[Marxism] 2 views on Iraq and oil

Louis Proyect lnp3 at panix.com
Tue Mar 6 13:22:54 MST 2012


Counterpunch Weekend Edition August 27-29, 2010

The Left and Iraq: Snatching Defeat
from the Jaws of Victory


“The US isn’t withdrawing from Iraq at all – it’s rebranding the 
occupation… What is abundantly clear is that the US , whose 
embassy in Baghdad is now the size of Vatican City , has no 
intention of letting go of Iraq any time soon.” So declared Seumas 
Milne of The (UK) Guardian on August 4.
Milne is not alone among writers on the left arguing that  even 
though most Americans think it’s all over,  They say that Uncle 
Sam still effectively occupies Iraq, still rules the roost there. 
   They gesture at  50,000 US troops in 94 military bases, 
"advising" and training the Iraqi army, "providing security" and 
carrying out "counter-terrorism" missions.  Outside US government 
forces there is what Jeremy Scahill calls  the "coming surge" of 
contractors in Iraq , swelling up from the present 100,000. 
Hillary Clinton wants to increase the number of military 
contractors working for the state department alone from 2,700 to 
7,000.  Of these contractors 11,000 are armed mercenaries, mostly 
"third country nationals, typically from the developing world. 
“The advantage of an outsourced occupation,” Milne writes, “ is 
clearly that someone other than US soldiers can do the dying to 
maintain control of Iraq.

“Can Iraq now be regarded as a tolerably secure outpost of the 
American system in the Middle East ?” Tariq Ali asked in the New 
Left Review earlier this year. He answered himself 
judiciously,“They have reason to exult, and reason to doubt.”, but 
the thrust of his analysis depicts Iraq as still the pawn of the 
American Empire., with a “predominantly Shia army—some 250,000 
strong—… trained and armed to the teeth to deal with any 
resurgence of the resistance,” all this with “ the blessing of the 
saintly Sistani’s smile”

The bottom line, as drawn by Milne and Ali is oil . Milne 
gestures to the  “dozen 20-year contracts to run Iraq’s biggest 
oil fields that were handed out last year to foreign companies”.

Is it really true that though the US troop presence has dropped by 
120,000 in less than a year, Iraq is as much under Uncle Sam’s 
imperial jackboot as it was in, say, 2004, even though now no US 
troops patrol the streets? If  Iraq’s political affairs are under 
US control, how come the U.S. Embassy—deployed in its Vatican 
City-size compound, (mostly as vacant as a foreclosed subdivision 
in Riverside, California and planned in the same phase of 
megalomania) cannot knock Iraqi heads together and bid them form a 
government? Those 50,000 troops broiling in their costly bases are 
scarcely a decisive factor in Iraq’s internal affairs; nor are the 
private contractors.

Is a Shi’a-dominated government really to America’s taste and 
nothing more than its pawn? It was Sistani  who forced the 
elections of 2005, calling Bush on his pledge of free elections, 
thus downsizing the excessive representation of the Sunni – who 
boycotted the election anyway. And if all this was a devious ploy 
to break “the Iraqi resistance” how come the United States 
constantly invokes the menace of Iran and decries its influence in 

The “Iraqi resistance” invoked in worshipful tones by Tariq Ali, 
as opposed to his ironic “saintly” reserved for Sistani, means, in 
his perspective, the Sunni. But if the Sunni  ever had a strategy 
beyond a strictly sectarian agenda, it was scarcely advanced by 
blowing up Shi’a pilgrims and their shrines and setting off bombs 
in market places. If Moqtada al Sadr has been side-lined by the US 
and its supposed creature, Sistani, why has he been  described as 
the “kingmaker” since his success in the parliamentary election 
this past March.?

As for the contractors, those sinister Third World mercenaries 
should not be oversold, unless the Shiites are supposed to quail 
before ill-paid Peruvians, Ugandan cops and the like., who will 
now be supposedly handing down orders to the Iraqi government. 
This takes a very imperial, and contemptuous attitude towards the 
capabilities of the Iraqi people.

If this really was a “war for oil,” it scarcely went well for the 
United States.

