The Quest: Energy, Security, and the Remaking of the Modern World

by Daniel Yergin

  Some critics said that the war was conducted for the benefit of Israel. The elimination of Saddam’s military power would certainly be a boon for Israel, on which Iraqi Scud rockets had rained during the 1991 Gulf War. But Saddam was already contained and his military much weakened. Israel was much more worried about the Iranian nuclear program. As Richard Haass, the head of policy planning in the State Department, wrote, “The Israelis did not share the administration’s preoccupation with Iraq. Actually, it was just the opposite. The Israelis . . . feared that Iraq would distract the United States from what they viewed as the true threat, which was Iran.” Both Israeli officials, including the minister of defense, who happened to be Iraqi-born, and Israeli experts warned that the administration was greatly underestimating the postwar troubles that would await them in Iraq. As one of Israel’s leading specialists put it at a prewar conference in Washington, D.C., someone needed to tell the U.S. president that American forces would have to be in Iraq for up to five years and “they will not have an easy time there.”7

  “OIL”

  Oil did not play the same role as these other factors in defining policy. The significance of oil was because of the nature of the region—the centrality of the Persian Gulf in world oil and thus the critical importance of the balance of power in that region. It had been determined U.S. policy since Harry Truman to prevent the Persian Gulf and its oil from falling under the sway of a hostile power. But the possibility of a hostile power—Iraq—achieving dominance in the region, and thus over the region’s oil, loomed much larger during the Gulf crisis of 1990–91, when Iraq had conquered Kuwait and was threatening the Saudi oil fields, than in the run-up to the subsequent Iraq War. At the same time, in 2003, neither the Americans nor the British were pursuing a mercantilist 1920s-style ambition to control Iraqi oil. The issue was not who owned the oil at the wellhead, but whether it was available on the world market. Iraqi oil could be purchased on the world market, albeit managed under the U.N. sanctions program. Indeed, in 2001 the United States imported 800,000 barrels per day from Iraq. A democratic Iraq, it was certainly thought, would be a more reliable provider and, not being under sanctions, could expand its capacity. In the minds of some policymakers, noting the number of Saudi nationals involved in 9/11, the prospect of Iraq’s becoming a much larger exporter that would counterbalance Saudi Arabia was attractive, but this was far from a wellshaped—or well-informed—strategic objective.8

  While a variety of ideas were being tossed around for the postwar organization of the industry, the clear policy determination was that the decisions about the future of Iraq’s oil would be made by a future Iraqi government. Nothing should be done to prejudice the prerogatives of the eventual government—even including the subject of OPEC membership—although a nongovernmental oil industry was seen as highly preferable in order to facilitate the introduction of the technology and the tens of billions of dollars of investment that the industry would need. Even in that case, however, a liberated Iraq, with its strong nationalist tradition, was likely to offer terms to investors that were as tough as those of any other petroleum-exporting countries, or tougher.

  As war approached in 2002–3, the dominant attitude among the major international oil companies was one of skepticism and caution, and some alarm over the entire idea of war. Many of them were familiar with the region and feared a backlash. They were very doubtful that a stable, peaceful, new-style democracy could be quickly created from the wreckage of the Baathist state.

  “You know what I’ll say to the first person in our company who comes to us with a proposal to invest a billion dollars in Iraq?” asked the CEO of one of the supermajors a month before the war. “I’ll say, ‘Tell us about the legal system, tell us about the political system. Tell us about the economic system and about the contractual and fiscal systems, and tell us about arbitration. And tell us about security, and tell us about the evolution of the political system. Tell us all those things, and then we’ll talk about whether we’re going to invest or not.’ ”9

  “BEYOND NATION BUILDING”

  The immediate issue in 2003 was the state of the Iraqi oil industry and the need to ensure that it operated to provide the revenues that the country required. That, however, would depend upon overall conditions in Iraq.

