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Context of 'Early 2005: Former CIA Oil Analyst Says Invasion of Iraq Driven by Overthrowing Hussein, Oil'

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“Within weeks” of taking office, the Bush administration begins planning for a post-Saddam Iraqi government. The State Department convenes a series of secret discussions attended by prominent Iraqi expatriates, many with ties to US industries, to plan for a post-Saddam Iraq. The meetings are held in the home of Falah Aljibury, an adviser to OPEC, Goldman Sachs, and Amerada Hess’s oil trading arm. He also served as Ronald Reagan’s backchannel to Saddam Hussein during the 1980s. According to Aljibury, the discussion group, led by Pamela Quanrud, an NSC economics expert, quickly evolves into an “oil group.” The plan they develop is said to represent the views of the oil industry and the State Department. According to the plan, Saddam Hussein would be replaced by some former Baathist general, while the rest of the government would continue to function as before. One of the candidates that is considered to head post-Saddam Iraq is Gen. Nizar Khazrahi (see Between February 2001 and February 2003), who is under house arrest in Denmark awaiting trial for war crimes. “The petroleum industry, the chemical industry, the banking industry—they’d hoped that Iraq would go for a revolution like in the past and government was shut down for two or three days,” Aljibury will later tell reporter Greg Palast. “You have martial law… and say Iraq is being liberated and everybody stay where they are… Everything as is.” [BBC Newsnight, 3/17/2005; Democracy Now!, 3/21/2005; Harper's, 4/2005, pp. 74-76]

Entity Tags: Falah Aljibury, Pamela Quanrud, Bush administration (43), Nizar Khazrahi

Timeline Tags: Events Leading to Iraq Invasion

The Oil and Energy Working Group, one of 17 such groups working under the US State Department’s “Future of Iraq” project (see April 2002-March 2003), meets to discuss plans for the oil industry in a post-Saddam Hussein Iraq. The only known member of the 15-member group is Ibrahim Bahr al-Ulum, who will become Iraq’s oil minister after the invasion. Other people likely involved include Ahmed Chalabi of the Iraqi National Congress, Sharif Ali Bin al Hussein of the Iraqi National Congress; recently defected personnel from Iraq’s Ministry of Petroleum; the former Iraqi head of military intelligence; Sheikh Yamani, the former Oil Minister of Saudi Arabia; and unnamed representatives from the US Energy Department. The responsibilities of this working group include: (1) developing plans for restoring the petroleum sector in order to increase oil exports to partially pay for a possible US military occupation government. (2) reconsidering Iraq’s continued membership in the Organization of Petroleum Exporting Countries (OPEC) and “whether it should be allowed to produce as much as possible or be limited by an OPEC quota.” (3) “consider[ing] whether to honor contracts made between the Hussein government and foreign oil companies, including the US $3.5 billion project to be carried out by Russian interests to redevelop Iraq’s oilfields.”] [Oil and Gas International, 10/30/2002; Observer, 11/3/2002; US Department of State, 12/19/2002; Financial Times, 4/7/2003; Financial Times, 9/5/2003; Muttitt, 2005] By April 2003, the working group will have met a total of four times. One of the policies they agree on is that Iraq “should be opened to international oil companies as quickly as possible after the war” and that development of Iraq’s oil fields should be done through the use of Production Sharing Agreements (PSAs). Under a typical PSA, oil ownership remains with the state, while exploration and production are contracted to the private companies under highly favorable terms. [Muttitt, 2005; Los Angeles Times, 12/8/2006]

Entity Tags: Ahmed Chalabi, Sheikh Yamani

Timeline Tags: Events Leading to Iraq Invasion

BearingPoint and Amy Jaffe complete the State Department-commissioned plan for Iraq’s oil industry (see November 2003). The 323-page document, titled Options for Developing a Long Term Sustainable Iraqi Oil Industry, lays out seven possible models for Iraq’s oil industry, none of which is privatization. “The seven options [range] from the Saudi Aramco model, in which the government owns the whole operation from reserves to pipelines, to the Azerbaijan model, in which the state-owned assets are operated almost entirely by ‘OICs’ (International Oil Companies),” Greg Palast reports. The plan seems to favor the production-sharing agreement (PSA) model, in which oil reserves are owned by the state but operated and controlled by foreign oil companies that earn a percentage of oil sales. [Harper's, 4/2005, pp. 75] “Using some form of [production sharing agreements] with a competitive rate of return has proved the most successful way to attract [international oil company] investment to expand oil productive capacity significantly and quickly,” the report says. [United States Agency for International Development, 12/19/2005, pp. 50 pdf file] The document makes it clear that in order to secure sufficient investment, the Iraqi government will have to offer OICs a generous portion of the oil proceeds. “Countries that do not offer risk-adjusted rates of return equal to or above other nations will be unlikely to achieve significant levels of investment, regardless of the richness of their geology,” the plan states flatly. As a case in point, the plan highlights the Azerbaijan system which it notes has “been able to partially overcome their risk profile and attract billions of dollars of investment but offering a contractual balance of commercial interests within the risk contract.” [BBC Newsnight, 3/17/2005; Democracy Now!, 3/21/2005; Harper's, 4/2005, pp. 75; United States Agency for International Development, 12/19/2005 pdf file] Jaffe later explains to reporter Greg Palast that the oil industry prefers state ownership of Iraq’s oil over privatization because it fears a repeat of Russia’s energy privatization, which barred US oil companies from bidding on its reserves. Furthermore, another reason the oil companies oppose the neoconservatives’ privatization scheme is because they have no desire to undermine OPEC as they have no problem with high oil prices. “I’m not sure that if I’m the chair of an American company, and you put me on a lie detector test, I would say high oil prices are bad for me or my company,” she acknowledges to Palast. Similarly, a former Shell oil boss tells Palast that the interests of the neoconservatives, who were calling for total privatization, and the oil companies are “absolutely poles apart.” He says: “Many neoconservatives are people who have certain ideological beliefs about markets, about democracy, about this, that and the other. International oil companies, without exception, are very pragmatic commercial organizations. They don’t have a theology.… They are going to do what is in the best interest of their shareholders.” [Democracy Now!, 3/21/2005; Harper's, 4/2005, pp. 75] The State Department will deny the existence of this oil plan “for months,” according to Palast, who will only obtain it after identifying its title and threatening legal action against the government. [Democracy Now!, 3/21/2005; Harper's, 4/2005, pp. 75]

Entity Tags: Amy Myers Jaffe, BearingPoint

Timeline Tags: Events Leading to Iraq Invasion, Iraq under US Occupation

In an interview with Greg Palast, Robert Ebel, a former Department of Energy and and CIA oil analyst, acknowledges that the invasion of Iraq was driven by oil interests. “The thought was, ‘Why are you going into Iraq? It’s about oil isn’t it?’ And my response was, ‘No, It’s about getting rid of Saddam Hussein. The morning after, it’s about oil.’” [Democracy Now!, 3/21/2005]

Entity Tags: US Department of Energy, Central Intelligence Agency, Robert Ebel, Greg Palast

Timeline Tags: Events Leading to Iraq Invasion, Iraq under US Occupation

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