Iraq Cash Cow: Part IV

000007(Excerpted from Chapter 12: The Gulf Oil War: Big Oil & Their Bankers…)

Balancing the Books

The record profits accrued by US corporations as a result of the Gulf War also served to offset the imbalance in US/GCC trade created by GCC oil revenue.

The oil monarchs were suddenly buying billions in US weaponry and paying US engineering firms to expand oil and gas facilities, allowing for higher oil production and lower oil prices that served as jet fuel for a sluggish US economy.  The rebuilding of Kuwait was another shot in the US economic arm.  The Bush Administration solicited financial contributions for the war effort which ended up exceeding the cost of the war.  The US Treasury made money off the war.  This profiteering didn’t go unnoticed.  Germany and Japan both requested refunds for their contributions. [514]

Saudi Arabia and Kuwait bore the brunt of the financial burden of the Gulf War, just as they were taking it on the chin for Saddam’s bills unpaid from the Iran/Iraq War.  Did the US seek to diminish the wealth of these two most powerful GCC nations as a means to keep them dependent on US security schemes?  Big Oil never liked the moves into downstream oil investments which both the Saudis and Kuwaitis had started making.  Kuwait had been so successful there was industry talk of it becoming “the 8th Sister”.

Even before the US bombed Iraq, the tab the GCC was running for US intervention outstripped oil revenues.  In Riyadh war expenses exceeded oil revenues by a whopping $10 billion dollars.  Despite ARAMCO’s expansion, the Saudis had to import jet fuel for allied planes, underscoring the lack of refining facilities in the country even after the Ras Tanura upgrade. [515]

The House of Saud spent $13.5 billion for basic upkeep of US troops based there to execute the Gulf War, $3-4 billion to provide for 200,000 Kuwaiti refugees and provided the brunt of the $9.5 billion in GCC aid which the US pushed for to reward countries like Syria, Egypt and Senegal for their support in the war effort.  But this was chicken scratch compared to the billions that ended up in the pockets of US defense and engineering firms.  Prince Abdullah Faisal bin Turki, chair of the Saudi Industrial Development Authority, estimated the total war cost to the Saudis at over $80 billion. [516]

There were economic losses to GCC less easily calculated.  The day Iraq invaded Kuwait, confidence in Persian Gulf investments was shattered.  Bahrain, offshore banking center to the region, lost $13.7 billion in bank deposits.  The UAE saw bank withdrawals rise to 25% of liabilities.  The Saudi Arabian stock market crashed and 11% of all bank deposits left the Kingdom.  Major industrial projects were canceled, including a Saudi plan to build another $6 billion petrochemical complex at Jubail Industrial City.

Saudi International Bank, whose executive director was Morgan Guaranty’s Peter de Roos, bought millions of dollars in discounted South American debt to bail out the international bankers under Bush Treasury Secretary and Dillon Read alumnus Nicholas Brady’s “Brady Plan”. [517]

The Saudi Arabian Monetary Agency (SAMA), the Kingdom’s Morgan-led central bank, showed a $9 billion account deficit in 1989 due to falling oil prices caused by ARAMCO and Four Horsemen expansions.  Now even the Saudi swing producer extraordinaire was suffering the consequences of low oil prices.  In a moment of remarkable irony SAMA was forced to borrow $3.5 billion to cover a reserve shortfall from an international banking syndicate led by JP Morgan Chase. [518]

Kuwait was faring no better.  It went from being an international creditor to a debtor nation because of the Gulf War.  Downstream oil investments were shelved.  The al-Sabah family slush fund was forced to sell $10-15 billion in overseas assets and borrow an additional $20 billion from the international bankers over the next five years to pay for reconstruction of the decimated emirate.  Some Kuwaiti assets were mysteriously “lost” and never recovered.  The rebuilding of Kuwait cost over $100 billion.

The Kuwait-Maryland Partnership was formed before the war to plan the rebuilding of Kuwait.  The US Army Corps landed an initial 90-day contract to clean up the war mess for $45 million. [519]  Time magazine reported that Waste Management went into Kuwait without even asking permission and began cleaning up, then presented the Kuwaitis with a $500,000 bill. It then got a $12 million contract to continue picking up war trash.  The World Bank advised Kuwait in its recovery effort. Bechtel led the contractor frenzy, with a cadre of subcontractors led by Brown & Root and Dresser Industries, two subsidiaries of Houston-based Halliburton.

Tough-talking Bush Sr. Secretary of Defense Dick Cheney was now Halliburton Chairman and CEO.  Cheney now struck a more business-like tone, cutting oil deals with Saddam Hussein.  According to the Financial Times, from 1998-2000 Halliburton did nearly $24 million in business selling oil drilling equipment and services to Iraq.  Cheney & Company circumvented the US embargo by dealing through two European subsidiaries, Dresser Rand and Ingersoll-Dresser Pump. [520]

Raytheon installed a new air traffic control system in Kuwait, while AT&T and Motorola received mobile phone contracts.  When the Kuwaitis announced they would purchase fifteen new Airbus jetliners from Europe for $200 million, Bush Commerce Secretary and Texas Commerce Bank insider Robert Mosbacher fired off an angry letter to the al-Sabah clan.  Kuwait decided to purchase three Boeing 747’s for $500 million instead.  According to World Bank officials 80% of Kuwaiti rebuilding contracts went to US companies.  US exports to Kuwait in 1991 more than doubled to $2 billion.

Neil Bush, the President’s Silverado S&L looting son, lobbied the al-Sabah clan on behalf of two Houston-based oil equipment companies.  Marvin Bush, another Bush progeny, lobbied for contracts for Murphy & Associates, a firm owned by former US Ambassador to Saudi Arabia Richard Murphy.  Former Reagan Press Secretary John Sununu helped Westinghouse procure a contract to build a $1 billion perimeter defense system for Kuwait, while Bush Secretary of State James Baker was hired straight out of office as a lobbyist for now-defunct Enron, which received a $600 million contract from Kuwait to build an electrical power plant. [521]

The Big Three US automakers fared well, since 300,000 cars were destroyed in the war.  It took nearly a decade to restore Kuwait’s oil industry.  Bechtel led this massive project receiving an initial $1 billion contract to put out the raging fires at 650 oil wells.  In 1996 Kuwait announced that it would spend another $25 billion on its seemingly endless rebuilding effort.  Other GCC nations rewarded Bechtel too.  In 1994 it got a $450 million contract to upgrade the refinery it built at Ras Tanura, Saudi Arabia.  A month later it was given the contract to upgrade another Saudi refinery.  That same year it contracted with UAE-based Abu Dhabi Company to build oil infrastructure.

In 1993 Bechtel built a fertilizer plant in Syria, an oil pipeline in Algeria, oilfield infrastructure for Chevron Texaco in Kazakhstan and the Miami International Airport.  In 1995 Bechtel led a USAID funded consortium to restructure the energy sectors in eleven Central and Eastern European nations and joined forces with Daewoo in a major Israeli industrial development.

Saudi billionaire Sulaiman Olayan, who rode the Bechtel escalator to riches, told a meeting of international bankers in New York in 1993 that total losses to the GCC states due to the Gulf War were over $620 billion.

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.  You can subscribe free to his weekly Left Hook column @www.hendersonlefthook.wordpress.com

One response to “Iraq Cash Cow: Part IV

  1. I must say I truly enjoy every article you write I always look forward to more Thanks for taking this time to explain to those of us who are just trying to figure out some truths.

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