WE'VE MOVED! IsraPundit has relocated to Click here to go there now.
News and views on Israel, Zionism and the war on terrorism.

January 08, 2003

This war is not about oil

This editorial from the National Post is a couple of days old, but remains relevant.

All signs indicate a U.S.-led coalition will soon end Saddam Hussein's tyranny over Iraq and destroy his weapons of mass destruction. Most Iraqis will cheer Saddam's departure, and the war will likely be over in a matter of weeks. Once Iraq is liberated, a peaceful, democratic society may emerge -- one that sets a constructive example for other Arab states. But for America's critics, none of this matters. No matter how valid U.S. motives or successful the war's outcome, they will always see war in Iraq as an imperialist grab for oil.
Noam Chomsky, the great icon of U.S. self-loathing, wrote recently that "the Sept. 11 terrorist atrocities provided a pretext for the plans to take control of Iraq's immense oil wealth." Linda McQuaig of The Toronto Star tells us that "the installation of a pro-U.S. regime in Iraq would clearly open up lucrative possibilities for American oil companies and guarantee the United States long-term access to oil." Her Star colleague, Gordon Barthos, reports that "a Saddam-free, Washington-friendly Iraq would turn the Mideast into an American sandbox pumping out cheap fuel and lucrative contracts for the oil firms that bankrolled [U.S. President George W.] Bush's campaign."

In The Globe and Mail, Michael Den Tandt wrote that any war would be motivated by "a looming U.S. energy shortage, and deep unease about Saudi Arabia's reliability as a crude oil supplier."

Little evidence exists to support any of this. But it sticks anyway because leftists find the "no war for oil" argument convenient. It fits well on a bumper sticker, after all, and dovetails with their overarching thesis that Mr. Bush is a mere pawn of America's oil barons and bomb-makers. Then there's the precedent of the first Gulf War, which -- let's face it -- really was about oil. That is to say, it was a just campaign aimed at preventing a regional thug from cornering the world's oil supply.

But take a close look at the modern "no war for oil" argument and it crumbles like cheap stucco. The simple fact is that Americans already have access to Iraq's black gold: The United States is Saddam's number-one buyer. Moreover, war would not be an efficient way to open the spigots further. If Iraq's oil fields were upgraded with state-of-the-art technology, they would yield about 6 or 7 million barrels of oil daily by 2007. The fact they only produce a third of that is owed to UN sanctions, which block investment and restrict the importation of industrial machinery. If Mr. Bush were really after cheap oil, he would beg the UN to end sanctions, and reassure the world that Iraq was open for business.

Of course, a liberated Iraq will also be a business-friendly Iraq. But the companies set to benefit from this transformation are mostly Russian, French and Chinese. Russia alone has at least $70-billion worth of investments in Iraq -- including the 15-billion-barrel West Qurna oil field in the southern part of the country. The French firm Total-Fina-Elf has a large interest in the 30-billion barrel Majnoon oil field near the Iranian border. American firms, by contrast, have no holdings in Iraq: They are prohibited from investing in the country under U.S. law.

The Chomsky/Toronto Star response to this, we suppose, might be to predict that Mr. Bush's first act once Baghdad is taken will be to eject the foreign firms, rip up their contracts, and turn the whole country over to U.S. oil companies. But any suggestion along these lines would be preposterous. The United States is not in the business of expropriating corporate assets from other major powers -- especially major powers that sit as permanent members of the UN Security Council. Moreover, if U.S. oil companies really were about to collect this sort of windfall -- Iraq, remember, has more oil reserves than any nation on earth except Saudi Arabia -- shouldn't insiders be gobbling up U.S. oil stocks? But take a look at the big three oil conglomerates in the United States. Each of Exxon-Mobil, Chevron-Texaco and Conoco-Phillips has recorded a decline of about 25% in its stock price since the White House started beating its war drum last spring.

What makes the "no war for oil" school of thought so weird is that many of its adherents are also advancing the theory that war would be too expensive. The White House estimates the direct costs of a conflict in Iraq would be about $80-billion. But according to Yale economics professor William D. Nordhaus, the real price tage would be as much as $2.5-trillion once the cost of nation-building is imputed. Would the United States get a good return on this 13-digit "investment"? Let's assume Iraq's liberation leads to a long-term oil supply expansion on the scale outlined above, and that the price of crude falls by, say, 10%, as a result. Given the value of U.S. oil imports, that would translate to just $22-billion in annual savings. No profit-seeking CEO would accept this miserly rate of return for such a controversial enterprise.

George W. Bush's critics have often accused the U.S. President of trying to finish off the war his father left half-finished in 1991. But it is the "no war for oil" crowd" that is truly living in the past. The idea of a Washington establishment obsessed with securing oil wealth dates to the 1970s, when spending on oil accounted for about 8% of U.S. GDP. In today's information economy, by contrast, the figure is 3.5%. To put this number in perspective, consider that Americans spend about 13% of their GDP on health care. If Mr. Bush were really as greedy as the Chomskyites suggest, he'd invade Canada and take our tongue depressors.

In a few years time, when a pluralistic Iraq emerges from the rubble of Saddam's imperium of terror, the "no war for oil" crowd will look ridiculous. But of course, by that time, they will have lost interest and moved on -- just as they lost interest in Afghanistan (which pipeline conspiracy theorists told us was also supposed to be "about oil") soon after U.S.-led forces deposed the Taliban. It should be clear by now that their "no war for oil" claim is not so much an argument built on fact as it is an empty catch phrase meant to marshall the sympathies of those who are already programmed to vilify the United States.

Ted Belman