Tue, May 06, 2003 - Page 9 News List

US crony capitalists go to war

The failure to find Saddam's weapons of mass destruction is putting the US grab for Iraqi oil into sharp focus

By Jeffrey Sachs


hen financial crisis hit Asia in 1997, America's leaders charged Asian governments with practicing crony capitalism. In retrospect, the charge seems like rank hypocrisy. America has shown itself to be second to none in practicing cronyism, first with its rotten corporate scandals of recent years, and now in Iraq. Asian capitalists may have stolen some borrowed loot, but at least they didn't mix finance with war.

Whatever other goals lay behind the Iraq war, the Bush administration seems keen to line the pockets of its cronies and to capture increased control over Middle East oil and pipeline routes. Only a few pesky obstacles -- the UN and the Iraqi people -- stand in their way.

The Iraq war was ostensibly launched because of former president Saddam Hussein's weapons of mass destruction (WMD), yet each passing day suggests that the threat was exaggerated. Another goal also loomed large: control over 11 percent (or more) of the world's oil reserves and, in the longer term, control over pipeline routes between the Mediterranean, the Caspian Sea and the Indian Ocean.

The failure to locate Saddam's WMDs is putting America's grab for Iraqi oil into sharp focus. The Cheney-Rumsfeld team is so arrogant that it acts as if it can flaunt the takeover of Middle East oil while brushing aside questions.

In Afghanistan last year, the US installed Hamid Karzai, a former consultant for oil giant Unocal, as interim leader. It also appointed Kalmay Khalilzad, another former Unocal consultant -- indeed, Karzai's boss -- as special US envoy. Khalilzad and Karzai spent considerable efforts in the late 1990s to get an American-built pipeline to carry gas from Turke-minstan through Afghanistan to Pakistan and the Indian Ocean.

Even before the bombs stopped falling on Baghdad, Khalilzad's writ as special envoy was extended to Iraq. Among his likely jobs in Iraq will be to secure a pipeline carrying Iraqi oil from Mosul, Iraq to Haifa, Israel via Syria. To stop Syria from objecting, the US is now threatening it as well.

Khalilzad will have plenty of support in the Bush administration, which is heavily loaded with oil industry executives.

National Security Advisor Condeleeza Rice was a director of Chevron-Texaco before coming to the National Security Council. She even had an oil tanker named after her. Secretary of Commerce Don Evans is also an oil-company chief executive officer. Vice President Dick Cheney was in effect lead conductor of the group when he served as chairman of Halliburton, the world's largest oil services company. Halliburton is now at the front of the line for Iraqi reconstruction projects, for which contracts are being handed out without any transparent and competitive process whatsoever.

But what is happening here is more than "guilt by association" with the oil industry. The Bush administration is flouting every rule to give its cronies the inside track.

Before joining the Pentagon, Secretary of Defense Donald Rumsfeld was a key player as well. A longstanding sidekick of Cheney, Rumsfeld traveled to Baghdad in 1983 and 1984 at the behest of former Bechtel president George Shultz, then passing a bit of non-corporate time as US secretary of state. Rumsfeld's hidden mission was to win Saddam's support of a Bechtel-built oil pipeline to run from Iraq via Jordan to the Gulf of Aqaba.

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