Within ten days of taking office the Bush Administration declared its intent to invade Iraq. This was a triumph for the neoconservative ideology of the Project for the New American Century, and personally for Vice President Richard Cheney and 15 other PNAC members who staffed the highest levels of the State and Defense Departments. Global dominion--by preemptive war if necessary--would define the foreign and defense policies of George Bush's presidency.
A seminal document of neoconservatism, however, described a precondition for achieving global dominance: "...access to vital raw materials, primarily Persian Gulf oil."(1)
This requirement was addressed immediately by the new Administration: during his second week in office President Bush asked Vice President Cheney to chair a National Energy Policy Development Group. Quickly nicknamed the "Energy Task Force," the group by early February was poring over maps of the producing oil fields in Iraq, the undeveloped exploration blocks, and the infrastructure of pipelines, refineries, and tanker terminals. They also scrutinized the list of foreign oil corporations negotiating contracts with Saddam Hussein.(2) Not one of them was an American company. That was intolerable.
Agenda Item: Seizing Iraqi Oil
The Administration was committed to the invasion of Iraq, but faced an immense barrier: nowhere on the horizon was there a Congressional Declaration of War.
That would have to wait, but there was much to do meanwhile in planning a desired political economy for postwar Iraq. The State Department thereupon undertook a policy-development initiative called The Future of Iraq Project. (This was done more than a year before Congress authorized the use of military force in Iraq.)
One component of the Project was the "Oil and Energy Working Group." (3) Cheney's Task Force was assessing the geography of the oil fields and infrastructure, but how would the U.S. gain control? How would the "...capture of new and existing oil fields in Iraq" actually take place?(4)
That's what the Oil and Energy Group needed to work out. A radical faction--the PNAC thinking in the group--suggested simply seizing the oil fields by force and transferring them directly to American oil companies. Cooler heads understood the international firestorm that would ignite, so the Oil and Energy Working Group developed an inconspicuous and devious mechanism instead.
The Working Group's final report dated June 22, 2002 was seemingly benign: "Iraq should be opened to international oil companies as quickly as possible after the war...to attract investment in oil and gas resources."
Under the "investment" protocol the Working Group had in mind, however, the oil companies would acquire the oil legally, but at catastrophic disadvantage to postwar Iraq.
Production sharing agreements were mandated as the investment contract to be employed. Known as "PSA's," these contracts are used typically by oil-rich but capital-poor countries to attract the attention of foreign oil companies.(5) The companies agree to "invest" their own capital building the development and production infrastructure, in return for a guaranteed share of the physical output of oil. If the share is big enough--75% or more is not unusual--the companies can earn exorbitant profits.
Iraq was a well-developed country with abundant capital readily available, circumstances rendering perverse the use of PSA's. But doing so would allow the companies to acquire the oil--without seizing the fields.
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