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Blood for expensive oil

Published Jun 16, 2005 7:53 PM

It was the best of times, it was the worst of times. For Wall Street fat cats and their flunky politicians, it was the spring of hope. For masses of people in Eastern Europe, Asia, Africa and Latin America, it was the winter of despair.

The time was the early 1990s. Wash ing ton’s decades-long, $12-trillion-dollar Cold War had succeeded. The Soviet Union and its vast planned economy had ceased to exist. From Saxony to Sakhalin, across the vast expanse of Eurasia, plants built to produce for use, not profit, closed their doors.

Production dropped by 50 percent. Hun dreds of millions of people were plung ed into poverty. Life expectancy fell by more than a decade. Infant mortality skyrocketed.

Hunger and disease stalked the land. The suffering was not confined to the former Soviet bloc. Countries in Africa, Asia and Latin America were devastated by the loss of Soviet aid and trade.

For Corporate America, though, it was a bonanza.

Festival of vultures

Wall Street soared as Eastern Europe’s new capitalists poured stolen gains into Western stocks, bonds and real estate. The dollar shot up in value as it became the de facto currency of the former Soviet bloc.

The U.S. share of world industrial production jumped nearly 20 percent—the first big increase since the 1940s. The collapse of Soviet industry left poor countries at the mercy of Wall Street banks and IMF Structural Adjustment Programs.

The collapse of the Soviet military gave the Pentagon a free hand to bomb and invade, from Iraq to Sudan to Yugoslavia.

It was a festival of vultures.

President Bill Clinton called the U.S. economic boom of the 1990s “the longest peacetime expansion ever.” But it was the product of destruction on the scale of a major war.

For the giant oil monopolies, the overthrow of the USSR created an opportunity to grab that country’s vast energy resources. But it posed a problem as well.

The Soviet Union produced more oil and gas than any other country. But most of it was consumed inside the socialist bloc. New capitalist Russia produced much less than the USSR had. But it exported much more, even while many Russians now had no heat in the winter.

Cheap Russian oil and gas flooded world markets. And Russia’s energy industry was closed to outside investment. It was the impoverished country’s chief source of foreign exchange. Even the corrupt Yeltsin regime couldn’t afford to let Western firms take it over.

The regimes in the oil-rich republics of Azerbaijan and Kazakhstan, far from the sea, welcomed U.S. investment. Exxon Mobil and ChevronTexaco developed fields in Kazakhstan, while BP focused on Azer baijan’s Apsheron peninsula. Unocal took an interest in Turk menistan’s natural gas.

Expensive pipelines were planned to bring those resources to faraway ports.

Not the oil, but the profits

Many opponents of Bush’s war in Iraq call it a war for cheap oil. But companies like BP, ExxonMobil and ChevronTexaco are not in business to give people heat and gas. They’re in business to make money—profit, the maximum return on their invested capital.

Their great fear is not an oil shortage but an oil glut—too much oil coming on the market, pushing down prices and profits and the value of their investments.

This may seem contrary to other capitalist interests. Oil, however, is central to the world position of U.S. and British monopoly capital. Big Oil is the wealthiest and most powerful section of the U.S. capitalist class. It is closely tied to the biggest banks, which were founded on oil money, finance drilling and exploration, and recycled oil income.

The richest U.S. capitalist dynasties—the Rockefellers and the Morgans—are now united in the JPMorganChase Bank and the ExxonMobil Oil Company.

In 1998 two events rocked the oil industry. The collapse of the Russian ruble, coming on the heels of the East Asian currency crisis, pushed oil prices below $10 a barrel. And in February 1998 the United Nations authorized Iraq, which had been under U.S./UN sanctions since 1990, to sell its oil directly to foreign buyers.

The Feb. 28, 1998, San Francisco Chron icle warned the UN’s move “would devalue British North Sea oil, undermine Amer ican oil production and—much more important—it would destroy the huge profits which the United States stands to gain from its massive investment in Caucasian oil production, especially in Azerbaijan.”

The article was headlined “Iraq Oil Poses Threat to West.”

The Clinton regime, thinking of long-term U.S. corporate interests, begged the oil companies not to drop their pipeline projects. If U.S. firms didn’t grab the region’s resources, someone else would—perhaps Russia or France or China.

Profits came first, however. Unocal dropped its plans to build a natural gas pipeline to the Indian Ocean through Afghanistan. And oil executives told the Clinton regime a pipeline across the Caucasus would not be worth it unless oil rose to $40 a barrel and stayed there. It seemed like a distant prospect at the time.

Clinton ordered a massive bombing of Iraq later that year.

Fast forward to 2002. U.S. troops have occupied Afghanistan. The Bush regime is openly preparing to invade Iraq. Oil prices—and oil company profits—spiral upward. The business media calls it the “war premium.”

On Aug. 1, bankers, oil executives and then-U.S. Energy Secretary Spencer Abra ham met in London to announce the Baku-Tbilisi-Ceyhan Pipeline (BTC) would go forward. Construction began on Sept. 18.

Seven months later Bush’s tanks roared across the Iraqi border.

It is now 2005. Iraq is in ruins, with over 100,000 civilians dead. The price of oil has been pushed to around $50 a barrel. Oil profits are at record highs—ExxonMobil made $25 billion last year. And Azeri oil is flowing through the Baku pipeline.

CIA-backed coups have changed regimes in Georgia and Ukraine, and U.S. Special Forces are supervising Georgia’s military. In April Donald Rumsfeld visited Baku to seek U.S. military bases on Azeri land. Azerbaijan borders Russia on the north and Iran on the south.

The Pentagon has also allocated $100 million to organize a force called the Cas pian Guard, supposedly to protect BTC and U.S. oil investments in Kazakh stan. Kazakhstan borders Russia and China.

All this accompanies the Bush regime’s growing belligerence toward Iran, Russia and China.

For workers in the U.S., high fuel prices amount to a wage cut. For China, Japan and Western Europe, they mean a big transfer of their wealth to U.S. and British banks and oil companies. For poor oil-importing countries, they mean devastation.

Mass murder in Iraq made BTC profitable. Big Oil and the banks behind it will demand more wars to maintain their rate of profit. They will not stop unless the people stop them.