Post by Bret Walker on Jan 14, 2003 21:12:45 GMT -5
Plan: Tap Iraq's Oil
U.S. considers seizing revenues to pay for occupation, source says
by Knut Royce
WASHINGTON - Bush administration officials are seriously considering proposals that the United States tap Iraq's oil to help pay the cost of a military occupation, a move that likely would prove highly inflammatory in an Arab world already suspicious of U.S. motives in Iraq.
Officially, the White House agrees that oil revenue would play an important role during an occupation period, but only for the benefit of Iraqis, according to a National Security Council spokesman.
Yet there are strong advocates inside the administration, including in the White House, for appropriating the oil funds as "spoils of war," according to a source who has been briefed by participants in the dialogue.
"There are people in the White House who take the position that it's all the spoils of war," said the source, who asked not to be further identified. "We [the United States] take all the oil money until there is a new democratic government [in Iraq]."
The source said the Justice Department has urged caution. "The Justice Department has doubts," he said. He said department lawyers are unsure "whether any of it [Iraqi oil funds] can be used or has to all be held in trust for the people of Iraq."
Another source who has worked closely with the office of Vice President Dick Cheney said that a number of officials there too are urging that Iraq's oil funds be used to defray the cost of occupation.
Jennifer Millerwise, a Cheney spokeswoman, declined to talk about "internal policy discussions."
Using Iraqi oil to fund an occupation would reinforce a prevalent belief in the Mideast that the conflict is all about control of oil, not rooting out weapons of mass destruction, according to Halim Barakat, a recently retired professor of Arab studies at Georgetown University.
"It would mean that the real ... objective of the war is not the democratization of Iraq, not getting rid of Saddam, not to liberate the Iraqi people, but a return to colonialism," he said. "That is how they [Mideast nations] would perceive it."
The Congressional Budget Office estimates that the cost of an occupation would range from $12 billion to $48 billion a year, and officials believe an occupation could last 1 1/2 years or more.
And Iraq has a lot of oil. Its proven oil reserves are second in the world only to Saudi Arabia's. But how much revenue could be generated is an open question. The budget office estimates Iraq now is producing nearly 2.8 million barrels a day, with 80 percent of the revenues going for the United Nations Oil for Food Program or domestic consumption. The remaining 20 percent, worth about $3 billion a year, is generated by oil smuggling and much of it goes to support Saddam Hussein's military. In theory that is the money that could be used for reconstruction or to help defer occupation costs.
Yet with fresh drilling and new equipment Iraq could produce much more. By some estimates, however, it would take 10 years to fully restore Iraq's oil industry. Conversely, if Hussein torches the fields, as he did in Kuwait in 1991, it would take a year or more to resume even a modest flow. And, of course, it is impossible to predict the price of oil.
U.S. considers seizing revenues to pay for occupation, source says
by Knut Royce
WASHINGTON - Bush administration officials are seriously considering proposals that the United States tap Iraq's oil to help pay the cost of a military occupation, a move that likely would prove highly inflammatory in an Arab world already suspicious of U.S. motives in Iraq.
Officially, the White House agrees that oil revenue would play an important role during an occupation period, but only for the benefit of Iraqis, according to a National Security Council spokesman.
Yet there are strong advocates inside the administration, including in the White House, for appropriating the oil funds as "spoils of war," according to a source who has been briefed by participants in the dialogue.
"There are people in the White House who take the position that it's all the spoils of war," said the source, who asked not to be further identified. "We [the United States] take all the oil money until there is a new democratic government [in Iraq]."
The source said the Justice Department has urged caution. "The Justice Department has doubts," he said. He said department lawyers are unsure "whether any of it [Iraqi oil funds] can be used or has to all be held in trust for the people of Iraq."
Another source who has worked closely with the office of Vice President Dick Cheney said that a number of officials there too are urging that Iraq's oil funds be used to defray the cost of occupation.
Jennifer Millerwise, a Cheney spokeswoman, declined to talk about "internal policy discussions."
Using Iraqi oil to fund an occupation would reinforce a prevalent belief in the Mideast that the conflict is all about control of oil, not rooting out weapons of mass destruction, according to Halim Barakat, a recently retired professor of Arab studies at Georgetown University.
"It would mean that the real ... objective of the war is not the democratization of Iraq, not getting rid of Saddam, not to liberate the Iraqi people, but a return to colonialism," he said. "That is how they [Mideast nations] would perceive it."
The Congressional Budget Office estimates that the cost of an occupation would range from $12 billion to $48 billion a year, and officials believe an occupation could last 1 1/2 years or more.
And Iraq has a lot of oil. Its proven oil reserves are second in the world only to Saudi Arabia's. But how much revenue could be generated is an open question. The budget office estimates Iraq now is producing nearly 2.8 million barrels a day, with 80 percent of the revenues going for the United Nations Oil for Food Program or domestic consumption. The remaining 20 percent, worth about $3 billion a year, is generated by oil smuggling and much of it goes to support Saddam Hussein's military. In theory that is the money that could be used for reconstruction or to help defer occupation costs.
Yet with fresh drilling and new equipment Iraq could produce much more. By some estimates, however, it would take 10 years to fully restore Iraq's oil industry. Conversely, if Hussein torches the fields, as he did in Kuwait in 1991, it would take a year or more to resume even a modest flow. And, of course, it is impossible to predict the price of oil.