  In overseeing the planning for the war, Defense Secretary Donald Rumsfeld was driven by an imperative—to prove that his design for the light and lethal “new model army” (to borrow a term from Oliver Cromwell) was the model for the army of the future. Rumsfeld was intent on prevailing over the uniformed leadership in the Pentagon, which he considered too cautious, too risk averse, and much too conservative. He was determined to overturn the “overwhelming force” doctrine championed by the then-chairman of the Joint Chiefs of Staff Colin Powell during the 1990–91 Gulf crisis (and now Secretary of State). Instead he wanted to demonstrate on the battlefield that smaller but highly skilled and disciplined, technologically advanced forces—with “speed and agility and precision,” in his words, were more than sufficient to win a swift victory. And, indeed, a very effective fighting force successfully demonstrated that capability on the battlefield in Iraq in 2003.

  But war and postwar—defeating an army on the field and occupying a country—were two very different propositions. In cultural, logistics, training, and regional political terms, little had been done to prepare the military or the civilian arms of the U.S. government for an occupation of open duration. As it turned out, the troop levels required for a swift victory were much less, perhaps only a third, of what was needed after the war to occupy and stabilize the country. Shortly before the war, Army Chief of Staff Eric Shinseki had told a Senate committee that, based on U.S. experience ranging from post–World War II Germany to Bosnia in the 1990s, “several hundred thousand” troops—on the order of 260,000—was the right size. To say his comments were unwelcome would be an understatement. He was immediately disavowed and summarily retired. For good measure, the secretary of the army, who had supported his view, was also fired.

  Rumsfeld was also determined to denigrate and banish the kind of “nation building” that had engaged U.S. forces in the Balkans during the Clinton administration in the 1990s. A month before the Iraq War, Rumsfeld delivered a speech titled “Beyond Nation Building,” in which he proclaimed Afghanistan a complete victory and contrasted that to what he said was the “culture of dependence” in the Balkans in the 1990s. The prime example that he cited to prove what was wrong with nation building was that of a driver who, while shuttling aid workers around Kosovo, earned more than a university professor. “The objective is not to engage in what some call nation building,” he declared. “If the United States were to lead an international coalition in Iraq,” he added, the objective would be “to leave as soon as possible.”

  Afghanistan, he said, was the proof of the right way to do things. For what seemed to be the remarkably swift victory in Afghanistan in the autumn of 2001 had reinforced Rumsfeld’s assumptions—and the self-confidence that underlay them. As Rumsfeld put it, the Soviets had hundreds of thousands of troops in Afghanistan “for year after year after year,” while the United States, with “tens of thousands” did in “eight, nine, ten, twelve weeks what [the Soviets] weren’t able to do in years.” (Some pointed out that the USSR had also made short work of its invasion; it was in the long occupation that it failed.)

  But the intervention in the Balkans in southeast Europe, as difficult as it was, was a much simpler situation than invading Iraq, a major Arab country in the Middle East that had been under tight dictatorial control for thirty-five years, and then proceeding to demolish all of its institutions, creating a giant vacuum, all under the premise that, as one U.S. official in Iraq put it, a “Jeffersonian democracy” would sprout almost overnight.

  Rumsfeld’s position was reinforced by the U.S. commander Tommy Franks, who made clear that his intention was to pull U.S. troop levels down as fast as possible after the initial victory. Some advocates wi
thin the Bush administration were further propelled by the belief that the war would not be difficult—that a “lightning victory” would be followed by a quick withdrawal and the emergence of that new Iraqi democracy. With such a mind-set, not much thought needed to be given to the planning for what would happen after the war. 10

  Nor was much thought given to the budgetary implications, for a quick war would surely also be cheap. As it turned out, the war was not quick and the subsequent occupation cost more than a trillion dollars in direct outlays.

  NOT A CAKEWALK

  Some voices in and around the U.S. government urged caution. The intelligence community on its own initiative developed an analysis of “the principal challenges that any postwar authority in Iraq” would likely face. Among the principal conclusions: Iraq was not a “fertile ground for democracy” and any transition would be “long, difficult, and turbulent.” The intelligence analysts could feel “a strong wind consistently blowing,” but it was not in their direction.

