The roots of the economic takeover of Iraq are long and deep. They became more
aggressive after the strongest U.S. ally in the region, the Shah of Iran, was
deposed in the 1979. The roots of the quest of dominance of the oil-rich region
are found in both the Democratic and Republican Party, but the most aggressive
pursuit has been by George W. Bush.
Former President Jimmy Carter wrote in his memoirs that many Americans "deeply
resented that the greatest nation on the earth was being jerked around by a
few desert states." And, when he was president he put forward "the
Carter Doctrine" in a State of the Union Address in 1980 that acknowledged
"the overwhelming dependence of the Western democracies on oil supplies
from the Middle East" and promised military force would be used to ensure
access to Middle East oil: "Any attempt by an outside force to gain control
of the Persian Gulf will be regarded as an assault on the vital interests of
the United States of America and . . . will be repelled by any means necessary
including the use of force."
But, according to a book by Antonia Juhasz, "The
Bush Agenda," it was the Reagan, Bush I and Bush II administrations
that most aggressively pursued the Iraq oil economy. Her excellent book tells
a story that explains the reasons for the invasion and occupation of Iraq. It
shows how the Reagan and Bush I administrations began by building a friendly
trade relationship that provided money, arms, intelligence, and political protection
to Saddam Hussein--despite his brutal record as a despotic dictator. And, how
the Clinton years led to 'regime change' in Iraq becoming the policy of the
United States and naturally following that was the Bush II's military invasion
of the country.
She highlights the web of corporate interests from the oil, oil engineering
and military sectors of the U.S. economy that have combined with government
to the build-up to the invasion of Iraq. Many of the corporate players--Chevron,
Bechtel, Lockheed Martin and Halliburton--have corporate leaders who went into
and out of government over the years, influencing the direction of U.S. policy
and then ensuring that their corporations profited mightily from the policies
they put in place. Juhasz points to Dick Cheney, Donald Rumsfeld, L. Paul Bremer,
Scooter Libby, Robert Zoellick, Paul Wolfowitz, Zalmay Khalilzad and George
Shultz, as key players in the long term quest to takeover of Iraq's economy.
The Root of the Problem: Peak Oil in the U.S. and Corporate Globalization
The story of the invasion of Iraq and theft of the Iraqi economy is part of
a larger story of multi-national corporations and corporate globalization affecting
much of the world. Under the guise of "free trade" economic policies
that make multinational corporations more powerful than governments. Laws favoring
corporations are put in place: less regulation, less commitment to specific
locations, and restrictions on government preventing the shift of economic benefit
away from small, local business, workers, consumers and the environment. Globalization
of trade claims to benefit by trickling down the profit, but in reality it continues
to funnel wealth to the top--making the rich richer, the poor poorer and the
middle class class smaller.
In 1970, U.S. domestic oil production hit its peak. The United States began
to rely on foreign sources of oil, and went deeper into an oil addiction that
continues to this day. It was also the decade where Middle East oil producers
began to flex their muscles. OPEC used oil as a weapon in response to the 1973
Arab-Israel War, imposing an embargo on the United States. The embargo ended
in March 1974, but the threat was heard.
President Carter fought back, in 1977 his Defense Secretary, Harold Brown,
described the insecurity around oil as the most "serious threat to the
long-term security of the United States." In 1978 the second oil shock
hit with the Iranian oil embargo, reducing supplies by 5 percent, increasing
oil prices by 150 percent causing inflation and interest rates to skyrocket
in the U.S. and the debt load of developing countries to rapidly rise. Carter
threatened military force to protect access to oil and turned to the World Bank
to find more oil--by 1981 the World Bank had 28 oil projects underway.
