Features » January 15, 2007
Spoils of War (cont’d)
On December 21, 2004, Mahdi joined U.S. Undersecretary of State Alan Larson at the National Press Club and announced Iraq’s plans for a new petroleum law that would open the oil sector to private foreign investment.
“I think this is very promising to the American investors and to American enterprise, certainly to oil companies,” said Mahdi. He described how, under the proposed law, foreign companies would gain access both to “downstream” and “maybe even upstream” oil investment in Iraq. (“Downstream” refers to refining, distribution, and marketing of oil. “Upstream” refers to exploration and production.)
The draft petroleum law adopted Allawi’s recommendation that currently producing oil fields are to be developed by Iraq’s National Oil Company, while all new fields are opened to private companies using PSAs.
The Bush administration and U.S. oil companies have maintained constant pressure on Iraq to pass the petroleum law. The administration appointed an advisor to the Iraqi government from Bearing Point to support completion of the law. And in July 2006, 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 Iraq Study Group, recognizing as it did the primacy of oil in its Iraq calculations, recommended that the U.S. “assist Iraqi leaders to reorganize the national oil industry as a commercial enterprise” and “encourage investment in Iraq’s oil sector by the international community and by international energy companies.”
Put simply, U.S. oil companies want access to as much of Iraq’s oil as they can get and on the best possible terms. The fact that Iraq is a war-ravaged and occupied nation works to the companies’ benefit. As a result, the companies and the Bush administration are holding U.S. troops hostage in Iraq until they get what they want. Once the companies get their lucrative contracts, they will still need protection to get to work. What better security force is there than 144,000 American troops?
Three days after the release of the Iraq Study Group Report, the al-Maliki government announced that Iraq’s oil law was near completion. The law adopts PSAs and not only opens Iraq to private foreign companies, but permits “for the first time–local and international companies to carry out oil exploration in Iraq.”
To ensure that this model prevails, the Iraq Study Group recommends that Iraq’s constitution be rewritten to give the central government of Iraq–as opposed to individual regions–the ultimate decision-making authority over all of Iraq’s developed and undeveloped oil fields.
Standard Oil Company’s John D. Rockefeller famously said, “Own nothing, control everything.” He would be proud of the U.S. oil companies and the Bush administration, as they seem poised to get exactly the control they want over Iraq’s oil.
Beyond Iraq: the U.S.-Middle East Free Trade Area
But the Bush agenda has never been limited to Iraq. As the Wall Street Journal reported in May 2003, “For many conservatives, Iraq is now the test case for whether the U.S. can engender American-style free-market capitalism within the Arab world.” To this end, the administration has used the “stick” of the Iraq war to convince nations across the Middle East to adopt its free trade agenda. The mechanism for doing so is the president’s U.S.-Middle East Free Trade Area (MEFTA).
The corporate lobbying group behind the MEFTA, the aptly named U.S.-Middle East Free Trade Coalition, includes among its 120 members Chevron, ExxonMobil, Bechtel and Halliburton–companies intimately connected to the Bush administration that have already been big winners in Iraq.
Insulated by oil revenue, the Middle East has largely avoided succumbing to the sacrifices required under free trade agreements. But since the war began, negotiations for the MEFTA have progressed rapidly.
The Bush administration devised a unique negotiating strategy for the MEFTA. Rather than negotiate with all of the nations as a bloc, the United States negotiates one-on-one with each country. This means that every nation–some half the size of one state in the United States–must try to make a deal that serves its own interests with the most economically and militarily dominant nation in the world. The reality is that there can be no “negotiation” between such thoroughly unequal pairings.
These individual free trade agreements are then united under the MEFTA. If successful, the MEFTA would be concluded by 2013 and include 20 countries: Algeria, Bahrain, Cyprus, Egypt, Palestine, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Syria, the United Arab Emirates, Tunisia and Yemen.
To date, the Bush administration has signed 13 Trade and Investment Framework Agreements (TIFAs), which demonstrate a country’s commitment to the MEFTA, and are considered the key step towards passage of a full Free Trade Agreement (FTA). Things have moved briskly since the invasion of Iraq. Algeria and Bahrain signed before the war, while agreements with Lebanon (the most recent, signed in December), Tunisia, Saudi Arabia, Kuwait, Yemen, the United Arab Emirates, Qatar, Egypt, Morocco, Oman and Iraq all followed the war.
The United States has signed FTAs with five Middle Eastern countries: Israel, Jordan, Morocco, Bahrain, and Oman. The last three were signed after the 2003 invasion of Iraq. Negotiations with the United Arab Emirates are underway and near completion.
The winners, of course, are U.S. corporations. On January 19, 2006, for example, then-U.S. Trade Representative Robert Portman sent a letter to Oman’s minister of commerce and industry affirming that, when it signs contracts, the Omani government may not give preference to the government’s state-controlled oil companies.
