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[prez_usa_exile] 2001 Flashback = The United States of Oil

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Apr 24, 2006, 10:18:14 PM4/24/06
The United States of Oil

No administration has ever been more in bed with the energy industry
-- but does that mean Big Oil is calling Bush's shots? First of two parts.

By Damien Cave
Nov. 19, 2001

The Bush administration's ties to oil and gas are as deep as an
offshore well. President George W. Bush's family has been running oil
companies since 1950. Vice President Dick Cheney spent the late '90s
as CEO of Halliburton, the world's largest oil services company.
National Security Advisor Condoleezza Rice sat on the board of
Chevron, which graced a tanker with her name. Commerce Secretary
Donald Evans was the CEO of Tom Brown Inc. -- a natural gas company
with fields in Texas, Colorado and Wyoming -- for more than a decade.

The links don't end with personnel. The bin Laden family and other
members of Saudi Arabia's oil-wealthy elite have contributed mightily
to several Bush family ventures, even as the American energy industry
helped put Bush in office. Of the top 10 lifetime contributors to
George W.'s war chests, six either come from the oil business or have
ties to it, according the Center for Public Integrity.

"There's no denying that this is an oil administration," says Peter
Eisner, managing director of the nonprofit, nonpartisan watchdog group
that conducted the study of Bush's campaign finances. "You can't talk
about the career of any George Bush -- father or son -- without
talking about oil."

But talking is one thing; determining exactly how the ties to the oil
industry affect domestic and foreign policy is another. How much
influence does the oil industry have? Is the U.S. bombing Afghanistan
in part because -- as antiwar critics have claimed -- the industry
wants to clear a path for oil and gas pipelines? Will the Bush
administration steadfastly avoid confrontation with Saudi Arabia --
home of 15 of the 19 suspected hijackers -- because it doesn't want to
upset ExxonMobil and the other oil companies with a deep Saudi stake?
Or, even more intriguingly, could the close ties between Bush and the
Saudis lead to increased U.S. pressure on Israel to create a peace

Or is this too simplistic? Since at least World War II, the oil
industry has often been forced by the U.S. government to serve foreign
policy objectives, rather than the other way around. Presidents have
generally accepted oil's economic significance, its role as the grease
that makes capitalism go. But even the most conservative
administrations have regularly emphasized geopolitical objectives --
Soviet containment, for example -- at the expense of oil industry
interests. Aspects of Bush's energy plan suggest that even this
administration will not break the give-and-take pattern.

The problem, however, is that this pattern, the so-called "cheap oil
strategy" looks more and more like a failure. Foreign oil dependence
has risen over the past decade while now -- with anti-American
sentiment growing in the Arab world -- foreign oil supplies are
looking increasingly insecure. More than ever, some kind of national
policy pushing both conservation and the development of renewable
energy resources seems eminently prudent, if not necessary.

And that's where the current makeup of the Bush administration becomes
crucial -- not because Bush-Cheney and company plan to invade Iraq to
make it safe for ExxonMobil, (although that's not totally beyond the
bounds of possibility) but because these are the last men and women in
the world to expect radical change from on questions related to
energy. Their friends, finances, and worldviews are all oil-drenched.

George W.'s ties to oil don't prove that the industry decides our
every foreign policy move. But they do just about guarantee, for all
practical purposes, that nothing significant will change in American
energy policy. With Bush-Cheney in power, oil addiction is here to stay.

Next page | Oil: It's a Bush family affair

The fusion of oil and politics is a Bush family tradition. For
generations, the Bushes and their friends have been shuttling back and
forth between energy industry boardrooms and Washington's hallowed halls.

Bush's grandfather, Prescott Bush, initiated the pattern. Shortly
before winning a Connecticut Senate seat in 1952 he helped his son
George raise $350,000 to start what would become Zapata Petroleum.

Sen. Bush also regularly looked out for the oil industry and his son's
interests while in Washington. His biggest single favor, according to
Herbert Parmet's book "George Bush: The Life of a Lone Star Yankee,"
came a year into his first Senate term, when he opposed legislation
that would have federalized offshore resources -- including oil -- to
raise money for education. In the name of states' rights and free
enterprise, the bill's defeat helped both the oil companies and gave
Zapata just what it needed to expand. In fact, soon after the
legislation failed, Zapata moved into offshore drilling -- eventually
one of Zapata's most lucrative ventures

George Bush made millions during the '50s and '60s Texas oil boom, and
he also made many friends, most notably James Baker, who became Bush's
company lawyer in 1963 after Zapata merged with Penn to become Pennzoil.

