BUSH BAILOUT PAL DROOLING FOR IRAQI OIL

Abboud and “Toxic Bob” Waiting for the New Oil Law to Pass

By Nick Mottern, Director, ConsumersforPeace.org

While blood is flowing freely in Iraq’s streets, A. Robert Abboud, a man who helped bail George W. Bush out of his Harken Energy fiasco, is angling for a contract that will give his firm, Ivanhoe Energy Inc., access to a major oil field in north central Iraq.

Mr. Abboud, who runs his own investment company and who has been president of Occidental Petroleum (1980-84), chairman of the First National Bank of Chicago (1975-80) and chairman and CEO of First City Bancorporation of Texas (1988-91), is co-chairman at Ivanhoe Energy and appears to be acting as the firm’s diplomatic frontman in going after the Iraqi oil.

He has experience in Iraq, working in concert with the administration of Bush senior to promote trade with Iraq under Saddam Hussein, acting in the 1980s as chairman of the United States-Iraqi Business Forum. In this role he worked with Henry Kissinger’s consulting firm and major U.S. companies that were clients of the Kissinger firm, according to a fascinating statement presented to Congress in 1991 by Cong. Henry Gonzalez D-TX, who said Mr. Abboud, because of his executive experience, “was well-wired into the U.S. business community.”

With respect to trade promotion to Iraq in the 1980s, Congressman Gonzales said:

“A foreign policy (toward Iraq) based on commercial trade had the advantage of providing Iraq with high quality food and United States technology to upgrade its military capability in order to defeat Iran…

“In order for this trade based-foreign policy to work, the United States had to ignore a few Iraqi bad habits including massive human rights abuses, the imprisonment, torture and execution of political prisoners, an almost complete lack of democracy, the use of poison gas against Iraq’s own Kurds, the use of poison gas against the Iranians, state-sponsored terrorism, making refugees out of over 100,000 Kurds, the execution of a foreign journalist, continual debt service problems, rampant fraud in the CCC (U.S. loans to buy food) program, and the diversion of United States technology to improve Iraqi nuclear, chemical and biological weapons capability…”

(www.globalsecurity.org)

Speaking to investors and the business press in an Ivanhoe conference call on April 20, 2007, Mr. Abboud reassured his listeners that he had experience in violent situations like Iraq. He referred to what he said was the success of Occidental in entering Colombia at a time when guerrilla warfare and drug trading created dangerous conditions. He neglected to add that Occidental, according to the website World War 4, lobbied the U.S. “to expand its role in Colombia, allowing military aid to be used for pipeline protection. This year (2002) President (George W.) Bush’s administration has complied, proposing $98 million to protect the duct.”

He did not note either that, according to the U.S. General Accountability Office (www.gao.gov/new.items/d05971.pdf) , the new U.S. military aid, which as of 2005 included 10 helicopters, logistics support and U.S. Special Forces training of Colombian troops, had not fully suppressed attacks on the major Cano Limon pipeline, with “insurgents” changing their tactics to include sabotage of the electical grid for the Cano Limon oil field. The GAO report recommended that the U.S. develop “a plan for transitioning the pipeline security program to Colombia” and also that there be established “an expected completion date for U.S. involvement.”

The GAO report noted that Occidental has given money to the Colombian military “for housing, food, land and air transportation, communication equipment, gasoline, and medical equipment” as well as building barracks for soldiers on an army base. Occidental has been charged with assisting the Colombian air force in a 1998 cluster bomb attack that killed 17 civilians near Cano Limon, including 7 children, in a federal lawsuit on behalf of a man whose mother, sister and cousin died in the attack and others. The case was dismissed two years ago based on the argument of the U.S. State Department that the suit interfered with U.S.-Colombia relations. The case is being appealed in the 9th Circuit Court of Appeals.

Human Rights Watch reports that in 1996 Occidental “formalized a voluntary assistance arrangement in which it has previously engaged with the Colombian military” to provide $2 million one-year inkind and cash payments to the military, with cash to be used for, among other things, a “network of informants.” The report said that guerrilla attacks had “driven the (oil) companies into the arms of the Colombian military, one of the few in the hemisphere still engaged in a pattern of gross violations of human rights.” (www.hrw.org/advocacy/corporations/colombia.Oilpat.htm)

Nor did Mr. Abboud mention that, after his tenure as Occidental’s president, the company met opposition from Colombia’s Uwa indigenous people who fought the company from 1992 to 2002 and in 1995 threatened mass suicide by jumping off a 1,400 foot cliff in the Andes if the company didn’t leave their region. In 2000, three Uwa children were killed when Occidental called on the military to clear an Uwa blockade to a drill site, reported WW4, which said Occidental eventually left the region,”citing technical and economic reasons” and denying that the protests had any effect.

The Occidental agreements with the Colombian military and the struggle with the Uwa occurred in part during the period when Ivanhoe Energy’s other co-chair, David R. Martin, was president and CEO of Occidental Oil and Gas Corporation, Occidental Petroleum’s exploration and development subsidiary working in Colombia. Mr. Martin joined Occidental in 1962, and according to a company press release, he became president of its international oil and gas unit in 1983. In 1986, he was appointed Executive Vice President of the parent corporation and in 1993 he became president and CEO of the oil and gas unit in 1993 and was named to the board of Occidental in 1996, the same year he retired from his operational and board positions. ( An internet search did not reveal whether or to what degree Mr. Martin was involved in the issues raised above. An Ivanhoe spokesperson said she could not comment on actions taken by Occidental and that she would ask Mr. Martin if he wished to comment when he returns next week from a trip.)

Mr. Abboud, in joining Ivanhoe Energy for an annual $250,000 salary and about $1.4 million in stock and stock options, is working with Robert Friedland, Ivanhoe’s largest stockholder, nicknamed “Toxic Bob.” Mr. Friedland is reported by SourceWatch to be worth $1.2 billion, and the website says his “colorful corporate career has included wild speculations on mining futures, spectacular pollution scandals” and willingness to work with the notoriously repressive government of Myanmar (formerly Burma) in a joint venture to develop an extremely profitable copper mine.

Mr. Friedland became known as “Toxic Bob” , according to SourceWatch, after a
“spectacular” 1993 cyanide spill at his gold mine in Summitville, Colorado, reputed to be the largest such disaster in U.S. history. The New Internationalist reports that he “avoided legal responsibility by making a timely resignation.” In addition, SourceWatch reports, Mr. Friedland was CEO of Omai gold in Guyana in 1995 when a tailings pond collapsed, killing life in two rivers. Citing the New Internationalist, Source Watch says: “No reparations at all have been paid here. An ‘independent’ report on the disaster denied any damage, despite news photographs and eyewitness accounts of dead fish, pigs and crocodiles. The mine was a joint venture of the World Bank, the Guyana Government and Freidland’s South American Goldfields. Once again, a timely resignation saved him from legal responsibility.”

Ivanhoe, a relatively small oil development company with a patented process for thinning out thick oil so it can flow easily through pipelines, is facing two hurdles to tapping into Iraq oil wealth.

First, the Iraq Parliament must pass the new, pending oil law, that will open its oil fields to private firms like Ivanhoe, ExxonMobil, Shell, BP and Chevron on extremely favorable terms to the oil companies. Ivanhoe “will closely monitor” the development of the new law, Mr. Abboud said on the conference call. The United States is pushing hard for the immediate passage of this law, and its passage is one of the benchmarks that will be used to determine whether the U.S. will continue to keep troops in Iraq. The oil law is opposed by Iraqi oil union workers and many others.

The second hurdle, once the oil law is passed, is the selection of Ivanhoe by Iraqi officials to develop the field. Mr. Abboud said on the conference call that, in a recent trip to the Persian Gulf, he spoke with Iraqi officials about the oil venture and that he thought that the relationships that Ivanhoe officials have developed with Iraqis would be fruitful. It’s important to remember, he said, that: “It’s their oil. They’re going to be in charge.”

Speaking on the conference call of the oil field in question, the Ivanhoe leaders would not reveal its exact location or size. Leon Daniel, of Ivanhoe, said the field has “huge quantities” of oil, but asked for more specifics, he would only acknowledge that most fields in Iraq are at least a billion barrels in size. It is a “challenging environment”, Mr. Daniel said, “where the prize is big.”

In answer to investor questions about security, he said the field is “far removed from Baghdad” and not in a troubled area; the challenge is “not like securing Baghdad.” He said there are “competent security forces” in the area, with clear lines of sight, and “we can make the work site secure.” He said that the thinned-out oil could be moved from the site in pipelines either south or north through Turkey, a path that would likely be more secure.

Ivanhoe drew attention to the project with an April 19 press release announcing that the Japanese oil and gas firm Inpex Corp. had invested $9 million in it for a 45% share in the proceeds; Ivanhoe will get 55%. The announcement resulted in a jump in the Ivanhoe stock price from a close of $2.32 on April 18 to $2.65 on the 19th. The stock has since settled to $2.21 as of April 25, 2007.

The October 9, 2002 Wall Street Journal (WSJ) reporting on the role of Harvard University in the bailout of Harken Energy, notes that one of the key steps in preventing the failure of Harken was a 1990 agreement by First City Bancorporation of Texas, then headed by Mr. Abboud, to take over Bank of Boston loans to Harken that were technically in default. Mr. Abboud is a graduate of Harvard College, Harvard Law and Business Schools.

“At the time,” the WSJ reports, “one of the Harvard endowment’s most influential board members (identified in the article as oil man Robert Stone Jr.) was a political supporter of then-President George H.W. Bush, the current president’s father. One result of the deal: The current president avoided damaging his credibility as a businessman.”

Leading up to this time, in 1986 Harken Energy agreed to buy failing Spectrum 7 Energy where George W. Bush was chairman. George W. became a board member of Harken, a $100,000 consultant to the company and a member of Harken’s audit board. The WSJ said that right after George W. joined the Harken board, Harvard’s endowment fund began backing Harken, buying its stock. In May, 1990, the WSJ said, Harken officials warned that the company was “about to run out of cash.” In June, 1990, according to an article by Stephen Minkin on CommonDreams.org, George W. sold 200,000 shares of Harken stock “before the price plummeted and while outside investors were unaware of the company’s desperate situation.”

