From new book Oil, Power & Empire: Iraq and the U.S. Global Agenda

Oil and U.S. Capitalism: The Plots of 1973

by Larry Everest

Revolutionary Worker #1225, January 18, 2004, posted at

During the run-up to the 2003 invasion of Iraq, the Bush regime argued that oil had nothing to do with its war aims. This blatant lie has been further exploded by the recent disclosure that in late 1973 the U.S. government secretly considered seizing oilfields in Saudi Arabia, Kuwait and Abu Dhabi.

On January 1, 2004, the Washington Post reported that newly disclosed British intelligence documents revealed the Nixon administration seriously contemplated military action in the Persian Gulf in order to end the Arab oil embargo against the Western powers. The embargo had been initiated by oil-producing Arab states in October 1973 in order to force the U.S. and its allies to pressure the Zionist state to withdraw from the occupied Palestinian West Bank and Gaza.

The December 13, 1973 document, titled "Middle East -- Possible Use of Force by the United States," cites then-Defense Secretary James R. Schlesinger's warning to British officials that the U.S. would not tolerate threats from "under-developed, under-populated" countries. It notes that were the oilfields to be taken over, "The area would have to be securely held probably for a period of some 10 years." The document also argued that in response to U.S. military action, "The greatest risk of such confrontation in the Gulf would probably arise in Kuwait where the Iraqis, with Soviet backing, might be tempted to intervene."

In the following excerpt from his new book, Oil, Power and Empire--Iraq and the U.S. Global Agenda , RW writer Larry Everest gives a crucial background to these take-over plots of 1973--situating them in the centrality of Persian Gulf oil for global capitalism, the challenges and constraints facing U.S. imperialism in the region, and Washington's concerns about Iraq's Ba'ath regime. These concerns would lead Nixon and Kissinger to embark on a sordid and infamous covert operation--the manipulation and betrayal of Iraq's Kurdish population.

The challenges of Arab nationalism, growing Soviet influence, and the oil price explosion took place when the U.S. was embroiled in Vietnam and in no position to mount a major counter- offensive in the Middle East. [President Richard Nixon's Secretary of State Henry] Kissinger felt that defeating the 1973-74 Arab embargo and rolling back oil prices hikes would have entailed domestic gasoline rationing and supplying Europe with petroleum, and didn't think the U.S. was capable of such discipline and sacrifice "in a country racked by Vietnam."

Forceful action was also hindered by conflicting agendas and strategies of the U.S. and its European allies in the Middle East--divisions which remain to this day. In addition, the U.S. realized some advantages from the rise in oil prices. According to Kissinger, one internal U.S. government study found that "the rise in the price of energy would affect primarily Europe and Japan and probably improve America's competitive position." Answering charges that the U.S. secretly supported the oil price hikes to either weaken Europe and Japan or bolster Saudi Arabia and Iran, Kissinger claimed, "The United States never saw the price rises as anything but a disaster, and no one welcomed them as a means to finance Iranian military purchase or for any other purpose."

Kissinger may not have felt military action was possible, but he apparently considered it. Robert Dreyfuss writes in the March 2003 issue of Mother Jones that in a 1975 Business Week interview Kissinger "delivered a thinly veiled threat to the Saudis, musing about bringing oil prices down through `massive political warfare against countries like Saudi Arabia and Iran to make them risk their political stability and maybe their security if they did not cooperate.' " Dreyfuss also reports that Harper's ran an article the same year titled "Seizing Arab Oil," which argued that the U.S. could solve its economic problems by taking over Middle East oil fields--an argument that experienced a post-Sept. 11, 2001 revival on the Washington think-tank circuit. The article, it turned out, had been inspired by a background briefing by Kissinger.

The U.S. may have been constrained, but it was neither helpless nor inactive. On the Mediterranean side of the region, it increasingly relied on Israel. Its June 1967 and October 1973 wars were intended to bludgeon the surrounding Arab countries --in particular Egypt and Syria--and to demonstrate as Kissinger put it, "the limits of Soviet influence." They were also aimed at the Palestinian liberation struggle, then the region's most revolutionary and broadly influential movement, as were its invasions of Lebanon in 1976 and 1982, during which over 20,000 Lebanese and Palestinians were killed.