Run your eye down the list of contracts the Iraqi government 
awarded in June and December 2009. Prominent is Russia’s Lukoil, 
which, in partnership with Norway’s Statoil, won the rights to 
West Qurna Phase Two, a 12.9 billion–barrel supergiant oilfield. 
Other successful bidders for fixed-term contracts included 
Russia’s Gazprom and Malaysia’s Petronas. Only two US-based oil 
companies came away with contracts: ExxonMobil partnered with 
Royal Dutch Shell on a contract for West Qurna Phase One (8.7 
billion barrels in reserves); and Occidental shares a contract in 
the Zubair field (4 billion barrels), in company with Italy’s ENI 
and South Korea’s Kogas. The huge Rumaila field (17 billion 
barrels) yielded a contract for BP and the China National 
Petroleum Company, and Royal Dutch Shell split the 12.6 
billion–barrel Majnoon field with Petronas, 60-40.


(behind a paywall)

New Left Review 73, January-February 2012

Alan Cafruny & Timothy Lehmann
The United States and Iraq

As American troops pull back from Iraq, what has been the balance 
sheet of the nearly nine-year occupation for us power and 
hegemony—ideological, military, economic? What, not least, has it 
meant for the Iraqis? On the first count, Obama has been able to 
add the occupation to his ‘job-done’ tick list, in election year. 
‘When I took office, I pledged to end this war responsibly’, he 
proclaimed at a December 2011 White House press conference. Today, 
‘I’m proud to welcome Prime Minister Maliki, the elected leader of 
a sovereign, self-reliant and democratic Iraq. We’re here . . . to 
begin a new chapter in the history between our countries: a normal 
relationship between sovereign nations, an equal partnership based 
on mutual interests and mutual respect. You will not stand alone’, 
he assured the dour-faced Maliki at his side. [1] Militarily, 
Obama has stuck religiously to the script he inherited from Bush’s 
surge-and-retrench policy of 2007–08: a temporary troop increase 
and concerted diplomatic offensive, in order to establish an 
operational monopoly of violence for a client government and to 
win, or buy, Sunni support for it; followed by a pull-back to us 
bases and eventual redeployment to Afghanistan or elsewhere.

Mainstream press accounts have been virtually unanimous in 
depicting a greatly diminished American superpower. It has been 
argued that the us is ‘leaving the country’s vast economic spoils 
to nations that neither supported nor participated in the us-led 
invasion.’ [2] Yet the extent of the draw-down should not be 
exaggerated. December 2011 saw a reconfiguration of American 
forces in the region, not a retreat. Some 15,000 us troops are now 
stationed just across the Iraqi border in Kuwait, readying a 
‘mobile response force’ equipped with heavy artillery, tanks and 
helicopters. In addition to naval and air bases in Bahrain and 
Qatar, two us aircraft carriers lurk offshore. [3] The us retains 
de facto control of Iraq’s airspace, augmenting regional air power 
with drones trawling Iraqi skies and extensive 
satellite-surveillance systems. Responsibility for the us security 
apparatus safeguarding the enormous Baghdad Embassy and 
strategically vital ‘consular installations’ will now fall to the 
cia and State Department; their staff currently includes over 
7,500 government-contracted private-security operatives, in 
addition to the largely unmonitored security hirings by the oil 
majors. [4]


In Iraq’s newly opened oil and gas sectors, Exxon-Mobil has won a 
commanding position. It got the largest share of the contract for 
West Qurna 1, another super-giant producing field, which could 
account for the greatest single increment of planned output 
increase. Estimates—perhaps over-optimistic—put West Qurna’s 
output for 2017 at over 2.8mbd, on a par with predictions for 
Rumaila. Since acquiring the contract, Exxon has raised production 
from 258,000bd to 350,000bd, while investing a mere $400 million. 
[17] Exxon has also been designated the contract for developing a 
massive water-injection system for the oil and natural-gas 
reservoirs of the leading fields in southern Iraq, where nearly 80 
per cent of output is located. This estimated $20 billion 
infrastructure project gives the company effective leverage over 
Iraq’s oilfield management and future output, as well as strategic 
control over development of the natural gas associated with the 
reservoirs’ operations. Without Exxon’s investment and approval, 
the water and gas re-injection needed to increase output cannot 
proceed. James Adams, Exxon’s Vice President for Iraq, noted that 
existing facilities would be incapable of handling the field’s 
potential output of 2.8 mbd: ‘We won’t add 2 million barrels of 
facilities all at once. That will be broken up into phases so we 
can achieve the target without investing too much any sooner than 
necessary.’ [18]

