@@ Oily Americans @@
Arash
May 19, 2003
The Oily Americans
Why The World Doesn't Trust The U.S. About Petroleum: A History Of Meddling
For more than a half-century, American foreign policy dealing with oil has
typically been manipulative and misguided, often both at the same time. The
pattern of intrigue has ranged from U.S. officials' secretly writing tax
laws in the 1950s (so the Saudi royal family could collect more money from
the sale of its oil and American companies could write off the added
payments on their tax returns) to overthrowing a government that showed too
much independence in handling its oil sales. To illustrate the dark side of
American oil policy, we offer two tales, stitched together from declassified
government documents and oil-industry memos, involving a pair of Iraq's
neighbors, Iran and Afghanistan.
The first one begins with the rise of a member of Iran's parliament,
Mohammed Mossadegh, an impassioned speaker and popular politician who had
long chafed at British domination over his country's oil. The Anglo-Iranian
Oil Co., partly owned by the British government and a predecessor of today's
British Petroleum, held the concession for all of Iran. It set production
rates and prices as well as Iran's token share of the proceeds. Mossadegh
sought a fifty-fifty sharing agreement, which was then becoming the common
arrangement between other oil-producing countries and U.S. companies. The
British refused. In 1951 Mossadegh successfully pushed to nationalize
Anglo-Iranian, became Iran's Premier and established the National Iranian
Oil Co.
The British boycotted Iranian oil, and the U.S. joined them. No
international oil company would buy Iran's oil. The Iranians had no
independent system for delivering it. They had no technical skills to
produce it, since the British had long relegated Iranian workers to menial
jobs. Even when Mossadegh threatened to flood the world with half-price oil,
he was able to deliver only a trickle because of the economic blockade. As
the Iranian government withered, the Eisenhower Administration cut off
foreign aid. Unrest followed, and angry citizens took to the streets. This
prompted suggestions that the communists were coming, even though Mossadegh
was as anti-Soviet as he was anti-British. On Aug. 19, 1953, after the
deaths of about 300 people in street riots, the 71-year-old Premier was
overthrown. He was replaced by a retired army general, Fazollah Zahedi. The
American-friendly Shah, Mohammed Reza Pahlavi, who had earlier fled the
country, returned triumphantly, resumed the throne and reasserted his
control.
Media accounts of the coup were seemingly straightforward. The Washington
Post reported that Iran had been saved from falling into communist hands and
that the communists were blaming Brigadier General H. Norman Schwarzkopf
"for alleged complicity in the coup." The paper said Schwarzkopf, whose
namesake son would lead U.S. forces nearly a half-century later as they
drove the Iraqi military out of Kuwait, had visited Iran "but only to see
friends, the State Department said." TIME reported: "This was no military
coup, but a spontaneous popular uprising."
It was anything but. When Mossadegh delayed settling with Anglo-Iranian on
the takeover of the company, the British approached the CIA with a plan to
remove the Premier and get Britain's oil back. The British could not do it
alone, since they had left Iran. Allen Dulles, the CIA director, and his
brother John Foster Dulles, the Secretary of State, agreed. The Dulles
brothers assigned the task of overseeing the clandestine venture to Kermit
Roosevelt, a longtime intelligence operative and the grandson of President
Theodore Roosevelt.
In the months leading up to the coup, Roosevelt spent much of his time in
Tehran, coordinating efforts of CIA agents and Iranian sympathizers. To
ensure the cooperation of a then indecisive Shah, the CIA turned to one of
his old friends, General Schwarzkopf, who in 1942-48 worked with an
internal-security force under palace command that helped the Shah maintain
rule.
The CIA's fingerprints were everywhere. Operatives paid off Iranian
newspaper editors to print pro-Shah and anti-Mossadegh stories. They
produced their own stories and editorial cartoons and published fabricated
interviews. They secured the cooperation of the Iranian military. They
spread antigovernment rumors. They prepared phony documents to show secret
agreements between Mossadegh and the local Communist Party. They masqueraded
as communists, threatened conservative Muslim clerics and even staged a sham
fire-bombing of the home of a religious leader. They incited rioters to set
fire to a pro-Mossadegh newspaper. They stage-managed the appearance of
Mossadegh's successor, General Zahedi, whose personal bank account they
fattened.
With Mossadegh gone, British Petroleum returned to the Iranian oil fields.
