How Bush Won The War In Iraq -- Really!

The neo-con idea was to break up and sell off Iraq's oil fields, ramp up production, flood the world oil market -- and thereby smash OPEC and with it, the political dominance of Saudi Arabia.

General Jay Garner also confirmed the plan to grab the oil. Indeed, Garner told me that Secretary of Defense Donald Rumsfeld fired him, when the General, who had lived in Iraq, complained the neo-con grab would set off a civil war. It did. Nevertheless, Rumsfeld replaced Garner with a new American viceroy, Paul Bremer, a partner in Henry Kissinger's firm, to complete the corporate takeover of Iraq's assets -- "especially the oil."

But that was not to be. While Bremer oversaw the wall-to-wall transfer of Iraqi industries to foreign corporations, he was stopped cold at the edge of the oil fields.

How? I knew there was only one man who could swat away the entire neo-con army: James Baker, former Secretary of State, Bush family consiglieri and most important, counsel to Exxon-Mobil Corporation and the House of Saud.

(One unwitting source was industry oil-trading maven Edward Morse of Lehman/Credit Suisse, who threatened to sue Harper's Magazine for my quoting him. Morse denied I ever spoke with him. But when I played the tape from my hidden recorder, his memory cleared and he scampered away.)

Weirdly, I was uncovering that the US oil industry was using its full political mojo to prevent their being handed ownership of Iraq's oil fields. That's right: The oil companies did NOT want to own the oil fields -- and they sure as hell did not want the oil. Just the opposite. They wanted to make sure there would be a limit on the amount of oil that would come out of Iraq.

There was no way in hell that Baker's clients, from Exxon to Abdullah, were going to let a gaggle of neo-con freaks smash up Iraq's oil industry, break OPEC production quotas, flood the market with six million barrels of Iraqi oil a day and thereby knock its price back down to $13 a barrel where it was in 1998.

Big Oil simply could not allow Iraq's oil fields to be privatized and taken from state control. That would make it impossible to keep Iraq within OPEC (an avowed goal of the neo-cons) as the state could no longer limit production in accordance with the cartel's quota system..

The problem with Saddam was not the threat that he'd stop the flow of oil -- he was trying to sell more. The price of oil had been boosted 300 percent by sanctions and an embargo cutting Iraq's sales to two million barrels a day from four. With Saddam gone, the only way to keep the damn oil in the ground was to leave it locked up inside the busted state oil company which would remain under OPEC (i.e. Saudi) quotas.

The James Baker Institute quickly and secretly started in on drafting the 323-page plan for the State Department. In May 2003, with authority granted from the top (i.e., Dick Cheney), ex-Shell Oil USA CEO Phil Carroll was rushed to Baghdad to take charge of Iraq's oil. He told Bremer, "There will be no privatization of oil -- END OF STATEMENT." Carroll then passed off control of Iraq's oil to Bob McKee of Halliburton, Cheney's old oil-services company, who implemented the Baker "enhance OPEC" option anchored in state ownership.

Some oil could be released, mainly to China, through limited, but lucrative, "production sharing agreements."

And that's how George Bush won the war in Iraq. The invasion was not about "blood for oil," but something far more sinister: blood for no oil. War to keep supply tight and send prices skyward.

Oil men, whether James Baker or George Bush or Dick Cheney, are not in the business of producing oil. They are in the business of producing profits.

And they've succeeded. Iraq, capable of producing six to 12 million barrels of oil a day, still exports well under its old OPEC quota of three million barrels.

The result: As we mark the 10th anniversary of the invasion this month, we also mark the fifth year of crude at $100 a barrel.

As George Bush could proudly say to James Baker: Mission Accomplished!