The Common Dreams article goes on to say:

“Mr. Bush later blamed his lawyers and the ‘loss of documents’ by the Securities and Exchange Commission when it was discovered that he failed to disclose the $845,560 sale within the time required by law.”

In August, 1990, First City Bankcorp agreed to take over the Bank of Boston loans.

“At the time,” the WSJ reports, “First City was controlled by Robert Abboud, …(a) supporter of the senior Mr. Bush who attended a White House event 10 days before that bailout’s (First City’s) approval. In an interview, Mr. Abboud said Harvard’s backing was a key factor in First City’s decision to approve the Harken bailout and that it wasn’t influenced by his relationship with the then-president.”

The First City money was not enough to save Harken, so a Harvard partnership assumed $20 million in Harken debt, according to the WSJ, and eliminated another $16 million by transferring Harken assets to Harvard. This move, says the article was “much like the controversial investments that Enron Corp. set up before it filed for bankruptcy-court protection.” In 1991 Harken stock began to recover, and Harvard sold its shares for a profit.

Mr. Bush remained on Harken’s board until 1993 and was paid between $80,000 and $120,000 a year as a consultant from 1986 to 1993, according to thetruthaboutgeorge.com.

Mystery of the Missing Meters: Accounting for Iraq's Oil Revenue

by Pratap Chatterjee, Special to CorpWatch March 22nd, 2007

The line of ships at the Al Basra Oil Terminal (ABOT) stretches south to the horizon, patiently waiting in the searing heat of the Northern Arabian Gulf as four giant supertankers load up. Close by, two more tankers fill up at the smaller Khawr Al Amaya Oil Terminal (KAAOT). Guarding both terminals are dozens of heavily-armed U.S. Navy troops and Iraqi Marines who live on the platforms. These two offshore terminals, a maze of pipes and precarious metal walkways, deliver some 1.6 million barrels of crude oil, at least 85 percent of Iraq's output, to buyers from all over the world. If the southern oil fields are the heart of Iraq's economy, its main arteries are three 40-plus inch pipelines that stretch some 52 miles from Iraq's wells to the ports. Heavily armed soldiers spend their days at the oil terminals scanning the horizon looking for suicide bombers and stray fishing dhows (boats). Meanwhile, right under their noses, smugglers are suspected to be diverting an estimated billions of dollars worth of crude onto tankers because the oil metering system that is supposed monitor how much crude flows into and out of ABOT and KAAOT - has not worked since the March 2003 U.S. invasion of Iraq. Officials blame the four-year delay in repairing the relatively simple system on "security problems." Others point to the failed efforts of the two U.S. companies hired to repair the southern oil fields, fix the two terminals, and the meters: Halliburton of Houston, Texas, and Parsons of Pasadena, California. The Special Inspector General for Iraq Reconstruction (SIGIR) is scheduled to publish a report this spring that is expected criticize the companies' failure to complete the work. Smuggled Three Ways Oil smuggling is believed to be occurring in three different ways in Iraq: 1. Iraqi crude. At ABOT, officials at Iraq's state-owned South Oil Company (SOC) that extracts the crude, and at the State Oil Marketing Organization (SOMO) that pipes the crude to the terminals, would have to know about smuggling, even if they were not benefiting from the scheme. Buyers from Brazil to India, from Thailand to the United States, purchase crude from Iraq at ABOT. The tanker operators would also have to be part of smuggling schemes. They would sign receipts for a lower quantity than they actually receive, and pay the extra directly to the smugglers. The most likely collaborators are either Iraqi or U.S. officials who supervise the production and delivery. Or both. 2. Imported fuel. Iraq spends a small fortune to buy fuel from neighboring countries including Iran, Kuwait, Saudi Arabia, and Turkey. Much of this fuel goes to local drivers at a subsidized rate, and constitutes possibly the single most expensive item in the national budget after government salaries. In 2005 Iraq spent $4.2 billion of its $24.2 billion gross domestic product (GDP) on imported oil; the bill for 2006 is expected to exceed $5 billion. Smugglers siphon off a significant amount of the government subsidized fuel to sell back overseas at full price: The Ministry of Oil estimates the value at $800 million. 3. Theft of locally-produced gasoline. Iraqi gasoline is stolen from refineries or illegal taps on pipelines and resold within the country or smuggled abroad. Another $800 million worth of black market fuels is sold within Iraq, in places from Penjwin in the far north, to Abu al-Khasib in the south. (see next box) The U.S. military believes that the money from these operations funds insurgent operations, although evidence suggests that some also goes to straightforward petty corruption. In mid-March 2007, the U.S. military launched "Operation Honest Hands" which brought the Beiji refinery under control of the 82nd Airborne Division. The U.S. government paid to install video cameras, digital weighing machines for the trucks, and "sophisticated data-sifting methods" to identify senior Iraqi officials with ties to black-market oil rings, according to the Wall Street Journal. Two senior officials have been arrested so far: Ibrahim Muslit, who ran the Beiji refinery's oil-distribution operation and allegedly allowed 33 tankers in a single day to receive fuel without any paperwork. Ahmed Ibrahim Hamad, a senior transportation official at the refinery who allegedly tried to help smuggle out seven tankers of heavy fuel oil. Soldiers are also checking up on trucks and gasoline stations in the neighborhood around the refinery to try and catch smugglers in the act. Rumors are rife among suspicious Iraqis about the failure to measure the oil flow. "Iraq is the victim of the biggest robbery of its oil production in modern history," blazed a March 2006 headline in Azzaman, Iraq's most widely read newspaper. A May 2006 study of oil production and export figures by Platt's Oilgram News, an industry magazine, showed that up to $3 billion a year is unaccounted for. "Iraqi oil is regularly smuggled out of the country in many different ways," an oil merchant in Amman told the Nation (U.S.) magazine last month. "Emir al-Hakim [the head of the Supreme Council of the Islamic Revolution in Iraq] is spending all his time in Basra selling oil as if it were his own. People there call him Uday al-Hakim, meaning he is behaving the same way Uday Saddam Hussein was acting. Other merchants like myself have to work through him with the big deals or smuggle small quantities on our own. The petroleum is now divided among political parties in power." The Resource Curse The smuggling and black market operations bear striking parallels to Saddam Hussein's tactics for circumventing the UN embargo. Saddam was accused of selling some $5.7 billion worth of petroleum products on the black market over the six years of the Oil-for-Food program while United Nations inspectors turned a blind eye. Today, his successors stand accused of similar abuses. Iraq sits on 115 billion barrels of proven oil reserves, the third largest in the world (behind Saudi Arabia and Canada). From a society that once used its oil revenue to create a social welfare state that provided education, health care and social services, the country has plummeted into the ranks of the poorest countries of the world. Economists call this the "resource curse." Those blessed with non-renewable resources often benefit the least, because a few wealthy people control the resources, or war prevents almost anyone from the benefiting. Iraq's main revenue source – earnings from the export sales of petroleum, petroleum products and natural gas – is currently managed by the Development Fund for Iraq. DFI's May 21, 2003 document, United Nations Security Council Resolution 1483, assigns this money to benefit the Iraqi people. The resolution replaces the previous United Nations-run Oil-for-Food scheme that lasted from 1997 until the March 2003 invasion. Almost four years after the DFI was created, officially logged crude sales have generated more than $80 billion. The U.S.-led Coalition Provisional Authority (CPA) managed the DFI from the immediate aftermath of Saddam's removal until June 28, 2004, when the CPA was disbanded. During those 14 months, the CPA spent $19.6 billion of Iraq's DFI funds. The three succeeding governments have been officially in charge of the DFI revenues, although the influence of the U.S. military and political advisors has remained significant throughout. In the 32 months after the CPA left, the three governments spent $47 billion more. Three Kinds of Gasoline A ten-foot-high hill of empty jerry cans is all that remains of a recent unauthorized gasoline delivery. The green plastic containers sit by the side of a road leading out of the town of Penjwin, high up in the Kurdish mountains, a stone's throw from the border of Iran. A little further down the road that winds through some of the most heavily mined countryside in Iraq, boys and men openly hawk smuggled gasoline. A smiling boy runs up to drivers who slow and stop. He quickly produces a funnel and up-ends full jerry cans into their gas tanks. This is Iraqi's unofficial version of a gas station or petrol pump. Authorities are well aware of the smuggling, but there is nothing they can do. "They bring it over the border from Iran," says a police officer pointing east to the mountain pass just a couple of miles away. He continues to direct traffic nearby and asks not to be named, The official price of gasoline in Iraq today is about 300 dinar a liter for regular and 350 dinar for diesel (about $1 a gallon). Official gasoline supplies are in short supply and heavily rationed. Drivers often queue for more than a day for a meager allotment. This situation is in stark contrast to Saddam Hussein's Iraq where new cars were rationed to wealthy or well- connected individuals, and subsidized gasoline sold for five cents a gallon. Today at many busy street corners in Iraq, black market fuel is readily available. In northern Iraq, for example, three kinds of gasoline are available to buyers: a plastic 20 liter jerry can of the cheapest transparent Iraqi gasoline retails for 12,000 dinar. It comes from the northern Iraqi refinery of Beiji. Better quality yellowish Iraqi gasoline retails for 15,000 dinar and comes from the Baghdad refinery of Daura. The best stuff, pale red Iranian gasoline, has been trucked over the mountain and sells for 17,000 dinar for a smaller 16 liter jerry can. This is two to three times the official price, and five times more expensive than in Kuwait or Saudi Arabia. Paradoxically, while Iraqis have to buy smuggled gasoline from Iran, some of their own reserves are being trafficked in the opposite direction, from Iraq to Iran. Some 600 miles to the south of Penjwin, in the riverside town of Abu al-Khasib, near Basra, a small flotilla of fishing boats sets sail every morning. The boats, filled with fuel supplied by the Iraqi government at the specially subsidized price of just 10,000 dinar a ton (about $7.50), return every night, empty of fish, but stocked with cash. The source of their wealth is Iranian vessels that deliver freight to the harbor of Abu Floos, where prices are almost 100 times higher. Ironically, Colonel Najim Abdulla, the commander of coast guard patrols in Basra, told a reporter that his force is denied enough fuel to pursue the scofflaws. "I