at 10:16 PM on June 30, 2009

I've posted this before but it's still very good: Blood for Oil?

Point/Counterpoint.......No Blood for Oil......
posted by lalochezia at 11:54 PM on June 30, 2009

Of course it wasn't just about the oil. There were also the military contracts. How much US money has been spent in Iraq? Much of that money went to US-owned contractors. Getting Iraqi resources into friendly hands was one goal, but funneling American public resources into American private hands was also very important, perhaps even more important. It was just one of the Bush administration's redistribution schemes.
posted by WPW at 2:23 AM on July 1, 2009

Reasons other than oil? Sure, but even if you add them all up they're still minor inputs.

All the other reasons were side benefits, like the way people justify their big-screen TVs by saying "We won't go out as much so we'll actually save money!"
posted by rokusan at 4:30 AM on July 1, 2009

It's a bit of a tangent, but it seems to me that thinking of global interests in terms like the Chinese, the Italians and even The United States is a bit obselete, in much the same way it would be outmoded to think in terms like the Huns.

ExxonMobil, Chevron and British Petroleum are the important historical players here, not those quaint old nation-state thingies.

I believe the Bush-style neocons, like many world leaders, work for those players more than they work for any notion of "America", and always have.
posted by rokusan at 4:35 AM on July 1, 2009 [5 favorites]

I have trouble reading this without laughing. Count me as also waiting for you to post those other reasons.

You know how much the war cost?
A lot.

You know where that money came from?
Taxpayers.

Know where that money went?
posted by Civil_Disobedient at 5:02 AM on July 1, 2009

"The US would not spend billions of dollars, the lives of over 4,000 troops, and the goodwill of the world for the end purpose of allowing a neophyte government the ability to give away its oil contracts to the Chinese and Italians."

Because clearly, countries make the decision to go to war knowing exactly how they will turn out six years down the road, right?!

You don't get it. The Chinese and Italians?! They legally *should* have the rights to much of Iraq's oil, with favorable profit-sharing agreement terms, but the U.S. came in and changed all the rules!

In 2001, Dick Cheney's team created these documents, reviewing all of the conflicting foriegn claims for oil... and two months after the invasion of Iraq, in May 2003, the U.S.-appointed senior adviser to the Iraqi Oil Ministry, Thamer al-Ghadban, announced that the new Iraqi government would honor few, if any, of the dozens of contracts signed with foreign oil companies under the Hussein regime.

China, of course, was pretty miffed, because they had production-sharing agreements with Saddam that the new government weren't honoring. Iraq -- and possibly the US -- bought them off, however, by giving China a piece of the pie, though they changed the original contracts from production sharing agreements to far less lucrative service contracts.

But does Iraq still have other production sharing agreements? Why yes... yes they do. Surprisingly, they have them with big Western oil companies that were previously locked out of Iraq's oil market.

These formerly locked-out companies are now getting the most profitable deals, worth tens of billions of dollars, while those companies which previously had oil rights are getting service contracts with rather thin margins, once you tack in the unknown variable of security costs.
posted by markkraft at 6:09 AM on July 1, 2009 [2 favorites]

It's a bit of a tangent, but it seems to me that thinking of global interests in terms like the Chinese, the Italians and even The United States is a bit obselete, in much the same way it would be outmoded to think in terms like the Huns.

Not a tangent at all, Rokusan. I think that's the real story here. The Iraqi people and America The Stupid are the losers, and ExxonMobil, Chevron and BP etc are the clear winners.

Historians will look back at this moment and blah blah blah.
posted by philip-random at 8:57 AM on July 1, 2009

"It's a bit of a tangent, but it seems to me that thinking of global interests in terms like the Chinese, the Italians and even The United States is a bit obselete,"

p-r has got a point... the war certainly didn't do anything for the majority of the American people.

Another tangent to look at is the China deal that people are talking about, as a good example. Their partner on the deal is BP.

Sooo... is British Petroleum the nominal winner, or is it the Chinese? From my POV, BP is getting more than they would've had under Saddam, while China is getting far less, and in order to even get that, they have to partner with the British.

Indeed, the profit margin on the deal is quite low, so I'm thinking cheap Chinese or outsourced labor is most likely, with BP taking their bit off the top.

How does this help the average Brit? Well... it probably doesn't.
posted by markkraft at 9:23 AM on July 1, 2009 [1 favorite]

Would you mind suggesting other factors? I'd appreciate the education.
Very late to this party: -
War is a very profitable business especially if you were Haliburton or its then subsidery Kellog Root Brown
However Alan Greenspan claimed the war was for oil and Oil came good for this guy a Bush / Cheney buddy. You could even say the war was "made in Texas".
posted by adamvasco at 1:04 PM on July 1, 2009

Cheney: Iraq Insurgency Not in Last Throes After All
posted by homunculus at 10:23 AM on July 2, 2009

Thank you all for your wisdom and links in this thread. I wish I were more politically astute to be able to do front page post justice to this momentous quasi-end of the Iraq so-called-War and the exposing, at this time, of some of the profiteering agendas of the so-called-war.

My heart goes out to those on all sides of the situation who paid for this so-called war with their lives. My hopes that the evil regimes that brought Saddam and Blackwater into power will decline. I suppose that responsibility falls into our hands to some degree or another to take what action is possible.
posted by nickyskye at 10:30 AM on July 2, 2009

10 Killed in Bombings, Dozens Wounded;
Al-Maliki Rejects Reconciliation with Baathists;
Sadrists Block British in South
posted by homunculus at 8:19 AM on July 12, 2009