Iraq: the global fight for oil

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FRFI 169 October / November 2002

Blair, Bush and the capitalist media make a deafening din about Iraq’s possession of weapons of mass destruction but it is oil and control of terrain stretching from the Atlantic Ocean to China that guides their actions. Terrifying phantoms of Iraqi nuclear weapons lubricate the wheels of imperialism's killing machines; alarm and fear are spread deliberately; Goebbels would have been in awe. Behind the noise is the cold calculation required by a system built on greed and plunder: calculations foreseeing a growing strategic role for the Middle East in the future of the world. Trevor Rayne reports on the setting for the wars to come.

Militarism and oil
‘Imperialism is a fierce struggle of the Great Powers for the division and re-division of the world. It is therefore bound to lead to further militarisation in all countries.’ Lenin, CW Vol 23, page 82

Since the end of the Second World War Britain has launched at least 98 overseas military interventions. Of these, 28 have been in the Middle East. Every year but one since 1945 British soldiers have been killed on active service. Two of the three biggest oil companies in the world are Royal Dutch Shell and BP: Anglo-Dutch and British respectively. BP is the biggest single holder of US oil assets. Exxon of the USA is the world’s biggest oil company. The USA is the biggest consumer and importer of oil. The Middle East contains approximately 66% of the world’s known oil reserves. The US and British states have repeatedly intervened militarily to secure these reserves for themselves and to destroy any challenge to their domination of the region. They are the principal backers of the Israeli state and conceived its formation as a military outpost defending their interests. Together with France they have drawn the boundaries, installed the regimes and furnished the weapons that have suppressed the peoples of the Middle East while the oil and the profits flowed west. Recently, US and British imperialism have judged their grip on the Middle East to be weakening. They intend to reverse this.

The current threats to Iraq are consistent with US-stated policy over three decades. During the 1973-75 oil crisis, when OPEC (Oil Producing and Exporting Countries) raised oil prices up to ten-fold, US Secretary of State Kissinger warned that military intervention was an option if ‘there is some actual strangulation of the industrial world’. Answering a question about whether a military takeover of the oil fields was possible, Secretary of Defence Schlesinger answered: ‘Yes’. Later, as Secretary of Energy in the Carter administration during the 1979 Iranian revolution, Schlesinger stated:

‘Even if the US is able to achieve self-sufficiency, Europe and Japan are 80% to 85% dependent on Middle East oil. If the area were to be dominated by elements inimical to the US, it would be the end of the free world as we know it.’

Oil prices rose once again. National Security Adviser Brzezinski spelled out the ‘Carter doctrine’:

‘Any attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the USA and such an assault will be repelled by any means necessary, including military.’

It is estimated that the 1973-75 and 1979 rises in world oil prices cost the US economy $4 trillion. By 1981 US military strength in the Indian Ocean and Gulf exceeded the defence forces of the entire region taken together. Nuclear weapons were moved onto Diego Garcia in the Indian Ocean. From 1983 a permanent US Central Command was established to protect ‘vital US interests’ from Morocco to Pakistan.

Saddam Hussein took power in Iraq in 1979 and the following year began a war with Iran. As Iraq used gas and chemical weapons against Iranian troops and Kurds in northern Iraq, the US and British governments, fearing an Iranian threat to Gulf oil, supported the Iraqi war effort with weapons, intelligence and diplomatic support. When Iraq invaded Kuwait in August 1990, it had possession of 20% of the world’s oil reserves and threatened Saudi Arabia. This was unacceptable to the US and British ruling classes. They assembled a 700,000-strong allied army to bomb Iraq and expel them from Kuwait. Approximately 200,000 Iraqis were killed in the assault. The US and British have continued to bomb Iraq ever since.

Over the past decade the US government has spent $30-$60bn each year guarding Middle East oil while its imports from the region total about $10bn a year. This is an investment in US global domination: the ability to subordinate Europe, Japan, Russia, China and any potential rival by having a US hand on the windpipe of their economies.

World domination
‘Force is no mere act of the will, but requires the existence of very real preliminary conditions before it can come into operation, namely, instruments …the triumph of force is based on production of arms, and this in turn on production in general – therefore, on “economic power”.’ Engels, Anti-Duhring.

With the collapse of the Soviet Union, the US ruling class has swiftly asserted world domination. In the Balkans and Central Asia it has militarily and economically demonstrated its determination to be the chief beneficiary of the collapse of the socialist bloc. With less than 5% of the world's population, the USA’s economy accounts for 31.2% of world production, 40% of world arms expenditure, and 40.6% of world research and development. The $396bn US annual expenditure on defence is as much as the next 14 biggest arms spenders in the world combined. Britain is NATO’s second biggest arms spender.

