John Chapman / The Guardian UK – 2004-08-06 09:17:01
LONDON (July 28, 2004) — There were only two credible reasons for invading Iraq: control over oil and preservation of the dollar as the world’s reserve currency. Yet the government has kept silent on these factors, instead treating us to the intriguing distractions of the Hutton and Butler reports.
Butler’s overall finding of a “group think” failure was pure charity. Absurdities like the 45-minute claim were adopted by high-level officials and ministers because those concerned recognised the substantial reason for war — oil. WMD provided only the bureaucratic argument: the real reason was that Iraq was swimming in oil.
Some may still believe the eve-of-war contention by Donald Rumsfeld that “We won’t take forces and go around the world and try to take other people’s oil…. That’s not how democracies operate.” Maybe others will go along with Blair’s post-war contention: “There is no way whatsoever, if oil were the issue, that it would not have been infinitely easier to cut a deal with Saddam.”
But senior civil servants are not so naive. On the eve of the Butler report, I attended the 40th anniversary of the Mandarins cricket club. I was taken aside by a knighted civil servant to discuss my contention in a Guardian article earlier this year that Sir Humphrey was no longer independent. I had then attacked the deceits in the WMD report, and this impressive official and I discussed the geopolitical issues of Iraq and Saudi Arabia, and US unwillingness to build nuclear power stations and curb petrol consumption, rather than go to war.
Saddam controlled a country at the centre of the Gulf, a region with a quarter of world oil production in 2003, and containing more than 60% of the world’s known reserves. With 115 billion barrels of oil reserves, and perhaps as much again in the 90% of the country not yet explored, Iraq has capacity second only to Saudi Arabia. The US, in contrast, is the world’s largest net importer of oil. Last year the US Department of Energy forecast that imports will cover 70% of domestic demand by 2025.
By invading Iraq, Bush has taken over the Iraqi oil fields, and persuaded the UN to lift production limits imposed after the Kuwait war. Production may rise to 3 million barrels a day by year end, about double 2002 levels. More oil should bring down OPEC-led prices, and if Iraqi oil production rose to 6m barrels a day, Bush could even attack the Opec oil-pricing cartel.
Control Over Iraq’s Oil
Control over Iraqi oil should improve security of supplies to the US, and possibly the UK, with the development and exploration contracts between Saddam and China, France, India, Indonesia and Russia being set aside in favour of US and possibly British companies. And a US military presence in Iraq is an insurance policy against any extremists in Iran and Saudi Arabia.
Overseeing Iraqi oil supplies, and maybe soon supplies from other Gulf countries, would enable the US to use oil as power. In 1990, the then oil man, Dick Cheney, wrote that: “Whoever controls the flow of Persian Gulf oil has a stranglehold not only on our economy but also on the other countries of the world as well.”
Oil Trading and the Dollar
In the 70s, the US agreed with Saudi Arabia that OPEC oil should be traded in dollars. American governments have since been able to print dollars to cover huge trading deficits, with the further benefit of those dollars being placed in the US money markets. In return, the US allowed the Opec countries to operate a production and pricing cartel.
Over the past 15 years, the overall US deficit with the rest of the world has risen to $2,700 billion — an abuse of its privileged currency position. Although about 80% of foreign exchange and half of world trade is in dollars, the euro provides a realistic alternative. Euro countries also have a bigger share of world trade, and of trade with Opec countries, than the US.
In 1999, Iran mooted pricing its oil in euros, and in late 2000 Saddam made the switch for Iraqi oil. In early 2002 Bush placed Iran and Iraq in the axis of evil. If the other Opec countries had followed Saddam’s move to euros, the consequences for Bush could have been huge. Worldwide switches out of the dollar, on top of the already huge deficit, would have led to a plummeting dollar, a runaway from US markets and dramatic upheavals in the US.
What Was Blair’s Motivation?
Bush had many reasons to invade Iraq, but why did Blair join him? He might have squared his conscience by looking at UK oil prospects.
In 1968, when North Sea oil was in its infancy, as private secretary to the minister of power I wrote a report on oil policy, advocating changes like the setting up of a British national oil company (as was done). My proposals found little favour with the BP/Shell-supporting officials, but Richard Marsh, the then minister, pressed them and the petroleum division was expanded into an operations division and a planning division.
Sadly, when I was promoted out of private office, the free-trading petroleum officials conspired to block my posting to the planning division, where I would surely have advocated a prudent exploitation of North Sea resources to reduce our dependence on the likes of Iraq. UK North Sea oil output peaked in 1999, and has since fallen by one-sixth. Exports now barely cover imports, and we shall shortly be a net oil importer. Supporting Bush might have been justified on geo-strategic grounds.
Oil and the dollar were the real reasons for the attack on Iraq, with WMD as the public reason now exposed as woefully inadequate. Should we now look at Bush and Blair as brilliant strategists whose actions will improve the security of our oil supplies, or as international conmen? Should we support them if they sweep into Iran and perhaps Saudi Arabia, or should there be a regime change in the UK and US instead?
If the latter, we should follow that up by adopting the pious aims of UN oversight of world oil exploitation within a world energy plan, and the replacement of the dollar with a new reserve currency based on a basket of national currencies.
John Chapman is a former assistant secretary in the civil service, in which he served from 1963-96.
In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.