by Greg Palast
Missing: A Billion and a Half in Oil
But Bremer’s Governing Council feasted.
Instead of installing one of the State Department’s four-star strongmen in Baghdad, Bremer chose the Pentagon’s pet Iraqis for his Governing Council (“GC”) that stitched together Kurdish warlords, scary sheiks and sticky-fingered ex-pats under the control of Ahmad Chalabi, a convicted bank swindler sought by Jordanian authorities. Despised but not feared, Bremer’s GC could not hold power without a huge American guard.
In no time, the Oil for Food program, which had been, under the former regime, a tightly controlled conduit for kickbacks to Saddam’s buddies, became, under U.S. rule, a loosely controlled conduit for huge kickbacks. With a nod and wink from the UN and, let’s not forget, U.S. brokers who bought the stuff, Saddam skimmed $1.7 billion off the $65 billion program. This was amateur stuff, a rake-off, reported The Wall Street Journal, of only about fifty cents a barrel.
Under the new regime, “Corruption is rampant—more than ever,” worse than under Saddam, one oilman complained to me, on condition, as you can imagine, of anonymity. The kickbacks kicked up into higher percentages.
It’s, “you wanna get a contract you gotta get the people who participate in it,” so it’s you know, it’s direct pay-offs to Government officials, by commercial operators, who demand it in order to give people access to anything, whether it’s oil or information.
Oil simply disappeared. During its one year in power, Bremer’s Civilian Provisional Authority says Iraq’s Governing Council sold $10 billion of petroleum—or maybe they sold $11.5 billion, depending on which set of reports you check. Wonder how to lose track of a billion and half dollars in oil? Answer: Iraq’s oil was unmetered.
Investigators with George Soros’s Iraq Revenue Watch and Christian Aid of Britain did their best to find the Iraqis’ oil money, but the CPA, once it closed shop, sealed their books, which, along with the oil, disappeared.
Who pocketed the loot? Don’t ask Mr. Bremer. Before he slipped out of Baghdad, he had a little trouble with CPA bookkeeping himself. We all lose an expense receipt or two on occasion, but the CPA’s petty cash drawer was fatter than most. They kept $200 million in bricks of U.S. currency in a room in Saddam’s palace and another $400 million tucked away here and there. Agents could check out these cash bricks, like library books. Unlike a library, they didn’t have to return them as long as they brought receipts. One agent took $23 million in a tub of cash and returned with $6 million in receipts. Another took $25 million and returned, it appears, with nothing at all. In all, 363 tons of U.S. currency were shipped to Iraq. Where did the cash go?
Let’s get realistic. A little grease around the edges is the norm for war. But we’re not talking edges here. According to U.S. government inspectors, of the $8.8 billion spent by the Bremer “interim government,” $8 billion is not properly accounted for. Ninety-six million dollars from Bremer’s cash piggy bank is gone with the wind. Bremer didn’t take it, but he just can’t say for sure where it went. Inspectors examined 198 contracts at random and found that 148 showed no evidence that that the money paid for anything, neither work nor goods. Another test of $327 million in contracts showed payment figures off by $228 million.
Where did the money go? The Bremer-Bush regime’s policy is, “Don’t ask, don’t tell.” The interim government stonewalled international auditors. However, contract employees, nauseated by the hogs at the trough, brought claims under U.S. law, which bars war profiteering. But the CPA had a perfect defense: This isn’t U.S. taxpayer money. The missing cash and the billions handed out without receipts by Bremer’s crew were taken from Iraq’s own accounts at the U.S. Federal Reserve. This was cash left over from the Oil for Food program and its successor, the “Development Fund for Iraq,” made up of donations and profits from Iraq’s own oil sales.
What about Iraqi law? Forget it. The money was given to the “Civilian Provisional Authority”—which isn’t a U.S. agency and it’s not an Iraqi agency. And now it doesn’t exist. Not only are the billions gone, but so is the Authority itself. The perfect getaway car—one that simply disappears.
Not just bricks of dollars took flight. The Pentagon plan called for replacing the Iraqi money which had Saddam’s smirking face on it with new “dinars.” Nineteen billion in the new dinar notes (about U.S. $1.3 million) were found, mysteriously, on board a plane in Lebanon sent from Iraq by the Interior Minister of the Bremer “government.”
