Oil Is Our Damnation
By Jeremy Scahill
December 2002 Issue
IT'S AN UNDERSTATEMENT TO SAY THAT Baghdad is a congested city. Practically every car on the streets is a taxi. And while the government has recently put a fleet of shiny new yellow taxis on the roads, most of the cabs are "private." Teachers, engineers, sometimes even doctors, drive the family car to make ends meet in a country where the average monthly salary is about $5 to $10.
Relatively speaking, riding in a taxi is a pretty inexpensive way to get around. Most destinations in Baghdad will cost about 750 Iraqi dinars (roughly forty cents). And going to the gas station to fill up is a bit of a formality--fuel is practically free. A gallon of gas costs less than five cents, while a liter of clean drinking water costs a quarter.
But cheap gas is one of the few perks ordinary Iraqis gain from their country's vast oil resources. Ask anyone in Iraq what they think the coming war is about and you'll get the same answer everywhere, "Bush wants our oil."
"Our oil is like our damnation," says Adil Raheem, a university professor in the oil-rich port city of Basra in southern Iraq. "It will never bring us health and happiness as long as we have the U.S. government and its so-called interests here."
In addition to teaching English literature at a private college in Basra, Raheem is a volunteer with Iraq's Disaster Preparedness Team. Every week, he attends meetings where plans are being mapped out for coping with what many see as an inevitable war.
"Unfortunately, we have experience that has taught us a lot," he says. He recalls his efforts to get ready for war the first time the United States invaded, in early 1991. This time, he is more prepared. "Back then, everything was theoretical," he says. "Now, it's practical."
Iraq's oil belt, the south of the country, is clearly bracing for war. Trucks zoom along the highway pulling large howitzer-type cannons. Armed military posts line the roads. Some are large walled-in encampments; others are small bunkers with a half-dozen soldiers. On hillsides, people have arranged white rocks to form written messages, as though they are meant to be seen by aircraft. In several places, the message is in English: "Down U.S.A." In the distance, refinery flames dot the skyline in one of the most oil-wealthy regions in the world.
Almost no one in Basra speaks of war in the future tense. The city of 1.7 million people lies within the so-called no-fly zones imposed by the U.S. and Britain, allegedly to protect Shi'ite Muslims from Saddam. Air raid sirens blare through the city as U.S. war planes zoom above, regularly dropping bombs. The Iraqi government says that more than 1,300 civilians have been killed in these attacks.
"I feel sick when I hear the planes flying above. I cry," says Kareema, who lives in a two-room shack with her husband and four children. "I have psychological shock. I can't bear it. I listen to the radio and I feel scared. We are asking God just to save us."
Kareema's husband, Majid, is a struggling artist. Since the Gulf War, the family has had to move twice, both times to more sparse dwellings. The family members speak sadly of the "big" house they once had. Majid walks with a limp. During the Gulf War, he was driving in a carpool to the factory where he was working when a missile hit the road in front of them. Three of his co-workers were killed, while Majid and six others sustained injuries.
The two small rooms in their shack are full of Majid's paintings of Imam Ali, one of the holiest figures in Shi'ite Islam. The front courtyard of the house is infested with flies, hovering around the enclosed hole in the ground that serves as a toilet. Just a few feet away is the open-air family bedroom--four shabby bedsprings with thin, rotting foam mattresses.
Like many men in Basra, Majid works on the periphery of Iraq's oil industry as a mechanic. His monthly pay is a thin stack of nearly worthless dinars.
While Majid and his co-workers see little benefit from their country's vast oil resources, American companies are already making a killing off of what many see as a final push to seize control of Iraq's oil. Halliburton, once run by Vice President Dick Cheney, helped Saddam rebuild the industry in the 1990s, and now is turning a buck by servicing the massive troop buildup in the region.
Far away from Majid's shack in Basra, Western oil corporations salivate at their prospects in a post-Saddam Iraq. But it's not just the Exxon Mobils and Texacos. A recent report by Deutsche Bank says oil field services companies like Halliburton are in a prime position to profit from a war.
"We expect to see oil service contracts to rehabilitate old fields, but anticipate long-drawn-out negotiations on new fields," the report says, estimating the possible revenues to oil field services companies at around $1.5 billion. The New York Times reported on October 26: "Industry experts and the State Department have said that oil revenues will probably finance the rebuilding of Iraq, which has reserves second only to Saudi Arabia's."
Despite devastating U.S.-led economic sanctions, Iraq's stature as a global oil giant endures. Though it cranks out some three million barrels per day, the industry is in tatters. Under the oil-for-food program, Iraq is permitted to produce and sell an unlimited amount of its oil. But it does not control the revenue generated by these sales. The money is put into an account administered by a highly politicized group at the United Nations, known as the 661 Committee. Iraq must then apply for permission to use the funds to purchase goods or services on the world market. Consistently, the U.S. and Britain have blocked the importation of various goods, labeling them as "dual use"--meaning they could have military value. Over the last decade, this has included such items as pencils, chlorine, and ambulances.
Ultimately, the sanctions prevent Baghdad from carrying out any significant restoration of facilities damaged or destroyed by a decade of consistent U.S. bombing, beginning in the 1991 Gulf War. The prohibitions on importing spare parts or new machinery and equipment have largely blocked Iraq from producing oil at a level even remotely close to its projected capacity. More importantly, the stranglehold caused by sanctions has prevented Iraq from exploiting the untapped reserves of what it describes as gigantic oil fields.