One fifth of US military personnel are based outside the USA. The US government has agreements to operate military facilities in 93 countries – half the countries of the world. It has 725 military installations outside its own territory. Since the US government declared its ‘war on terrorism’ the US military has added bases in Afghanistan, Kyrgyzstan, Uzbekistan and Tajikistan. There are US bases in Turkey, Saudi Arabia, Kuwait, Bahrain, Qatar, Oman, the United Arab Emirates, Diego Garcia (leased from Britain), Djibouti, Eritrea and Kenya. US military supplies are being stockpiled in Israel. The US and British fleets patrol the Mediterranean, the Persian Gulf, Arabian Sea and Indian Ocean. Through these bases and its enormous military reach the US ruling class has placed a noose around Iraq and intends to control Middle Eastern, Caucasian and Central Asian oil and gas reserves, their trade routes and markets.

In the recent period the USA established new military bases in El Salvador, Ecuador and on Curacao, off the coast of Venezuela. These are directed at the growing anti-imperialist movements in Colombia, Venezuela and across Latin America, and at Venezuelan and Colombian fuel reserves.

Britain: the special relationship
The British ruling class relinquished its dominant role in the Middle East to the USA after the Suez Crisis of 1956. However, with its shared economic interests, Britain has allied with the USA to suppress any challenge in the region. British governments, Tory and Labour, have sought to use their alliance with the USA to ‘punch above their weight’ in the world; to secure for British capital a privileged position in sharing out the spoils compared to Germany, France and Japan.

Central to this alliance is Britain’s willingness to engage in military adventures. Blair has taken Britain to war on more occasions than Thatcher. Over Kosovo in 1999 the British Labour government was the most virulent and militaristic NATO member; the first to talk of a NATO protectorate in Kosovo; the first to propose a ground invasion. Britain sent the biggest troop contingent to Afghanistan. The Labour government sent the marines to scour the Afghan mountains when the US asked for help after its forces were ambushed at Shah-i-kot in March. This was the biggest deployment of British combat troops since the Gulf War. In March, Labour Defence Secretary, Geoff Hoon, talking of Iraq said: ‘I am absolutely confident, in the right conditions, we would be willing to use nuclear weapons.’

British and Labour bellicosity has its origins in the foundations of British imperialism. Not only are there the oil interests, but also Britain is second only to the USA as owner of overseas investments – US military might helps secure those investments and keep them profitable. Between 1991 and 2000 British firms made direct foreign investment in the USA of $188.3bn, 36.8% of their total direct investment overseas. Over the same period US firms' direct investment in Britain was £87.6bn, 34% of the total received (Office of National Statistics). Britain is the biggest weapons exporter to the USA accounting for 40% of that country’s arms imports:

‘Sales of defence equipment in (the USA) by the top six biggest (British) defence aerospace companies have doubled since 1997. BAE sells more these days to the Pentagon than it does to Britain’s Ministry of defence.’ The Economist, 14 September 2002

British capitalism and the Labour government that serves it, have very real reasons for being the USA’s number one ally. This role is significant for the US ruling class in preventing any concerted European Union opposition to its plans from developing. The British Labour government is also critical to the diplomatic effort to marshal maximum global support for the war effort; to lend credence and respectability to this exercise in raw power.

The growing significance of Middle East oil
Two distinct trends in the world’s oil industry figure in imperialism’s calculations for the Middle East. Firstly, Asia, particularly China, has the fastest growth in oil consumption. Secondly, oil reserves outside the Middle East are costly to extract and are rapidly being depleted.

Estimates of oil reserves are often inflated by companies to boost their share prices and by OPEC countries to increase their quota of supplies and thus income. However, the Gulf and Middle East are thought to contain over 66% of the world’s proven oil reserves. Saudi Arabia has a quarter of the reserves with 262bn barrels. Iraq is second with 113bn barrels, then come the United Arab Emirates 98bn, Kuwait 97bn, Iran 90bn, Venezuela 73bn, Russia 57bn, Mexico 48bn, Libya 30bn, China 24bn and the USA 23bn barrels. Extraction costs in the Middle East are between $2-3 a barrel, in the North Sea $11-15 a barrel, in Russia $14, in the USA $10-11. Gulf oil, including Iran’s and Iraq’s, accounts for 40% of the world’s oil trade.