Chicago Boys to Baghdad
Where did they find these guys?
I asked insiders how Ahmad Chalabi, a fugitive from Jordanian jailers, who hadn’t set foot in Baghdad since he was a child, could have floated to the top of the neo-con list to replace Saddam.
His career as leader of Iraq was not born in Baghdad but in Chicago, where he and his two schoolmates, Paul Wolfowitz and Richard Perle, spent their sober, unyouthful days. This was the sixties. While the rest of us at the University of Chicago grew long hair and wore peace symbols, these guys had briefcases and discussed the “manly art of war” and “graduated deterrence” bombing with strange Professors Leo Strauss and Albert Wohlstetter. In other rooms, the “Chicago Boys” took lessons from Milton Friedman and his acolytes. (I joined them, surreptitiously working for the electrical and steelworkers unions, trying to figure out what the Chicago Boys were up to.) There the Chicago Boys planned for General Pinochet, the free-market-and-interim-dictatorship model that would eventually mutate into the neo-con “Economy Plan” for Iraq.
Chalabi’s unwild college days with future gods of the neo-con pantheon gave him access and protection, but his power, I’m told, came from a lesser-known neo-con light: Harold Rhode.
When Bush came to power, the Arabic-speaking Rhode was strategically placed at the Pentagon’s “Office of Net Assessment,” one of those oddly named fulcrum points of hidden power. We now know (see “The Other Downing Street Memo,” below) that, in 2002, the British Defense ministry told the Prime Minister Tony Blair that the Pentagon had “fixed…facts and intelligence” on Iraq to match George Bush’s sales pitch for war. The Office of Net Assessment was one of the repair shops accused of smoothing and repainting views not conforming to the neo-con stratagem or Bush’s bias. When I interviewed Bob Ebel, the former CIA oil expert, he suggested, when the cameras were off, that Net Assessment was the dream factory that produced the fantasy oil gushers for Wolfowitz.
By control of information flow, net assessment could allay any qualms about the people of Iraq’s love of the neo-cons’ anointed man, Chalabi. (However, once Chalabi took power in Baghdad, a large U.S. occupation force would be needed to ensure Iraqis’ affection for him.)
Rhode is “one of those Arab-haters, Muslim-haters, everything haters,” hissed a well-placed Saudi Arabian out to discredit him. Rhode is no such thing. In practice, Rhode is an OPEC-hater. But, of course, to a Saudi, OPEC, the Organization of the Petroleum Exporting Countries, the oil monopoly, is everything.
Rhode, said the Saudi, saw Iraq as the weak fissure in the OPEC edifice. The right tool—Ahmad Chalabi—properly placed in the crack, could break OPEC apart. Chalabi was right for the task, a rare “Iraqi” ready to call for his nation’s quitting the OPEC cartel.
And the tool was cheap as these things go, the rental already paid. The CIA and Defense Intelligence Agency, beginning in 1992, had been giving Chalabi’s group, the “Iraqi National Congress,” monthly stipends of typically $335,000 per month. The “Iraqi National Congress” was neither in Iraq nor a Congress, but with CIA pay stub in hand, Chicago ties, and the neo-con plan in his pocket, Chalabi made himself a government in exile. The convict, still on the run from Jordanian police, opened Iraq for business even before he arrived there. In late 2002, Ahmad Chalabi met privately with executives from three big U.S. oil companies. With his fellow tribesman, Fadhil Chalabi (in London), Ahmad Chalabi was hot to sell off Iraq’s oil fields—in accordance with page 73 of the neo-con Economy Plan. We only know of the secret meetin
g because British Petroleum screamed bloody murder over being left out of Chalabi’s sale-a-thon.
The aim of the neo-con Chicago Boys was for Chalabi to get Iraq out of OPEC, or at least bust its quotas. But before he could be used to destroy OPEC, Chalabi, who hadn’t lived in Iraq for four decades, had to get back in—and quickly, before the State Department put others in power. On April 6, 2003, two weeks after U.S. motorized cavalry sped through southern Iraq, when enemy fire would not ruin the photo-op, Chalabi landed at Nasariyah at the head of a “liberation” force of 700 Iraqi exiles. They had secretly trained for the mission in Hungary. Saddam, whose intelligence agents had likely infiltrated the group, would have known they were coming. Nevertheless, I’m told, the invasion force realized its goal: The State Department, kept in the dark about the Pentagon’s airlift of Chalabi’s army, was taken completely by surprise.
