[The following article (all four parts) does as good a job as any other in explaining the goofy geopolitical rationale behind American foreign policy. We see clearly that China is the big winner in Iraq, Afghanistan, Africa and in the “Pipeline Wars,” buying-up all the oil and gas, as well as the strategic minerals made available by American military efforts. Is this an unintended consequence of multiple failed war efforts, or has the plan always been to facilitate Chinese economic interests? I believe that this has always been the secret plan, that American corporate and govt. leaders have plotted together to wage wars of aggression, to undermine the American economy and the world economy, to deceive the people of the world…all in the name of “freedom and democracy.”
Does this reflect a secret merger between the big oil companies and the Chinese govt., or does it merely highlight the latest stage in forging a new world order? In light of the dying American economy, does this mean a complete abandonment of the American market in order to facilitate the new Chinese growth, or is this simply another diversification of America’s multinational corporations? In a few years time, will the US mainland be completely cut-off from all oil and gas imports, in favor of easier to service Chinese outlets? I think that China is just the next stage in the evolution of multinationalism, the plan all along. China is just another layer of profit-taking, that will itself be disrupted by its own internal contradictions, just like the American capitalist state has been.
In contrast to the author’s optimistic prescription for change, I have my doubts that any moderate political actions that we could take would alter the outcome that has long been planned. It is going to take drastic political actions to save this Republic from the forces supposedly protecting us. We have to shut down the corrupt system before we see the Powers That Be shutting it down for us. This is way bigger than just the oil companies.]
The War – Did We Sacrifice a Million Lives and a $Trillion Cash Just to Hand Our Jobs to China?
Nicholas C. Arguimbau
While the Tea Partiers and the liberals squabble over important domestic issues, America’s corporate and military titans, at the expense of America’s workers and taxpayers and with the blessing of Congress and the President, are creating China’s economic miracle. The military, at a cost of over $1 trillion, has paved the way for China to acquire and the U.S. to lose access to vast mineral and petroleum resources. The oil industry, with U.S. government assistance, is building a safe haven in East Asia from the imminent crash of oil everywhere else, by cornering the entire supply. And foreign investment, largely American, is giving China on average nearly one million new jobs a month while American unemployment soars.
This is a four-part series. Part One discusses why and how the oil industry could create a safe haven from its own collapse, and why it might choose China for the project. Part Two discusses how East Asia became “the right market” for the world’s remaining oil reserves, endangering everyone else. Part Three discusses how the US military has turned Afghanistan and Iraq into China’s good buddies. Part Four takes a broader view of what has happened and what if anything can be done about it. Enjoy.
Part One of Four. Thinking About the War
“The war is not China’s war, but economically and socially, we can try to help.”
Liu Xuecheng,
China Institute of International Studies, Chinese Foreign Ministry, Beijing1
“Are you a prisoner?”
Hugo Chavez, speaking to Barack Obama, April 20092
Introduction
The War in Iraq and Afghanistan has had many victims – one million dead Iraqis, thousands of U.S. and Taliban casualties, countless U.S. soldiers with PTSD bringing the war home to their families, two U.S. Commanders-in-Chief and as we shall see, it has had one victor – the growing Chinese empire.
There are two current explanations for the war – the official “fighting terrorism” explanation, and the popular explanation on the left and in Europe that the US is a dying imperialist nation attempting to save its bloated economy by taking control of the world’s remaining oil by force. If either explanation is correct, then “the world’s only superpower,” as we were perceived and perceived ourselves a decade ago, has nothing whatsoever other than remarkably fast collapse of that status to show for its efforts – an outrageously expensive and demoralizing result. And as the “fighting terrorism” explanation has come to appear “thinner” every passing year, the world has come to perceive us, I think, as a nation of petulant children willing to kill to keep our SUVs running. That is a very sad end for the nation of Jefferson and Lincoln, the nation that pronounced:
Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, the tempest-tost to me,
I lift my lamp beside the golden door.3
We weren’t all bad, you know, but the “dying imperialist” view leaves us no friends at all..
What if neither explanation is correct? I think you’ll agree if you read on that there has been one hands-down winner in this war: a winner of almost every battle, and that is China.. We shall see that China is working very hard at cornering the world oil market, and that the United States military, with some encouragement from the oil industry, has assisted China along its way immensely. I think the evidence shows that was probably not merely the effect but the intent of our trillion-dollar adventure in Afghanistan and Iraq, that the United States Government has accomplished EXACTLY what it set out to accomplish: a great victory for China but the final blow to American prosperity. Has our Government truly gone that low? That’s what the facts suggest.
But keep in mind the caveat of a great and good friend who read this essay in draft:
“I have learned over the years not to attribute to malfeasance that which can more easily be described as stupidity. Sometimes folks just do stupid things. So, is your article linking a bunch of stupid actions, or reflecting a larger truth? Damned if I know.”
Maybe it doesn’t matter. Maybe we need a “regime change” to root out the majority of both parties who put Wall Street and the oil industry before the people but divert us into issues that divide us so we will vote perennially for the “lesser of two evils” until we are rendered penniless and powerless. Regardless, I hope you will enjoy a little saunter through Googlespace, and I think you will find a wealth of information through the links if you wish to pursue it.
Let’s try to take a look at the last decade with open minds. One thing is clear: that if the war of the last decade hasn’t been to some extent “about oil,” that would be pretty surprising, because everything else has been to some extent “about oil.”
Look around you. Unless you are in an exceptional place, the scene is dominated by petroleum. You see (under lights more likely than not poweed by fossil fuels), walls coated in petroleum-based paint, “organic chemicals ((aka petroleum derivatives) in your food, asphalt on your roof and under your car, which runs on “petrol,” and is largely made of plastic; in the summer you wear polyester, a petroleum product, or cotton, which arguably uses more petroleum than polyester does;4 and in winter you warm yourself with oil or natural gas. And so on, ad nauseum. No wonder the world uses thirty billion barrels of the stuff per year, 200 gallons per capita.
The industry associated with this has under its control something under a trillion barrels of the “conventional” (easy to access) portion of this black goop, worth maybe eighty trillion dollars, and generating about 2.5 trillion dollars per year in gross income (but it might be $8 trillion next year). No one outside the industry really knows, because the industry doesn’t like to open its books, especially on the total supply figures (which it openly exaggerates) and no one has forced the issue.5 It’s important to keep in mind, though, that 90% of the oil is “owned” by countries rather than companies.6
Who else has that sort of wealth and income to command? The United States Government, about comparable to the oil industry in gross income. Who else? Maybe the U.S. banking industry So to understand what’s going on in the world, we’d better understand something about the behavior of these three entities. Let’s start with oil.
So your boss controls all the oil. What’s your plan for the great crash?
Imagine that you are a planner for the private oil industry. You know, and your client knows, whether or not you admit it publicly, that oil is running out fast. Conventional oil,7 with reserves you know to be under 1 trillion barrels, has to run out completely in about 30 years if the present rate of consumption continues, and if instead consumption drops in the frequently-observed approximate “exponential decay” form, then the quantities will have to drop by 3-4% per year. Without the discovery and rapid development of several Saudi Arabias, which is pretty much impossible just in terms of time, production has to go down at the same time as demand is increasing everywhere and particularly rapidly in China.8 The latest report on China says its demand for oil is rising at an “astonishing 28% per year,”9although its more typical rate of increase is 10%/yr, which means doubling its already enormous demand every seven years. Your client has likely known the general situation since 1990 or before, but has done the best it can to keep the public unaware of the quantity of remaining oil and when production would peak.10 You know and your client knows that the myth of a long-lasting supply is what it is, and you also know that the post-oil human carrying capacity is widely seen to be and is likely actually to be AT MOST 2 billion, comparable to the preoil actual population.11 Anyhow, with one billion people (and rising) going hungry now, no one says we can feed and clothe and house 9.5 billion people on zero oil (how things will be about 2050), so things are looking a bit bleak.
Your client, however, is coming upon an extraordinary one-time opportunity. Although if things go as generally anticipated there will in a generation be no more oil and therefore no more oil industry, the industry has the greatest potential for investment the world has ever known. It comes from two sources: (1) oil prices are about to burst through the ceiling,12 giving the industry a greatly increased income from a gradually decreasing oil supply, (2) the formerly ever-rising costs devoted to oil exploration, drilling, pipeline construction, and refinery construction are likely to drop off long before the income stream ceases. So the industry is coming upon a time when it can invest trillions per year in a world in which the contraction of oil is causing contraction of economies and industries, virtually across the board, and shortly will be causing contraction of populations as well.
