How Dick Cheney Got His Cold War On
A Cold War Timetable
By Mark Ames ( editor@exile.ru )
Exile

One of the oddest reactions to Vice President Cheney's now-infamous speech in Lithuania, the one which many Russians believe officially heralded the start of a new Cold War, came from the mainstream American media. What was so strange? They actually did their job.

Instead of simply parroting the Administration's latest pieties, something the press has been doing for as long as I've been here, they actually allowed themselves to smell a rat. And what a putrid, bloated, rotting-in-a-flooded-Manila-gutter rat odor it was! You'd have to have been literally brain dead not to have smelled it.

The rat of course was the insane hypocrisy of a foaming fascist like Dick Cheney suddenly getting all Amnesty International righteous over a bad regime that does bad things. The fact that Cheney flew straight to Kazakhstan and Azerbaijan right after squirting over Russia's human rights problems turned the rank hypocrisy into a bad black comedy routine, barely fit for even a Tom Green. Kazakhstan is a country where opposition politicians and media aren't merely jailed, exiled or cowed as they are in Russia, but are shot and dumped in forests, Miller's-Crossing style, on behalf of a despot whose family runs the country like its own fiefdom.

Azerbaijan is even worse, if such a thing can be imagined not only because the Azeri authorities brutally suppress pro-democracy protests, but because it is the first and only post-Soviet state to officially create a despotic family dynasty. After former leader Heydar Aliyev died in office, he passes power (along with control over the country's vast oil wealth) to his son, Ilham Aliyev, in 2003, a dynastic transfer that was then "legimitized" by rigged elections that the Bush administration always sees as a cup 1/100 full rather than 99/100 empty.

Incredibly enough, a few members of the mainstream American press were shocked into action by Cheney's hypocrisy. On May 9th, the normally anti-Putin New York Times published an editorial titled, "Cheney as Pot, Putin as Kettle," tepidly calling into question Cheney's bizarre meta-irony routine: "spearing Russia while flirting with its even more undemocratic neighbors confuses the message, especially when done by a vice president identified with oil interests." Tepid, but at least a rare acknowledgement of common insanity.

The hypocrisy was so bizarre and brazen that even bland newswire agency AP got in on the outting bandwagon, with a May 8th article, "Analysis: Cheney promotes democratic reform everywhere but oil-rich Kazakhstan." You'd almost think that the American media actually questions its leaders' motives!

Even the pro-Cheney Wall Street Journal published an Op-Ed by Andrew Kuchins, although in a clever ruse he tried to diffuse it by pointing out how obvious it was: "Alert the media: We've identified double standards in U.S. foreign policy!" he sneered, before moving on to the "real" issues raised. As if obvioius evil is somehow less bad than the kind of evil you have to look for.

Cheney's speech raised a lot of questions and a lot of debate, but no one asked one of the most obvious questions of all: Why did Cheney choose to flaunt his hypocrisy in everyone's faces? Why not try faking it, the way most Western leaders operate when they mix righteous words with rapacious policies? Why didn't Cheney choose to put a bit of space in between his speech attacking Russia's record on democracy and his visits to the despotic Central Asian states?

Or put another way, what if it wasn't a mistake. What if the blatant, insane hypocrisy WAS the real message...and always has been all along?

* * *
The best way to answer this is to go back and retrace how Russia and America wound up in this once-unimaginable situation. It would seem to be a massive policy failure, allowing Russia to become a Cold War enemy again, perhaps the greatest American foreign policy failure of our time. Unless, of course, you put all the blame on Putin's evil little authoritarian shoulders, which is the natural tendency of nearly every American commentator.

They say Americans' memories are short, but that's like saying a Nazi's sense of compassion was fleeting. Americans literally rewrite their memories over and over. Case in point: Just 4-1/2 years ago, Vladimir Putin was treated as a rock star in America. You probably forgot about it, so I'm going to remind you because it's not a pretty memory.

After 9/11, Putin became our biggest, bestest friend in the world when he made his famous first-to-the-phone call to Bush and green-lighted American forces entering Central Asia for the war against the Taliban.

I was in America at the time I remember all too well how happy Americans were to have the mysterious, morally-ambiguous yet effective evil guy joining our side.

In fact, I can say that I've never, ever in my lifetime seen a foreign leader more adored than Putin was in that brief period, from September through December of 2001. Articles like the November 21st "To a Russian, with Lust," by Boston Globe staffer Joanna Weiss, capture the rather embarrassing Pootiemania: she described the man who had shut down NTV, quashed the free media and consolidated power as "Compact and athletic, with a Mona Lisa smile"."visibly buff"."balding, in a cute Jean-Luc Picard sort of way"..."or maybe a Thorn Yorke sort of way." Even heavyweights like the Los Angeles Times, which now tries to out-anti-Putin its rivals, wore out their kneepads fawning over Putin. In its November 24th editorial, "In a Word, Zdorovo," the LA Times concluded, with full Spielberg happy-ending and John Williams score accompaniment, "Never mind for now the remaining political and policy differences between the two countries and the savvy public relations. ...If Americans could feel real terror at times about an opponent's evil 50 years ago, then there's nothing wrong with reveling for a warm moment in the changes today. 'Wow' is one word for it. 'Zdorovo' is another." Ah, it's so vile it's is fun. For me any- way. God I hope whoever wrote that has to read it again. Read it and weep, folks. Yes, Putin had literally charmed the socks of America, because, well, let's admit the shameful truth we were scared shitless then. We were cowards. We didn't know if we'd actually win in Afghanistan, or if we'd be plunted into a new Dark Age of fire and plague. In that sense of insecurity and existential crisis, a man like Putin was exactly what Americans, even liberals, felt they needed. Strange, but Russians, who experienced total collapse over the past 20 years, are called savages for supporting Putin for the same reasons. But at least Russians support him without that sphincter-twisting sentimentality found in that LA Times Op-Ed.

Aliyev re-creating the Saddam photo.

Our other friend Saddam with Grandma Rumsfeld.
* * *
When Putin reached out to Bush and gave him everything he asked for post-9/11, his base was furious. Particularly the siloviki, who saw it as yet another in a series of betrayals, a repeat of Gorbachev and Yeltsin, whom they believed had betrayed Russia's interests in order to earn a pat on the head from America. They argued that Putin was being naive and foolish just as his predecessors were; and that in the end, the Americans would **** him like they ****ed Gorby and Yeltsin. Russia would get nothing for helping, neither would Putin; nothing but problems, just like what happened in the 90s.

The argument wasn't simply a matter of pride. The Gorbachev-Yeltsin years were among the most catastrophic of any nation in peace time. Russia was literally dying off. Another repeat of that could destroy Russia for good, they argued.

So it was a huge risk for Putin to cozy up so closely to America post-9/11. He went out on a limb, made a bold move against his own powerful base, in the hope that the benefits of a mutually-supportive relationship with America would in the end prove him right and make him, and Russia, stronger.And at first it looked like he might be right, as America was undergoing Pootimania.

But then America won the war in Afghanistan much more easily and quickly than we or anyone else thought. And that war victory went to our heads. Suddenly, we decided we didn't need Putin's help anymore. In fact, as the Newsweeks triumphantly declared, we didn't need anyone's help anymore. America was not just a superpower, it was a hyperpower, perhaps the most powerful (and benign) empire that the world had ever seen. We were finally the true "Number One!" That kind of thinking went to our heads and turned us into assholes. Really Stupid assholes. Overnight, America became what can only be described as "If the Death Star were piloted by Gary Coleman." And here is where the Timeline for a New Cold War really begins.

On December 13th, 2001 after it was clear that Afghanistan had fallen to our allies Bush announced that America was unilaterally withdrawing from the ABM Treaty.

Putin went on national television, clearly stunned and weakened, calling Bush's move a "mistake." It was a painful broadcast, egg dripping from his face. I've never seen Putin so clearly bitch-slapped before or since.

I remember being shocked at what assholes we'd turned out to be. I couldn't understand why Bush didn't wait even, say, two or three months, at least for the victory dancing to settle down in Afghanistan, maybe throw Russia a bone or two. What was behind the timing?

I contacted a good friend of mine in the Defense Department to ask him why we chose to withdraw from the ABM treaty in such a time and manner as to maximally embarrass Putin for having sided with us. Why didn't we wait?

My DoD friend seemed surprised. "We didn't even consider the effect on Putin," he answered. "We only considered what's in our own interest, which is to withdraw now. Besides, we got rid of the Taliban, that was a favor enough for the Russians in our opinion." At the time, Russian anger over Bush's decision to start building a missile shield was dismissed as old Russian paranoia, a holdover of Cold War thinking. Russia had "nothing to worry about," we said.

In fact, the Russians were entirely right to be shocked and paranoid. As Professor Kier Lieber, one of the authors of the recent controversial Foreign Affairs article "The Rise of US Nuclear Primacy," admits that the shield is offensive in nature and only makes sense as a weapon aimed at an enemy like Russia or China. Otherwise, a waste.

"The missile defenses that the United States might plausibly deploy would be valuable primarily in an offensive context. If the United States launched a nuclear attack against Russia (or China), the targeted country would be left with a tiny surviving arsenal if any at all." As for deterring North Korea, Dr. Lieber told the eXile, "You wouldn't have a shield for them, you'd put AEGIS ships all around the Korean peninsula and hit the missiles upon launch." This is where the bad blood started. At America's darkest hour, we reached out to Russia and got full cooperation and trust. And literally the second we felt tough again, we announced our intention to build a weapons system that targeted Russia for total annihilation. * * * A couple of months later, in early 2002, Bush announced that he was sending Green Berets into Georgia to fight against alleged Al Qaeda terrorists in the Pankisi Gorge. I visited Georgia then, and literally no one believed that there was a real Al Qaeda threat. What it had everything to do with was training up a strong pro-American Georgian army to secure a planned Caspian Sea oil pipeline, which was due to be constructed through southern Georgia's territory on its way to Turkey, a route chosen to bypass Russia and stay Western (i.e., American).

When the Green Berets were first announced, the Russians, particularly the siloviki base that first warned Putin against trusting America, went ape shit. First America took East Europe, the Baltics and its former wealth; now the Americans were moving in on what was left, working through the Caucasus and Central Asia, while Russia still couldn't even pacify Chechnya (a conflict which America would now be in an even better position to manipulate).

Just like with the ABM treaty, Putin kept a low profile for the first few days after the Green Berets-in-Georgia announcement, then said that there was no reason to get hysterical. His hand was weak, and he saw no gain in reacting hysterically.

As time went on, it was becoming clear that Bush really didn't plan to leave the military bases he was setting up in Central Asia. I remember working on an Op-Ed piece at the time for the San Jose Mercury News about this, and when I suggested to my editor that the thinking in Russia was that Bush was planning to stay in Central Asia and take what he could, Russia be damned, she was horrified: "No, we couldn't do that," she said. "That would be so wrong of us."

"Yeah, but what can Russia do about it? Nothing," I said.

"But...we're just not like that," she argued. "We're not that ungrateful. The American people would not be happy." Well, we did it. And as usual, the American people didn't care.

* * *
The rest of 2002 was about the lead-up to the war in Iraq. This is when neo-cons were genuinely outraged, feeling a sense that they were getting stabbed in the back by a merely-spiteful Russia for not supporting the war. Of course, the fact that Russia stood to lose potential tens of billions in oil contracts and that America stood to gain those tens of billions also played a roll. But most Americans dismissed Russian (and French) objections to the war as mere jealousy and spite.

From Russia, however, America looked like it had literally gone insane, with no limits to its war-aggression, part Wermacht, part Napolean's Army. And now America was building up its military capability all around Russia's southern flank in Central Asia and Georgia, and expanding further.

It was at this time that the real battle in this new "cold war" the Yukos battle was coming to a head. Yukos was fast becoming one of top three or four oil companies in the world. Its chairman, Mikhail Khodorkovsky, was feted by the very top elite circles of American/Western power, regularly hobnobbing with Bill Gates and Dick Cheney among others.