can't chase smugglers who are well aware of our shortages," he said. Halliburton & Parsons U.S. contractors have played a key role in the repair and upgrading of Iraq's oil infrastructure and expected the industry to pay for reconstruction. In January 2004, under project Restore Iraqi Oil II (RIO II), the Bush administration contracted with Halliburton to fix southern Iraq's oil fields and with Parsons to handle the northern fields. The two companies were supposed to be supervised by yet another contractor, New Jersey-based Foster Wheeler. (The first RIO contract was the infamous, secret no-bid contract issued to Halliburton before the invasion of Iraq. Although RIO II was competitively bid, Sheryl Tappan, a former Bechtel employee wrote a book criticizing the award as unfair.) Halliburton and Parsons have long histories in Iraq, going back more than 40 years. Brown & Root, which is now part of Halliburton , began work in Iraq in 1961, while Parsons dipped into Iraq's oil sector in the 1950s. Foster Wheeler dates its work in Iraq to the 1930s. These companies have a lot of experience at the terminals where the black market now thrives. Indeed, Halliburton built the ABOT terminal, then known as Mina al-Bakr, in the early1970s. After it was damaged during the Iran-Iraq war in the 1980s, Halliburton repaired the terminal, before it was bombed yet again during the 1991 Persian Gulf War. The Khor al-Amaya oil terminal also saw a similar cycle of destruction and rebuilding. Built with Halliburton 's help in 1973, it was heavily damaged by Iranian commandos during the Iran-Iraq war, then again during Operation Desert Storm in 1991, and most recently in May 2006 by a major fire that destroyed 70 percent of its facilities. During the sanctions, Ingersoll Dresser Pump Company, a Halliburton subsidiary, had a secret contract to sell Iraq spare parts, compressors, and firefighting equipment for the refurbishment. ( Halliburton also a long history near the Turkish port of Ceyhan, from where Iraq sells oil produced at Kirkuk in northern Iraq. Halliburton runs the nearby U.S. military base at Incirlik, which was the staging ground for Operation Northern Watch that provided air protection for the Kurds during the 1990s.) Measuring the Oil With billions of dollars to spend and extensive experience with oil infrastructure and Iraqi ports, Haliburton and Parsons seem unable to deal with the routine problem of broken meters at the Southern Iraq terminals. The kinds of meters they were supposed to repair or replace at ABOT are commonly found at hundreds of similar sites around the world. Because they are custom-built, shipped, then assembled and calibrated on site, the process can take up to a year. But the probelm has persisted for four years. After the 2003 invasion, the meters appear to have been turned off and there have since been no reliable estimates of how much crude has been shipped from the southern oil fields. (The northern oil fields in Kirkuk, which supply the Beiji refinery in Iraq and export crude to the Turkish port of Adana, has reliable metering but little oil to measure since insurgent attacks largely shut down the facility.) Oil Meters Three kinds of meters are used around the world today: positive displacement meters, turbine meters and ultrasonic meters. A displacement meter measures the rate at which compartments of known volume are filled with the liquid or gas; a turbine meter is simply a pipe with a spinner that measures the volume that passes through it; while an ultrasonic meter uses sound frequencies to measure flow rates. Each has advantages and disadvantages. Before the 1991 Gulf War, ten turbine meters were installed on ABOT's platform A, while ABOT's platform B got 16 positive displacement meters. In January 2007, the U.S. government installed ultrasonic meters to verify the older meters. In the late 1990s, the United Nations hired Saybolt International, a Dutch company, to make sure that Saddam Hussein was only selling crude under the Oil-for-Food program. However CorpWatch interviews indicate that the inspectors could not rely on the meters at the time because they were not calibrated. Instead Saybolt relied on a simple and effective way of determining how much was being shipped: It measured the amount of crude loaded into the tankers. Lieutenant Aaron Bergman, the U.S. Navy officer in charge of Mobile Security Squadron 7 at ABOT, says export authorities have "guesstimated" how much is being sold, with a back-of-the-envelope formula: Every centimeter a tanker lowers into the water equals 6,000 barrels of oil cargo. "So you can imagine," he said earlier this month to Stars & Stripes, a newspaper serving the U.S. military, the numbers could be off, "A couple of inches could equal 180,000 barrels of fuel." "I would say probably between 200,000 and 500,000 barrels a day is probably unaccounted for in Iraq," Mikel Morris, who worked for the Iraq Reconstruction Management Organization (IRMO) at the U.S. embassy in Baghdad, told KTVT, a Texas television station. Neither US officials nor contractors have provided good reasons why, four years into the US occupation, the meters have not been calibrated, repaired, or replaced. One excuse is that the job of calibration requires special devices to assess the current meters and security issues make importing these devises problematic. Yet that and other security-related explanations fall apart given that the oil terminals are under 24 hour high security guard, lie more than 50 miles off-shore, and are accessible only by helicopter or ship. There are two possible explanations: that the project has been delayed by bureaucracy or that vested interests benefiting from the lack of oil metering (such as smugglers or corrupt officials) have prevented the project from moving forward. Skyrocketing Costs The RIO II project, which includes the meter repair work, has come under much criticism, although specific details are scarce. For example, the Bush administration issued Halliburton the RIO II order in January 2004 and gave detailed task orders in June. But despite not starting work until November 2004, the company charged the government millions of dollars for engineers who sat idle. Halliburton 's $296 million bill included at least 55 percent overhead. (In an estimate due later this month, SIGIR may predicts even higher overhead costs.) A Parsons joint venture (with Worley of Australia), was also issued a contract in January 2004, given detailed task orders in June, and started work in July 2004. It has also been accused of charging high overhead costs while idle, although not as much as Halliburton . SIGIR estimate pegs its overhead at 43 percent. In addition, in a series of scathing internal reports uncovered by Congressman Henry Waxman, supervisors Foster Wheeler criticized Halliburton 's cost. The U.S. Army Corps of Engineers issued a "cure" notice on January 29, 2005, ordering Halliburton to do a better job or else. After Halliburton did improve its cost controls, the military turned over the southern oil work to Parsons in mid 2005. When Parsons took over the contracts, two years after the invasion, it hired a Saudi Arabian sub-contractor, Alaa for Industry, to help repair or replace the meters. The turbine meters were shipped to Kuwait for repairs but do not appear to have been fixed in a timely manner, although some have been fixed and re-installed earlier this year. Unofficial sources suggest that the Kuwaiti bureaucracy delayed the repair work: "The real reason for the hindrance to work at the ABOT is because Kuwait has a vested interest in minimizing Iraqi oil exports," an anonymous source who worked on the project told CorpWatch. His claim could not be verified. In mid-September 2006, the Iraqi oil ministry abruptly announced that it would pull the plug on the oil metering project, making future monitoring even less certain. Asim Jihad, the oil ministry spokesman, told Al Hayat: "The American company had failed in keeping its promise to finish installing these meters; also, refusing to reveal the exact cost, except for saying that it is executing it within the American grant to Iraq and the sum of that grant is unknown to us too. This relieves the ministry from its obligation to it. Besides, many international companies presented good offers to implement the project in a record time due to its importance." The oil ministry then invited British Petroleum and Shell to plan a comprehensive national metering project that would cover not only the oil terminals, but also the productions wells and the even the refineries. A SIGIR team traveled to ABOT in November 2006 to check on progress. Its unpublished report suggests that the work was less than half complete. Suddenly, in December 2006, a high-level U.S. team traveled out to ABOT to inspect the meters. In a little-noticed announcement issued on a Saturday just before Christmas, John Sickman, the resident oil expert at the U.S. Embassy in Baghdad, said the meters had been fixed and were working fine. "The measurement using the existing turbine meters and displacement meters at the offshore terminal at ABOT is transparent and the measurement devices are more than adequate," Sickman was quoted in the press release. "Furthermore, the crude oil vessels have measurement and quality samplers." Indeed this is how the Dutch company Saybolt measured oil export under the United Nations Oil for Food program. The problem even today, according to experts consulted by CorpWatch, is that the meters have yet to be calibrated, so the data are basically useless. Even if the meters are working properly, smuggling could still occur. "It's easy to steal crude if you knew what you were doing," Don Deaver, a petroleum metering expert who worked for Exxon for 33 years, told CorpWatch. "If you meaure too low or too high, someone will lose and some will one gain. It's why you need professionals who understand how the meters work to make sure that nothing is being lost or stolen." U.S. government officials claim that little is being stolen. SGS (a British consultancy) "is providing independent third party loading certifications onsite for the customers. This, coupled with the recent installation of ultrasonic meter provides more than redundant measurement capability," said Sickman in December. Days after the press release, in early January 2007, Parsons began work on the meters under a $57.8 million U.S. government-funded contract supervised by Major Dale Winger of the Joint Contracting Command in Basra. Almost as soon as work started, Winger was replaced by Lieutenant Commander Brian Schorn. When CorpWatch reached Schorn, he said he was not up to speed on what work had been done, and referred questions to his "front-office" in Baghdad at the U.S. Army Corps of Engineers. Parsons Iraq Joint Venture spokesman Don Lassus also refused to comment to CorpWatch. The contract with the military does not permit the release of "any unclassified information," he said, without prior approval of the military. Today no government officials have been able to establish conclusively whether oil is being smuggled or not. Even the future of the oil metering remains unclear. The latest report issued by SIGIR in January 2007 notes that repair and rehabilitation work at ABOT is scheduled to be finished by May 2007, but "it is unclear whether this project will be completed because of de-obligation requirements" that is to say that the funding could be cut. This is the second in a series on the failure of reconstruction in Iraq. The first article, on healthcare in Iraq, may be read here: http://www.corpwatch.org/article.php?id=14290 To contact the author, e-mail pratap@corpwatch.org

