[R-G] Halliburton Preparing to Steal Oil from the People of Iraq
u_majeed at straight.com
Sun Jul 13 14:01:44 MDT 2003
U.S. May Tap Oil for Iraqi Loans
The White House weighs a plan to pledge future revenue to finance postwar
reconstruction. Critics question the effort's legitimacy.
By Warren Vieth
The Los Angeles Times
Friday 11 July 2003
WASHINGTON - The Bush administration is considering a provocative idea to
pledge some of Iraq's future oil and gas revenue to secure long-term
reconstruction loans before a new Iraqi government is in place to sign off
on the proposal.
The plan, endorsed by the Export-Import Bank of the United States and some
of America's biggest companies, would help avert a looming cash crunch that
has the potential to stall the postwar rebuilding effort. One U.S. official
rated the proposal's prospects at 50-50.
But the plan is drawing fire from some administration officials,
lawmakers, policy analysts and prominent Iraqis who say it would mortgage
the Persian Gulf nation's most treasured resource, prevent future leaders
from deciding how to spend their oil money and put U.S. taxpayers at risk.
"Iraqis believe their oil should not be touched by foreigners, that it
should remain in the hands of the Iraqi government and that no one has a
right to do anything before an elected government is in place," said Fadhil
Chalabi, executive director of the Center for Global Energy Studies in
London and a former Iraqi Oil Ministry official.
"As an economist, I believe in what they are proposing. You couldn't come
up with a better formula," Chalabi said. "But Iraqi politics and the way
they look at these things are not encouraging. It could create problems
later on. Better to wait until a government is formed."
That may be too late, in the view of the plan's supporters. The
Export-Import Bank and an industry coalition that includes Halliburton Co.,
Bechtel Group Inc. and other major companies that are interested in winning
contracts in Iraq are warning that unless steps are taken soon to secure new
funds, the reconstruction well could run dry.
"Common sense says get Iraq running. How do you get the country running?
By using its own oil revenue 100% for the benefit of the Iraqi people," said
Export-Import Bank Chairman Philip Merrill. "If you want to wait three or
four years, be my guest. But that means the country is going to be running
on the dole of the United States."
Many experts agree that Iraq is headed for a possible cash flow crisis as
reconstruction costs escalate, initial funds are depleted and the resumption
of oil exports is delayed due to damage caused by looting and sabotage.
But they part company over whether the U.S.-led occupation administration
in Baghdad has the legal or moral authority to pledge future oil revenue as
loan collateral before the issue can be debated by elected Iraqis.
"Unless a reconstituted Iraqi government or the U.N. Security Council
authorizes the plan, it appears to violate international law," said Rep.
Henry A. Waxman (D-Los Angeles). "We do not have the right, without
additional authority, to impose financial obligations on the future
government of Iraq."
Waxman, the ranking Democrat on the House Government Reform Committee, has
asked the Export-Import Bank, the Pentagon and the U.S. Army Corps of
Engineers to disclose more information about the proposal and the role
played by Halliburton and other companies in crafting it.
Opponents of the plan warn that if a future Iraqi government chose to stop
making payments on the obligations, U.S. taxpayers could wind up holding the
"We're going to be on the hook, just like U.S. banks were on the hook to
Mexico in the early 1980s and U.S. lenders were on the hook to South America
in 1990," said independent energy economist Philip K. Verleger Jr.
Although the proposal is under consideration in Washington and Baghdad,
the State Department has expressed concern about the preemption of Iraqi
decision-making authority and the possibility that a future government might
choose to default on the debt.
The Treasury Department has voiced similar reservations, warning that the
creation of a new class of debt could complicate U.S. efforts to persuade
other countries to write off or restructure Iraq's massive prewar debt
Still, a Treasury official who requested anonymity said the plan has merit
and might well win approval. "It's a 50-50 proposition right now," the
Experts estimate that rebuilding Iraq could cost anywhere from $20 billion
to $100 billion over several years. Oil exports are expected to net about
$3.5 billion this year and $14 billion in 2004. But some of that money will
be needed for other purposes, and coalition officials continue to scale back
their export targets as pipeline explosions and power outages constrain
The administration has been financing reconstruction from a $7-billion
pool of congressional appropriations, international contributions and seized
Iraqi assets. But concern is growing that the rising costs could consume all
of the money set aside so far and that initial oil sales will not make up
"Existing revenues for reconstruction are not adequate to sustain the
effort much beyond the end of this year," said Edmund Rice, president of a
business group called the Coalition for Employment Through Exports. "The
crunch could come in late autumn or after the first of the year. But roughly
six months is when they're going to hit the wall on resources."
The oil loan proposal is designed to bridge the funding gap. Under the
plan, a portion of Iraq's future oil and gas revenue would be pledged as
collateral to repay loans or bonds issued to finance infrastructure
improvements. An Iraq Reconstruction Finance Authority would be established
to review projects and arrange the financing.