PART 2½
A BRIEF HISTORY OF GULF WARS ONE THROUGH SIX
The Other Downing Street Memo
In the “Downing Street Memo,” top-secret meeting minutes (secret no more), Britain’s Prime Minister was told in July 2002, eight months before the invasion, that “the facts and intelligence were being fixed” for President Bush to justify his plan to attack Iraq.
It would also be useful to review other memos to the Prime Minister at No. 10 Downing Street written by military diplomats on the ground. One wrote:
The people of England have been led in Iraq into a trap from which it will be hard to escape with dignity and honour. They have been tricked into it by a steady withholding of information. The Baghdad communiqués are belated, insincere, incomplete. Things have been far worse than we have been told, our administration more bloody and inefficient than the public knows. It is a disgrace to our record, and may soon be too inflamed for any ordinary cure. We are today not far from a disaster.
The Prime Minister did not ignore the missive. He responded, after Fallujah was retaken:
You do not need to bother too much about the long term future in Iraq. Your immediate task is to get a friendly Government set up in Baghdad.
The diplomat, in this case, was T. E. Lawrence—“Lawrence of Arabia”—and the Prime Minister, Winston Churchill (words actually written years later, after Fallujah was captured in 1941).
A hyperventilated tour of history is in order here.
In 1920, the Kurds were gassed. But you can’t blame Saddam for this one. It was Churchill, who’d suggested a scientific study:
I am strongly in favor of using poisoned gas against uncivilized tribes to spread a lively terror… against recalcitrant Arabs as an experiment.
The Royal Air Force thought Churchill squeamish—the politician wanted to paralyze Iraqis, not kill them. The RAF ran their own experiment, initiating what may be history’s first-ever mass aerial assault, killing 9,000 Iraqis with 97 tons of bombs, a kill-to-munitions ratio not matched until Gulf War 5 (“Desert Storm”) in 1991, when U.S. and British high-level carpet bombing of lines of refugees from Basra killed a thousands of Shias. (An odd favor for Saddam who thought there were too many Shias anyway.) Of course, in 1920, Churchill had a right to be angry at the ungrateful Middle Eastern nation: He’d just invented Iraq the year before in a deal with the French.
That happy event occurred in 1919, when, as Air and War Minister, Churchill argued the next world war would be fought with airplanes. That would require air bases and airplane fuel. So Iraq was born, as the “coaling station” for the new Royal Air Force—General Garner’s scheme was not an original—sewn together from three large potential oil fields at Kirkuk-Mosul, at Baghdad and at Basra. Two years later, in 1921, the British crowned a Saudi Arabian, Faisal I, as King of Iraq, a place he’d never seen. (At least, when the Americans repeated British precedent, the Pentagon chose a leader, Mr. Chalabi, who had at least visited Iraq’s Kurdish zone seven years earlier.)
Pundits today say Churchill’s design showed his ignorance of the centripetal ethnic conflicts inherent in this amalgam. Far from it. A maker of history but also a student of it, Churchill would have realized this arrangement suited war’s needs well. A hopeless and hapless mix of Kurds (Kirkuk), Shias (Basra) and Sunnis (Baghdad) could be counted on to cut each other’s throats before they would join together to challenge their colonial authority.
Lawrence of Arabia warned the Brits that they would reap the whirlwind by promising Iraqis freedom then holding them as an oil colony—but he died too young to see his jeremiads come true. That would happen in 1941, when Rashid Ali, a nasty little man with a moustache, seized power to become dictator, hoping to win his place in the hearts of Muslims worldwide by supporting the Palestinian cause. But the Palestinian cause also became Hitler’s cause and the Palestinian leader, the Mufti of Jerusalem, taking sanctuary in Baghdad, was soon wooing Iraqi strongman Ali toward a deal to supply oil to the Nazi’s New World Order then arriving by Panzer division through southern Russia.
Churchill countered by ordering a landing at Basra. (In 2003, the U.S. military assigned the Brits to take Basra once again, further proof that Americans have a sense neither of history nor of irony.) The Brits of ’41 crushed the Iraqi army within weeks at Fallujah, then took Baghdad with just a couple of tanks, and set up a Governing Council. Hitler’s Russian assault ran out of gas, literally.
