[Congressional Record Volume 153, Number 47 (Monday, March 19, 2007)]
[House]
[Pages H2647-H2649]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
PETRODOLLARS AND THE IRAQ WAR
The SPEAKER pro tempore. Under a previous order of the House, the
gentlewoman from Ohio (Ms. Kaptur) is recognized for 5 minutes.
Ms. KAPTUR. Mr. Speaker, the Wall Street Journal reported last week
what most Americans may not realize, that for the first time in
history, our U.S. military is now guarding the major Iraqi oil pipeline
that leads to its major refinery in Bayji. Yes, our brave soldiers from
the 82nd Airborne are now maintaining around-the-clock presence at
Iraq's largest oil pipeline and refinery to fight the corruption,
smuggling and sabotage that characterize Iraq's oil industry, its
premier industry.
The article talks about the flourishing market in stolen Iraqi oil.
It says U.S. military officials estimate that as much as 70 percent of
the fuel processed at the plant is lost to the black market, an amount
valued at more than $2 billion. Iraq's oil reserves may be the largest
in the world. Future access to them is now being determined by a group
of people we generally don't see on the evening news.
Do you know them? It's important to figure out who those people are
and who exactly is now involved in writing Iraq's hydrocarbon law. How
transparent are these oil deliberations?
Indeed, it is amazing how little we hear about them, as trillions of
dollars are at stake. Meanwhile, oil smuggling has earned lots of shady
characters hundreds of millions of dollars since the beginning of the
war. Why did we let this go on? Until now, we can catch Saddam Hussein
in the spider hole, and yet somehow we could not figure out who is
smuggling Iraqi oil?
Americans deserve answers to so many questions. Who has been earning
the money from the oil smuggling? Which global oil companies will
benefit once the U.S. leaves Iraq? What percent of oil resources in
Iraq will be left for the Iraqi people?
Traveling to Iraq and Kuwait a few weeks ago, I had the chance to
witness how technology and power systems transformed endless deserts
into oil supply lines. It is an awesome sight. Yet I couldn't help but
ask, what is America doing in these deserts? Who does our oil addiction
benefit? How have we let ourselves become tied to oil dictatorships?
Why do we pay nearly $400 billion a year to import petroleum rather
than become energy-independent ourselves here at home?
Our able colleague, Congressman Bill Delahunt of Massachusetts, gave
me a book last week, and I looked on page 96. This is called ``The
Price of Loyalty,'' by Ron Suskind. It explains how Donald Rumsfeld
used our Defense Intelligence Agency to map Iraq's oil fields and lists
companies that might be interested in leveraging the precious asset
long before the Iraqi war was declared.
Judicial Watch obtained Mr. Rumsfeld's map through a Freedom of
Information request because Mr. Rumsfeld and Paul Wolfowitz would not
share it voluntarily. Imagine that. Our taxpayers footed the bill for
this map to benefit private firms.
The book attests Rumsfeld and his cohorts in the Bush administration
were not concerned with legitimate reasons to go to war; they only
concerned themselves with how and how quickly to penetrate Iraq's oil
fields. Mr. Wolfowitz had written as early as 1999 that the United
States should be committed, should be prepared to commit ground forces
to protect a sanctuary in southern Iraq where the opposition could
safely mobilize. As we pay dearly for this violent war, and our
soldiers die in Iraq, just coincidentally we have to remember the
world's largest untapped oil reserves are in Iraq.
Most other nations in the Middle East have guarded their oil reserves
as national treasures, but I will tell you what: Halliburton,
ExxonMobil, ConocoPhillips, ChevronTexaco and foreign companies like
Total, Royal Dutch Shell and British Petroleum have been identified by
reporters like Antonia Juhasz, who said last week in the New York
Times, these oil companies would not have to invest their earnings in
the Iraqi economy, partner with Iraqi companies, hire Iraqi workers or
share their new technologies. In fact, she says, only 13 of the 80 oil
wells, oil fields in Iraq would be for the Iraqi people. The other ones
are being bargained away as the hydrocarbon law is written. Why do we
hear so little about this on our evening news?