President Reagan took the World Bank to another level--forcing countries to
change their laws so that U.S. corporations would have direct access and control
of oil. Reagan increased World Bank oil projects from 1982 to 1984 to more than
55. Reagan also aggressively put forward the trickle down theory--at home and
abroad--making the wealthy wealthier would, in theory, trickle down resources
to all. But the facts were the opposite. Juhasz points out that in the thirteen
years before Reagan the income divide was shrinking--from 1967 to 1980 the poorest
in the U.S. increased their share of total income by 6.5 percent. Reagan's aggressive
redistribution of wealth to the wealthiest reversed that trend and from 1980
to 1990 the Census reports that the poorest Americans lost more than 10 percent
of the income pie, while the wealthiest gained almost 20 percent.
Reagan and Bush I also dramatically increased trade with Iraq. They knew of
Saddam's human rights atrocities, and that Iraq was on the U.S. terrorism list
but they supplied money, arms, and commercial products to Iraq. They even allowed
U.S. corporations to provide the ingredients for weapons of mass destruction.
See the Arming of Iraq, .
Reagan removed Iraq from the list of terrorist nations in March 1982 to open
up more trade. There was virtually no trade with Iraq in 1981 but by 1989 annual
trade was up to $3.6 billion and had been expected to double in 1990 before
Iraq's invasion of Kuwait. When Saddam refused U.S. efforts to build an oil
pipeline, the strategy changed to the removal of Saddam from office. The first
effort the Gulf War and the aftermath failed to achieve that goal.
The Blueprint for the Economic Takeover of the Middle East
The initial blueprint for the takeover of Iraq came in 1992 in the final year
of the Bush I administration. The 1992 "Defense Planning Guidance"
(DPG) describes America's overall military strategy and represents guidance
from the president and secretary of defense. The 1992 DPG was written by Dick
Cheney, Paul Wolfowitz, Zalamy Khalizad, Scooter Libby, Eric Edelman and Colin
Powell--six men who served Bush I and II, most worked in the Reagan administration
The DPG was written after the success of the 1991 Gulf War, and the failure
to remove Saddam Hussein from power--two years after the fall of the Berlin
Wall and the emergence of the U.S. as a sole superpower. The document, built
on the Carter Doctrine and remained in effect through the Clinton years, states
the goal clearly--the objective of the United States in the Middle East is "to
remain the predominant outside power in the region and preserve U.S. and Western
access to the region's oil." The document describes an aggressive, unilateral,
preemptive military agenda--that includes ad hoc coalitions of countries--rather
than working through organizations like the U.N.
Many in this same group reunited in 1997 to establish the Project for the New
American Century. PNAC restated support for the DNG and sought U.S. military
dominance in the world. They recognize the importance of economic dominance
as a compliment to unrivaled military power. They proposed an annual increase
in military spending of $15 to $20 billion. Being able to act preemptively in
the Middle East gets special attention noting that "the United States has
for decades sought to play a more permanent role in Gulf regional security."
They describe Saddam Hussein as providing an "immediate justification"
for a "substantial American force" in the Middle East. In January
1998 PNAC wrote President Clinton urging the removal of Saddam Hussein from
power noting that Hussein was a threat to "a significant portion of the
world's supply of oil."
Another key group was the Committee for the Liberation of Iraq. The group was
founded in 2002 by Robert Jackson, a Lockheed Martin executive who wrote the
Republican Party foreign policy platform in 2000. He formed the Committee while
at Lockheed and advocated aggressively for the overthrow of Saddam Hussein.
The Chairman of the Committee was former Secretary of State and Bechtel executive,
George Shultz. Shultz wrote a column in The Washington Post in 2002 claiming
the US must "ACT NOW. The danger is immediate. Saddam must be removed."
The article argued heavily for an immediate attack because of weapons of mass
destruction and Saddam's ties to terrorism saying: "If there is a rattlesnake
in the yard, you don't wait for it to strike before you take action in self-defense."
Shultz fanned the flames of fear saying the risk is "tens or hundreds of
thousands killed by chemical, biological or nuclear attack." After the
occupation Lockheed Martin received more than an $11 billion increase in sales
and contracts including $5.6 million for work with the Air Force in Iraq. Bechtel
received nearly $3 billion in Iraq reconstruction contracts.