  One of the most widely respected senior statesmen in Washington was Brent Scowcroft. He had been national security adviser to two former presidents—Gerald Ford and George H. W. Bush. He had worked closely with Dick Cheney when Cheney was secretary of defense during Desert Storm, and the current national security adviser Condoleezza Rice had been one of his deputies during the George H. W. Bush administration. Moreover, he spoke with considerable current authority. He was, after all, chairman of the President’s Foreign Intelligence Advisory Board. “An attack on Iraq at this time would seriously jeopardize, if not destroy, the global counterterrorist campaign we have undertaken,” he wrote in a Wall Street Journal article in August 2002. “If we are to achieve our strategic objectives in Iraq, a military campaign in Iraq would likely have to be followed by a large-scale, long-term military occupation.” He added, “It will not be a cakewalk.”

  Scowcroft had been among the key policymakers in the decision not to go to Baghdad and depose Saddam during the Gulf War in 1991. In Scowcroft’s mind, it was not only because of the “CNN factor” and the likely splintering of the coalition. It was exactly because of the risks of a long occupation. During the 1991 war, the first President Bush had ordered up a study on the lessons from previous conflicts. “Don’t change objectives in the middle of a war just because things are going well,” was one of the prime lessons that Scowcroft had taken away from that study. “We learned that from Korea.” In 1991 Scowcroft had been convinced that capturing Baghdad would “change the character of what we were doing. We would become the occupiers of a large country. We don’t have a plan. What do we do ? How do we get out?” Those were the same questions that troubled Scowcroft in 2002.

  The month following Scowcroft’s article, Richard Haass, head of policy planning in the State Department, wrote to Secretary of State Colin Powell. “Once we cross the Rubicon by entering Iraq and ousting Saddam ourselves, we will have much greater responsibility for Iraq’s future.... Without order and security, all else is jeopardized.”

  The inadequacy of forces would have far-reaching impact on what would transpire over the next several years in Iraq, including the fate of its oil industry and the direction of the global oil market. And, in turn, what would happen to the oil industry would be central to Iraq’s future.

  Iraq was a petro-state—about three quarters of its GDP was derived from oil around the time of the war, and 95 percent of government revenues would come from oil after the war. There were extremely optimistic expectations about how quickly production and exports could be restored and put on a growth track. Just prior to the war, Deputy Defense Secretary Paul Wolfowitz had declared that, with restored oil exports, Iraq “can really finance its own reconstruction.” He suggested that Iraq could soon be at 6 million barrels per day, double its current capacity.11

  The war began on March 20, 2003, Baghdad time, some twelve years after the end of the first Gulf war. By April 9, U.S. forces had captured Baghdad. That same day, American soldiers helped Iraqis pull down the giant statue of Saddam Hussein in a downtown square, a scene reminiscent of the end of communism in Eastern Europe and one that seemed to promise that a “pluralistic and democratic Iraq” was at hand. Up to this point, things had gone according to plan.

  But what would happen thereafter? General Franks, the U.S. commander, thought he had the answer. Not long after that initial victory, he posited U.S. forces would be drawn down to 30,000 by September 2003—a little more than a tenth of what, others argued, historical experience suggested was the prudent number. 12

  THE OIL INDUSTRY: “DILAPIDATED AND DEPLORABLE”

  The actual conditions of the oil industry ensured that it was in no condition to meet the heady prewar expectations. The industry was suffering from years of neglect and lack of investment. With the collapse of Saddam’s regime, communication had broken down, the country was in chaos, and no one was in charge. Most of the government buildings in Baghdad were looted and burned. A notable exception was the oil ministry, which was secured by units of the U.S. Army’s 3rd Infantry.

  A few days after the fall of Baghdad, an experienced Iraqi technocrat showed up at the gate of the ministry and asked to speak to someone about getting the industry restarted. This was Thamir Ghadhban, who had been chief geologist and then head of planning for the Iraq National Oil Company. He eventually connected over a satellite phone with Phil Carroll, who at this point had not yet arrived in Iraq. After several conversations, Carroll finally asked Ghadhban if he would like to be “chief executive” of the Iraqi oil industry, with Carroll as chairman. They became the core of the team charged with getting the oil sector up again. It was hard going.