John Perkins, in his book ``Confessions of an Economic Hit Man,''
talks about how Saudi oil money through petrodollars has been
reinvested in our economy, holding up so many of our equities and
certainly our U.S. Treasury securities. Why can't America become
energy-independent at home? Why do we have to be dependent to the 20th
century view of dependency on foreign oil?
``Almost immediately after the [1973 oil] embargo ended,'' Perkins
writes, ``Washington began negotiating with the Saudis, offering them
technical support, military hardware and training and an opportunity to
bring their nation into the twentieth century, in exchange for
petrodollars and, most importantly, assurances that there would never
be another oil embargo.'' Congress did not negotiate this--the overall
management and fiscal responsibility lay with the Department of the
Treasury, and according to the book, the ensuing agreement, which was
negotiated in intense secrecy, ``fortif[ied] the concept of mutual
interdependence.'' The very goal of this agreement was to ``find ways
that would assure that a large portion of petrodollars found their way
back to the United States'' so that ``Saudi Arabia would be
[[Page H2648]]
drawn in, its economy would become increasingly intertwined with and
dependent upon ours'' and, of course, we on them. It is a ridden
economy.
Is this the America you want? Do you want U.S. soldiers risking their
lives guarding Iraqi oil? I want an America free of counterproductive
foreign entanglements. I want an America free of support for
dictatorships, no matter how tempting their treasures. I want an
America free of foreign oil. I want to invest our dollars here at home
in energy independence--in solar, wind, hydrogen, clean coal, new
turbine systems, fuel cells and so much more.
I think most Americans, if they understood the extent to which we are
hurting ourselves, would want the same. Some global interests are
getting so filthy rich year after year, that they would risk a free
America for the sake of their bloodied oil profits. It's worth changing
how we do business in order to regain our freedom.
[From the Wall Street Journal Europe, Mar. 15, 2007]
Iraq's Oil Smugglers Are Targeted
(By Yochi J. Dreazen)
Bayji, Iraq--Adding another facet to Washington's new
pacification plan for Iraq, U.S. and Iraqi forces have
launched an aggressive campaign to curb the oil smuggling
that is destabilizing the fragile Baghdad government and
helping to fund insurgents.
In concert with stepped-up military and reconstruction
initiatives across Iraq, U.S. troops for the first time are
maintaining a round-the-clock presence at the sprawling oil
refinery here, Iraq's largest. Soldiers from the Army's 82nd
Airborne Division are cracking down on illegal gas stations,
arresting refinery workers suspected of corruption and using
sophisticated data-sifting methods to identify which senior
Iraqi officials might have ties to black-market oil rings.
The Iraqi government, meanwhile, has begun what it calls
Operation Honest Hands, which puts the entire refinery under
Iraqi military control. Iraqi Army soldiers are physically
monitoring each of the facility's pumps and entrances,
assuming many of the responsibilities previously held by a
paramilitary security force employed by the Oil Ministry that
was widely considered corrupt and ineffectual. Iraqi troops
are also escorting many convoys of fuel trucks from the
refinery to destinations around the country.
The move represents another course change for the
administration of U.S. President George W. Bush as it
struggles to craft a new approach for stabilizing Iraq. U.S.
and Iraqi officials have long been aware of the flourishing
market in stolen Iraqi oil but largely turned a blind eye
because Washington feared that stationing American soldiers
in major refineries would spark a nationalist backlash and
renew accusations that the U.S. invaded Iraq for its oil. The
Iraqi government, meanwhile, felt its modest security
resources were better used directly fighting insurgents.
But officials from both governments have concluded recently
that oil smuggling had become too big a problem to ignore any
longer. The loss of so much output to the black market is
sharply reducing the Iraqi government's main source of
revenue: About 94% of Iraq's $32 billion budget last year
came from oil revenue. The stolen oil also gives Iraq's
insurgent groups a ready source of income, helping to
perpetuate the country's civil war.
``Disrupting the insurgent funding is our main job,'' said
30-year-old Capt. Kwenton Kuhlman, who is leading the
antismuggling operation at the Bayji refinery. ``I'm under no
illusions--we can't stop it. It's too big. But we can try to
disrupt it.''