So what to do? Logically, the answer appears to be to concentrate all oil supplies in an area of population around 2 billion and proceed to concentrate investments in non-oil industries in that place, which will be shielded from collapse to the extent possible because (1) it will be assured dependable oil longer than any other part of the world, (2) its non-oil industries will have their foreign competition decimated or impoverished by the lack of oil elsewhere, and (3) the oil industry will be supporting an economy for as long as possible that is small enough in fact to do without oil once oil is gone. This may be the ONLY advice you can rationally give your client, because it is the only advice that would result in your client having the optimal conditions for investing its riches as its oil disappears, and for leaving the largest technically feasible human economy in the post-oil era.
But where? Given your client’s interests, the following criteria seem logical
(1) The place should be densely populated to minimize needs for oil as transportation fuel.
(2) The place should be self-sustaining for food to the extent possible without oil, a criterion seemingly at war with the first.
(3) As a general proposition, the place should have been in the past as little dependent upon oil as possible, so that there will be the fewest preconceptions about necessary or efficient or desirable allocation of the resource.
(4) To make your client happy, labor costs should be low and controllable.
(5) Environmental and health regulation of both the oil industry and other manufacturing industries should be minimal.
(6) Ideally, the place will have a government willing and able to make probusiness decisions smoothly, and to “manage” any opposition “efficiently.”
(7) There should be a solid educational system allowing the population to be “brought up to speed” quickly.
(8) The place should be physically defensible from invasion by angry or hungry hordes.
(9) Should it prove necessary, the government should be capable and willing to take population-control measures.
This combination might likely assure that the maximum percentage of the oil with which the country is supplied can be used for expansion of a manufacturing economy and therefore assure maximum income to investors.
Looks like China, doesn’t it? China and some of its neighbors as appropriate. No one else comes close.
And China’s extraordinarily rapid economic expansion strongly suggests the assistance of outside investment from some source or sources with immense economic resources at a time that most economic entities everywhere are stressed. Looks like oil, doesn’t it?
But how? The private industry can take its own steps to the extent it is free to do so, to shift oil resources to China, but in fact those steps are fairly limited because at this time, 90% of the world’s oil reserves are publicly owned.13 So control of the nations owning oil and control of transportation corridors for oil is essential. It should be obtained by economic and political means where possible, but by military means where necessary.
What military means? The oil industry lacks direct military might. China lacks the ability to place ground forces in large numbers in oil-producing nations. Besides, to carry out a plan in which China obtains oil supplies at the expense of the rest of the world by overt military hostilities to the extent of “drying up” everyone else is hardly the way to win friends and therefore might undermine the whole project. This needs to be a militarily mighty nation other than China, with potential “cover” for its designs, which can be controlled in its actions by the oil industry, and which will not suffer so much from the gambit that it will refuse to cooperate. Sounds like the US, doesn’t it? Probably no one else.
And finally, you’ve got to be decisive – the people short-counted on the oil are going to have to fight, for their at least temporary survival. Once you have control of the oil fields, you have to provide them security and maintain control of the shipping lanes, a task more difficult if the potential competitors have any oil of their own. So the trick, logically, is to be quick and complete and decisive.
OK, that’s a plan. Corner all the oil, using your political control over the US as necessary, send it to China (and possibly adjacent Asian nations), starve everyone else of oil, stop investing in marginal oil and oil infrastructure, and put your excess cash from “peak oil” where you’re sending the oil. EVERYONE seeking to find a safe haven for living and investing in the era of collapsing oil might logically seek out the place where the oil is going to last longest, and go there. But the oil industry has a unique advantage -the ability to pick the spot itself. Once we look at it, it is hard to see how the oil industry could avoid having this or a very similar plan.
Of course your client doesn’t understand, and maybe neither do you (so it’s a story for another day), that this plan won’t work unless corporate sociopathy and the growth imperative are abandoned, because otherwise the oil reserve cushion will disappear overnight.
All of this is almost pure , unadulterated speculation. Is there any real evidence?
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The author is a California-licensed lawyer residing in Massachusetts (e-mail narguimbau@earthlink.net). He wishes to thank Ted Cady, Peter Goodchild, Peter Hollings, Lance Rodgers and Emily Spence for encouragement and valuable input. All rights reserved, in particular for republicatiion.
NOTES
1. Tini Tran, AP News Service, “As U.S. fights, China spends to gain Afghan foothold ,” US Independence Day, July 4, 2010, http://www.msnbc.msn.com/id/38076136/ns/world_news-south_and_central_asia/
2. Quoted in Lewis Seiler and Dan Hamburg, “Still the Land of the Free and Home of the Brave?” Urbana-Champaign Independent Media Center, November 21, 2009. http://www.ucimc.org/content/still-land-free-and-home-brave.
3. Emma Lazarus, “The New Colossus,” http://www.libertystatepark.com/emma.htm
4. http://www.buzzle.com/articles/sustainable-fashion-polyester-vs-cotton.html.
5. Nicholas C. Arguimbau, “Imminent Crash of the Oil Supply. . .” http://www.countercurrents.org/arguimbau230410.htm
6. Council on Foreign Relations -“National Security Consequences of Oil Dependency,” Oil Drum December 5, 2006, http://www.theoildrum.com/story/2006/12/4/121714/354
7. See definition discussed in Nicholas C. Arguimbau, “Imminent Crash of the Oil Supply. . .” http://www.countercurrents.org/arguimbau230410.htm .
8. Nicholas C. Arguimbau, “Imminent Crash of the Oil Supply. . .” http://www.countercurrents.org/arguimbau230410.htm
9. Live Oil Prices, March 12, 2010, IEA says China oil demand increase is astonishing, http://www.liveoilprices.co.uk/oil/iea_oil_report/03/2010/iea-says-china-oil-dema nd-increase-is-astonishing.html
10. The OPEC nations traditionally inflate their reserves to justify increased sales and the governments traditionally use the OPEC figures for planning purposes Arguimbau, “Imminent Crash of the Oil Supply . . .,” http://www.countercurrents.org/arguimbau230410.htm; only in 2010 an Oxford University study uncovered that as a result, planners had been knowingly assuming reserves implying a full decade of supply in excess of reality. Rowena Mason, “Oil reserves ‘exaggerated by one third’,” http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7500669/Oilreserves-exaggerated-by-one-third.html; and no one has ever followed through on the warnings of global petroleum investment banker Matt Simmons, recently deceased, that OPEC had to open its books. EnergyTechStocks.com, “Meeting the Challenge Matt Simmons: Force All Oil Producers to Give Transparent Data,” (September, 2007) http://energytechstocks.com/wp/?p=245
11. See Pimentel et al, “WILL LIMITS OF THE EARTH’S RESOURCES CONTROL HUMAN NUMBERS,” dieoff.org/page174.htm. See also Hayes, “REINDEER, CARS & MALTHUS: POPULATION, CONSUMPTION AND CARRYING CAPACITY.” Population Press 1995,http://www.populationpress.org/essays/essay-hayes.html, Population, Carrying Capacity,http://www.umac.org/ocp/Carrying Capacity/info.html. Please note that these numbers are based upon “steady state” assumptions, but humanity has not shown itself capable of maintaining a steady state population for a reasonable time since prior to the agricultural revolution; additionally, humanity has done substantial damage to the planet in the last century, which will likely further reduce its carrying capacity for anywhere from centuries to millions of years, so this writer suspects that the true carrying capacity is substantially lower time. Nonetheless, a widely accepted estimate of carrying capacity, not the actual number, is the logically relevant figure when, as here, we are trying to ascertain what people are likely to do rather than what they ought to do.
12.See, for example, Deutsche Bank’s projection that crude oil prices will double in five years, http://climateprogress.org/2009/10/07/deutsche-bank-oil-to-hit-175-a-barrel-by-20 16-which-will-drive-a-final-stake-into-long-term-oil-demand-spurred-by-a-disrupt ive-technology-the-hybrid-and-electric-car-that-will-very/
13. Council on Foreign Relations -“National Security Consequences of Oil Dependency,” Oil Drum December 5, 2006,http://www.theoildrum.com/story/2006/12/4/121714/354
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The War – Did We Sacrifice a Million Lives and a $Trillion Cash Just to Hand Our Jobs to China?