Non-OPEC and non-Middle East reserves are depleting rapidly. The extraction technology that made the North Sea, Alaska etc, fields profitable, has also accelerated the rate of exhaustion of these reserves. Additionally, the privatisation of state-run oil industries has speeded up extraction rates to meet corporate profit targets. Most of the large North Sea oil fields are already 70-90% depleted. Over 80% of the world's additional oil production over the next 20 years is projected to come from the Middle East. At present production rates the rest of the world’s oil reserves will last 25 years, the Gulf’s will last for 100 years. The strategic significance of the Gulf grows ever more critical to the balance of world power.

Speaking in Shanghai in September 2001, Saudi oil minister Ali al-Naimi observed that: ‘Of the 9m barrels per day increase in world demand [in the 1990s] Asia accounted for 7m barrels per day of that.’ China was the biggest contributor accounting for 37% of Asia’s increased consumption. He forecast that by 2020 Asia would consume 35% of the world’s oil. Asia already has the largest part of Saudi oil sales with 40%. China became a net importer of oil in 1993. Its dependence on oil imports is expected to rise to 50% by 2010. Half of China’s oil imports come from the Middle East. In 1997 China bought a $4.3bn stake in a Kazakhstan oil company; China’s biggest overseas investment. The following year US forces flew non-stop from their base in Kansas to take part in manoeuvres in Kazakhstan close to the Chinese border. China has a $1.2bn deal to operate in Iraq once sanctions are ended. The US ruling class intends that its armed forces will straddle all the oil routes from the Middle East to Asia.

The ‘axis of evil’
Iran, Iraq and North Korea constituted President Bush’s ‘axis of evil’. This August a RAND Corporation briefing to the Pentagon was leaked. It called Saudi Arabia ‘the kernel of evil’, an enemy of the USA, and proposed that the USA should confront its former ally, seizing oil fields if necessary.

In a context of worsening economic crisis, imperialism cannot stand dissent that could turn an economic crisis into a political crisis. The US and British ruling classes assess that their grip on the Middle East is weakening. All the 11 September suicide attackers against the USA were Arabs and 15 of the 19 were Saudis, as is Bin Laden himself. Al-Qaida has ties with the Saudi ruling class beyond Bin Laden’s family. Historically, Saudi Arabia has been a reliable ally of the US ruling class since the first Saudi oil flowed to the USA in 1939. Gulf, including Saudi, oil revenues were used to buy western weapons and invested in the imperialist metropoles. In some years Saudi Arabia accounts for up to 75% of British arms exports. Gulf countries’ overseas investments are put at $1.3 trillion, including $400bn of US companies’ shares.

Saudi Arabia’s 5,000 princes and its merchants are extremely rich, but the kingdom’s per capita income is little higher than Mexico's. Between 1975 and 2000, Saudi income per head shrank at an average rate of 2% a year, and is now half what it was 20 years ago. Customarily when the USA and Britain wanted to keep oil prices down Saudi Arabia, with its massive reserves and under-used capacity, would increase supplies onto the world market. Confronted with declining income, the Saudi rulers have co-operated with other OPEC producers and non-OPEC members (like Russia and Norway) to curb production and keep oil prices up. In particular, OPEC has been strengthened by the co-operation of Saudi Arabia, Venezuela and Iran. Saudi Arabia has also improved relations with Syria. All of this infuriates the US ruling class. Further, since the latest Intifada began, Saudi Arabia has funded Arafat’s Palestinian Authority to the tune of $400m, keeping it in existence. This confronts the joint US-Israeli policy for Palestine and the Middle East.

When Iranian Prime Minister Mossadeq nationalised the oil fields in 1951, depriving BP of its holdings there, Britain and the US collaborated in his overthrow and the installation of the Shah in 1953. When the Shah was overthrown in 1979 the British and US governments collaborated to arm Saddam Hussein in Iraq and aid his war against Iran. Any reduction in imperialist influence in the Middle East increases the threat to imperialism of Iran’s relative independence. Since 11 September 2001 the US government has accused Iran of sponsoring terrorism in Lebanon, shipping arms to Palestine, harbouring al-Qaida fighters, stockpiling weapons of mass destruction, developing nuclear weapons and long-range missiles capable of reaching Israel. For the US government it is a priority to stop a joint nuclear energy project between Iran and Russia.

If US and British forces were to occupy Iraq they could use their bases to intimidate and subordinate both Saudi Arabia and Iran and have directly under their heel two thirds of the world’s most vital and valuable strategic resource – oil.