Why it Was Time for Saddam to Go
Hidden Economics of the Iraq Wars

By Al Hidell

"It's not about oil." - Secretary of Defense Donald Rumsfeld

Despite the denials of the Bush administration, it's clear that U.S. interest in Iraq has always related to the fact that Iraq has some 112 billion barrels of proven oil reserves, or about 11 percent of the world's known remaining oil. Indeed, in the chaotic days after the fall of Saddam Hussein, museums, hospitals, and even nuclear research plants stood undefended from looters while one building was heavily guarded by the U.S. military: the Iraqi Oil Ministry.

The oil motive emerges through a process of elimination. Recall that the threats of terrorism and weapons of mass destruction were the Bush administration's main justifications for the war. Indeed, as late as September 2003, President Bush declared that there was "no question" the Iraqi ruler had ties to al Qaeda. However, in January 2004, Secretary of State Colin Powell finally admitted there was "no concrete evidence" linking Saddam Hussein with al Qaeda. Nor has any solid evidence emerged linking him to 9/11, despite the blind conviction of many Americans.

In fact, alleged 9/11 "mastermind" (it seems that every al Qaeda figure who is captured becomes the 9/11 mastermind) Khalid Sheikh Mohammed told interrogators that al Qaeda rejected the idea of a working relationship with Iraq, which they viewed as a corrupt, secular regime. In addition, when Saddam Hussein was captured in December 2003, he was found with a document warning his supporters to be wary of working with foreign Islamic fighters, whom Saddam apparently feared might move to overthrow his secular regime once their common anti-American goals were fulfilled. A January 23, 2004 Los Angeles Times article by Greg Miller concludes that while some al Qaeda operatives have found haven in Iraq in the past, "no intelligence has surfaced to suggest a deeper relationship, and other information turned up recently has suggested that any significant ties were unlikely."

That leaves the oil. As professor Michael Klare of Hampshire College reminds us in a January 2004 article for Foreign Policy in Focus (www.fpif.org):

When first assuming office in early 2001, President George W. Bush's top foreign policy priority was not to prevent terrorism or to curb the spread of weapons of mass destruction. … Rather, it was to increase the flow of petroleum from suppliers abroad to U.S. markets. In the months before he became president, the United States had experienced severe oil and natural gas shortages in many parts of the country, along with periodic electrical power blackouts in California. In addition, oil imports rose to more than 50% of total consumption for the first time in history, provoking great anxiety about the security of the country's long-term energy supply. Bush asserted that addressing the nation's "energy crisis" was his most important task as president.

Furthermore, in a rare admission, Under Secretary of Commerce Grant Aldonas was quoted in an October 16, 2002 Christian Science Monitor article by Peter Grier as saying that war with Iraq might end up having a positive economic effect. "It will open up the spigot on Iraqi oil, which would certainly have a profound effect in terms of the performance of the world economy for those countries that are manufacturers and oil consumers."

Yet, the United States currently obtains only about 18 percent of its imported petroleum from the Persian Gulf area. Some observers say this discredits the idea of an oil motive. In this regard, Professor Klare makes an important distinction. "Controlling Iraq is about oil as power, rather than oil as fuel. Control over the Persian Gulf translates into control over Europe, Japan, and China. It's having our hand on the spigot."

Up For Grabs?
The idea that the war in Iraq amounts to an American grab for oil resources is strengthened by the fact that the Bush administration is the most oil-soaked regime in American history. Bush himself was an oilman, as was Vice President Dick Cheney. In addition, National Security Advisor Condoleezza Rice served on Chevron's board of directors, and even had an oil tanker named after her.

To be fair, even an administration with a business background in, say, widget production couldn't help but recognize the critical importance of petroleum to our nation's economy. "America faces a major energy supply crisis over the next two decades," Secretary of Energy Spencer Abraham told a National Energy Summit on March 19, 2001. "The failure to meet this challenge will threaten our nation's economic prosperity, compromise our national security, and literally alter the way we lead our lives." Thus, unless and until serious efforts are made to develop alternative energy sources, our leaders have little choice but to engage in an oil-driven foreign policy.

An oil-driven foreign policy, however, isn't necessarily limited to the interests of the petroleum industry. In fact, prior to the invasion, the oil lobby in Washington generally favored the relaxation of U.S. sanctions against doing business with Hussein, not his removal. Here's why. First, the petroleum industry generally prefers stability and predictability in the world's oil-producing regions. Before the U.S. invasion, Anthony Sampson wrote in the December 22, 2002 Observer (U.K.), "All oil companies in the Middle East would face a more dangerous political climate, caught between the American-Israeli intervention and nationalists fearing reversion to a neo-colonial system." He noted, "Oil companies dread having supplies interrupted by burning oilfields, saboteurs and chaotic conditions."

