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Al-Ahram Weekly Online
18 - 24 October 2001
Issue No.556
Published in Cairo by AL-AHRAM established in 1875
Current issue | Previous issue | Site map
Fuel for the war machine
Big Oil, defence, and policy-making: Pascale Ghazaleh discovers some
curious connections
Outside the oil industry, not many people would have exclaimed over
the news, in January 1998, that the Taliban had signed an agreement
allowing a 1,272km, $2-billion, 1.9- billion-cubic- feet-per-day
natural gas pipeline project to proceed. The proposed pipeline,
according to the US government's Energy Information Administration
(EIA), would have transported natural gas from Turkmenistan's
Dauletabad natural gas field to Pakistan, and was projected to run
from Dauletabad south to the Afghan border, through Herat and
Kandahar, to Quetta in Pakistan before linking up with Pakistan's
natural gas grid at Sui.
By March, however, Unocal, the company leading the project, had announced that details
would not be finalised immediately due to the civil war in Afghanistan. In August, the
company announced it was suspending its role in
the pipeline because of the military action the US government was taking in
Afghanistan, as well as fighting between the Taliban and the opposition. By the end of
the year, according to an EIA Country Analysis Brief, Uno
cal was announcing its withdrawal from Centgas (the Central Asian Gas Pipeline Ltd.)
-- the consortium responsible for building the pipeline -- "citing low oil prices and
turmoil in Afghanistan as making the pipeline proj
ect uneconomical and too risky." It had previously stated that the pipeline project
would not proceed until an "internationally recognised government" was in place in
Afghanistan. Unocal, however, was no stranger to unpop
ular governments: it was, after all, part of the consortium building a pipeline in
Burma that human rights groups slammed for using forced labour and cooperating with a
military dictatorship. Among the other members of th
at consortium, incidentally, was an oil company named Halliburton -- of which the CEO
was none other than current Vice- President Richard Cheney. Unocal and Halliburton
share other affinities, however: at the Collateral D
amage Conference of the Cato Institute on 23 June 1998, Cheney himself made some of
these clear, noting that "70 to 75 per cent of [Halliburton's] business is energy
related, serving customers like Unocal, Exxon, Shell, C
hevron and many other oil companies around the world."
But back to Afghanistan. Until Unocal relinquished its shares in Centgas, it had held
an 85 per cent stake in conjunction with the Saudi Arabian company Delta Oil (which
became the leader of the consortium following Unoca
l's withdrawal). Other holders included Pakistan's Crescent Group, Russia's Gazprom,
South Korea's Hyundai Engineering & Construction Company, and two Japanese firms,
Inpex and Itochu. When the consortium was formed, Mart
y Miller, Unocal Corporation vice-president responsible for new ventures in Central
Asia and Pakistan, had explained that "no other import project can provide such
volumes of natural gas to [the markets of India and Pakis
tan] at a lower price. Market analyses, according to a Unocal press release dated 27
October 1997, "indicate that Pakistan's electric power generation market will be the
main consumer of the imported gas."
>From top: stuck in the middle -- the Centgas pipeline would have sliced through Herat
>and Kandahar; the Bushes pray; Mr and Mrs Cheney in 2000; the rubble of Afghanistan
To any amateur conspiracy theorist, that information seems almost too good to be true.
Removing the Taliban from Afghanistan and installing an "internationally recognised
government" would eliminate the main obstacle to U
nocal's investment in the pipeline project. In this perspective, a side effect of the
US-led attacks -- while they may have been triggered by the 11 September disaster and
the subsequent decision to "root out terrorism" -
- would benefit Big Oil, at least in the long run. Nor is such speculation restricted
to conspiracy theorists. Nina Burleigh, one of the first reporters to enter Iraq after
the Gulf War, observed recently: "So many busine
ss deals, so much oil, all those big players with powerful connections to the Bush
administration. It doesn't add up to a conspiracy theory. But it does mean there is a
significant money subtext that the American public o
ught to know about as 'Operation Enduring Freedom' blasts new holes where pipelines
might someday be buried."
And amid the fanfare of America's "war on terror," it is easy to miss one disturbing
note: it would seem that the decision to attack Afghanistan was taken months ago --
long before 11 September. On 26 June, India Reacts r
eported: "India and Iran will 'facilitate' US and Russian plans for 'limited military
action' against the Taliban if the contemplated tough new economic sanctions don't
bend Afghanistan's fundamentalist regime." As early
as mid-March, there were reports that India, Russia and Iran were heading an
anti-Taliban campaign on the ground, while Washington provided the Northern Alliance
with information and logistical support. Military sources,
according to Jane's Intelligence Review, indicated that Russia and India were using
Tajikistan and Uzbekistan as bases to launch anti- Taliban operations. In the wake of
the 11 September attack, former Pakistani Foreign M
inister Niaz Naik revealed that, in mid- July, "senior American officials" had told
him military action against Afghanistan would take place before the snows -- "by the
middle of October at the latest." Speaking to the BB
C, Naik quoted these officials as having said "that unless Bin Laden was handed over
swiftly America would take military action to kill or capture both Bin Laden and the
Taleban leader, Mullah Omar." And in a puzzling asi
de, Naik observed it was "doubtful that Washington would drop its plan even if Bin
Laden were to be surrendered immediately by the Taleban."