The industry coalition has proposed using the financing mechanism to raise
$3 billion to $4 billion a year for reconstruction work on a
project-by-project basis. The Ex-Im Bank envisions raising $25 billion to
$30 billion to boost Iraq's oil production to as much as 5 million barrels a
day from its current level of less than 1 million barrels.
Depending on how much money was raised, the plan could wind up claiming
anywhere from a small fraction to the lion's share of Iraq's oil revenue
over a decade or longer.
The Iraqi reconstruction authority would use the borrowed money to pay
contractors for large-scale improvements such as renovating oil wells or
building power plants. The loans would be guaranteed by a consortium of
export credit agencies, including the Ex-Im Bank and its foreign
counterparts. The financing would be reserved for new projects and would be
subject to competitive bidding open to companies from all countries.
"Bechtel and Halliburton would have to rebid on a level playing field with
everybody else," said Rice, whose coalition represents 28 companies and two
trade groups. Members include such California-based giants as ChevronTexaco
Corp., Fluor Corp., Hewlett-Packard Co., Northrop Grumman Corp. and Oracle
Ex-Im Bank officials believe the U.S.-led occupation already has adequate
legal authority to launch the oil loan program. In May, the U.N. Security
Council authorized allied officials to disburse Iraqi oil revenue for
humanitarian purposes, economic reconstruction, disarmament and "other
purposes benefiting the Iraqi people." It did not address the use of future
Bank officials say there is a precedent for such a plan in the region. In
1948, a similar money-raising authority was established in behalf of the new
state of Israel before an elected government was in place to endorse taking
on the financial obligation.
Supporters of the oil loan idea insist that Iraqis should be included in
the decision-making process from the start. But until some form of elected
government is in place, the only Iraqi officials in a position to
participate are those appointed by allied authorities to staff the various
"We're better off to have the Iraqis involved," said Merrill of the Ex-Im
Bank. "Should they have control from Day 1? Probably not. Will they have
control at the end of the decade? For certain. Where on the curve do they
get control? I don't know.
"But they're likely to get there a lot quicker if they've got the money
than if they don't."
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Editor's Note | The letter is available for download in .pdf format by
clicking the above link. This requires the use of Adobe Acrobat Reader,
which is avaible for downlad below.
Tuesday 24 June 2003
Lt. Gen. Robert B. Flowers
ATTN: Directorate of Military Programs
U.S. Army Corps of Engineers
441 G Street, NW
Washington, DC 20314
Dear General Flowers:
I am writing to inquire about U.S. plans to mortgage Iraq's oil to pay for
contracts with private companies like Halliburton and Bechtel.
For many months, opponents of the war in Iraq have been arguing that the
real purpose of the war was to obtain control for the United States over the
vast oil fields in Iraq. In response, the Administration has consistently
said that Iraqi oil belongs to the Iraqi people. Recently, for example you
Iraqis will make all decisions about how much oil and refined products to
produce, when and where to produce for the domestic market and how to
distribute the product...Iraqis will decide for themselves all matters
relating to development, production, sale and distribution of Iraqi
The Wall Street Journal has reported, however, that the United States is
considering a plan to mortgage Iraq's oil to pay for the costs of
reconstruction. Such an arrangement would commit future oil revenue from
Iraqi wells to paying the expenses of major U.S. contractors operating in
Iraq. This policy would appear to conflict fundamentally with the claim that
Iraq's oil belongs to the Iraqi people. In effect, the country's oil
revenues would belong to Halliburton, Bechtel and the other large U.S.
corporations operating in Iraq.
Not suprisingly, the Wall Street Journal reports that this proposal "has
the enthusiastic backing" of Halliburton and Bechtel. According to the Wall
Street Journal, this plan has been advocated by the Coalition for Employment
Through Exports, a U.S. business group whose members include Halliburton,
Bechtel and other large contractors in Iraq. This group has been "knocking
on doors throughout the Bush Administration" to promote the mortgage
I am writing to request information about this plan to mortgage Iraq's
oil. In particular, I am interested in the role, if any, that Halliburton
and other companies working in Iraq may have played in shaping this plan.
Specifically, I request that you:
1. Describe the plan being considered to securitize Iraq's oil, including
details such as the duration of the plan and the amount of Iraqi oil
2. Identify all contacts concerning this plan between the Corps and any
nongovernmental party or its representative(s);
3. Provide copies of all records (including telephone records, notes and
any other form of written or electronic communication) related to item 2
Thank you for your prompt attention to this important matter.
Henry A. Waxman
Ranking Minority Member
"Power concedes nothing without a demand. It never has, and it never will.
If there is no struggle, there is no progress. Those who profess to favor
freedom, and yet deprecate agitation are men who want crops without plowing
the ground. They want rain without thunder and lightning. They want the
ocean without the awful roar of its waters." (Frederick Douglass)
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