The Hindu Business Line : US, Iraq and oil: Now and later

Even as the US Government is debating ways to get out of Iraq honourably, it is faced with the possibility of losing its clout in the oil-rich Gulf to Iran and may end up extending covert support for the balkanisation of Iraq, if it serves its oil interests.

Alok Ray

How can the US get out of the self-created mess in Iraq without losing its face? This is the big question haunting it as the run-up to the next year’s Presidential elections is gathering momentum.

With the death toll of US marines mounting and no victory of whatever kind in sight, more and more Americans are questioning the wisdom of continuing the military involvement in Iraq.

Of course, they are not too concerned with Iraqi casualties; they care only for the loss of American lives. By now, many of them also realise that the war started on the basis of a bunch of lies – the so-called weapons of mass destruction (WMDs) were never there and Iraq was not involved in any kind of terrorist activity against the US.

Paradoxically, Iraq now is; but that is only after the US invasion. Yes, Saddam Hussein was a ruthless dictator but he was supported by the US so long as he was fighting against Iran.

The story was the same with Osama bin Laden. He was a friend and ally as long as he was leading the Taliban war against the Russians in Afghanistan. He became an enemy the moment he set upon his next project of forcing “infidel” Americans out of Saudi Arabia — the holy land of the Prophet.

Interesting parallel

The parallel with Vietnam War is interesting. The US Administration used to provide statistics (number of Vietcongs killed) on a daily basis to prove that it was making steady progress in the Vietnam War against the communists; the same story has been repeated in Iraq.

However, there is a big difference. This time, the 24-hour TV news channels make it impossible to hide the ground realities. In addition, the outcome of the Vietnam War itself has made many people wiser.

Even the army generals and career diplomats now prefer to hedge their optimistic statements with riders. So, Gen Petraeus, the current US army chief in Iraq, recently presented statistics before the US Congress to show some improvement after the infusion of more American troops into Iraq in February 2007. He tried to show that the number of deaths due to sectarian violence in Iraq had come down and fewer incidents are occurring in Baghdad which used to be the hotbed of terrorist activities.

He claimed ordinary Iraqis are getting fed up with the Al Qaeda terrorists and are cooperating more with the Americans and local administration. He was using these as arguments to continue the US army involvement in Iraq.

At the same time, the General and the US ambassador in Iraq conceded that no real progress had been made in narrowing the political differences between the warring Shia and Sunni politicians and that the level of violence, though less than before, was still alarmingly high. They also made it clear that victory was by no means certain. It is only in the realm of possibilities – which, of course, is not saying much.

Statistics in doubt

The sceptics are even questioning the significance of the statistics presented. They argue that sectarian violence has come down because millions of Iraqis have either left the country or moved to safer areas where their own people are in the majority. There are not many more left to be killed in mixed neighbourhoods.

Further, though the violence has come down in Baghdad, it has increased in other areas. It follows that as soon as US troops withdraw, sectarian violence on a much bigger scale would erupt.

So, the question before US policymakers is when can the US troops withdraw, without throwing the country into more bloodshed and chaos? Moreover, will US geopolitical interests be protected if a truly democratic national government eventually rules in Iraq?

US government officials admit that despite a series of meetings between some leaders of warring groups of Shias, Sunnis and Kurds, there is no real progress towards political reconciliation and a unified national government at the centre. Every group wants to have an assured share of the oil revenue and a role in administration which others are not willing to give.

Basically, there are three possible models for the future. A strong centralised Iraq, a loose federation of areas ruled by the three groups or a break-up of the country into a number of independent states (as in the former Yugoslavia). But, then, as one commentator put it: “The US has already killed the only person who could make the first model work – namely Saddam Hussein.”

It is difficult to predict whether the country would eventually settle for the second or the third alternative after a protracted civil war which would definitely be more violent and widespread after the US troops leave.

The final outcome would also depend on two factors – how far Iran would go in supporting the Shia majority in Iraq and the form in which the US military would be present in Iraq even after a major troop withdrawal following a possible victory of the Democratic Party candidate in the US Presidential election next year.

War for oil

By this time, several influential commentators in US have gone on record to suggest that the Iraq war is basically a war for oil and not against terrorism.

The latest to join the rank is Mr Alan Greenspan, the former Governor of Federal Reserve, in his most recent book: The Age of Turbulence. From that perspective, Iran is now the No 1 enemy of the US, not Al Qaeda.

Many observers in the US feel that once most US troops leave Iraq, Iran will fill the vacuum and control the Iraqi government (the majority of Iraqis and Iranians are Shias). If so, then Iran would have a dominant influence in deciding the price of oil and who gets the lucrative contracts in these oil-rich areas.

The US-aligned Saudi regime is not very stable either and its character may change as a result of pressures from both fundamentalist forces and democratic nationalists.

An Islamic fundamentalist movement is also gaining ground in Egypt which has so far been more favourably inclined towards the US and Israel than many other Arab states. So, the US may lose much of its control over Arab oil in the coming years.

‘Tax’ing advice

Some analysts are advising the US government to prepare for this eventuality by imposing a high tax on oil right now. This would reduce the US demand for oil and its dependence on imported oil, while at the same time lowering the level of carbon pollution and global warming.

It would also increase the profitability of alternative energy sources and the innovation of new energy-saving technologies and products. But all these would hurt the standard of living of Americans dependent on cheap oil.

It is unlikely that US politicians would go for this unpopular decision unless they are forced by circumstances as in the early 1970s when OPEC hiked the price of oil fourfold at one go.

Strategic option

In the meantime, as a strategic move, the US administration may undermine the present democratically elected (Shia-majority) government in Iraq if it gets more aligned with Iran.

It may even covertly support the insurgents against the central government by providing them arms and finance which may lead to an eventual break-up of the country if it serves the US oil interest. Democracy in the rest of the world is good only so long as it fits with US geo-political objectives.

(The author is Visiting Professor of Economics, Graduate School of Public and International Affairs, University of Pittsburgh, Pittsburgh, US.)

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