Let us assume, for the moment, that the US government was planning to attack
Afghanistan, and that 11 September merely provided an opportunity to make such plans
public. Why would it have wanted to? The answer seems simpl
e enough: oil, and weapons. Afghanistan's principal selling point is not the
breathtakingly rugged landscape or the rustic lifestyle: it is its strategic position,
in uncomfortable proximity to any pipeline channeling oil
and gas out of Central Asia to India and Pakistan, or west, to Europe and eventually
the US.
Larry Klayman, chairman and general counsel of Judicial Watch, a Washington
public-interest law firm, recently discovered that Bush and Bin Laden are united by
more than just a shared belief in the battle of good vs evil.
Bush Sr, it turns out, is a paid senior adviser to the Carlyle Group, a private
Washington equity firm described by the New York Times as the US's 11th largest
defence contractor. Carlyle's investors include -- no surpri
ses here -- the Bin Laden family, as well as Bush Sr and former Secretary of State
James Baker; and Judicial Watch, according to an 11 October article in the Village
Voice, "says all involved stand to benefit from any inc
rease in U.S. defense spending." Charles Lewis, executive director of the Center for
Public Integrity, spelled it out: "George Bush is getting money from private interests
that have business before the government, while h
is son is president. And, in a really peculiar way, George W. Bush could, some day,
benefit financially from his own administration's decisions, through his father's
investments."
Such a confluence between "private" and "public" interests is not new to US politics;
last year, according to a Chicago Tribune article dated 10 August 2000, questions were
raised over work that Dresser Industries, Inc.,
had been doing to keep Iraqi oil production up. Dresser, it so happens, had been
purchased for $8.5 billion in 1998 by Halliburton. We may remember Halliburton from
its activities in Burma, mentioned earlier. We may also
remember that Richard Cheney was the company's CEO from 1995 to 2000. As defence
secretary in 1991, Cheney had helped wage war against Iraq; less than a decade on, he
was helping Saddam Hussein bypass sanctions imposed by
his administration and enforced under its successor.
During Cheney's stewardship of Halliburton, as an 11 October Center for Public
Integrity investigative report by Knut Royce and Nathaniel Heller reveals, the oil
giant also benefited from almost $4 billion in federal cont
racts and taxpayer- insured loans. Under Cheney's guidance, Halliburton "garnered $2.3
billion in U.S. government contracts... Most of the contracts have been with the U.S.
Army for engineering work in a variety of hot sp
ots, including Bosnia, Albania, Kosovo and Haiti." In return, the firm made
substantial lobbying expenditures, with contributions amounting to over a million
dollars "in soft and hard money to candidates and parties" -- l
argely Republicans. Cheney left Halliburton to run for the vice-presidency; but the
New York Times reported on 12 August 2000 that he had received a retirement package
worth $20 million. Late that same month, he sold 660,
000 of his shares for a $18.3 million profit, promising on 1 September that if
elected, he would forfeit 233,333 options that could not be vested until 2001 or
later, according to AP. Strangely, however, there has been no
mention of that forfeit since. Meanwhile, global conflict and oil prospecting
continue apace.
It is true that war has generally been good to Halliburton; in 1999, according to the
Tribune, its Brown and Root division won substantial portions of Pentagon contracts
worth over $1 billion "for support services for U.S
. troops in the Balkans and at the Incirlik air base in Turkey" -- where the US planes
that patrol the northern no- fly zone over Iraq are stationed. The firm,
interestingly, also won a $100 million contract to improve se
curity at US embassies worldwide.
There is more. Lynne Cheney, otherwise known as Mrs Richard Cheney, served until
recently on the board of Lockheed Martin, the world's biggest weapons manufacturer and
a major Star Wars contractor along with TRW -- anothe
r arms maker, of which the board included none other than Dick Cheney himself. That is
hardly a secret; nor is the fact that National Security Adviser Condoleezza Rice was a
member of the board of Chevron, and helped that
corporation get into Kazakhstan, as Ian Bremmer, president of research and consulting
firm Eurasia Group and senior fellow at the World Policy Institute, told Al-Ahram
Weekly. Zalmay Khalilzad, who served in Reagan's Sta
te Department and Bush Sr's Pentagon, was once chief consultant for Unocal. It gets
better: on 23 May, Khalilzad was appointed special assistant to Bush Jr, and senior
director for Gulf, Southwest Asia and other regional
issues on the National Security Council. The links between administration figures, Big
Oil and defence are numerous: one need only look to James Baker and John Sununu for
further evidence.