As to Churchill’s “ignorance” in 1919 in further dividing Kurdish lands among several ad hoc states, that is an unlikely charge against an accomplished historian. He knew the Kurds well. It was a Kurd, Salah al-Din Yusuf ibn Ayyub (“Saladin”), who defeated the Crusaders (including “Ivanhoe”) at Jerusalem in 1187. The lesson is nearly a thousand years old, but Brits never forgot that an armed and independent Kurdish state is a dangerous state.7 It is true that the Kurds are among the world’s sad peoples who remain stateless in a land in which they are a homogeneous majority. But it should be noted that the Kurds created Kurdistan by driving away or murdering others within a sword’s length. Much is said about the Turkish massacre of a million and a half Armenians in 1915, the twentieth century’s first of many genocides. In fact, while it was the Ottoman Turkish military that directed the killings, the Turks merely had to arm the Kurds, who merrily completed the job of slaughtering Armenians and taking their homes. It’s a fine tradition of ethnic cleansing the Kurds continue today in a free Iraq, ridding Kirkuk of its Turkmen minority.
The Kurds’ mass murder of Armenians would not have disturbed Churchill per se, but he could not ignore the fact the Kurds committed the atrocities at the command of Britain’s enemy (the Ottomans). In the gentleman’s great game of empire, this could not go unanswered. One can imagine Winston, border-cutting scalpel in hand, inspired by his fourth brandy, placing the blade at the heart of Kurdistan and thinking, Your turn.
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Gulf War Six
It seems the British attitude toward Iraq is, it’s a nice place to conquer, but not a place you’d want to occupy. For America, the invasion of 2003 was Gulf War Two. For the United Kingdom, this was Gulf War Six. And we’re not counting the itsy-bitsy interventions or proxy wars—nor the Crusades, though Muslims would certainly count them. For Britain, this is a history gone and forgotten; for Americans, a history not learned in the first place.
1916–18 Gulf War 1: War of Independence from Ottoman Empire instigated by “Lawrence of Arabia.”
1920 Gulf War 2: War of Independence from British Empire. Crushed when UK bombs Kurds and Arabs.
1941 Gulf War 3: Reconquest of Iraq by British Empire. British invasion overthrows Iraqi/Palestinian allies of Hitler.
1956 Gulf War 4: Suez “Crisis.” Canal retaken.
1991 Gulf War 5: Desert Storm.
2003 Gulf War 6: Operation Iraqi Liberation.
___? Gulf War 7:______________
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PART 3
THE WAR FOR OPEC: THE NO-BRAINERS VERSUS THE WITCHES BREW
“Was the invasion about the oil?” Bob Ebel asked himself, anticipating my question. “No,” he answer
ed himself, “it was about getting rid of Saddam Hussein.”
Then why did the Pentagon fly him to London?
“The morning after, it’s about oil.”
But what about the oil?
Here’s what I found. It’s not the oil itself—the United States could have doubled our take from Iraq simply by lifting sanctions. It’s all about George Bush’s seat on OPEC. That is the real, if never discussed, booty of this war.
But what George Bush should do with his OPEC perch is what requires the occupation to drag on, not the provincial tussle between Shias and Sunnis, but the gladiatorial fight to the death between neo-cons and the Big Oil establishment.
This was The Prize: Through the new captive state of Iraq, the power to control or destroy OPEC, the Organization of Petroleum Exporting Countries, the elite club that sets oil’s price.
And it all began with Ari Cohen.
The Godfather of Plan B
“It’s a no-brainer,” Cohen told me of his grand design to divide and sell Iraq’s entire oil industry. Cohen operates from the Heritage Foundation, the madrassa of neo-con fundamentalism in Washington, DC. For the neo-cons, this was The Big One. Long before the State Department dreamed of the three-day coup, long before George Bush “won” Florida in 2000, Cohen and his neo-comrades at the Heritage Foundation and American Enterprise Institute had big plans for the Middle East. Their true target was not Saddam. He was just a troublesome nudnik whose replacement would provide the hunting blind to shoot at bigger game: the Saudi Arabians. Getting at the Saudis required tearing apart OPEC. And tearing apart OPEC was completely dependent on the privatization of Iraq’s oil reserves, the second-largest in OPEC after the Saudis.