Iraq Cash Cow: Part III

1997 - 3-7 - Guatemala - Antigua - Volcan Aqua (volcano in b(Excerpted from Chapter 12: The Gulf Oil War: Big Oil & Their Bankers...)

Shortly after Iraq attacked Kuwait Jordan’s King Hussein joined with Algerian President Chadli Benjladid to organize an Arab League Summit in Algiers to try and head off a full-scale war.  Saddam agreed to pull his troops from Kuwait while the summit proceeded. But Egypt, with backing from the US and Britain, convinced 14 of the 21 foreign ministers in attendance to denounce Iraq. The peace effort fell apart.  The Bilderbergers would have their bloodbath.

On October 5, 1990 Iraq’s Ambassador to the UN Sabah Talat Kadrat stated to the General Assembly, “America and its Western allies are seeking, through this military, political and informational campaign; to gain control over the oil wells and to impose imperialist political, economic and military hegemony over the world, and over the Third World countries in particular.”

Al-Sabah Yellow Ribbons

Turkey followed US orders to shut down a key Iraqi oil pipeline. King Fahd agreed to allow US troops to base out of Saudi Arabia.  UAE and Qatar followed suit.  President Bush announced a $7.8 billion sale of F-15 fighters, M-60 tanks and Stinger missiles to Saudi Arabia; along with a letter of intent locking the Saudis into another purchase of 315 M-1 tanks worth $3 billion.  He announced a $1.2 billion increase in military aid to Israel. Military sales to Egypt were expedited.  A month later Bush announced another $20 billion in arms sales to the Saudis.

UN Security Council Resolution 678, authorizing use of force against Iraq, passed on November 29, 1990 in a 15-1 vote.  Despite additional peace attempts by France and Russia, bombs began raining down on Iraq in January 1991.  On January 29th French Defense Minister Chevenment resigned in protest.  Russia and Egypt accused the US of exceeding its UN mandate.  Protests erupted worldwide.  In Morocco 300,000 people marched in Marrakech.  In San Francisco, nearly a million Americans did the same.

The al-Sabah family hired PR firm Hill & Knowlton (HK) to polish up the image of the monarchy and to promote the Gulf War.  The $10.5 million HK effort, the biggest PR contract ever, included the yellow ribbon campaign, aimed at dividing the US anti-war movement.  HK sponsored Kuwaiti Ministers who appeared at the National Press Club and put out a book titled The Rape of Kuwait.  HK papered the walls of the UN Security Council chamber with oversized photos of tortured Kuwaitis.  They created Citizens for a Free Kuwait, which sponsored witnesses who lied to Congress about alleged Iraqi atrocities in Kuwait.  The star witness was the 15-year-old daughter of Kuwait’s US Ambassador, who gave heart rendering testimony of Iraqi soldiers grabbing Kuwaiti babies from hospital incubators.  A 60 Minutes investigation later proved these stories to be total lies. [504]

President Bush’s Chief of Staff Craig Fuller had been CEO of HK.  The head of HK’s US division was Robert Gray, an October Surprise insider who ran the Reagan inaugural.  HK’s clients included the Chinese government and Indonesia’s Suharto regime.  Kuwait also hired PR firms Rendon ($100,000/month), Neill & Company ($50,000/month) and Pintak/Brown International ($20,000/month).  PR firm Keene, Shirley sponsored talk show appearances by former US Ambassador to Bahrain Sam Zakhom, who co-chaired the Coalition for America at Risk, which had touted the Nicaraguan contras.  Zakhom’s group advertised an emergency action kit which targeted anti-war protesters.  Kuwaiti Sheik Fahd al-Sabah, chair of the Kuwait Investment Office, said Kuwait and Saudi Arabia sent $4 billion to the US as secret payoffs to protect their Kingdoms.  The money was diverted into a London slush fund that financed the HK-led propaganda effort.

On February 23rd, 1991 the US launched its ground assault.  Bush had drawn his “line in the sand” between advancing Iraqi troops and the oil interests owned by son George W.’s Harken Energy.  In 1990 the US signed a secret agreement with Bahrain, in whose territorial waters the Harken concessions were located, allowing for permanent US military bases in the country.  One battalion of troops prosecuting the ground assault went straight to secure the Rumaila oilfield.  Within two days the Iraqis surrendered.