Ukraine, Turkey, Kurdistan Conflicts, A Tale of Two Realities, Iran-Iraq War, Dana Gas and Egypt

Thursday, April 12, 2007

Regarding the Iran-Iraq war. In a past blog entry of August 24, 2005 I quoted from a French book from 1981 regarding initiation of the Iran-Iraq conflict. In a current entry at the uruknet website, more is quoted from this very same source. I will link to the uruknet entry, first, and, then, after, I will link to a blog entry of my own from March 10, 2006, with some further commentary as well as an embedded link refering back to the August 24, 2005 book quotes. It's unfortunate that the entire book is not available on line, since there's much more background and historical context, including the contested area in the South called Arabistan. However, I'm very glad uruknet posted at least alittle more from this book. First link, www.uruknet.de/?p=m32038&hd=&size=1&l=e
For some further commentary on this subject from my blog entry from March 10, 2005, which includes embedded link back to my blog of August 24, 2005, www.karlmarxwasright.blogspot.com/2006/03/what-really-happened-to-shah-of-iran.html
Extending from the previous material and other entries, a translation (a thank you note for the effort of translating) which HELPS to shed some light on the current situation, "Entrapped," www.uruknet.de/?p=m32023&hd=&size=1&l=e
and, from an Arab source, this time, basically, recapitulating the information on some of my previous blogs, www.arablinks.blogspot.com/2007/04/advice-for-iraqi-resistance-on-us.html
In addition, the Arab Baath Socialist Party's own statement on the matters, above, www.uruknet.de/?p=m32064&hd=&size=1&l=e
By the way, a personal note as to the question surfacing regarding the American use of a neutron bomb in Iraq. I am definitely NOT a military specialist. As a matter of fact, I don't even know the names and differences between one gun and another and what they do. HOWEVER, I happen to recall a talk I heard awhile back regarding a "new" weapon PRIOR to the FIRST Gulf War that was to be possibly tested at that time. I cannot presently recall it's name for sure, but, I believe it is/was a "fuel air explosive???" However, I remember it functioned SIMILAR to a neutron bomb but was NOT a neutron bomb. Apparently, as I recall, it killed EVERYTHING that moved, breathed, crawled and was alive underneath it, but, left the structural edifices standing. The way it worked had something to do with creating an enormous explosion/fire in the atmosphere that sucked oxygen from the ground, thus suffocating and incinerating everything alive underneath but left structures standing. Could this be the weapon instead of a neutron bomb to which everyone is referring?? I can also tell everyone who is/was the person who gave the talk to which I referred, above. His name is David F. Noble and the last time I heard he is/was a Professor of History, I believe, at York University in Canada. (He was then living and working near here, instead, which is why I heard him). For those who might be interested in his works or contacting him, here's a wikipedia reference ( I do NOT recommend wikipedia, however, this is a SNAPSHOT link), www.wikipedia.org/wiki/David_F._Noble
Or, do a search for yourself under his name.
Regarding my above heading a "Tale of Two Realities," I am, of course, referring to the ongoing, economic "internationalization and privatization of Iraq" moving ahead as if oblivious to the direction of the military realities exploding on the ground with more explosions, dislocations and destablization in the offing vis-a-vis Turkey and Kurdistan, as well as Ukraine and elsewhere. In case the reader STILL doesn't get it after voluminous information on my blogs, I can hit you/her/him/them over the head with a blunt instrument, "Iraq PM Calls for International Help to Rebuild," www.petroleumworld.com/story07041202.htm
Developments are fluid, ongoing, dynamic, so, I can only highlight a few points.
On the Turkish elections and Kurdistan, for example, "US-Kurdish Rift Emerges on Kirkuk Referendum Timing," www.turkishdailynews.com.tr/article.php?enewsid=70448
Then, "Turks [that is, private Turkish companies] Are Reconstructing Northern Iraq" www.turkishdailynews.com.tr/article.php?enewsid=70442 and, lastly, exemplifying THE fundamental contradiction represented by the above and the following, "Top [Turkish] General Talks Today," www.turkishdailynews.com.tr/article.php?enewsid=70504
As an aside, there's an English translation from a Turkish language source, Hurriyet, suggesting the following, "Barzani Bribed Former Iraq Justice Minister," regarding the deportation of Arabs from Kirkuk, www.uruknet.de/?p=m32053&hd=&size=1&l=e
However, there's no question on which side in Turkey stands the US Fascist state. With private business, naturally. The economic state of Turkey be damned! And, likewise, the economic state of Iraq! Both of which have been and are being privatized, destroyed, sold out, sold off and deconstructed as I write. "For whom the State tolls/toils, NOT for thee my fellow working class."
As an aside about privatization, in consideration of my previous blogs documenting US labor/union pension fund investment in this process, there was an interesting article, ironically, in the Turkish press gleaned from the Independent, about pension fund and privatization in Canada. Here's the link, "Pension Fund Set to Lead World's Largest Leverage Buyout," regarding Bell Canada, www.turkishdailynews.com.tr/article.php?enewsid=70443
As for the "battle for Ukraine," well, that's being reported ad nauseum. Try some international and Russian websites. For starters, www.rian.ru (English).
Meanwhile, in the ongoing saga of Dana Gas and Crescent Oil of the UAE which I've been following since its emergence, Dana has recently expanded into Egypt, with the distinct possibilities of supplying gas to Israel and well beyond, www.ameinfo.com/111787.html (If you happen to be unfamiliar with the Dana Gas, Crescent Oil saga, go to my blog of March 27, 2007 and work backwards, www.karlmarxwasright.blogspot.com/2007/03/crescent-dana-gas-internationalizing.html Previous links contained in that blog entry).
ALL of this, of course, merely being the extension, continuation, realization of economic plans after the dissolution of the Soviet Union to transform this highly nationalized, energy rich and strategic region into a center, pivotal point of a privatized, commodified and capitalized "Middle East Free Trade Zone," a critical component of the larger, greater global economic transformation.
So, along these lines, let me end on two opposite notes. First, the Pakistanis militant trade unionists, "Meeting in Solidarity with Airbus Workers in Multan," www.ptudc.org/content/view/120/36 A refreshing antidote to the American AFL-CIA.
And, lastly, an HYPOTHESIS on the "Eagle Group of Iraq." Since I have so far been unable to ascertain from any public sources available on the internet WHO precisely constitutes (private individuals and/or corporations) the "Eagle Group of Iraq" in what can only be described as a potential EXTRAORDINARILY lucrative oil bonanza, agreement between Canada's Heritage Oil Company, Mr. 5% Gulbenkian, and the KRG, Kurdistan Regional Govt, then, let's suppose, for example, it turns out that the Eagle Group of Iraq is none other than either Talabani and/or Barzani himself/themselves??!!! I challenge anyone reading this to disprove my HYPOTHESIS by publicly PROVIDING me (or others) the exact names of the investors and/or individuals who compromise the "Eagle Group of Iraq."

The Ethanol Hoax

by NICHOLAS VON HOFFMAN

[posted online on April 9, 2007]

The other day the French, who we Americans know cannot do anything right, sent one of their trains hurtling down a railroad track at 357 miles per hour. France has more than 1,000 miles of high-speed railroad track. The United States does not have one inch.

The United States sticks with its climate-warming, congested and inefficient Eisenhower-era transportation system. It was back then that the modern federal highway was begun and it was decided--perhaps by default--that cars and airplanes would be the nation's people carriers and choo-choos would chug off to the nearest transportation museum.

Americans, who seem to spend an ever greater percentage of their waking hours bragging about how much better they are than everybody else, have not noticed they are falling behind. It is, for example, the French, the Japanese and the Germans who are competing to sell a high-speed railroad system to the Chinese. Visiting American tourists will enjoy the ride.

Fewer of them are enjoying domestic air flight. Air travel in the United States has become a slow, exasperating, sometimes humiliating, sometimes painful and always uncomfortable experience. Even Attorney General Alberto Gonzales would classify what the airlines put children and older people through as torture.

Personal miseries aside, consider the contribution our transportation chaos makes to global warming. Actually, it is something we try not to consider or act on at all. Here we are after thirty years of warnings about what carbon dioxide is doing to life on the planet and the United States has no plan or program for curtailing its own magnificent donation to what Al Gore calls earth's "fever."

Hey, no Al Gore, please. Do not listen to that man. He's a politician. He's doing it to get elected even if he is not saying so. Listen to George Bush, who has gotten himself elected and is running the country on the premise that carbon dioxide is nothing but the bubbles in the beer he no longer drinks.

The Bush position is: Why should we do something if the Chinese are not doing anything? As long as they are ruining the earth, we must do it first and bigger. Bush is hardly by himself on this one. It seems almost every major industrial group in the country is as committed to inaction as he.

The global-warming naysayers would have us believe there is a one-shot, magic cure that will preserve the earth in a coolly livable form without our having to do anything or change our ways or spend any money. For the time being the magic cure is ethanol. Ethanol will stop global warming, and as an added plus, it will make the agribusiness interests richer and insure that the GOP carries the corn-growing states of the Midwest. Talk about living happily ever after!

In a few years the articles and books about the ethanol hoax will begin to appear, and we will learn who got rich while the earth got warmer and almost nobody--at least nobody important, nobody with influence and power--took note. The effects of global warming are all around us. Anybody with a backyard garden knows about them, but the garden lobby does not swing a heavy club.

So here we are, like the polar bear marooned on his little melting iceberg, snuffling here and there, looking out across the warming sea, hoping to God somebody throws him a fish. Well, bless us all, but are we truly too dumb and too selfish to save ourselves and our children?

Gas Prices Are Going to be Painful .... AGAIN

April 10, 2007

By Bonddad
bonddad@prodigey.net

From CBS:

The average cost of self-serve regular gasoline rose about 18 cents per gallon nationwide over the past two weeks, according to a survey released Sunday.

That translated to an average price of $2.78 a gallon, according to the latest Lundberg Survey of 7,000 gas stations across the country.

On April 6, a gallon of midgrade gasoline averaged about $2.89, and premium was nearly $3.

I've been closely following gas prices for the last 5-6 weeks for several reasons.