Nicholas C. Arguimbau
While the Tea Partiers and the liberals squabble over important domestic issues, America’s corporate and military titans, at the expense of America’s workers and taxpayers and with the blessing of Congress and the President, are creating China’s economic miracle. The military, at a cost of over $1 trillion, has paved the way for China to acquire and the U.S. to lose access to vast mineral and petroleum resources. The oil industry, with U.S. government assistance, is building a safe haven in East Asia from the imminent crash of oil everywhere else, by cornering the whole supply. And foreign investment, largely American, is giving China on average nearly one million new jobs a month while American unemployment soars.
This is a four-part series. Part One discusses why and how the oil industry could create a safe haven from its own collapse, and why it might choose China for the project. Part Two discusses how East Asia became “the right market” for the world’s remaining oil reserves, endangering everyone else. Part Three discusses how the US military has turned Afghanistan and Iraq into China’s good buddies. Part Four takes a broader view of what has happened and what if anything can be done about it. Enjoy.
Part Two of Four. The US and Europe Aren’t “the Right Markets.”
Does “Big Oil” have the resources to carry out your plan?
For starters, is it right to assume that the oil industry has an enormous amount of money to invest somewhere else at this time and in the short-term future? Apparently, yes. As oil becomes depleted, exploratory drilling drops because it is futile, additional tankers are largely unnecessary if there isn’t additional oil, and as the industry approaches peak production there is less reason to expand refinery capacity. The industry isn’t about to announce its investment strategy, but to the extent available, statistics bear this out. When oil was a growth industry, it was necessary steadily to increase refinery capacity. But it is uneconomical to build refineries that will be unnecessary long before their useful life is over. Global refinery capacity has hardly grown at all since the early eighties, and the excess of refinery capacity over production/demand dropped from 15 mbpd (close to enough to meet the entire US demand) to zero between 1980 and the peak in production of conventional oil,1increasingly recognized as having occurred in or around 2005. (Refineries are again being built, but overall, e.g. with several being built in China while five of Britain’s eight have “for sale” signs, “the world needs fewer oil refineries.”)2 Additionally, exploratory drilling for conventional oil dropped from 11,000 wells to 3000 wells in the same period.3 . Similarly, oil tanker construction (92% of which takes place in South Korea, China and Japan) is slowing.4 These changes began three decades ago, which suggests, notwithstanding a stance of public denial that continued until this year,
the industry has been aware for that long of the coming peak.5
And then, of course, is the industry’s coming “free ride” from price escalation. It has been calculated that a 4% drop in supply could result in a 177% increase in gasoline prices(i.e. from $3/gal to $8.31/gal) and that a 15% drop in supply could result in a 550% increase in prices, (i.e. from $3/gal to $19.50/gal.),6 that peak oil could “soon”, according to Robert Hirsch,7 result in $12-15/gal gasoline, and according to the former Shell President that gas will rise to $5/gal in 2012..8 None of this should be too surprising, because the prices will have to cut consumption of oil generally by perhaps 20% by 2020. 9
While oil is sitting pretty relative to the rest of us, such figures might present almost as scary a prospect to the industry as they do to you and me. How can the oil industry get away from the oil shortages to which everyone else is about to fall victim? Well, China is increasing its demand by 10%/yr, doubling its consumption in 7 years, and (if it can keep up the frenetic pace) quadrupling consumption in 14 years. That would run the rest of the world down to zero. ZERO petroleum by 2025. Of course doubling your consumption twice in fourteen years is a pretty good trick, but then you might get fire sale prices because the oil industry is rooting for you, and buying the oil and leaving it in the ground where no one else could touch it would work as well to take the oil away from everyone else. As we shall see, China is well on its way with the potential to increase its consumption by 50% just from its overwhelming success at the 2009 Iraq oil auction. In fifteen years, all the world could be destitute except for China and its chosen few neighbors, with a population arguably not too many for a permanent global steady state, and with half a trillion barrels of oil left all to itself to tide it over to sustainability, assuming it does not pollute the world to death..
China sitting by itself with its population is far from sustainable, notably because of a massive groundwater deficit for agriculture on the North China Plain.10 The country has long prided itself as being self-supportive for food, but has more recently been considering importation of grain as an alternative to extremely expensive water importation to the North China Plain, but neither alternative should be out of reach of a nation holding most all the oil. China, after all, performs a trick that looks inconceivable: being the world’s greatest grain producer with farms averaging under an acre in size.11 And were China to corner the world oil supply with enough to keep it going for a century or so, the rest of the world would be virtually defenseless to any attempts it makes to pick the plums of the remaining world’s resources. It will be said by anyone who survives,
“The sun never sets on the Chinese empire.”12
Is “Big Oil”moving into China as if it’s planning to stay?
Is the oil industry in fact putting down roots in the Chinese economy? Glad you asked. Yes. International oil companies have been “pumping money into China,” with BP, Shell and Exxon-Mobil “leading the surge.” They are making the sort of investment that suggests they intend to stay awhile and think their industry will, too. They’ve been building 100 gas stations per month for years, the Kuwaiti Oil Company is building one refinery in China,13 and Shell is building another.14 And China itself is building refineries in Nigeria and Brazil.15 This isn’t how they’d behave it they thought China was going to run out of oil in a hurry. It’s more as if they think China is cornering the market. And they should know.
Of course, there are the five billion or so people who would rather not see ALL the remaining oil going to China and its neighbors, and if it appears that’s what’s happening, may wish to intervene. Fifteen years is not much time, and while the scenario, like China’s “astonishing” January 2009 to January, 2010 28% demand increase, seems improbable on its face, there is surprisingly little to stop it. A partnership between the oil industry and China is a pretty formidable one.
What we might expect is that the United States, with the most to lose, the most military might, and endless lip service to the importance of “energy independence,” would step in to create some balance.. But consistent with Congress’ long-established subservience to oil (the industry, not the commodity), the reverse is in fact happening.
Getting the oil to the “right market”
The oil industry has long had the ability to use the US Government to steer oil resources away from the US itself. Maybe you remember the fight over construction of the pipeline from Alaska’s North Slope. This was just after peak US oil, and concerns about American oil “security,” and American “oil independence” were as strong as they are today. There were two alternative pipeline routes: up the Mackenzie River Valley in Canada, ending in the US Midwest (the environmentally preferred alternative), and down through the completely undeveloped Alaskan interior to Valdez, the oil-industry preferred alternative. To be fair, “completely undeveloped” is hardly an accurate phrase. There were native Alaskan villages in the way, the rights of which Congress swept away in favor of the oil industry with the Alaska Native Claims Settlement Act of 1971.16 The oil industry maintained that it was important for the sake of “security” and “oil independence” that the route be entirely “on American soil.” All of that made sense until Charles Cicchetti, then an economist at John Hopkins, pointed out that from an economic point of view it made no sense to build the pipeline to Valdez rather than to the Midwest if the oil were to remain in the US, because there was a surplus of low-priced oil on the West Coast but a short supply of high-priced oil in the Midwest. . The only way the oil industry would prefer the Alaskan route, he said, was if it intended to sell to Japan rather than to the US.17 So much for American oil “independence.” The Alaskan route was chosen by Congress anyway. A restriction was placed in the bill that said the oil could not be shipped directly from Valdez to Japan, but that did not change Cicchetti’s calculus – that we needed the oil in the Midwest, and didn’t need it on the West coast. Thus the US Government was willing as long ago as 1972 to assist oil companies in reducing the supply of American oil to American citizens, all in the name of oil independence.
Since at least 1998, there has been an odd dichotomy between the perceived strategic aims of the US in Afghanistan and Iraq, and the actual beneficiaries of our intevention.. Almost immediately after 9/11, there arose a cottage industry of “It’s about oil” writing,18 and it probably is. This writer recalls being part of the fan club and an occasional contributor .That is not the focus of this article. What is odd is the dichotomy – a confusion between a war for oil and a war for oil companies.
