Oil imperialism

Published : Jul 29, 2011 00:00 IST

The U.S. game plan, since the oil shock of 1973, has been to control the oil market by keeping the focus on the West Asian region.

IT is not a coincidence that global oil prices spiralled upwards immediately after the attack on Libya by North Atlantic Treaty Organisation (NATO) forces in March. Oil production in the country has since virtually come to a halt. Libya holds the largest crude reserves in Africa and the ninth largest in the world. Libyan oil is considered to be of the highest quality. Oil prices have gone up by 35 per cent since the Western-backed rebellion in Libya started in the last week of February.

The Organisation of Petroleum Exporting Countries (OPEC), the cartel that plays an important role in controlling output and prices, is now divided down the middle. Member-countries such as Saudi Arabia, the United Arab Emirates (UAE), Kuwait and Qatar, instigated by the United States, openly aid the Libyan rebels operating out of Benghazi, while another member, Algeria, has denounced the foreign intervention in the conflict in Libya, also an OPEC member. Venezuelan President Hugo Chavez was one of the first world leaders to call for a peaceful settlement of the conflict. He issued a dire warning about the harmful political and economic consequences of the NATO-led war for the international community.

Oil has gained 9.5 per cent this year. For a period it crossed the critical $100-a-barrel mark. While the divisions in OPEC precluded an agreement to increase output, the war in Libya has blocked the supply of 1.4 million barrels a day. The International Energy Agency (IEA) said in a statement on May 16 that there was an urgent need to pump more oil to help bring down global oil prices, which were threatening the economies of most countries, including India.

Washington's numerous attempts at toppling or assassinating the Libyan leader Muammar Qaddafi were closely linked to the desire to take control of Libya's oil. In previous wars, too, it was oil and gas that the West was after. Every time the U.S. goes to war for oil, the price of the precious commodity starts skyrocketing. It happened after the first Gulf War and before that after the 1973 war between Israel and Egypt. Arab nations used the oil weapon collectively to pressure the U.S. into forcing Israel to agree to a ceasefire.

The important reason why the U.S. went into Iraq was to gain control of its oil. The assumption was that once the U.S. established control over the Iraqi oil sector, it would be able to control OPEC's ability to manipulate energy prices. Iraq has the third largest known reserves of oil after Saudi Arabia and Iran. However, things have not gone according to the American blueprint for Iraq. The Shia-dominated Iraqi government is no quisling of the U.S.; it strives to maintain equidistance from Washington and Teheran. The vast Iraqi oil reserves still remain untapped. Oil production under Saddam Hussein was higher than what it is now and attacks on pipelines by the resistance forces continue to happen sporadically.

In Afghanistan, the American dream was to build a gas pipeline that would carry Central Asian gas to lucrative markets in India and beyond. The ongoing attempts to destabilise Iran are motivated primarily by the desire to control that country's hydrocarbon assets. The Central Intelligence Agency (CIA)-engineered coup against the democratically elected government of Mohammed Mossadegh in 1953 took place after the nationalisation of the Western oil companies. The oil companies were against nationalisation after the revolution that toppled the Shah in 1979. The West was quick to impose economic sanctions on the country. The CIA-backed coup attempt against Hugo Chavez in 2002 was also aimed at reversing Venezuelan state control over hydrocarbon assets.

Additional punitive sanctions that were put in place recently by the Obama administration against Iran and Venezuela could push petrol prices even higher. Recently, U.S. lawmakers introduced in both Houses of Congress Bills that empower the imposition of more draconian unilateral sanctions on Iran. If implemented, the new sanctions will prohibit both countries and companies from buying oil and gas from Iran.

Many Indian companies have already stopped dealing with Iran. The Indian market could have had access to cheap energy had the proposed Iran-Pakistan-India gas pipeline materialised. However, Western machinations, coupled with arm-twisting by Washington, have ensured that it will not.

Iran, along with Qatar, has the biggest known gas deposits in the world. It needs $200 billion in foreign investments to tap its oil and gas reserves. Currently, sanctions have made it difficult for the country to refine its own oil and forced it to import even from India. Besides, the government is forced to use domestically a significant amount of its oil meant for export.

