It Is About Oil, But Not All About Oil
Jude Wanniski
April 11, 2003


Memo To: Website Fans, Browsers, Clients
From: Jude Wanniski
Re: “Secret Bechtel Documents”

Someone sent me this Counterpunch article yesterday, by a fellow named David Lindorff who I don’t remember ever meeting. I like Counterpunch, though, so I read it, and really did not find anything in it that I disagreed with. There are a lot of people who will make a lot of money out of the war, which is one reason we have wars, and it would not be surprising to find Bechtel Corp. at the center of these financial bonanzas. Oil and money is not the primary reason for the war, but it is a good part of it, which is why I recommend the Lindorff exposition. When you think of Bechtel, the global construction company, think of George Shultz, who sits next to Richard Perle at the Defense Policy Board, which ordered up the war with Iraq. One of these days I’ll have to write about Shultz’s role as an agent of the Establishment over the past three decades. (He was the Treasury Secretary who floated the U.S. dollar away from gold, for example.) But this is a most interesting piece that will get you started:

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April 9, 2003

Counterpunch Special Report
Secret Bechtel Documents Reveal:
Yes, It Is About Oil

Is the war against Iraq all about oil? Not to hear Defense Secretary Donald Rumsfeld tell it. Back on November 15, he called the notion that oil was the real reason behind the Bush administration's drive against Saddam Hussein "nonsense," saying, "It has nothing to do with oil, literally nothing to do with oil."

But a new study released by the Institute for Policy Studies, based upon secret diplomatic cables just declassified by the National Archives, and internal communications of the Bechtel Corporation, suggests just the opposite: that oil is the underlying cause of this war.

The study, which discloses the intimate links between the Bechtel Corporation and Bechtel executives and U.S. policy towards Iraq, also shows that some key players in the push for America's war against Iraq, including Rumsfeld, Vice President Dick Cheney, and other former Reagan administration officials Roger Robinson, Judge William B. Clark and Robert McFarlane, have been intimately involved in issues relating to Iraqi oil as far back as the 1980s.

Titled "Crude Vision: How Oil Interests Obscured US Government Focus on Chemical Weapons Use by Saddam Hussein," this report traces an intense effort by Reagan officials in the mid-OE80s to win Hussein's approval for a $2-billion oil pipeline to be built by Bechtel, running from the Euphrates oilfields in southern Iraq westward to Jordan and the Gulf of Aqaba.

A key player in that effort was Rumsfeld, then the CEO of Searle, the giant pharmaceutical company.

One particularly revealing 1983 memo, declassified for the first time in February by the National Archives, concerns a trip by Rumsfeld to Iraq. Acting as a special White House "peace envoy" allegedly to discuss with Hussein and then foreign minister Tariq Aziz the bloody war between Iran and Iraq, Rumsfeld turns out according to this memo to have been talking not about that war, but about Bechtel's proposed Aqaba pipeline.

In his memo to Secretary of State George Schultz reporting on the meeting with Hussein, Rumsfeld talks at length about the pipeline discussion, but makes no mention of having discussed either the war or charges that Hussein's army was using chemical weapons against the Iranians.

The intense focus of Rumsfeld, Schultz (a former president of Bechtel), Cheney and other Reagan officials, in concert with Bechtel, on the pipeline, reads like an abbreviated, or mini "Pentagon Papers," laying the groundwork for a collapse in relations between the U.S. and Iraq, and eventually to war. The documents also cast Bechtel's current position as one of two top candidates for the lucrative contract to "rebuild Iraq" in a troubling light.

As American troops press into Baghdad, and Iraqi casualties run into the thousands, Counterpunch speaks with Jim Valette, director of research at the Sustainable Energy and Economy Network, and one of the three authors of "Crude Vision."

Q: What prompted this study?

