[Peace-discuss] Air Strikes In Iraq Largely About Oil

Fri Aug 15 08:12:07 EDT 2014

  Air Strikes In Iraq Largely About Oil

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Educate! <http://www.popularresistance.org/category/educate/> Foreign 
Policy <http://www.popularresistance.org/tag/foreign-policy/>, Iraq 
<http://www.popularresistance.org/tag/iraq/>, Oil 
<http://www.popularresistance.org/tag/oil/>, Wars and Militarism 
<http://www.popularresistance.org/tag/wars-and-militarism/>
By John B. Judis, www.newrepublic.com 
<http://www.newrepublic.com/article/119035/us-attack-islamic-militants-all-about-iraqs-oil>
August 14th, 2014
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Note: Two articles below make the point that the US air strikes are 
primarily about protecting the US friendly undeclared Kurdish Oil State.

    The U.S. Airstrikes in Northern Iraq Are All About Oil

By John B. Judis <http://www.newrepublic.com/authors/john-b-judis>

Last night, President Barack Obama announced 
<http://www.whitehouse.gov/the-press-office/2014/08/07/statement-president> 
that he was authorizing American airtstrikes in Iraq. He described 
<http://www.whitehouse.gov/the-press-office/2014/08/07/statement-president> 
his intervention as a "humanitarian effort to help save thousands of 
Iraqi civilians who are trapped on a mountain" and as an effort "to 
protect our American personnel." One word that he didn't mention is 
"oil," but it lies near the center of American motives for intervention.

The United States is conducting airdrops to aid the Yazidis who have 
fled the advance of Islamic State militants, but it is conducting 
airstrikes around Erbil, which is to the east. There are American 
consular personnel in Erbil, but they could be evacuated if necessary. 
What Obama left unsaid was that Erbil, a city of 1.5 million, is the 
capital of the Kurdish regional government and the administrative center 
<http://www.cwckiog.com/> of its oil industry, which accounts for about 
a quarter of Iraq's oil. The Kurds claim that if they were to become an 
independent state, they would have the ninth-largest oil reserves in the 
world. And oil wells are near Erbil.

If the Islamic State were to take over Erbil, they would endanger Iraq's 
oil production and, by extension, global access to oil. Prices would 
surge at a time when Europe, which buys oil from Iraq, has still not 
escaped the global recession. Oil prices have already risen in response 
to the Islamic State's threat to Erbil, and on Thursday, American oil 
companies Chevron and Exxon Mobile began evacuating 
<http://online.wsj.com/articles/oil-companies-evacuate-staff-from-iraqi-kurdistan-1407512928> 
their personnel from Kurdistan. But oil traders are predicting that 
American intervention could halt the rise. "In essence we find U.S. air 
strikes more bearish than bullish for oil as the act finally draws a 
line for IS and reinforces both the stability in south Iraq and in 
Kurdistan," Oliver Jakob, a Swiss oil analyst, told 
<http://uk.reuters.com/article/2014/08/08/markets-oil-idUKL4N0QE1CI20140808> 
/Reuters/.

In portraying American intervention in Iraq as a purely humanitarian 
effort, Obama is following the script he read from in Libya, when he 
justified American intervention as an effort to prevent a massacre in 
Benghazi. In a March 28, 2011 address 
<http://www.whitehouse.gov/the-press-office/2011/03/28/remarks-president-address-nation-libya> 
to the nation, Obama painted the American intervention as a response to 
"brutal repression and a looming humanitarian crisis." Oil was not 
mentioned, even though Libya was the world's sixteenth-largest oil 
producer in 2009 and a major supplier to Europe. But oil was most likely 
involved, as became clear when, after preventing a massacre in Benghazi, 
the United States and its coalition partners stuck around to topple the 
regime of Muammar Qaddafi. If the Obama administration wanted to prevent 
the world's peoples from brutal dictators and repressive regimes or from 
takeovers by terrorist groups, there are other countries besides Libya 
and Iraq where it could intervene. What distinguishes these two 
countries is that they are major oil producers.