Columnist George Monbiot said it all on October 23, 2001, in a column titled “America’s pipe dream. A pro-western regime in Kabul should give the US an Afghan route for Caspian oil.” He argued,
If the US succeeds in overthrowing the Taliban and replacing them with a stable and grateful pro-western government and if the US then binds the economies of central Asia to that of its ally Pakistan, it will have crushed not only terrorism, but also the growing ambitions of both Russia and China. Afghanistan, as ever, is the key to the western domination of Asia.19
But what was the “Afghan route for Caspian oil” that a “pro-western regime in Kabul should give the US”? John Maresca. Unocal Vice President and former US diplomat,20described it in testimony on invitation from Congress in February, 1998,21 in which he discussed the need to remove the Taliban so as to make way for pipelines to carry Caspian crude and natural gas across Afghanistan to the coast of Pakistan, where it could be shipped to India and China. Maresca’s testimony is a fount of information for conspiracy buffs, but it stands on its own as an indicator of US policy with regard to energy for China. Maresca said that the Caspian oil was likely “enough to service Europe’s oil needs for 11 years” if exported through a pipeline to the Mediterranean, and that the Caspian could be producing 4.5 mbpd by 2010. In 1998 China, by comparison, consumed 4.1 mbpd.22 Nonetheless, Maresca recommended against reliance on the pipeline to the Mediterranean and in favor of a pipeline across Afghanistan that would service India and China. Unocal presumably was aware that peak oil would occur in the interim, so giving oil to China was taking it from the rest of the world.
While Maresca’s testimony later proved optimistic and the oil pipeline across Afghanistan for Caspian crude, specifically endorsed by Robert W. Gee, Assistant Secretary for Policy, U.S. Department of Energy at the time of Maresca’s testimony,23 is apparently no longer on the table, it is nonetheless indicative of what Congress was willing to give away to China. Why was this Maresca”s recommendation?
He explained that a western route, out through the Mediterranean, would not have the capability to move it to the “right markets.” The Mediterranean route was designed for export of Caspian oil to the United States and Europe,24implicitly the “wrong markets.” Predictably, he mentioned Europe but not the United States in this testimony invited by the US Department of Energy. East Asia, he predicted, was “a different story altogether” and could be expected to more than double its demand before 2010. That in fact happened.
Such predictions, of course, always have an element of self-fulfilling prophecy. As discussed below, investment rather than exports is the primary driver of GDP growth in China, and foreign investments in China multiplied by ten in the six years prior to Maresca’s testimony, to a level that has been approximately 10% of the GDP ever since.25 So in modern China, if one must ask “Which came first, the chicken (foreign investment) or the egg (economic growth)?” the answer appears to be, “The chicken.” Promoting oil for China, promoted foreign investment.
Next, Maresca told his listeners, twice for emphasis, that
“The territory across which the pipeline would extend is controlled by the Taliban, an Islamic movement that is not recognized as a government by most other nations. From the outset, we have made it clear that construction of our proposed pipeline cannot begin until a recognized government is in place that has the confidence of governments, lenders and our company..”
Maresca was asking Congress to intervene in Afghanistan in a manner that would shift oil, and ultimately jobs, to China.
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The author is a California-licensed lawyer residing in Massachusetts (e-mail narguimbau@earthlink.net). He wishes to thank Ted Cady, Peter Goodchild, Peter Hollings, Lance Rodgers and Emily Spence for encouragement and valuable input. All rights reserved, in particular for republicatiion.
NOTES
1. http://www.imf.org/external/pubs/ft/weo/2006/01/chp1pdf/fig1_21.pdf ; “Conventional” oil means that which is pumped from fields on the land or under shallow water, is not under deep sea and does not come from “tar sands,” shales, etc. See Campbell, below.The “unconventional” oils exist in staggeringly high amounts, but are often useless as energy sources because the energy recovered over the energy in (“EROEI”) is numerically less than one. Even to the extent practically recoverable, none of these sources can be developed quickly enough to eliminate shortfalls in the near future.
2. Martin Quinlan,”Refining: short-term improvement, long-term problems.” Petroleum Economist June 2010, http://www.petroleum-economist.com/default.asp?page=14&PubID=46&ISS=25678&SID=726819
3. Colin Campbell, “Peak Oil: an Outlook on Crude Oil Depletion,”http://www.greatchange.org/ov-campbell,outlook.html .
4. MIC, “World Ship-Building forecast shows weak-but-steady growth in oil and as tanker fleet over next five years,” http://www.micportal.com/index.php/Please%20see%20the%20MPA%20circular%20for%20full%20details%20a%20link%20to%20which%20can%20be%20found%20here:%20http:/Please%20see%20the%20MPA%20circular%20for%20full%20details%20a%20link%20to%20which%20can%20be%20found%20here:%20http:/cgvi.uscg.mil/media/Please%20see%20the%20MPA%20circular%20for%20full%20details%20a%20link%20to%20which%20can%20be%20found%20here:%20http:/www.mpa.gov.sg/circulars_and_notices/pdfs/banners/index.php?option=com_content&view=article&id=2432:world-shipbuilding-forecast-shows-weak-but-steady-growth-in-oil-and-gas-tanker-fleet-over-next-five-years&catid=7:Tankers&Itemid=15 (2009)
5. 1980 was when Ronald Reagan was elected President. His environmental policies demonstrated a strong allegiance to the oil industry, and his support for massive public and private debt and large-scale development of unsustainable oil-guzzling suburbia, set the stage for much of America’s present predicament. Did his policies reflect what the oil industry knew would come three decades later? That’s a question for historians, if history survives the next few decades.
6. Stanton, “Is the UK ready for an oil shortage?” http://www.roadtransport.com/Articles/2008/01/30/129667/Is-the-UK-ready-for-an-oil-shortage.htm
7. speaking on CNBC, http://www.youtube.com/watch?v=IWGsnW_NnxE
8. Cleanmpg.com http://www.cleanmpg.com/forums/index.php
9. See graph in Nicholas C. Arguimbau, “Imminent Crash of the Oil Supply. . .” http://www.countercurrents.org/arguimbau230410.htm
10. “Water Policy Briefing: Choosing Appropriate Responses to Groundwater Depletion,” International Water Management Institute, Colombo, Sri Lanka Email:waterpolicybriefing@cgiar.org,http://www.iwmi.cgiar.org/waterpolicybriefing/index.asp. This report is exclusively on the North China Plain problem. IWMI in Sri Lanka is an excellent source of materials on global water problems.
11. UN Food and Agricultural Organization (FAO), Agricultural Outlook 2010-2019 (2010)
12. Credits to John Wilson, who is said to be the originator of “The sun never sets on the British Empire,” Answers.com, http://wiki.answers.com/Q/Who_said_’The_sun_never_sets_on_the_British_Empire’
13. China: Foreign Oil Companies Boosting Investments ,” Energy Tribune January 27, 2007, http://www.energytribune.com/articles.cfm?aid=365&idli=1
14. “Shell, CNOOC Parent in Talks on Refinery Deal, China Daily Says,” Bloomberg News, Jan 10, 2011, http://www.bloomberg.com/news/2011-01-11/shell-cnooc-parent-in-talks-on-refinery-deal-china-daily-says.html
15. www.glennbeck.com/2011/01/14/footnotes-research-for-t...
16. (43 USC 1601-1624) — Public Law 92-203, approved December 18, 1971 (85 Stat. 688)
17. Cicchetti, C.J. 1972. Alaskan Oil: Alternative Routes and Markets. Baltimore: Johns Hopkins University Press. Congress placed a provision in the bill limiting direct shipment from Valdz to Japan; whether it alleviated thesituation, this writer does not know. But it could not change the fact that from an American standpoint, the oil was needed in the Midwest but not on the West Coast..
