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Oil Is Important But Not The Reason for War - 2003-02-10

In recent interviews, Iraqi leader Saddam Hussein said the United States wants to go to war to seize his country’s oil, the world’s largest reserves after Saudi Arabia.

Many agree with him, even while opposing him. They say Iraq is a tempting prize to the Bush Administration with its close ties to the oil industry. War is worth it, they say, to get control of Iraq’s oil fields.

They cite Vice President Dick Cheney, who served as chief executive of Halliburton, a major oil service company. Indeed U-S oil company executives are now conferring with top government officials about Iraqi oil.

But their talks deal with postwar Iraq. If anything, American oil men are uneasy about going to war because it could lead to the torching of Iraqi oil fields, a reduction in supply, a spike in price. Business likes stability.

A report by Goldman Sachs, a leading U-S investment bank, says war could cause a bigger oil crisis than the one that occurred in the 1973 Israeli-Arab conflict. Unrest in Venezuela has already sharply cut production. “If oil is the question” writes Daniel Yergin, chairman of Cambridge Energy Research Associates, “Iraq is not the answer.”

And Iraq is certainly not the tool of the United States or any other power, says Gregory Gause, director of the Middle East studies program at the University of Vermont. Postwar Iraq, he insists, will remain a sovereign nation.

"I think it is a mistake to think of this in terms of a 1920’s style colonial grab for oil in that the world oil market just does not work that way any more," Mr. Gause says. "Whatever government succeeds Saddam Hussein, and even if it is a pro-American, an American-installed government, that government is going to want to get control of the oil resources in Iraq because that is the major asset that the government is going to have."

Mr. Yergin, who has written extensively on the oil industry, notes that after the 1991 Gulf War, a liberated Kuwait said it would welcome foreign investment in its oil industry. But its parliament, conscious of nationhood, has resisted.

And Kuwait is typical, says Professor Gause. Oil does give the Persian Gulf its strategic importance.

"An Iraq without oil would not be nearly the same concern to the United States as an Iraq with oil in an area where there is a lot of oil in other countries," Mr. Gause says. "So if you take all of the oil out of the Persian Gulf, I do not think the United States would be doing what it is doing."

But don’t jump from this to oil causing war, cautions Professor Gause. The United States is acting in what it believes to be its geopolitical interest, not its economic interest. It may want to influence the Persian Gulf nations, yes. But control them, no.

Professor Gause says, "The models that are available for how countries deal with their oil resources in the modern world oil market basically do not have a place for those kinds of old-fashioned colonial arrangements. These governments control their own oil resources, and they do it in ways that they think serve their own interests. And I imagine that is what is gong to happen in Iraq, even in a post-Saddam environment."

U-S Secretary of State Colin Powell has emphasized that the oil of Iraq belongs to the Iraqi people. In the immediate aftermath of war, he says it may be in the hands of an outside custodian but only to prepare it for Iraqi use.

That will be the case, says Thomas Lippman, an analyst at the Middle East Institute in Washington. The United States has nothing to fear from Iraqi control of its own oil.

"We do not know whether a new government in Iraq will honor the oil development contracts already signed with Russia and France," Mr. Lippman says. "But it is certain that if there is not an American within a thousand miles, a post-Saddam Iraq will want to expand its oil output, modernize its fields and increase production. Therefore, we do not have to do it."

Mr. Lippman adds that even a hostile government in postwar Iraq cannot prevent the United States from getting the oil it needs. Iraqi oil is only a small percentage of the global market.

"I think people like George Bush and Dick Cheney understand that in the modern oil market, in effect the origin of the crude oil is irrelevant," Mr. Lippman says. "There is a single global oil market. If we are buying oil from Iraq, then the Japanese are not buying it. If we are not buying it, then the Japanese or the French or the Spaniards are buying it or whoever needs oil. The origin of the crude is essentially irrelevant."

Furthermore, if the United States were going to war to acquire Iraqi oil, says Mr. Lippman, there is an easier way of doing it.

"If, for example, our overriding purpose were to obtain greater access to Iraqi oil, the cheap, easy, painless way to do that would be to concoct Iraqi compliance with the U-N inspectors and then to lift the sanctions. Having done that, we could have all the Iraqi oil we could buy," he says.

Mr. Lippman says that would be a lot less costly than sending three hundred thousand troops into Iraq with inevitable damage, at least short term, to its infrastructure and oil industry. Blaming war on oil is an old habit, writes Brendan O’Neill in the Christian Science Monitor. It avoids serious thought. Name the war, and many say oil is the cause. This has been said of the U-S intervention in Afghanistan, Kosovo, even Somalia. One theory fits all cases, says Mr. O’Neill: oil greedy imperialists on one side, defenseless civilians on the other. Never mind that wars are often fought for reasons that have little or nothing to do with economic gain.

Then why the widespread belief in this notion? Mr. Lippman says one reason is the suspicion of many critics of the need for war.

"People do not understand the urgency of going to war now," he says. "That being the case, they are looking for a hidden agenda for what they think the true reason must be, not knowing much about the oil market or the way the oil market works in the modern world, they put two and two together and get five."

Oil will be crucial to pay for rebuilding Iraq after the war. Larry Goldstein, president of the Petroleum Industry Research Organization in New York, told the Wall Street Journal: “If we go to war, it’s not about oil. But the day the war ends, it has everything to do with oil.”

Professor Gause says this rebuilding could be greatly complicated if Saddam Hussein manages to destroy the oil fields in Iraq, as he did in Kuwait in the Gulf War.

"If he blows the wells and Iraq is out of commission for a while, you are going to see the markets react in a very nervous way," Professor Gause says. "Of course, what happens with Saudi production and other countries’ production could mitigate those effects. But this could have much longer consequences in terms of the rebuilding of Iraq and the ability of Iraq to get back to a more normal life."

Professor Gause says this threat will lead U-S forces to occupy the oil fields as quickly as possible to prevent their sabotage.