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Iraq, Oil, and the Gospel of Greenspan
Former Fed Chairman's One-Liner Kicks Damage Control Into High Gear
By BEN LANDO 09/18/2007 3:19 PM ET
Copies of 'The Age of Turbulence: Adventures in a New World' by former federal Reserve chairman Alan Greenspan are seen in a local book store 17 September 2007 in Washington, DC.
Mandel Ngan/AFP/Getty
Copies of 'The Age of Turbulence: Adventures in a New World' by former federal Reserve chairman Alan Greenspan are seen in a local book store 17 September 2007 in Washington, DC.

WASHINGTON, Sept. 18 (UPI) -- History and reality cap the fallout from former Fed Chairman Alan Greenspan’s one-liner in his new book that the war in Iraq is “largely about oil.”

The mere 20 words in the 500-plus page memoir elicited much media hype and a prompt defense from the Bush administration. Greenspan used the media circuit to qualify -- though not contradict -- what he originally wrote.

“I am saddened that it is politically inconvenient to acknowledge what everyone knows: The Iraq war is largely about oil,” Greenspan wrote toward the end of “The Age of Turbulence: Adventures in a New World,” released Monday. Iraq has the world's third-largest proven reserves and an unexplored potential to rival Saudi Arabia.

“He is wrong. Oil was not and is not a motivation for our actions in Iraq,” the U.S. State Department’s coordinator for Iraq, David Satterfield, said after a speech at the Center for Strategic & International Studies the same day.

White House spokeswoman Dana Perino expressed the president’s “respect” for Greenspan.

"He was excellent at his job,” she said, adding Greenspan “acknowledged that oil was not the president’s motive for our engagement in Iraq.”

In an interview published in the Washington Post Monday, Greenspan said, “I’m not saying that that’s the administration’s motive,” rather ousting Saddam Hussein “was essential.”

Saddam posed a threat to the United States not with weapons of mass destruction -- as was first claimed -- but “Saddam was seeking to get a choke hold on the Straits of Hormuz, where about 18 million barrels a day flow from the Middle East to the industrial world,” Greenspan said Monday on NBC’s "Today."

“I’m not saying that they believed it was about oil. I’m saying it is about oil and that I believe it was necessary to get Saddam out of there,” he said.

In other words, he’s not saying the Iraq war was launched because of Iraq’s oil, but Iraq’s oil was a reason -- along with now discredited allegations Saddam had weapons of mass destruction and links to al-Qaida -- to launch the Iraq war.

“When we went into Iraq, I said it’s all about getting rid of Saddam Hussein,” said Robert Ebel, senior adviser in the Energy Program at CSIS. “Once we got rid of Saddam Hussein, then the day after it would be about oil.”

“That was my impression at that time,” said Ebel, who covered oil issues for the CIA and Interior Department and, in 2002 and 2003, worked with former Iraqi oil officials in the U.S. State Department’s “Future of Iraq” project. “We would go in and expand the production and use that to bring prices down.”

“I know the same allegation was made about the Gulf War in 1991, and I just don’t believe it’s true,” U.S. Defense Secretary Robert Gates said Sunday on ABC’s “This Week.”

“I think that it’s really about stability in the Gulf. It’s about rogue regimes trying to develop weapons of mass destruction. It’s about aggressive dictators,” he said.

“If we had wanted to ensure the stability of oil supplies, we would have left Saddam Hussein in place,” said Danielle Pletka, vice president of Foreign and Defense Policy Studies at the American Enterprise Institute. She said Saddam “posed a potential threat” to U.S. energy supply, “but those were not the reasons articulated in going to war.”

“Our foreign policy is multidimensional,” she said. “Energy security is an important part of our national security,” along with terrorism and other key issues.

History, however, shows oil is often a factor in foreign policy. In May 2003 Deputy Defense Secretary Paul Wolfowitz, attending an Asia security summit in Singapore, was asked why the United States isn’t invading North Korea, which has an affirmed nuclear weapons program.

