Within weeks of the first inaugural, prominent Iraqi expatriates -- many with ties to U.S. industry -- were invited to secret discussions directed by Pamela Quanrud, National Security Council, now at the State Department. "It quickly became an oil group," one participant, Falah Aljibury. Aljibury is an advisor to Amerada Hess' oil trading arm and Goldman Sachs.


"The petroleum industry, the chemical industry, the banking industry -- they'd hoped that Iraq would go for a revolution like in the past and government was shut down for two or three days," Aljibury told me. On this plan, Hussein would simply have been replaced by some former Baathist general.

However, by February 2003, a hundred-page blue-print for the occupied nation, favored by neo-cons, had been enshrined as official policy. "Moving the Iraqi Economy from Recovery to Sustainable Growth" generally embodied the principles for postwar Iraq favored by Deputy Defense Secretary Paul Wolfowitz and the Iran-Contra figure, now Deputy National Security Advisor, Elliott Abrams. The blue-print mapped out a radical makeover of Iraq as a free-market Xanadu including, on page 73, the sell-off of the nation's crown jewels: "privatization… [of] the oil and supporting industries."

It was reasoned that if Iraq's fields were broken up and sold off, competing operators would crank up production. This extra crude would flood world petroleum markets, OPEC would devolve into mass cheating and overproduction, oil prices would fall over a cliff, and Saudi Arabia, both economically and politically, would fall to its knees.

However, in plotting the destruction of OPEC, the neocons failed to predict the virulent resistance of insurgent forces: the U.S. oil industry itself.  Rob McKee, a former executive vice-president of ConocoPhillips, designated by the Bush Administration to advise the Iraqi oil ministry, had little tolerance for the neocons' threat to privatize the oil fields nor their obsession on ways to undermine OPEC. (In 2004, with oil approaching the $50 a barrel mark all year, the major U.S. oil companies posted record or near-record profits. ConocoPhillips this February reported a doubling of its quarterly profits.)

In November 2003, McKee quietly ordered up a new plan for Iraq's oil. For months, the State Department officially denied the existence of this 323-page plan, but when I threatened legal action, I was able to obtain the multi-volume document describing seven possible models of oil production for Iraq, each one merely a different flavor of a single option: a state-owned oil company under which the state maintains official title to the reserves but operation and control are given to foreign oil companies.

According to Ed Morse, another Hess Oil advisor, the switch to an OPEC-friendly policy for Iraq was driven by Dick Cheney. "The VP's office [has] not pursued a policy in Iraq that would lead to a rapid opening of the Iraqi energy sector… that would put us on a track to say, "We're going to put a squeeze on OPEC."

Cheney, far from "putting the squeeze on OPEC," has taken a defacto seat there, allowing the cartel to maintain its suffocating grip on the U.S. economy.

*****

Read the full story in the April edition of Harper's Magazine, out this week: "OPEC ON THE MARCH: Why Iraq Still Sells Its Oil à la Cartel," by Greg Palast.

Greg Palast is the author of the New York Times bestseller, "The Best Democracy Money Can Buy." View his writings at www.GregPalast.com.

SECRET U.S. PLANS FOR IRAQ'S OIL

BBC News World Edition

Thursday, March 17, 2005

By Greg Palast

Reporting for BBC Newsnight (London)


Why was Paul Wolfowitz pushed out of the Pentagon onto the World Bank?  The answer lies in a 323-page document, secret until now, indicating that the allies of Big Oil in the Bush Administration have defeated neo-conservatives and their chief Wolfowitz.  BBC Television Newsnight tells the true story of the fall of the neo-cons.  An investigation conducted by BBC with Harper's magazine will also reveal that the US State Department made detailed plans for war in Iraq -- and for Iraq's oil -- within weeks of Bush's first inauguration in 2001.

The Bush administration made plans for war and for Iraq's oil before the 9/11 attacks sparking a policy battle between neo-cons and Big Oil, BBC's Newsnight has revealed.

Two years ago today - when President George Bush announced US, British and Allied forces would begin to bomb Baghdad - protestors claimed the US had a secret plan for Iraq's oil once Saddam had been conquered.

In fact there were two conflicting plans, setting off a hidden policy war between neo-conservatives at the Pentagon, on one side, versus a combination of "Big Oil" executives and US State Department "pragmatists."

"Big Oil" appears to have won. The latest plan, obtained by Newsnight from the US State Department was, we learned, drafted with the help of American oil industry consultants.


View Segments of Iraq oil plans


Insiders told Newsnight that planning began "within weeks" of Bush's first taking office in 2001, long before the September 11th attack on the US.

An Iraqi-born oil industry consultant, Falah Aljibury, says he took part in the secret meetings in California, Washington and the Middle East. He described a State Department plan for a forced coup d'etat.

Mr Aljibury himself told Newsnight that he interviewed potential successors to Saddam Hussein on behalf of the Bush administration.

Secret sell-off plan

The industry-favoured plan was pushed aside by yet another secret plan, drafted just before the invasion in 2003, which called for the sell-off of all of Iraq's oil fields. The new plan, crafted by neo-conservatives intent on using Iraq's oil to destroy the Opec cartel through massive increases in production above Opec quotas.

The sell-off was given the green light in a secret meeting in London headed by Fadhil Chalabi shortly after the US entered Baghdad, according to Robert Ebel. Mr. Ebel, a former Energy and CIA oil analyst, now a fellow at the Center for Strategic and International Studies in Washington, flew to the London meeting, he told Newsnight, at the request of the State Department.

Mr Aljibury, once Ronald Reagan's "back-channel" to Saddam, claims that plans to sell off Iraq's oil, pushed by the US-installed Governing Council in 2003, helped instigate the insurgency and attacks on US and British occupying forces.

"Insurgents used this, saying, 'Look, you're losing your country, your losing your resources to a bunch of wealthy billionaires who want to take you over and make your life miserable," said Mr Aljibury from his home near San Francisco.

"We saw an increase in the bombing of oil facilities, pipelines, built on the premise that privatization is coming."

Privatization blocked by industry

Philip Carroll, the former CEO of Shell Oil USA who took control of Iraq's oil production for the US Government a month after the invasion, stalled the sell-off scheme.

Mr Carroll told us he made it clear to Paul Bremer, the US occupation chief who arrived in Iraq in May 2003, that: "There was to be no privatization of Iraqi oil resources or facilities while I was involved."

The chosen successor to Mr Carroll, a Conoco Oil executive, ordered up a new plan for a state oil company preferred by the industry.

Ari Cohen, of the neo-conservative Heritage Foundation, told Newsnight that an opportunity had been missed to privatise Iraq's oil fields. He advocated the plan as a means to help the US defeat Opec, and said America should have gone ahead with what he called a "no-brainer" decision.

Mr Carroll hit back, telling Newsnight, "I would agree with that statement. To privatize would be a no-brainer. It would only be thought about by someone with no brain."

New plans, obtained from the State Department by Newsnight and Harper's Magazine under the US Freedom of Information Act, called for creation of a state-owned oil company favored by the US oil industry. It was completed in January 2004, Harper's discovered, under the guidance of Amy Jaffe of the James Baker Institute in Texas. Former US Secretary of State Baker is now an attorney. His law firm, Baker Botts, is representing ExxonMobil and the Saudi Arabian government.

Read the story in greater detail in the April issue of Harper's magazine.

Greg Palast is the author of the New York Times bestseller, "The Best Democracy Money Can Buy." View his writings at www.GregPalast.com.