A: We were examining the interconnections between private corporations and the U.S. government in the pursuit of oil worldwide since 1995--principally the U.S. financing --through the World Bank and US agencies like the Export-Import Bank and the Overseas Private Investment Corporation (OPIC), etc. of that pursuit. But what has clearly occurred in recent months has been clearly an even more serious expression of this pursuit of fossil fuels for the benefit of Big Oil, which is an extension of this relation into the military role. And so we're looking at the deployment of troops and paramilitaries financed by the U.S. government worldwide, and of course the most serious conflict of interest is in Iraq. In the course of that research we saw the beginning and end of the story of American efforts to gain control of Iraq's oilfields, the beginning being Rumsfeld's meeting with Saddam Hussein in December 1983 to the end, which was the Independent Counsel's investigation of the Attorney General, at the time, Edwin Meese, and his relationship with one of the brokers of the pipeline, E Robert Wallachs. Before this nobody had connected the dots between Rumsfeld and the Meese investigation and nobody had examined exactly how dominant this pipeline project was in the diplomacy and the burgeoning relationship between the Reagan administration and Saddam Hussein. It was in that context that we came across corporate records and government memoranda related to the Aqaba pipeline project. It was a real eye-opener to us to see how interwoven Bechtel's interests were with the Reagan Administration.

Q. We're talking about stuff that happened almost 20 years ago. How is this relevant to what's happening in Iraq now?

A: This story, I think, is timely even though it's 20 years old because Bechtel is back now, as the likely winner of the contract to rebuild Iraq's infrastructure, and many of those Reagan administration officials are back, and they are poised to get their hands on Iraq's oil again.

Q: So what is new here?

A: The release in February by the National Archives of cables back and forth between Washington and U.S. diplomats in the Middle East around the time of 1983 and 1984 disclose for the first time what really transpired in Rumsfeld's meetings with Saddam and other Iraqi officials. What had previously been reported was that Rumsfeld had a cozy meeting with Saddam in Baghdad in December 1983. In the past, the focus was on whether or not he had raised the issue of Saddam's use of chemical arms against Iran. But what the actual memoranda show is that a big part of Rumsfeld's discussion with Saddam Hussein was this new proposal from Bechtel to build a pipeline form Iraq to Jordan. I mean Rumsfeld was executing the marching orders of George Schultz, who was the Secretary of State, but who came directly from the presidency of Bechtel to the Reagan administration. The documents released by the National Security Archive suggest that what was going on then had quite a bit to do with oil--certainly more than had been known before.

Q: Before the release of those documents we didn't know that Rumsfeld was talking about a pipeline?

A: Right. Right. I mean it was reported that when he was there he didn't raise an issue with Saddam about the use of chemical weapons, even though there were reports coming out of Iran that Saddam was dropping chemical bombs on Iranian troops.

Q: So we knew before what he didn't talk about, but not what he was talking about? and that was the pipeline?

A: .Right, he was there sort of as a bagman for Bechtel. And then there were documents I found in the government's National Archives that showed the extensive involvement of Reagan officials and the very close relationship they had with Bechtel officials, in pursuing this pipeline over the next two years. We sort of connected the dots between what was in these National Security Archives and what was known in the general coverage over the last 15 years.

Q: How important was this pipeline in terms of U.S.-Iraqi relations?

A: It was the focus of U.S. relations with Iraq for several years, right through the period that Iraq was locked in a bitter war with Iran. In one 1984 internal company memo, Bechtel executive H. B. Scott exhorts his colleagues at Bechtel, after it appeared that all this diplomacy by Rumsfeld seemed to be paying off, "I cannot emphasize enough the need for maximum Bechtel management effort at all levels of the U.S. government and industry to support this project. It has significant political overtones. The time may be ripe for this project to move promptly with very significant rewards to Bechtel for having made it possible." And in these documents we see how tightly interwoven this management effort is with their former colleagues such as George Schultz in the State Department in implementing this initiative. It shows how corporations take advantage of U.S. geopolitics in the region and how they try to profit from those geopolitical developments. Another important memo was in July of 1985, after Bechtel had run into some difficulties in assuaging Saddam's fears about potential Israeli threats to the pipeline. Bechtel and the State Department were having trouble getting the right degree of assurance from the Israeli Labor Party [then the ruling party in Israel] that the pipeline would be off limits to attack. Bechtel and the Reagan administration officials were trying to get absolute assurance from the Labor Party that the pipeline would absolutely not be attacked. There were some frustrations to that approach in 1985, and so Bechtel hired a couple of very close friends of the Reagan administration to sort out the deal. In July of 1985, pipeline promoters hired Judge Jim Clark, who was considered Reagan's right hand man. He had just left government to go into private business. There's a memo from Judge Clark saying that he's "on board" and laying out the terms of his involvement, which were $500 an hour, and saying he'd be flying to Baghdad, not as a private consultant, but representing himself as a White House representative. That memorandum, which is available on our website ( ), shows how blurry that revolving door had become. He's working for the government while he's simultaneously getting paid as an agent for Bechtel.