“The primarily difference -- to put it a little too simply -- between North Korea and Iraq is that we had virtually no economic options with Iraq because the country floats on a sea of oil,” Wolfowitz said.

The 20 words that set off the firestorm were contained in Greenspan’s chapter, "The Long-Term Energy Squeeze." He explains the growth in oil demand is outpacing growth in supply and most of the reserves are in “politically volatile regions.”

“What do governments whose economies and citizens have become heavily dependent on imports of oil do when the flow becomes unreliable?” he asks. “The intense attention of the developed world to Middle Eastern political affairs has always been critically tied to oil security.”

He points to Iran’s nationalization of oil and Egypt taking control of the Suez Canal in the 1950s, and the response from U.S., Britain and other Western governments.

“And whatever their publicized angst over Saddam Hussein’s 'weapons of mass destruction,' American and British authorities were also concerned about violence in an area that harbors a resource indispensable for the functioning of the world economy,” he wrote.

“You have to go back to the Carter doctrine,” said Michael Makovsky, a former special assistant in the Office of Secretary of Defense on Iraqi energy policy from 2002 to 2006 and author of the new book “Churchill's Promised Land: Zionism and Statecraft.”

“It was Jimmy Carter that made interference -- he was referring to the Russians and Afghanistan -- warned of instability and interference of the Persian Gulf and flow of oil there,” Makovsky said.

(He added he “saw no evidence” the war was about oil and was “not aware” that Saddam was trying to control the Straits of Hormuz.)

“U.S. interests in the Persian Gulf are vital to the national security. These interests include access to oil and the security and stability of key friendly states in the region,” wrote President George H.W. Bush in Aug. 20, 1990, National Security Directive 45, titled "U.S. Policy in Response to the Iraqi Invasion of Kuwait."

Saddam claimed Kuwait's oil policy depressed prices and was encroaching on Iraq’s Rumaila oil field.

“The United States will defend its vital interests in the area, through the use of U.S. military force if necessary and appropriate, against any power with interests inimical to our own,” the elder Bush wrote at the time.

Saddam remained in power but was largely handcuffed as U.N. sanctions officially restricted his oil sector development. But Saddam was starting to ink deals with many foreign companies -- Russian, French, Chinese and South Korean -- not Western firms, and the call to oust him grew and, after taking office, the Bush administration's planning began.

Documents released by court order in 2002 from Vice President Dick Cheney's secret Energy Task Force included maps and charts of Iraq's oil infrastructure and projects as well as a list of "Foreign Suitors for Iraqi Oilfield Contracts."

A pre-war oil and energy working group of the U.S. State Department's Future of Iraq project, which CSIS’ Ebel was part of, was formed.

The U.S. Agency for International Development signed a contract with McLean, Va.-based BearingPoint to provide support and assistance in “broad economic reform,” including of the oil sector. BearingPoint no longer has anyone focusing on oil in Iraq; now the U.S. government directly is helping shepherd a controversial oil law through the political process, both behind the scenes and as part of the “benchmarks.”

Greenspan’s one-liner was further vindication to the global anti-war movement that considered oil a prime motive.

“This is Washington’s dirty little secret that Chairman Greenspan has chosen to expose and I hope that his words carry the weight that the 50 million people have been saying ‘this is a war for oil’ for 5 years have not been able to penetrate,” said Antonia Juhasz, fellow at Oil Change International and author of “The Bush Agenda: Invading the World One Economy at a Time.”

“There has always been an argument made and an argument believed that it is dangerous for all sorts of reasons to have had and allow Saddam Hussein to continue to sit on all that oil,” Juhasz said. “Not saying it was a war so ExxonMobil could have access to Iraq’s oil ... but more that we need the oil to be under control to be under a realm of influence.”

“Clearly he’s trying to backpedal,” Juhasz said of Greenspan’s qualifiers to the media. “But he wrote exactly what he meant to say.”

Ben Lando is UPI energy editor (energy@upi.com) This article was re-printed by permission. © Copyright United Press International. All Rights Reserved.

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