U.S. influence on the Iraq Oil Economy - Essay Example

U.S. influence on the Iraq Oil Economy The paper focuses on the US influence in shaping the oil economy of Iraq. An attempt has been made to analyze the interest of the US in the oil resource of the country. The importance of the Iraqi oil in the context of establishing American stronghold over global economy and its possible implications on the political scenario of the world has been discussed in detail. The steps taken by the present US administration to monitor the oil industry has also been discussed in detail. How successful are they in establishing themselves as a global power; the scopes offered by the present political sensitivity in Iraq. The paper also evaluates the importance of the Iraq oil industry as a significant energy resource, benefiting industries worldwide. INTRODUCTION Oil constitutes one of the major economy sources of Iraq, the amount of oil present in the Persian Gulf region, has lured many world powers to establish their stronghold. Controlling the resources commanded a power (economical and political), which established its identity has a reigning world power. After Saudi Arabia, Iraq has the largest oil reserve in the world. Researchers of the field are of the opinion that there are more potential oil reserves, estimated to be approximately 200 billion barrels of high quality crude oil. Statistics show that the production of oil in Iraq has remained consistent since 1980, with an estimated production of 2.5 million barrels per day. In comparison the consumption carve had hardly risen over the 0.5 million barrels per day estimated in the last two decades. (Oil Connections to War, 2003) Since the nationalization of 1972, which restricted the control of the Iraq's oil industry from the oil firms of UK and US; the US have been targeting the Iraqi oil industry. The invasion of Iraq in 2003 changed the scenario. It is predicted that the US influence in Iraq's oil economy will lead to a lot of worthwhile billion dollar oil deals being passed onto oil companies, especially the ones in US. (Global Policy Forum, 1996) The oil reserves of the gulf region have the capacity to meet any potential global oil crisis that may crop up. US interest in Iraq's oil is born of the ambition to establish military, political and economic dominance world over. Experts have estimated that the oil reserves of Iraq will not dry up for at least 5 more centuries, as compared to the oil source of the US (estimated to last for no more than a decade). BACKGROUND The US monopoly on the global oil industry started with the nationalizing of the British Petroleum in 1953, after the dissolve of the Dr. Muhammad Mosaddeq lead government in Iran. Safeguarding the interest of the US multinationals and restrain any imperialism. The US continues to maintain a stronghold on the oil resources of the Gulf region ever since. Oil contributes to 95% of Iraq's economy. At a rate of 2.5 million barrels per day, experts evaluating the economic potential have estimated the figure to rise to 3.5 million barrels per day. (US to Take Bigger Bite of Iraq's Economic Pie, 2004) The Persian Gulf constitutes about 30 percent of the oil produced worldwide but nearly 70 percent of the total oil reserve of the world also constitutes that of the region. So in the event of any global oil crisis this is the only region that will meet the demands for oil. Controlling this highly profitably resource would not only prove to be beneficial for any country, which wishes to establish its power on the world. But it would also increase the chances of boosting the economic status of the respective nation. So the US interest in this highly profitable venture is well established (The US invasion of Iraq: Oil, the Mother of all Factors, 2005) Experts analyzing the reasons for the invasion of Iraq by the US have formulated an opinion that it is perhaps the oil resource of the country that propelled the attack from the US forces. The opinions are broadly based on the Project for the New American Century (PNAC)-"Rebuilding America's defenses: Strategies, Forces and Resources for a New Century." The latter was written in September 2000, much before the attack on the twin towers of New York (September 2001), which was the alleged reason cited by the US government for invading and attacking Iraq. The document by PNAC is referred to as the blueprint for the global grand strategies of the US. The plan to remove the Saddam government had been devised before January 2001, when President George Bush came to power. (The US invasion of Iraq: Oil, the Mother of all Factors, 2005) The importance of the oil resource of Iraq as a potential energy source for the global markets and also as a significant source for the national budget is cause for the disputes that have risen post the invasion of the US. Experts have evaluated that the disputes over the oil law, that awaits approval at the Parliament presently, may not produce the same results as was intended. A poll conducted revealed that 75% of the Iraqis are of the opinion that the primary purpose behind US invasion was to control Iraqi Oil. The US influence is evident in the setting of the "benchmark" for the oil law to be passed by the Iraqi Government. Passing of the oil law had been referred to as the prerequisite for reducing Saddam's Hussein's debts. The oil law has resulted in a number of disputes, spanning religious groups, secular