The Spoils of War: Be the First on Your Block to Make a Buck off Iraq

by James Ridgeway
Village Voice
October 9 - 15, 2002

As they prepare to make war on Iraq, cowboy-in-chief George Bush and his cohorts have pulled out all the stops. They're trying to convince us that this act of pure aggression is a "preemptive" move that will allow Americans to sleep more peacefully in their beds, while the Iraqi masses cheer the conquerors who have starved them for a decade and then bombed them to smithereens. And that's just for starters. In the imaginations of Bush and his advisers, this Wild West approach to the Middle East stands to knock out Syria's despot, rein in the Saudi royal family, inspire the neighboring Iranians to their own pro-American putsch, banish the Palestinians to Jordan, and clear the way for Israeli settlers.

The doctrine of the preemptive strike is the perfect strategy for ushering in a new century of neocolonialism, unfettered by any need to respect sovereignty or self-determination. Better still, it's going to mean big bucks for whoever gets in on the ground floor. Before the war can begin, the movers and shakers in Washington and around the world have their eyes on divvying up the spoils.


First in line to benefit from the war is Dick Cheney's old company Halliburton and its subsidiary Kellogg Brown & Root--or, more colloquially, just Brown & Root--which has cornered the market in supplying American armies of "liberation" around the globe. Launched in the 1930s amid a maze of political deals and lucrative government contracts, the Texas oil construction outfit built airstrips, roads, harbors, and military bases in Vietnam, and later provided similar services in Zaire, Haiti, Somalia, Kosovo, and Afghanistan.

As Bush Senior's secretary of defense, Cheney oversaw the privatization of the military's logistics operations. Journalist Robert Bryce, who has chronicled the construction company in minute detail, reports Brown & Root won contracts of nearly $9 million to help the government implement those policies, giving it a natural leg up. During the 1990s, records show, it earned more than $2.5 billion for military support-- much of it during Cheney's time as a top Halliburton executive.

With Cheney back in the White House, Brown & Root's fortunes have only improved. Last spring the Army Operations Support Command awarded it an open-ended deal to work with army engineers and "provide for the construction of base camps and their infrastructures, including billeting and dining facilities; food preparation, potable water and sanitary systems; showers; laundries; transportation; utilities; warehouses and other logistics support." How much has Brown & Root already made under this contract--and how much does it stand to make in Iraq? We may never know. The numbers are classified.


Before the first Persian Gulf war, Iraq had become a sizable market for American rice, wheat, and chickens. In the last half of the '80s, the United States sold $4 billion in food to Iraq. Twenty percent of the American rice crop went there at one point in the 1980s.

In 1988-89 the United States exported 521,000 tons of rice to Iraq, making it our number one consumer. More recently, the figure has been zero. A spokesperson for the U.S. Rice Federation, which takes a dim view of the sanctions, wouldn't comment on the current situation. But it's safe to say there would be nothing like a war, regime change, and the subsequent lifting of sanctions to open up this lucrative market once again.


Oil, clearly, is the commercial jackpot in this war. Even under the sanctions, Iraq provides us with 9 percent of our oil supply. Until this spring, we were buying half of all Iraq's oil exports. But oil is also the carrot the U.S. is holding out to potential allies. As Bush with his left hand assures the American people that he will fight to secure their energy supply, with his right he's giving away future Iraqi oil to buy support from the French and the Russians.

At the recent Group of Eight summit in Canada, Russian president Vladimir Putin reportedly told Bush he couldn't care less whether Saddam got the heave-ho, as long as Russia got compensated for about $12 billion in outstanding loans to Iraq, and $4 billion owed them for transporting Iraqi oil. Meanwhile, the Russian oil companies are scrambling to save their recent deals. LUKoil, for one, signed an exploration contract in 1997. "We're against this war," said LUKoil's flack Dmitry Dolgov in Moscow. "We don't know about the United States, [but] we know that our government and our president promised us to back all our interests in Iraq under any possible event." And Slaveneft--which, according to one story, is actually financed by Saddam Hussein himself--wants in.