The pro-military dominance advocates worked in other spheres as well. Paul
Wolfowitz left the Clinton administration and went to Johns Hopkins School of
Advanced International Studies, where he began to advocate for a second Gulf
War--this time including the overthrow of Saddam Hussein. Zalmay Khalilzad,
the current U.S. ambassador to Iraq, went to the Rand Corporation and founded
the Center for Middle Eastern Studies and also served as a paid adviser to Unocal
Oil Corporation (purchased by Chevron in 2005) where he openly advocated for
a close relationship with the Taliban in order to build a 890 mile natural gas
pipeline. In a Washington Post Oped he urged re-engaging the Taliban as "The
Taliban does not practice the anti-U.S. Style of fundamentalism practiced by
Bush II united military and corporate globalization into what Juhasz calls
"one mighty weapon of Empire." She points out that Bush's unilateralism
became evident before 9/11 with the withdrawal from the Anti-Ballistic Missile
Treaty, opposition to the Comprehensive Test Ban Treaty, rejection of the International
Criminal Court and the Biological and Toxin Weapons Convention protocols. Instead
of a new DPG, Bush issued a National Security Strategy which makes U.S. status
as the only superpower a reason to expand U.S. military spending to dissuade
others from challenging U.S. dominance. Bush also put forward that America "will
not hesitate to act alone, if necessary, to exercise our right of self defense
by acting preemptively."
Embedding U.S. Corporations in the Iraq Economy
After George W. Bush became president, those who had planned and advocated
an attack on Iraq to remove Saddam took power. Dick Cheney held meetings under
his "Energy Task Force" with corporations including Halliburton, Bechtel
and Chevron. A draft of the Task Force's recommendations came out to the media
in April 2001. The first recommendation under Strengthening Global Alliances
included a graph of Iraq oil output to the United States in 2000 and said a
goal was to "make energy security a priority of our trade and foreign policy."
The second goal was for the U.S. to "support initiatives by [Mid East]
suppliers to open up areas of their energy sectors to foreign investment."
In 1998 Chevron's CEO said: "Iraq possesses huge reserves of oil and gas--reserves
I'd love Chevron to have access to." His dream was about to be realized.
The well-known drum beat for war with Iraq began and after the success of the
invasion the economic takeover began. The initial U.S. czar of Iraq, Jay Garner
headed the Office of Reconstruction and Humanitarian Assistance. He advocated
for putting Iraqis in charge as soon as possible, with elections held quickly.
Garner was fired by Rumsfeld on the night he arrived in Iraq--fired, he believes
because of these views. He was replaced by neo-con Paul Bremer and the Coalition
Bremer was in charge from May 6, 2003 to June 28, 2004. He had complete legislative,
executive and judicial authority over Iraq. Bremer had four decades of corporate
and government experience, working with Kissinger as managing director of Kissinger
and Associates, as well as working in government with George Shultz and Donald
Prior to the invasion, Bearing Point received a $250 million contract from
US AID to develop a blueprint for the remaking of Iraq's economy into a 'free-market'
economy friendly to U.S. corporate interests. Bremer's job was to implement
the Bearing Point plan. Juhasz points out that while there may have been an
inadequate military plan, there was in fact a plan for the takeover and remaking
of the economy of Iraq.
Bremer had the power to create laws by issuing "binding instructions or
directives." Bremer issued 100 Orders, Juhasz in 2005 interview describes
some of the key orders:
"Order No. 39 allows for: (1) privatization of Iraq's
200 state-owned enterprises; (2) 100% foreign ownership of Iraqi businesses;
(3) "national treatment" - which means no preferences for local
over foreign businesses; (4) unrestricted, tax-free remittance of all profits
and other funds; and (5) 40-year ownership licenses.
"Thus, it forbids Iraqis from receiving preference in the reconstruction
while allowing foreign corporations - Halliburton and Bechtel, for example
- to buy up Iraqi businesses, do all of the work and send all of their money
home. They cannot be required to hire Iraqis or to reinvest their money in
the Iraqi economy. They can take out their investments at any time and in
"Orders No. 57 and No. 77 ensure the implementation
of the orders by placing U.S.-appointed auditors and inspector generals in
every government ministry, with five-year terms and with sweeping authority
over contracts, programs, employees and regulations.