civil societies and even oil experts as well as unions. Researchers, investigating the oil economy of Iraq are of the opinion that the oil law will result in creating rifts within the country, as opposed to uniting it as was initially made to believe. (Slick Connections: US Influence on Iraqi Oil, 2007) The US influence became evident as early as the beginning of 2001, when a list of "Foreign Suitors for Iraqi Oilfield Contracts" was brought out by the White House Taskforce. (The Struggle Over Iraqi Oil, 2007) This was followed by the drafting of the country's oil policy, which would pave the way for international oil companies, brought over by the joint collaborative efforts of the US State Department Oil and Energy Working Group. (Crude Designs: The Rip - Off of Iraq's Oil Wealth, 2005) Plans for the revival of the oil sector of Iraq was started early on 2003, by April of the same year a request had been sent by President Bush for the withdrawal of the UN sanctions against Iraq. It is analyzed that US planned to use the crude resources to reconstruct the war ravaged nation. (For Iraq's Oil Wealth, Tangled Pipes, 2003) The drafting of an oil law, by the end of 2006, is agreed upon with the International Monetary Fund. The passing of the new law would allow foreign investment in Iraq's oil industry. In 2007, the US influence is further established by Robert Gates (US defense secretary), followed by US Vice President, Dick Cheney, to Baghdad, the purpose to politically pressurize in the passing of the oil law. (New York Times, May 10, 2007) and (International Herald Tribune, April 19, 2007) BIBLIOGRAPHY 1. Hooshiyar K. and S. Karni US invasion of Iraq: Oil, the Mother of all Factors, August 2005 2. Leaver Erik and Greg Muttit "Slick Connections: US Influence on Iraqi Oil" (2007): 2 3. Schwartz, Michael "The Struggle Over Iraqi Oil" Eyes Eternally on The Prize (2007):< http://www.globalpolicy.org/security/oil/2007/0508struggleiraqioil.htm> 4. Muttit Greg "Crude Designs: The Rip - Off of Iraq's Oil Wealth," (2005): 5. Rice, Mark, "For Iraq's Oil Wealth, Tangled Pipes." The Christian Science Monitor, (2003) 6. Burns John F. "Cheney Visits Baghdad and Presses Leaders on Political Progress," The New York Times, May 10, 2007 7. Cloud David, Alissa J. Rubin and Edward Wong, "Gates in Baghdad to Press Iraqis on Reconciliation," International Herald Tribune, April 19, 2007. ANALYSIS Interest of the US in Iraq's oil resource is evident if the course of events starting from the invasion of the nation was evaluated. What started as a process for aiding Iraq to reconstruct its oil industry soon became the condition used by the US government to take care of its own political and economic interest. President Bush's statement that "the oil belongs to the Iraqi people. It's their asset" (Slick Connections: US influence on Iraqi Oil, 2007), post his visit to Baghdad foiled his actual interest of controlling the oil industry. The pressurization for the passing of the oil law, soon became a condition for relieving (partially) the debts of Saddam Hussein. The appointment of Phillip Carroll (former chief executive of Royal Dutch - Shell) to oversee the oil industry of Iraq and his sudden relieving from the responsibilities seven months later, right after he declared "there was to be no privatization of Iraqi oil resources or facilities while he was involved," to the US occupation chief, Paul Bremer clearly indicates the plans of the US to control the functioning of the oil industry of Iraq. (US Secret Plans For Iraq's Oil, 2005) US interest in Iraq's oil can be traced back traced back to the 1950's, when the payments collected from the sale of oil by the royal families of Saudi Arabia would be written off by American companies on the tax returns. Dissolving the government that independently handled the oil trade further endorses the influence of the US on Iraq's oil economy. (Oil Connections to War, 2003) The steps employed bear a similarity to overthrowing of the Mohammed Mossadegh lead government in Iran. The latter had successfully nationalized the oil industry of the nation. Following a riot, which killed 300 people, Mossadegh was displaced in favor of Shah Mohammed Reza Pahlavi, the US friendly citizen, who had earlier fled Iran. The fact that the passing of the new oil law will ensure the US interest, with a number of billion dollar deals being granted to US corporations further strengthens the interest of US in Iraq's oil economy. This in turn will serve a greater purpose of establishing America as a greater power, which was part of the grand strategies that was to be undertaken as per the PNAC document, published in 2000. The latter document is proof of the grand scheme of things planned by the US to displace the Iraq government and control the oil economy of the country. The state of things can be viewed in a more clear light, analyzing the reason cited for the invasion of Iraq. Following the attacks on the twin towers of America on September, 2001, America invaded Iraq in 2003. The PNAC clearly proves that plans to overthrow the Saddam government were part of the grand plans of America to establish its powerful political and economical identity globally. The pressure to pass the oil, which will benefit the American oil corporations, proves the US plans for controlling the oil economy of Iraq. The strengthening of the US administration in controlling the oil reserves of Iraq is evident