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Week 15 - April 14th - 2003 |
| David
Seaton's Energy Links® Editorial
The fall of Saddam Hussein has been swift, nearly as swift as his getaway. It appears that the regime's top Baath party elite has 'vanished into thin air'. Such a perfectly executed disappearing act with all US forces and the CIA hot on their trail indicates a level of organization which is puzzling to contrast with the hellish anarchy of post Saddam Baghdad. A puzzling and disturbing contrast. "Al Fawda" is the Arabic word for "chaos", certainly a useful word to know these days. The bombing broke the regime and the crowds of looters have finished the job by destroying or scattering to the winds all the public records in the ministries. Any new administration will have serious difficulties in even identifying its citizens. With hospitals and even archeological museums being ransacked the picture of disorder is complete. Following the "Rumsfeld doctrine" of light ground forces supported by overwhelming air superiority the coalition armies in place are far too undermanned to be able to police the captured cities of Iraq. In order to bring some semblance of law and order to the streets of Baghdad and Basra the coalition has been forced to recall the Baath party police to duty. Thus an old and weakened dictator has been eliminated, but if his police and bureaucracy - overwhelmingly from the Sunni minority - continue in place, a new and younger strong man will inevitably emerge... from among the Sunnis. The Sunnis only represent ten percent of Iraq's population, but they have held power since the days of the Ottoman Empire. A democracy means "one man, one vote" or it means nothing at all. An Iraqi democracy will mean a Shi'ite government in Iraq. More than sixty percent of Iraq's population are Shi'ite Muslims who have never tasted power in any form in the eighty years since Iraqi independence was declared. Many Iraqi Shi'ites Muslims, who take their theology from Shi'ite Iran, would like to establish a similar Islamic republic in Iraq. It should also be remembered that when the Israelis invaded Lebanon in 1982 the Shiites of southern Lebanon cheered them as "liberators" - from the Sunnis of course - but subsequently formed the Hezbollah terrorist group which eighteen years later expelled the Israelis from Lebanon. In al Najaf, Shi'ite Islam's holiest city in Iraq one pro-western Ayatollah, Abdul Majid al-Khoei, has already been murdered and the top Shi'ite Muslim cleric and pro-western Grand Ayatollah Ali Sistani has been given 48 hours to get out of town. There has been much trumpeting of France, Germany and Russia's isolation after the fall of Saddam, but for some reason the World Bank and the International Monetary Fund refuse to work in Iraq without a new UN resolution and that leaves those three countries with more leverage than before the war. Nothing was going to stop the USA from going to war... but paying for it passes through the UN where France, Germany and Russia still have a veto. The United States wants them to write down Iraq's huge debts, which they are reluctant to do. As the United States has been against forgiving the debts run up by the successors of the apartheid government in South Africa or Mobutu's debts in Zaire, US concern for the finances of post-Saddam Iraq may not move the French, certainly not the Russians and the Germans, to make such a huge sacrifice. Starting a new war with Syria would guarantee their lack of cooperation. This is more or less the state of "hearts and minds" in the first week of Pax-Americana in Iraq. Despite the falling statues and cheering Shi'ites I still believe that the United States has made perhaps the biggest error in its history in committing ground forces to the Middle East in what could easily become a permanent footing. The only thing that could perhaps change the situation in America's medium and long-term favor would be for the United States to put extreme pressure on Israel to comply with UN resolutions and create a viable, sovereign Palestinian state. With a Presidential election coming the possibilities of George W. Bush putting meaningful pressure on Israel are nil. Certainly Paul Wolfowitz didn't design the war in Iraq in order to pull the rug out from under Ariel Sharon, did he? David Seaton
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| Oil
wealth far from covering all of Iraq's debts and needs (San Jose Mercury)
Bush administration officials have described Iraq as a wealthy nation that can pay for much of its postwar reconstruction simply by tapping the vast pool of oil deep beneath it. But while it's true that Iraq sits atop the second-largest known oil reserve in the world, the country also sits on a staggering amount of international debt: about $383 billion in foreign loans, unpaid legal claims and outstanding contracts. Some analysts warn that Iraq's antiquated oil wells, which produced about $12.5 billion worth of oil last year, can't pump enough to get the country out of the red. ``No matter how you run the numbers, there is no way in hell that oil can solve Iraq's problems,'' said Anthony Cordesman, an expert on Middle East security at the Center for Strategic and International Studies in Washington. Unless much of the country's debt is forgiven -- a tough sell, because Russia, which opposed the war, is one of Iraq's biggest creditors -- the United States could end up spending tens of billions of dollars on reconstruction to prevent Iraq from descending into chaos. ``I think there's a huge financial problem with Iraq that this administration has been unwilling to discuss with the American public,'' said Rep. Sam Farr, D-Salinas, who serves on a private commission looking at the reconstruction of postwar countries. ``There's not going to be enough money from oil.' (...)Critics dispute claims that Iraq is a wealthy nation because of its huge debts. ``It's difficult to see how you can classify Iraq as a wealthy nation,'' said Bathsheba Crocker, a fellow at the