Iraq produces some 2 million barrels of oil a day, but U.S.
and Iraqi officials believe the figure could rise as high as
5 million barrels a day with improved security and new
infrastructure.
Former Iraqi President Saddam Hussein helped create the
black market in oil in response to economic sanctions imposed
in the wake of the 1990-91 Persian Gulf War. Mr. Hussein used
smuggling, as well as kickbacks on oil sold legitimately
through the United Nations' oil-for-food program, to generate
cash for his regime and to reward allies at home and abroad.
The stepped-up fight against smuggling has no guarantee of
success--and risks triggering more political and economic
turmoil. Senior Iraqi officials regularly pressure the
Americans to call off specific investigations or release
individuals detained for suspected involvement in the black
market, feeding Washington's suspicions that oil-related
corruption extends deep into the government.
The enormity of the task facing the soldiers from the 82nd
Airborne was evident on recent visits, and underscores the
broader challenge Americans face in turning more security
over to their Iraqi counterparts. Several tanker drivers said
Iraqi soldiers at the plant had already begun asking for
bribes. The drivers also said they don't want to be escorted
by Iraqi troops for fear of attracting insurgent attacks. ``I
want coalition forces to guard this place, not the Iraqi
Army,'' driver Suhaib Adil Kareem said. ``The Iraqis don't
care about the law.''
Widespread oil smuggling siphons off as much as $5 billion
per year. At the Bayji refinery--one of three in the country
[U.S. military officials estimate that as much as 70% of the
fuel processed at the plant is lost to the black market, an
amount valued at more than $2 billion per year.]
Iraq's parliament will soon debate a landmark petroleum law
that would clear the way for direct foreign investment in the
battered oil sector and set out rough guidelines for
distributing oil revenue among Iraq's 18 provinces. But U.S.
and Iraqi officials warn the new law will have little
substantive impact unless the smuggling is brought under
control.
The endemic oil-sector corruption is a financial boon to
insurgent operations. A classified U.S. government report in
November estimated Iraqi militants earn $25 million to $100
million every year by stealing tankers full of fuel,
smuggling oil to other countries, carrying out kidnappings
for ransom, and charging protection money from truckers and
gas station owners.
``The fuel that is stolen comes back as bombs, mortar
shells and Katyusha rockets,'' said Hamad Hamoud al-Shakti,
the governor of the Salahaddin province, home to the Bayji
refinery.
The black market is fueled by three factors. Baghdad
heavily subsidizes gasoline and other oil products, and the
resulting low prices mean they can be resold at enormous
profit in neighboring countries. The government also doesn't
verify that gas-station owners--who are entitled to receive
100,000 liters of fuel per week--sell to retail customers
instead of on the black market.
The biggest issue, though, is pervasive corruption. U.S.
and Iraqi officials say refinery workers routinely allow
tankers to pick up fuel without any paperwork, which makes it
easy to sell off the books. Police officers demand bribes of
as much as $1,000 to let tankers pass through checkpoints or
for ``protection'' along routes, the officials say. And some
government officials work directly with smugglers or secretly
own gas stations and fuel trucks, giving them a share of
money earned through illicit sales, U.S. officials say.
``You're talking about corruption at basically every
level,'' says Maj. Curtis Buzzard, the Harvard-educated
executive officer of the brigade conducting the interdiction
push. ``And it's deeply entrenched.''
As part of the campaign, the U.S. in coming months will
spend more than $12 million to install video cameras to
monitor the refinery's pumps and new digital scales to weigh
trucks, making it easier to see if truckers are carrying more
fuel than they were meant to receive. The money will also be
used to build parking lots designed to protect drivers from
extortion and insurgent attack.
Over the past few months, U.S. and Iraqi forces already
have quietly begun arresting officials suspected of playing
central roles in black-market rings. As far back as
September, Iraqi forces arrested Ibrahim Muslit, who ran the
Bayji refinery's oil-distribution operation, after he
allegedly allowed 33 tankers in a single day to receive fuel
without any paperwork. In January, U.S. troops arrested Ahmed
Ibrahim Hamad, a senior transportation official at the
refinery, after he allegedly tried to help smuggle out seven
tankers of heavy-fuel oil. Both men are in custody and
unavailable for comment.