in the placing of American economic advisors throughout the nation's government ministries. United States in a meeting with the Iraq - US Joint Economic Commission (JEC) had announced its plans for training personnel's of the oil sector in US universities. This further established the plans of US to control the oil economy of the country. The reconsideration of the deals with the French and Russian corporations is viewed as proof of the influence of the US in controlling the oil economy of the nation. The fact that both Russia and France were against the Iraq invasion of America in 2003, places things in a light that favors the opinion that US seeks to gain complete control of the nation's oil reserves. Despite the declaration from Washington that non US companies could function from Iraq, most of the contracts have been given only to American firms by the US Agency for International Development (USAID). (US to Take Bigger Bite of Iraq's Economic Pie, 2004) Another school of thought is of the opinion that the US is actually helping the interim government of Iraq reconstruct the economic status of the nation, in a war ravaged nation. Granting access to the oil reserves to American organizations, evaluation of the oil deal signed with Russia and France; are just some of the helpful steps that is actively supported by the US. The fact that is highlighted by the economic reconstruction steps undertaken by the interim government is that American companies will play a vital role in the economic reconstruction process of the country. Privatizing the Iraq National Oil Company is one of the major steps taken in the direction. (US to Take Bigger Bite of Iraq's Economic Pie, 2004) INFERENCE Based on the analysis of the different schools of thought an inference can be drawn regarding the US influence on Iraq's oil economy. The US claims that the steps taken regarding the use of the oil resources of Iraq is part of its economic reconstruction plans for the nation is not supported by facts. Arguments are placed stating that the involvement of American companies will just serve to rebuild the economy of the war ravaged country. If that is taken to be true, then the same is also true for the other foreign nations interested in investing in the oil reserves of the country. The re - evaluation of the contracts already signed with other nations do not support the argument. Privatization of oil reserves, reconsideration of the oil contracts signed with other foreign nations and even the "training" to be provided to people employed at the oil sector, that too at American universities points to the control that United States wishes to impose on the oil resource of Iraq. The contracts of most oil deals being given exclusively to US companies endorses the fact that America intends to gain complete control over the oil economy of Iraq. The placing of US economists in the ministry of the country's ministry, just ensure that the administrative decisions are taken with the US interest in mind. The political pressure imposed for the passing of the oil law, which will prove beneficial for the American companies, investing in oil trade with Iraq; further endorses the US interest of things. The protection of the oil fields even during the invasion of 2003 by the US soldiers proves the significance of the oil resources of the country. CONCLUSION The power play that surrounds the oil resource of the Iraq is evident in the political struggle that is raging in the country. Plans for restructuring the economy of the nation are coupled with the political and economical interest of the US. Starting from privatization of oil fields, passing of contracts worth billions of dollars to American firms to placing of American economist to influence the political decisions that would impact the oil economy and consequently the eco - political status of the US; every step is a calculated move to strengthen and establish the supremacy of the nation. The US influence over Iraq's oil reserve just points to the nearly inexhaustible energy source that is capacitated to meet any demand for oil in the global scheme of things. As per the analysis of experts, the oil reserves have enough oil to replenish the needs for five more centuries. Protecting and planning the optimum utilization of this vast energy source is important for the interest of the whole world. References 1. Hooshiyar K. and S.Karni US invasion of Iraq: Oil, the Mother of all Factors, August 2005 2. Phillips Graham,"Oil Connections to War"Iraq &Energy Future, students of Geography 378, University of Wisconsin -Eau Claire,USA 3. Leaver Erik and Greg Muttit "Slick Connections: US Influence on Iraqi Oil" (2007): 2 4. Schwartz, Michael "The Struggle Over Iraqi Oil" Eyes Eternally on The Prize (2007):< http://www.globalpolicy.org/security/oil/2007/0508struggleiraqioil.htm> 5. Muttit, Greg "Crude Designs: The Rip - Off of Iraq's Oil Wealth," (2005): 6. Palast, Greg, "US Secret Plans for Iraq's Oil," BBC News World Edition, March 17, 2005. 7. Rice, Mark, "For Iraq's Oil Wealth, Tangled Pipes." The Christian Science Monitor, (2003) 8. Burns, John F. "Cheney Visits Baghdad and Presses Leaders on Political Progress," The New York Times, May 10, 2007 9. Cloud, David; Alissa Rubin J. and Edward Wong, "Gates in Baghdad to Press Iraqis on Reconciliation," International Herald Tribune, April 19, 2007. 10. Mekav, Emad, "US to Take Bigger Bite of Iraq's Economic Pie," 2004 Read More