18. Cvf. Ted Rall, It’s About Oil. The San Francisco Chronicle: November 2, 2001: http://articles.sfgate.com/2001-11-02/opinion/17625946_1_kazak-caspian-sea-black-sea
19. George Monbiot The Guardian, Tuesday 23 October 2001
http://www.guardian.co.uk/world/2001/oct/23/afghanistan.terrorism
20. http://commdocs.house.gov/committees/intlrel/hfa48119.000/hfa48119_0.HTM
21. Mr. Maresca’s testimony, made on invitation of the House Committee on International Relations Subcommittee on Asia and the Pacific, may be read at http://www.serendipity.li/wot/wsap212982.htm
22. US Energy Information Administration. Independent Statistics and Analysis, International Petroleum (Oil) Consumption http://www.eia.doe.gov/emeu/international/RecentPetroleumConsumptionBarrelsperDay.xls Researchers will find the EIA data bank invaluable
23. House Committee transcript at 17, http://commdocs.house.gov/committees/intlrel/hfa48119.000/hfa48119_0.HTM
24. Leyla Tabasaranskaya (Senior Supply Chain Officer, Supply Chain Management Department, BP Azerbaijan Business Unit) “Baku – Tbilisi-Yhan Pipeline Project Underway,” UK Trade and Investment, http://www.touchoilandgas.com/baku-tbilisi-yhan-pipeline-a102-1.html
25. FDI inflows into China 1984-2009,The rise of foreign direct investment (FDI) , Chinability, http://www.chinability.com/FDI.htm
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The War – Did We Sacrifice a Million Lives and a $Trillion Cash Just to Hand Our Jobs to China?
Nicholas C. Arguimbau
While the Tea Partiers and the liberals squabble over important domestic issues, America’s corporate and military titans, at the expense of America’s workers and taxpayers and with the blessing of Congress and the President, are creating China’s economic miracle. The military, at a cost of over $1 trillion, has paved the way for China to acquire and the U.S. to lose access to vast mineral and petroleum resources. The oil industry, with U.S. government assistance, is building a safe haven in East Asia from the imminent crash of oil everywhere else. And foreign investment, largely American, is giving China on average nearly one million new jobs a month while American unemployment soars.
This is a four-part series. Part One discusses why and how the oil industry could create a safe haven from its own collapse, and why it might choose China for the project. Part Two discusses how East Asia became “the right market” for the world’s remaining oil reserves, endangering everyone else. Part Three discusses how the US military has turned Afghanistan and Iraq into China’s good buddies. Part Four takes a broader view of what has happened and what if anything can be done about it. Enjoy.
Part Three of Four. Our Hand-Picked Governments in Afghanistan and Iraq Snub Us and Befriend China
Next stop, Afghanistan
After ousting the Taliban under the guise (or the reality – take your pick) of doing something about 9/11, the US put in place Hamid Karzai, a former Unocal (you remember, the company that convinced Congress that the “right markets” were in East Asia, not the West) adviser. While the specific project pushed by Unocal’s Maresca has not gone forward, the continuing significance of Maresca’s testimony is demonstrated by the signing in December, 2010 by Karzai of a multinational agreement (not including the US) to build a natural gas pipeline, to serve points East. Maresca’s vision of the “right markets” has remained alive and well.
Shortly, with the Taliban out of the way, China arrived on the scene to get involved in a variety of resource exploitation projects, and was greeted by the Karzai administration and the Afghan public with open arms. With the Taliban gone from Kabul, Afghan-Chinese business is booming on many levels. In the decade since 9/11, trade has increased tenfold, consumer markets in Kabul, like those in the US, are packed with Chinese products, often one fifth the price of similar goods manufactured in the US or Germany or Iran, and there is a continuous stream of about 30,000 traders shuttling back and forth between the two countries.1
At least equally important, and better known, is that China has won numerous industrial and resource-development contracts from the Karzai government in Afghanistan. China Railway Construction Group/China Railway Shisiju Group has won major railway-construction contracts. Chinese companies now dominate the Afghan cable and fiber optics markets. Chinese contractors have also received contracts for hospital, school, road and housing developments..
The crown jewel of it all is a 30-year contract to exploit what is said by some to be the largest and by others to be the second-largest undeveloped copper deposit in the world, Aynak, approximately 40 miles southeast of Kabul.. The deposit is said by one reporter to be valued at $30 billion and by another to be valued at “up to” $88 billion, yet China’s bid of $3.5 billion winning it the deal over several other bidders including Phelps-Dodge of the United States, reportedly surprised analysts who were not expecting a bid over $2 billion. Some have questioned the integrity of the bidding process, which also reportedly had no economic or environmental review, and question the over-involvement in favor of the Chinese proposal by Karzai’s mining minister, discussed in a Nature article in October, 2007, but the Karzai government denies any wrong-doing.2
None of this would have been possible without the United States’ military intervention, apparently immensely expensive to the people of the United States in dollars, lives, and loss of good will. Mathew Nasuti of Kabul Press writes:
“China is not merely winning the propaganda war. It is keeping a low public profile in Afghanistan, which keeps Muslim militant efforts focused on the very visible American military presence. While the United States Government spends an estimated $1 billion a day in Afghanistan and, more importantly, places its men and women in uniform in the line of fire, the country that benefits the most from that effort appears to be China. If the Americans and their NATO allies were not fighting and dying in Afghanistan, Chinese military forces would likely have to be deployed. The Beijing government seems happy to have the West take over its military responsibilities. As the Taliban and al-Qaeda focus on battling the very visible Western forces, China officials work behind the scenes preparing to benefit in the long-term from the primarily American effort.”3
Ironically, one of the reasons for continued presence of the United States in Afghanistan is that the Aynak mining operation faces continued threats from Taliban insurgents, and the U.S. Army’s Tenth Mountain Division patrols the area for China.4
Even the Afghan-American Chamber of Commerce, folks one would expect to find allies among American Republicans and Tea-Partiers, is whistling into the wind about what’s going on: “We’re giving tens of billions of dollars in assistance to Afghanistan, and we’re getting no credit. We need a policy on developing mines and minerals and oil and gas in Afghanistan. Otherwise, it will be dominated by the Chinese.”5
None of these stunning advances for China could have occurred without military intervention by the United States. Can they be reconciled with the Government’s asserted goal of routing out Al Qaeda in Afghanistan? No, because there are in fact under 100 Al Qaeda in Afghanistan. For this we would deploy over 100 THOUSAND US troops, spend half a trillion dollars and still find ourselves regularly outmaneuvered? Can they be reconciled with the leftperceived goal of US imperialism in the sense of capture and control of the resources of a nation with the use of military force? No, because the only imperialist interests appearing to be furthered are those of the Chinese, and if conventional imperialism is involved, we are fighting FOR those we should be fighting against. No especially because US imperialist interests cannot be reconciled with providing military security for China’s mining operations.
Has George Monbiot’s prediction that our handpicking the Taliban’s successor would “crush” China’s ambitions in Afghanistan come true? Hardly. On the other hand, if the US military has been hijacked by the oil industry and China to aid in consolidating resources in Maresca’s “right markets,” then not only do the facts fit, but far from bumbling, the operation has been a tremendous success at costs that, while very high to the US taxpayer, have been negligible to the “clients.”
All of this is surely at least CONSISTENT with implementation of the conjectured plan for giving oil a Chinese safe haven in which to invest its trillions as the oil-based economies of the rest of the world, including the US, collapse. It is not a pretty picture to see the US using its military might with either the effect or the intent of depriving Americans of resources and sending them to China, while China, insisting it has nothing to do with the war, reaps the benefits. That uis unquestionably the effect, but we should take a look at what’s been happening in Iraq before jumping to conclusions about intent.
On to Iraq, the One-time Home of Saddam Hussein.
Iraq is in fact more of the same. The United States Government has never shown that Al Qaeda had a safe haven in Iraq or even that the US was making an attempt to rout out Al Qaeda. The same is true of the Taliban in Iraq. And the back-up claim of the US, that attempts to manufacture weapons of mass destruction in Iraq had to be halted, was never shown to have any factual support. This writer will not reiterate the evidence on this subject. So that left a “US-imperialists-are seeking-control-of-the-oil” explanation as the only apparently viable one.
Viable, that is, until the US “regime change” occurred and Saddam Hussein’s chosen successor began to parcel out contracts on its vast oil reserves, estimated at 110 billion barrels (vast at least in this day of declining oil). We shall look in vain for any signs of gratitude to the U.S. from the newly-installed “grateful pro-western government.”6
Falah Aljibury, an Iraqi energy analyst who has advised several Iraqi oil ministers as well as other OPEC nations, says that the Asian nations have been at an advantage as a result of their non-participation in the military operations that secured benefits for them.7 And so it certainly appears.