Now, U.S. commanders say they are conducting investigations
of senior officials from the Bayji city council, the local
police force and the provincial and national governments. The
American officers say they have made about 40 arrests since
the crackdown began in earnest in early February, when the
Iraqis formally joined the campaign, and they hope to make
additional arrests in coming weeks.
During a surprise inspection of the refinery's gasoline and
diesel pumps one afternoon, Sgt. Stephen Truesdale noticed
that the analog display on one of the machines showed it had
pumped 4,000 liters more than the facility's handwritten
records indicated.
``He helped steal 4,000 liters of gas,'' Sgt. Truesdale, a
former North Carolina police officer, said of the heavy-set
Iraqi man who had been manning the pump. ``The pumps don't
lie.''
The refinery worker insisted he was innocent, but Capt.
Kuhlman, the brigade leader, told his men they had enough
evidence to arrest him.
On the way back to their base, the U.S. forces saw a large
fuel truck parked on the side of the road, surrounded by
pickup trucks carrying overflowing oil barrels. The 18 Iraqis
at the site freely admitted they had purchased the fuel from
a tanker driver who had left the refinery a short time
earlier. The men said they made such purchases several times
a week and resold the oil to factory owners and other small
businesses in neighboring towns.
The American forces ordered the Iraqis to drive their
pickups back to the refinery, where the men were searched,
photographed and escorted onto a pair of open-backed military
vehicles for transport to holding cells at the U.S.
installation.
The following day, Capt. Kuhlman told a room full of
refinery officials and trucking-company executives about the
arrests. Shakir Hamid, a businessman who said his partner had
been kidnapped from the refinery months earlier, shook his
head.
``In Saddam's time, oil smugglers were hung,'' he said.
``And I release them after two days,'' Capt. Kuhlman
replied, shrugging his shoulders. ``But it's a start.''
____
Beneath the surface was a battle O'Neill had seen brewing
since the NSC meeting on
[[Page H2649]]
January 30. It was Powell and his moderates at the State
Department versus hard-liners like Rumsfeld, Cheney, and
Wolfowitz, who were already planning the next war in Iraq and
the shape of a post-Saddam country.
Documents were being prepared by the Defense Intelligence
Agency, Rumsfeld's intelligence arm, mapping Iraq's oil
fields and exploration areas and listing companies that might
be interested in leveraging the precious asset.
One document, headed ``Foreign Suitors for Iraqi Oilfield
Contracts,'' lists companies from thirty countries--including
France, Germany, Russia, and the United Kingdom--their
specialties, bidding histories, and in some cases their
particular areas of interest. An attached document maps Iraq
with markings for ``supergiant oilfield,'' and ``other
oilfield,'' and ``earmarked for production sharing,'' while
demarking the largely undeveloped southwest of the country
into nine ``blocks'' to designate areas for future
exploration. The desire to ``dissuade'' countries from
engaging in ``asymmetrical challenges'' to the United
States--as Rumsfeld said in his January articulation of the
demonstrative value of a preemptive attack--matched with
plans for how the world's second largest oil reserve might be
divided among the world's contractors made for an
irresistible combination, O'Neill later said.
Already by February, the talk was mostly about logistics.
Not the why, but the how and how quickly. Rumsfeld, O'Neill
recalled, was focused on how an incident might cause
escalated tensions--like the shooting down of an American
plane in the regular engagements between U.S. fighters and
Iraqi antiaircraft batteries--and what U.S. responses to such
an occurrence might be. Wolfowitz was pushing for the arming
of Iraqi opposition groups and sending in U.S. troops to
support and defend their insurgency. He had written in
Foreign Affairs magazine in 1999 that ``the United States
should be prepared to commit ground forces to protect a
sanctuary in southern Iraq where the opposition could safely
mobilize.''
____
[From the New York Times, Mar. 13, 2007]
Whose Oil Is It, Anyway?
(By Antonia Judasz)
Today more than three-quarters of the world's oil is owned
and controlled by governments. It wasn't always this way.
