I never gave the No Blood For Oil slogan much credence when it was confined to the extremes of the internet and screaming adolescent web blogs. However, when Alan Greenspan wrote one short sentence linking oil to the Iraq war in his recently published book The Age of Turbulence, the press was all over it. Chris Matthews, a vocal and consistent Bush critic, seized on it as the rhetorical question on his show in October 2007: Was the Iraq War all about oil? If Alan Greenspan said so, then there must be something to the accusation.

 

Greenspan’s book is a real service to the American electorate. It offers an insightful and critical assessment, not just of the Bush administration, but of the fiscal irresponsibility of the entire government. We are on an out-of-control spending binge that cannot be sustained. Greenspan says that someday we must confront the enormous Medicare and Social Security deficits – by either raising taxes, cutting benefits, and perhaps inflating away some of the debt by debasing our currency. During committee hearings, he warned the administration and the Congress that we were on this path, and they acted as though they were listening. He appeared on television repeatedly before Congress as Chairman of the Federal Reserve, where his stature was such that Congressman asked him what we needed to do to for such diverse problems as income disparity and urban blight.

 

Greenspan’s answer, by the way, has never changed. He places the blame – and the hope – for America’s economic future squarely on our educational system. If we do not educate the next generation of Americans to become self-sufficient, productive citizens, we will not survive in a competitive global economy.

 

Back to the war, here is the quote from Greenspan’s book that Chris Matthews threw up on the screen to bolster his argument that the Iraq War was about cheap oil for America:

 

 

So, what does this mean? Well, Greenspan himself has appeared on television to correct the misperception that by this remark he meant that Bush went into Iraq for oil. No one knows that, not even Alan Greenspan. Instead, he simply links the Iraq war with historical efforts to keep the Middle East friendly to the U.S. or politically stable. In reality, the war is “about oil” for the Iraqis much more so than it is for Americans. Oil is Iraq’s only resource, and therefore the only economic engine that help them create a viable state when the war is finally over. What else can they export... sand?

 

Furthermore, Iraq's contribution to U.S. petroleum imports is small - only about 3.7% of the total. Do you know who our largest oil supplier is? I'll give you a hint, it is a country not located in the Middle East.

It is Canada. There is a pipeline that takes oil from the Canadian oil sands project straight to Cushing, Oklahoma, where it is refined. In fact, the top five suppliers of petroleum products to the U.S. have remained fairly constant over the last decade, and three of the five are located in the Western Hemisphere. They are:

Canada - 21.4% of total imports

Mexico - 13.7% of total imports

Saudi Arabia - 12.6% of total imports

Venezuela - 12.0% of total imports

Nigeria - 9.8% of total imports. (1)

 

After Nigeria, there are ten other countries that supply the U.S. with oil, including Great Britain, the Netherlands, Colombia, Brazil, Ecuador and the Virgin Islands. The top five account for 70% of our imports, and only one of them is in the Middle East.

Greenspan’s most condemning remark about the Iraq war is simply that American and British authorities “were also concerned about violence in an area that harbors a resource indispensable for the functioning of their economies.” (p. 463) He ignores the more compelling arguments about U.S. security interests in a region where militant Islamic fundamentalism is spreading.

 

There is no reference in Greenspan’s book to free oil for the U.S.. There is no reference to cheap oil for the U.S., and how could there be? The price of oil has risen dramatically since the beginning of the war four years ago. The price of oil used to average around $45 a barrel. Last year it has hovered over $90 a barrel, and peaked this year at about $140 a barrel! Furthermore, bringing an end to Saddam Hussein’s regime did nothing to insure the U.S. of a future flow of oil from Iraq. Just the opposite: the war basically shut down Iraq’s oil production for over a year, and it has only reached pre-war levels last year.

 

The truth about foreign oil is that it has been in the hands of politically unstable regimes or regimes that were unfriendly to the U.S. for at least 50 years. Nothing will change in the future. We will always have to purchase oil on the world markets from countries that may experience periodic supply disruptions (Nigeria); countries that are openly hostile to us (Venezuela); or countries with internal problems that could disrupt their own oil production (Saudi Arabia and Iraq). No matter who pumps the oil, we always can buy it – just as any other country buys its oil – on the world market.