U.S. vital interest

Ever since the oil shock of 1973, Washington's game plan has been to control the oil market and its main focus has been West Asia. In 1980, President Jimmy Carter declared the Persian Gulf an exclusive zone of American influence. An attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the USA, and such an assault will be repelled by any means necessary, including military force, Carter said. He created a Rapid Deployment Force, which later became the U.S. Central Command, or CENTCOM. Under his successors, the U.S. built military bases all over West Asia.

The two wars against Iraq, whose government was the first to nationalise oil resources, followed. In 2008, the Bush administration set up the Africa Command (AFRICOM), which is currently headquartered in Germany as no African country has so far provided basing facilities. AFRICOM is playing a lead role in the war in Libya.

According to recent projections by the U.S. Department of Energy, West Asia and North Africa will jointly provide approximately 43 per cent of the world's crude petroleum supply by 2035 and contribute a greater share of the world's exportable oil.

The West has played a key role in dividing Sudan, one of the main oil exporters in Africa. Most of the oilfields were in South Sudan, which became formally independent early in July. Western oil companies are expected to reap handsome benefits. Libya, too, is headed for balkanisation. The area under the control of the Western-backed rebels is where most of the oil and gas fields are located.

Western oil corporations are also attempting to monopolise Central Asia's huge hydrocarbon deposits by building a network of pipelines that bypass existing Russian pipelines and circumvent Iran. The Western-financed Baku-Tbilisi-Ceyhan pipeline is an example. It pumps Caspian oil, taking a circuitous route through Georgia and Turkey. Oil and gas from the Caspian region can be transported more easily and cheaply through Iran and then onward to the lucrative Asian markets.

Russia and China are working to thwart America's game plan for the region. Under the auspices of the Shanghai Cooperation Organisation (SCO), energy cooperation between the member-states, which include the Central Asian states, has led to the emergence of alternative pipelines. India, Pakistan and Iran have observer status in the SCO and hope to become full-fledged members in the near future.

According to Professor Michael Klare, an American expert on global oil politics, the American military has been transformed into a global oil-protection service for the benefit of U.S. corporations and consumers, fighting battles overseas and establishing bases all over the world. The U.S. Army, which is engaged in wars in Iraq, Afghanistan and Libya at present, is itself one of the biggest consumers of oil. Klare writes that Pentagon's annual consumption of oil for its Afghanistan operation is more than the annual petroleum usage of Bangladesh, a country with a population of more than 150 million.

Documents of the U.S. State Department accessed by WikiLeaks show that Washington was highly critical of the Libyan government's resource nationalism. The cables were especially critical of a speech by Qaddafi in 2006, in which he said: Oil companies are controlled by foreigners who have made millions from them. Now Libyans must take their place to profit from this money. Qaddafi had allowed Western oil companies back in return for the lifting of the economic and political sanctions on the country in 2004. But in recent years, the Libyan government was trying to regain control of its oil assets by trying to limit the profits of the Western-owned oil giants. The cables talk of Qaddafi pressuring the oil companies to hire more Libyans in managerial positions. To add to the discomfiture of the West, many of the recent oil concessions were given to Chinese oil companies.

Another State Department cable, in 2009, notes with alarm a speech by Qaddafi suggesting that all oil-exporting states nationalise their oil production in view of the falling oil prices. The leaked cables make it clear that the West's hostility towards Qaddafi is on the issue of control of the country's vast hydrocarbon resources. Those who dominate Libya's political and economic leadership are pursuing increasingly nationalistic policies in the energy sector that could jeopardise efficient exploitation of Libya's extensive oil and gas reserves, a 2007 cable states. The Libyan rebel leadership seems to have assured Washington that a post-Qaddafi Libya will be a safe place for the big oil companies to rake in profits.

Sign in to Unlock member-only benefits!
  • Bookmark stories to read later.
  • Comment on stories to start conversations.
  • Subscribe to our newsletters.
  • Get notified about discounts and offers to our products.
Sign in


Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide to our community guidelines for posting your comment