Despite US propaganda that it would arm the Shi’ites in the south and the Kurds in the north to overthrow Saddam Hussein, US military forces were ordered to stand down only one mile from where Hussein unleashed his Republican Guard on the Shi’ites. The Bush Administration refused to meet with the Joint Action Committee formed by Iraqi opposition groups. [505]  Instead, Bush formed the Free Iraq Council with the Saudis, which consisted of members of Hussein’s own Ba’ath Party.  The US wanted Saddam left in place to serve as justification for yet another US military buildup in the Persian Gulf designed to protect Four Horsemen oilfields.  On March 3rd, a week after the Iraqis surrendered, the US announced an agreement with Saudi Arabia allowing a permanent US military presence in the Kingdom.

Contracts for Vampires

As oil historian Daniel Yergin put it, “What we had before the war was a special relationship with Saudi Arabia.  Now we have a more special relationship”.  In 1988 ARAMCO announced its intention to pair up with its Four Horsemen parents in building downstream oil ventures.  On March 21, 1990 there was a low-profile meeting between ARAMCO executives and leaders of the world’s six largest engineering firms – Bechtel, Fluor, Foster Wheeler, MW Kellogg, Asea Brown Boveri and Lummus Crest.  At the gathering ARAMCO unveiled plans for a major expansion of the Saudi oil industry, yielding $10-$15 billion in construction contracts for the firms. The expansion increased refining capacity at the Bechtel-built Ras Tanura refinery by 25%, amplifying ARAMCO hegemony over world oil prices. [506]

Four months later, as US Ambassador April Glaspie was giving Saddam the green light to attack Kuwait, Fluor received the biggest ARAMCO contract, positioning the company to undertake any oilfield reconstruction in the Kingdom should the Iraq/Kuwait tensions spill over into Saudi Arabia. [507]  Fluor is an ARAMCO old hand.  They operate Fluor Arabia with the Saudi Juffali family and built two Big Oil petrochemical complexes at Jubail Industrial City. Kuwaiti officials had talked with Fluor before the Gulf War even began, but later chose Bechtel as lead contractor in rebuilding Kuwaiti oil infrastructure after Operation Desert Storm. [508]  Most of the damage to Kuwait’s oil facilities was not from Iraqi troops, but from US bombing raids which supposedly missed their mark.  Considering Bechtel’s political connections to the State Department and the billions it made rebuilding Kuwait, one has to wonder if the bombing was not intentional.

The ARAMCO expansion was underway.  In August 1990 the Saudis produced 5.3 million barrels of oil a day.  Throughout the Gulf War Saudi crude production increased, peaking at 8.5 million barrels a day.  The ARAMCO increase represented 50% of the world increase in oil production that occurred during the Gulf War. The Four Horsemen accounted for the rest, eager to turn cheap crude into expensive finished product.  RD/Shell greatly expanded its refinery at Tabangao in the Philippines in December 1990. [509]

The ARAMCO expansion paralleled a massive US military buildup which began in 1986 when Iran gained advantage in its war with Iraq.  Defense contractors led by Raytheon, manufacturer of the Patriot missile, received hours of free advertising as the world watched a CNN light show that allegedly showed Patriots knocking down Iraqi Scud missiles.  Later the Pentagon admitted that hardly any of the Scuds were hit.  Nevertheless, the stocks of defense giants Raytheon, Northrup Grumman and Lockheed Martin soared during the Gulf War.  The Bush Administration didn’t even count Gulf War expenses in its 1991 military budget, while the Pentagon set aside $16 billion in “off-budget post-war” expenses as well.  When the war began, the Pentagon played on the patriotic fervor gripping the nation to announce several new weapons systems.