  Although Iraq’s potential was considerable, it had not been seriously explored since the 1970s. Out of eighty discovered oil fields, only twenty-three were put into production. In 1979–80 the Iraqi oil industry had worked out a plan to raise output to six million barrels per day, but it had never been put into effect because of the Iran-Iraq War in the 1980s and then the 1990–91 Gulf crisis. Instead the industry went into a long decline. Now, after the invasion, workers were frightened to go to work because of the lack of security. Carroll and Ghadhban concluded that the physical capacity of the Iraqi industry was just under 3 million barrels a day, less than half of the 6 million barrels per day that had been cited as a “reasonable” target. They set a series of more-reasonable targets aimed at reaching that 3 mbd level by the end of 2004. 13

  But the obstacles were formidable. Despite fears prior to the war that Saddam’s forces might blow up the wells and then set oil fields on fire, as they had done in departing Kuwait in 1991, the oil infrastructure, in fact, went through the war largely unscathed. Yet the overall conditions of the industry were, in Carroll’s words, “dilapidated and deplorable.” The underground reservoirs had been damaged by years of mismanagement. The sanctions had also had their impact. Equipment was rusting and malfunctioning. The machinery and systems were obsolete. The control room in the key Daura Refinery, near Baghdad, said Carroll, “was a time warp, right out of the 1950s.” Indeed, it had been installed by an American company in the mid-1950s, when Iraq was still ruled by a king. Environmental pollution was also widespread. From a practical standpoint, what kept the industry going was the skill of Iraqi engineers; they were geniuses at improvisation. But now, with the looting and the breakdown in the infrastructure of the country in the aftermath of the war, conditions were even worse. There were no phone links to the refineries or the oil fields. Even the normal tools for measuring the flow of oil were absent.

  As Carroll saw it from his vantage point, there were three priorities for the restoration of the Iraqi oil industry—and the rest of the economy—“security, security, and security.” But none of the three was being met. The collapse of the organized state and the inadequacy of the allied forces left large parts of the country very lightly guarded, and the forces that were there were overstretched. 14 And what crippled everything else was the disorder that was the consequence
of two decisions haphazardly made by the Coalition Provisional Authority, the entity set up to run the American-led occupation.

  “DE-BAATHIFICATION” AND THE ARMY’S DISSOLUTION

  The first was “Order #1—De-Baathification of Iraqi Society.” Some two million people had belonged to Saddam’s Baath Party. Some were slavish and brutal followers of Saddam; some were true believers. Many others were compelled to join the Baath Party to get along in their jobs and rise up in the omnipresent bureaucracies and other government institutions that dominated the economy, and to ensure that their children had educational opportunities in a country that had been ruled by the Baathists for decades. The very choice of the name of the edict showed its model—the denazification program in Germany after World War II. But that program had actually been applied quite differently in very different circumstances. Postwar Iraq was not postwar Germany, nor for that matter postwar Japan; and the Coalition Provisional Authority under L. Paul Bremer III was not the military administration of General Lucius Clay, America’s proconsul in postwar Germany, or the occupation in Japan under General Douglas MacArthur.

  Initially, de-Baathification was meant only to lop off the top of the hierarchy, which needed to be done immediately. But as rewritten and imposed, it reached far down into the country’s institutions and economy, where support for the regime was less ideological and more pragmatic. The country was, as one Iraqi general put it, “a nation of civil servants.” Many schoolteachers were turned out of their jobs and left with no income. The way the purge was applied removed much of the operational capability from government ministries, dismantled the central government, and promoted disorganization. It also eliminated a wide swath of expertise from the oil industry. Broadly, it set the stage for a radicalization of Iraqis—especially Sunnis, stripped of their livelihood, pensions, access to medical care, and so forth—and helped to create conditions for the emergence of Al Qaeda in Iraq. In the oil industry, the result of its almost blanket imposition was to further undermine operations.