Second, it's a little-known fact that U.S. oil companies already had access to Iraqi oil prior to the war. In "U.S. buys up Iraqi oil to stave off crisis," Faisal Islam and Nick Paton in the January 26, 2003 Observer (U.K.) reported, "Facing its most chronic shortage in oil stocks for 27 years, the U.S. has this month turned to an unlikely source of help - Iraq. Weeks before a prospective invasion of Iraq, the oil-rich state has doubled its exports of oil to America, helping U.S. refineries cope with a debilitating strike in Venezuela."

Lastly, in about five years, the Iraqi oil industry will be able to produce about six million barrels a day, estimates Amy Myers Jaffe, an energy analyst at the James A. Baker Institute for Public Policy at Rice University. If pumped at full capacity, abundant Iraqi oil could actually lower the world price by $3 to $5 per barrel, says Jaffe. That would, of course, translate to lower profits for the oil industry. All in all, then, the liberation of Iraq's oil wells may prove to be a mixed blessing for Big Oil.

Saddam vs. The New World Order
Considering all the attention paid to Saddam Hussein's foreign and domestic security policies, surprisingly little has been said about his economic policies. Perhaps, as is often the case, we can gain some insight into why Hussein had to be removed by looking in a direction that official sources have scrupulously avoided. Here, we may find the hidden economic reasons why the U.S. felt it had to overthrow Saddam Hussein. As we'll see, some involved oil while others did not.

In the eyes of U.S. policymakers, Saddam Hussein's economic policies set a bad example for the rest of the Middle East. For example, in 1972, he nationalized Iraq's oil fields. In response, the U.S. immediately branded him "unreliable" and even "a terrorist leader." Here is the template, then, for the government turning on Saddam Hussein and linking him to terrorism in response to his oil policies.

Writer Louise Neville provides further examples of Hussein's economic policies as a motive for U.S. animus in "Why Does Washington Hate Saddam?" (www.sonic.net/~doretk/ncxarchives.html). Writing in Spring 1998, she observes, "Part of the recent U.S. policy of containment is to demonize Saddam Hussein, telling us that he is a vicious dictator who abuses his people. Yet everything in the U.S. Army's own 1990 publication Iraq: A Country Study directly contradicts that view." It is truly ironic that the U.S. Army was the source for information that this supposed brutal dictator who oppressed his own people actually:

Hussein's largesse even extended to a Detroit church, to which he contributed $250,000 in 1979. Saddam subsequently received the honorary key to the city, courtesy of then Mayor Coleman Young, according to a March 26, 2003 Associated Press report.

Despite its positive aspects, Hussein's Iraq was also a brutal dictatorship. In April 2001, the UN Commission on Human Rights adopted a resolution strongly condemning "the systematic, widespread and extremely grave violations of human rights and of international humanitarian law by the Government of Iraq, resulting in an all-pervasive repression and oppression sustained by broad-based discrimination and widespread terror." However, the United States has long supported brutal dictators all over the world. Of greater concern to our rulers was the fact that Iraq was a socialist state. It was thus a bad example in the eyes of the architects of the New World Order. As Neville explains, "Socialism seriously competes with capitalism by nationalizing industry and selling its products cheaply. The ‘New World Order' is a capitalist economic order run by capitalist methods, capitalist finance and carried out by capitalist corporations. In such a world there is no place for socialism."

Neville also reports that the U.S. Army publication noted "Iraq was the leading country in forming an Arab Alliance similar to the European Economic Commission. All oil nations would share and work together and plan their own army that would include no Europeans." This, says Neville, is when alarm bells went off … Independent oil states working in concert could make their own terms and control OPEC. The last thing the Western world wants is an alliance of oil states - especially if they have their own army. Their control of oil would result in a huge financial crunch to big business.

Another economic policy that may have been even more crucial in putting Hussein on America's hit list was his rejection of the GATT (General Agreement on Trade and Tariffs). In a speech made on September 10, 1997, he explained that he viewed the GATT and similar international trade systems as a threat to national sovereignty. He mocked those Arab states [that] consent or seek to become part of regional or international organizations in which a new flag flutters above their flags, over which flies the U.S. or other flag, as is now the fashion with the so-called GATT and subsequently the World Trade Organization, ... and [then] find it strange that the will of [that outside] nation should fly over their will…

Neville speculates on what signing the GATT would have done to Iraq, and by implication what it has done to those nations that have signed it:

The GATT, then, essentially puts all political and financial power into corporate hands and severely limits the ability of a nation's leaders to follow independent economic policies. It's little wonder that Saddam Hussein saw fit to reject it. Indeed, the real question is why so many nations have capitulated and accepted it.