1.) They are a big component of inflationary pressures. As it appears a bit more likely that we may have a recession, it's a good idea to know what the possibilities of a Federal Reserve rate cut are. In his latest Congressional testimony, Bernanke stated declining oil prices were the primary reason for a decreasing inflationary pressures:

Core inflation, which is a better measure of the underlying inflation trend than overall inflation, seems likely to moderate gradually over time. Despite recent increases in the price of crude oil, energy prices are below last year’s peak. If energy prices remain near current levels, greater stability in the costs of producing non-energy goods and services will reduce pressure on core inflation over time. Of course, the prices of oil and other commodities are very difficult to predict, and they remain a source of considerable uncertainty in the inflation outlook.

....

To date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation. Because core inflation is above the levels most conducive to the achievement of sustainable growth and price stability, the Committee indicated in the statement following its recent meeting that its predominant policy concern remains the risk that inflation will fail to moderate as expected.

The problem here is gas prices were about 15 cents/gallon lower than present prices when Bernanke made that speech. That means from Bernanke's perspective, inflationary pressures are increasing and barring a complete move into recession a rate cut is not going to happen.

2.) Consumer spending is the only thing holding the economy above recession -- at least according to the Dallas Fed. In a recent analysis of the US economy, they noted that although residential and business investment is down, consumer spending remains high. The Dallas Fed was essentially summarizing the latest GDP report from the BEA. So what the economy needs right now is for the consumer to keep spending to keep us out of a recession. The problem is increasing gas prices make the likelihood of a consumer pullback a bit higher.

So, where are gas prices right now?

According to the Department of Energy:

Gasoline prices saw another significant increase for the week of April 2, 2007, jumping 9.7 cents to 270.7 cents per gallon. This is the ninth consecutive week of increases; prices are now 11.9 cents per gallon higher than at this time last year. All regions reported higher prices. East Coast prices were up 9.6 cents to 267.1 cents per gallon, while Midwest prices rose 9.6 cents to 261.4 cents per gallon. The Gulf Coast saw the largest regional increase, with prices up 12.3 cents to 256.5 cents per gallon. In the Rocky Mountains, prices increased 8.1 cents to 261.9 cents per gallon. West Coast prices were up 8.0 cents to 309.6 cents per gallon, with the average price for regular grade in California up 7.6 cents to 322.8 cents per gallon, 48.5 cents per gallon above last year's price.

Here's a chart from the same report. The red line -- which is higher -- represents this years prices.

One of the primary reasons for the decease is a declining inventory of gasoline. Here is a chart of gasoline stockpiles represented by the orange line.

So, what does all this mean?

We're probably going to have higher gas prices as the summer progresses. And the higher those prices go, the more likely consumers will pull back on their spending. Considering they are the only economic sector increasing their economic input, their cut backs would not be welcome.

For economic commentary and analysis, go to the Bonddad Blog.

George Bush’s Land Mine

March 30, 2007

If the Iraqi People Get Revenue Sharing, They Lose Their Oil to Exxon

by Richard Behan

George Bush has a land mine planted in the supplemental appropriation legislation working its way through Congress.

The Iraq Accountability Act passed by the House and the companion bill passed in the Senate contain deadlines for withdrawing our troops from Iraq, in open defiance of the President’s repeated objections.

He threatens a veto, but he might well be bluffing. Buried deep in the legislation and intentionally obscured is a near-guarantee of success for the Bush Administration’s true objective of the war-capturing Iraq’s oil-and George Bush will not casually forego that.

This bizarre circumstance is the end-game of the brilliant, ever-deceitful maneuvering by the Bush Administration in conducting the entire scenario of the “global war on terror.”

The supplemental appropriation package requires the Iraqi government to meet a series of “benchmarks” President Bush established in his speech to the nation on January 10 (in which he made his case for the “surge”). Most of Mr. Bush’s benchmarks are designed to blame the victim, forcing the Iraqis to solve the problems George Bush himself created.

One of the President’s benchmarks, however, stands apart. This is how the President described it: “To give every Iraqi citizen a stake in the country’s economy, Iraq will pass legislation to share oil revenues among all Iraqis.” A seemingly decent, even noble concession. That’s all Mr. Bush said about that benchmark, but his brevity was gravely misleading, and it had to be intentional.

The Iraqi Parliament has before it today, in fact, a bill called the hydrocarbon law, and it does call for revenue sharing among Sunnis, Shiites, and Kurds. For President Bush, this is a must-have law, and it is the only “benchmark” that truly matters to his Administration.

Yes, revenue sharing is there-essentially in fine print, essentially trivial. The bill is long and complex, it has been years in the making, and its primary purpose is transformational in scope: a radical and wholesale reconstruction-virtual privatization-of the currently nationalized Iraqi oil industry.

If passed, the law will make available to Exxon/Mobil, Chevron/Texaco, BP/Amoco, and Royal Dutch/Shell about 4/5’s of the stupendous petroleum reserves in Iraq. That is the wretched goal of the Bush Administration, and in his speech setting the revenue-sharing “benchmark” Mr. Bush consciously avoided any hint of it.

The legislation pending now in Washington requires the President to certify to Congress by next October that the benchmarks have been met-specifically that the Iraqi hydrocarbon law has been passed. That’s the land mine: he will certify the American and British oil companies have access to Iraqi oil. This is not likely what Congress intended, but it is precisely what Mr. Bush has sought for the better part of six years.

It is why we went to war.

For years President Bush has cloaked his intentions behind the fabricated “Global War on Terrorism.” It has long been suspected that oil drove the wars, but dozens of skilled and determined writers have documented it. It is no longer a matter of suspicion, nor is it speculation now: it is sordid fact. (See a brief summary of the story at http://www.alternet.org/waroniraq/47489/ . )

Planning for the two wars was underway almost immediately upon the Bush Administration taking office–at least six months before September 11, 2001. The wars had nothing to do with terrorism. Terrorism was initially rejected by the new Administration as unworthy of national concern and public policy, but 9/11 gave them a conveniently timed and spectacular alibi to undertake the wars. Quickly inventing a catchy “global war on terror” theme, the Administration disguised the true nature of the wars very cleverly, and with enduring success.

The “global war on terror” is bogus. The prime terrorist in Afghanistan and the architect of 9/11, Osama bin Laden, was never apprehended, and the President’s subsequent indifference is a matter of record. And Iraq harbored no terrorists at all. But both countries were invaded, both countries suffer military occupation today, both are dotted with permanent U.S. military bases protecting the hydrocarbon assets, and both have been provided with puppet governments.

And a billion dollar embassy in Baghdad is under construction now. It will be the largest U.S. embassy in the world by a factor of ten. (To see it, go to http://www.globalresearch.ca/index.php?context=viewArticle&code=20070124&articleId=4579 .) It consists of 21 buildings on 104 acres, six times larger than the United Nations compound in New York city, larger than Vatican City. It will house a delegation of more than five thousand people. It will have its own water, electric, and sewage systems, and it is surrounded by a fortress wall of concrete fifteen feet thick. For an Administration committed to fighting terrorism with armies and bombs, that’s far more anti-terror diplomacy than a tiny country needs. There must be another purpose for it.

In the first two months of the Bush Administration two significant events took place that preordained the Iraqi war. Vice President Cheney’s Energy Task Force was created, composed of federal officials and oil industry people. By March of 2001, half a year before 9/11, the Task Force was poring secretly over maps of the Iraqi oil fields, pipe lines, and tanker terminals. It studied a listing of foreign oil company “suitors” for exploration and development contracts, to be executed with Saddam Hussein’s oil ministry. There was not a single American or British oil company included, and to Mr. Cheney and his cohorts that was intolerable. The final report of the Task Force was candid: “… Middle East oil producers will remain central to world security. The Gulf will be a primary focus of U.S. international energy policy.” The detailed meaning of “focus” was left blank.

The other event was the first meeting of President Bush’s National Security Council, and it filled in the blank. The Council abandoned abruptly the decades-long attempt to resolve the Israeli-Palestinian conflict, and set a new priority for Middle East foreign policy instead: the invasion of Iraq. This, too, was six months before 9/11. “Focus” would mean war.

By the fall of 2002, the White House Iraq Group-a collection not of foreign policy experts but of media and public relations people-was cranking up the marketing campaign for the war. A contract was signed with the Halliburton Corporation-even before military force in Iraq had been authorized by Congress-to organize the suppression of oil well fires, should Saddam torch the fields as he had done in the first Gulf War. Little was left to chance.

The oil industry is the primary client and top-ranked beneficiary of the Bush Administration. There can be no question the Administration intended to secure for American oil corporations the rich petroleum resources of Iraq: 115 billion barrels of proven reserves, twice that in probable and possible resources, potentially far more than Saudi Arabia. The Energy Task Force spoke to this and the National Security Council answered.

A secret NSC memorandum in 2001 spoke candidly of “actions regarding the capture of new and existing oil and gas fields” in Iraq. In 2002 Paul Wolfowitz suggested simply seizing the oil fields. These words and suggestions were draconian, overt, and reprehensible-morally, historically, politically and diplomatically. The seizure of the oil would have to be oblique and far more sophisticated.

A year before the war the State Department undertook the “Future of Iraq” project, expressly to design the institutional contours of the postwar country. The ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­”Oil and Energy Working Group” looked with dismay at the National Iraqi Oil Company, the government agency that owned and operated the Iraqi oil fields and marketed the products. 100% of the revenues went directly to the central government, and constituted about 90% of its income. Saddam Hussein benefited, certainly-his lavish palaces-but the Iraqi people did so to a far greater extent, in terms of the nation’s public services and physical infrastructure. For this reason nationalized oil industries are the norm throughout the world.

The Oil and Energy Working Group designed a scheme that was oblique and sophisticated, indeed. The oil seizure would be less than total. It would be obscured in complexity. The apparent responsibility for it would be shifted, and it would be disguised as benefiting, even necessary to Iraq’s well being. Their work was supremely ingenious, undeniably brilliant.