What we didn't know until later was that Khodorkovsky already deep in a battle with Putin over control of Russia's pipeline network. Owning pipelines was the Kremlin's one stick it wielded over the oil oligarchs. Khodorkovsky understood that for Yukos to further boost its position, it would need to at the very least wrest control of the pipeline network away from the Kremlin. Khodorkovsky wanted to build up Yukos' value quickly to sell a huge chunk of it to one of Cheney's Texas oil buddies, reportedly either Exxon or Chevron. The reason this was so important for Khodorkovsky was that, since he essentially stole the company during the loans-for-shares privatization scheme in the 1990s, it meant that his hold on the asset was tenuous. The Kremlin could just steal it back any time, as it later did. But the Kremlin would be loathe to steal a massive asset from Exxon or Chevron.

At the same time, Cheney was formulating a worldwide oil grab which he had been working on going back to the 1990s at least. In a speech in 1998, then-CEO of Halliburton Cheney said, "I cannot think of a time when we have had a region emerge as suddenly to become as strategically significant as the Caspian." The reason is simple: The Caspian Sea basin, particularly Kazakhstan and Azerbaijan's shares, holds upwards of $5-10 trillion worth of oil, perhaps more given today's prices.

Meanwhile, Russia emerged as the world's second-largest oil producer, but not much of that was getting to the US. At an Russia-American oil summit held in Houston in late 2002, an agreement was signed to build a pipeline from the rich oil fields in western Siberia to Murmansk, where it could be easily shipped to the US. The pipeline was to be Russia's first private consortium, and Yukos was essentially going to lead it. This was it, the first big play to free up Russian oil from Kremlin control, and get it to the US.

But there was a hitch. Putin and the siloviki saw this pipeline as an American oil grab. Putin was no longer inclined to like or trust the US after the ABM disaster and the Green Berets in Georgia scandal. No more illusions.

Now you can see where the chips were lining up. Both Cheney and Khodorkovsky had a serious interest in seeing control of the pipelines taken away from the Kremlin and handed to the "free market," where the US would have an advantage; and both of them wanted to see Yukos get bought by a US major, and both wanted to secure that US stake in Russia's oil wealth by every means possible, including political means. Khodorkovsky was transforming both Yukos and himself into a model Westernerizer, and he was becoming increasingly critical of the Kremlin's role in holding Russia back. If Khodorkovsky really was able to transform Russia into a pro-American state, it would obviously be better for Cheney and the oil companies than if the FSB controlled the state, and the oil.

This is what led to Khodorkovsky to allegedly try to buy off and retool the Russian political system. Without political control, he might not keep and grow his assets. While the Kremlin kept the oil companies from becoming even bigger and richer simply so that the Kremlin wouldn't lose control of them.

The siloviki saw it as a struggle for Russia's survival and independence (and their own too). If Khodorkovsky, working with the most powerful people in the US (the Cheneys and the Houston oil oligarchs), took control of Russia's resources and its power, it would become little more than an appendage of American capitalism, they believed.

In March, America invaded Iraq, turning Russian public opinion decidedly against America as a nation of Huns. That same month, Khodorkovsky was allegedly working with Duma parties he'd paid off in order to change the Constitution and weaken the powers of the President in favor of parliament. It was a kind of constitutional coup in the works, a coup which would serve his and the Bush people's mutual interests.

It all ended in July 2003 when Putin jailed Platon Lebedev, and Yukos was finished. With its destruction went Cheney's hope of getting control of Russian oil.

It's odd now to look back and consider how quietly Bush people reacted to it. My sense is that they didn't expect it. I did see my column "Russia's Thaw" in July, 2003, when I predicted that everything had completely changed after Lebedev's arrest. I'm gloating now because, well, that's what you do when you're right. But I think Cheney and his goons were too busy mired in the unfolding debacle in Iraq that summer, when the dead-enders were first getting their insurgency on, to react to Russia.

Today most of Yukos is in Kremlin hands; Putin's power is uncontested; and Khodorkovsky is in jail. The Murmansk pipeline was canceled. Now the Siberian pipelines, secure in Kremlin hands, are taking oil to Asia.

You could see why a guy like Dick Cheney wouldn't like Putin.

* * *
That is the real story behind this mini Cold War. The other part of it is, of course Cheney's longstanding desire to get ahold of Caspian Sea oil. With Russia seemingly lost, this meant that the fight for Central Asia took on more importance. Indeed in 2001, Cheney advised President Bush to "deepen [our] commercial dialogue with Kazakhstan, Azerbaijan and other Caspian states." Kazakhstan and Azerbaijan: the two countries he visited right after his Cold War speech last week.


In 1994, Cheney was a member of Kazakhstan's Oil Advisory Board. He helped broker a deal between Kazakhstan and Chevron, a company where Secretary Condoleeza Rice served on the Board. Today, US oil companies have large stakes in Kazakhstan's oil fields. But most of the oil being pumped goes through Transneft lines out of the Russian port in Novorossiisk. America has been battling with Russia to get Kazakhstan to pump its oil through an alternate pipeline, the Baku-Ceyhan pipeline, that goes through Azerbaijan, Georgia and Turkey.

In order to secure that pipeline, powerful American oil/politics figures, led by Bush family consigliore James Baker, ingratiated themselves into oil-rich Azerbaijan. Despite that nation's atrocious record on democracy and human rights, in 1996 oil majors like Exxon, Chevron and Amoco, set up the powerful United States Azerbaijan Chamber of Commerce (USACC). Its board members include or included Cheney, Baker, top figures in the oil majors, and top figures in Azerbaijan's government (even crazed war-monger Richard Perle had a place on the board of trustees!).

The task was to get Azerbaijan to agree to the Baku-Ceyhan pipeline, whose stated goal was to ship Caspian oil out of Russia's reach and into the Mediterranean for Western consump tion. It worked the pipeline is now operational. And a big event in late 2003 was the key to securing it: Georgia's Rose Revolution.

This was the first of the "color revolutions," and it quickly became apparent that, although it was rooted in genuine dissatisfaction, it was accomplished with massive American aid (documented already in the eXile and elsewhere).

To recap: then-President Shevardnadze was showing signs of drifting away from the US and towards Russia in the summer of 2003. Suddenly, Bush became concerned with Georgia's "backsliding" on democracy, and he sent Baker of all people to tell Shevardnadze that he'd better hold "free and fair elections" or else. The elections were rigged; a carefully coordinated revolution (in fact a coup) was staged to overthrow Shevardnadze; and a pro-Western, US-educated president, Saakashvili, was installed. Shortly afterwards, control over a region of Georgia where the Baku-Ceyhan pipeline passes was taken out of a pro-Russian leader's hands, and given to a pro-American.

* * *
The Russians were oddly slow in reacting to the Rose Revolution. They were taken by surprise: in the siloviks' paranoid way of thinking, the "people" are irrelevant, and everything is manipulated by a tiny elite and outside interests. To them, the entire Rose Revolution was nothing but an American-manufactured coup, which was only partly-true.

The same month that Bush and the US denounced the rigged elections in Georgia, they praised even worse-run elections in nextdoor Azerbaijan, and kept mum over the bloody crackdown on pro-democracy protestors. Why? Because Azerbaijan is giving Cheney what he wants: oil. Both for his favored oil companies, his friends, and for the West.

In other words, in classic Cold War maneuvering, Aliyev is "our bastard."

* * *
If Putin's first real counterstrike in Cold War II was against Khodorkovsky, then his second major counterstrike took place in mid-2004, when Georgia tried to start asserting its control over two Russian-backed breakaway ethnic regions, Abkhazia and South Ossetia. Putin drew a line in South Ossetia, where war started to break out again in the summer of 2004 when Saakashvili tried to assert federal control over it.

It was strange how that war's coverage evolved: in the big Western press, article after article dismissed the notion that there is any legitimate Ossetian grievance, calling it an entirely manufactured Russian ploy to maintain control over Georgia and keep it weak (oddly similar to Russian belief that the Rose/Orange Revolutions were entirely manufactured by cynical American interests). But I happen to know some Ossetians. The eXile's former Sales Manager was an Ossetian. Believe me, they exist, and the tensions with the Georgians are very real, and very deep. And valid. The West bleeds for oppressed minorities in literally every corner of the world, even every corner of the Caucasus, except for the Ossetians and the Abkhaz. Why?

Could it be.because they're aligned with Russia?

When Saakashvili tried retaking South Ossetia, Russian-backed troops repelled them. Putin was not going to lose anything else to pro-American interests.

In the summer of 2004, the Georgians realized that the US wasn't going to support a hot war against Russia, so they stood down...and then in September, Chechen terrorists seized a school in North Ossetia, leading to the massacre of hundreds of children. Connected?

If you recall, at the time Putin essentially blamed the West, and specifically, the US, for helping make the Beslan attack happen. He said it was funded with the goal of "weakening Russia" in order to seize and control the region's resources.

It seemed crazy at the time, but looking at the big picture...is it?

Putin was widely criticized for post-Beslan moves to cancel gubernatorial elections. But put in this context, it seems like a genuine wartime move to consolidate power in the face of an attack. Not Chechen attacks. But American Cold War-ll attacks.

* * *
The last great American victory in this Cold War-ll was certainly the Orange Revolution. But it was a hollow victory, shocking the Russians into action. Since then, Ukraine has turned into a political, ideological, and geopolitical swamp. The fight is still on; neither side has won yet.

The Tulip Revolution in Kyrgyzstan was the first one to go bad. Since then, it's been nothing but setbacks for the US as it lost its huge military base and its influence in formerly-anti-Russian Uzbekistan, now Putin's bestest buddy in the region. Kyrgyzstan is also showing signs of moving closer to Moscow. Bush's people recently made incredible claims about democracy moving forward in Tajikistan, but it's unlikely that the whitewashing will do much good since the country is under pretty solid Russian control.

Meanwhile, Putin, now completely and forever disabused of any illusions that he would ever be anything to Bush and Cheney but an obstacle standing between Siberian oil wells and Houston oil oligarch bank accounts, has seen his country become wealthier and bolder. He's fighting back, not just in Russia and its near-abroad, but also for example by selling weapons to Venezuela and nuclear plants to Iran.

Cheney lost out in his bid to secure Russia's oil, but the Caspian oil is still being fought over, especially as Kazakhstan hasn't started pumping yet most of its upcoming oil streams.

That's what this Cold War hype is about and the bleating about democracy, and the seemingly clumsy display of hypocrisy. It's not a Cold War, it's an oil grab gone bad.

I don't think a jackal like Cheney is capable of recognizing hypocrisy. I think he meant everything he said, with a straight face, and that he saw it as both rationally and morally right to chastise Russia's record on democracy while praising Kazakhstan's and Azerbaijan's in the same trip.

Democracy isn't about voting. It's about serving America's interests. And serving America's interests is more tightly defined a serving the interests of the oil oligarchs in Houston, where Cheney spent the previous ten years. In fact, it's even more simple than that it's personal. America's interests are Cheney's interests. Il et l etat. In that sense, Putin is indeed a genuine menace. And that's what makes this Cold War so different. Whereas the last one was a mortal struggle over two different systems, this is a struggle between two short, balding, bloodless men, and the oil other people's oil that made them as powerful as they are today.

Defender of Imperial Property Rights
Bush Targets Chavez and Morales
By ROGER BURBACH
Counterpunch

George W. Bush has come out with harsh words for the governments of Bolivia and Venzeuela.``Let me just put it bluntly--I'm concerned about the erosion of democracy in the countries you mentioned,'' Bush said in response to a question put to him about Venezuela and Bolivia. ``I am going to continue to remind our hemisphere that respect for property rights and human rights is essential for all countries," he added.

While Bush's hostility towards Hugo Chavez of Venezuela is well known, his critical comments about Bolivia came as somewhat of a surprise, given that Evo Morales has served only four months as the country's first Indian president and has done nothing to thwart the democratic process. As Bolivian foreign minister David Choquehuanca noted: "We are creating a participatory democracy and the world knows it. I don't understand how the United States can say democracy is eroding..."

Bush's true agenda is reflected in his call for "respect for property rights." A change is taking place in South America as Morales and Chavez move to exert greater control of their energy resources and challenge US plans for a hemispheric free trade zone. As the president of the Bolivian Senate, Santos Ramirez, noted: "Bolivia and Latin America are no longer the servile democracies that tolerate...poverty and the surrendering of sovereignty."

Early in May Morales announced that Bolivia would nationalize its energy resources, particularly its natural gas exports. While no foreign corporations were expropriated out right, Morales made it clear that "the looting of our natural resources by foreign enterprises is over."