Bush later brought his friends to Washington, first as a
representative in the House, then as head of the Republican National
Committee and finally as vice president and president. He didn't stock
his administration as full of oilmen and women as his son has, but
like Prescott Bush, he didn't mind doing the industry's bidding
either. His most public act for oil came in 1981. While serving as
Ronald Reagan's vice president, he departed from the White House's
official stance and visited Saudi Arabia to plead for an end to
sliding prices. Bush argued that he was simply trying to protect
American security interests by protecting domestic producers, who have
higher costs than their Persian Gulf counterparts. But higher prices
had another benefit: by protecting domestic oil jobs, they helped
shore up support in Texas for what would eventually become his
successful 1988 presidential campaign.

Higher prices also directly helped Bush's son, George W. Bush. George
W.'s oil career started in 1978 -- 12 years after his father first
entered Congress -- when several of his father's friends invested in
his firm, Arbusto ("Bush" in Spanish). Unlike his father, George W.
spent much of his oil career in the red. As Joe Conason pointed out in
Harper's last year before the election, the company's original
investors and others bailed out his firm at least three times. But
after a final act of corporate CPR -- a merger with Harken Energy in
1986 -- Bush's connections to power really paid off. Two years after
the merger, Abdullah Taha Bakhsh, a former director of Saudi Arabia's
income tax department, purchased an 11 percent stake in Harken through
his company Traco International. That same year, Harken won a contract
for oil-drilling in Bahrain.

"Harken had no international experience at the time," says Eisner at
the Center for Public Integrity, which published a detailed account of
Bush's rise to power titled "The Buying of the President: 2000." "It
was their first out of country contract."

Press reports at the time questioned Bahrain's motivations. Even the
normally reserved Wall Street Journal reported in 1991 that the
contract "raises the question of ... an effort to cozy up to a
presidential son."

The Bush family countered that the contract was well deserved.
Regardless, the deal in the Persian Gulf gave Bush a direct tie to the
Saudi elite and set Bush on a suddenly successful path.

"It's not just the matter of a single contract," Eisner says. "It also
has to do with converting Harken into a player that was then converted
into a stake in the Texas Rangers and a run for governor. It's not
incidental. The Bahrain deal is central to Bush's life."

Some experts suggest that it's not necessarily a bad thing to have a
presidential family so steeped in oil knowledge, given the importance
of oil to both national security and the domestic economy. But Bush
has shown a pervasive willingness to let oil interests define energy
and environmental policy. After accepting millions from the industry
during his run for governor, he signed into law tax breaks for state
energy producers, and in 1997, he gave them a hand in writing their
own rules. Upon hearing that Texas' state environmental agency planned
to end an exemption that allowed power plants built before 1971 to
avoid complying with state pollution laws, Bush tapped two people to
come up with an alternative plan: Vic Beghini, an executive with
Marathon Oil Inc. and Ansel Condray, an executive with Mobil.

The plan they came up with initiated a voluntary pollution reduction
program that didn't punish companies for noncompliance and thus
essentially failed. A study by the Environmental Defense Fund
published six months after Bush announced the program revealed that
only three of the 26 companies had actually cut their emissions. Two
years later, under increasing public pressure, Bush signed a bill
forcing power plants to cut their emissions in half by 2003 -- but the
essential exemption, as the industry wanted, still stands.

Next page | The Condoleezza Rice-Chevron-Central Asia connection

The politicos surrounding Bush also have enjoyed warm
government/oil-industry connections. While Bush used his elected
position to help friends in his former industry, Cheney employed past
government connections to improve his own bottom line.

Iraq provides the most dramatic example. Cheney, intentionally or
inadvertently, went against his own edicts in order to pad his
company's profits. He told Sam Donaldson in August 2000 that, as the
head of Halliburton, "I had a firm policy that I wouldn't do anything
in Iraq, even arrangements that were supposedly legal." And yet, as
the Financial Times eventually proved, Cheney oversaw $23.8 million in
sales to Iraq in 1998 and 1999. Cheney, who collected a $36 million
salary before becoming vice president, essentially profited from the
destruction of Iraq that he oversaw as secretary of defense during the
Gulf War. And while the oil-rig and equipment sales were legal -- a
1998 U.N. resolution gave Iraq the right to rebuild its oil industry
-- Cheney's firm sold through European subsidiaries "to avoid
straining relations with Washington and jeopardizing their ties with
President Saddam Hussein's government," according to a November 2000
Financial Times report.