Some newcomers tagged along. They included five American companies, the
ancestors of today's ExxonMobil and ChevronTexaco. Meanwhile, the U.S.
government opened the foreign-aid spigot. Over the next 25 years, more than
$20 billion in U.S. taxpayers' money would pour into a decidedly
undemocratic Iran, most of it military aid and subsidized weapons sales for
the Shah's armed forces and SAVAK, his secret police. As for American oil
companies, they would extract 2 billion bbl. of oil from their new Iranian
fields. But the access came with a stiff price tag in U.S. government
dollars and Iranian lives. And the Shah's oppression led to the
establishment of the first American-hating Islamic republic, when the
Shi'ite Muslim clerics duped by the CIA overthrow of Mossadegh masterminded
their own takeover in 1979, installing the Ayatullah Ruhollah Khomeini. For
two decades and counting, American oil companies have been barred by the
U.S. government from doing business with Iran. Now the Shi'ites are seeking
to turn Iraq into an Islamic republic.
But all this was merely the overture to the next U.S. foreign-policy
decision rooted in oil. This time the players were the Soviet Union and
Afghanistan. In 1977 the CIA sounded an alarm on the Soviets' faltering
energy prospects in a secret 14-page memo titled "The Impending Soviet Oil
Crisis." The agency concluded that the Soviet Union, which had been
self-sufficient in oil, was running out and would soon become a major
importer. "During the next decade," the report said, "the U.S.S.R. may well
find itself not only unable to supply oil to Eastern Europe and the West on
the present scale, but also having to compete for OPEC oil for its own use."
Two years later, the Soviets invaded Afghanistan. President Jimmy Carter,
concluding that the Soviet army was passing through Afghanistan to seize the
Middle East oil fields, sounded a warning: "An attempt by any outside force
to gain control of the Persian Gulf region will be regarded as an assault on
the vital interests of the United States of America, and such an assault
will be repelled by any means necessary, including military force."
When Ronald Reagan replaced Carter in the White House a year later, he
turned up the heat. Administration officials insisted that the Soviet
Union's interest in Afghanistan was a prelude to a communist takeover of the
Middle East oil fields. The CIA report on the Soviets' running out of oil
gave the Reagan Administration the ammunition to secure more money from
Congress to arm Afghan insurgents and establish a permanent military
presence in the Persian Gulf. Soon after Reagan took office, Defense
Secretary Caspar Weinberger announced that it was essential for the U.S. to
establish bases in the Persian Gulf region "to act as a deterrent to any
Soviet hopes of seizing the oil fields." The Reagan Administration began
building those bases, sold sophisticated AWACS planes to Saudi Arabia, and
conducted joint military exercises with Egypt and other countries. And the
CIA began one of its longest and most expensive covert operations, supplying
billions of dollars in arms to a collection of Afghan guerrillas fighting
the Soviets. The arms shipments included Stinger missiles, the
shoulder-fired, antiaircraft weapons that were used with deadly accuracy
against Soviet helicopters and that are now in circulation among terrorists
who have fired such weapons at commercial airliners. Among the rebel
recipients of U.S. arms: Osama bin Laden.
At the same time the U.S. was moving into the Persian Gulf militarily and
supplying Afghan rebels, all based on a faulty CIA oil assessment, it was
also secretly supporting Saddam Hussein. The Reagan Administration remained
neutral after Iraq's invasion of Iran in September 1980, but as the war
progressed and it appeared that Iran might emerge victorious, the U.S.
secretly backed Iraq, according to declassified government documents. That
began in 1982, when the State Department removed Iraq from its list of
countries supporting terrorism. According to a General Accounting Office
report, this "made Iraq eligible to purchase aircraft, helicopters, and
national security controlled items for military end use." Yet another
declassified State Department document makes clear that the Reagan
Administration intended to implement regulations that would lift
restrictions on exports "to both Iran and Iraq of five chemicals that could
be used in chemical weapons production." This made sense, as the U.S. was
peddling arms to Iran as well via the Iran-contra conduit.
The root of all this folly was the U.S. government's officially sanctioned
version of faltering Soviet oil production, which was at odds with reality.
To be sure, Soviet oil production was trailing off. But the Soviets were not
running out of oil. Nor would they become dependent on imports. Rather, they
were using primitive technology and needed to make investments in their
infrastructure. In fact, Russia today is the world's second largest
producer, after Saudi Arabia. Instead of becoming a major buyer of middle
east oil, as the cia had warned, Russia ships 3 million bbl. A day to other
countries, including the U.S.
As all this makes clear, the former Soviet Union was not running out of oil.
Neither is the world. The one exception: the U.S., which was the Saudi
Arabia of the first half of the 20th century, is finally running out. As a
result, thanks in part to American policy that put an emphasis on foreign
intervention rather than domestic conservation, Americans are more dependent
than ever on imported oil.
www.time.com/time/magazine/article/0,9171,1101030519-450997,00.html