The plan would keep the National Iraqi Oil Company in place, to continue overseeing the currently producing fields. But those fields represent only 19% of Iraq’s petroleum reserves. The other 81% would be flung open to “investment” by foreign oil interests, and the companies in favored positions today-because of the war and their political connections-are Exxon/Mobil, Chevron/Texaco, BP/Amoco, and Royal Dutch/Shell.

The nationalized industry would be 80% privatized.

The investment vehicle would be the “production sharing agreement,” a long-term contract-up to 40 years-that grants to the company a share of the oil produced; in exchange, the company underwrites the development costs and oilfield infrastructure. Such “investment” is touted by the Bush Administration and its puppets in Iraq as necessary to the country’s recovery, and a huge benefit, accordingly. But it is not unusual for these contracts to grant the companies more than half the profits for the first 15-30 years, and to deny the host country any revenue at all until the investment costs have been recovered.

The Iraqi oil industry does very much need a great deal of investment capital, to repair, replace, and upgrade its infrastructure. But it does not need Exxon/Mobil or any other foreign company to provide it. At a reduced level, Iraq is still producing oil and hence revenue, and no country in the world, perhaps, has better collateral against which to float bond issues for public investment. Privatization of any sort and in any degree is utterly unnecessary in Iraq today.

The features of the State Department plan were inserted by Paul Bremer’s Provisional Coalition Authority into the developing structures of Iraqi governance. American oil companies were omnipresent in Baghdad then and have been since, shaping and shepherding the plan through the several iterations of puppet governments-the “democracy” said to be taking hold in Iraq.

The package today is in the form of draft legislation, the hydrocarbon law. Only a handful of Iraqi officials know its details. Virtually none of them had a hand in its construction. (It was first written in English.) And its exclusive beneficiaries are the American and British oil companies, whose profits will come directly from the pockets of the Iraqi people.

The Iraqi people do, however, benefit to some degree. The seizure is not total. The hydrocarbon law specifies the oil revenues-the residue accruing to Iraq-will be shared equally among the Sunni, Shiite, and Kurdish regions, on a basis of population. This is the feature President Bush relies upon exclusively to justify, to insist on the passage of the hydrocarbon law. His real reasons are Exxon/Mobil, Chevron/Texaco, BP/Amoco, and Royal Dutch/Shell.

No one can say at the moment how much the hydrocarbon law will cost the Iraqi people, but it will be in the hundreds of billions. The circumstances of its passage are mired in the country’s chaos, and its final details are not yet settled. If and when it passes, however, Iraq will orchestrate the foreign capture of its own oil. The ingenious, brilliant seizure of Iraqi oil will be assured.

That outcome has been on the Bush Administration’s agenda since early in 2001, long before terrorism struck in New York and Washington. The Iraqi war has never been about terrorism.

It is blood for oil.

The blood has been spilled already, hugely, criminally. More than 3,200 American military men and women have died in Iraq. 26,500 more have been wounded. But the oil remains in play.

The game will end if the revenue-sharing “benchmark” is fully enforced. The land mine will detonate.

Mission almost accomplished, Mr. President.


Author’s endnote:

This article was written assuming the members of Congress were ignorant, when they passed the supplemental appropriation bills, of the clever origin, the details, and the true beneficiaries of the Iraqi hydrocarbon law. It was written assuming they did not know President Bush’s stated “benchmark” of revenue-sharing was fraudulently incomplete, intentionally obscuring the fully intended seizure, by military force, of Iraqi oil assets.

The Bush Administration made every effort to mislead deliberately both the Congress and the American people. Ignorance of the circumstances was imposed.

If any members of Congress acted with full and complete knowledge, however, then they have become complicit in a criminal war.


Richard W. Behan lives and writes on Lopez Island, off the northwest coast of Washington state. He is working on his next book, To Provide Against Invasions: Corporate Dominion and America’s Derelict Democracy. He can be reached at rwbehan@rockisland.com (This essay
is deliberately not copyrighted: it may be reproduced without restriction.)

George Bush’s Land Mine

March 30, 2007

If the Iraqi People Get Revenue Sharing, They Lose Their Oil to Exxon

by Richard Behan

George Bush has a land mine planted in the supplemental appropriation legislation working its way through Congress.

The Iraq Accountability Act passed by the House and the companion bill passed in the Senate contain deadlines for withdrawing our troops from Iraq, in open defiance of the President’s repeated objections.

He threatens a veto, but he might well be bluffing. Buried deep in the legislation and intentionally obscured is a near-guarantee of success for the Bush Administration’s true objective of the war-capturing Iraq’s oil-and George Bush will not casually forego that.

This bizarre circumstance is the end-game of the brilliant, ever-deceitful maneuvering by the Bush Administration in conducting the entire scenario of the “global war on terror.”

The supplemental appropriation package requires the Iraqi government to meet a series of “benchmarks” President Bush established in his speech to the nation on January 10 (in which he made his case for the “surge”). Most of Mr. Bush’s benchmarks are designed to blame the victim, forcing the Iraqis to solve the problems George Bush himself created.

One of the President’s benchmarks, however, stands apart. This is how the President described it: “To give every Iraqi citizen a stake in the country’s economy, Iraq will pass legislation to share oil revenues among all Iraqis.” A seemingly decent, even noble concession. That’s all Mr. Bush said about that benchmark, but his brevity was gravely misleading, and it had to be intentional.

The Iraqi Parliament has before it today, in fact, a bill called the hydrocarbon law, and it does call for revenue sharing among Sunnis, Shiites, and Kurds. For President Bush, this is a must-have law, and it is the only “benchmark” that truly matters to his Administration.

Yes, revenue sharing is there-essentially in fine print, essentially trivial. The bill is long and complex, it has been years in the making, and its primary purpose is transformational in scope: a radical and wholesale reconstruction-virtual privatization-of the currently nationalized Iraqi oil industry.

If passed, the law will make available to Exxon/Mobil, Chevron/Texaco, BP/Amoco, and Royal Dutch/Shell about 4/5’s of the stupendous petroleum reserves in Iraq. That is the wretched goal of the Bush Administration, and in his speech setting the revenue-sharing “benchmark” Mr. Bush consciously avoided any hint of it.

The legislation pending now in Washington requires the President to certify to Congress by next October that the benchmarks have been met-specifically that the Iraqi hydrocarbon law has been passed. That’s the land mine: he will certify the American and British oil companies have access to Iraqi oil. This is not likely what Congress intended, but it is precisely what Mr. Bush has sought for the better part of six years.

It is why we went to war.

For years President Bush has cloaked his intentions behind the fabricated “Global War on Terrorism.” It has long been suspected that oil drove the wars, but dozens of skilled and determined writers have documented it. It is no longer a matter of suspicion, nor is it speculation now: it is sordid fact. (See a brief summary of the story at http://www.alternet.org/waroniraq/47489/ . )

Planning for the two wars was underway almost immediately upon the Bush Administration taking office–at least six months before September 11, 2001. The wars had nothing to do with terrorism. Terrorism was initially rejected by the new Administration as unworthy of national concern and public policy, but 9/11 gave them a conveniently timed and spectacular alibi to undertake the wars. Quickly inventing a catchy “global war on terror” theme, the Administration disguised the true nature of the wars very cleverly, and with enduring success.

The “global war on terror” is bogus. The prime terrorist in Afghanistan and the architect of 9/11, Osama bin Laden, was never apprehended, and the President’s subsequent indifference is a matter of record. And Iraq harbored no terrorists at all. But both countries were invaded, both countries suffer military occupation today, both are dotted with permanent U.S. military bases protecting the hydrocarbon assets, and both have been provided with puppet governments.

And a billion dollar embassy in Baghdad is under construction now. It will be the largest U.S. embassy in the world by a factor of ten. (To see it, go to http://www.globalresearch.ca/index.php?context=viewArticle&code=20070124&articleId=4579 .) It consists of 21 buildings on 104 acres, six times larger than the United Nations compound in New York city, larger than Vatican City. It will house a delegation of more than five thousand people. It will have its own water, electric, and sewage systems, and it is surrounded by a fortress wall of concrete fifteen feet thick. For an Administration committed to fighting terrorism with armies and bombs, that’s far more anti-terror diplomacy than a tiny country needs. There must be another purpose for it.

In the first two months of the Bush Administration two significant events took place that preordained the Iraqi war. Vice President Cheney’s Energy Task Force was created, composed of federal officials and oil industry people. By March of 2001, half a year before 9/11, the Task Force was poring secretly over maps of the Iraqi oil fields, pipe lines, and tanker terminals. It studied a listing of foreign oil company “suitors” for exploration and development contracts, to be executed with Saddam Hussein’s oil ministry. There was not a single American or British oil company included, and to Mr. Cheney and his cohorts that was intolerable. The final report of the Task Force was candid: “… Middle East oil producers will remain central to world security. The Gulf will be a primary focus of U.S. international energy policy.” The detailed meaning of “focus” was left blank.

The other event was the first meeting of President Bush’s National Security Council, and it filled in the blank. The Council abandoned abruptly the decades-long attempt to resolve the Israeli-Palestinian conflict, and set a new priority for Middle East foreign policy instead: the invasion of Iraq. This, too, was six months before 9/11. “Focus” would mean war.

By the fall of 2002, the White House Iraq Group-a collection not of foreign policy experts but of media and public relations people-was cranking up the marketing campaign for the war. A contract was signed with the Halliburton Corporation-even before military force in Iraq had been authorized by Congress-to organize the suppression of oil well fires, should Saddam torch the fields as he had done in the first Gulf War. Little was left to chance.

The oil industry is the primary client and top-ranked beneficiary of the Bush Administration. There can be no question the Administration intended to secure for American oil corporations the rich petroleum resources of Iraq: 115 billion barrels of proven reserves, twice that in probable and possible resources, potentially far more than Saudi Arabia. The Energy Task Force spoke to this and the National Security Council answered.

A secret NSC memorandum in 2001 spoke candidly of “actions regarding the capture of new and existing oil and gas fields” in Iraq. In 2002 Paul Wolfowitz suggested simply seizing the oil fields. These words and suggestions were draconian, overt, and reprehensible-morally, historically, politically and diplomatically. The seizure of the oil would have to be oblique and far more sophisticated.