Center for Strategic and International Studies and co-author of several recent reports on Iraqi reconstruction. Iraq has about $127 billion in outstanding international debt, according to a 2001 estimate by the World Bank. The U.S. government estimates the figure much lower, at $62.2 billion, but that does not include about $47 billion in accrued interest. In addition, Iraq is on the hook for about $199 billion in unsettled legal claims and unpaid settlements from the invasion of Kuwait in 1990, according to Crocker's recent study, ``A Wiser Peace: An Action Strategy for a Post-Conflict Iraq.'' Added to those debts are $57.2 billion in contracts Iraq has signed with companies in several nations for energy, telecommunications and other work. The total of nearly $400 billion dwarfs that of other financially troubled countries. Argentina, for example, owes $141 billion. And Iraq's troubles are amplified by its meager economy. The U.S. State Department estimates Iraq's gross domestic product at $59 billion. Argentina's economy is more than four times that size. Rubar Sandi, a Kurdish Iraqi who heads the Washington-based U.S.-Iraq Business Council, plans to press the Bush administration to work toward an international agreement to forgive some of Iraq's debt. ``A wealthy nation that's paying all its wealth to others is no longer wealthy,'' Sandi said. Click here to read more Contents |
| As
Prices Fall for Crude Oil, OPEC Leader Calls for Talks (New York Times)
OPEC's president called yesterday for a special meeting later this month to discuss the recent slide in oil prices, which have fallen almost 20 percent since just before the war with Iraq began. Speaking to reporters in Paris after meeting with French government officials, the OPEC leader, Abdullah al-Attiyah, who is Qatar's oil minister, said: "My main worry is how to deal with the dramatic price drop. The market is full of oil. It's facing a glut, not a shortage." He suggested a meeting on April 24 at the group's headquarters in Vienna. Since the beginning of the year, the Organization of the Petroleum Exporting Countries has gradually increased output above its official quotas to provide extra oil for global markets in the wake of a national strike in Venezuela and in anticipation of war in Iraq. Oil prices remained stubbornly high for most of the winter, despite OPEC's efforts, until the recent decline, caused largely by the expectation that a swift victory by United States-led forces would quickly revive Iraqi oil exports. To halt the fall in crude oil prices on world markets, OPEC may decide to rein in production, holding it at its official quota levels, industry analysts said. "They're worried about a price slide," said Leonidas P. Drollas, chief economist with the Center for Global Energy Studies, a London research group. "They will tell each other: `We must go down to our quotas. The crisis is over, prices are at $23 a barrel and we must act.' " Mr. Drollas was referring to the cost of Brent crude oil on the International Petroleum Exchange in London, which fell as low as $23.40 a barrel yesterday. On the New York Mercantile Exchange, the price of crude oil for May delivery closed at $27.96, down 66 cents. Retail prices, particularly for gasoline, though still at relatively high levels, eased for the third consecutive week. The Energy Department said the average price at the pump for regular unleaded gasoline fell 1.9 cents, to $1.63 a gallon, in the week ended yesterday. That was down from a record $1.728 in the week of March 17. Prices are higher in some parts of the country, notably California and sections of the New York metropolitan area. Industry analysts said that crude oil prices might remain somewhat volatile for some time, given the political instability in several major exporting countries. Click here to read more Contents |
| Turkey
cautions US, Iraqi Kurds over oil-rich towns (Agence France Presse)
Turkish Prime Minister Recep Tayyip Erdogan warned on Monday that Iraqi Kurdish control of oil-rich Mosul and Kirkuk would constitute grounds for Turkish military intervention in northern Iraq, Anatolia news agency reported. "Going into northern Iraq is not an objective for us. Entering northern Iraq will not be on the agenda as long as Iraq's territorial integrity is preserved and there is no move aimed at seizing the oil of Mosul and Kirkuk," Erdogan told reporters. In cooperation with US troops, the forces of the two main Kurdish factions in northern Iraq have recently adavanced towards the two towns, on which they have historical claims. Turkey fears that control of local oil resources could embolden Iraqi Kurds to move towards independence, a prospect that could set an example to their restive Turkish cousins. During a visit to Ankara last week, US Secretary of State Colin Powell pledged that the Kurds would not be allowed to advance "beyond a certain line" around Mosul and Kirkuk, according to a senior Turkish government official. "I do not believe that they will not keep their word," Erdogan said. In an apparent reference to a newspaper report claiming that Ankara had sent a harsh-worded official note to Washington on the issue, Erdogan said: "There has been no warning." The mass-circulation daily Hurriyet reported Monday that Ankara had warned the United States against allowing Iraqi Kurds to seize Mosul and Kirkuk, asserting that such a development would prompt its intervention in the region. The warning was conveyed through a foreign ministry note handed to the US ambassador in Turkey, Robert Pearson, last Friday, according to Hurriyet. A spokesman for the US embassy here would not confirm the existence of such a note, but said Ankara had repeatedly made its concerns known to Washington. Click here to read more Contents |
| Sharing,
Alaska-Style (New York Times)
