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The Final War for Resources: Special
Update
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OnlineInvestorsNews
Volume M 10-6, March 31, 2005
a free supplement of The Growth Stock Report www.jameswinston.com
Neo Cons Lose Control of Iraqi Oil
For the past few years I have been documenting how Washington's
neo-conservatives have been pushing to remove Saddam Hussein
from power and in doing so, take control of Iraq's oil.
For the sake of new readers, let me just recap that this
agenda has been around well before 9/11 and even before George
W. Bush was elected President.
The viewpoint of these extreme right wingers is that ultimately
the security of the United States rests on the free flow of
oil. And without it, the American way of life - the free enterprise
economy, health and welfare, the maintenance of the world's
most powerful armed force and so on - would quickly grind
to a halt.
When George Bush Jr. came to power in January 2001, the White
House and the Pentagon were at once populated with hard line
hawks in positions of power. With the likes of Dick Cheney,
Donald Rumsfeld, Richard Perle, and Paul Wolfowitz - it was
game on to accomplish the vision.
The neo conservatives now had the right people in place to
go after their number one objective - Iraqi oil.
Just days after the Bush administration took control of the
White House, Vice President Dick Cheney headed up the new
energy task force. Their acute awareness of the tightening
U.S. oil supply was revealed when Cheney confirmed that U.S.
production had peaked in 1970 and by 2000 output was 39% below
the peak. Cheney pointed out that "dependence on foreign
sources of oil is at an all-time high and is expected to grow…the
U.S. and global economies remain vulnerable to a major disruption
of oil supplies. The Gulf will be a primary focus of U.S.
international energy policy."
In those early days just after Bush moved into the White
House the National Security Council held their first meeting
where plans to overthrow Iraq where at the top of the agenda.
Revelations of these meetings where gathered by Wall Street
Journal reporter Ron Suskind and documented in his book: The
Price of Loyalty: George W. Bush, the White House, and the
Education of Paul O'Neill.
The book reports that former U.S. treasury secretary Paul
O'Neill told of his surprise when he found out that getting
rid of Saddam and a proposal for military action in Iraq were
the administration's number one priority.
O'Neill recalled that at the next National Security Council
meeting just two days later, Rumsfeld had rejected an idea
from Colin Powell that targeted sanctions should be brought
against Saddam. Rumsfeld instead was pushing hard for an outright
overthrow of the Iraqi government.
According to O'Neill, Rumsfeld reportedly stated "Imagine
what the region would look like without Saddam and with a
regime that's aligned with U.S. interests."
Then September 11th came along. You know the terrible story.
The next day, Bush links al Qaeda with Saddam. The following
weekend the group meets again. O'Neill recalls that Wolfowitz
is urging military action against Iraq.
O'Neill's recollections are further confirmed by Richard
Clarke who served as the top counter-terrorism expert in the
White House before he resigned last year. Clarke stated in
his book Against All Enemies that he was shocked to discover
that on the day after the 9/11 attacks, he showed up for work
at the White House expecting to discuss al-Qaeda but instead
the conversation centered on Iraq. Clarke states he "realized
with almost a sharp physical pain that Rumsfeld and Wolfowitz
were going to try and take advantage of this national tragedy
to promote their agenda about Iraq."
The Bush administration are no dummies when it comes to the
global oil economy. They know U.S. oil production has peaked
and is now on a downward plunge.
With the U.S. having a growing dependency on oil imports
which are estimated to hit 90% by 2020, the economic future
of the U.S. is very much dependant on the supply of oil -
most of which comes from the Mid East.
Before the invasion of Iraq took place, a plan was already
in place on how to deal with Iraq's oil. The neo con's guide
book for governing the occupied nation of Iraq was titled
"Moving the Iraqi Economy from Recovery to Sustainable
Growth." This action plan had the seal of approval of
Paul Wolfowitz and the other hard liners in Washington.
Aside from securing Iraqi oil fields, the neo conservative
agenda had another specific objective in mind. After the successful
invasion, the next order of business was to privatize Iraqi
oil assets which would allow for the free flow of oil into
the open market. The idea here was to crush OPEC's strangle
hold on world supplies and pricing by flooding the oil market
with millions of barrels of excess capacity.
In order to accomplish this objective however, the power
brokers first needed to privatize Iraqi oil assets. Once Baghdad
fell, Washington thought their plan to sell off Iraqi oil
assets to friendly hands would be a slam dunk. The neo cons
thought everyone was on the same page- literally. But that
was not the case.
In an interview with Newsnight of London, Robert Ebel, a
former CIA and Energy oil analyst said he flew to a secret
meeting in London at the request of the State Department to
strategize the reorganization of Iraqi oil assets.
The man selected to implement the plan was Philip Carroll,
a former CEO of Shell Oil. Carroll's job was to take control
of Iraq's oil facilities and production while the paperwork
for the sale of Iraqi oil assets was drawn up by the puppet
interim governing council of Iraq.
However the neo-cons dream was about to be shattered when
they learned that the power brokers behind the scenes in the
State Department had no desire to sell off Iraqi oil assets.
This was made clear by their front man, Carroll who stated
in May of 2003 that "There was to be no privatization
of Iraqi oil resources or facilities while I was involved."
It seems the State Department had their own influential group
who had much different plans - Big Oil Inc.
The evidence of these new plans were obtained from the State
Department by way of the U.S. Freedom of Information Act and
reported by Newsnight and Harper's Magazine.
The new plan was completed in January 2004 under the direction
of Amy Jaffe of the James Baker Institute. This is the same
James Baker who was the former U.S. Secretary of State but
is now practicing law. His firm, Baker Botts just happens
to represent the world's largest oil company, ExxonMobil and
the Saudi Arabian government. AKA - Big Oil Inc.
What a tangled web THEY weave.
As you can imagine, Big Oil Inc. wasn't too happy about the
prospects of Iraqi oil diluting the highly structured quotas
set by OPEC and thus forcing the price of oil to drop - and
with it record breaking profits.
Ms Jaffe revealed to Newsnight that the oil industry prefers
state control of Iraq's oil over a sell-off because it fears
a repeat of Russia's energy privatization where U.S. oil companies
were locked out.
Jaffe said "There is no question that an American oil
company ... would not be enthusiastic about a plan that would
privatize all the assets with Iraq companies and they (US
companies) might be left out of the transaction."
Philip Carroll concurs, "Many neo-conservatives are
people who have certain ideological beliefs about markets,
about democracy, about this that and the other. International
oil companies without exception are very pragmatic commercial
organizations. They don't have a theology."
Conclusion
Well you can forget about low oil prices. The balance between
increasing world oil demand and stagnant supplies is destined
to be under the control of OPEC for the foreseeable future.
On the upside, we as investors are destined to reap the benefits
of greater profits from select oil and gas stocks going forward
as well. The neo cons plan of cheaper oil, for now at least,
is history. With Big Oil Inc. now influencing the destiny
of Iraqi oil, you can now bet high prices will be with us
for some time to come.
Bill Ridley
Publisher
OnlineInvestorsNews
www.jameswinston.com
***
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