Thursday, May 10, 2007
"What is our oil doing under their sand?"- Ancient American Riddle
Jeff Berg
It of course comes as no surprise to anyone over the age of six, and likely to many six and under, that America intends to maximize its control over the profits from Iraq's oil - a potentially 10 trillion dollar prize. How they intend to do this is with pretty much the same three step shuffle that the extractive industries have used across the globe for resources found in the "less developed" countries. i.e. A) If they are in debt use it against them, if they aren't in debt get them into debt. B) Take the money and run. C) Pay the locals to do the shit work. For those of you who prefer cutting to the chase you need read no further. For those of you who like knowing something of the plot line before the crash scene read on.
Step 1
The first step to take is dependent on how the country is set up when the resources are discovered. If the country is a dictatorship then its leader undoubtedly rang up a substantial international debt buying the means to maintain control over his people. This provides the handy leverage of an IMF debt that will allow the roll back of whatever mechanisms might be in place for the purpose of national control over resource extraction if such laws exist and ensure that they never do if they don't. This is referred to in the parlance of economic theory as "opening up markets" and "liberalizing trade". The IMF in a fit of either the darkest of humours or the most blithe lack of awareness decided to call this roll back program SAPS. (Structural Adjustment Programs) The truly difficult thing for the population to swallow in these cases is the knowledge that they are giving up their patrimony in return for the "right" to pay back a debt that was largely incurred buying the means to repress them.
If the country is not in debt and/or not a dictatorship, now rare to the point of extinction though Venezuela did just turn the trick much to the dismay of U.S. punditry, then the first step becomes fostering an elite that can be made to see that yours is the path to gold and glory. If you chose just right these "dear leaders" will also die at a ripe old age insisting and quite likely believing to their final breath that they did all they did "for the good of the country". Augusto Pinochet being perhaps the quintessential example in a all too long list of examples.
Step 2
"Persuade" the national government to pass a law that allows all multinationals to repatriate their profits. Ideally all of the profits would be allowed to be taken out of the country. The reasons for this are two-fold. On the one hand it allows the companies to maximize the amount of money they can put into the pockets of those who own the company but equally importantly it also ensures that the country remains too weak to repudiate the contracts. Contracts that no OECD nation for example would countenance. (Canada aside. e.g. Chapter 6 of NAFTA) The "mistake" of allowing too much profit to accrue to the host country occurred in all of the Gulf oil states. As a result they became too strong, nationalized their industries and now keep the lion's share of the profits. This has of course by no means made the oil companies unprofitable but it has made them much-much less profitable than they would have been under the original agreements.
Step 3
Leave your host enough of the profit to ensure that the men in the armed forces live better than the general population. Also make sure to set up a very close relationship between their and your armed forces. It is crucial that their officer class feels that it has more in common with you than they do with their own population. This will pay dividends should the regional governors start getting uppity or should a people's movement start gaining any momentum. It is also imperative to give them sufficient means to ensure that they maintain a monopoly on the means of violence in the country. This necessary move is not without its risks it's true but as a not inconsiderable side benefit it will enable your armament manufacturers to sell them scads of the arms needed to overcome those who may disagree from time to time that this arrangement is in the best interest of the country. aka. "The insurgents".
Step 4
This step was not mentioned above as it is not for everyone but is an extraordinarily powerful weapon of hegemony if you can pull it off. i.e. All sales of their resources and all of the debts that they incur be denominated in your currency.
The essay appended below does quite simply a brilliant job of showing how the three step shuffle is today being applied to Iraq. The fourth step is not talked about which is not very surprising as it is just about never talked about nor has its influence ever been adequately quantified in a systematic way. There is however at least the beginnings of an analysis that shows that this step is the most profitable, long lasting and resistant to change of them all.
Jeff Berg and I am a member of a political action committee and public outreach group called Post Carbon Toronto. www.postcarbontoronto.org
RELATED: Tomgram: Michael Schwartz, The Prize of Iraqi Oil