The Pentagon awarded a $688 million dollar contract to Lockheed Martin for a mobile ground-based missile defense system known as THAAD.  Two battalions of THAAD ended up slightly over-budget costing $6 billion.  Rockwell International began testing its new X-31 fighter, while McDonnell Douglas offered up its X-32 at a price tag of $120 million each.  Lockheed Martin joined forces with Boeing and General Dynamics in procuring a $95 billion contract to develop its YF-22 Advanced Tactical Fighter.  The only flyable prototype crashed at Edwards Air Force Base in April 1992. [510] General Dynamics was given $2.9 billion for its Seawolf submarine program.  Boeing-Sikorsky got $34 billion to develop its LH helicopter.  McDonnell Douglas received $82 billion for its Tomahawk missile system.

Every day before noon the Pentagon was spending $550 million. One B-2 bomber cost the US taxpayer $2 billion, enough money to build 400 new schools.  The price of one F-18 would hire 1,000 new teachers.  The Saudis purchased over $13 billion in weapons before the Gulf War.  Now the US pressured the House of Saud and other GCC monarchs to buy more weaponry. [511]  The first post-Gulf War GCC contracts went to GE and Hughes Aircraft, a GM subsidiary.

The Four Horsemen have always made exorbitant profits in times of crisis.  The myth of scarcity is their friend, so by the 3rd quarter of 1990, with the threat of war looming, profits for Big Oil began to surge.  Spot crude prices shot up in August, but settled back by October.  Pump prices stayed high throughout the war.  By 4th quarter 1990, 19 of the top 20 oil companies showed a combined average profit increase over 4th quarter 1989 of 281%.

The top five US oil companies reported collective profits of $4.8 billion for the quarter.  Chevron Texaco, which supplied much of the fuel needed by US and allied forces during Operation Desert Storm, showed a profit increase of 651% for the quarter. [512]  Board member George Pratt Schultz must have been pleased.  In the first quarter of 1991, with the war in full swing, Exxon Mobil netted $2.4 billion, its biggest single quarterly profit since John D. Rockefeller founded Standard Oil of NJ in 1882.  The world’s eleven largest oil companies saw their profits increase 157% from 1989-1991.  Ten of the top twenty-three oil companies established new peak asset levels.

The war helped the Four Horsemen further diminish the power of independent challengers.  Sun Oil, American Petrofina, ARCO, Coastal, Unocal, Marathon and Pennzoil saw profits decline during the war. [513]

The Gulf War pulled the US out of a deep recession.  There had been much talk of waning US economic might.  Japan was seen emerging as world economic superpower, with the Asian Tiger economies playing a supporting role.  The US held competitive advantage in only three industries: oil, defense and engineering.  Each US economic engine was revved to mach speed by the Gulf War and the reconstruction of Kuwait that followed.

[504] 60 Minutes. CBS. 9-20-92

[505] Beyond the Storm: A Gulf Crisis Reader. Phyllis Bennis and Michel Monshabeck. Olive Branch Press. Brooklyn, NY. 1991. p.70

[506] “The Saudis Make Ready to Open the Spigots”. John Rossant. Business Week. 4-2-90. p.32

[507] “If a Shooting War Breaks Out, Fluor Will Win”. Gene Marcial. Business Week. 12-10-90. p.209

[508] “A Bonanza for Bechtel”. Mario Shao. Business Week. 5-6-91. p.36

[509] “Pilipinas Shell Petroleum Corporation” Oil & Gas Journal. 12-17-90. p.32

[510] “Crash Destroys Air Force’s New Fighter”. AP. Missoulian. 4-29-92. p.A8

[511] “Power, Poverty and Petrodollars: Arab Economies after the Gulf War”. Yahya Sadowski. Middle East Report. May-June 1991. p.5

[512] “Oil Companies’ Embarrassment of Riches”. Thomas Karier. In These Times. February 6-12, 1991. p.2

[513] “Exxon, Mobil, Amoco, Conoco and Hess Report Whopping Earnings”. National Petroleum News. June 1991. p.8

Dean Henderson is the author of five books: Big Oil & Their Bankers in the Persian Gulf: Four Horsemen, Eight Families & Their Global Intelligence, Narcotics & Terror NetworkThe Grateful Unrich: Revolution in 50 Countries, Das Kartell der Federal Reserve, Stickin’ it to the Matrix & The Federal Reserve Cartel.  Subscribe free to his weekly Left Hook column @ www.hendersonlefthook.wordpress.com

2 responses to “Iraq Cash Cow: Part III

  1. interesting

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