"Order No. 17 grants foreign contractors, including
private security firms, full immunity from Iraq's laws. Even if they, say,
kill someone or cause an environmental disaster, the injured party cannot
turn to the Iraqi legal system. Rather, the charges must be brought to U.S.
"Order No. 40 allows foreign banks to purchase up to
50% of Iraqi banks.
"Order No. 49 drops the tax rate on corporations from
a high of 40% to a flat 15%. The income tax rate is also capped at 15%.
"Order No. 12 (renewed on Feb. 24) suspends "all
tariffs, customs duties, import taxes, licensing fees and similar surcharges
for goods entering or leaving Iraq." This led to an immediate and dramatic
inflow of cheap foreign consumer products - devastating local producers and
sellers who were thoroughly unprepared to meet the challenge of their mammoth
Full interview at: http://democracyrising.us/content/view/180/164/.
The result of these orders was to create an economic environment more favorable
to U.S. corporations than laws in the United States. As a result Iraq corporations,
and Iraqi workers have been excluded from the rebuilding of Iraq. And, the Iraq
reconstruction has failed to provide adequate electricity, food, sewage treatment
and even gasoline--but U.S. corporations have profited handsomely from this
Juhasz describes the impact of U.S. policies on the Iraqi economy:
"The new economic laws have fundamentally transformed Iraq's economy,
applying some of the most radical, sought-after corporate globalization policies
in the world and overturning existing laws on trade, public services, banking,
taxes, agriculture, investment, foreign ownership, media, and oil, among others.
The new laws lock in sweeping advantages to U.S. corporations including greater
U.S. access to, and corporate control of, Iraq's oil. And the benefits have
already begun to flow. Between 2003 and 2004 alone, the value of U.S. imports
of Iraqi oil increased by 86 percent and then increased again in the first
three quarters of 2005."
To further embed a U.S. corporate economy in Iraq, the Iraq Constitution contained
provisions that approve the Bremer Orders. The new Iraqi Constitution specifically
repealed the Transitional Administrative Law, but did no such thing for Bremer's
Orders and therefore they continue to be the law of the land. Thus, U.S. corporations
continue their hold on the reconstruction of Iraq, and U.S. contractors continue
to have full immunity from prosecution in Iraq. Beyond that, several articles
of the Constitution re-enforce the Bremer Orders, e.g. Article 25 requires "modern
economic principles that insure the full investment of its resources, diversification
of its sources and the encouragement and development of the private sector;
Article 26 "guarantees the encouragement of investment in various sectors,"
Article 27 allows for the privatization of state property. Juhasz points out
that modern economic principles means corporate globalization and the market
principles of the Bremer Orders, and private investment means foreign investment.
Further, the Iraq Constitution does nothing to end the military occupation.
Early drafts of the Constitution included provisions that forbid Iraq "to
be used as a base or corridor for foreign troops" and "to have foreign
military bases in Iraq." These provisions were deleted in the final draft.
The Future: Oil Takeover, US Economic Dominance of the Middle East
and the Battle Lines of World War III
The next stage for Iraq is a national oil law that will allow for oil companies
to sign contracts with Iraq that gives them access and control over Iraqi oil.
Juhasz points out that U.S. oil companies were brought into to advise the Bush
administration on Iraq oil policy six months before the invasion. Further, the
State Department's "Future of Iraq Project's Oil and Energy Group,"
which included Ibrahim Bahr al-Ulou,, a U.S. educated oil industry who served
as Iraqi Minister of Oil from September 2003 and again beginning in May 2005,
agreed that Iraq "should be opened to international oil companies as quickly
as possible after the war."
The method being used for U.S. control of Iraq's oil is Production Sharing
Agreements. PSA's favor private companies at the expense of exporting governments
as the entire exploration, drilling and infrastructure-building process are
turned over to private companies in contracts that last twenty-five to forty
years. These contracts lock in the laws at the time the contract is signed.