Oil, then, greases the palm of war; and war opens the door to oil. Now Congress has
whipped itself into a veritable frenzy of defence spending, and the Pentagon stands to
nab fully half of a $40 billion emergency package
approved in the days immediately following the 11 September attack. On 28 September,
William D Hartung noted in Mother Jones that "Lockheed Martin's F-22, which at more
than $200 million each is the most expensive fighter
plane ever built, will be in a much stronger position to stave off future budget cuts
if Congress continues to ramp up Pentagon spending." And that's just for starters.
"The Bush administration," explains Hartung, "is po
ised to accelerate weapons sales to the Middle East and South Asia, including pending
deals to transfer Lockheed Martin F-16s to Oman and the United Arab Emirates; a sale
of the Lockheed Martin Multiple Launch Rocket Syst
em (MLRS) to Egypt; and possible exports to Pakistan of spare parts for its F-16s,
C-130 transport planes, and P-3 surveillance aircraft (all Lockheed Martin products)."
All in the name of the war on terror. Hartung concl
udes: "Just as his father did in the run-up to the 1991 Persian Gulf War, President
Bush plans to swap arms sales for political and military support for his war on
terrorism" -- for Lockheed Martin is only one of the bene
ficiaries from the budget increase.
All this is not to say that evil individuals with insalubrious oil and defence
interests are working behind the scenes to manipulate US foreign policy. It does seem,
however, that gaining a secure foothold in Central Asia
will benefit a few members of the present administration, as well as their former
employers, not to mention the military-industrial complex as a whole. In other words,
the defence industry will make money off waging war,
and the oil industry will benefit from a US military presence in or around
Afghanistan. If one happens to be active in both -- well, sounds like a textbook
win-win situation.
Oil, defence and politics, in other words, are not mutually exclusive interests.
Indeed, US foreign policy is intimately entwined with US businesses abroad, as a
Washington Post article (26 October 2000) demonstrates. Acc
ording to AP writer Katherine Pfleger, "U.S. diplomats lobbied foreign governments,
banks and state-run companies to assist two business deals" for Halliburton.
Specifically, officials "helped arrange financing" from the
Export-Import Bank, which provides credits and loan guarantees for U.S. businesses
investing overseas; as a result of these efforts, Angola obtained a $68 million loan
package allowing it to sign an oil services contract
with Halliburton.
The same Export-Import Bank has been involved in other oil deals; most recently, it
guaranteed $489 million in credits to a Russian oil company "whose roots are imbedded
in a legacy of KGB and Communist Party corruption,
as well as drug trafficking and organized crime funds," according to Royce and
Heller's report. The Russian company, Tyumen Oil Co., is represented by the blue- chip
Washington law firm Akin, Gump; its lead attorney, writ
e Royce and Heller, is James C Langdon Jr, who also happens to be one of George W
Bush's "Pioneers" -- one of the elite fundraisers who brought in at least $100,000 for
W's presidential campaign.
Bremmer, however, argued that, while "both Cheney and Rice have had strong interests
in developing Western investment into the Caspian Basin, I don't think this has played
a meaningful role in the present war in Afghanist
an." Conceding that "Central Asia's importance has clearly increased for the United
States" because of the war, he warned nonetheless: "There are no illusions about the
greater strategic role [the Central Asian states] pl
ay for the Russian Federation, and the significance of Russian cooperation to maintain
their support for the long term." Yet a 1998 report prepared by Rajan Menon, professor
of international relations at Lehigh University
and adjunct professor at Columbia University's Harriman Institute, for the National
Bureau of Asian Research, a nonprofit, nonpartisan institution, attributed the Unocal
project in part to the Caspian Sea energy-producin
g nations' desire to build pipelines that bypass Russia. And with the signing on 29
September of the deal between Azerbaijan and Georgia, which provides alternative fuel
sources for those countries as well as Turkey (all
of which rely on Russia for gas), it would seem that Russian influence in the Caspian
area has already been dealt quite a blow.
By juggling Big Oil, defence, and government, at any rate, senior members of the US
administration have ensured that they have a finger in every possible pie. The
picture, though, is not completely crystal clear. Royce, c
o-author of the investigative report cited above, told the Weekly:
"If anything, the decision to send US troops to the region and to
launch raids inside a Muslim country could have the effect of
destabilising neighbouring countries, including large oil producers,
notably Saudi Arabia." And in that arid kingdom, too, the temperature
is rising.
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