Transfer of Wealth
The victory has given a new perspective to the war on Iraq. Will Iraq's oil wealth and international assets be used to finance American industry in a reconstruction of a destroyed Iraq?
From Victory to Reconstruction
If the overthrow of the Saddam Hussein regime was the purpose of the coalition invasion of Iraq, why wasn't this coalition concerned with the problems of the Iraqi people in the immediate aftermath of victory?
- The U.S. military victory over a hapless Iraq immediately concentrated on securing the oil fields and preventing adverse reactions to the military presence.
- Preparation for humanitarian aid has been inadequate and slow in being distributed.
- A preliminary and well organized civil administration was not immediately available to guide the country.
- The allies showed no regard for immediately protecting Iraq's cultural, economic and social interests and infrastructure.
If the primary purpose of the overthrow of the Iraqi regime did not consider immediate assistance to the populace then what was the primary purpose of the invasion? One clue was revealed in the early days of the invasion.
Transfer of Assets
In the first days of the war, the United States directed foreign banks to seize Iraq's assets, frozen since the 1991 war, and transfer them to the United States Treasury. These assets had accumulated from payments by oil companies. UBS Warburg's Zurich subsidiary claimed it would comply with the U.S. directive. The United States took unilateral action to seize Iraq's disputed assets. Evidently it intends to decide how these assets will be used for Iraq's reconstruction.
The looting of Iraq's banks has greatly reduced the value of Iraq's dinar. Enter the dollar, not ersatz scrip, to the rescue, which means that Iraq's economy will become tied to America's economy. Iraq's prices will be determined by the value of the dollar and how the U.S. values Iraq's goods.
The transfer of assets from Iraq to the United States is being driven by: Who owns the oil and: Who will finance reconstruction?
Who owns the Oil?
Why is there is a debate concerning the ownership of Iraq's oil.
The Iraq Oil Ministry controls a nationalized oil industry through the Iraq National Oil Company (INOC). The INOC is composed of several autonomous companies: State Company for Oil Projects (SCOP) - design and engineering of upstream and downstream projects; Oil Exploration Company (OEC) - exploration; Northern Oil Company (NOC) and Southern Oil Company (SOC) - upstream activities in northern/central and southern Iraq, respectively; State Organization for Oil Marketing (SOMO) - crude oil sales and OPEC relations; Iraqi Oil Tankers Company (IOTC)
In addition to the autonomous companies, the oil fields have concession holders:
Iraq Petroleum Company (Mosul Oil Company and Basrah Oil Company), Royal Dutch/Shell, Anglo-Persian, CFP, Exxon, Mobil, Atlantic Richfield, Gulf Oil Corporation, Standard Oil of Indiana [Amoco], and Participations and Explorations Corp., under auspices of the Near East Development Company.
The autonomous companies, the concession holders and personnel have not changed. So, why fuss? The Iraq Oil Ministry can still exist, perform repairs (which was previously done by Houston-based Kellogg Brown & Root), explore for oil and operate as before. The U.S. certified the existence of the Iraq Oil Ministry and its operations after the U.S. forces entered Baghdad:
Associated Press, BAGHDAD, 4/18/2003
Since US forces rolled into central Baghdad a week ago, one of the sole public buildings untouched by looters has been Iraq's massive oil ministry, which is under round-the-clock surveillance by troops.
The imposing tile-colored building in the Al-Mustarisiya quarter is guarded by around 50 US tanks which block every entrance, while sharpshooters are positioned on the roof and in the windows. The curious onlooker is clearly unwelcome. Any motorist who drifts within a few meters (yards) of the main entrance is told to leave immediately.
Denis Halliday, a former UN Official based in Baghdad between August 1997 and October 1998, voiced an ominous opinion on who will control the Iraq oil. Halliday resigned his post after protesting the continued UN sanctions against Iraq.
BAGHDAD (AFP) - Former UN official Denis Halliday warned here Sunday that the United States and Britain were ready to "annihilate" Iraqi society in order to control the country's oil wealth.
Halliday told a press conference that "the United States and Britain are proceeding with plans to annihilate Iraqi society, a catastrophe that would be heightened by the threatened use of tactical nuclear weaponry."
"Washington has informed us that the very security of America require ever-increasing quantities of oil and the source of that oil can only be the Middle East," he said.
Halliday said that since the Sept. 11, 2001, terror attacks on the US, "the relationship between Washington and Saudi Arabia has become fragile, therefore making that massive flow of cheap oil insecure."
"Iraq constitutes one very large reserve tank - a tank of some 120 billion barrels - and control of that tank has become paramount for the very survival of American economic superiority," he said.
The pre-war situation can govern the post-war situation.
After the Gulf war, twenty five percent of the Iraq oil revenues went to Kuwait and the Kurds as reparations. Before the present war, the UN deposited the proceeds from Iraqi oil sales in an account. The UN (and not Saddam Hussein) used the account to buy food, medicine and other civilian goods. What's wrong with that? Yet, the United States is not supporting the continuation of an effective UN program, which would also relieve America of the burden of managing the oil proceeds.
The U.S. (Where are the British; didn't they fight in the war?) is hinting it will manage the oil resources, and use those resources to finance reconstruction of Iraq. The notable difference between the pre-war method and the evolving post-war methods for managing the Iraq oil resources is that the pre-war method did not assist U.S. industry and the evolving post-war method is anticipated to be a bonanza for U.S. industry and a rescue plan for its faltering economy.
Who finances Reconstruction?
The question that has not been asked is: why does Iraq need reconstruction? It is not the most prosperous country, but it is not an impoverished Third World country. It has well developed educational and economic institutions.
What are the principal reasons why Iraq deserves assistance for reconstruction?