In the Persian Gulf, U.S. difficulties were compounded by Britain's announcement in 1968 that it could no longer be responsible for protecting Western interests there and that it would withdraw its forces by 1971. Iraq was becoming a particular concern. Kissinger and the Shah of Iran worried that the Ba'ath regime, newly strengthened by rising oil revenues and Soviet arms:

"would be used as a battering ram against all moderate pro-western regimes in the area. Though not strictly speaking a Soviet satellite, once fully armed with Soviet weapons Iraq would serve Soviet purposes by intimidating pro-western governments, such as Saudi Arabia; simultaneously, it would exert pressure on Jordan and even Syria, which, while leaning to the radical side was far from being a Soviet client. The Soviet Union would try to squeeze Iran between Afghanistan and its Iraqi client...We must try to prevent the fertile crescent--Iraq, Syria, and Jordan--from being ruled from Baghdad."

Yet U.S. options for dealing with Iraq were limited:

"To keep Iraq from achieving hegemony in the Persian Gulf, we had either to build up American power or to strengthen local forces...Creating a credible military capability for the defense of the Persian Gulf by America alone is a task of enormous, perhaps insuperable, practical and logistical difficulty in the best of circumstances."

In 1972, the U.S. chose "local forces" --Iran and Saudi Arabia--as its "Twin Pillars" in the Persian Gulf. These client regimes were the region's two largest oil producers, would soon become flush with billions in additional oil income thanks to soaring crude prices. Between 1970 and 1978, the Shah bought some $20 billion worth of U.S. arms (amounting to one-quarter of total U.S. arms sales at the time). "Our choice in 1972," Kissinger argued, "was to help Iran arm itself or to permit a perilous vacuum." The U.S. and Saudi Arabia also began constructing an extensive network of military bases and supply depots, built to U.S. specifications. These facilities became crucial to the projection of American military power in the Persian Gulf over the next decades-- especially during the 1991 and 2003 wars on Iraq..

OPEC's "Pivotal" Price Hike

In the early 1970s, soaring crude oil prices rocked the West--climbing from $1.26 a barrel in 1970, to $9.40 per barrel in 1974, to $24 in 1979. The economic shocks from petroleum's steep price climb reverberated well into the 1980s, and still color U.S. strategy in the Middle East. Kissinger even called OPEC's December 1973 decision raising the price of crude from $5.12 to $11.65 a barrel, "one of the pivotal events in the history of this century:"

The statistics were staggering enough. Within forty-eight hours the oil bill for the United States, Canada, Western Europe, and Japan had increased by $40 billion a year; it was a colossal blow to their balance of payments, economic growth, employment, price stability, and social cohesion...all the countries involved, even the producers themselves, faced seismic changes in their domestic structures.

These price hikes, he adds, "altered irrevocably the world as it had grown up in the postwar period. The seemingly inexorable rise in prosperity was abruptly reversed."

Western capitalism found ways to cope with these rising oil prices, and giant global oil monopolies continued to dominate world production, marketing, and supply. By 1990, inflation-adjusted crude prices had returned to pre-1972 levels. Yet the price shock of the 1970s, as well as the 1973-74 embargo, highlighted the western industrialized countries' dependence on cheap Middle East crude, and the devastating impact that severing that economic lifeline could have. Today, some 30 years later, establishment think-tanks warn that another severe energy crunch is on the horizon, and averting such a crisis and strengthening U.S. control of global energy sources was a major objective in the 2003 Iraq War and the Bush Doctrine that inspired it, as we examine in chapter 10.

Over the 1970s, rising crude prices, frustrations with nationalistic regimes such as Iraq and Syria, sharpening rivalry with the Soviet Union, and the constraints that forced the U.S. to work through local proxies contributed to a growing sense among America's rulers that they needed to deal more forcefully with these challenges to their power. Former Reagan National Security Council staffer Howard Teicher, in a study of U.S. Middle East policy written with his wife, [Gayle Radley Teicher] states that America's inability to block OPEC price increases "helped convince Middle East leaders and others that the United States would not act forcefully to defend important interests."

This concern over the erosion of U.S. power took on even greater urgency in the wake of three dramatic regional shocks that took place in 1979. The U.S. would then spend the 1980s and 1990s forging the strategic doctrine and building the military presence and capability to deal with them, laying the groundwork for two wars on Iraq in the process.