At the same time Morales is moving to reshape the country's commercial relations, particularly with Venezuela. This week Hugo Chavez flew to Bolivia, declaring "we are going to concretize the People's Trade Treaty," an accord that was recently signed between Venezuela, Bolivia and Cuba. It is openly pitched as an alternative to the US-backed Free Trade Area of the Americas, a trade zone based on neo-liberal principles that facilitates the expansion of multinational corporations.

Bolivia and Venezuela have signed eight different accords dealing with 200 different projects concerning energy, mining, education, sports and cultural exchanges. Most importantly Venezuela has agreed to invest over $1 billion to help industrialize Bolivia's natural gas production, including the construction of a petrochemical complex.

Venezuela is also providing diesel fuel, which Bolivia does not produce, in exchange for the sale of soybeans. This comes at an opportune moment for Bolivia as most of its soy exports have gone to Colombia which just signed a free trade agreement with the United States. The US-Colombian accord means that cheap, subsidized US grains will flood Colombia, driving out Bolivian soybeans.

In Bolivia Morales took Chavez on a visit to Chipare, the semi- tropical region where he rose to prominence as the leader of the coca growers' confederation. There they announced their intention to build a factory to process coca leafs for herbal teas, medicinal products, and cosmetics. This is certain to arouse the ire of the United States which for years has pursued a policy of forced eradication of coca in Chipare, leading to the virtual militarization of the region.

The burgeoning economic alliance between Venezuela and Bolivia also helps offset the difficulties that have arisen with Brazil and Argentina over Morales' determination to exert greater control over natural gas exports. Both neighboring countries have significant investments in Bolivia's gas fields, and both are importing gas for domestic use at prices well below the world market. At a recent international gathering of Latin American and European leaders in Vienna, Austria, Morales and President Luis Inacio Lula da Silva of Brazil exchanged harsh words over efforts to draft a new accord over natural gas. While the two leaders formally made up before they left Austria, there is little doubt that Chavez' support provides Bolivia with leverage in its negotiations with its two more powerful neighbors.

Venezuela is also signing a financial accord aimed at bolstering Bolivia's banking and monetary system. This is intended to strengthen Morales' hand vis-a-vis the United States and international financial institutions. The Bolivian government at the end of March announced that it would not solicit any new loans from the International Monetary Fund. The fund has aroused a great deal of antipathy in recent decades as it restricted social spending and forced the privatization of state enterprises, particularly in the tin mining industry.

The visit of Chavez to Bolivia coincides with the opening of the Exchange Fair, a project of the People's Trade Treaty between Bolivia, Venezuela and Cuba. Enterprises from all three countries participated with the goal of expanding commerce and sharing technical expertise. At the fair the vice-president of Bolivia, Alvaro Garcia Linera, criticized the US neo-liberal trade regime, asserting: "It is not necessary for small producers and entrepreneurs to subordinate themselves to financial capitalThere are other forms of interdependence, other forms of globalization, other ways to generate regional exchanges of products, ideas, and necessities." Garcia Linera concluded, "Bolivia needs the world, and it will produce for the world."

Roger Burbach is director of the Center for the Study of the Americas (CENSA) and a Visiting Scholar at the Institute of International Studies, University of California, Berkeley. He is co- author with Jim Tarbell of "Imperial Overstretch: George W. Bush and the Hubris of Empire," He released late last year "The Pinochet Affair: State Terrorism and Global Justice."

UNREPORTED: THE ZARQAWI INVITATION
by Greg Palast
gregpalast.com

They got him — the big, bad, beheading berserker in Iraq. But, something’s gone unreported in all the glee over getting Zarqawi … who invited him into Iraq in the first place?

If you prefer your fairy tales unsoiled by facts, read no further. If you want the uncomfortable truth, begin with this: A phone call to Baghdad to Saddam’s Palace on the night of April 21, 2003. It was Secretary of Defense Donald Rumsfeld on a secure line from Washington to General Jay Garner.

The General arrived in Baghdad just hours before to take charge of the newly occupied nation. The message from Rumsfeld was not a heartwarming welcome. Rummy told Garner, Don’t unpack, Jack — you’re fired.

What had Garner done? The many-starred general had been sent by the President himself to take charge of a deeply dangerous mission. Iraq was tense but relatively peaceful. Garner’s job was to keep the peace and, to use the President’s words, “Open Iraq’s arms to democracy.”
Unfortunately for the general, he took the President at his word. But the general was wrong. “Peace” and “Democracy” were the slogans.

“My preference,” Garner told me in his understated manner, “was to put the Iraqis in charge as soon as we can and do it in some form of elections.”
But elections were not in The Plan.

The Plan was a 101-page document to guide the long-term future of the land we’d just conquered. There was nothing in it about democracy or elections or safety. There was, rather, a detailed schedule for selling off “all [Iraq’s] state assets” — and Iraq, that’s just about everything — “especially,” said The Plan, “the oil and supporting industries.” Especially the oil.

There was more than oil to sell off. The Plan included the sale of Iraq’s banks, and weirdly, changing it’s copyright laws and other odd items that made the plan look less like a program for Iraq to get on its feet than a program for corporate looting of the nation’s assets. (And indeed, we discovered at BBC, behind many of the odder elements — copyright and tax code changes — was the hand of lobbyist Jack Abramoff’s associate Grover Norquist.)

But Garner didn’t think much of The Plan, he told me when we met a year later in Washington. He had other things on his mind. “You prevent epidemics, you start the food distribution program to prevent famine.”

Seizing title and ownership of Iraq’s oil fields was not on Garner’s must-do list. He let that be known to Washington. “I don’t think [Iraqis] need to go by the U.S. plan, I think that what we need to do is set an Iraqi government that represents the freely elected will of the people.” He added, “It’s their country ? their oil.”

Apparently, the Secretary of Defense disagreed. So did lobbyist Norquist. And Garner incurred their fury by getting carried away with the “democracy” idea: he called for quick elections — within 90 days of the taking of Baghdad.

But Garner’s 90-days-to-elections commitment ran straight into the oil sell-off program. Annex D of the plan indicated that would take at least 270 days — at least 9 months.

Worse, Garner was brokering a truce between Sunnis, Shias and Kurds. They were about to begin what Garner called a “Big Tent” meeting to hammer out the details and set the election date. He figured he had 90 days to get it done before the factions started slitting each other’s throats.

But a quick election would mean the end of the state-asset sell-off plan: An Iraqi-controlled government would never go along with what would certainly amount to foreign corporations swallowing their entire economy. Especially the oil. Garner had spent years in Iraq, in charge of the Northern Kurdish zone and knew Iraqis well. He was certain that an asset-and-oil grab, “privatizations,” would cause a sensitive population to take up the gun. “That’s just one fight you don’t want to take on right now.”

But that’s just the fight the neo-cons at Defense wanted. And in Rumsfeld’s replacement for Garner, they had a man itching for the fight. Paul Bremer III had no experience on the ground in Iraq, but he had one unbeatable credential that Garner lacked: Bremer had served as Managing Director of Kissinger and Associates.

In April 2003, Bremer instituted democracy Bush style: he canceled elections and appointed the entire government himself. Two months later, Bremer ordered a halt to all municipal elections including the crucial vote to Shia seeking to select a mayor in the city of Najaf. The front-runner, moderate Shia Asad Sultan Abu Gilal warned, “If they don’t give us freedom, what will we do? We have patience, but not for long.” Local Shias formed the “Mahdi Army,” and within a year, provoked by Bremer’s shutting their paper, attacked and killed 21 U.S. soldiers.

The insurgency had begun. But Bremer’s job was hardly over. There were Sunnis to go after. He issued “Order Number One: De-Ba’athification.” In effect, this became “De-Sunni-fication.”

Saddam’s generals, mostly Sunnis, who had, we learned, secretly collaborated with the US invasion and now expected their reward found themselves hunted and arrested. Falah Aljibury, an Iraqi-born US resident who helped with the pre-invasion brokering, told me, “U.S. forces imprisoned all those we named as political leaders,” who stopped Iraq’s army from firing on U.S. troops.

Aljibury’s main concern was that busting Iraqi collaborators and Ba’athist big shots was a gift “to the Wahabis,” by which he meant the foreign insurgents, who now gained experienced military commanders, Sunnis, who now had no choice but to fight the US-installed regime or face arrest, ruin or death. They would soon link up with the Sunni-defending Wahabi, Abu Musab al-Zarqawi, who was committed to destroying “Shia snakes.”

And the oil fields? It was, Aljibury noted, when word got out about the plans to sell off the oil fields (thanks to loose lips of the US-appointed oil minister) that pipelines began to blow. Although he had been at the center of planning for invasion, Aljibury now saw the greed-crazed grab for the oil fields as the fuel for a civil war that would rip his country to pieces:

“Insurgents,” he said, “and those who wanted to destabilize a new Iraq have used this as means of saying, ‘Look, you’re losing your country. You?re losing your leadership. You’re losing all of your resources to a bunch of wealthy people. A bunch of billionaires in the world want to take you over and make your life miserable.’ And we saw an increase in the bombing of oil facilities, pipelines, of course, built on — built on the premise that privatization [of oil] is coming.”

General Garner, watching the insurgency unfold from the occupation authority’s provocations, told me, in his understated manner, “I’m a believer that you don’t want to end the day with more enemies than you started with.”

But you can’t have a war president without a war. And you can’t have a war without enemies. “Bring ‘em on,” our Commander-in-Chief said. And Zarqawi answered the call.

Greg Palast is the author of Armed Madhouse out this week from Penguin Dutton, from which this is adapted.

Greg Palast, investigative reporter with the BBC and author of the books "The Best Democracy Money Can Buy" and "Democracy and Regulation." His latest book is "Armed Madhouse: Who’s Afraid of Osama Wolf? China Floats, Bush Sinks, The Scheme to Steal "08, No Child’s Behind Left, and Other Dispatches from the Front Lines of the Class War."

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AMY GOODMAN: Investigative reporter Greg Palast joins us in the studio right now. He has a brand new book. It's called Armed Madhouse, and the subtitle is Who's Afraid of Osama Wolf?, China Floats, Bush Sinks, the Scheme to Steal ‘08, No Child’s Behind Left and Other Dispatches from the Frontlines of the Class War. Welcome to Democracy Now!

GREG PALAST: Thanks, Amy, for getting the entire subtitle without choking. There's a lot of ground to cover in the book.

AMY GOODMAN: There certainly is. And right now, Hugo Chavez, the Venezuelan president, who you recently met with and interviewed and we broadcast on Democracy Now!, was in Vienna, offering to the poor of Europe cheap oil. Of course, the deaths continue in Iraq, both U.S. soldiers and Iraqis. We have the spy scandal that is unfolding here in the United States. Link them.

GREG PALAST: Yeah, that's why I wrote a book, because it does link the whole thing together. I mean, I just got back from meeting with Chavez, as you know, and you showed our interview a few weeks ago. He's offered the U.S. $50-a-barrel oil. That’s a third off of what we're paying right now. Now, you would think our president would be down in Caracas kissing Hugo Chavez's behind and saying, “Thank you, thank you for dropping the price of oil by a third, and let's make a deal,” because Chavez wants a deal.


But he's not doing that, our president, even though the high prices are costing about a million jobs right now. And the reason he's not is that what Chavez will not do is that Chavez will not return the money. It's not about petroleum, it's about petrodollars, as I explain in the book. In other words, when George Bush rides around King Abdullah in his little golf cart on the Crawford ranch, he's not trying to get Abdullah's oil. Abdullah can't drink the stuff. He’s got to sell it to us and Japan. But Abdullah takes the money back from the -- when you fill up your SUV, you give your money to Saudi Arabia, the big oil companies, Saudi Arabia. But then he returns it the form of petrodollars, and that is what is funding George Bush’s mad spending spree.

We have a president who has racked up $2 trillion in extra debt, you know, stone sober, apparently. And someone’s got to pay for that. And basically we're paying for it by effectively an oil tax, which is returned to us, because the Gulf states and our other trading partners are now buying up $2 trillion in U.S. Treasury bonds and debt. So, in other words, they're recycling the money back and paying for George Bush's spending spree on ending inheritance taxes, you know, several wars, etc.