As for Oman’s apparel industry, the U.S. International Trade Commission estimates that the U.S.-Oman agreement will lead to a 66 percent increase in U.S. imports of apparel manufactured in Oman. What are the likely effects? In May, a report by the National Labor Committee detailed the cost of the first Middle East trade agreement signed by Bush in December 2001–the U.S.-Jordan FTA. After that agreement was implemented, new factories arrived in Jordan to service American companies, primarily apparel firms such as Wal-Mart, JC Penney, Target and Jones New York. These factories have engaged in the worst kinds of rights violations, including 48-hour shifts without sleep, physical and psychological abuse, and, in the case of imported foreign workers, employers who hold passports and refuse to pay. (Wal-Mart also is a member of the U.S.-Middle East Free Trade Coalition.)
The Bush administration will spend the next two years aggressively pushing the MEFTA as it seeks to expand the economic invasion of Iraq to the entire region.
Throughout his presidency, George W. Bush has claimed that we will live in a safer, more prosperous, and more peaceful world if the United States remains at war and if countries throughout the world change their laws and adopt economic policies that benefit America’s largest multinational corporations. The Bush Agenda has proven to have the opposite effect: increasing deadly acts of terrorism and economic insecurity, reducing freedom, and engendering more war. To replace the Bush Agenda, we must address each of its key pillars individually–war, imperialism and corporate globalization.
The most urgent first step is ending the war in Iraq by ending both the military and corporate occupations. We in the peace movement have already made tremendous progress in reaching these ends. Most Americans now oppose the war. The peace movement has welcomed with open arms U.S. soldiers and their families who share this opposition and unity has made us all stronger. Counter-recruitment efforts are blossoming across the country. The U.S. labor movement has joined forces with its counterpart in Iraq. Protests at corporate headquarters and shareholder meetings have led to U.S. war profiteers being called to account for their abuses in Iraq. Our success was made concrete with the dismissal of the president’s party from power in both the House and the Senate.
According to “Election 2006: No to Staying the course on Trade,” by Public Citizen, 18 House races saw “fair traders” replace “free traders” in the midterm election, and not a single “free trader” beat a fair trade candidate. In every Senate seat that changed hands, a fair trader beat a free trader. One of their most important tasks this year will be to deny Bush the renewal of Fast Track negotiating authority when it expires in July. Fast Track allows the president to move trade bills through Congress quickly by overriding core aspects of the democratic process, such as committee deliberations, full congressional debate and the ability to offer amendments.
In addition to the newcomers, several existing allies have been elevated to new positions of power. Rep. Ike Skelton (D-Mo.) is now chairman of the House Armed Services Committee. He has pledged to resurrect the subcommittee on oversight and investigations. Rep. David Obey (D-Wisc.) will use his chairmanship of the House Appropriations Committee to exercise greater oversight of Bush’s war spending. The most important ally, however, will likely be Rep. Henry Waxman (D-Calif.), the new chairman of the House Government Reform Committee. Waxman has been one of the most effective and aggressive critics of Halliburton’s work in Iraq, greatly contributing to Halliburton’s loss of its LOGCAP contract.
Our allies in the new Congress should put forward two key demands:
First, all remaining and future U.S. reconstruction funds must be turned over to Iraqi companies and Iraqi workers. SIGIR found that when Iraqi companies receive contracts (rather than subcontracts from U.S. companies), their work is faster, less expensive and less prone to insurgent attack. There are literally hundreds of both private and public Iraqi companies–and millions of Iraqi workers–ready, able and willing to do this work. U.S. military commanders and soldiers in Iraq have repeatedly made this demand as they have learned firsthand that a person with a clipboard or a shovel in his or her hands is far less likely to carry a gun.
Second, U.S. corporations must not be allowed to “cut and run.” Every U.S. corporation with reconstruction contracts in Iraq must be individually audited and each project investigated by SIGIR. Misspent funds must be returned and made available to Iraqis for reconstruction. SIGIR has begun this process with plans for a full audit of Bechtel’s work due out early this year. SIGIR needs more staff, greater oversight authority and more money to complete this work in a timely manner.
The Democrats must abandon the Bush administration’s plan to remake Iraq into an economic wonderland for U.S. corporations. Iraq must belong to the Iraqis to remake as they see fit. Nowhere is this demand more critical than in the case of Iraq’s oil.
It is clear that Iraq needs to develop its oil sector to survive and that it needs to retain as much of the proceeds from its oil as possible. It is also clear that it should be the Iraqi public–freed of the external pressure of a foreign occupation, the Bush administration and U.S. corporations–that decides how its oil is developed. U.S. oil corporations cannot be permitted to “win” the war in Iraq while we–Iraqis and Americans–pay the price for their victory.
Antonia Juhasz, a visiting scholar at the Institute for Policy Studies, is the author of The Bush Agenda: Invading the World, One Economy at a Time, on which part of this article is based. She is working on a new book that will make the case for the break-up of the largest American oil companies. Learn more at www.TheBushAgenda.net.