Big Oil and the war in Iraq

By Derrick Z. Jackson | The Boston Globe, June 24, 2008

IT TOOK five years, the deaths of 4,100 US soldiers, and the wounding of 30,000 more to make Iraq safe for Exxon. It is the inescapable open question since the reasons given by President Bush for the invasion and occupation did not exist, neither the weapons of mass destruction nor Saddam Hussein's ties to Al Qaeda and the Sept. 11 terrorist attacks.

The New York Times reported last week that several Western oil companies, including ExxonMobil, Shell, Total, BP, and Chevron, are about to sign no-bid contracts with the Iraqi government. Western oil had a significant stake in Iraqi oil for much of the last century until the government nationalized the industry in 1972. The Associated Press quoted Oppenheimer & Co. analyst Fadel Gheit as saying he believed the contracts were a first step toward production-sharing agreements. "These companies are in it for the money, not to make friends," Gheit said.

This of course blows a hole in another ancient Bush fallacy, the one in which former Defense secretary Donald Rumsfeld said "the oil wells belong to the Iraqi people" and former secretary of State Colin Powell seconded him by saying Iraqi oil "will be held in trust for the Iraqi people." Former Deputy Defense secretary Paul Wolfowitz once claimed there was so much oil in Iraq that "When it comes to reconstruction, before we turn to the American taxpayer, we will turn first to the resources of the Iraqi government."

No, all that is really happening is that while the American taxpayer is being turned inside out by the war, and while families bury the brave, the corporate colonialists get all the resources. Halliburton, the oil services company which Vice President Dick Cheney once led, last year reported a 49 percent rise in profits, to $3.5 billion.

KBR, the former Halliburton subsidiary that provides food, shelter, and laundry services to soldiers, last year reported record profits and is about to share in a new 10-year, $150 billion contract. The controversial North Carolina-based private security firm Blackwater, whose guards shot and killed 17 Iraqis in one incident last year, has crossed the billion-dollar mark in government contracts, charging, according to the Raleigh News and Observer, $1,221 a day for security guards who are actually paid $500 a day.

This is despite repeated charges of waste, overcharging and recklessness, and a degree of patriotism that verges on betrayal. As many veterans were being treated amid appalling conditions at Walter Reed Army Medical Center, Halliburton CEO Dave Lesar last year moved from Texas to Dubai. The Globe last March reported on how KBR has avoided paying perhaps half a billion dollars in Social Security and Medicare taxes since the start of the invasion by hiring employees through shell companies in the Cayman Islands.

Now comes Big Oil itself, which is already basking in record profits. Its interest in Iraq, which has the world's third-largest oil reserves according to the federal government, is utterly transparent. A decade ago, then-Chevron CEO Kenneth Derr said "I'd love Chevron to have access to" the Iraqi oil reserves. A Los Angeles Times news account just before the invasion said, "Maybe it's a coincidence, but American and British oil companies would be long-term beneficiaries of a successful military offensive . . . Industry officials say Hussein's ouster would help level the playing field . . . a bonanza for the US-dominated oil-services industry."

Who will stop the bonanza or at least ensure that it is not an utter windfall for CEOs as US soldiers risk their lives keeping the peace and as Iraqis continue to struggle out of the rubble of the invasion? That is unclear. Of the two presumptive nominees for president, Democrat Barack Obama makes the most noise against oil profiteering and indeed, Republican John McCain has received more money overall from Big Oil. But Obama has received enough campaign contributions to leave it an open question as to how much leadership he would exert. We know Big Oil is in this for the money. Nothing says it is returning to Iraq in the name of the people.

Derrick Z. Jackson can be reached at jackson@globe.com.

© Copyright 2008 Globe Newspaper Company.