In an early round of sales, four small contracts were entered into, but notably, all with Asian contractors: China, Vietnam, India and Indonesia.8
In August, 2008, without a bidding process, Iraq entered into a 20-year contract with China to develop the small Ahdab field, near the Iranian border, expected to yield 125,000 bpd. Iraq’s spokesperson, discussing the deal with the Washington Post, emphasized that Western oil compaies had thus far only been given technical services contracts, that the contract given to China was much more lucrative, and that Iraqi officials hoped the deal with China would “refute all the rumors that say the American companies are the only ones benefitting from the American occupation.” 9
In 2009, again without a bidding process, Iraq gave China and its partner BP the largest contract that can or will ever be made anywhere again for oil
a 20-year contract to develop its crown jewel, the Rumaila field, said to be second only in the world to Saudi Arabia’s now-declining Ghawar field.10Longterm contracts, unique in Iraq for the Middle East, are permitted under the Iraqi regime change’s law, the terms of which were reviewed by the Bush Administration prior to its submission to the Iraqi parliament.11 Those terms include the contractor sharing title to the petroleum with Iraq, but that particular provision has yet to be approved by Iraq’s parliament. With estimated reserves of 17 billion barrels and production at 2.85 mbpd, Rumaila makes the giant Alaskan Prudhoe Bay field, the largest in North America (total production to reach 13 billion barrels at a maximum production rate of 2 mbpd,12) look modest.
Again without a bidding process, in May, 2010, Iraq signed a contract with China and the Turkish Petroleum Corporation (TPAO) to develop the Maysan oilfield complex, which contains 2.5 billion barrels. The complex is expected to yield 450,000bpd (remember that only a decade ago, that alone would have been 10% of China’s demand), and the stakes are divided 64% China, 11% Turkey, and 25% retained by Iraq. 13.
The American companies by appearances got their main chance in Iraq with an open auction on numerous large fields in December, 2009. The American companies were, however, according to the press, “noticeably absent.”14 Despite a very flashy televised show of transparency in the bidding process,15 the die had already been cast – the American companies had apparently already decided either that they did not want to develop Iraq’s huge oil reserves, or that they could not win on the terms Iraq was offering. The fields auctioned off16 included
Rajnoon – another “Prudhoe Bay” field, its total reserves 13 billion barrels and projected output 1.8 mbpd- successful bidder Malaysia.
Halfaya (4.1 billion barrels of reserves, projected output of 535,000 barrels per day (bpd)) – successful bidder China (50%), along with partners Total from France (25%) and Petronas from Malaysia (25%).
Gharaf (reserves of around 860 million barrels, projected output of 230,000 bpd) – successful bidder a partnership (Malaysia 60%, Japan 40% )
West Qurna Phase 2(about 12 billion barrels of reserves; projected production of 1.8 mbpd) – successful bidder Russia.
US company Exxon-Mobil, partnering with Royal Dutch Shell, had been awarded one month earlier a significant 20-year development contract for West Qurna Phase 1 (estimated reserves of 8.5 billion barrels, with an output target of 2.1 mbpd),17 but that is the only major contract awarded to a U.S. company, and there are not expected to be additional major auctions for decades. As discussed in Part Two, Exxon is actively investing in China, so the oil it obtains from Iraq may ultimately go to China rather than to the U.S.
Here in summary are the fields parceled out by Iraq in 2009 alone:
Asia Rumaaila 2.85mbpd primary holder China
Maysan 0.45 primary holder China
Rajnoon 1.80 primary holder Malaysia
Halfaya 0.535 primary holder China
Gharaf 0.230 primary holder Malaysia
Total Asia 5.865
Russia W. Qurna Ph 2 1.80
Exxon/U.S. W. Qurna Ph 1 2.10
France Halfaya (25%) 0.134
Malaysia is a small player in the world of oil relative to the above contracts, producing approximately 693,000bpd and consuming 536,000 bpd, with reserves of about 4 billion barrels,18 so Malaysia is likely standing in for someone else in Iraq.
Oh, yes. Part of what the US is doing in Iraq is the same as in Afghanistan: serving as security forces for the primarily-Asian and particularly Chinese oil contractors, which is apparently a major reason the Commander-in-Chief doesn’t seem to be in much hurry to fulfill his commitment to bring the troops home.19
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The author is a California-licensed lawyer residing in Massachusetts (e-mail narguimbau@earthlink.net). He wishes to thank Ted Cady, Peter Goodchild, Peter Hollings, Lance Rodgers and Emily Spence for encouragement and valuable input. All rights reserved, in particular for republicatiion.
NOTES
1. Tini Tran, AP News Service, “As U.S. fights, China spends to gain Afghan foothold ,” US Independence Day, July 4, 2010, http://www.msnbc.msn.com/id/38076136/ns/world_news-south_and_central_asia/
2. Mathew Masuti, “US Losing Afghanistan to China,” Kabul Press July 19,2010, http://www.kabulpress.org/my/spip.php?article19517; Radio Free Europe / Radio Liberty, November 24, 2007, “Afghanistan: China’s Winning Bid For Copper Rights Includes Power Plant, Railroad,” http://www.afghan-web.com/economy/china_copper.htm land ; Tini Tran, AP News Service, “As U.S. fights, China spends to gain Afghan foothold ,” US Independence Day, July 4, 2010, http://www.msnbc.msn.com/id/38076136/ns/world_news-south_and_central_asia/
3. Mathew Masuti, “US Losing Afghanistan to China,” Kabul Press July 19,2010, http://www.kabulpress.org/my/spip.php?article19517.
4. As reported in the Asia Times, citing the Economist magazine. Syed Fazl-e-Haider “Afghan cash starts going to China, ” http://www.atimes.com/atimes/South_Asia/KK11Df04.html.
5. As reported in the Asia Times, citing an NBC News interview of Donald Ritter, president of the Afghan-American Chamber of Commerce. Syed Fazl-e-Haider “Afghan cash starts going to China, ” http://www.atimes.com/atimes/South_Asia/KK11Df04.html.
6. Cf. observations of George Monbiot in October 2001, quoted above.
7. Steve Hargreaves, CNNMoney.com staff writer, April 5 2007: “And Iraq’s big oil contracts go to … Companies from China, India and other Asian nations are seen getting the first contracts. But don’t write off Big Oil just yet.” http://money.cnn.com/2007/04/05/news/international/iraq_oil/index.htm
8. Steve Hargreaves, CNNMoney.com staff writer, “And Iraq’s big oil contracts go to … Companies from China, India and other Asian nations are seen getting the first contracts. But don’t write off Big Oil just yet.’ April 5 2007.http://money.cnn.com/2007/04/05/news/international/iraq_oil/index.htm
9. Amit R. Paley, Washington Post Foreign Service, Friday, August 29, 2008, “Iraq and China Sign $3 Billion Oil Contract: Deal Is First of Its Kind Since Invasion,” http://www.washingtonpost.com/wpdyn/content/article/2008/08/28/AR2008082802200.html
10. Friday, 24 September 2010, Jay Ruskin, “NEWS: ‘Surge of interest’ in Iraq oil contracts as BP prepares to develop Rumaila field.” http://www.ufppc.org/us-a-world-news-mainmenu-35/9930-news-surge-ofinterest-in-iraq-oil-contracts-as-bp-prepares-to-develop-rumaila- field.html. Note that the Prudhoe Bay field has had 13 billion barrels of “recoverable” oil but 25 billion barrels total. Press reports for Rumaila have not made the distinction, so there is some possibility that its “recoverable” oil is no more than Prudhoe Bay’s.