Though most Americans don't believe this war is about oil, much of the rest of the world does. How the United States handles Iraq's oil after the war is therefore crucial. For guidance, America might look to its experiences in Japan after World War II and — perhaps more surprisingly — in Alaska in the 1970's. Most revolutions that produce stable democracies expand the number of stakeholders in the nation's economy. America's occupation of Japan succeeded not just because the United States purged Japan's warmongers and established a peace constitution but because it imposed land reform. American occupiers broke up vast estates held by the Japanese aristocracy and redistributed the land to farmers, thus linking Japan's most lucrative resource to millions of citizens. Now America should do the same with Iraq's most lucrative resource, oil. Here is where Alaska comes in. In the 1970's, during the construction of the Trans-Alaska Pipeline, the state realized that the new oil leases would produce an enormous windfall. Its citizens set up the Alaska Permanent Fund to manage this income, directing that the revenue be invested, the principal remain untouched and the gains be used for state infrastructure investments. A part of the proceeds was distributed as dividends to every Alaskan. By July 2002, the fund had grown to more than $23.5 billion. Dividend payments to Alaskan families averaged about $8,000 per year. Iraq's annual oil revenue comes to approximately $20 billion. A postwar government could invest $12 billion a year in infrastructure to rebuild the nation. The other $8 billion could anchor an Iraq Permanent Fund, to be invested in a diverse set of international equities. The resulting income would go directly to Iraq's six million households. These payments would make a huge difference to families in a country whose per capita gross domestic product rests at about $2,500. Click here to read more Contents |
| Defending
the dollar (Natal Witness - South Africa)
Writing in the Sunday Times on March 30, Judge Richard Goldstone stated that there were only two lawful ways in which the U.S. could use military force against Iraq. One was if the UN Security Council sanctioned it; the other was in the case of "dire self-defence". The U.S. war against Iraq is in dire defence of dollar imperialism against the threat of the euro. Put another way, the war is about world economic dominance. That, according to Australian analyst Geoffrey Heard, is the reason for the Bush Administration's determination to oust Saddam Hussein's regime, because his policy of selling oil in euros is threatening U.S. global hegemony. The origin of Establishment America's problem with Iraq goes back to 1999 when Iraq broke ranks among the oil producers and began to trade its oil in euros instead of U.S. dollars. As Heard notes, under an Opec agreement all oil has been traded in greenbacks since 1971. America's monopoly of the oil business has premised the U.S. dollar's supremacy among world currencies. Initially the U.S. scoffed at Iraq's move to the euro but by 2001 disdain had turned to alarm. Iran indicated an interest in changing to euros while Russia has been seeking to increase its oil production aimed at European sales - in euros, of course. Venezuela, the world's fourth largest producer, has been cutting out the dollar in its dealings and bartering with various countries, including Cuba. The net result of these developments meant that the dollar's stranglehold on oil was slipping and with it America's dominance of world trade. With Iraq having the world's second largest oil reserves, the American Establishment, which is sodden in oil investments, simply had to act against Saddam - even if it meant going to war. The alternative was the meltdown of the U.S. economy. America was in serious trouble long before the Al-Qaeda attacks of September 11, 2001. Its real threat came not from the Middle East so much as from the EU with its new currency, the euro. Commanding 40% of world trade, the EU poses a major challenge to continued U.S. dominance. If only a few Opec members switched to euros, argues Heard, that would hurt the U.S. in two critical ways: it would result in a stronger euro and an increase in the "eurozone" and it would trigger dollar dumping and depress the greenback's value. With the dollar facing bleak times, the only thing left for the Bush administration as the proxy of Establishment America (Al Gore would have had to have done the same) was to come out fighting. In one respect, Bush has been very frank about the purpose of this war. He has said it is to protect the American way of life. Indeed. And that means ensuring the reign of dollar imperialism. Click here to read more Contents |
| Venezuela
makes new light oil field discovery (Forbes)
Venezuela has discovered an oil field containing 350 million barrels of light crude, state oil firm Petroleos de Venezuela said in a press release over the weekend. Petroleos de Venezuela (PDVSA) said the Chaguaramal field, in the eastern Monagas state, contains light 32 degree API crude and 870 billion cubic feet of natural gas. The OPEC nation, recovering from a crippling two-month oil strike started Dec. 2 by foes of President Hugo Chavez, announced in late March that two new oil finds holding nearly 1 billion barrels of crude had been discovered. Government officials said major international oil companies such as ExxonMobil and Royal Dutch/Shell had expressed an interest in developing the new oil fields. Oil analysts say cuts in PDVSA's exploration and production budget due to losses accrued during the strike, as well as the loss of experienced personnel, may hinder the company's ability to develop the new oil fields alone. More than 17,000 PDVSA workers were fired for participating in the strike, which temporarily cut off the oil sales of the world's No. 5 crude exporter. Foreign companies have been critical of a nationalistic hydrocarbons law passed by Chavez in 2001. The law increased royalty payments and the minimum level of state participation in oil development. Oil companies say the terms are not competitive with contracts offered by other countries and need to be amended. Click here to read more Contents |
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