Opinion: Iraq Vs. US – a new phase?
For the last couple of weeks U.S. Vice President Al Gore has been anxiously flipping through the wire news reports from the Middle East. Iraqi President Saddam Hussein and the price of oil are giving him ulcers. The unhappy fact is that the Clinton administration’s worst nightmare has come true.
Saddam’s appointed himself the world’s swing oil producer, and there is absolutely nothing the U.S. can do about it. If Saddam were to take his oil off the market -- something the Iraqi leader is perfectly capable of doing -- the rise in crude prices would make a Titan rocket look slow. Gore, the Democratic presidential contender, can’t think of a scarier October surprise.
In August, Iraq’s crude output increased a whopping 630,000 b/d, taking its total production to a post-Gulf War record of 3.07 million b/d. That’s a lot of oil, especially considering that OPEC was only able to come up with an 800,000 b/d increase at its September 10th meeting. And that’s a lot of oil for Baghdad, too.
Iraq is right up against its pre-war OPEC quota of 3.14 million b/d. What is impressive is that Baghdad has achieved this with almost no investment in its oil industry since 1991.
Saddam is exhilarated. Five years ago, the Iraqi president, in his most fantastic dreams, never thought he would find himself in the position he is today. Tight oil markets, a world weary of U.S. sanctions, and an American presidential election.
There’s no way Saddam is going to let this one pass. He doesn’t care that Baghdad is pushing Iraqi production to its limits, inflicting serious damage to the country’s crude fields. All he knows is that an opportunity like this to get out from under the U.N. embargo will not come along again.
Signs of Saddam’s offensive are starting to percolate. On September 14th, the regional director of Aeroflot announced that he would make a trip to Baghdad in preparation for the resumption of flights, possibly as early as October.
Aeroflot was unable to give “exact information” whether or not it had received permission to resume flights, which means that Aeroflot is weighing the idea of defying the U.N.
At the same time, Baghdad is pounding Amman to release an Italian pilot who illegally flew to Baghdad, crossing Jordanian airspace on April 3rd. The pilot was convicted on August 30th.
Baghdad hopes a judgment reversing his conviction will be the toe hold he needs to lift the air embargo. Iraq appears cocky enough to publicly threaten Kuwait again and put Saudi Arabia on edge.
On September 14th, Iraq said it would take unspecified measures against the emirate for what it claimed was sabotage and the theft of Iraqi oil, with Iraqi Oil Minister Amer Rasheed claming that Kuwaiti drilling in a desert border zone was depleting Iraqi crude.
Earlier in September, an Iraqi aircraft violated the “no fly” zones and briefly entered Saudi air space, which was believed, in part, to be an effort to provoke a crisis during the U.N. Millennium Summit in New York.
Both the threat to Kuwait – a reminder of Iraq’s similar complaints a decade ago before it invaded its neighbor – and the air incursion over Saudi Arabia prompted the U.S. Defense Department to warn Baghdad not to threaten its neighbors on September 14th.
Within a year after the end of the Gulf war, Baghdad started courting foreign oil companies. But, now it is pulling out all the stops to persuade a foreign oil company to sign an exploration and production agreement.
The latest charm offensive was targeted toward Slavneft. The Iraqis invited the Russian-Belarussian oil firm to bid on a 1 billion-barrel field. Iraqi Deputy Prime Minister Tariq Aziz discussed the field in a meeting with Slavneft President Mikhail Gutseriyev in Baghdad.
Gutseriyev said Slavneft would consider the offer, but only after the U.N. embargo is lifted. That’s not good enough for Saddam. If Slavneft isn’t gutsy enough to sign now, he’ll find someone else.
In the meantime, every night when Gore kneels by the side of his bed to say his prayers, he asks that it get no worse than this. But, just in case he hasn’t been heard, Gore is preparing for the worst. With U.S. President Bill Clinton’s blessing, in late August he put on alert a Patriot antimissile battery in Germany to deploy to Israel.
Israel didn’t ask for it, but one can never be too careful when it comes to Saddam. And on September 12th, U.S. Secretary of State Madeleine Albright even offered a carrot. She stated very plainly that the U.S. would not use force to make Saddam accept the new weapons inspection regime, the U.N. Monitoring, Verification, and Inspection Commission (UNMOVIC).
Recent reports out of Baghdad are telling Oil Navigator™ that Saddam has been warning his inner circle to brace themselves for a “hot six weeks.” Gore has heard this rumor, too, and has wondered if he should drop Saddam a little note to apologize for Clinton having written off Iraq for the last eight years and to promise to do better after the November U.S. presidential election.
( oilnavigator )