Q: Okay, so we have the evidence that there was this big concern about getting this big pipeline for Bechtel, and the interest in getting oil out without it having to go through the Persian Gulf. But wasn't that a legitimate national security concern for the U.S., given Iran's political situation and its hostility towards America?

A: Well, it has been long-standing US national security policy on paper that threats to the free flow of oil are threats to national security, and this is what we're getting at here. Is this pursuit of oil or the pursuit of empire? Some folks define what's going on in Iraq as U.S. pursuit of empire, but right now it's really two sides of the same coin. And this policy of pursuing oil and empire is coming up against all sorts of realities now that weren't well understood back in the 1980s. On the National security side, this pursuit of oil wealth at all costs has huge costs to democracy and human rights. It's creating a backlash in the Middle East and elsewhere that has had some horrible expressions recently.

Q: The pipeline never got built though. What happened?

A: In the end, Saddam decided that Bechtel was trying to charge too much for the project, and so he killed the project and instead went with a pipeline connecting into pipelines in Turkey and into Saudi Arabia, but avoiding the Straits of Hormuz.

Q: Do you expect to see the Aqaba pipeline revived?

A: Maybe, maybe not. I've seen reports now of Israel looking to build a pipeline from Iraq to the Golan Heights. It's not the same project as Bechtel's Aqaba pipeline idea. Bechtel asked the Commerce Department to keep the Aqaba pipeline registered as an active project for years, but it's probably less necessary now for the U.S. and Bechtel. The pipelines to Saudi Arabia and Turkey give an alternative route for oil to the Persian Gulf, and Bechtel gets into Iraq as a contractor to rebuild Iraq after the war. Right now, according to an article in the Wall Street Journal, Bechtel is one of the two finalists for the Iraq reconstruction job, along with Parson's group, which has Halliburton as a secondary contractor. Halliburton is Vice President Cheney's former company [Note: Cheney is still receiving payments from Halliburton]. That was reported in the Wall Street Journal today (April 2). They're both on the short list. Halliburton sort of stepped back for obvious reasons but they1re still in there with Parsons.

A: Aside from the unseemly picture of two well connected companies getting an inside track for all that post-war business in Iraq, why do you find the Bechtel involvement in this situation so troubling?

Q: Schultz worked at Bechtel. So did (Reagan Defense Secretary) Caspar Weinberger. There were a lot of Bechtel people in the government in the '80s at the same time that the Iraqi's were gassing the Iranis. The same people are now formulating the plans for a coming U.S. occupation of Iraq, and in turn, the same people will be given the spoils of war--whether it's Parsons and Halliburton or Bechtel. It's all kind of circular back to the 1980s, you know -- completing unfinished business--getting American companies back in there after their being shut out since 1991 and the first Gulf War. Bechtel was also listed by Iraq in its report to the U.N. weapons inspectors as one of the companies that helped supply Saddam with equipment and knowledge for making chemical weapons. Bechtel in the 1980s was prime contractor on PC 1 and 2, two petrochemical plants constructed in Iraq, which had dual-use capacity. So I guess the bottom line is that the Bush-Cheney-Rumsfeld squad are now holding Saddam Hussein accountable for chemical weapons of mass destruction--the same weapons which these same officials ignored in pursuit of the Aqaba pipeline project. And now we are going to reward the pipeline promoter with massive contracts for reconstruction resulting from this policy. There is just such hypocrisy in all this.

Q: This all seems like a kind of mini-Pentagon Papers, laying out the early roots of this war.

A: It's not as much of a blue-print as was the Pentagon Papers, but these memos and documents do show how business gets done in Washington, how it was conducted in the 1980s and how it's probably being conducted now behind closed doors under secret bidding processes. And it shows how the origins of American conflict with Iraq involve control of and access to oil.