A year before the war the State Department undertook the “Future of Iraq” project, expressly to design the institutional contours of the postwar country. The ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­”Oil and Energy Working Group” looked with dismay at the National Iraqi Oil Company, the government agency that owned and operated the Iraqi oil fields and marketed the products. 100% of the revenues went directly to the central government, and constituted about 90% of its income. Saddam Hussein benefited, certainly-his lavish palaces-but the Iraqi people did so to a far greater extent, in terms of the nation’s public services and physical infrastructure. For this reason nationalized oil industries are the norm throughout the world.

The Oil and Energy Working Group designed a scheme that was oblique and sophisticated, indeed. The oil seizure would be less than total. It would be obscured in complexity. The apparent responsibility for it would be shifted, and it would be disguised as benefiting, even necessary to Iraq’s well being. Their work was supremely ingenious, undeniably brilliant.

The plan would keep the National Iraqi Oil Company in place, to continue overseeing the currently producing fields. But those fields represent only 19% of Iraq’s petroleum reserves. The other 81% would be flung open to “investment” by foreign oil interests, and the companies in favored positions today-because of the war and their political connections-are Exxon/Mobil, Chevron/Texaco, BP/Amoco, and Royal Dutch/Shell.

The nationalized industry would be 80% privatized.

The investment vehicle would be the “production sharing agreement,” a long-term contract-up to 40 years-that grants to the company a share of the oil produced; in exchange, the company underwrites the development costs and oilfield infrastructure. Such “investment” is touted by the Bush Administration and its puppets in Iraq as necessary to the country’s recovery, and a huge benefit, accordingly. But it is not unusual for these contracts to grant the companies more than half the profits for the first 15-30 years, and to deny the host country any revenue at all until the investment costs have been recovered.

The Iraqi oil industry does very much need a great deal of investment capital, to repair, replace, and upgrade its infrastructure. But it does not need Exxon/Mobil or any other foreign company to provide it. At a reduced level, Iraq is still producing oil and hence revenue, and no country in the world, perhaps, has better collateral against which to float bond issues for public investment. Privatization of any sort and in any degree is utterly unnecessary in Iraq today.

The features of the State Department plan were inserted by Paul Bremer’s Provisional Coalition Authority into the developing structures of Iraqi governance. American oil companies were omnipresent in Baghdad then and have been since, shaping and shepherding the plan through the several iterations of puppet governments-the “democracy” said to be taking hold in Iraq.

The package today is in the form of draft legislation, the hydrocarbon law. Only a handful of Iraqi officials know its details. Virtually none of them had a hand in its construction. (It was first written in English.) And its exclusive beneficiaries are the American and British oil companies, whose profits will come directly from the pockets of the Iraqi people.

The Iraqi people do, however, benefit to some degree. The seizure is not total. The hydrocarbon law specifies the oil revenues-the residue accruing to Iraq-will be shared equally among the Sunni, Shiite, and Kurdish regions, on a basis of population. This is the feature President Bush relies upon exclusively to justify, to insist on the passage of the hydrocarbon law. His real reasons are Exxon/Mobil, Chevron/Texaco, BP/Amoco, and Royal Dutch/Shell.

No one can say at the moment how much the hydrocarbon law will cost the Iraqi people, but it will be in the hundreds of billions. The circumstances of its passage are mired in the country’s chaos, and its final details are not yet settled. If and when it passes, however, Iraq will orchestrate the foreign capture of its own oil. The ingenious, brilliant seizure of Iraqi oil will be assured.

That outcome has been on the Bush Administration’s agenda since early in 2001, long before terrorism struck in New York and Washington. The Iraqi war has never been about terrorism.

It is blood for oil.

The blood has been spilled already, hugely, criminally. More than 3,200 American military men and women have died in Iraq. 26,500 more have been wounded. But the oil remains in play.

The game will end if the revenue-sharing “benchmark” is fully enforced. The land mine will detonate.

Mission almost accomplished, Mr. President.


Author’s endnote:

This article was written assuming the members of Congress were ignorant, when they passed the supplemental appropriation bills, of the clever origin, the details, and the true beneficiaries of the Iraqi hydrocarbon law. It was written assuming they did not know President Bush’s stated “benchmark” of revenue-sharing was fraudulently incomplete, intentionally obscuring the fully intended seizure, by military force, of Iraqi oil assets.

The Bush Administration made every effort to mislead deliberately both the Congress and the American people. Ignorance of the circumstances was imposed.

If any members of Congress acted with full and complete knowledge, however, then they have become complicit in a criminal war.


Richard W. Behan lives and writes on Lopez Island, off the northwest coast of Washington state. He is working on his next book, To Provide Against Invasions: Corporate Dominion and America’s Derelict Democracy. He can be reached at rwbehan@rockisland.com (This essay
is deliberately not copyrighted: it may be reproduced without restriction.)

War with Iran will destroy U.S. and the world

The Herald-Dispatch
OPINION

Peter Chamberlin

March 29, 2007

The neocon plan for world domination goes on. Even without former Defense Secretary Donald Rumsfeld and all the other key players, the violent plan to remake the Middle East in our image is now shifting into a higher gear. If you listen closely, you can hear the sound of a clock counting down. Bush is running out of time.

The majority of the American people think that the war in Iraq has been a series of "mistakes" that have destabilized the region and have given Iran a big boost. People such as Dick Cheney insist that all is going swimmingly. They deny that anyone can stop them from doing whatever they please; the will of the American people does not matter. The war will expand into Iran, regardless of the will of the people.

There are now so many lit fuses leading into Iran that an explosive confrontation in the very near future is almost certain. The crisis of the British sailors held -- in retaliation for the U.S. grabbing an Iranian general and arresting diplomats -- will be resolved in days, according to Tony Blair. American/Israeli-sponsored Sunni terrorist groups, operating out of Iraq, Afghanistan and Pakistan (Kurdish PPK, Saddam's MEK and Pakistani Balochs) have been staging bomb attacks in Iranian cities with significant civilian casualties.

UN sanctions against Iran might carry military penalties. Israeli reports dwell on the need to destroy Iranian reactors before they are fueled. Congress caved to the Israeli-American lobby and dropped efforts to block new unauthorized wars.

While Congress and the American people are distracted by the sleight of hand that the mainstream media calls "the surge," the real surge is set to take place in the Persian Gulf.

European sources report high-level governmental leaks that the war with Iran is set to commence in April. Middle Eastern sources report the same. Whenever it begins, the entire world will fall apart when it does, as the Middle East goes up in flames and the global economy is destroyed by $100-per-barrel oil.

Supporters of immediate military action to disarm Iran and to overthrow the mullahs have fully bought into the incendiary propaganda onslaught from the mainstream media.

They believe that Iran (like Iraq before it) really represents a credible threat to the U.S. They accept the idea of America fighting Israel's wars for it. Their blind loyalty causes them to strike out at anyone who dares to challenge the president's bloody losing strategy in the war. They want us to follow Bush, no matter what, even if he leads us over a cliff. They equate loyalty to a counterfeit hero, to patriotism.

Patriots would not allow any leader to destroy our democratic constitutional republic.

If the lost president cannot be reeled in by the American people or by his own dad, he will destroy everything that he has claimed to champion.

If either Israel or the United States is allowed to bomb Iran, then the little war that we call Iraq will be seen as the long-running "firefight" that it really is (not a real war between two military powers).

At that time, the political divisions that keep us Americans at each others' throats today will fall away as democracy falls to martial law, and freedom dies at our own hand.

Click here to add your view to this story

Copyright © 2005 The Herald-Dispatch

British pawns in an Iranian game

The Iranian seizure of 15 British sailors may be much cleverer than it appears. Oil has moved above US$60 a barrel as a result of the incident. And if Tehran drags out proceedings, the Shi'ites in southern Iraq may take the hint and accelerate a confrontation, and even start merging with strands of the Sunni resistance.

Mar 29, 2007 Publish

THE ROVING EYE

By Pepe Escobar

The 15 British sailors and marines who were patrolling the Shatt-al-Arab - or Arvand Roud, as it is known in Iran - were not exactly indulging in a little bit of Rod Stewart ("I am sailing/stormy waters/to be with you/to be free"). They had their guns loaded. These would certainly have been fired against Iraqi smugglers - or, better yet, the Iraqi resistance, Sunni or Shi'ite. But suddenly the British were confronted not by Iraqi but by Iranian gunboats.

This correspondent has been to the Shatt-al-Arab. It's a busy and tricky waterway, to say the least. Iraqi fishing boats share the waters with Iranian patrol boats. From the Iraqi shore one can see the Iranian shore, flags aflutter. These remain extremely disputed waters. In 1975, a treaty was signed in Algiers between the shah of Iran and Saddam Hussein. The center of the river was supposed to be the border. Then Saddam invaded Iran in 1980. After the Iran-Iraq War that this sparked ended in 1988, and even after both Gulf wars, things remain perilously inconclusive: a new treaty still has not been signed.

The British are adamant that the sailors were in Iraqi waters checking for cars, not weapons, being smuggled. It's almost laughable that the Royal Navy should be reduced to finding dangerous Toyotas in the Persian Gulf. Some reports from Tehran claim the British were actually checking Iranian military preparations ahead of a possible confrontation with the US.

Western corporate media overwhelmingly take for granted that the British were in Iraqi or "international" waters (wrong: these are disputed Iran/Iraq waters). Tehran has accused the British of "blatant aggression" and reminded world public opinion "this is not the first time that Britain commits such illegal acts" (which is true). Tehran diplomats later suggested that the British might be charged with espionage (which is actually the case in Khuzestan province in Iran, conducted by US Special Forces).

Chess matters
The coverage of the sensitive Shatt-al-Arab incident in the Iranian press was quite a smash: initially there was none. Everything was closed for Nowrouz - the one-week Iranian New Year holiday. But this has not prevented radicalization.

