should it come, is intended to mark the official
emergence of the United States as a full-fledged
global empire, seizing the sole responsibility and
authority as a planetary policeman. It would be the
culmination of a plan 10 years or more in the making,
carried out by those who believe the United States
must seize the opportunity for global domination,
even if it means becoming the 'American
imperialists' that our enemies have always claimed
is understood, other mysteries solve themselves.
For example, why does the administration seem unconcerned
about an exit strategy once Saddam is toppled?
we won't be leaving..."
-- Jay Bookman
Atlanta Journal Constitution
Sept. 29, 2002
April 16, 2003 1400 PDT,
(FTW) - None
of it looks good. As surreal media coverage trumpets
victory and sounds a clarion call to arms for the next
target - Syria, the real data on both Iraqi oil production
and the economy may leave the Bush administration no
option but to perpetuate and enlarge a massive global
conflict. Its dreams of a 2004 re-election are now
evaporating like water in the blazing Iraqi desert.
Notwithstanding irrational reductions in the price
of oil futures contracts and rises in the equity markets
based upon hype and Centcom media manipulation, the
hard numbers are ominous indeed.
Colin Campbell, previously
a senior geologist for Texaco, Amoco and BP, and an
executive and chairman at major oil companies before
becoming a governmental and industry consultant, made
some chilling observations to FTW. Two weeks
after the start of the Iraqi war he observed, "Short
term movements of oil price since the war began are
completely irrational. They just reflect the patterns
in the market by the hour. It may be that buyers have
held off buying in anticipation of a fall in price
in the mistaken belief that when Bush takes the place
all he has to do is open a tap. I think, in fact, that
you can expect quite a severe increase in price about
45 days from March 20th.
"Tankers have stayed away
from Iraq because of war risk insurance costs and other
risks. It takes 45 days for this interruption to flow
through the system. It is impossible to look further
ahead. It seems evident that these famous weapons,
which the inspectors couldn't find, were not real or
the Iraqis would have used them. Bush may yet fabricate
them, along with much of the other evidence he has
used so far. But it gets harder to con the people.
So I suppose when that becomes ever more evident, people
throughout the world will become even more upset, which
I imagine would lead to increased acts of sabotage
against oil installations in the Middle East."
Recent stories from major
press organizations are confirming earlier FTW reports
that the Iraqi infrastructure was too run down before
the war even started to accommodate any rapid increase
in production after victory. This belief, which the
administration has quietly promoted as a "sure thing" after
Saddam's defeat, has been fueling market speculation
in both oil prices and stocks. When combined with the
effects of widespread Iraqi looting and sabotage, along
with rising anti-American sentiment in a populace that
is correctly viewing itself as irrelevant to American
interests, Campbell describes a reality which is becoming
ever more apparent. "I think it will be years before
Iraqi production gets back to pre-invasion levels,
never mind an increase."
Like a bucket of cold water
in the face of irrational financial markets, Agence
France Presse reported from Nicosia, Cypress on April
12 that the Middle East Economic Survey (MEES) had
concluded that there won't be a drop of Iraqi oil on
the markets until at least June. And those drops are
a long way from 3.5 million barrels per day (Mbpd).
On April 11, the AP confirmed
Campbell's dire assessment. "Political disputes, legal
issues and the need for billions of dollars in investment
are among the hurdles Iraq must pass before it can
restore crude output even to 1990 levels - much less
increase it beyond that...
"... its pipelines, pumping
stations and oil reservoirs have suffered for years
from a dearth of funds and lack of maintenance."
Quoting an analyst at the
Washington-based Petroleum Finance Co, the AP reported
that an investment of $3-6 billion and two years would
be required to permit Iraqi production to reach 3 Mbpd.
That issue is further compounded by the fact that title
to Iraqi oil is presently uncertain and the only way
to resolve the issue might be through the recently
Just a day later, CBS News' Market
Watch labeled post-war Iraqi oil as a "wild card",
reaffirming evaluations of current Iraqi infrastructure
and quoting oil industry expert Kevin Kerr as stating
that it would take three years and $7 billion in
new investment to bring Iraqi oil production to the
1980 peak of 3.5 Mbpd, $20 billion to reach 5.5 Mbpd,
and more than 10 years to double production from
current levels if "everything goes smoothly".