Now, Hugo Chavez says, “I'll give you cheap oil, not only to the poor, but to everyone. But I'm not giving you back the money. That money is going to stay in Latin America to build our nations.” And he just withdrew $20 billion out of the U.S. Federal Reserve. You have to understand, this is a punch in the face of the U.S. administration, far more than withholding oil, withholding and withdrawing petrodollars, as I explain in the book, and that's why you have that little nice floater from -- balloon thrown out by Reverend Robertson, Pat Robertson, saying “Hugo Chavez thinks we're trying to assassinate him, and I think we ought to just go and do it,” because they have got to get that -- it’s not that they need that oil, they need that oil money. And if they can't get it, they have to eliminate Hugo Chavez.

AMY GOODMAN: Is the war in Iraq a war for oil?

GREG PALAST: Is the war in Iraq for oil? Yes, it's about the oil, but not for the oil. In my investigations for Armed Madhouse, I ended up with a story far more fascinating and difficult than I imagined. We didn't go in to grab the oil. Just the opposite. We went in to control the oil and make sure we didn't get it. It goes back to 1920, when the oil companies sat in a room in Brussels in a hotel room, drew a red line around Iraq and said, “There'll be no oil coming out of that nation.” They have to suppress oil coming out of Iraq. Otherwise, the price of oil will collapse, and OPEC and Saudi Arabia will collapse.

And so, what I found, what I discovered that they’re very unhappy about is a 323-page plan, which was written by big oil, which is the secret but official plan of the United States for Iraq's oil, written by the big oil companies out of the James Baker Institute in coordination with a secret committee of the Council on Foreign Relations. I know it sounds very conspiratorial, but this is exactly how they do it. It's quite wild. And it's all about a plan to control Iraq's oil and make sure that Iraq has a system, which, quote, “enhances its relationship with OPEC.” In other words, the whole idea is to maintain the power of OPEC, which means maintain the power of Saudi Arabia.

And this is one of the reasons they absolutely hate Hugo Chavez. As you’ll see in next week's Harper's coming out, which is basically an excerpt from the book, Hugo Chavez on June 1st is going to ask OPEC to officially recognize that he has more oil than Saudi Arabia. This is a geopolitical earthquake. And the inside documents from the U.S. Department of Energy, which we have in the book and in Harper's, say, yeah, he's got more oil than Saudi Arabia.

AMY GOODMAN: And is it accessible?

GREG PALAST: That's the trick. It’s accessible, but the price of oil -- it's heavy oil, which means it costs about -- you need oil to be about $30 a barrel, less than half of what it is now. Chavez says, “Cut a deal with me. Oil will never drop below a minimum price, but we’ll get off this insane world-destroying $75 a barrel. I’ll give you cheap oil, but you just put a floor under it.” He shook hands with Bill Clinton on the deal. And Bush came in and spit on his hand, to say the least. He had the guy kidnapped back in 2002. Bush does not -- you have to remember, he doesn't like cheap oil. When we talk about paying $3-a-gallon gasoline, Bush’s benefactors, donors and his own family collects the $3 a gallon.

AMY GOODMAN: What do you mean?

GREG PALAST: Well, we're paying three bucks a gallon. ExxonMobil is collecting $3 a gallon. There's a chapter called “Trillion-Dollar Babies.” When Bush came in, we had oil as low as $18 a barrel. It was like water. Bush has successfully built up the price of oil from 18 bucks a barrel to over $70 a barrel. That's the “mission accomplished.” He didn't make a mistake here. That's the “mission accomplished.”

ExxonMobil, which after Enron is the biggest lifetime donor to the Bush campaigns, its value of its reserves, of its oil reserves, because of the Bush wars and Bush actions, has gone up by almost exactly $1 trillion in value. Just one company. A trillion-dollar windfall to a single company. That's the Bush benefactors. And you have to look at where’s Bush make his money.

So, the problem that they have now is that Chavez is trying to supplant the Saudis running OPEC, and we've got a president who basically is caught up in, you know, these guys in bathrobes and crowns, these dictators of Saudi Arabia in the Gulf. And that's what the Bush family is linked up to, and they are not going to let them be supplanted by Chavez.

AMY GOODMAN: Greg Palast, when you open your book, Armed Madhouse -- most people have a white space there, but you use every inch, and you have a secret history of the war over oil in Iraq.

GREG PALAST: Yes.

AMY GOODMAN: You have a chronology.

GREG PALAST: Yes. I had a big fight with my capitalist pig publisher to put in this very fancy colorful front page to give you a chronology, the complexity of these secret deals between the administration and big oil. We actually got our hands on two different plans for Iraq's oil, a 101-page plan and a 323-page plan, which is all about, in great detail, what we are going do with Iraq's oil, and the number of Iraqis involved in writing this thing is exactly zero. You know, and of course, the number of Americans who know that that's why we're in Iraq, and we even know from -- in my research for Armed Madhouse, going through this and getting this document, I now know what was in the discussions between the oil companies, Ken Lay and Dick Cheney, in his bunker.

AMY GOODMAN: All right, what?

GREG PALAST: Well, and you’ll see there, they were going over the oil maps of Iraq, and the question was why was Ken Lay, you know, the kind of Al Capone of electricity --

AMY GOODMAN: He’s on trial right now, of course, in Houston.

GREG PALAST: -- who's on trial right now. The verdict is about to come down. Why was he in the meeting with oil companies, looking over the maps of Iraq? The answer is he was on this committee, drafting up the program for what to do about Iraq. And they had to get rid of Saddam, because he was jerking the oil markets up and down. I was very interested in why did we go into Iraq suddenly, and the answer was he was destabilizing the oil markets. He was making it jump up, making it jump down. And he had to go. And that's right in the documentation.

AMY GOODMAN: Plan B?

GREG PALAST: Plan B -- there are two plans. There was a neo-con plan, which was 101 pages long. Now, they actually did want to break up OPEC and destroy Saudi Arabia, but the Bush family wasn't going to let that happen, nor was big oil. And you will see behind this all: James Baker and, of course, Dick Cheney. You know, actually the interesting thing -- I was just realizing this morning -- four years of investigation, Amy, you’ll find in the book. You’ll see all the stuff about the hugger muggers between Cheney, big oil, Rumsfeld, Jim Baker. Nowhere is there any discussion of George Bush. He was not in the picture. He was not in the frame. Basically, there was no decision made or even discussed with George Bush. He’s the president who’s not there.

AMY GOODMAN: We’re talking to Greg Palast. He has written a new book. It is called Armed Madhouse, short title, extremely long subtitle, Who's Afraid of Osama Wolf?, China Floats, Bush Sinks, the Scheme to Steal ‘08, No Child’s Behind Left, and Other Dispatches from the Front Lines of the Class War. Why “Armed Madhouse"?

GREG PALAST: That’s back to the Allen Ginsberg's Howl, my old teacher. He said, “The soul should not die ungodly in an armed madhouse.” It's like we have a circus of -- it’s like we have the asylum taken over by the inmates, and they're quite dangerous. And so, we have to get out of it. So, in a way, the idea is to kind of arm you with the information.

AMY GOODMAN: The scheme to steal ‘08?

GREG PALAST: Yeah. Well, for those who, you know, know my background, I came to the U.S. attention when I broke a story that before the 2000 election, Jeb Bush and Katherine Harris knocked off tens of thousands of black voters off the voter rolls of Florida, and this is what gave the election to George Bush in 2000. It was fixed by knocking off of these black voters. There’s a chapter in the new book --

AMY GOODMAN: You broke this on BBC.

GREG PALAST: Yeah, I broke this on BBC, and to get in the United States, we got Michael Moore to put on a chicken suit and report it here as a joke. And then, thank you very much, Amy, for bringing it across the water and breaking through the electronic Berlin Wall. By the way, all of these stories are stories developed out of BBC and Guardian that basically are blacked out, except for here on Democracy Now! That's very important, because these are the stories that they don't want you to have for good reason. And they don't want you to have it, because -- I then followed up with 2004. Now, it’s accepted 2000 pretty much was fixed. Well, there’s a chapter, “Kerry won.” 2004 was fixed. And the way it was done is that 3.6 million votes were cast and never counted in the United States. That's very important to know. This isn’t Greg Palast conspiracy nut stuff.

AMY GOODMAN: Say the number again.

GREG PALAST: 3.6 million ballots cast, never counted. And that's because they call these spoiled votes or rejected provisional ballots, 1.9 million so-called provisional ballots, and then, most of those don't get counted. And so, whose votes don't get counted? If it was random, it wouldn’t matter. In other words, if these were votes where the machine doesn't record it properly, hanging chads, extra marks on a paper ballot, you had the wrong address on your absentee ballot, etc.

Three million ballots. Whose ballots? If you're a black person, the chance your ballot will be technically invalidated is 900% higher than if you're a white voter. Hispanic voter, 500% higher than if you're a white voter. Native Americans, it’s like 2,000% higher than if you're a white voter. The overwhelming majority -- and I went to the state of New Mexico, which supposedly Bush won by 5,000 votes, 89% of the ballots were cast out of minority precincts that were thrown away. Kerry won New Mexico. You go into the dumpster, and it’s black votes, 155,000 black votes that were chucked away in Ohio. Kerry won those votes. He won Ohio.

AMY GOODMAN: ’08?

GREG PALAST: And ‘08, so what's happening is there is no fix of the system. In other words, just like black folk get bad schools and bad hospitals, they get the bad voting machines, which are going to kill those votes. But they're not satisfied with just letting the ballots be thrown away. They're going to move it along. And one of the things I discovered is the Republican Party has something called “caging lists,” which came to our -- you know, just like you had Friday, the way the Yes Men capture material by using false websites, so through a false website we were able to capture Republican Party internal missives, through georgebush.org.

And so, what happened was is that they sent us a bunch of lists of literally tens of thousands of names of voters and addresses. We were wondering what the heck this was. It turns out these were almost all African American voters, who they were prepared to challenge in 2004, and they did, to say that these people shouldn't vote, because their addresses are suspect. And you'll see in the book that in the lists of thousands of black voters that they were challenging over their address were thousands of black soldiers who were sent to Iraq; go to Baghdad, and the Republican Party challenges your vote.

And that’s the beginning, and because there's been really no action taken, they're accelerating the system now. And the next thing that they’re going after is the Hispanic vote. So when we saw two million votes cast/not counted in 2000, nearly four million votes cast/not counted in 2004, you're going see that number massively increase in challenges to voters in 2008. And that's what's going back to this database story with the National Security Agency.

AMY GOODMAN: We have 30 seconds.

GREG PALAST: So, you have to say, “Why are they collecting this data?” The answer is 2008. It's ultimately all about the elections.

AMY GOODMAN: Well, this is part one. Greg Palast, I want to thank you for being with us. You'll be traveling around the country, and you can go to our website at democracynow.org. We will link to Greg's website, gregpalast.com. Greg Palast’s book is called Armed Madhouse: Who's Afraid of Osama Wolf?, China Floats, Bush Sinks, the Scheme to Steal ‘08, No Child’s Behind Left, and Other Dispatches from the Front Lines of the Class War.

To purchase an audio or video copy of this entire program, click here for our new online ordering or call 1 (888) 999-3877.

Group: Internal memos show oil companies limited refineries to drive up prices
Internal Texaco memo, March 1996
Rawstory

The Foundation for Taxpayer and Consumer Rights (FTCR) today exposed internal oil company memos that show how the industry intentionally reduced domestic refining capacity to drive up profits, RAW STORY has learned.

The three internal memos from Mobil, Chevron and Texaco illustrate how the oil juggernauts reduced refining capacity and drove independent refiners out of business in an effort to increase prices. The highly confidential memos reveal a nationwide effort by American Petroleum Institute, the lobbying and research arm of the oil industry, to encourage major refiners to close their refineries in the mid-1990s.

"Large oil companies have for a decade artificially shorted the gasoline market to drive up prices," said FTCR president Jamie Court, who successfully fought to keep Shell Oil from needlessly closing its Bakersfield, California refinery this year. "Oil companies know they can make more money by making less gasoline. Katrina should be a wakeup call to America that the refiners profit widely when they keep the system running on empty."

"It's now obvious to most Americans that we have a refinery shortage," said petroleum consultant Tim Hamilton, who authored a recent report about oil company price gouging for FTCR. "To point to the environmental laws as the cause simply misses the fact that it was the major oil companies, not the environmental groups, that used the regulatory process to create artificial shortages and limit competition."