Thus contracts signed now would have the Bremer Orders as their law no matter
what a future Iraqi government did.
Interim Prime Minister Allawi submitted guidelines for Iraq's new petroleum
law in September 2004. The guidelines put "an end to the centrally planned
and state-dominated Iraq economy" and urged the "Iraqi government
to disengage from running the oil sector." Further, he recommended privatization
stating the industry "should be exclusively based in the private sector,
that domestic wholesale and retail marketing of petroleum products should be
gradually transferred to the private sector, and that major refinery expansions
or grassroots refineries should be built by the local and foreign private sectors."
Finally, Allawi called for all undeveloped oil and gas fields to be turned over
to private international oil companies. This, at a time when only seventeen
of Iraq's eighty known oil fields have been developed. Article 109 of the Iraq
Constitution re-enforces this goal stating that the federal government only
administers existing oil and gas fields. The plans for a new Iraq petroleum
law were made public at a press conference in Washington, DC by Adel Abdul Mahdi,
formerly the Finance Minister, and now a Deputy President of Iraq.
Thus, the goal is about to be realized, control of Iraq's oil and the Iraqi
economy. Iraq will be dominated by U.S. corporations, supported by the U.S.
military. Ending the economic occupation of Iraq may be more difficult than
ending the military occupation. The embedding of laws favoring foreign investment
through the Bremer Orders and the Iraq Constitution will make it difficult to
give Iraq back to the Iraqis.
The U.S. is already moving to gain control of the broader Middle East economy.
The U.S. is aggressively pushing the U.S.-Middle East Free Trade Area. MEFTA
is modeled after NAFTA and seeks to economically tie the region--where 54 percent
of the world's oil reserves exist--to the United States. MEFTA seeks to cover
20 countries in the Middle East and North Africa. MEFTA is being developed through
bi-lateral negotiations with each country, leading to a region-wide agreement.
The U.S. is using the "us against them" strategy--those that oppose
us will be viewed as against us. Part of the negotiation includes Generalized
System of Preferences (GSP) which provide for duty free import into the United
States. Unique in the Middle East is the trilateral nature of these agreements--the
U.S. and another country plus Israel. To get duty free entry to U.S. markets
a certain percentage of goods must go through Israel allowing Israel to take
a piece of the profit.
Iraq is the first economy to fall. The massive U.S. Embassy in Baghdad shows
it will be the base of U.S. operations in the region. Juhasz subtitles her book
"Invading the World, One Economy at a Time." This is consistent with
the views of PNAC, the 1992 DPG, and the 'access of evil' speech. As John Gibson,
the founder of Committee for the Liberation of Iraq and a Lockheed Martin executive,
said in 2003 "We hope Iraq will be the first domino and that Libya and
Iran will follow. We don't like being kept out of markets because it gives our
competitors an unfair advantage." PNAC labeled the countries of greatest
concern 2000 as Iraq, Iran and North Korea--the future 'axis of evil' of George
W. Bush. They placed Iran as the second target saying "Over the long-term,
Iran may well prove as large a threat to U.S. interests in the Gulf as Iraq
President Bush has declared that we are now in World War III. While this World
War is framed in terms of good vs. evil--terrorism against the United States--what
it may really be about is U.S.-corporate and military dominance of the world.
As Juhasz says--the U.S. taking over one economy at a time.
For more information on "The Bush Agenda: Invading the World One Economy
at a Time," by Antonia Juhasz, Harper Collins, 2006 visit www.TheBushAgenda.net.
Juhasz is a leading expert on corporate globalization, formerly the Project
Director of the International Forum on Globalization and currently a visiting
scholar at the Institute of Policy Studies. This is a must read book for those
who want to understand how we have gotten where we are in Iraq, and where the
next phase of 'World War III' will take the U.S.
Kevin Zeese is Director of Democracy
Rising and a candidate for U.S. Senate in Maryland.