No surprise, then, that the Russian and American presidents have been chatting a lot lately, and that one of Putin’s pet subjects is oil. In a recent conversation, Putin asked Bush for reassurances that oil would not be permitted to drop too low (say, $21 a barrel) if there were an Iraq war, administration officials said. Oil came up again last week when Putin’s chief of staff, Aleksandr Voloshin, made the rounds in Washington. Along with visits to the White House and Secretary of State Colin Powell, Voloshin also met–with little publicity–with Commerce Secretary Don Evans. A key topic of discussion: the U.S.-Russia Energy Partnership, an expansion of U.S. investment in Russia’s oil and gas industries.
Mind you, the Russians say, they are not the Turks, brazenly demanding billions in aid in exchange for support, as if Iraq were a piece of prime real estate (though, of course, it is). Moscow is not asking that Washington make any guarantees about maintaining price levels–the Bush administration insists it won’t interfere with the market–or about Russian postwar oil interests in Iraq. But Russia has elicited reassurances from Bush and other officials that the United States will do its best “to protect Russia’s economic interests” in the event of war.
The genteel dickering between Bush and Putin raises again the question of whether, as many protesters seem to believe, the imminent conflict is mainly a brazen U.S. grab for Iraq’s vast oilfields and reserves. Certainly much of the world thinks so, to judge from the number of no blood for oil signs seen in protests worldwide. And as oil prices rise to their highest level since 1990-91–nearly $40 a barrel–there seems to be a greater urgency than ever about tapping Iraq’s unused reserves, believed to be the second largest in the world.
In truth, except for Bush’s harshest critics, few people believe that the seemingly imminent war involves a stark trade of blood for oil. Not least because such a policy makes no sense, oil experts say. Even if Washington were to seize Iraq’s oil industry, the expense of a U.S. war and occupation will far outweigh any benefit from Iraq’s 2.5 million barrels of oil a day. Even a two-term Bush presidency would be long over before Iraq’s broken economy realized its full capacity of 6 million barrels or more. Bush administration officials insist that U.S. oil companies–which would love to get production-sharing agreements in postwar Iraq–have been kept at arm’s length from interagency discussions for postwar planning. One official privy to those talks says they’re bogged down in lawyerly squabbling. “It almost feels like seven blind men and an elephant. You’ve got the Pentagon lawyer saying, ‘We can do what ever we want with Iraqi oil.’ Then other lawyers will say, ‘Hold on, Cochise, what about international law, and antitrust and competition law’… There is no resolution.”
Bush, in a speech last week, sought to lay the issue to rest at last. Iraq’s “natural resources,” he said, will be used only “for the benefit of the owners: the Iraqi people.” The president also confirmed that Iraq’s oil revenue would continue to be funneled through the U.N. Oil-for-Food Program, which will be the heart of the humanitarian-relief effort. Bush officials like to point out that Americans returned Kuwaiti oil to its rulers a decade ago. They’ve even developed a paper of talking points titled “Myths to Be Debunked.” Among the standard lines is that if all America was looking for was cheap oil, Washington could cut a deal with Iraq: that would be far easier than going to war. One Pentagon official, asked why the administration can’t at least admit that the oil-rich region is critical to America’s economy–as Bush’s father did in justifying the 1990-91 gulf war–responded, “Because then a lot of idiots would say it’s about oil.”
So what is the war about? As described by some officials, the administration’s drive to take on Saddam began after 9-11 as a genuine fear of what this longtime U.S. enemy could do with weapons of mass destruction. Saddam’s ouster and the presumed Iraqi democracy to follow will be a two-part message to other autocrats who turn a blind eye to terrorism. First, that no pursuit of WMD will be tolerated; and second, that these leaders need to open up and reform their political systems and societies. This was the subtext of Bush’s speech last week touting a grand vision for the Mideast. As one official puts it, “an icebreaker” is needed in the frozen mass of dysfunction of the Islamic world. Its autocratic and backward regimes, like Saudi Arabia’s, only spur Islamist radicalism. “This is the crucial element that no one can talk [to the countries] about,” concedes one Bush official. “The president can’t say we want to scare all these other dictators, even the ones who have been ‘friendly’ to us.”
Only as part of this grand vision does oil play into the administration’s thinking–at least in the view of extreme hawks or “neoconservatives” like Richard Perle, the Defense Policy Board chairman who has long harbored a deep mistrust of Saudi Arabia. Especially since 9-11, the administration has sought to diversify its oil supplies beyond the Mideast, emphasizing new sources in Africa, Alaska and, yes, Russia. “The United States has had two mistresses in the Mideast for a long time: Israel and Saudi Arabia,” says Raad Alkadiri of Petroleum Finance Corp. “This is to ensure that one is banished from the bed forever.”
Most oil experts like Alkadiri scoff at this as a neocon fantasy. Saudi Arabia can’t be marginalized, they say. Case in point: today, with the world’s oil supplies strained, Riyadh controls some 75 percent of the excess capacity that will be needed to pull prices out of their upward climb (indeed, one reason prices are not even higher today is that the Saudis have ramped up production). Knowing this, even many Bush hawks concede that oil remains only a small part of the overall picture–“black gravy,” as one official puts it. “It’s almost a much bigger issue for Europe than for us,” he says. “They’re much more dependent on Middle Eastern oil. Is it nice to have a country with so much oil on our side? Yes. But I don’t think there’s a strategy to exploit that.” The question is, can Bush convince the rest of the world that this is true?