The memos from Mobil, Chevron and Texaco show the following.

-- An internal 1996 memorandum from Mobil demonstrates the oil company's successful strategies to keep smaller refiner Powerine from reopening its California refinery. The document makes it clear that much of the hardships created by California's regulations governing refineries came at the urging of the major oil companies and not the environmental organizations blamed by the industry. The other alternative plan discussed in the event Powerine did open the refinery was "....buying all their avails and marketing it ourselves" to insure the lower price fuel didn't get into the market.

-- An internal Chevron memo states; "A senior energy analyst at the recent API convention warned that if the US petroleum industry doesn't reduce its refining capacity it will never see any substantial increase in refinery margins."

-- The Texaco memo disclosed how the industry believed in the mid-1990s that "the most critical factor facing the refining industry on the West Coast is the surplus of refining capacity, and the surplus gasoline production capacity. (The same situation exists for the entire U.S. refining industry.) Supply significantly exceeds demand year-round. This results in very poor refinery margins and very poor refinery financial results. Significant events need to occur to assist in reducing supplies and/or increasing the demand for gasoline. One example of a significant event would be the elimination of mandates for oxygenate addition to gasoline. Given a choice, oxygenate usage would go down, and gasoline supplies would go down accordingly. (Much effort is being exerted to see this happen in the Pacific Northwest.)" As a result of such pressure, Washington State eliminated the ethanol mandate - requiring greater quantities of refined supply to fill the gasoline volume occupied by ethanol.

Hugo Chavez
By Greg Palast
Progressive.org
July 2006 Issue

You’d think George Bush would get down on his knees and kiss Hugo Chavez’s behind. Not only has Chavez delivered cheap oil to the Bronx and other poor communities in the United States. And not only did he offer to bring aid to the victims of Katrina. In my interview with the president of Venezuela on March 28, he made Bush the following astonishing offer: Chavez would drop the price of oil to $50 a barrel, “not too high, a fair price,” he said—a third less than the $75 a barrel for oil recently posted on the spot market. That would bring down the price at the pump by about a buck, from $3 to $2 a gallon.

But our President has basically told Chavez to take his cheaper oil and stick it up his pipeline. Before I explain why Bush has done so, let me explain why Chavez has the power to pull it off—and the method in the seeming madness of his “take-my-oil-please!” deal.

Venezuela, Chavez told me, has more oil than Saudi Arabia. A nutty boast? Not by a long shot. In fact, his surprising claim comes from a most surprising source: the U.S. Department of Energy. In an internal report, the DOE estimates that Venezuela has five times the Saudis’ reserves.

However, most of Venezuela’s mega-horde of crude is in the form of “extra-heavy” oil—liquid asphalt—which is ghastly expensive to pull up and refine. Oil has to sell above $30 a barrel to make the investment in extra-heavy oil worthwhile. A big dip in oil’s price—and, after all, oil cost only $18 a barrel six years ago—would bankrupt heavy-oil investors. Hence Chavez’s offer: Drop the price to $50—and keep it there. That would guarantee Venezuela’s investment in heavy oil.

But the ascendance of Venezuela within OPEC necessarily means the decline of the power of the House of Saud. And the Bush family wouldn’t like that one bit. It comes down to “petro-dollars.” When George W. ferried then-Crown Prince (now King) Abdullah of Saudi Arabia around the Crawford ranch in a golf cart it wasn’t because America needs Arabian oil. The Saudis will always sell us their petroleum. What Bush needs is Saudi petro-dollars. Saudi Arabia has, over the past three decades, kindly recycled the cash sucked from the wallets of American SUV owners and sent much of the loot right back to New York to buy U.S. Treasury bills and other U.S. assets.

The Gulf potentates understand that in return for lending the U.S. Treasury the cash to fund George Bush’s $2 trillion rise in the nation’s debt, they receive protection in return. They lend us petro-dollars, we lend them the 82nd Airborne.

Chavez would put an end to all that. He’ll sell us oil relatively cheaply—but intends to keep the petro-dollars in Latin America. Recently, Chavez withdrew $20 billion from the U.S. Federal Reserve and, at the same time, lent or committed a like sum to Argentina, Ecuador, and other Latin American nations.

Chavez, notes The Wall Street Journal, has become a “tropical IMF.” And indeed, as the Venezuelan president told me, he wants to abolish the Washington-based International Monetary Fund, with its brutal free-market diktats, and replace it with an “International Humanitarian Fund,” an IHF, or more accurately, an International Hugo Fund. In addition, Chavez wants OPEC to officially recognize Venezuela as the cartel’s reserve leader, which neither the Saudis nor Bush will take kindly to.

Politically, Venezuela is torn in two. Chavez’s “Bolivarian Revolution,” a close replica of Franklin Roosevelt’s New Deal—a progressive income tax, public works, social security, cheap electricity—makes him wildly popular with the poor. And most Venezuelans are poor. His critics, a four-centuries’ old white elite, unused to sharing oil wealth, portray him as a Castro-hugging anti-Christ.

Chavez’s government, which used to brush off these critics, has turned aggressive on them. I challenged Chavez several times over charges brought against Sumate, his main opposition group. The two founders of the nongovernmental organization, which led the recall campaign against Chavez, face eight years in prison for taking money from the Bush Administration and the International Republican [Party] Institute. No nation permits foreign funding of political campaigns, but the charges (no one is in jail) seem like a heavy hammer to use on the minor infractions of these pathetic gadflies.

Bush’s reaction to Chavez has been a mix of hostility and provocation. Washington supported the coup attempt against Chavez in 2002, and Condoleezza Rice and Donald Rumsfeld have repeatedly denounced him. The revised National Security Strategy of the United States of America, released in March, says, “In Venezuela, a demagogue awash in oil money is undermining democracy and seeking to destabilize the region.”

So when the Reverend Pat Robertson, a Bush ally, told his faithful in August 2005 that Chavez has to go, it was not unreasonable to assume that he was articulating an Administration wish. “If he thinks we’re trying to assassinate him,” Robertson said, “I think that we really ought to go ahead and do it. It’s a whole lot cheaper than starting a war . . . and I don’t think any oil shipments will stop.”

There are only two ways to defeat the rise of Chavez as the New Abdullah of the Americas. First, the unattractive option: Cut the price of oil below $30 a barrel. That would make Chavez’s crude worthless. Or, option two: Kill him.

Q: Your opponents are saying that you are beginning a slow-motion dictatorship. Is that what we are seeing?

Hugo Chavez: They have been saying that for a long time. When they’re short of ideas, any excuse will do as a vehicle for lies. That is totally false. I would like to invite the citizens of Great Britain and the citizens of the U.S. and the citizens of the world to come here and walk freely through the streets of Venezuela, to talk to anyone they want, to watch television, to read the papers. We are building a true democracy, with human rights for everyone, social rights, education, health care, pensions, social security, and jobs.

Q: Some of your opponents are being charged with the crime of taking money from George Bush. Will you send them to jail?

Chavez: It’s not up to me to decide that. We have the institutions that do that. These people have admitted they have received money from the government of the United States. It’s up to the prosecutors to decide what to do, but the truth is that we can’t allow the U.S. to finance the destabilization of our country. What would happen if we financed somebody in the U.S. to destabilize the government of George Bush? They would go to prison, certainly.

Q: How do you respond to Bush’s charge that you are destabilizing the region and interfering in the elections of other Latin American countries?

Chavez: Mr. Bush is an illegitimate President. In Florida, his brother Jeb deleted many black voters from the electoral registers. So this President is the result of a fraud. Not only that, he is also currently applying a dictatorship in the U.S. People can be put in jail without being charged. They tap phones without court orders. They check what books people take out of public libraries. They arrested Cindy Sheehan because of a T-shirt she was wearing demanding the return of the troops from Iraq. They abuse blacks and Latinos. And if we are going to talk about meddling in other countries, then the U.S. is the champion of meddling in other people’s affairs. They invaded Guatemala, they overthrew Salvador Allende, invaded Panama and the Dominican Republic. They were involved in the coup d’etat in Argentina thirty years ago.

Q: Is the U.S. interfering in your elections here?

Chavez: They have interfered for 200 years. They have tried to prevent us from winning the elections, they supported the coup d’etat, they gave millions of dollars to the coup plotters, they supported the media, newspapers, outlaw movements, military intervention, and espionage. But here the empire is finished, and I believe that before the end of this century, it will be finished in the rest of the world. We will see the burial of the empire of the eagle.

Q: You don’t interfere in the elections of other nations in Latin America?

Chavez: Absolutely not. I concern myself with Venezuela. However, what’s going on now is that some rightwing movements are transforming me into a pawn in the domestic politics of their countries, by making statements that are groundless. About candidates like Morales [of Bolivia], for example. They said I financed the candidacy of President Lula [of Brazil], which is totally false. They said I financed the candidacy of Kirchner [of Argentina], which is totally false. In Mexico, recently, the rightwing party has used my image for its own profit. What’s happened is that in Latin America there is a turn to the left. Latin Americans have gotten tired of the Washington consensus—a neoliberalism that has aggravated misery and poverty.

Q: You have spent millions of dollars of your nation’s oil wealth throughout Latin America. Are you really helping these other nations or are you simply buying political support for your regime?

Chavez: We are brothers and sisters. That’s one of the reasons for the wrath of the empire. You know that Venezuela has the biggest oil reserves in the world. And the biggest gas reserves in this hemisphere, the eighth in the world. Up until seven years ago, Venezuela was a U.S. oil colony. All of our oil was going up to the north, and the gas was being used by the U.S. and not by us. Now we are diversifying. Our oil is helping the poor. We are selling to the Dominican Republic, Haiti, Cuba, some Central American countries, Uruguay, Argentina.

Q: And the Bronx?

Chavez: In the Bronx it is a donation. In all the cases I just mentioned before, it is trade. However, it’s not free trade, just fair commerce. We also have an international humanitarian fund as a result of oil revenues.

Q: Why did George Bush turn down your help for New Orleans after the hurricane?

Chavez: You should ask him, but from the very beginning of the terrible disaster of Katrina, our people in the U.S., like the president of CITGO, went to New Orleans to rescue people. We were in close contact by phone with Jesse Jackson. We hired buses. We got food and water. We tried to protect them; they are our brothers and sisters. Doesn’t matter if they are African, Asian, Cuban, whatever.

Q: Are you replacing the World Bank and the International Monetary Fund as “Daddy Big Bucks”?

Chavez: I do wish that the IMF and the World Bank would disappear soon.

Q: And it would be the Bank of Hugo?

Chavez: No. The International Humanitarian Bank. We are just creating an alternative way to conduct financial exchange. It is based on cooperation. For example, we send oil to Uruguay for their refinery and they are paying us with cows.

Q: Milk for oil.

Chavez: That’s right. Milk for oil. The Argentineans also pay us with cows. And they give us medical equipment to combat cancer. It’s a transfer of technology. We also exchange oil for software technology. Uruguay is one of the biggest producers of software. We are breaking with the neoliberal model. We do not believe in free trade. We believe in fair trade and exchange, not competition but cooperation. I’m not giving away oil for free. Just using oil, first to benefit our people, to relieve poverty. For a hundred years we have been one of the largest oil-producing countries in the world but with a 60 percent poverty rate and now we are canceling the historical debt.

Q: Speaking of the free market, you’ve demanded back taxes from U.S. oil companies. You have eliminated contracts for North American, British, and European oil companies. Are you trying to slice out the British and American oil companies from Venezuela?

Chavez: No, we don’t want them to go, and I don’t think they want to leave the country, either. We need each other. It’s simply that we have recovered our oil sovereignty. They didn’t pay taxes. They didn’t pay royalties. They didn’t give an account of their actions to the government. They had more land than had previously been established in the contracts. They didn’t comply with the agreed technology exchange. They polluted the environment and didn’t pay anything towards the cleanup. They now have to comply with the law.

Q: You’ve said that you imagine the price of oil rising to $100 dollars per barrel. Are you going to use your new oil wealth to squeeze the planet?

Chavez: No, no. We have no intention of squeezing anyone. Now, we have been squeezed and very hard. Five hundred years of squeezing us and stifling us, the people of the South. I do believe that demand is increasing and supply is dropping and the large reservoirs are running out. But it’s not our fault. In the future, there must be an agreement between the large consumers and the large producers.