The importance of Hussein's defiance of the GATT as a motive for the first Iraq War is suggested by a report related by Neville which, unfortunately, is not sourced. She writes, "At the last minute just before the military attacks on Iraq began, Hussein was told by a member of our State Department that if he signed the GATT there would be no war. He refused to sign."

Rumsfeld's Pipe Dream
Despite his socialist and pan-Arabic policies, Saddam Hussein was aggressively courted and supported by the Reagan administration in the early to mid-1980s. This had to do with the fact that Iraq was at war with Iran, an enemy of the U.S., as has been widely reported.

There was another factor that is less well known. As detailed in a well-documented investigative report by Jim Vallette, Steve Kretzmann and Daphne Wysham of the Institute for Policy Studies (IPS, at www.ips-dc.org), the Reagan administration was working hard to convince Hussein to permit the development of an oil pipeline from Iraq to Jordan, the Aqaba pipeline. In fact, current Secretary of Defense Donald Rumsfeld personally pitched the plan to Saddam when he served as a Reagan administration special envoy. At that time, it should be noted, Rumsfeld didn't seem concerned with Saddam's use of chemical weapons and the dictator's other misbehaviors.

Echoing the recent controversy over Vice President Dick Cheney's former company Halliburton being awarded lucrative no-bid contracts for work in Iraq, the IPS report reveals that then Secretary of State George Shultz "pushed the [Aqaba] pipeline project on behalf of his former company, Bechtel," which stood to make at least $500 million on the deal.

However, Saddam rejected the plan on December 31, 1985. That's when U.S.-Iraq relations began to sour. As the IPS report observes, "The break in US-Iraq relations occurred not after Iraq used chemical weapons on the Iranians, nor after Iraq gassed its own Kurdish people, nor even after Iraq invaded Kuwait, but rather, followed Saddam's rejection of the Aqaba pipeline deal." In short, as the report concludes, "The hard lesson of the Aqaba pipeline project, it seems, is that an ‘evil dictator' is a friend of the United States when he is willing to make a deal, and a mortal enemy when he is not."

Saddam Embraces the Euro
Lastly, Saddam committed an unpardonable economic offense in 2000 when he dared to begin pricing his oil in euros rather than dollars (all oil has been priced in U.S. dollars since 1859). So, was Saddam's switch to the euro really such a big deal? Although his motivation was more political than economic, if other oil-producing nations were to follow his example, the economic fallout for the Unites States could be massive. Currently the pressure to do so is growing as the dollar continues its unprecedented decline in value. This decline is due to three main factors: (1) ballooning U.S. budget deficits, (2) low U.S. interest rates, and (3) general weakness of the U.S. economy. The reason a weak dollar is tempting oil-producing nations to switch to euro pricing is simple. Trading one's goods in a weak currency means lower revenue. In fact, in January 2004, OPEC raised crude oil prices, saying the weaker U.S. dollar brings member nations lower revenues because oil is traded in dollars.

In addition, worldwide nearly 70 percent of official exchange reserves are held in dollars. This has been a crucial advantage for America, giving it great political leverage and allowing it to run a huge trade deficit. Because countries that conduct their international trade in euros would no longer need American dollars, they would likely start holding their reserve currency in euros, too. All of this would translate into a decrease in U.S. economic and political influence, and a concomitant rise in the influence of the European Union.

Australian journalist Geoffrey Heard (www.gulufuture.com) has described the U.S. advantage of the oil-dollar connection in terms everyone can understand:

In "Saddam's Last Laugh: The Dollar Could be Headed for Hard Times if OPEC Switches to the Euro" (available at www.tompaine.com) Arjun Makhijani, president of the Institute for Energy and Environmental Research, elaborates on the threat represented by Saddam's switch to the euro. "To date, the oil-dollar link has given the United States a huge advantage in international trade. Corporations and countries carry out trade in U.S. dollars, making the U.S. Treasury and the U.S. Federal Reserve Board the ultimate arbiters of global monetary policy." In addition, pricing oil in euros rather than dollars, says Makhijani, could cause an even greater drop in the dollar's value as foreigners who hold dollars decide to dump them. This would in turn make U.S. companies and real estate so cheap that there could be a major buy-up of U.S. assets by foreigners. He concludes, "There is no predicting whether chaos and uncertainty would take hold first. In any case, the U.S. economy would likely be deeply damaged."

What kind of damage? In "The Real Reasons for the Upcoming War With Iraq" (www.ratical.org/ratville/CAH/RRiraqWar.html) William Clark presents this alarming and perhaps overstated scenario:

At the very least, the rise of the euro represents the threat of increased U.S. interest rates, an effort to make the weak dollar more attractive to foreign investors. Furthermore, a declining dollar makes imports more expensive for U.S. consumers, and makes general inflation more likely. When you factor in the recent OPEC price increase cited above, the dollar drop and stronger euro are clearly bad news for the average American.

