By Chris Sanders –

              Originally posted at The Hemingway Table,
              Le Metropole Café –, October 8, 2002.

              “The international oil system started out as a setup to control a commodity,
              oil. Over the years, and most recently under the direction of the United States,
              that has metamorphosed into a form of people control.” - Stephen Pelletiere,
              Iraq and the International Oil System, Praeger 2001. pp. 223-4

              “The United States is a very special country in that when we maintain this
              position of military strength that we have now, we do it in support of a
              balance of power that favours freedom.” -US National Security Advisor
              Condoleezza Rice in interview on News Hour with Jim Lehrer

              “A coup consists of the infiltration of a small but critical segment of the state
              apparatus, which is then used to displace the government from its control of
              the remainder.” - Edward Luttwak, Coup d’État, A Practical Handbook, Harvard
              University Press, 1979 p.27

              RULE NUMBER 1:

              Her Majesty’s government has finally released its long ballyhooed and much
              awaited report on Iraqi weapons of mass destruction. Helpfully entitled Iraq’s
              Weapons of Mass Destruction its PDF version came with two title pages just in
              case we missed the first one. Actually, on reading the document, one rather
              thinks this just another example of the careless, slipshod, and at times downright
              mendacious character of the rest of the document. There is no smoking gun and
              no evidence that the Iraqi government has or plans to use so-called weapons of
              mass destruction. What one does find is a repetitive catalogue of over fifty pages
              of charges, assertions and bombast designed to frighten and dissimulate. What it
              did to me was scare me out of my wits. If this is the best that the British and
              American governments can do to justify escalating the existing state of war
              against Iraq to an outright invasion, then god help us.

              Striking in the discussion of the Anglo-Israeli-American assault on Iraq is the
              absence of historical context. Apparently the only context necessary is the sort
              of glib and meaningless chatter offered up by president Bush’s advisors such as
              Condi Rice. In fairness to Rice, however, opposition to the war can be similarly
              glib and blinkered.

              Although much opposition to an invasion of Iraq centres on the oil question, this
              itself is curiously devoid of context. America, on this line of reasoning, intends
              to invade Iraq simply to enrich the oil barons of Texas. Superficially plausible,
              this is at best only partly true. This makes even less sense when one considers
              that the US already had access to Iraqi production. It is the biggest customer for
              Iraqi "oil for aid" crude.

              RULE NUMBER 2:
              RIG THE MARKET

              The oil market has always operated as a cartel. The specifics vary from country to
              country, but the nature of oil as a physical commodity has always meant that
              long-term profitability depends on regularity of supply and output. John D.
              Rockefeller’s Standard Oil was the first of the cartels, built upon the insight that
              refining and marketing control was essential to regulate output and to keep prices
              stable. The extremely high capital costs of transportation and refining
              infrastructure need to be depreciated over long periods. This in turn means that
              cash flow needs to be stable.

              Without this control, the industry would stagger from boom to bust and the
              needed investment in infrastructure could not take place.

              As the world approaches the point at which half of the total endowment of
              extractable oil has been consumed, the point is also approaching at which the
              OPEC 5 countries of the Persian Gulf littoral will produce more than half of
              total world production. It is inconceivable in the real world that the world’s major
              power would view this with detachment given that it is also the world’s most
              profligate user of oil. The obsession of the Americans and the British with
              Saddam Hussein has perhaps more to do with the fact that he is a nationalist than
              it does with their ability to purchase his oil. After all, he does need to sell it. If
              this were simply a matter of getting oil, the market would do the job. What is
              intolerable is that a significant pool of petroleum is under the control of what
              amounts to an independent producer with a political agenda of his own. That
              threatens volatility, and volatility threatens profits. But even more important,
              every major power today with the exception of Russia is a net importer of oil.
              Control of the Middle Eastern fields and access to and from them confers an
              advantage far more important than the profits of Halliburton or Exxon. It means
              control of the world.

              RULE NUMBER 3:

              The history of modern Iraq is basically the history of the relationship between the
              inhabitants of that’s country and the oil industry. Iraq has never enjoyed the
              stability of the industry’s long-term relationship with the ruling Al- Saud in Saudi
              Arabia. It has consequently, not enjoyed investment in the extraction, transport
              and refining infrastructure that Saudi Arabia has. Nor has it enjoyed the relative
              political stability of Saudi Arabia. The British maintained control of their Iraqi
              creation during the mandate period by installing a puppet ruler and then
              supporting the numerous tribal groups in the country against him. Today we have
              come full circle. It was the British in Iraq who pioneered the use of airpower to
              chastise the remote and the recalcitrant. Seventy years on, British and American
              bombers are at it again.

