Oil for War: America’s Relationship with Iraq’s Oil Supply
I read an interesting AP story today:
BAGHDAD — Iraq’s oil production and exports have risen to their highest levels since the March 2003 U.S.-led invasion, the Oil Ministry said Monday.
The country’s exports reached 2.11 million barrels a day in March while the total output stood at about 2.5 million barrels a day, spokesman Assem Jihad told The Associated Press.
“The figures in May showed that we have succeeded in reaching the prewar levels both in production and exports,” he said.
Oil exports were down in April because of the fighting between government forces and militiamen loyal to radical Shiite cleric Muqtada al-Sadr in Basra province, the center of the southern oil industry.
The fighting ended with a truce brokered in Iran.
Iraq sits on the world’s third-largest proven petroleum reserves, totaling more than 115 billion barrels. But the industry is plagued by a lack of modern equipment and training after decades of U.N. sanctions, war and Saddam Hussein’s ruinous rule.
The country plans to boost oil output to 3 million barrels a day by the end of 2008 and 4.5 million barrels a day by end of 2013.
Iraq hopes to earn about $70 billion in oil revenues this year if crude oil prices remain high and the country maintains stability in major producing areas.
This got me thinking. I remembered reading another interesting story about a month ago in The Washington Times:
The Washington Times recently reported that the Iraqi government is investing billions of dollars earned from oil sales in U.S. Treasury securities instead of spending the revenue on vital reconstruction projects.
The article continued:
Iraq’s use of oil revenues, which have swelled as a result of high oil prices and improved security in the country, has become a hot-button issue on Capitol Hill.
“We believe that it has been overwhelmingly U.S. taxpayer money that has funded Iraq reconstruction over the last five years, despite Iraq earnings billions of dollars in oil revenue over that time period that have ended up in non-Iraqi banks,” said a letter to the Government Accountability Office signed by Sen. Carl Levin, Michigan Democrat and chairman of the Senate Armed Services Committee, and Sen. John W. Warner of Virginia, a top Republican on the committee.
So we that Iraq has increased its oil production. We know that the price of oil is through the roof. We also know that we have spent approximately $500 billion on the war in Iraq.
Is Iraq paying us back in oil? Of course not.
How are they paying us back? Check the answer out from that same Washington Times article:
The Washington Times recently reported that the Iraqi government is investing billions of dollars earned from oil sales in U.S. Treasury securities instead of spending the revenue on vital reconstruction projects.
Why is this? Why is Iraq paying us back by purchasing billions of dollars of our treasury securities?
The Bush administration and the Iraq apologists will argue that by purchasing treasury securities, Iraq is helping t finance the budget deficit that the war helped create.
This is true, however, what they won’t tell you is that when a foreign government purchases our securities that government acquires a certain amount of leverage against us. What’s more, that government then earns interest off of that debt it purchases.
So in the case of Iraq, once could make the argument that it’s actually profiting off of the war. How do I arrive at this conclusion.
Well we know that Iraq is now producing a significant amount of oil and that the going price is quite high. We also know that it’s not using most of its oil revenues to fund its own reconstruction. Finally, we know that they are using the oil revenue to purchase our debt, presumably earning interest off of it.
What should be done? Well the answer comes not from me but independent conservative talk show host Michael Savage. He as long been a proponent of what he calls Oil for War:
For years, I have been calling for Iraq to pay us back for the cost of liberating them from the torture chambers of Saddam Hussein. Iraq’s sustainable oil production capacity is almost 3 million barrels per day. The earth beneath Iraqi sands holds more than 112 billion barrels of oil – the world’s second largest proven reserves – and unexplored regions could yield an additional 100 billion barrels, according to the U.S. Energy Information Administration. Iraq also contains 110 trillion cubic feet of natural gas. And yet this war has nearly bankrupted our treasury.
I was surprised to hear Senator Carl Levin, a Democrat from Michigan, call for this very idea at the Petraeus hearings this week he said, “We need to put continuous and increasing pressure on the Iraqis to settle their political differences, to pay for their own reconstruction with their oil windfalls, and to take the lead in conducting military operations.”
It is fascinating to hear a liberal congressman repeat my idea while the so-called “conservatives”, the Whig Party of our time, the Republicans continue to pump money from American taxpayers to support this unpopular war instead of pumping Iraqi oil. We have spent 500 billion, half a trillion dollars so far on making the Sunni triangle safe for democracy, but it hasn’t even kept our own Marines safe from prosecution. The month that President Bush was sworn into office, gas was $1.40 a gallon. This week, gas is averaging $3.30 a gallon, and near $5 a gallon in Los Angeles. Two dollars a gallon more for the war on terror! Make the Iraqis foot the bill for their own liberation!
When the Republican Party stops depleting the tax base for this endless war, Iraq’s oil can be used to rebuild their country and pay us back. Now it is time for the 24 million liberated Iraqis to pay back their liberators. With the one resource they have – oil.
This makes a tremendous amount of sense (which is one of the reasons it hasn’t been talked about). But this does beg the question: why isn’t this being done?
The answer is simple: greed. At least that explains why the Iraqis aren’t doing this, but why aren’t we forcing this? I don’t hear anyone except Michael Savage talking about this. No one in this administration has mentioned it. Why?
Well I’ll let you figure that out.
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Oil for War: America’s Relationship with Iraq’s Oil Supply…
[Source: The Conservative Beacon] quoted: I was surprised to hear Senator Carl Levin, a Democrat from Michigan, call for this very idea at the Petraeus hearings this week he said, “We need to put continuous and increasing pressure on the Iraqis t…