by Greg Palast
Morse was close-lipped about who saw and used the 2001 Baker-CFR report, but Amy Jaffe could not help telling me that Morse reported its conclusions in a briefing at the Pentagon. More important, back in early 2001, the initial Baker-CFR report (another participant tipped me) was handed directly to Vice President Dick Cheney. Cheney met secretly with CFR task force members and other energy industry comrades to go over the maps of Iraq’s oil fields. That, apparently, sealed it. Cheney took Morse’s CFR/Baker recommendations as his own plan for dissecting Iraq, I’m told, beginning with the none-too-thinly-veiled take-out-Saddam “assessment.”13
And whose plan was it? The membership of the Baker-CFR group was Big Oil and its retainers. But I was curious to know who put up the cash for drafting the extravagant report that was so protective of OPEC and Saudi interests. This 2000–2001 document was, after all, the outline on which the Bush administration drew its grand design for energy, from Iraq to California to Venezuela. According to Jaffe’s introduction, the cost of this exercise in Imperialism Lite was funded by “the generous support of Khalid al-Turki” of Saudi Arabia. Did he who pays the piper call the tune?
It is worth underscoring that the Baker-CFR report duly inventoried Iraq’s enormous untapped oil reserves—then carefully noted these riches must never be touched, nor Iraq leave OPEC, without inviting crushing punishment from Saudi Arabia. “Punish” is a term straight out of the report. From the Saudis’ point of view, al-Turki’s generosity was money well spent. The Saudis could, if provoked, economically devastate Iraq—which now had fair warning.
PART 5
WOLFOWITZ DÄMMERUNG: TWILIGHT OF THE NEO-CON GODS
The Decision from the Bunker
As the occupation slogged into 2004, there were still two competing plans for Iraq’s oil: the OPEC-friendly state-owned oil company and privatization of the fields, Cohen’s no-brainer, favored by Chalabi’s Governing Council.
More was at stake than Plan A versus Plan B. This chapter, beyond Iraq and its oil, is about the flow and tides of power, centered on a struggle over two competing visions for the Middle East; on one side, the aggressive neo-con agenda for remaking Arabia as a Little USA (or better, another Chile); on the other, Big Oil and the State Department’s history-hardened view of the Middle East as a giant gas station inhabited by creatures with inscrutable superstitions and violent habits best not disturbed.
Someone had to choose. It was time for the big man in Washington, sitting in judgment over the factions, to make a decision. And that would be, Ed Morse told me,
The person most influential in running American energy policy, the Vice President.
In over four years of investigation, not one insider I spoke with suggested that George Bush weighed in at all on the decisions that would determine the fate of Iraq, the length of war or the price America would pay for oil.
The Pentagon crowd had hope: Cheney is a card-carrying member of the Rumsfeld/Wolfowitz Project for a New American Century. But, in the end, said a confident Morse, the Vice President would never let neo-cons gun down OPEC nor bring down the industry that raised him.
* * *
S.P.R.
Cheney’s Strategic Political Reserve
When the “oil-will-be-cheap” propaganda of 2003 ran into the reality of 2004, oil prices doubled to over $50 a barrel and gasoline closed in on $3 a gallon.
Neo-cons—joining, oddly, with Democrats—had a solution. They were pushing Vice President Cheney to use America’s special weapon to cut down the post–invasion price spike: our Strategic Petroleum Reserve. Bill Clinton had done it, dumping oil from U.S. government stocks when oil threatened to bust above $30 a barrel. Clinton worked out this price-capping stratagem with the complicity and connivance of Venezuela’s President Hugo Chávez, who, not incidentally, was also president of OPEC. Chávez got Clinton to agree to an implicit floor of $20 in return for agreeing to a cap of $30 per barrel. Clinton, by releasing or merely threatening to release oil from the Strategic Petroleum Reserve, maintained the Goldilocks not-too-hot-not-too-cold solution known as “The Band.”
