With the globe being rocked by multiple shocks, the disaster capitalists stateside have been busy in the last 10 months.
But their dirty deeds are amaterish compared with what is unfolding at Iraq’s oil ministry. It started with no-bid service contracts announced for ExxonMobil, Chevron, Shell, BP and Total. (They have yet to be signed but are still on course.) Such contracts usually go to oil service companies, not to the oil majors.
But as London-based oil expert Greg Muttitt points out, the contracts make sense only in the context that the oil majors have insisted on the right of first refusal on subsequent contracts handed out to manage and produce Iraqi oil.
One week after the no-bid service deals were announced, the world caught its first glimpse of the real prize. After years of backroom arm-twisting, Iraq is officially flinging open six of its major oil fields, accounting for around half of its known reserves, to foreign investors.
According to Iraq’s oil minister, the long-term contracts will be signed within a year. While ostensibly under control of the Iraq National Oil Company, foreign firms will keep 75 per cent of the value of the contracts, leaving just 25 per cent for their Iraqi partners.
That kind of ratio is unheard of in oil-rich Arab and Persian states, where achieving majority national control over oil was the defining victory of anti-colonial struggles.
According to Muttitt, the assumption until now was that foreign multinationals would be brought in to develop brand new fields in Iraq – not to take over ones that are already in production and therefore require minimal technical support. “The policy was always to allocate these fields to the Iraq National Oil Company,” he told me. This is a total reversal of that policy.
So what makes such lousy deals possible in Iraq, which has already suffered so much? Ironically, it is Iraq’s suffering. The logic goes like this: Iraq’s oil industry needs foreign expertise because of years of punishing sanctions, the invasion and continuing violence.
That’s where the new no-bid contracts come in: they will raise more money, but Iraq has become such a treacherous place that the oil majors must be induced to take the risk of investing. Thus, the invasion of Iraq neatly creates the argument for its subsequent pillage. The country is being forced to sell 75 per cent of its national patrimony to pay the bills for the U.S.’s illegal invasion and occupation.
Iraq isn’t the only country in the midst of an oil-related stickup.
The George W. Bush administration is busily using a related crisis – the soaring price of fuel – to revive its dream of drilling in the Arctic National Wildlife Refuge (ANWR). “Congress must face a hard reality,” he said on June 18. “Unless members are willing to accept gas prices at today’s painful levels – or even higher – our nation must produce more oil.”
This is the president as Extortionist in Chief, with gas nozzle pointed to the head of his hostage – which happens to be the entire U.S.
Despite the “Drill Here. Drill Now. Pay Less” bumper stickers, drilling in ANWR would have little discernible impact on actual global oil supplies, as its advocates well know.
The argument that it could nonetheless bring down oil prices is based not on hard economics but on market psychoanalysis: drilling would “send a message” to the oil traders that more oil is on the way, which would cause them to start betting down the price.
But it will never work. If there is one thing we can predict from the oil market’s recent behaviour, it’s that the price is going to keep going up regardless of what new supplies are announced.
Take the massive oil boom under way in Alberta’s notorious tar sands.
With little fanfare, oil from this largely untapped source has been pouring into the American market. (The North American Free Trade Agreement contains a provision barring Canada from cutting off supply to the U.S.) Canada is now the largest supplier of oil to the U.S., surpassing Saudi Arabia.
Between 2005 and 2007, Canada increased its exports to the States by almost 100 million barrels. Yet despite this significant increase in secure supplies, oil prices have been going up the entire time. What is driving the ANWR push is not facts but pure shock doctrine strategy.
Intimately connected to oil prices is the global food crisis. Not only do high gas prices drive up food costs, but the boom in agro-fuels has blurred the line between food and fuel. Several Latin American nations have been pushing to re-examine the shift to agro-fuels and to have food recognized as a human right.
U.S. Deputy Secretary of State John Negroponte has other ideas.
In a speech touting the U.S. commitment to emergency food aid, Negroponte called on countries to lower “export restrictions and high tariffs” and eliminate “barriers to innovative plant and animal production technologies, including biotechnology.”
This was an admittedly more subtle stickup, but the message was clear: impoverished countries had better crack open their agricultural markets to American products and genetically modified seeds, or they could risk having their aid cut off.
GM crops have emerged as the cure-all for the food crisis, at least according to the World Bank and the European Commission president.
And, of course, agribusiness. The problem with this argument, at least for now, is that there is no evidence that GMOs increase crop yields, and they often decrease them.In recent months, Monsanto, Syngenta and BASF have been frenetically buying up patents on so-called “climate ready” seeds – plants that can grow in earth parched from drought and salinated from flooding. In other words, plants built to survive a future of climate chaos.
We have seen patented AIDS medications fail to treat millions in sub-Saharan Africa. Why would patented “climate ready” crops be any different?
Privatizing Iraq’s oil, ensuring global dominance for GM crops, lowering the last of the trade barriers and opening the last of the wildlife refuges…. Not so long ago, those goals were pursued through polite trade agreements. Now this discredited agenda is forced to ride on the backs of serial crises, selling itself as lifesaving medicine for a world in pain.