Everything is not going
smoothly. Little noticed by the American press is the
fact that saboteurs are ravaging northern Iraqi oil
fields. An April 14 AP story quoted Shad, an electrical
engineer who would not give his last name, as saying,
It's the worst destruction I have seen in my life.
It will set Iraq back many years." Shad should know.
He works for the Northern Oil Company, which administers
all of the oil fields in northern Iraq.
There is no immediate promise
or even a remote possibility that Iraqi production
will increase rapidly. U.S. military, economic planners
and experts in the financial markets know this. In
his FTW interview Campbell stressed that even
the loss of seismic charts or the hands-on expertise
of people who know how to work each unique oil field
could set reconstruction back years.
As Iraqi outrage over uncontrolled
looting - in some cases reportedly encouraged by U.S.
troops - continues to mount, it is apparent that something
else is driving U.S. actions. The cavalier and glib
assertions of Centcom that they did not expect looting,
and their failure to recognize the value to all humanity
of the antiquities stored in Iraq's museums, is the
basest kind of cultural and ethnic insult. The failure
to protect antiquities dating back to the time of Abraham,
or even plan for it, does more to reaffirm global perceptions
of Ugly Americans with a Big-Mac culture than any U.S.
action thus far.
The Bush administration
has obviously concluded either that it does not need
a quick increase in Iraqi production or has misplayed
its hand entirely. If the former is true then where
and how can the U.S. economy obtain other supplies
of inexpensive oil, especially if OPEC proceeds with
announced plans to cut production?
PEAK OIL CONFIRMED
On April 7, the Associated
Press reported that OPEC was planning an emergency
meeting to discuss the pricing impacts of a possible
oil glut. Saudi Arabia and all the OPEC nations know
that Iraqi production is not a price threat for several
years and they are very aware of the fact that planetary
supplies are both running out and becoming more expensive
to obtain. Yet a flurry of press stories following
the apparent U.S. victory have indicated that OPEC
is moving to cut production to avoid a sudden fall
in prices as imaginary Iraqi oil hits the markets.
Both OPEC and Saudi Arabia
know that the United States has two objectives. The
first, made ever more apparent by the actual conduct
of the war, is simply to gain control of Iraq's
112 billion barrels (Gb) of
oil; the second largest reserves on the planet. That
Centcom purposely allowed the looting, the
removal or destruction of vital records, and indirectly
encouraged actions that have distracted attention from
the oil fields conveys a powerful message. If the U.S. priority
had been to do what was necessary to restore Iraqi
production as quickly as possible, the human resources,
seismic data, administrative infrastructure and other
key assets would have been foremost on Centcom's military
agenda, the same way that Nazi rocket scientists were
on the U.S. agenda
at the end of World War II.
Iraqi oil cannot be pumped,
exported or sold without a governmental infrastructure
to handle the paperwork, collect taxes, authorize shipments,
control port entry by tankers and a thousand other
details. Press reports tell us that Iraqi governmental
buildings have been burned and that even if there were
employees able to work, they would have no computers
to work on, no telephones to talk on, and no chairs
to sit at. Oil experts have decried the prospect that
the U.S. might privatize Iraqi oil assets. That would
be a replay of the nightmare scenario inflicted on
Russia by Goldman Sachs, The Harvard Endowment and
the U.S. Treasury in the 1990s. That media-hyped effort
to show the Russian people how to be capitalists resulted
in the looting of Russian wealth and a financial debacle
which the Congressional Cox Committee characterized
as "three times worse than the great depression" in
terms of what it did to the Russian people.
What OPEC is afraid of
is not an oil glut tomorrow, but in five to ten years
as the rest of the world suffers the serious repercussions
of Peak Oil. That glut from unused Iraqi fields would
have a double impact, as the OPEC nations pass their
production peaks at the start of the next decade and
go into decline. Any immediate moves OPEC makes to
cut production are intended to tighten an economic
noose around the United States now,
rather than later, while the U.S. economy
is fragile and before it can benefit from Iraqi reserves.