11. Steve Hargreaves, CNNMoney.com staff writer, April 5 2007: “And Iraq’s big oil contracts go to … Companies from China, India and other Asian nations are seen getting the first contracts. But don’t write off Big Oil just yet.” http://money.cnn.com/2007/04/05/news/international/iraq_oil/index.htm
12. Wikipedia, Prudhoe Bay Oil Field, http://en.wikipedia.org/wiki/Prudhoe_Bay_Oil_Field
13. “Iraq signs oilfield deals with CNOOC, TPAO,” Maktoob News, 5/17/2010http://en.news.maktoob.com/20090000470398/Iraq_signs_oilfield_deals_with_C NOOC_TPAO/Article.htm
14. Jane Arraf, Global Post, December 12, 2009, “Iraq’s giant oil fields go on auction block. Royal Dutch Shell and Malaysia’s state-owned oil company win the biggest prize, the super-giant Majnoon Field,” http://www.globalpost.com/dispatch/iraq/091211/oil-auction
15. The auction “was conducted like a high-stakes game show. To ensure transparency, oil company representatives brought their bids to the stage in sealed envelopes. The figures were then put up on giant screens with the winner announced to polite applause.” Jane Arraf, Global Post, December 12, 2009, “Iraq’s giant oil fields go on auction block. Royal Dutch Shell and Malaysia’s state-owned oil company win the biggest prize, the super-giant Majnoon Field,”http://www.globalpost.com/dispatch/iraq/091211/oil-auction
16. Pepe Escobar, “Iraq’s oil auction hits the jackpot,” Asia Times On Line, December 16, 2009, http://www.atimes.com/atimes/Middle_East/KL16Ak02.html
17. Alarabiya.net, Thursday, 05 November 2009, “W.Qurna a prized oilfield with 8.7 bln bbls of reserves. Exxon-led group clinches Iraq’s W.Qurna contract.” (The article alternatively refers to the field as having 8.5 and 8.7 billion barrels.)http://www.alarabiya.net/articles/2009/11/05/90303.html
18. EIA, “Malaysia Oil,” http://www.eia.doe.gov/cabs/Malaysia/Oil.html
19. See, e.g., Ben Lando, “Major oil export development highlights security questions, July 13, 2010, http://www.iraqoilreport.com/security/energy-sector/major-oil-export-developmen t-highlights-security-questions-4814/
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The War – Did We Sacrifice a Million Lives and a $Trillion Cash Just to Hand Our Jobs to China?
Nicholas C. Arguimbau
While the Tea Partiers and the liberals squabble over important domestic issues, America’s corporate and military titans, at the expense of America’s workers and taxpayers and with the blessing of Congress and the President, are creating China’s economic miracle. The military, at a cost of over $1 trillion, has paved the way for China to acquire and the U.S. to lose access to vast mineral and petroleum resources. The oil industry, with U.S. government assistance, is building a safe haven in East Asia from the imminent crash of oil everywhere else. And foreign investment, largely American, is giving China on average nearly one million new jobs a month while American unemployment soars.
This is a four-part series. Part One discusses why and how the oil industry could create a safe haven from its own collapse, and why it might choose China for the project. Part Two discusses how East Asia became “the right market” for the world’s remaining oil reserves, endangering everyone else. Part Three discusses how the US military has turned Afghanistan and Iraq into China’s good buddies. Part Four takes a broader view of what has happened and what if anything can be done about it. Enjoy.
Part Four of Four. What’s Really Going on Here?
Several months before the 2009 auction in Iraq, MichaelEconomides, editor of the industry newspaper, Energy Tribune, had described the changing roles of the West and China in petroleum acquisition in a virtual script for the up-coming Iraqi auction:
“It is certain that large Chinese oil acquisitions will become commonplace . .. . .Almost overnight, the US and the EU will be reduced to mere bystanders while China moves into the geopolitical major leagues. Massive Chinese acquisition of energy assets will lead to a transfer of political and economic power that the modern world has rarely seen. Why the US would be willing to give up competing for what has arguably been the world’s most vital commodity and for which there is no credible alternative, is mystifying.”1
Mystifying indeed. Economides attributed the Western lassitude to too much “philosophizing on the future of the planet.”2Hmmm. Is that what motivated the US oil companies in sitting out the 2009 auction? Somehow it seems even less likely than the idea that the war has been an aging imperialist nation’s gambit to “crush the growing ambitions of China.” We all allow our vision to be clouded on occasion by our determination to blame things on our favorite enemies. Were we “philosophizing on the future of the planet” when we killed one million Iraqis? Were we “crushing the growing ambitions of China” when we imposed “regime changes” in which the new rulers fell over backwards to give China their geological crown jewels? I don’t think so. And yet the BEHAVIOR of both the US Government and the US oil companies is as if they do not want Americans to have oil in the future. An environnmentally admirable position to take if the oil were not going to be used anyway, but the safe-haven-in-China motive and Maresca’s assurances that Asia is the “right market” ring more true to this observer at least, especially given that the Waxman and Kerry global warming bills were drafted apparently so that the oil industry would be saved from doing more than “peak oil” would require. Seewww.countercurrents.org/arguimbau230410.htm (“Imminent Crash of the Oil Supply . . .”), .
Good cop, bad cop
So we go into Afghanistan, rough everyone up, put “our” man in charge and tell ‘em it’s time to have a democracy. Folks aren’t terribly impressed. Then right behind us comes China, which “hearts and minds ‘em,” and they lay out the red carpet. The scene repeats itself in Iraq, where there’s a literal red carpet at the 2009 petroleum auction.
It’s a classic “good cop bad cop” routine. For those unfamiliar with it, the routine originated in police interrogation techniques. The “good cop” ingratiates himself to the suspect, offers him food or drink, explains that he wants to get him the best possible deal and may be able to do so if the suspect cooperates. The “bad cop” is standing by, seething, seemingly willing to beat up the suspect at the least excuse if he fails to cooperate. When the routine works, the suspect ultimately does what the “good cop” wants out of gratitude for having an alternative to the “bad cop.”
In context, China, playing “good cop,” is in a strong position to negotiate favorable contracts for pipeline corridors, oil or other resources from a country that has been subjected to US military intervention. The countries holding natural resources or pipeline corridors coveted by China may choose between China’s “carpet of gold” and America’s “carpet of bombs.” 3 To the casual observer, the “good cop” and “bad cop” have conflicting goals, but in fact they are one and the same.. As Chinese analyst Liu Xuecheng puts it as quoted at the opening of this article, the US wages war while China “tries to help.”
You have to admire China’s chutzpah. China avoids blame for engaging in imperialist war, China carries off the spoils, United States soldiers bear the casualties, United States taxpayers shoulder the bill, the United States takes the exclusive blame for yet another immoral war, AND China purchases bonds, about one trillion dollars, altogether, on which U.S. taxpayers will be paying interest for decades, to cover the cost.4 As writer William Schneider asks, “Isn’t there something worrisome about Communist China financing operations of the U.S. government?”5 But that’s a question for another day.
OK, what’s goin’ on here, if it isn’t clear already?
So what IS going on here? Let’s make a list:
(1) In 1992, there began a massive foreign investment in China. Annual foreign investment multipled by more than 10 in five years to around $70 billion per year by 1997, an influx of “stimulus money” every year greater relative to the size of the GDP, than the US stimulus package of 2009. China, which had been stagnating in the years just prior to that influx, boomed. And for the last decade, investment has been by far the largest contributor to China’s GDP growth, eclipsing its phenomenal export volume,.6 And for the last five yearshas contributed an average of 750,000 jobs per month to the Chinese economy.One might surmise that the oil industry had something to do with that, given its abundance of cash, but this writer lacks the data.
(2) John Maresca made his famous 1998 speech on invitation of Congress and DOE explaining why the Taliban needed to be booted from power in Afghanistan to make way for a pipeline that could get oil to .”the right markets” – namely East Asia rather than the western markets.
(3) The Clinton and Bush administrations negotiated with the Taliban over the pipeline corridor up until August, 2001. The US negotiator made the famous “carpet of gold or carpet of bombs”warning shortly before the negotiations collapsed.
(4) 9/11 happened, apparently as the brainchild of Osama Bin Laden and the Al Qaeda, and in response the “War Against Terrorism” began. At the time, these folks were in fact in Afghanistan
(5) The US delegated capture of Bin Laden and the Al Qaeda to local fighters, the “Northern Alliance,” who allowed Bin Laden and the Al Qaeda to escape into Pakistan, where we let them be. The US forces themselves went after the Taliban and ousted its government, replacing it with Hamid Karzai.
(6) These events led the left and much of the European press to conclude that a major and perhaps exclusive purpose of the US in ousting the Taliban was that the war was “for oil,” when the logical inference to be drawn was that it was for “oil companies” who wanted the oil itself to go to East Asia.
(7) China particularly, plus other East Asian nations,, have profited magnificently from the war the United States has fought at tremendous cost in Afghanistan and Iraq., and could not otherwise have profited unless they had gone to war themselves.
(8) The Energy Tribune concluded prior to the Iraqi auctions that neither the United States nor its oil companies are any longer seeking to secure oil rights for Americans, and are abandoning the field to China.