The French, too, want American assurances they won't lose oil concessions. "We have no operations right now, as it isn't legally possible," said Tomas Fell of Totalfinaelf, the giant French oil concern hungry to develop two fields in southern Iraq. "If we could legally operate in Iraq, we would be very interested in working there."

Other smaller outfits are hoping to cash in on oil deals: Petro Vietnam, China's National Petroleum Corporation, and Indonesian companies are all eyeing the Iraqi fields.

Publicly, the big international oil companies remain above it all. When asked if the Exxon Mobil had any operations in Iraq, flack Lynn Durano of Exxon Mobil said, "Absolutely not." As for the upcoming war, Durano added, "It would be totally inappropriate to speculate on a war with Iraq. Exxon has not been involved with any topical discussions regarding a war in Iraq." A Shell spokesperson likewise had no comment on the sanctions or the possibility of war, saying only, "We obey the law."

However, it is well known that the majors, reeling from attacks on their environmental policies and with an invidious history of meddling in the third world, need stability to drill oil and protect the billion-dollar- plus investments in pipelines. Lucio Noto, former Exxon Mobil vice chairman, said in a recent interview, "I think in many cases [sanctions] do not achieve the intended objective. In many cases they hurt groups of people we are not intending to hurt. I believe they take us out of the ball game and leave the playing field to other people. And I think if you look at the track record, they have been singularly ineffective."

The prospect of a black-gold rush in Iraq means the United States can exchange oil futures for support for the war. But over the long haul, the war may produce unanticipated consequences for the oil companies--and thus for their native son George W. Bush. Robert Mabro, who heads the Oxford Institute for Energy Studies, a British think tank, argues there is no doubt that a new pro-American Iraqi government will initially seek to maximize the volume of production. "This output- maximization policy, particularly if pursued at a time when the market is oversupplied, could cause prices to collapse" and thus destabilize the region. "Bad seeds sowed now will inevitably produce in the end their poisonous flowers," warns Mabro.


There's another potential monkey wrench in the rosy scenario for big business. If there's war, the one man Bush will need is Abdullah bin Abd al-Aziz, crown prince of Saudi Arabia. His kingdom is America's surrogate in the Middle East, providing the U.S. with a secure military base and acting as a stabilizing force within OPEC, absorbing the ups and downs of oil prices. More than anyone else in the royal family, the prince knows how to handle the quarrelsome local tribes-- including the Wahhabi, whose religious fundamentalism influences Osama bin Laden and many of his followers-- and how to stave off any fundamentalist revolt by doling out jobs in the Saudi National Guard.

But by all reports, al-Aziz is getting tired of being Our Man in Riyadh, taking in billions in oil dollars and then recirculating them back to the United States through defense contracts. He wants a more independent policy.

He also has close dealings with Syria's strongman, President Bashar al Asad, and has been trying to persuade the International Monetary Fund to help modernize Syria's economy with the understanding that Saudi Arabia stands behind any deal. Bush hawks who see Iraq as the starting point for a world war that takes out Syria will run hard up against the Saudis. The Saudis also are financiers of last resort if Lebanon goes down the drain.

Most important, the prince has reached out to Iran with the goal of forging a common oil policy. A report last month from the Petroleum Finance Company--a consulting firm in Washington which works with Aramco, the joint U.S.-Saudi oil company--pointed out that a united Saudi-Iranian oil front would become the heartbeat of OPEC, and would wield extraordinary power. Should either or both of these two nations decide they've had it with Bush, all they have to do is let the much- heralded free market take over, flooding the globe with crude and sending oil prices into a steep dive. Lower prices would wipe out not only smaller international companies that have been enticed into oil play by high prices, but could wipe out the domestic oil companies in the United States, causing sheer political hell for Bush in his little oil bastion of Houston.

Additional research: Gabrielle Jackson, Rebecca Winsor, and Josh Saltzman