 

You can find an insightful essay on this subject at The Independent Institute’s website. See http://www.independent.org/store/policy_reports/detail.asp?id=25 for a summary of a policy report by economist David Henderson. Henderson points out that even if a producer refused to sell oil to the United States, we would still buy it on the world market from intermediaries. In his words, such a politically hostile move would only initiate a game of musical chairs “in which the number of chairs equals the number of players. Different buyers would be linked with different sellers than before... but the cost to Americans of switching suppliers would be negligible.”

 

The only way an oil producer could actually reduce the amount of oil available on world markets – and therefore available for the U.S. to purchase – would be to reduce or curtail its own production of oil. That would obviously hurt the producing country more than the importing country, as we always have other sources for petroleum but petroleum exporting countries seldom have other sources of foreign exchange income. They have simply become too dependent on oil!

 

As for the screaming bloggers and their new ally, Chris Matthews, I pose this challenge: show me the free oil. Show me the imports of free or cheap oil that we have received from Iraq as a result of the war. Show me the economic benefit of a war which has cost the lives of several thousand U.S. servicemen and women; thousands more wounded; thousands more Iraqis killed and wounded, and over $800 billion of the U.S. taxpayers’ money.

 

You cannot show it to me because it does not exist. It never existed. This war was never about free or cheap oil for the United States. This is even acknowledged by critics of the war – critics with advanced university degrees and experience working in the government. Paul Pillar and Stephen Walt are two. They are both university professors who gave interviews to the Stanford Review in which they specifically addressed the question of oil as a motive for the Iraq War.

 

Pillar is a visiting professor at Georgetown’s Security Studies Program, and has previously served as the National Intelligence Officer for the Near East and South Asia. Stephen Walt is a professor of political science at the John F. Kennedy School of Government at Harvard University. Stanford Review editor-at-large Tristan Abbey asked them in an interview about the accusation that we went to war to control Iraq’s oilfields.

 

Here is an excerpt from Abbey’s article in the June 11^th issue of the Review:

 

Pillar pointed out that, “some architects of the war mistakenly believed that Iraq’s oil would mean that the war would pay for itself.” This belief was articulated by a diverse range of officials, including Richard Perle, Lawrence Lindsey, and Paul Wolfowitz. (Stephen) Walt agreed, stating, “There may have been a few Bushies who had oil on their minds, and certainly a few people invoked Iraq’s oil riches to convince people that the occupation would ‘pay for itself,’ but that hardly means that it was a primary motivation for the invasion.” (2)

 

Early in the war the President did in fact say that any Iraq oil revenues would be used within Iraq for re-building its own infrastructure. They are being used to re-build the country, but the U.S. has not profited from it. Yes, U.S. companies have profited from it, but that does not mean the argument about weapons of mass destruction was simply a ploy to enrich U.S. companies.

 

Don’t fall for the idea that economics explains everything. Ideas matter. However misguided the war may look in retrospect, you must remember the national feeling of both revenge and insecurity in the wake of the 9/11 attacks. There was a reason that Congress gave George Bush extraordinary powers of retaliation at the time. We were awakened from our slumber, and we lashed out with a very imperfect vision of where out actions would take us.

 

 The real reasons for entering the war in Iraq are known only to George Bush and his closest advisors, and they have been less than candid in telling that story. The most likely reason is that Bush and his advisers were convinced that it was necessary to topple Saddam Hussein in order to insure our security in the Middle East. Bush and Colin Powell probably really believed, given the intelligence available to them at the time, that Hussein did have chemical or biological weapons, and was going to continue nuclear weapons research.

 

If Halliburton profited from the war, it is a logical result of U.S. companies getting the contracts to rebuild a country that the U.S. destroyed. To conclude that we went to war to enrich Haliburton is illogical. It would have been much easier and politically expedient for the President to simply push legislation through Congress that gives oil companies fat depletion allowances; tax breaks for infrastructure investments; or increase government purchases of oil for the strategic petroleum reserve. We did not have to go to war to put taxpayer’s money into domestic oil companies, Halliburton, or oil services companies. We could have accomplished that much more easily without going to war.

 

Still, everyone loves a conspiracy theory, and the one that links Halliburton, oil, Dick Cheney, and the war effort will linger on.

 

See:

(1) http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/company_level_imports/current/import.html

(2) Tristan Abbey, “Iraq Critics Reject Claim War Was for Oil,” Stanford Review, June 11, 2008, page 4.

 

July 2008

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