An April 15 AP story headlined "OPEC to discuss ways
to stabilize oil prices" supported this theory. "OPEC
members will discuss 'all scenarios' to keep oil prices
stable, the president of the group said Tuesday, keeping
the idea of production cuts alive despite warnings
that such a move could be premature." AP reported that
OPEC fears of a price crash had prompted an "emergency" OPEC
meeting in Vienna next week.
The International Energy
Agency has been cautioning that no glut is likely and
affirming, as previously reported in FTW, that
current production capacity is near its limit. Therefore,
OPEC's move toward production cuts must have other
motives. Those motives are a response to what OPEC
and Russia both fear most, a fall in prices below the
$22-28 per barrel range favored by OPEC. The U.S. cannot
do that today, but with Iraq firmly
in its control, it can do it five to ten years from
now when the pains of Peak Oil are more acute. If that
happened, the fall in oil revenues in the Middle East
would evaporate domestic stability in OPEC nations
and make Russian oil uncompetitive on world markets
because of its higher (and rising) production costs.
On April 8, ABC News reported
that the U.S. economy was "On The Edge". Quoting David
Rosenberg, chief North American economist for Merrill
Lynch, the ABC story said, "'Investors could be in
for a rude awakening' once the war comes to an end, 'the
economy is back on the precipice of recession.'" The
ABC story cited confirming opinions from experts at
Goldman Sachs and J.P. Morgan, which were based on
a wide range of economic data. Aside from grim data
on unemployment, consumer confidence, debt, manufacturing
and retail sales, the picture got far worse as the
Congressional Budget office revealed this week that
the deficit has now exceeded $3 trillion, making it
the largest in history.
The New York Post added
another wrinkle on April 13 when it observed that Iraqi
instability, damage to infrastructure, new technologies
and rising production by non-OPEC countries might actually
curtail infrastructure investment in the short term.
That might be what is intended, as the U.S. "banks" Iraqi
reserves for use at a more appropriate moment. That is also the scenario that OPEC and Russia cannot
afford to see play out and they may be trying to proactively
A number of stories have
recently confirmed FTW's prediction that a new "anti-American" alliance
was forming between Russia, France, Germany and China.
In our last major story - "The Perfect Storm" - we
predicted that these nations, unable to oppose the
U.S. militarily, would do whatever they could to give
themselves an economic edge including quiet support
for rebel movements around the world that would stress
global production capacity.
Events confirming that
possibility have recently taken place in Nigeria, the
world's sixth largest oil producer. BBC, AFP and other
major news organizations reported in late March that
rebel insurgencies had caused oil giants ChevronTexaco
and Shell to abandon facilities there, cutting production
by some 800,000 barrels per day. Over the next two
weeks, other stories reported that the U.S. government
had rushed delivery on the first of seven new warships
to the Nigerian government, and that the oil companies
were returning to work. However, just days after the
oil companies were announcing that things had settled
down, both AP and AFP reported the April 6 bombing
of Nigeria's main pipeline which had been seriously
damaged and burning out of control.
Continuing evidence of
the failure of the Bush Neocons to manage events in
a manner pleasing to the world's financial elites surfaced
in a rare and very stinging public rebuke form Henry
Kissinger business partner and former Bush I Secretary
of State, Lawrence Eagleburger. In a story published
on April 14 by Britain's Independent-UK it was
reported that Eagleburger told the BBC, "If George
Bush [Jr.] decided he was going to turn the troops
loose on Syria, and Iran after that, he would last
in office for about 15 minutes. In fact, if President
Bush were to try that now even I would think that he
ought to be impeached. You can't get away with that
sort of thing in this democracy."
Although not intended to
reach the ears of the general American public the warning
was meant to have an impact inside the administration.
It did. In his Pentagon press briefing the next day,
Secretary of Defense Donald Rumsfeld bluntly stated
that the U.S. had no intentions of engaging in military
conflicts in Syria or anywhere else in the region.
The rapidly coalescing
New European Alliance, which Britain will
ultimately be compelled to join due to energy demands,
appears to be leaving the Bush administration few alternate
approaches. The days of the Neocons may be numbered.
Frankenstein's monster may be removed but the financial
interests who created it remain busy in their laboratories.