Hardliners like the Republican Guards and the Basiji - Iran's volunteer Islamist militia - asked the government of President Mahmud Ahmadinejad not to release the sailors until the five Iranian diplomats arrested by the US in Iraq were freed. They also demanded that the new United Nations sanctions imposed on Iran over its nuclear program be scrapped. And all this was under the watchful eyes (and ears) of the US Navy's 5th Fleet in Bahrain.

Much of the Western press assumed Iran wanted Western hostages to exchange for the five Iranian diplomats, without ever questioning the Pentagon's illegal capture of the Iranians in the first place. Then the plot was amplified as an Ahmadinejad diversion tactic as the UN Security Council worked out a new resolution for more sanctions on Iran and as Russia told Tehran to come up with the outstanding money or the Bushehr nuclear plant it is building in Iran would not be finished.

The Shatt-al-Arab incident has been linked to an Iranian response to Washington's accusations that Tehran is helping Shi'ite militias with funds, weapons and training in Iraq. For the record, Iran's ambassador in Iraq, Hassan Kazemi Qomi, said there is absolutely no connection: "They entered Iranian territorial waters and were arrested. It has nothing to do with other issues." Not surprisingly, Iraqi Foreign Minister Hoshyar Zebari had to take the side of the occupiers who installed him in his post: he said the British were in Iraq invited by the Iraqi government and were operating in Iraqi waters.

This doesn't stop people, especially in the Islamic world, questioning what business the British, as an occupation force, had in the Shatt-al-Arab to start with.

From the depths of their abysmal, recent historical experience, even the Arab world - which is not so fond of Persians - sees the US-orchestrated UN sanctions on Iran for what they are: the West, once again, trying to smash an independent nation daring to have its shot at more influence in the Middle East. More sanctions will be useless as China and India will continue to do serious business with Iran.

Tactically, as a backgammon or, better yet, chess move - in which Iranians excel - the Shatt-al-Arab incident may be much more clever than it appears. Oil is establishing itself well above US$60 a barrel as a result of the incident, and that's good for Iran. It's true that from London's point of view, the incident could have been arranged as a provocation, part of a mischievous plan to escalate the conflict with Iran and turn Western and possibly world public opinion against the regime.

But from Tehran's point of view, for all purposes British Prime Minister Tony Blair is a soft target. The episode has the potential to paralyze both President George W Bush and Blair. Neither can use the incident to start a war with Iran, although Blair has warned that his government is prepared to move to "a different phase" if Iran does not quickly release the sailors.

If the Tehran leadership decides to drag out the proceedings, the Shi'ites in southern Iraq, already exasperated by the British (as they were in the 1920s), may take the hint and accelerate a confrontation. Strands of the Shi'ite resistance may start merging with strands of the Sunni resistance (that's what Shi'ite cleric Muqtada al-Sadr has wanted all along). And this would prove once again that you don't need nuclear weapons when you excel at playing chess.

Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007). He may be reached at pepeasia@yahoo.com.

Copyright 2007 Asia Times Online Ltd.

Big powers jockey for oil in Central Asia

Related
Navy: nothing to substantiate Iran market rumor
Oil spikes $5 on rumors of Iran attack
---
from the March 28, 2007 edition

The US, Russia, China, and others have a military or business presence.

The Christian Science Monitor

DUSHANBE, TAJIKISTAN

Here at Dushanbe airport, French Air Force planes sit on the tarmac, their blue, white, and red roundels looking a bit incongruous against the backdrop of the soaring, snowy Pamir Mountains.

A dozen miles away, Indian engineers are quietly reconstructing a former Soviet airfield. In central Tajikistan, Russia maintains a motorized infantry division of 10,000 men at a sprawling outpost, while the US is reportedly training Tajik forces in counterterrorism techniques.

They're all piling into a modern replay of the 19th-century "Great Game," in which the contending Russian and British Empires vied for land and influence amid these same Central Asian desert wastes and towering mountain peaks.

In this round, the main prize is control over pipelines that will deliver an estimated 5 percent of the world's dwindling energy reserves to market. And the players are far more diverse: In addition to the US, China, France, and India, the region's five post-Soviet states are getting into the game, giving the local hazards that stalk them – including faltering authoritarian governments, rising Islamic militancy, and a wave of drug trafficking that originates in the poppy fields of Afghanistan – a new international dimension.

"The game in Central Asia is very much about competition between the powers," says Dmitri Suslov, an expert with the independent Council on Foreign and Defense Policy in Moscow. "But this time the countries of the region are players themselves, using the contradictions between Russia, the US, the European Union, and China for their own benefit. It's becoming very complicated."

It's not only Tajikistan where world powers have taken to flying their flags, especially since the 9/11 attacks focused attention on the dangers of state failure in this volatile region.

In neighboring Kyrgyzstan, gleaming rows of US Air Force KC-135 midair refueling tankers line the airstrip at Manas International Airport; Russia flies Sukhoi-27 fighters from its base at nearby Kant. China is said to be eyeing its own Kyrgyz military presence. And Germany stations 300 troops with helicopters at Termez, in next-door Uzbekistan.

West seeks Russia-free energy

On Tuesday and Wednesday this week, a delegation of European Union officials, led by German Foreign Minister Frank-Walter Steinmeier, is meeting with foreign ministers of five Central Asian states in the Kazakh capital, Astana, to discuss deepening ties. The EU has declared an "Energy Dialogue" with Central Asia a key foreign policy goal, as part of a general effort to wean Europe from a perceived overdependence on Russian supplies. That coincides with US purposes in the region and, experts say, this is the main play to watch as the game develops.

"The Central Asian countries are still very much locked into the Russian pipelines and infrastructure and must sell their oil and gas to world markets on Russian terms," says Ivan Saffranchuk, Moscow director of the independent World Security Institute. "The Western idea is that these countries will have real sovereignty only when they are able to independently sell their resources."

The US strongly backed the recently opened $4 billion Baku-Ceyhan pipeline, which carries Caspian oil to the West without Russian participation. Mr. Suslov says that Washington is urging hydrocarbon-rich Kazakhstan to break free from Russia's grip and build links to the Baku- Ceyhan network. China has recently managed to buy a key Kazakh oil company and in 2005 a 1,000-mile pipeline began carrying Kazakh crude to China. It reportedly has plans to extend the pipeline westward by 2011 to funnel Caspian oil eastward.

Fears of instability, Islamist influence

Two years ago this week a lightning revolution overthrew Kyrgyz President Askar Akayev, and the little mountain state has been mired in unrest ever since. A few weeks later a putative Islamist uprising at Andijon, Uzbekistan, was brutally put down by forces loyal to Uzbek strongman Islam Karimov. That rang alarm bells about the dangers of regionwide destabilization.

"These are very weak states that cannot provide social services or justice to their populations," says Irina Zvigelskaya, a regional expert at the official Institute of Oriental Studies in Moscow. "The Islamists are moving into this vacuum, and creating a real long-term challenge to stability in Central Asia."

Thousands of alleged members of the banned Islamist organization Hizb ut-Tahrir have been arrested in several regional countries in the past two years. Experts say the group, which calls for a single Muslim Caliphate, is increasingly active – particularly in the multiethnic and impoverished Fergana Valley, which spills across the borders of Uzbekistan, Tajikistan, and Kyrgyzstan.

"Hizb ut-Tahrir is a very radical movement, which many people believe has taken root in Uzbekistan and is spreading around the region from there," says Parviz Mullojanov, director of the Public Committee for Democratic Process, a Tajik NGO. He says a combination of poverty, weak government, and huge numbers of young, jobless males in the Fergana have created a perfect storm for Islamist movements. "If economic conditions worsen, this could become the problem of our future," he adds.

Ms. Zvigelskaya cites unofficial studies that indicate drug money could make up a third of local economies. Some experts say there's a danger that drug lords and Muslim militants, who share hostility to state authority, will make common cause to undermine local governments.

"Islamists and drug traffickers are interested in each other's support," says Nur Omarov, a political expert at Bishkek's Slavic University. "Both find it perfectly acceptable to use drugs as a weapon of jihad against the West."

Others blame the West for stimulating Islamic reaction through military operations in Afghanistan and Iraq. "People for whom Islam is the main source of identity find themselves fighting foreign invaders, and of course that strengthens their beliefs and encourages sympathy for them," says Saimodin Dustov, director of the independent Information for Democracy and National Progress Center in Dushanbe.

Russia, leader of the Collective Security Treaty Organization, which includes three regional states, often appears to chafe at the US military presence on former Soviet turf. In July 2005, after the US condemned Uzbekistan's response to the uprising, the Shanghai Cooperation Organization, a six-member group run by Russia and China, issued a declaration that implicitly called for the US to close its Central Asian bases. American forces subsequently were compelled to vacate a sprawling airbase at Karshi-Khanabad in Uzbekistan.

US relations become more complex

Kyrgyzstan, however, is resisting Russian pressure to evict the US from Manas air base, in what experts say is a growing tendency of Central Asian leaders to play the big powers off against each other. "Our president thought about removing [the US base] but gradually realized that its existence is not only in American interests, but in ours too," says Orozbek Moldaliyev, director of the independent Center for Politics, Religion and Security Research in Bishkek, the capital.

The Bush Administration, which may have driven some of the region's authoritarian rulers into Moscow's arms by trumpeting US support for democratization, has lately adopted a more pragmatic stance. Last May, on a trip to Kazakhstan, US Vice President Dick Cheney raised eyebrows in the human rights community by embracing Kazakh strongman Nursultan Nazarbayev – who's been accused of banning opposition parties, fixing elections, and shutting down independent media – calling him "a good friend" and expressing "admiration for all that's been accomplished here in Kazakhstan."

Russian experts say that that, plus warmer ties with Tajik leader Imomali Rakhmon (he recently changed his name from the Russified "Rakhmonov") and optimistic US statements about the prospects for democratic thaw in authoritarian Turkmenistan, make Washington a sharper opponent.

"The region's main threats are state failure and rising Islamism, and both of these demand democratization in the long run," says Suslov. "But as soon as you push for that, you spoil relations with the regional lords and lose leverage. The Americans appear to have taken that on board now, and the game is becoming more sophisticated."

By Fred Weir | Correspondent