Cheney doesn’t like Clinton and he doesn’t like Chávez and he certainly doesn’t want to play in their band. “We keep the Strategic Petroleum Reserve available to deal with true emergencies, national crisis,” the Vice President said in a sneering comparison with Clinton. Cheney released oil only one time during the first Bush term. The “national crisis” was the hurricane that hit Florida in late 2004. Cheney released oil from the Reserve only and solely to refiners in Florida. This created a short-lived dip in gasoline prices in Florida just before the presidential election. The timing, doubtless, was coincidental.
For the Vice President, releasing reserve oil to bring down prices was Clintonesque impiety. The petroleum industry’s freedom to price is as sacred to the Vice President as free speech to the ACLU. Cheney “thinks security begins by building an S.P.R. and letting prices follow where they may,” Hess Oil Trading’s Ed Morse told me. Oil at $50 a barrel? Cheney’s response was, Fill’r up! He added to the reserve as prices jumped. The 2005 energy bill quietly authorized new purchases of 300 million barrels. In other words, Cheney dealt with higher oil prices by letting them go higher.
* * *
CHENEY ENERGY PLAN
Both the timing, this map and the few other papers pried from Dick Cheney’s secret March 2001 meeting with Ken Lay and other oil and power company executives (whom he refuses to name) suggest its topics were taken from the Council on Foreign Relations / James Baker Institute joint recommendations for global energy control. (Lay was a member of the CFR-Baker group.) These recommendations include “military, energy, economic… assessments” of Iraq and other oil-producing states. (Map Source: Judicial Watch)
BUSH ENERGY PLAN
“Turn Ordinary Tap Water Into Hydrogen Fuel!” In his 2003 State of the Union address, the President called for betting America’s energy future on hydrogen. “A single chemical reaction between hydrogen and oxygen generates energy, which can be used to power a car,” he said. I could not fathom where he got the idea. Then this arrived in the mail for my kids. (Toy and catalog listing from Mindware, “Brainy toys for kids of all ages.” Mindwareonline.com 1-800-999-0398.)
A triumphal Morse told me (admittedly, in the conversation he said we never had):
The VP’s office [has] not pursued a policy in Iraq that would lead to a rapid opening of the Iraqi energy sector… so they have not done anything, either with producers or energy policy, that would put us on a track to say, “We’re going to put a squeeze on OPEC.”
The quotas were safe, OPEC was safe and Big Oil had won. But to put the industry’s plan into place, the Options “so generously supported” by the Saudis, to create a permanent, all-powerful state oil company in Iraq, another regime change was necessary: Ahmad Chalabi and his oil ministry toy-boy, Bahr al-Ulum, had to go.
Day of the Long Knives
And they went. On May 20, 2004, Iraqi police raided Ahmad Chalabi’s home in Baghdad and carted away his computers and files. Two days before, the CIA yanked his $335,000 monthly stipend for his front group and his White House sponsors launched the character assassination leak barrage they had previously practiced on General Garner. Chalabi was now hunted by his own government: The charge was espionage, no less, for Iran.
Chalabi was swapped for another CIA payroller, ex-Ba’athist Iyad Allawi, dubbed “Prime Minister” of the newly sovereign Iraq, chosen by an electorate made up of the occupying powers. New puppets, same strings.
Chalabi’s Governing Council was shut down and, crucially, Bahr al-Ulum was yanked from the Oil Ministry. With Chalabi off the “De-Ba’athification Committee,” the way was clear for the return of Saddam’s old nomenklatura, headed by oil industry favorites Mohammad al-Jiburi, brought back to Baghdad from Westchester, New York, as new Minister for Trade, and Thamir Ghadbhan, ex-Ba’athist technocrat, who was back on top as Oil Minister, replacing the man who had replaced him.
Sovereignty meant, if not an elected government, at least one that could quickly get back to the oil industry’s Options for Iraqi Oil. In accordance with the Options plan, Ghadbhan rushed to announce to the Financial Times that he would establish a state oil company to own and control all reserves.
June 30, 2004: “Sovereignty Day.” It was, as our president said, a peaceful transfer of power—but not to the Iraqi people. Rather, it was a passing of authority from the neo-cons to the IOCs, the international oil companies.
