Monday, April 7, 2003, Chandigarh, India


M A I N   N E W S

Economic diplomacy behind war?
Subdued Iraq serves US strategic oil interests
Rajeev Sharma
Tribune News Service

New Delhi, April 6
Gulf War I cost $ 40 billion but the Americans made a neat profit of $ 69 billion from the war.

Gulf War II may cost double that much if it stretches as long as the first one did — 42 days — and the Americans profit from the war are expected to increase proportionately.

Welcome to the new emerging world order thrust on defenceless countries that are virtual political pariahs and which serve as pawns in the international power game.

Independent diplomatic observers here point out that compulsions of economic diplomacy and long term strategic requirements could well be the real reasons behind the largely Anglo-American “Iraqi Freedom” launched against Iraq on March 20. The US discomfiture over recent developments in two countries — Saudi Arabia and Venezuala — may well have prompted the operation which actually has little to do with the allies’ two stated objectives: (i) “Liberate” Iraq from the allegedly repressive regime of President Saddam Hussein; and (ii) Disarm Iraq by destroying its weapons of mass destruction which the UN Inspectors have not found after over 35,000 rounds of inspection.

Milan Technical University has computed the expenses for Gulf War I as $ 40 billion, widely believed to be borne by the USA. But Washington paid only 25 per cent of the expenses ($ 10 billion), the rest borne by Arab countries mainly Kuwait (the main affected country by Hussein’ invasion) and Saudi Arabia.

The oil prices before the war were approximately $ 15 per barrel, which shot up to $ 42 per barrel because of the war. The near tripling of oil prices generated an extra profit of about $ 60 billion which was divided equally by the Arab countries between two principals : the state and the multi-national that controls the oil deposit. Needless to say, the rise in oil prices was paid by tax payers around the globe who have nothing to do with the murky cloak and dagger diplomacy of major powers of the world.

More simply put, out of the $ 60 billion profit, $ 30 billion went to the oil company and another $ 30 billion to the Government of Kuwait and Saudi Arabia.

In the Middle East the extraction and trading of oil is in the hands of seven companies all of which are Americans, five of them state-owned. So, the Arab nations ended up with a no-profit, no-loss situation after the war as their profit from the increase in the oil prices equalled their expenses — $ 30 billion.

The US Government, which incurred an expenditure of $10 billion, made a profit of $ 21 billion from the increase in the oil prices, thus making a net profit of $ 11 billion. Beside, the US private sector, which incurred no expenditure in the war, made a profit of $ 9 billion from the increase in the oil prices taking the total American profit to $ 20 billion. Over and above all this, the American arms manufacturing company made a whopping profit of $ 49 billion from the sale of weapons during and after the war, taking the gross total of American profit from Gulf War I to $ 69 billion.

Now the question doing the rounds in diplomatic circles here is whether the same methodology is being experimented in Iraq, and more importantly, why target Iraq?

Another relevant question is whether the war in Afghanistan was actually as per the state objective of Operation “Enduring Freedom” of the international coalition — to root out the terrorist regime of Taliban — or whether it was a smokescreen for much larger, and different objective?

Diplomatic observers point out that Venezuela, the oil rich Latin American nation, has seen social and political upheavals in the past couple of years. This is certainly not a good omen for Washington which relies heavily on Venezuela for its oil supplies.

Besides, with Saudi Arabia too —another major source of oil supplies for the USA — Washington has been experiencing diplomatic and political problems. The two countries have not had best of relations since 9/11 terrorist attack mainly because of the Osama bin Laden factor.

Thus, Iraq, having the second largest known oil and gas reserves in the world after Saudi Arabia, comes under American spotlight. If Mr Saddam Hussein is ousted by military force and a friendly regime is installed in Baghdad — a la Afghanistan — it can serve long term strategic interests of the USA.

And targeting Iraq is much simpler because of Saddam Hussein’s regime because of (i) past records of irresponsible and irrational acts, (ii) its alleged accumulation of weapons of mass destruction and (iii) its alleged but as yet unproven hobnobbing with terrorist elements like bin Laden’s Al Qaida.

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