(9) The US oil companies were “no shows” at the major 2009 Iraqi auctions, and China and Malaysia secured the great majority of he contracts.
(10) Everyone agrees that China’s ability to do business in Afghanistan and Iraq has been helped, and America’s ability has been hurt, by America rather than China having had the military presence.
(11) Despite enormous expenditures of money and loss of lives, the United States has made negligible progress for itself, but has made enormous progress getting oil to the “right markets,” where its use in a declining oil industry will automatically mean that the Western markets will have substantially less.
There have been a multitude of analyses why the Afghan/Iraq war cannot be considered to be exclusively or even primarily a “war against terror,” a war against “weapons of mass destruction,” or, since we have had an opportunity to see the “changed regimes” in action, a war for US energy security. This writer submits, however, that the simplest explanation that fits all the facts,7 is that it has been from the start a war to ensure that as much oil and other natural resources will get to the “right markets” – namely, East Asia, as possible. Because oil production is no longer growing, every new barrel of oil for East Asia is a barrel less for the remainder of the world.
What about our hypothetical plan’s objective of depriving the “nonwnners” of as much oil as possible as quickly as possible? That is where things get scary. As noted above, the current trend has China increasing its share of oil consumption exponentially at 1%^/yr, meaning that its share, if the trend could continue, would reach 100% of the then-available total, with no one else having anything China didn’t want to give them, by 2025. With the support of the US military in the form of security, and the support of the oil industry in the form of subsidies and “no-shows,” there is no obvious insurmountable hurdle. And as long as China and the US can continue playing “good cop bad cop” to a gullible world, China has nothing to lose and everything to gain. Could the hypothetical conspirators be so demonic? Well, there’s nothing new about this. Psychopathy is not-unheard-of even among supposedly sane U.S. geopolitical planners.8
If something like this weren’t happening, we would have no viable explanation for the wars in Afghanistan and Iraq, and we would have no viable explanation for what is happening to the oil industry’s probably enormous postpeak profits. And with China and the US Government working in harmony, there is no obvious reason why China will not acquire the whole remaining oil supply in short order. Is that at least part of the reason
-Microsoft is making major investments in China,9
-GM, raised from the dead by United States taxpayers, has put most of its
hopes for the future in China, where its sales already exceed its sales in the US,10
-business invested in only 39,000 new jobs in the US in November as compared to the 750,000 jobs per month, 45 million total over the last five years that foreign investors have created in China11 and
-American oil companies were “noticeably absent” from the Iraq auction, the editor of Energy Tribune says Europe and the United States are no longer trying to compete with China for oil, and private oil companies are building refineries and gas stations in China?
Do they all know something we don’t know about where the remaining oil is going to go?
But Hold On, Oil’s Chinese Safe Haven Isn’t Quite Built Yet
There’s always a possible glitch. China has a legitimate ability to sap the American economy: the extreme disparity between wages here and there, which is ultimately unsustainable. But China does not have a legitimate expectation that the United States will provide military assistance at our taxpayers’ expense to forward Chinese imperialist designs. Nor does China have legitimate expectation that the United States will assist in creating a Chinese safe haven from the end of oil, allowing American companies to pick up their marbles and take them away with impunity, taking our jobs with them. In fact there should be no safe havens from the end of oil, because they are inconsistent with climate stabilization,. Nor does China have a legitimate expectation that it can take charge of companies built by and for Americans, leaving behind lifeless skeletons like Detroit.
The fundamental reason that this was able to occur, was that we allowed oil and banking interests to corrupt or at least control our government so completely that we cannot even call the military our own. So we must all work to end that, starting by making sure we all agree we will not allow anyone to be elected who has accepted contaminated money in their public lives. No more voting for “lesser evils” who support our particular concerns but continue to accept oil money, Wall Street money, etc. We need to end the ability of corporate “persons” to spend billions influencing elections. We need to end the wars in Iraq and Afghanistan NOW, and restore the constitutional principle that our presidents cannot engage in war without a declaration of war setting its boundaries. The books need to be opened as to major investments by Americans and American businesses in foreign countries, and in particular as to the use of any “bailout” funds for investment in China. Steps must be taken to preserve or replace at the cost of the investors, jobs jeopardized through foreign investment. These things are unlikely to occur while we have a Congress and President so removed from those they ostensibly represent that they will engage in war at our expense with the intent or effect to take our jobs away.
We must also remember that the pay disparity between developing countries and the US is a legitimate threat to the US economy wherever and whenever it exists. Consequently, it is in our interest to work for healthy labor conditions and fair compensation EVERYWHERE.
And we, individually and collectively, need to go all out to minimize our petroleum use because (a) it is necessary for saving the earth, (b) it is necessary for dispelling our ugly public image, and (c) if China and industry succeed with the “safe haven,” we;d better get used to it FAST.
Finally, we must remember what we did when Sputnik crossed our skies. We didn’t just whine. We started a crash program in technical education to assure that our workers would continue to offer unique talents to the world. The time has come again for that. The United States has the best educational institutions in the world (although China is rapidly outstripping us) but by no means the best educations. Over the long haul, we have to expect our paychecks to correlate better with our talents than they do today, which means doing what it takes to improve American education.
So we have our work cut out for us. We don’t have much time, because with the active support of our government and businesses and no significant opposition, China may be able to achieve 100% control of the oil reserves by 2025. We need a government that will not “give away the store,” as both parties have become accustomed to doing with impunity.
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The author is a California-licensed lawyer residing in Massachusetts (e-mail narguimbau@earthlink.net). He wishes to thank Ted Cady, Peter Goodchild, Peter Hollings, Lance Rodgers and Emily Spence for encouragement and valuable input. All rights reserved, in particular for republicatiion.
NOTES
1. Economides, “China’s Oil Power Play,” Energy Tribune, August 27, 2009,http://www.energytribune.com/articles.cfm/2199/Chinas-Oil-Power-Play
2. Economides, “China’s Oil Power Play,” Energy Tribune, August 27, 2009,http://www.energytribune.com/articles.cfm/2199/Chinas-Oil-Power-Play
3. Cf. threat made by US negotiators with Taliban shortly before 9/11 concerning an oil pipeline corridor to the Indian Ocean, as quoted in the French book by two reputable investigative reporters, published November 15, 2001, “Bin Laden, la verité interdite” (”Bin Laden, the forbidden truth”):”Either you accept our offer of a carpet of gold, or we bury you under a carpet of bombs.” http://archive.democrats.com/view.cfm?id=5166. The threat has never subsequently been denied by the US.
4. “Who Owns the US National Debt?” Business Insider, January 14, 2011.http://www.businessinsider.com/who-owns-the-us-national-debt-2011-1
5. William Schneider, “Re-evaluating U.S. Debt,” Atlantic Monthly, 10/ 2005, http://www.theatlantic.com/magazine/archive/2005/10/re-evaluating-usdebt/4396/
6. “An old Chinese myth. Contrary to popular wisdom, China’s rapid growth is not hugely dependent on exports.” The Economist, Jan 3rd 2008, http://www.economist.com/node/10429271?story_id=10429271
7. Occam’s Razor, or as Einstein put it, “Everything should be kept as simple as possible, but no simpler.” Wikipedia, “Occam’s Razor,” http://en.wikipedia.org/wiki/Occam’s_razor
8. Daniel Ellsberg’s Website, September 13, 2009, “U.S. Nuclear War Planning for a Hundred Holocausts,” describing the approved US plan for eliminating one billion civilians in a nuclear first strike against the Sino-Soviet bloc, http://www.ellsberg.net/archive/us-nuclear-war-planning-for-a-hundred-holocaust s
9. See for example, CIIP.con, “Microsoft steps up its expansion in second-tier cities,” January 4, 2011, http://www.ciipp.com/en/index/view-285257.html ; Agence France-Presse, “Microsoft Plans $1 Billion Investment in China R&D,” November 13, 2008,” http://www.industryweek.com/articles/microsoft_plans_1_billion_investment_in_ china_rd_17808.aspx
10. Bloomberg News, “GM’s First-Half China Sales Surge Past the U.S.,” 7/2/10, http://www.bloomberg.com/news/2010-07-02/general-motors-first-half-china-sale s-rise-48-5-pass-u-s-for-first-time.html