Q: What happens when the oil money runs out, what happens when the price of oil falls as it always does? Will the Bolivarian revolution of Hugo Chavez simply collapse because there’s no money to pay for the big free ride?

Chavez: I don’t think it will collapse, in the unlikely case of oil running out today. The revolution will survive. It does not rely solely on oil for its survival. There is a national will, there is a national idea, a national project. However, we are today implementing a strategic program called the Oil Sowing Plan: using oil wealth so Venezuela can become an agricultural country, a tourist destination, an industrialized country with a diversified economy. We are investing billions of dollars in the infrastructure: power generators using thermal energy, a large railway, roads, highways, new towns, new universities, new schools, recuperating land, building tractors, and giving loans to farmers. One day we won’t have any more oil, but that will be in the twenty-second century. Venezuela has oil for another 200 years.

Q: But the revolution can come to an end if there’s another coup and it succeeds. Do you believe Bush is still trying to overthrow your government?

Chavez: He would like to, but what you want is one thing, and what you cannot really obtain is another.

Investigative reporter Greg Palast, who interviewed President Hugo Chavez for the British Broadcasting Corporation (BBC), is the author of “Armed Madhouse: Dispatches from the Front Lines of the Class War,” from which this is adapted.

Chavez's cheap oil for US poor angers Washington
By Alec Russell in Washington
November 25, 2005
Sunday Morning Herald

Venezuela's President, Hugo Chavez, has pulled off his greatest public relations coup yet in his campaign to irritate the Bush Administration with a deal to supply cheap fuel to thousands of poor residents of Boston and New York.

To the anger of many in Washington, Citgo Petroleum Corporation, a company controlled by the Venezuelan Government, will supply more than 45 million litres of oil at 40 per cent below market prices.

The deal is one of the most spectacular moves yet in Mr Chavez's attempt to market his "21st-century socialism" using his country's oil wealth.

While it will not change many minds in Washington about his populist and autocratic regime, Caracas hopes it will bolster Mr Chavez's claim as the coming leader of an anti-capitalist Latin America. Mr Chavez, who once dubbed President George Bush a "genocidal madman" and led a huge anti-US protest earlier this month, first proposed his fuel offer in August when oil prices were at a record high after Hurricane Katrina.

Joe Kennedy, the chairman of Citizens Energy, one of the organisations that will distribute the oil, said the deal highlighted the failure of oil companies in the US and the Government to step in to help.

"Our government has made billions of dollars just this year on the royalty payments the oil companies pay to the Government," he said. But when it is a question of poor Americans, "what do we hear from Washington? Sorry boys. There's no money in the till."

To promote his dream, Mr Chavez has offered cheap oil and refineries to his neighbours and pledged financial support for regional development programs.

All the while he has positioned himself as a rival to Washington, accusing the Bush Administration of plotting a coup against him, and predicting the imminent demise of American capitalism.

The US on Wednesday threatened to block a record-breaking arms deal under which Spain would sell ships and aircraft to Venezuela, claiming that the €1.3 billion ($2 billion) arms deal with Mr Chavez could destabilise the region.

The deal, due to be signed in Caracas on Monday, would be a huge boost to Spain's ailing shipyard industry and to the rest of its defence industry.

"Those air or naval platforms include US technology," the US ambassador to Madrid, Eduardo Aguirre, said on Wednesday. "We have not yet decided whether to grant our permission for obtaining that technology."

'Blood in Beirut: $75.05 a barrel'
Greg Palast
July 27, 2006
Smirkingchimp

The failure to stop the bloodletting in the Middle East, Exxon's record second-quarter profits and Iran's nuclear cat-and-mouse game have something in common -- it's the oil.

I can't tell you how it started -- this is a war that's been fought since the Levites clashed with the Philistines -- but I can tell you why the current mayhem has not been stopped. It's the oil.

I'm not an expert on Palestine nor Lebanon and I'd rather not pretend to be one. If you want to know what's going on, read Robert Fisk. He lives there. He speaks Arabic. Stay away from pundits whose only connection to the Middle East is the local falafel stand.

So why am I writing now? The answer is that, while I don't speak Arabic or Hebrew, I am completely fluent in the language of petroleum.

What? You don't need a degree in geology to know there's no oil in Israel, Palestine or Lebanon. (A few weeks ago, I was joking around with Afif Safieh, the Palestinian Authority's Ambassador to the US, asking him why he was fighting to have a piece of the only place in the Middle East without oil. Well, there's no joking now.)

Let's begin with the facts we can agree on: the berserkers are winning. Crazies discredited only a month ago are now in charge, guys with guns bigger than brains and souls smaller still. Here's a list:

idf- Israel's Prime Minister Ehud Olmert's approval rating in June was down to a Bush-level of 35%. But today, Olmert's poll numbers among Israeli voters have more than doubled to 78% as he does his bloody John Wayne "cleanin' out the varmints" routine. But let's not forget: Olmert can't pee-pee without George Bush's approval. Bush can stop Olmert tomorrow. He hasn't.

- Hezbollah, a political party rejected overwhelmingly by Lebanese voters sickened by their support ofhezbollah Syrian occupation, holds a mere 14 seats out of 128 in the nation's parliament. Hezbollah was facing demands by both Lebanon's non-Shia majority and the United Nations to lay down arms. Now, few Lebanese would suggest taking away their rockets. But let's not forget: Without Iran, Hezbollah is just a fundamentalist street gang. Iran's President Mahmoud Ahmadinejad can stop Hezbollah's rockets tomorrow. He hasn't.

- Hamas, just days before it kidnapped and killed Israeli soldiers, was facing certainhamas political defeat at the hands of the Palestinian majority ready to accept the existence of Israel as proposed in a manifesto for peace talks penned by influential Palestinian prisoners. Now the Hamas rocket brigade is back in charge. But let's not forget: Hamas is broke and a joke without the loot and authority of Saudi Arabia. King Abdullah can stop these guys tomorrow. He hasn't.

Why not? Why haven't what we laughably call "leaders" of the USA, Iran and Saudi Arabia called back their delinquent spawn, cut off their allowances and grounded them for six months?

Maybe because mayhem and murder in the Middle East are very, very profitable to the sponsors of these characters with bombs and rockets. America, Iran and Saudi Arabia share one thing in common: they are run by oil regimes. The higher the price of crude, the higher the profits and the happier the presidents and princelings of these petroleum republics.

exxonThis Thursday, Exxon is expected to report the highest second-quarter earnings of any corporation since the days of the Pharaoh, $9.9 billion in pure profit collected in just three months -- courtesy of an oil shortage caused by pipelines on fire in Iraq, warlord attacks in Nigeria, the lingering effects of the sabotage of Venezuela's oil system by a 2002 strike... the list could go on.

Exxon's brobdingnagian profits simply reflect the cold axiom that oil companies and oil states don't make their loot by finding oil but by finding trouble. Finding oil increases supply. Increased supply means decreased price. Whereas finding trouble -- wars, coup d'etats, hurricanes, whatever can disrupt supply -- raises the price of oil.

A couple of examples from today's Bloomberg newswire are:

"Crude oil traded above $75 a barrel in New York as fighting between Israeli and Iranian-backed Hezbollah forces in Lebanon entered its 14th day... Oil prices rose last month on concern for supplies from Iran, the world's fourth largest producer, may be disrupted in its dispute with the United Nations over its uranium enrichment ... [And, said a trader,] 'I still think $85 is likely this summer. I'm really surprised we haven't seen any hurricanes."'

MahmoudIn Tehran, President Ahmadinejad may or may not have a plan to make a nuclear bomb, but he sure as heck knows that hinting at it raises the price of the one thing he certainly does have -- oil. Every time he barks, 'Mad Mahmoud' knows that he's pumping up the price of crude. Just a $10 a barrel "blow-up-in-the-Mideast" premium brings his regime nearly a quarter of a billion dollars each week (including the little kick to the value of Iran's natural gas). Not a bad pay-off for making a bit of trouble.

Saudi Arabia's rake-in from The Troubles? Assuming just a $10 a barrel boost for Middleabdullah Eastern mayhem and you can calculate that the blood in the sand puts an extra $658 million a week in Abdullah's hand.

And in Houston, you can hear the cash registers jing-a-ling as explosions in Kirkuk, Beirut and the Niger River Delta sound like the sleigh-bells on Santa's sled. At $75.05 a barrel, they don't call it "sweet" crude for nothing. That's up 27% from a year ago. The big difference between then and now: the rockets' red glare.

Exxon's second-quarter profits may bust records, but next quarter's should put it to shame, as the "Lebanon premium" and Iraq's insurgency have puffed up prices, up by an average of 11% in the last three months.

So there's not much incentive for the guys who supply the weaponry to tell their wards to put away their murderous toys. This war's just too darn profitable.

We are trained to think of Middle Eastern conflicts as just modern flare-ups of ancient tribal animosities. But to uncover why the flames won't die, the usual rule applies: follow the money.

Am I saying that Tehran, Riyadh and Houston oil chieftains conspired to ignite a war to boost their petroleum profits? I can't imagine it. But I do wonder if Bush would let Olmert have an extra week of bombings, or if the potentates of the Persian Gulf would allow Hamas and Hezbollah to continue their deadly fireworks if it caused the price of crude to crash. You know and I know that if this war took a bite out of Exxon or the House of Saud, a ceasefire would be imposed quicker than you can say, "Let's drill in the Arctic."

Eventually, there will be another ceasefire. But Exxon shareholders need not worry. Global warming has heated the seas sufficiently to make certain that they can look forward to a hellacious -- and profitable -- season of hurricanes.

"This war in Iraq has been the best thing in the world for Big Oil and OPEC. They've made the largest profits in the history of the world. The interesting thing about your book is you show how it was all planned from the beginning. The story is like a spy thriller." -- Robert F. Kennedy Jr.

* * *
THE JERK: WHY SADDAM HAD TO GO
by Greg Palast
Excerpt from 'Armed Madhouse'
A BUZZFLASH GUEST CONTRIBUTION

The 323-page multi-volume "Options for Iraqi Oil" begins with the expected dungeons-and-dragons warning:

The report is submitted on the understanding that [the
State Department] will maintain the contents confidential.

More...

For two years, the State Department (and Defense and the White House) denied there were secret plans for Iraq's oil. They told us so in writing. That was the first indication the plan existed. Proving that, and getting a copy, became the near-to-pathologic obsession of our team.

Our big break came when James Baker's factotum, Amy Jaffe, first reached on her cell in Amsterdam, then at Baker's operation in Houston, convinced herself that I had the right to know about the plan. I saw no reason to correct her impression. To get the plan's title I used a truly dumb trick, asking if her copy's headings matched mine. She read it to me and listed its true authors from the industry.

The plan carries the State Department logo on the cover, Washington DC. But it was crafted in Houston, under the tutelage of the oil industry -- including, we discovered, Donald Hertzmark, an advisor to the Indonesia state oil company, and Garfield Miller of Aegis Energy, advisors to Solomon Smith Barney, all hosted by the James A. Baker III Institute.

After a year of schmoozing, Jaffe invited me to the Baker lair in Houston.

The James A. Baker III Institute is constructed a bit like a church or mosque, with a large echoing rotunda under a dome at its center, encircled by memorabilia and photos of the Great Man himself with the world's leaders, about evenly split between dictators and democrats.

And there is the obligatory shot of a smiling Nelson Mandela shaking Baker III's hand. (Mandela is not so impolite as to remind Jim that he was Reagan's Chief of Staff when Reagan coddled the regime that kept Mandela imprisoned.)

For tax purposes, it's an educational institute, and looking through the alarm-protected display cases along the wall was unquestionably an education. You could virtually write the recommendations of the 'Options for Iraqi Oil' report by a careful inspection of the trinkets of Baker's travels among the powerful.

There is the golden royal robe given Baker by Kazakh strongman Nazerbaev, the one who shared in the $51 million payment from ExxonMobil -- a James A. Baker client -- and alongside it a jeweled sword with a note from Nazerbaev, "Jim, there will always be a slice for you." (I made that up.)

Who is this James A. Baker III that he rates a whole institute, and one that will tell Iraq its oil future? Once Secretary of State to Bush Sr., Baker was now promoted to consigliere to ExxonMobil, the Republican National Committee and the Kingdom of Saudi Arabia.