Q: Can you see any signs that the current war is linked directly to oil? I mean the administration has given so many reasons for going to war I'm surprised they haven't gotten to oil. I remember in 1991, the first Bush said it was about jobs, which equates pretty quickly to oil. But they didn't say that this time around.

A: Yeah, they've redacted any reference to oil from their language. Maybe that's the best evidence that that's what it's really about, because it's logical. I mean Bush the first in his national security papers defined the free flow of oil as a national security priority, as did President Clinton in his final months in office. He released a national security paper that said that the free flow of oil is a national security priority that must be enforced with military might if necessary. The current Bush came out with the national security strategy that redacted this long-standing text dating back to the Carter administration, but at the same time you had this Cheney energy policy that continues this idea of the necessity of a "diverse and free supply of oil" without the military language. And actually you had Cheney kind of kick off the whole war fever last August in a speech to the Veterans of Foreign Wars. He cited the specter of Saddam Hussein with his weapons of mass destruction threatening the flow of oil from the region. Then immediately afterwards, any kind of reference like that vanished from the Bush administration's rhetoric, to the point that Secretary of Defense Rumsfeld called any kind of association of the current conflict with oil to be an "absurdity." So there is no document or strategy paper now that says "we must invade

Iraq because our US oil companies have been shut out of this second largest reservoir of oil for the last 20 years," but who knows what we'll find in the National Archives 20 years from now? It's a circumstantial case, but that's as good as we can do now. And logic certainly has its place as well. I mean, the question is why are the weapons of mass destruction today a cause for war when these very same weapons were ignored by the same officials 20 years ago when they were being used. What has changed is that other national oil companies--French, Russian and Chinese--have gotten into Iraq, while U.S. companies were being frozen out. I'm sure there are other factors. Certainly the Kuwait invasion didn't help U.S. relations with Saddam, and since Kuwait, Saddam signed very lucrative oil contracts with the French, Russians, Chinese and others.

Q: You made the point in your paper that US relations started to tank with Iraq after the rejection of the oil pipeline.

A: That's true. There was a shift away from Iraq to Iran right at that time, but I should say that Reagan and Bush the First both played both sides of the fence for a while, even after the pipeline project collapsed. You had the Iran Contra deal, but at the same time the U.S. was providing Iraq with intelligence about Iranian troop movements. And the U.S. did extend commodity credits through the Agriculture Department that Saddam then parlayed into arms. And there were the chemical plants that Bechtel helped build. So it's been quirkier than that. But certainly the end of the pipeline destroyed oil relations.

Q: What do you think led to the current war. What's the oil link?

A: Look at what's in Iraq and what's undeveloped. Iraq represents a major insurance package against any kind of political overhaul in Saudi Arabia or problems elsewhere in the Middle East. Look at the policy that people like Rumsfeld and others were recommending in the 1990s leading up to this war and they certainly cited the threat of Saddam Hussein to regional oil supplies as a cause for war. Certainly if the Bechtel pipeline had been built, the course of Iraqi-U.S. relations would have been much different. The failure of that pipeline set into motion a much different course for those relations.

A: So having control of Iraqi oil is still a key issue?

Q: It's the sole reason why the Persian Gulf region and Iraq have been a United States national security concern for so long. It's not geography.

Q: So what would you say is the lesson of all this?

A: The lesson is that when it comes to oil, a dictator is friendly to the U.S. when he's willing to do business and he's a mortal enemy when he's not. That has been the driving force behind national security policy, especially since the fall of the Soviet Union. Oil and national security policy were all submerged in the context of the Cold War. But once that Cold War collapsed, now it's a no-holds-barred battle for oil globally, and the U.S. has seen itself cut out of the world's second largest reserve of oil--and oil that is very inexpensive to extract. So with the U.S. shut out of Iraq, certainly it makes the trigger fingers of U.S. policy-makers itchy. And whether it's a blood feud or a war for oil, it's just a tragedy that the people of Iraq and our own sons and daughters and brothers and sisters are paying the price.

Dave Lindorff is the author of Killing Time: an Investigation into the Death Row Case of Mumia Abu-Jamal.