Iraq invasion, occupation about oil and profiteering

The Iraq invasion and occupation is not just about oil. It’s also about war profiteering, an attempt to compensate for the failed globalization and privatization schemes of the 1980s and ’90s. Those opposed to the Iraq adventure mistakenly believe that it was just all about oil and oil profits for the big U.S. multinational corporations. This assertion is not supported by the facts – not in the short run, and probably not in the long run either.

First, both the United States and the United Nations embargoed Iraq after the Desert Storm invasion in 1991 and severely restricted that nation’s exportation of oil. Somewhat less than $4 billion a year of Iraqi oil exports were permitted from that date until the latest invasion in 2003, despite the fact that Iraq wanted to and had the ability to export as much as $20 billion annually.

Second, since the 2003 Iraq invasion, the occupation coalition has claimed that oil exports from Iraq have recovered to the prewar level of about $4 billion on an annual accounting but not yet an actual fact.

Third, the invasion and occupation has, within the last year, cost the U.S. taxpayers more than $160 billion, and the Pentagon has recently requested an additional $25 billion “blank check” for a total of $185 billion – approximately half of the record federal budget deficit for the current fiscal year

Simple calculation and comparison of these factual figures tells us that it would take 46 years of Iraq’s oil exports at the $4 billion pre-invasion export level, and more than nine years at the maximum potential $20 billion export level to pay for just one year of the Iraq invasion and occupation if all the revenues from those oil exports were used to reimburse the U.S. Treasury.

Where, one might ask, are those promised oil revenues and oil profits from Iraq? Yes, they are there, just check your rising fuel and gasoline prices. Economics 101 tells us that multinational oil corporation profits are higher when supply is lower, ceteris paribus. The Iraqi embargo, invasion and occupation had the objective and intended result of decreasing, not increasing, the global supply of oil and energy and therefore the oil profits of the energy corporations. The spike of $12 a barrel of crude oil since the invasion translates into another $70 billion to $100 billion in inflated energy costs to the U.S. consumers.

What else is the invasion and occupation all about? Is anyone who supported the so-called war still naive enough to still believe the myths about weapons of mass destruction, terrorism, liberation and democracy? I sincerely feel profoundly sorry for those who still cling to these illusions. I likewise feel the same for those who were opposed to the invasion and occupation and cling to the illusion that it was just about oil and oil profits.

The illegal and immoral invasion and occupation of Iraq had as its major objective the robbing of approximately $185 billion (and still counting) from the U.S. Treasury now and much more in the long run by private, U.S. corporate profiteers. After short-run war profiteering and energy price gouging will come “peacetime” corporate privatization of Iraq’s oil and other industries, “free trade” and out-sourcing that we know so well. This too will be a type of war profiteering if it ever happens.

Today, however, newspapers are replete with stories of such war profiteering from Rumsfeld’s so-called transformation of the U.S. military, i.e. the privatization of the U.S. military, which ironically is claimed to be saving the U.S. taxpayers money. One fails to see how Cheney’s Halliburton, Bush’s Carlyle and other corporate noncompetitive military contracts save us money. The estimated 13,000 private security contractors – the second largest contingent of the so-called coalition (British troops number less than 10,000) – pay their truck drivers, mechanics, warehousemen, engineers and police and military trainers $100,000 to $350,000 a year with cost-plus contracts, which means that the contractor is being paid by the U.S. Treasury for the cost of the work plus an additional guaranteed 40 percent for overhead and profits.

These lucrative cost-plus contracts explain the profitability of hiring such high-priced U.S. contractors instead of hiring unemployed Iraqis at $5,000 to $10,000 for many of these tasks. Forty percent of $100,000 for a U.S. contractor is a significantly larger profit and overhead for these corporations than 40 percent of $10,000 to hire an Iraqi. It is estimated that these security costs in Iraq will consume 25 percent of the only $18 billion earmarked for reconstruction out of the last $87 billion appropriated for the Iraq adventure. The story is much the same for the Pentagon’s enormous expenditures. Many of these military expenditures are for private contractors who now feed, house, transport and clothe the troops – tasks once done by low-wage soldiers without lucrative private contracts or profits. Added to these costs are the huge expenditures for the Iraqi military and police.

War profiteering is what the Iraq adventure was and is mostly all about, not just oil, and certainly not U.S. national security, or defense, or the liberation of and democracy for the Iraqi people. To measure the benefits of the invasion and occupation of Iraq, simply measure the corporate oil and war profits. Our taxpayer costs are their benefits and profits. Or to put it bluntly, their corporate “win-win” is the flip side of the “lose-lose” for the people of the United States and Iraq.

Melvin Burke is a professor of economics at the University of Maine.