Completing that transfer would require still more regime change. Paul Bremer was made to walk the plank, replaced as our top man in Baghdad by the State Department’s John Negroponte. Ambassador Negroponte was once a hero to the neo-cons because he allegedly turned a blind eye to the right-wing death squads in Honduras during the Reagan years. But he’d become a wizened State Department pragmatist, an early opponent, I’m told, of the neo-con’s totalen Krieg in Iraq.14
* * *
World Bank as Occupying Power
The war with the insurgency did not distract the new sovereign governments nor the Bush administration from their duties in the class war.
As 2006 began, Iraq’s economy was so thoroughly defeated that a depression would have been an improvement. In the third year of occupation, Iraqis suffered 60% unemployment. But their suffering was just beginning. In August 2005, Iraq’s finance minister du jour complained that, under Saddam, “I’m afraid people here have become addicted to various subsidies,” and the minister proposed cutting those on food. Addicted to eating and working. Well, at least they have guns.
Iraq’s Finance Minister didn’t dream up these new cruelties all on his own. Six months before the minister went after food subsidies, on February 1, 2005, World Bank executives held a closed meeting about Iraq’s economy. We obtained a copy of the minutes “whose contents,” it warns, “may not be disclosed without World Bank authorization.” I don’t think they’ll mind if I share. On the other hand, it’s easy to see why the World Bank would rather its plans for Iraq not be revealed to Iraqis. The international oligarchs of finance, in coordination with the International Monetary Fund, couldn’t wait to “advise” Iraq to accept the free-market shock-and-awe nostrums of “food and fuel subsidy reform to pension and payroll reform.” “Reform” is IMF-speak for “cut.” Cut food subsidies, cut fuel, cut pensions, cut payrolls. All in the midst of an economic depression.
Does Iraq have a choice? The World Bank, as gatekeeper of $18 billion in aid for Iraq, “advises” the way the Godfather does—their way, or no way. It’s cut cut cut or Iraq gets cut out of international financial markets and aid is pulled. At least George Bush will get his Social Security reform—but in Fallujah at gunpoint.
* * *
What is left to the Iraqis? To them will go, after time, the shards of their economy, the industries not sold off or financially demolished, and the dead hand of the copyright laws and other free-market commandments that are the neo-cons’ lucrative consolation prize.
Bremer was removed but his one hundred New World Orders stayed behind as Iraq’s law in perpetuity. There is just no point in Grover Norquist arranging for Bremer to give Sony a 50-year copyright on Céline Dion’s oeuvre if some later out-of-control Iraqi government is going to take it away. To prevent that, there’s Order 100, Bremer’s final commandment. Order 100 ensures that, “the interim government and all subsequent Iraqi governments inherit full responsibility for these [Bremer’s] laws, regulations, orders, memoranda, instructions and directives,” which effectively locks in the economic rules of occupation.
To make certain the latest sovereign government got it right, the U.S. State Department embedded Americans, nearly 200 of them, to sit right in the offices of each Iraqi agency to babysit the sovereign government’s ministers.
Bremer departed with the words “The Coalition Provisional Authority will cease to exist on June 28, 2004. At that point the occupation will end”… except for the 200 government proconsuls and the 140,000 troops that will remain.
And the oil? In 2005, Iraq exported only 1.4 million barrels a day, less than under Saddam, less than half its old OPEC quota, less than a fourth of its ultimate capacity and light-years from Wolfowitz’s promise. World prices leaped to reflect the shortfall. Oil executives, if wired to a lie detector per Amy Jaffe’s tantalizing suggestion, would have to admit that Iraq has turned into a financial orgasmatron.
With neo-cons out, the long-term plan for Iraq’s oil industry was settled. Though technically owned by the Iraqis through their state oil company, we can expect the crude to be gathered and controlled downstream by the same old hands, British Petroleum, Chevron and other IOCs that first drew that nation’s borders, politely fulfilling Iraq’s quota assigned by the Saudis, no more, maybe less.