The United States should worry about the global oil supply. It is 
important for global economic and political stability. And having a 
significant chunk of it fall into the hands of a group like the Islamic 
State should certainly be a concern. But if Obama is worried about the 
world's oil supply, then he should say so forthrightly and not leave 
himself in a position where he will be unable to justify or explain 
further intervention after the airdrops to the Yazidis are completed. 
And the administration should also have a plan for making sure that in 
sending out the Air Force, it will actually end a dire threat to Iraq's 
oil production and put Iraq back on its feet. In Libya, the U.S. and its 
partners succeeded in getting rid of Muammar Qaddafi, but not in 
resolving the country's humanitarian crisis or in keeping its oil 
flowing. Oil production has plummeted as Libya has been plunged into 
anarchy after Qaddafi's fall. The challenge in Erbil and Iraq is even 
more daunting.

    Oil a key motive for U.S. air strikes in Iraq

This week's U.S. air strikes in northern Iraq are being accompanied with 
an undertow of "it's all about oil" talk.

Take for example, Columbia School of Journalism Dean Steve Coll's 
observation in the New Yorker, that "Obama's defense of Erbil (capital 
of the semiautonomous Kurdish region) is effectively the defense of an 
undeclared Kurdish oil state."

It's no secret that Iraqi Kurdistan has an abundance of oil reserves, 
nor that U.S. oil companies, like San Ramon's Chevron Corp., are busy 
exploring there. Chevron has three "production sharing contracts" with 
the Kurdish government, covering a combined 444,000 acres, north of 
Irbil, where it's in the early testing and drilling stage. And it likes 
what it sees.

"We are very encouraged with the initial results in the Kurdistan region 
of Iraq," the company said in its earnings call two weeks ago. 
"Exploratory drilling and logging has indicated multiple pay zones in a 
large structure ... the formations have demonstrated the ability to 
deliver high liquid flow rates."

Days after the earnings call, the extremist Islamic State, which had 
been swallowing swathes of Iraqi territory to the south, were suddenly 
close to the gates of Irbil. Chevron and other energy multinationals, 
which had been well out of harm's way, began evacuating personnel.

Asked for an update, a Chevron spokesman said Monday, "We continue 
monitoring the situation. We remain in regular contact with the 
Kurdistan Regional Government and are dedicated to supporting the 
(Kurdistan Region of Iraq) in developing its natural resources."

"Could it affect operations? Civil wars always do," said Amy Myers 
Jaffe, a global energy policy expert at UC Davis. "But the level of 
danger appears reduced, now the U.S. is engaged, hopefully."

Oil traders agree. "In essence we find U.S. air strikes more bearish 
than bullish for oil (prices) as the act finally draws a line for IS 
(Islamic State) and reinforces both the stability in south Iraq and in 
Kurdistan," Oliver Jakob, a Swiss oil analyst, told Reuters.

So, sure -- setting aside for the moment that without U.S. intervention, 
the Yazidi minority group would be worse than they already are -- much 
of this is about oil. Iraq, north and south, has enormous quantities of 
it. And -- sorry -- the world will depend on oil to help fill its energy 
needs far into the future.

Ironically, for Chevron, it would not be the end of the world if 
Kurdistan was forced offline. "It could be a very profitable place, but 
it's small for Chevron," said Jaffe, referring to the company's much 
larger oil holdings in Venezuela and the Saudi Arabia-Kuwait neutral 
zone, and natural gas in Australia.

A potentially bigger worry for both Chevron and the Kurds, she said, 
could be if Iraq did stabilize and unite, with Kurdistan under its 
umbrella. "It could be a problem for Kurds who saw the rest of Iraq as a 
failed state, and have had freedom of movement for its oil."

For Chevron, she added, a new arrangement in Iraq could entail the 
renegotiation of contracts it has with the Kurds, which by the way, 
Baghdad refused to recognize. "A federal government might want to 
revisit its export policy," she said.

Jaffe thinks that's less likely, and notes that Kurdistan's oil pipeline 
via Turkey continues to pump out oil -- 120,000 barrels per day.

Andrew S. Ross is a San Francisco Chronicle columnist. E-mail: 
bottomline at sfchronicle.com <mailto:bottomline at sfchronicle.com> Blog: 
http://blog.sfgate.com/bottomline Twitter: @andrewsross 
<http://twitter.com/andrewsross>

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