- Sanctions denied importation of significant resources to Iraq and greatly lowered its people's standard of living,
- The recent war destroyed important infrastructure, stimulated looting and brought chaos to parts of the country.
Which nations and entities are responsible for the damage done to Iraq? The coalition of nations that invaded Iraq have a major responsibility. The nations that voted for sanctions and implemented them also bear responsibility.
The United States administration has declared it wants:
- the sanctions against Iraq to be immediately terminated,
- the World Bank and UN to fund reconstructions.
- the Iraq oil resources to finance rebuilding,
- France, Germany and Russia to forgive Iraq's debts to them.
All nations want the sanctions against Iraq to end. However, the sanctions create a leverage for Security Council members; a means to persuade the US to give the UN a political role in Iraq's future. The US could be tempted to use its current controls in Iraq to decide the leaders of post-war Iraq and acquire beneficial agreements with the government it places in charge; giving itself a "victory dividend."
The World Bank isn't prepared to fund Iraq because it has no credible information on the status of Iraq's economy, finances and debts. The UN isn't prepared to fund reconstruction without controlling the funding projects and participating in the political reconstruction of Iraq. The UN fears its funds might be used to finance American industry and make Iraq a U.S. satellite.
If a proper government is installed in Iraq, then that government will be able to use oil revenues for the economic ventures. Iraq doesn't need another country to direct its oil profits and determine what constitutes building and rebuilding.
The U.S. attack on Iraq demolished Iraq's financial structure. After making it more certain that Iraq cannot pay back its debts, the U.S. wants France, Russia and Germany to forgive Iraq's debts.
Apparently, Iraq owes plenty, more than $100 billion. Its debts are estimated at $8 billion to France, $12 billion to Russia, and several billion dollars to Germany. The Gulf war reparations to Saudi Arabia and Kuwait, imposed by Washington, added another $40 billion to Iraq's debts .
Russian finance minister, Alexei Kudrin, gave a sanguine opinion of the debt reduction proposal, "no one has forgiven Russias debt, regardless of what kind of regime it was and regardless of the countrys clout."
The opinion of president of Germanys central bank, Ernst Welteke, "Only very poor countries should have their debt canceled."
The hypocrisy of those who favored the war and the manner in which agendas dictate decisions is shown by a report on MSNBC, April 13. An MSNBC commentator stated: France and Germany won't forgive Iraq's debt. They don't realize that reparations after WWI caused international problems.
Debts are not reparations. Reparations is what Iraq had to pay wealthy Kuwait and Saudi Arabia after the Gulf War - no complaint then.
Perhaps, Malaysia's controversial Prime Minister Mahathir Mohamad has it right:
Saturday, April 19, 2003 at 09:00 JST
KUALA LUMPUR The United States and Britain are responsible for reviving Iraq's economy since they were the ones who destroyed it through their military invasion, Prime Minister Mahathir Mohamad said Friday.
"They know how to destroy Iraq so they must also know how to rebuild it," he told official news agency Bernama in an interview.
Unimpeded by international pressure, the United States Congress has approved a $2.5 billion aid package for Iraq. The Agency for International Development (USAID) has already awarded several contracts for projects in Iraq:
- $680 million to Bechtel to build and restore infrastructure,
- $600 million "emergency" oil contract to Halliburton,
- $7.9 million to a small team of non-profit researchers, RTI, to "build consensus among Iraqis in designing systems of local government."
The U.S. is prepared to rebuild Iraq's wireless network. One would expect that Iraq has higher priorities than acquiring an advanced wireless system. But, technology is one of America's fortes and selling it is one of its highest priorities. To U.S. credit, it is leaning to the European Global Systems for Mobile Communications (GSM). This preliminary recommendation has provided a preview of the future battles in the plans for Iraq's reconstruction.
California congressman Darrel Issa has introduced legislation that could force USAID to award the wireless contract to Qualcomm and its Code Division Multiple Access System (CDMA) and give preference to U.S. companies in "all other contracts awarded for the reconstruction of Iraq."
Transfer of Wealth
In the immediate post-war days the U.S. actions reinforced the beliefs of its opponents:
- The more infrastructure destroyed, the more that needs to be reconstructed.
- The more instability, the greater the need for external governing.
- Not recognizing any Iraqi government leads to temporary military rule by Commander Tommy Franks and a transition government of aid and reconstruction led by Ret. Lt. General Jay Garner.
- The victor will regulate the distribution of the assets.
Each day the U.S. approach to post-war Iraq provides social, military and economic controls that direct Iraq towards becoming a satellite of America:
- The U.S. gave excessive attention to safeguarding the oil fields and oil ministry and gave no attention to safeguarding Iraq's cultural heritage.
- After having destroyed Iraq's television network, the U.S. announced it will transmit U.S. news programs (NBC, Fox News, etc.) by satellite to Iraqi viewers. Iraqis will be subjected to America's interpretation of news events and be subtly influenced by an American perspective. It is not known if commercials for U.S. goods will be eliminated from the broadcasts.
- According to the New York Times (denied by Secretary of Defense Rumsfeld), the U.S. is requesting access to several air bases in Iraq, giving the U.S.military a permanent presence in Iraq.
It's difficult to believe that the U.S. will allow an election of a fundamentalist regime in Iraq - a possible outcome of a democratic election.The confusion in the developments of post-war Iraq, that has a multitude of contending forces, might only be resolved by a central authority outside of Iraq. In the power vacuum, the only central authority that an occupying power will allow is itself - in this case the United States.
By not considering the significance of heritage and customs to Iraq's people, by modifying the social and political beliefs of Iraqis to correspond with American beliefs, and by maintaining a military presence in Iraq, the United States is beginning to incorporate Iraq as a satellite of America. A satellite country becomes economically subordinate to its central authority. Its assets become intertwined with those of the central power.
april 20, 2003
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