Until about 35 years ago, the world's oil was largely in
the hands of seven corporations based in the United States
and Europe. Those seven have since merged into four:
ExxonMobil, Chevron, Shell and BP. They are among the world's
largest and most powerful financial empires. But ever since
they lost their exclusive control of the oil to the
governments, the companies have been trying to get it back.
Iraq's oil reserves--thought to be the second largest in
the world--have always been high on the corporate wish list.
In 1998, Kenneth Derr, then chief executive of Chevron, told
a San Francisco audience, ``Iraq possesses huge reserves of
oil and gas--reserves I'd love Chevron to have access to.''
A new oil law set to go before the Iraqi Parliament this
month would, if passed, go a long way toward helping the oil
companies achieve their goal. The Iraq hydrocarbon law would
take the majority of Iraq's oil out of the exclusive hands of
the Iraqi government and open it to international oil
companies for a generation or more.
In March 2001, the National Energy Policy Development Group
(better known as Vice President Dick Cheney's energy task
force), which included executives of America's largest energy
companies, recommended that the United States government
support initiatives by Middle Eastern countries ``to open up
areas of their energy sectors to foreign investment.'' One
invasion and a great deal of political engineering by the
Bush administration later, this is exactly what the proposed
Iraq oil law would achieve. It does so to the benefit of the
companies, but to the great detriment of Iraq's economy,
democracy and sovereignty.
Since the invasion of Iraq, the Bush administration has
been aggressive in shepherding the oil law toward passage. It
is one of the president's benchmarks for the government of
Prime Minister Nuri Kamal al-Maliki, a fact that Mr. Bush,
Secretary of State Condoleezza Rice, Gen. William Casey,
Ambassador Zalmay Khalilzad and other administration
officials are publicly emphasizing with increasing urgency.
The administration has highlighted the law's revenue
sharing plan, under which the central government would
distribute oil revenues throughout the nation on a per capita
basis. But the benefits of this excellent proposal are
radically undercut by the law's many other provisions--these
allow much (if not most) of Iraq's oil revenues to flow out
of the country and into the pockets of international oil
companies.
The law would transform Iraq's oil industry from a
nationalized model closed to American oil companies except
for limited (although highly lucrative) marketing contracts,
into a commercial industry, all-but-privatized, that is fully
open to all international oil companies.
The Iraq National Oil Company would have exclusive control
of just 17 of Iraq's 80 known oil fields, leaving two-thirds
of known--and all of its as yet undiscovered--fields open to
foreign control.
The foreign companies would not have to invest their
earnings in the Iraqi economy, partner with Iraqi companies,
hire Iraqi workers or share new technologies. They could even
ride out Iraq's current ``instability'' by signing contracts
now, while the Iraqi government is at its weakest, and then
wait at least two years before even setting foot in the
country. The vast majority of Iraq's oil would then be left
underground for at least two years rather than being used for
the country's economic development.
The international oil companies could also be offered some
of the most corporate-friendly contracts in the world,
including what are called production sharing agreements.
These agreements are the oil industry's preferred model, but
are roundly rejected by all the top oil producing countries
in the Middle East because they grant long-term contracts (20
to 35 years in the case of Iraq's draft law) and greater
control, ownership and profits to the companies than other
models. In fact, they are used for only approximately 12
percent of the world's oil.
Iraq's neighbors Iran, Kuwait and Saudi Arabia maintain
nationalized oil systems and have outlawed foreign control
over oil development. They all hire international oil
companies as contractors to provide specific services as
needed, for a limited duration, and without giving the
foreign company any direct interest in the oil produced.
Iraqis may very well choose to use the expertise and
experience of international oil companies. They are most
likely to do so in a manner that best serves their own needs
if they are freed from the tremendous external pressure being
exercised by the Bush administration, the oil corporations--
and the presence of 140,000 members of the American military.
Iraq's five trade union federations, representing hundreds
of thousands of workers, released a statement opposing the
law and rejecting ``the handing of control over oil to
foreign companies, which would undermine the sovereignty of
the state and the dignity of the Iraqi people.'' They ask for
more time, less pressure and a chance at the democracy they
have been promised.
____________________