All these scenarios have Washington in a panic, though you don't hear about them on the news. They're the reason the government is working hard behind-the-scenes to keep oil priced in dollars, and why Saddam's move to the euro represented such a serious threat.

The genie, though, may be out of the bottle. On April 17, 2003, Bloomberg reported that Indonesia's state oil company was considering dropping the U.S. dollar for the euro in its oil and gas trades. More troubling, on November 24, 2003, Reuters reported that Russia, the world's No. 2 oil exporter after Saudi Arabia, said it wants to sell its oil output in euros instead of the U.S. dollar.

The Big Picture
In conclusion, the overthrow of Saddam Hussein went beyond the needs of the petroleum industry - which generally favored the relaxation of U.S. sanctions against doing business with Hussein, not his removal. America's real motives, largely absent from public debate and news reports, involved Saddam Hussein's economic policies. To the Bush administration, they represented a dangerous example for the rest of the Middle East and, in some cases, a direct threat to the U.S. economy. Therefore, the Iraqi leader had to be removed from power. This would end his troubling economic policies, and send a powerful message to other leaders in the region who may have wished to follow his example. Hussein's troubling policies were (1) his nationalization of Iraq's oil fields, (2) his rejection of the Aqaba pipeline deal, (3) his socialist government programs, (4) his promotion of a European Union-type Arab economic and military alliance, (5) his rejection of the GATT, and (6) his decision to price his oil in euros. Thus, the invasion of Iraq was indeed largely about oil, but was mired in a more complex scenario than the public and news outlets generally acknowledge.

In addition to the economic dimensions of America's Iraq policy, there is a larger geopolitical strategy at work. At the risk of sounding melodramatic, it essentially amounts to nothing less than a plan for world domination. It is a plan that was hatched well before Bush's controversial 2000 election. Indeed, "Not since Mein Kampf has a geopolitical punch been so blatantly telegraphed, years ahead of the blow," charges Chris Floyd in an online commentary (www.informationclearinghouse.com). He elaborates, "The Bush Regime's foreign policy is being carried out according to a strict blueprint written years ago, then renewed a few months before the Regime was installed in power by the judicial coup of December 2000."

Drafted in 1992 by a group of Neo-Conservatives led by then Defense Secretary Dick Cheney, the report essentially advocated U.S. dominance of the world through aggressive, unilateral actions. A new group soon coalesced around the doctrine, the Project for a New American Century (PNAC). Funded by various right-wing foundations and what Floyd calls "the military-energy-security apparatus," PNAC's membership roster included future Vice President Dick Cheney, future Secretary of Defense Donald Rumsfeld, and future Undersecretary of Defense Paul Wolfowitz. PNAC would, essentially, go on to become George W. Bush's cabal of war advisors.

In September 2000, PNAC published "Rebuilding America's Defenses: Strategies, Forces and Resources for a New Century," an update of the original Cheney report, available at PNAC's website (www.newamericancentury.org). In this and similar documents, PNAC urged unprecedented hikes in military spending, the establishment of American bases in Central Asia and the Middle East, the toppling of uncooperative regimes, the militarization of outer space, and the abrogation of international treaties. Oh, and the willingness to use nuclear weapons.

In addition to calling for a war against Iraq, the September 2000 report urged massive increases in military spending by some $15 to $20 billion per year. Recognizing that such increases would face great political and public opposition, as would increases in America's military adventurism, the report longed for "some catastrophic and catalyzing event - like a new Pearl Harbor" to hasten the implementation of its goals. Perhaps not coincidentally, the authors of the report would get their "new Pearl Harbor" on September 11, 2001.

A key goal of PNAC's planning was control of the world's energy resources. Significantly, the authors of "Rebuilding America's Defenses" admitted:

In other words, overthrowing Saddam would be little more than an excuse, and Iraq just a stepping stone, for a major and permanent U.S. military occupation of the Middle East. And it was all planned before George W. Bush even set foot in the White House.

So, which country might be next? Iran, perhaps, which Cheney, Rumsfeld and the other PNACers labeled as "perhaps a far greater threat" than Iraq. And then, according to Floyd's interpretation of PNAC's master plan, "Other nations will follow, including Russia and China. In one way or another - by military means or economic dominance, by conquest, alliance or silent acquiescence - they must all be brought to heel." In short, other nations must be forcibly prevented, according to PNAC, from "challenging our leadership or even aspiring to a larger regional or global role."

With the dollar in freefall, continued U.S. economic weakness, depleting world energy supplies, and the rising political and economic power of the European Union, PNAC's words look increasingly like the threats of an overconfident yet desperate nuclear-armed bully. Removing Saddam may have been a cakewalk, but the rest of the world may not present such an easy statue to topple.