Cheney also helped Halliburton obtain a windfall of U.S. government
loans. He secured $1.5 billion in taxpayer-backed financing for
Halliburton -- a massive increase over the $100 million loan it
received during the five-year period before Cheney took over. And
while Cheney has claimed that Halliburton's rise to power had nothing
to do with his political stature, State Department documents obtained
by the Los Angeles Times suggest that U.S. officials assisted
Halliburton both in Asia and Africa. Even the domestic
defense-contracting arm of Halliburton -- Brown & Root -- saw its
fortune change drastically once Cheney took over. The company booked
$1.2 billion in contracts between 1990 and 1995; with Cheney at the
helm, contract awards spiked to $2.3 billion between 1995 and 2000.

Other Bush administration officials have also profited from past
government experience and influence. Bush's father and his then
Secretary of State James Baker -- the lawyer who fought for Bush
during the Florida election fiasco -- work for the Carlyle Group, an
investment firm that until recently collected investments from the bin
Laden family and other members of the Saudi elite. Reagan's Secretary
of State George Schultz sat on the board of Chevron before the arrival
of Condoleezza Rice.

Rice joined the Chevron board in 1991, after serving for a year on
Bush Sr.'s National Security Council. There, she earned a $35,000
annual retainer, $1,500 for every meeting she attended and stock
options worth hundreds of thousands of dollars, according to SEC
documents. She was reportedly hired for expertise in the former Soviet
states, and long before U.S. planes started dropping bombs in nearby
Afghanistan, she spent much of her time at Chevron working on
prospective deals in the Caspian region. Chevron (with Mobil) already
produces 70 percent of the oil coming out of the Tengiz oil field in
Kazakhstan, according to Ahmed Rashid's book, "Taliban," and the
company has been working hard to secure a pipeline that would allow
more oil to be produced. In 1993, with Rice on the board, the company
pulled together a pipeline project to carry oil to a Russian port on
the Black Sea. Russian opposition eventually postponed the plan
indefinitely but Chevron still holds a 45 percent stake in the project
-- and given the present state of improved Russian-American relations,
many suspect that project will eventually get off the ground.

The slowly improving relations between the U.S. and Iran could also
help Chevron. When negotiations over pipelines from Tengiz broke down
a few years ago, Chevron turned its focus toward the Islamic
theocracy, asking the Clinton State Department for a "swapping"
license. Approval would have allowed oil from Tengiz to be shipped
across the Caspian to Iran while, in exchange, Chevron would be able
to sell an equal amount of Iranian oil that would be shipped from the
Persian Gulf. The proposal was never approved, but given Rice's ties,
many have suspected that Chevron will soon play a larger role in
American foreign policy, whether in Iran or the Caspian.

Critics of the Bush administration point out that a stabilized Caspian
region could benefit Rice's friends at Chevron, and if she returns to
the board, Rice herself. They also argue that maintaining dependence
on Saudi oil could benefit Cheney's old firm and Bush's father, and
ultimately, the president himself when an inheritance comes his way.

But there is no clear evidence, right now, of oil company desires
affecting current U.S. foreign policy. If anything, the terrorist
attacks have reduced the energy industry's influence. Before Sept. 11
Saudi Arabia was reportedly pushing the U.S. to pressure Israel into
Palestine peace concessions and, according to a Newsweek story, Bush
was beginning to comply. But after Sept. 11, the chance that the U.S.
would accede to Saudi requests evaporated, given the numerous Saudi
connections to the attacks.

In that sense, the trajectory of oil influence over foreign policy has
continued upon its historical path. A review of the evidence suggests
that over time, the oil industry has progressively lost power. But
that still doesn't mean that the current administration is likely to
do anything radical to alter U.S. dependence on foreign oil -- barring
the unlikely event of Bush pulling a Nixon-visit-to-China shock, and
using his oil ties to force a real commitment to renewable energy and

Tuesday: George Bush may not be a puppet, but he's no groundbreaker

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