Saturday, August 06, 2005

Not quite what they planned. 

The other day I admonished a think tank analyst for jeopardizing his job by stating the very politically incorrect fact that the invasion of Iraq was largely driven by a desire to gain control of Iraq’s oil and use it to undermine OPEC. However, it appears that this fact is becoming less politically incorrect. I’m not sure why. Maybe because it has so obviously failed it no longer is that damming to admit it. In any event, here is what was said on the subject in today’s New York Times in an article on Saudi oil production:

Then came the Iraq war. Among the fringe benefits of removing Saddam Hussein from power, went the thinking in the United States at the time, would be a rapid recovery of that country's oil production. In some hawkish circles in Washington, it was thought that a free Iraq would eventually undercut OPEC's power and marginalize Saudi Arabia.

The day American troops entered Baghdad, Mr. Cheney told the American Society of Newspaper Editors that Iraq would be able to produce as much as three million barrels a day, "hopefully, by the end of the year."

Still more optimistic forecasts predicted that Iraqi production would climb to six million barrels a day within five years, and provided more fodder to the theory that American troops went into Iraq to break OPEC's back, weaken the Saud dynasty and reduce the kingdom's oil-based influence.

Of course, these predictions turned out to be wrong. Iraq's production is struggling at two million barrels a day because of the relentless targeting of pipelines and infrastructure by the insurgency. Exports lag prewar levels and today few, even among Washington's most radical neoconservatives, expect that a restoration of Iraq's oil sector will quickly chip away at Saudi Arabia's clout.

Indeed if the U.S. had been successful in getting Iraqi oil production up to undercut OPEC and bring down oil prices the world sure would look a different. Take Venezuela for example. Some have accused the Bush administration of ignoring Venezuela and not having a plan for “dealing with” Chavez. Nothing could be further from the truth. The plan to use Iraqi oil to undermine world oil prices was partially aimed at Chavez as his government is heavily dependent on oil for its revenue. Cut the price of oil and Chavez would be cut down to size, so the thinking goes. And there probably is much truth to this. If oil had been selling at $15 per barrel the past two years Chavez would indeed be in a much weaker position. It is quite possible he would not have been able to get the country back on its feet after the opposition “strike” of 02/03 and would have lost the recall referendum. There certainly would not be the resources to run the social programs that have boosted the standard of living of the poor so central to Chavez’s government.

Realistically, if the U.S. had gotten Iraqi production up to 4 or 5 million barrels a day by now Chavez would not be in power and no one would be criticizing Bush for ignoring Latin America. But unfortunately for Bush’s plans the Iraqi’s had no intention of just rolling over and allowing the U.S. to take their oil. Rather than play dead as some had hoped they would they have fought tenaciously against heavy odds. Once again it is demonstrated, even the best laid plans can go awry.


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