From barrels to battlefields

Today, it is oil politics that dictates international relations and alliances. Several international conflicts in recent years have been sparked off by the need to control oil fields. With war clouds hovering over Iraq and the conference on climate change coming up in Delhi, Down To Earth digs into the role of oil in global politics (Read full article)

 
Last Updated: Sunday 07 June 2015

From barrels to battlefields

-- (Credit: Reuters)The US President George W Bush is raring to launch an attack on Iraq. Whether it has weapons of mass destruction or not, Iraq certainly has the world's second largest reserves of petroleum after Saudi Arabia. Thanks to UN sanctions, it produces a mere fraction of its potential. The US, on the other hand, is the world's largest consumer and importer of oil. It is certain whatever else, the desire to control Iraq's oil lubricates the US war machinery. As the daily Washington Post reports, US oil companies are ready - drills and all - to enter the Iraqi oilfields after Saddam Hussein's removal. Oil companies from the other four permanent member countries in the UN Security Council (the UK, France, Russia and China) also have interests in Iraqi oil fields.

The US oil tactics are clear. Countries that participate in the US effort against Hussein will get a fair share in the post-Hussein Iraqi oil party. "It's pretty straightforward. France and Russia have oil companies and interests in Iraq," said R James Woolsey, former director of the Central Intelligence Agency, who is all for attacking Iraq. "They should be told that if they are of assistance in moving Iraq towards a decent government, we'll do the best we can to ensure that the new government and American companies work closely with them."

Elements favoured to constitute a 'decent government' in Iraq - if Hussein is ousted in a US-led attack, that is - include the Iraqi National Congress (INC), a forum of opposition groups backed by the US. The Western media quoted an INC leader, Ahmed Chalabi, as saying that he favoured the creation of a US-led consortium to develop Iraqi oilfields: "American companies will have a big shot at Iraqi oil." Several countries, including India, Italy, Vietnam and Algeria, already have agreements with Iraq to extract oil. But these are in the cold bag due to the UN sanctions on Iraq. In a post-Hussein Iraq, these agreements are likely to be scrapped in favour of US companies.

All this speculation has led to a rapid rise in oil prices -hovering close to US $30 to the barrel, US $5 of which is being labelled 'war premium'. There are fears that it might climb beyond US $50 and set in a recession as had happened after the 1991 Gulf War. Just before a meeting of ministers of Organisation of Petroleum Exporting Countries (OPEC, a cartel that keeps oil prices unnaturally high by controlling production through quotas) in Osaka, Japan, in the third week of September 2002, the most influential member of OPEC, Saudi Arabia, a US ally, had said that it would increase supplies of oil to compensate any shortfall resulting from US military action against Iraq. But, at the Osaka meet, OPEC ministers decided to keep oil production levels unchanged till the end of the year as they were afraid of releasing extra oil into a weakening global economy. Major oil producers are unhappy with the prospect of the opening up of Iraq's oilfields. They fear the glut of oil might drive down the prices. The Iraq imbroglio is also about the US need to control the Saudi oil regime with competing reserves, according to The Economist.

But why is oil so important to international politics?

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