In Houston, I found in Jaffe a preppy, talky Jewish girl with a Bronx accent like a dentist's drill who, stranded in a cowboy world, poignantly wanted to be one of The Boys. She thinks she can accomplish this through fashion accoutrements -- she showed me her alligator cowboy boots and rolled her eyes -- "for Rodeo Day!"

Lucky for me and my (hidden) recorder, she did not learn from Baker and the boys' Rule #1 for rulers: shut up.

So while Amy was in the mood to say too much, and before I got into the details of Big Oil's plan for Iraq, I needed Amy's help in finding the answer to the question that was just driving me crazy: why did Saddam have to go? Why did the oil industry promote an invasion of Iraq to get rid of Saddam?

The question is basic but the answer is not at all obvious.

We know the neo-cons' answer: Their ultimate target of the invasion was Saudi Arabia, which would be cut low by a Free Iraq's busting the OPEC oil cartel. But Big Oil wouldn't let that happen. The neo-cons' scheme ended up an unnoted smear under Amy's alligator boot heels.

And we can rule out Big Oil's desire for Iraq's oil as the decisive motive to invade. The last thing the oil industry wanted from Iraq in 2001 was a lot more oil.

Neither Saddam's affection for euro currency nor panic over oil supply 'peaking' ruffled the international oil industry. What, then, made Saddam, so easy to hug in the 1980s, unbearable in the 1990s?

Saddam had to go, but why?

Amy told me they held meetings about it.

Beginning just after Bush's Florida 'victory' in December 2000, the shepherds of the planet's assets got together to plan our energy future under the weighty aegis of the "Joint Task Force on Petroleum of the James A. Baker III Institute and the Council on Foreign Relations." The master plan makers included Paul Bremer's and Kissinger's partner, Mack McLarty, CEO of Kissinger McLarty Associates; John Manzoni of British Petroleum; Luis Giusti, former CEO of the Venezuelan state oil company (until Hugo Chavez kicked him out); Ken Lay of Enron (pre-indictment); Philip Verleger of the National Petroleum Council, and other movers and shakers crucial to such bi-partisan multi-continental group gropes -- all chaired by Dr. Edward Morse, the insider's insider, from Hess Oil Trading.

Their final report detailed Saddam's crimes. Gassing Kurds and Iranians? No. James A. Baker was the Reagan Chief of Staff when the U.S. provided Saddam the intelligence to better target his chemical weapons. Weapons of Mass Destruction? Not since this crowd stopped selling him the components.

In the sanitary words of the Council on Foreign Relations' report (written up by Jaffe herself), Saddam's problem was that he was a "swinger":

Tight markets have increased U.S. and global vulnerability
to disruption and provided adversaries undue potential in-
fluence over the price of oil. Iraq has become a key
"swing" producer, posing a difficult situation for the U.S.
government.

Now hold on a minute: Why is our government in a "difficult" position if Iraq is a "swing producer" of oil?

The answer was that Saddam was jerking the oil market up and down. One week, without notice, the man in the moustache suddenly announces he's going to "support the Palestinian intifada" and cuts off all oil shipments. The result: Worldwide oil prices jump up. The next week, Saddam forgets about the Palestinians and pumps to the maximum allowed under the Oil-for-Food Program. The result: Oil prices suddenly dive-bomb. Up, down, up, down. Saddam was out of control.

"Control is what it's all about," one oilman told me. "It's not about getting the oil, it's about controlling oil's price."

So, within days of Bush's election in November 2000, the James Baker Institute issued this warning:

In a market with so little cushion to cover unexpected events, oil prices become extremely sensitive to perceived supply risks. Such a market increases the potential leverage of an otherwise lesser producer such as Iraq...

I met with Falah Aljibury, an advisor to Goldman Sachs, the Baker/CFR group and, I discovered, host to the State Department's invasion planning meetings in February 2001. The Iraqi-born industry man put it this way: "Iraq is not stable, a wild card." Saddam cuts production, or suddenly boosts it, playing games with the U.N. over the Oil-for-Food Program. The tinpot despot was, almost alone, setting the weekly world price of oil and Big Oil did not care for that. In the CFR's sober language:

Saddam is a "destabilizing influence... to the flow of oil to international markets from the Middle East."

With Saddam out of control, jerking markets up and down, the price of controlling the price was getting just too high. Saddam drove the oil boys bonkers. For example, Saddam's games pushed the State Department, disastrously, to launch, in April 2002, a coup d'etat in Venezuela.

This could not stand. Saddam delighted in playing cat-and-mouse with the USA and our oil majors. Unfortunately for him, he wasn't playing with mice, but a much bigger and unforgiving breed of rodents.

Saddam was asking for it. It was time for a "military assessment." The CFR concluded:

Saddam Hussein has demonstrated a willingness to threaten to use the oil weapon to manipulate oil markets... United States should conduct an immediate pol icy review toward Iraq, including military, energy, economic, and political/diplomatic assessments.

The true motive to invade Iraq, Saddam's "manipulation of oil markets," was there, but not yet, in April 2001, the official excuse.

Not surprisingly, the desires of the "Project for a New American Century," the neo-con field of dreams, of remaking Arabia, was not in the Baker Institute-CFR plan. However, the conclusion, Saddam must go, matched the neo-con's policy demand, if for highly different reasons. The Baker-CFR panel had a limited concern: Get rid of the jerk, the guy yanking the market.

Morse was close-lipped about who saw and used the 2001 Baker-CFR report, but Amy Jaffe could not help telling me that Morse reported its conclusions in a briefing at the Pentagon.

More important, back in early 2001, the initial Baker-CFR report (another participant tipped me) was handed directly to Vice President Dick Cheney. Cheney met secretly with CFR task force members (including Ken Lay) to go over the maps of Iraq's oil fields. That, apparently, sealed it. Cheney took the CFR/Baker recommendations as his own plan for dissecting Iraq, I'm told, beginning with the none-too-thinly-veiled take-out-Saddam "assessment."

And whose plan was it? I knew the membership of the Baker-CFR group was Big Oil and its retainers. But I was curious to know who put up the cash for drafting the extravagant report that was so protective of OPEC and Saudi interests. This document was, after all, the outline on which the Bush administration drew its grand design for energy, from Iraq to California to Venezuela. According to Jaffe, the cost of this exercise in Imperialism Lite was funded by "the generous support of Khalid al-Turki" of Saudi Arabia.

Middle East at a crossroads
by Richard Heinberg
by MuseLetter / Energy Bulletin
4 Aug 2006

At the fifth annual conference of ASPO (the Association for the Study of Peak Oil), held in July in Pisa, Italy, there were many excellent presentations, one of which I will report on at some length below.

But the timing of the conference proved ominous. During two weeks of travel in Italy I had only occasional access to the Internet or to other news sources, and heard only sporadic reports on the unfolding crisis in Israel, Gaza, and Lebanon. Back home, I quickly caught up on the events.

The situation clearly requires comment, as it has enormous implications both for the world as a whole and for the small but growing community of people involved in preparations for Peak Oil. Mainstream reporting seems to miss much of the context of events and, when discussing the Middle East, the geopolitical struggle for control of energy resources nearly always forms much of that context.

Israel / Palestine / Hezbollah / Lebanon

It seems useful to start by recounting a timeline of the crisis, but that’s not as easy as it sounds. Where does one start? What incidents should be mentioned or not mentioned? The following is my best effort, but may strike some as incomplete or skewed.

In elections held last year, the Palestinian people voted in a Hamas government, which came to power in January. Israel and the US responded by refusing to recognize the new government’s legitimacy; since then, there has been a steady escalation of tensions between Israel and the Palestinian authority.

On June 24 Israeli soldiers kidnapped a Palestinian doctor and his brother in Gaza and removed them to some unspecified detention facility. This would not be a particularly noteworthy event, except for the fact that on the following day militants in Gaza—perhaps in retaliation—kidnapped an Israeli soldier.

Israel responded with dramatically intensified attacks on Gaza.

Then, on July 12, Hezbollah—a political and military Shia Muslim organization based in Lebanon—captured two Israeli soldiers and killed six others. According to the official Israeli version of the story, this occurred during a cross-border raid by Hezbollah into northern Israel. However, early press accounts said that Israel had sent a commando force into southern Lebanon; these commandoes, operating near the village of Aitaa al-Chaab inside Lebanon’s southern territory, were then allegedly engaged by Hezbollah fighters, who struck an Israeli tank.

In either case, over the next days and weeks Hezbollah fired hundreds of rockets into Israel, killing dozens and wounding many more, while Israel bombed southern Lebanon, using (according to some reports) chemical weapons and cluster bombs, killing hundreds and destroying roads, bridges, power stations, and other civilian infrastructure.

US Secretary of State Condoleeza Rice traveled to Lebanon on July 23, but not to broker a ceasefire; instead she called a ceasefire “premature.” In Washington she had said that Israel should ignore calls for a ceasefire; en route to Beirut she honed the message: while there was an “urgent” need for peace, conditions had to be right. In Beirut Rice explained that those “right” conditions consisted essentially of the satisfaction of Israel’s goals in the conflict; she also called for the creation of “a new Middle East”—a phrase that can inspire little hope or comfort in the inhabitants of the region, given what the US has accomplished in Iraq during the past three years. While no one would say so, it was obvious to nearly everyone that the US was refusing to call for a ceasefire to give Israel time to conclude its operations.

On July 26, Israel bombed a UN observer post in Lebanon, killing four. Then, on July 30, Israeli bombs killed 54 civilians (mostly women and children) in Qana, raising such international outrage that Israel felt compelled to suspended most of its bombing campaign for 48 hours.

As of this writing, Rice is proposing a ceasefire to be implemented on condition of the banning of arms sales to Hezbollah, the moving of the Lebanese army to the southern region, and the creation of an international force as a backup. There is no mention, in this proposal for a “lasting” peace, of an Israeli pullback from Gaza or the release of hundreds of Lebanese prisoners. Meanwhile, Israel has commenced a large-scale ground offensive that seems likely to continue for at least a couple of weeks.

This is more or less what we know—given the differences in the versions being rehearsed by news outlets and government officials. But there is much that is even less clear: Why is this happening now? What are the motives of Israel, Hezbollah, and the US? And in what direction are the events headed?

Hezbollah’s initial motive seems principally to have been to gain a couple of Israeli hostages to use as bargaining chips in exchange for Lebanese, Palestinian, and Hezbollah prisoners held in Israel. Hezbollah’s leader, Sheik Hussein Nasrallah, made it perfectly clear months prior to the commencement of the current hostilities that this was the plan. Secondarily, Hezbollah wishes to support the embattled Palestinians in Gaza. There are those who have suggested that Hezbollah was acting at the behest of Iran in order to deflect international attention from that nation’s nuclear research program (more on that below), but this suggestion seems far-fetched.

It would be a mistake to probe only Hezbollah’s motives in the conflict while assuming (as most American politicians and news outlets do) that Israel is merely responding self-defensively to a situation imposed upon it. First, there is the legitimate question as to whether Israel provoked the conflict through its own cross-border incursion; then there is an article published in the San Francisco Chronicle on July 21 (“Israel Set War Plan More than a Year Ago,” by Matthew Kalman), detailing how Israel’s campaign against Hezbollah in Lebanon was in fact planned months in advance, merely requiring a proximate trigger. If this is the case, then it is Israel’s motives that we should probe first and foremost. According to leftist international affairs commentator Pepe Escobar, in “The Spirit of Resistance” (Asia Times, July 26, www.atimes.com/atimes/Middle_East/HG26Ak02.html),

As far as Lebanon is concerned, Israel wants nothing less than a permanent buffer zone on its northern flank. And if Lebanon turns into an Iraq, even better—although the Lebanese have learned the hard way about sectarianism and won’t “Iraqify” their own country. Beirut will be rebuilt—again, and again the Hariri clan (with its dodgy deals with the US and the Saudis) will plunge Lebanon in further debt purgatory with regard to the International Monetary Fund and the World Bank, as the clan did in the previous reconstruction process. There’s also the all-important matter of the waters of the Litani River in southern Lebanon. Israel might as well prepare the terrain now for the eventual annexation of the Litani. Beyond Lebanon, Israel is mostly interested also in Syria. The motive: the all-important pipeline route from Kirkuk, in Iraqi Kurdistan, to Haifa. Enter Israel as a major player in Pipelineistan. So Israel wants to grab water (and territory) from Palestine, water (and territory) from Lebanon, and oil from Iraq. This all has to do with the inevitable—the 21st-century energy wars.
While the US is not a direct participant in the conflict, its own aims cannot be ignored. These, according to Escobar, include “cutting off Hezbollah from Lebanese society,” which would in turn “lead to a vulnerable Syria extricating itself from a close relationship with Iran.” In the short term, the United States would like Israel to wipe out Hezbollah, allow the Lebanese government to send its troops to the south of the country, ensure the safety of northern Israel, cut Syria’s influence down to size, and apply greater pressure on Hezbollah-supporting Iran. In the longer term, Washington apparently wants to redraw the political and ideological map of the Middle East in ways set forth in various neoconservative planning documents, regardless of the cost to locals.