In October 2011 Exxon also became the first oil major to sign 
deals with the Kurdistan Regional Government (KRG), winning six 
oil blocks in the Kurdish region despite vocal opposition from 
Baghdad—particularly from Shahristani, now Deputy Prime Minister, 
who went so far as to menace Exxon’s contracts in the southern 
fields. Maliki then intervened, undermining his deputy, stating 
that the southern contracts would be honoured, despite the KRG 
awards. Whether Exxon would object to the contracts being 
re-negotiated is an open question; the oil major might yet again 
re-write them to its advantage, while perhaps also playing the 
role of a helpful catalyst in KRG–Baghdad relations, to better or 
worse effect. As an oil-market commentator noted of the KRG 
awards: ‘Whatever the case, Exxon felt sufficiently insulated—and 
with some justification. The us oil major has become so enmeshed 
with Iraq that the government cannot punish Exxon without harming 
itself.’ [19]

The relationship between Exxon’s deals with the KRG and us 
strategy for the region remains opaque. Officially, Washington is 
committed to a united Iraq with a strong federal state. In 
practice, it has actively fostered the development of a 
micro-state in the north, equipped with its own security forces 
and armed with a constitutional veto over national developments. 
Leading us officials in Iraq, including former Ambassador Zalmay 
Khalilzad and Jay Garner, first head of the Coalition Provisional 
Authority, have taken lucrative positions in the KRG oil sector on 
their retirement. It is possible that the Obama Administration is 
taking a page from the 1920s playbook, when strategic policy was 
sometimes outsourced to oil majors while the State Department 
renounced any direct involvement. It is also possible that both 
Exxon and the White House are seeking to hasten a Baghdad–KRG 
settlement and passage of the oil law, by showing how easily the 
Iraq central government can be underbid. In any case, Exxon has 
emerged as the pivotal actor, with a crucial hold over Iraq’s 
future oil output and the means to play Baghdad and Arbil off 
against each other.

For their part, BP and Royal Dutch Shell have done well, but they 
are not in the same league as Exxon. At Rumaila, BP holds a 
marginally larger stake than China’s CNPC; elsewhere, Russian, 
French and other oil firms have been incorporated into deals in 
subordinate positions, lacking control of the oilfields’ 
infrastructural development and with their stakes diluted among 
many parties. Rumaila’s planned increase from its current 1.3mbd 
must be shared nearly equally between BP and CNPC, unlike the 
position at West Qurna where Exxon will receive 80 per cent of the 
gain and Shell only 20 per cent. Nevertheless, Shell’s $17bn deal 
to develop the associated natural gas of three large oilfields 
around Basra suggests the recrudescence of the 
Anglo-American-Dutch majors that dominated Iraq from the 1920s 
through to the 1970s. While Iraq’s electricity generation needs 
are still so stark, Shell appears to have won the right to export 
most of the gas it captures, paying only a 1 per cent export tax 
upon these yet-to-be determined quantities; at the same time, the 
gas that is to be used for domestic purposes, such as electricity 
generation, may be priced at international rates rather than 
treated as recovered costs, as is standard in the region. [20] 
Meanwhile, Iraq’s oil revenues are still being processed through 
an account at the Federal Reserve Bank of New York, despite the 
expiry of the unsc mandate for this in July 2011, and are only 
released back to Baghdad after the New York Fed has accounted for 
them. Provided they remain within the jurisdiction of the us 
banking system, Iraq’s dollars have presidential immunity from any 
lawsuits under Executive Order 13303. Obama has extended this 
order yet again through May 2012, so that us banks can continue to 
intermediate Iraqi oil earnings.

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