For those Big Oil dreams to come true, more regime change would be required—this time in the USA, for which the Vice President sharpened his long knife.15 On November 2, 2004, Bush-Cheney forces took Ohio. Then, as the Bush-Cheney second term began, neo-con forces, surrounded by the Vice President and the oil industry, surrendered. In January 2005, Undersecretary Douglas Feith announced his departure. Feith had created the Office of Special Plans, the neo-con’s dream factory at the Pentagon. (His assistant there, Larry Franklin, later plead guilty for passing classified documents to lobbyists.) At the State Department, John Bolton, the vicious, knuckle-dragging enforcer of neo-con orthodoxies, was booted from Washington to New York to the powerless post of United Nations Representative. With Bolton’s removal to the U.N., the editor of the Council on Foreign Relations’ journal crowed in triumph, “The realists have defeated the fantasists!”
Finally, on March 16, 2005, second anniversary of the invasion, Paul Wolfowitz was cast out of the Pentagon war room and tossed into the World Bank’s presidency.
Only in BushWorld is an appointment to run the World Bank a punishment post but that’s what it is for Wolfowitz, exiled from the testosterone-powered war-making decision center at Defense to the lending office for Bangladeshi chicken farmers.16
Old Puppets, New Strings
But just when you thought the fat lady sang for the neo-cons, who should rise from his crypt but Ahmad Chalabi. Cutting a deal with Sheiks Sistani and Bahr al-Ulum, Chalabi rides, mirabilis dictum, the religious Shia vote back into office as Deputy Prime Minister and interim oil minister. The espionage accusations against him are dropped; the King of Jordan offers to pardon Chalabi for the $72 million missing from Chalabi’s former bank; and Chalabi once again turns over his oil ministry to Sheik Bahr al-Ulum’s son, “the nothing.” The oil industry’s favorite, Ghadbhan, is again kicked downstairs and Big Oil’s Ambassador, Negroponte, is kicked upstairs, back to Washington as the new “Terrorism Czar.”
Chalabi’s maneuvers with the Shia mullahs open the path for a neo-con counter-coup, capped with Ambassador Negroponte’s removal and replacement, in July 2005, by neo-con Zalmay Khalilzad, holder of the full deck of over-the-right-edge credentials: University of Chicago, Wolfowitz aide, RAND, Project for a New American Century. In 1997, Khalilzad, ever the gracious host, rolled out the red carpet in Sugarland, Texas, for the Taliban, winning their hearts and an agreement for his client, Unocal Oil, to run a gas pipeline from Turkmenistan to Pakistan by way of Afghanistan. Only a few years later, he was named the U.S. Ambassador to Afghanistan, land of his birth. Homeboy done well; but not all Afghan voices rose to praise the think-tank warrior who backed the Islamic berserkers that left Kabul a city of rubble.
In 2005, after two years of bringing democracy to Afghanistan (one warlord, one vote), Khalilzad was ready to show the Iraqis a thing or two about “sovereignty.” While Iraq now had an “elected” government, Zalmay did not want any misunderstandings about who was in charge. On June 21, 2005, Zalmay was sworn in at an ambassadorial castle befitting his ambitions—an embassy of 3,000, the largest in world history (at least since the U.S. evacuated the one in Saigon in 1975).
Khalilzad immediately launched
into ten days of backroom dictation to the new government, surfacing to announce the seven points on which “we agreed” about the economy, politics, military and foreign policy of the nation. He began each point with “the U.S. and the Iraqi government” or “we” or “I will.” Quite an odd role for a foreign diplomat. Old puppets, new strings.
The Conoco Petroleum/Halliburton man McKee, now that the Options plan was complete, returned to Houston, leaving the ministry in the able hands of Mike Stinson, also from Conoco Petroleum. On the day Chalabi returned to power, Stinson—from Houston—announced to the press that the new government, despite the stated position of the returning minister, would establish a fully integrated state oil monopoly within the year. Nevertheless, Chalabi’s man Bahr al-Ulum began to offer licenses for private companies to export some of Iraq’s oil.
Bahr al-Ulum imposed the drastic domestic oil price hikes that the World Bank imposed upon him. When the government gunned down four Iraqis protesting the increases, Bahr al-Ulum lost his stomach for the job, and in January 2006, handed the oil ministry back into Ahmad Chalabi’s hands. The neo-con’s counter-coup was nearly complete, though doubtless temporary.
And the cycle starts over again with the tug-of-war between Big Oil and the neo-cons unresolved, never resolved, as Iraq conquest à la Bush staggers into its fourth year.