Iraq's proven oil reserves total more than 112 billion barrels. Potential reserves are estimated at more than 200 billion barrels. Additionally, according to U.S. Department of Energy documents, Iraq contains 110 trillion cubic feet of gas.
"If you control the Iraqi oil, you are halfway there to controlling the world oil," says Dr. Faleh Al-Khayat, director general for planning at the Iraqi Oil Ministry. "And with your substantial hold on the Saudi fields, then you are in complete control of oil supplies for a long time to come."
The fields Al-Khayat refers to lie in southern Iraq: Majnoun and West Qurna (known as "The Giant"). These fields have lain largely idle for several decades, as they were repeatedly attacked during the Iran-Iraq war, as well as the Gulf War. Russia, which is owed some $8 billion by Iraq, has a $3.5 billion, twenty-three-year deal to rehabilitate Iraqi oil fields. Included in this agreement is the fifteen-billion-barrel West Qurna field. A 1997 deal between Baghdad and Moscow resulted in a plan for the Russian company Lukoil to begin oil production at the site. For years, Iraq has been negotiating a contract with the French company Elf for the lucrative twenty-billion-barrel Majnoun field. But, citing the U.N. sanctions, neither of these "friendly countries" moved much on the projects.
Last June, Iraq marked the thirtieth anniversary of its nationalization of foreign oil companies by announcing that it would no longer wait for the Russians or French. Iraq's oil minister, Amir Mohammed Rashid, accused them of "slackness" and bowing to pressure from the United States. Rashid announced that Baghdad was beginning immediate production at the two sites, saying it was a message to foreign oil companies that Iraq will not wait for them or an end to the sanctions. "We decided to move alone in developing these oil fields without any help," Rashid said.
Al-Khayat says Majnoun and West Qurna are "the greatest prizes of the oil industry in the world. We're talking about a half a million barrels each, at least. Together, that is as big as many OPEC countries. Now, we're talking about giant fields at the tip of the Gulf, on flat ground--not in the wilderness of Alaska or in the isolation of the Caspian Sea."
U.S. oil companies have lost out to Russian and French companies in bidding for Iraqi oil contracts. They hope to get a better shake at that oil under a post-Saddam regime. But as The New York Times reported: "Western energy companies have demurred from discussing the business possibilities in a post-Hussein Iraq, concerned that such talk would reinforce Baghdad's contention that the current conflict is driven by oil."
Demure all they want; the companies aren't convincing anyone at Iraq's Oil Ministry.
"The United States principally would be very stupid not to exercise pressure," Al-Khayat says. "Especially in the Administration, which is led by the oiligarchs."
Before the Gulf War, American oil companies like Exxon and Mobil operated in Iraq. They utilized the wealthy Kirkuk field in northern Iraq and were partners in the discovery and exploitation of the prized Rumaila fields in the south. Al-Khayat says U.S. companies know the area "very well," and therefore know what they might eventually be missing.
"If I was the chairman of Exxon Mobil," Al-Khayat says, "I would be sitting at the doorstep of the State Department demanding that he should put pressure so that I would have a share in this."
A diplomatic solution to the current crisis would be a disaster for U.S. corporations. But if the government in Baghdad is overthrown, the United States could declare an "all bets off" situation, paving the way for the Texacos, Exxon Mobils, and Halliburtons to move in.
Whoever controls Iraq's oil wealth, it's unlikely that the people who work in the industry will be better off.
Abu Mohammed lives in the poor Jumurriyah district of Basra. He is an imposing figure with rough, strong hands. He has worked throughout his adult life as an oil mechanic. Yet the meager salary that he earns from his work in the oil industry barely allows him to feed his family of eight, including two children with Down's syndrome. The minimal cost of education in Iraq is still too much for the family to afford, so only one of the children can attend school. The family lives in a rat-infested, decrepit hovel. Apart from a ceiling fan and a broken TV, they have no electrical appliances. They recently sold their refrigerator and electric cooker to repair a wall that crumbled.
Their residence is near an intersection that houses the garbage heap for their block. No one could remember the last time the massive, rotting mound was cleared away.
When foreign visitors enter Abu Mohammed's home, he offers nothing. His behavior is totally uncharacteristic of Iraqi hospitality. It emerges that nothing is offered because there is nothing to offer--not even tea. The family says their monthly food rations usually run out after twenty days. He tells a longtime foreign friend who has campaigned against U.S. policy not to visit anymore "because it is too painful." He simply has asked for a Caterpillar catalogue so he can see what modern equipment looks like.
Abu Mohammed is a proud and dignified man. He sits on the cement floor in his home, holding Haider, his teenage son with Down's syndrome, in his lap. The boy draws circles in the air as his father speaks. "I belong to a tribe and no matter what happens I will defend them," Abu Mohammed says. "Even this poor destroyed house is very dear to us. I will defend it, and I will not give it to anybody."
Outside, Abu Mohammed's children play near the murky, green water running in sewage ditches outside. His girls have worn the same dresses for years. Their father has given up wondering why anyone would want to punish him and his family so relentlessly. He says he and his wife do not speak with their children about the current situation.
"We don't want to scare them," he says. "What am I supposed to say? There will be a war and you will be dead?"
Jeremy Scahill is an independent journalist who reports for the nationally syndicated radio and TV show Democracy Now! He is currently based in Baghdad, Iraq, where he and filmmaker Jacquie Soohen are coordinating Iraqjournal.org, the only web site providing regular independent reporting from the ground in Baghdad.
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