Currently, between Israel and Hezbollah, it is unclear whose goals are being accomplished more fully—although on balance it would seem that Hezbollah has had the upper hand so far (this view appears to hold across the international political spectrum). Israel’s devastating attacks seem not to have turned Lebanese society against the militant organization; moreover, Hezbollah’s Viet Cong-style guerilla campaign appears to be succeeding, as merely to survive the sustained Israeli atttack can be counted a victory. As Israel’s ground assault continues, that assessment could change.

But what are the longer-term implications? Where is all of this headed? It may be impossible to assess the situation merely by reference to the current combatants; we must take into account the other trends in the region and how this conflict may play into them.

Iran: Will the US Attack Before November?

At the ASPO conference a riveting presentation was delivered by Terence Ward, a writer (Searching for Hassan) who grew up in Iran and is currently a cross-cultural consultant for businesses, foundations, and governments in the Islamic World and the West. Ward believes that a US bombing attack on Tehran is nearly inevitable (a view that I put forward in MuseLetter #155, March 2005, “Onward to Iran”), and that it will have devastating consequences for the region and for the world.

He began by reminding the audience that there is no clear proof of an Iranian nuclear weapons program, and that what the US and Israel have pointed to as evidence falls short of what would be needed to publicly justify pre-emptive military action. The central question hanging over the proposals and counter-proposals involving the US, Iran, the UN Security Council, and other interested parties including Russia and China, is this: What if both the US and Iranian presidents seek confrontation and war?

Sure enough, on August 1 the US was able to obtain a UN Security Council resolution giving Iran 30 days to end its uranium enrichment program (otherwise permitted by the Nuclear Non-Proliferation Treaty)—which it seems unlikely to do. Events appear to have achieved a relentless, irrational momentum in a direction all too reminiscent of those in the weeks leading up to the 2003 US invasion of Iraq.

Why would the US administration want confrontation with Iran? Perhaps that country represents an essential next step, following “regime change” in Iraq, in the project of remaking the Middle East. From a geopolitical point of view, Iran is located at the juncture of the Middle East and Central Asia. Not only are its own reserves of oil and gas considerable, but it controls access to the Persian Gulf. Iran is thus crucial to oil and gas transshipment routes to Europe, Japan, and the rest of the world.

Neoconservatives appear to believe that, as soon as the bombing commences, Iranians will rise up en masse to overthrow their humiliated rulers—just as they believed that the Iraqi people would welcome an American effort to completely reshape their country’s economy and political system following the invasion.

Ward speculates that Mr. Bush may bomb before the November elections in order to preserve his Republican majority in Congress. However, the US military is already under enormous strain, and would be unable to deal with likely chain reactions following an air attack; and the likely response of the American people is difficult to gauge.

Why might the Iranian leaders want confrontation? Ward made the important point that the current Tehran regime is even less popular domestically than is its US counterpart among Americans. This is shown in the remarkable statistic that, according to a report by the Islamic Republic’s Ministry of Culture and Guidance, less than two percent of the population attends Friday prayers regularly. Ahmadinejad, whose support comes almost entirely from the dwindling ranks of religious fundamentalists, is in power only because his opponent in the most recent election rendered himself utterly odious through blatant corruption.

Iranian hard-liners believe the US bombing will enrage and unite their people. Lacking a strong popular base, the Tehran regime has seized upon “nuclear nationalism” as a way of gaining legitimacy with the masses—just as Bush and company seized upon the issue of national security following 9/11. Ahmadinejad and his cohorts evidently believe that, in the event of an American attack, the Iranian people will rally behind their government, thus injecting new life into the Islamic revolution. In confronting the US and Israel, the hard-liners also expect to be propelled to the forefront of the radical Muslim world.

Iranian exiles, who number roughly two million, generally loathe the current regime and look forward to its collapse, yet fear a conflict with the US, according to Ward. They say the bombing will not only leave the country in ruins, but will play into the hands of the hard-liners.

In discussing the likely scope of the air campaign, Ward foresees a bombing lasting two weeks, targeting 1,000 sites including sea ports, missile defense systems, military bases, airports, industries, and 20 nuclear facilities.

Iran’s response is not hard to guess. The nation has hundreds of undeclared dock and port facilities along its Persian Gulf coast. The Iranian Navy recently conducted exercises in the Strait of Hormuz, in which a thousand small Iranian boats simulated attacks on American ships. The Strait is the world’s only access point for millions of barrels per day of OPEC oil. The passage of tankers through this narrow waterway would almost certainly be interrupted for days, weeks, and perhaps months if hostilities erupted.

An attack on Tehran would also unleash an enormous backlash against the US in Shia areas of Iraq, possibly making the American presence in that country untenable. The Iranians’ capabilities in this regard have not been lost on US military leaders. According to Ward, from American military leaders’ perspective this is a mission from hell. The Pentagon brass are uncertain what targets to attack, because American and European intelligence agencies have found no specific evidence of clandestine activities or hidden facilities.

Thus it would be virtually impossible to gain confirmation of the effectiveness of air strikes in eliminating Iran’s nuclear program. Recently, General Pace, head of the Joint Chiefs of Staff, apparently forced the White House to agree not to use nuclear weapons in its planned bombing campaign. This rebellion by the military has infuriated the White House.

Ward also provided a helpful perspective on the Shia-Sunni divide in Middle East. He noted that the bulk of oil reserves on the planet lie in Shia territory:
The Shia of Saudi Arabia would love to have the same control over their oil revenues as their Shia brothers in Iraq. Long oppressed by the Sunni Wahhabi rulers, these Shia go on pilgrimage to Iran and will react in subtle and overt ways if Iran is attacked. Bahrain is over 95% Shia and has experienced unrest before along the Shia/Sunni divide. Dubai is a large center of Persian-speakers and Iranian influence. Kuwait is also 30% Shia. In Aramco and KOC, the Shia vastly represent the local skilled labor force. An incident like the attempt on the Abqaiq collection stations by al-Qaeda operatives is not out of the question.
Ward pointed out that the Saudi and Jordanian monarchies speak openly of a radical “Shia crescent” across the Middle East, and that both ruling families would support a US strike against Iran. The Shia-dominated government of Iraq strikes fear in the hearts of Saudi leaders because they know it emboldens Shias in the Saudi oil-rich Eastern Province of al-Hassa. It is the emergence of Iran as a regional power that is their principal concern, not Israel.

Southern Lebanon is Shia majority, and Syria’s Bashar al-Assad is a member of the Alawite Shia sect. The alliance between Hezbollah and the Syrian regime is strong, and Iran has provided monetary and military assistance to Hezbollah for decades. Thus the current conflict in southern Lebanon carries a deep resonance across the region.
Ward also notes:
Many Sunnis view the US and Shia cooperation in Iraq as a conspiracy against them—a “Wahhabi containment policy.” The profound conviction among much of the Arab world today, including the Saudi royal family, is that the U.S. plans to do the same to Saudi Arabia that they have engineered in Iraq. Like Iraq, the theory goes, Saudi Arabia would be divided into three parts. The moderate Hashemites of Jordan would regain their historic control of the holy cities of Mecca and Medina; autonomous Saudi Shia would control the oil-laden Eastern Province; and the Wahhabis would be left baking in the sands of the Nejad Desert.
Thus the bombing of Iran could trigger wider chaos in the region, provoking not only temporary oil shortages and a global recession, but a wholesale reconfiguration of the Middle East in ways difficult to foresee.

Ward offered this helpful insider’s view of Iranian politics:
Iran’s clerical regime includes three pragmatic factional power blocs willing to engage in an opening to the USA: Mehdi Karroubi, Mostapha Moin, and Hashemi Rafsanjani, the Leader of the unelected Guardian Council. They all continue to openly criticize the President, who is increasingly viewed as a loose cannon. His Messianic claims have proved more controversial in Iran itself than in the West. Among the President’s critics, the “dealmaker” Rafsanjani may be a significant figure, for he represents the business class and the unelected clerics. These three factions, in contrast to Ahmedinejad, do not thrive on a siege mentality or on provoking a clash with the West.
When hostilities eventually ceased, negotiations between the US and Iran would necessarily ensue. Why not pursue them now and bypass the intervening catastrophe?

Ward discussed a recent Trilateral Commission Report—Is There a Plan B?—prepared for the plenary meeting of the Trilateral Commission in Tokyo, which recommended US-Iran negotiations with the goal of creating a Regional Middle East Nuclear Council, which would engage all countries with nuclear weaponry: The United States, Russia, Israel, Iran, China, India, Pakistan, Japan, the UK and France. IAEA inspections would be accelerated, with open, transparent, unrestricted access in all countries. Israel would be provided with a comprehensive security package, and Iran would be offered explicit US security guarantees. Meanwhile the Middle East would be offered a modern Marshall Plan to provide Palestine, Jordan, Tunisia, Morocco, Turkey, Egypt and Algeria access to the WTO and World Bank funding. A regional Middle East Water Council would deal with the region’s most valuable resource. Potential members would include Turkey, Syria, Lebanon, Iraq, Israel, Palestine, and Jordan. Finally, a Middle East Energy Council would deal with the region’s other valuable resources—oil and gas. Regional pipelines, oil security, technology-sharing, and reservoir depletion and monitoring would all be discussed. Such a council would include Saudia Arabia, the United Emirates, Kuwait, Bahrain, Oman, Yemen, Iraq, and Iran.

This plan has the potential to avert the looming conflict, but it is handicapped by conventional Western notions about the benefits of association with the World Bank and WTO.

Ward’s presentation was remarkable for its depiction of Bush and Ahmadinejad as two sides of the same coin. Both need external conflict to maintain domestic legitimacy, and both are right-wing hard-liners supported by religious fundamentalists; they are also unpopular at home and habitually rely on bravado to boost their image.

There are those who maintain that a US attack on Iran is unlikely because the negative consequences for America would be severe and the benefits few or nonexistent. I recently made the acquaintance of an Air Force officer with a high-level security clearance who receives daily classified briefings; while being careful not to divulge secret information, he insisted that no bombing campaign is being seriously contemplated. I can only hope he’s right.

Iraq: This Is What Collapse Looks Like

The war between Israel and Hezbollah in southern Lebanon and the growing hostilities between the US and Iran are of course unfolding in the context of the failed US occupation of Iraq. There, ethnic conflicts are deepening, a de facto civil war rages, and a partition of the country seems likely if not inevitable.

Iraqi Grand Ayatollah Ali al-Sistani was recently forced to issue a fatwa denouncing the Israeli assault on southern Lebanon. Even the US-supported Iraqi president had to make statements critical of Israel while in Washington, embarrassing his official hosts. But any other attitude would have been unacceptable to his constituents. So far, the only thing to unite Baghdad’s parliament—consisting of Sunnis, Shias, and Kurds—is condemnation of Israel and the call for a ceasefire.

Fiery nationalist Shia leader Muqtada al-Sadr, whose rising influence now rivals that of Sistani, said at a recent Friday sermon in Kufa, “I will continue defending my Shi’ite and Sunni brothers, and I tell them that if we unite, we will defeat Israel without the use of weapons.” Were Muqtada’s Mehdi Army to join with the few thousand Sunni Arab guerrillas currently bedeviling US troops, Iraq would quickly become untenable for the Americans.

Mr. Bush has repeatedly announced a “turning point” in the ongoing war—at the end of the i