Firas Al-Atraqchi: Scorched Earth?

The day after U.S. President George Bush announced his near-declaration of a war against Iraq during the State of the Union Address, the Dow Jones and NASDAQ looked flimsy at best. Bush's economic recovery plan has failed to impress and the opening statements on the economy seem to have fallen on deaf ears as the Bush administration (thanks in large part to Karl Rove) trumpets the calls for war.

War is shaking the economy. As fears of worldwide economic despair (should the U.S. invade Iraq) become more boisterous, the previously taunted AOL/Time-Warner merger, a free market, capitalist feat, is quickly fading to black.

The world's largest, most ambitious media giant announced a nearly (U.S) 45 billion dollar fourth quarter loss. This represents the single greatest financial loss in conglomerate history in a single quarter.

On the one hand, this may seem like more recession blues to most investors. On the other, economic woes might serve as a catalyst for war in some circles.

Why?

Iraq is sitting on nearly 125 billion barrels of untapped oil reserves. While sanctions have crippled the Iraqi oil industry, unfettered geo-mining and remote sensing are sure to uncover another cache of oil reserves. In essence, Iraq is a black gold rush waiting to happen.

All the more reason to pursue a war against Iraq immediately, some might say. They argue that the price of economic recovery (and we are talking major prosperity down the yellow brick road) far outweighs the lives of American soldiers and Iraqi civilians.

The Bush administration has not hidden the fact that it plans to seize Iraqi oilfields at the outset of military action. "To hold for the Iraqi people," says U.S. Secretary of State Colin Powell.

While some may argue that this is not a war about oil, the U.S. is planning to create hundreds of thousands of new jobs, both domestically and in Iraq, to elevate Iraq's current oil production levels from 1.3 million barrels a day to a whooping 6.5 million barrels a day. That figure would quickly outpace Saudi Arabia's production capacity in a few years, lower the price of oil from the current (U.S.) 32 dollars a barrel to nearly 10, and give the U.S. economy an explosive kick start.

"But the war on Eye Rack will cost nearly (U.S.) 300 billion," some will argue. Indeed, but Iraq's so-called oil-economy recovery will pay that off.

So, why are we going to war again? It's the economy, stupid.

The anti-war, pro-inspections camps have asserted that the rush to war is due to Bush's lack of domestic economic policy and the need to inject Iraqi oil revenues into the U.S. economy.

To that charge, White House Spokesperson Ari Fleischer replies:

"If this were about Iraq's oil, we would have simply lifted the sanctions and allowed Iraq to pump oil again." (White House Briefing January 30, 2003)

The above statement is true in principle. However, Fleischer does not mention that if the sanctions were indeed lifted it would be Russia's Lukoil, a rising power in the global oil industry, which stands to benefit from Iraqi oil fields. Lukoil joins a list of other Russian oil companies who have signed multi-billion euro deals with Iraq to develop and enhance Iraq's oil infrastructure once sanctions are lifted.

China, Jordan, Germany, Egypt, and France would be the next in line to reap the benefits.

Where do the U.S. and the U.K come in? Nowhere. They aren't even on the list of countries awarded oil contracts with Iraq. Ironically, the U.S. imports 70 percent of Iraq's oil output, directly and through third parties.

The world knows this. Today, Former South African Nelson Mandela, who helped his country dispose of its nuclear armaments program, launched an inflamed attack against the Bush administration:

"Bush is leading us to a holocaust for oil," he said.

Most in North America are not aware of what the rest of the world is saying.

The world also knows that Iraqi President Saddam Hussein is fully willing to destroy Iraq's oil infrastructure in a Stalinist scorched earth policy rather than let it fall into anyone else's hands. Reminds one of James Tiberius Kirk who would rather blow up the Enterprise than let it fall into Romulan hands.

(Tariq Aziz, Iraq's Deputy Prime Minister, denied his country had weapons of mass destruction, but promised that Iraq would use every means at its disposal to fight off an invasion.)

And Saddam is not alone. Many Iraqis (in Iraq) are aware that they are being targeted for oil, and some even go as far as to curse this wealth beneath their feet. Would they carry out Saddam's orders to blow up their own oil refineries? It's anyone's bet at this point.

So great is the threat of Saddam blowing up Iraq's oil fields that the U.S. is drawing up contingency plans involving U.S. Special Forces who would capture these oil fields and refineries, and "hold them for the Iraqi people" as Powell reminded us last week.

At this point, the race to "hold" Iraq's oil fields is on.

ENDS

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