              It is not merely a coincidence, I think, that British interest in the Persian Gulf and
              Iraq dates from the early twentieth century when two things happened:
              commercially exploitable quantities of oil were discovered there and the British
              navy made the decision to convert its warships from coal to oil. Nor is it a
              coincidence that the British decision to support a homeland for Jews in Palestine
              also dates from the same period. Situated on the Eastern Littoral of the
              Mediterranean, Palestine flanks the approaches to the Suez Canal, and offers
              access from the hinterland to the sea through the port of Haifa.


              The role of oil in the First World War is an arcane but important subject. It
              wasn’t until Germany was completely cut off from access to petroleum that it
              capitulated. In 1916, with the war raging, Britain and France signed the
              Sykes-Picot Agreement dividing the Middle East into zones of direct control and
              zones of influence. A glance at the map is revealing. Their respective zones of
              influence divided the oil rich northern sector of modern Iraq around Mosul and
              Kirkuk. Following the war, the San Remo agreement ratified French control of
              Lebanon and Syria, effectively shutting France out of the biggest oil producing
              regions. Britain was granted Palestine as a mandate, and established puppet
              regimes in Baghdad and Amman, redrawing the map of the area to suit itself. With
              her army based in Egypt and Palestine, access to India via the Suez Canal was
              guaranteed. The oil to fuel her navy, whose job it was to protect those sea-lanes,
              was assured by her control of the Persian Gulf.

              RULE NUMBER 4:

              Politically, direct control over such a vast area by a country the size of Britain
              was impossible. Indirect control, however, was feasible using client regimes.
              Destabilisation of local political society ensured that the locals were too busy
              with other problems to have the time to mobilise against the British. In this
              context British sponsorship of Zionist immigration to Palestine is easy to
              understand. Britain deliberately encouraged the establishment of colonies of
              European settlers dependent on her whose presence and growing numbers
              undermined the nascent Palestinian nationalist movement. Zionist settlement
              proved to be a mixed blessing for the British. While certainly successful in
              diverting local attention, it has also proved to be a spur to local nationalism. And
              it is also true that one has to get one’s oil to the market. When for example, plans
              were made to transport oil from Abqaiq in Saudi Arabia to the Mediterranean, it
              was envisioned that the port of Haifa in mandate Palestine would serve as the
              Western terminus. Israeli independence in 1948 changed that.

              Instead the Tapline, as it came to be called, transited Jordan and Syria across the
              Golan Heights to end at Sidon in southern Lebanon. By this time of course,
              America had supplanted Britain as the region’s premier power, inheriting control
              of the oil, but also the problem of Palestine. At about the same time that the
              Israelis cut the Tapline by occupying the Golan in 1967, Britain completed her
              withdrawal from the world beyond Suez and left her last Middle Eastern base in

              RULE NUMBER 5:

              If the United States is so special, as Rice and others in Washington seem to think,
              it is more because of its similarity to the late British Empire than endowment
              uniquely American. But the megalomania of those such as Rice, Cheney and
              Rumsfeld is informed by the knowledge that they outspend the next twenty
              nations combined on arms and are well ahead in the race to put surface targetable
              weapons into the "high ground" of space. In conventional military terms, this will
              be analogous to being the only air power. Historically, it is eerily reminiscent of
              the naval arms race set off a century ago by Britain’s fleet conversion to oil.

              But Britain also emerged from two World Wars burdened with foreign debt,
              especially from India and Egypt. It had a globally deployed military with
              commensurate commitments. The British had tried to insulate themselves from
              the inevitable consequences of this by the creation of a sterling zone that forced
              creditors to accept sterling in settlement of debts. This invites comparison to
              modern America. The United States may have been the victor of the Cold War,
              but was forced to go deeply into debt to win. That is has been able to finance this
              has been thanks to her ability to mobilise her own and foreign capital, and this in
              turn has depended on the cooperation of her allies, much the same as Egypt and
              India cooperated with Britain. The result has been the creation of an international
              monetary regime analogous to the British Sterling Area. Unlike the Sterling Area,
              however, no one is outside the dollar system. Thus the US has achieved what
              Keynes and the British could only dream of in the 30s and the 40s: a global
              closed international monetary system in which all debts are settled in the
              currency of the debtor.


              The political logic of this seems plain enough to me: In order to build
              overwhelming military power, one has to borrow. In order to carry that debt, one
              has to have overwhelming military power, else one’s creditors ask for their
              money back. In this connection, Rice continued:

              "…if it comes to allowing another adversary to reach military parity with us in the
              way that the Soviet Union did, no, the United States does not intend to allow that
              to happen…because when that happens, there will not be a balance of power that
              favours freedom…there will be a balance of power that keeps part of the world in
              tyranny the way the Soviet Union did."

              Such self-referential and tautological reasoning ironically evokes what else, but