Nicolas J S Davies

A collection of published articles and letters to policymakers regarding the crisis in United States foreign policy by Nicolas J S Davies.

Location: North Miami, Florida, United States

Monday, July 03, 2006

What they're dying for: Oil, Lily Pads and Puppets

Published by Magazine:

“If certain acts in violation of treaties are crimes, they are crimes whether the United States does them or whether Germany does them, and we are not prepared to lay down a rule of criminal conduct against others which we would not be willing to have invoked against us.”

U.S. Chief Justice Robert H. Jackson,
International Conference on Military Trials, London, July 23rd 1945

It is clear by now that the United States’ invasion and occupation of Iraq has two primary objectives, plus a third that stems from the first two. The first two can be summarized as: oil and “lily pads”. The third is to maintain some kind of government to legitimize U.S. access to both. Contrary to conventional wisdom, these objectives have been pursued relentlessly and consistently, from the formulation of this policy in 2001 and 2002 to its continuing and increasingly violent application at the present time.

These objectives are an integral part of the United States’ long-term strategy to preserve its dominant economic and strategic position into the 21st century. Secondary objectives, such as privatization of the Iraqi economy or a profitable military alliance with a new government, may or may not be achieved, but it is the primary objectives that have driven this policy from its inception and by which the U.S. government will ultimately measure its success or failure.


Before the Second World War, the Anglo-Persian Oil Company (now BP) held a monopoly on oil production in Persia (now Iran), for which it paid a 16% royalty to the Persian government. The oil exporting countries of the world have come a long way since then, and state-owned national oil companies now produce most of the world’s oil, particularly in the countries with the largest reserves: Saudi Arabia, Iran, Iraq, Kuwait, United Arab Emirates and Venezuela. Western oil companies make sizable profits refining and distributing oil from most of these countries, but could gain far more if any of these principal oil-exporting countries would once again open up significant production opportunities to Western firms.

In April 2001, the U.S. Council on Foreign Relations submitted a report to the U.S. government that warned of a projected shortfall in global oil supplies. It was imperative that “political factors do not block the development of new oil fields in the Gulf”. It called on “the Department of State, together with the National Security Council” to “develop a strategic plan to encourage reopening to foreign investment in the important states of the Middle East”.

The thesis that privatization holds the promise of more efficiently tapping the world’s oil reserves has little empirical support. The petroleum sectors of the major oil-exporting countries lack neither capital nor expertise, and the urgency of the current supply shortfall is driven as much by the failure of Western companies to develop substantial new sources of oil in recent years as by any deficiencies in state-owned oil companies. In fact, the only major exporting country that has continued to find sufficient new reserves to replace its current production is Iran, which relies mainly on its own resources and expertise.

In reality, the most serious barriers to greater production were the sanctions imposed on Iraq and Iran by or at the behest of the United States. The oil companies wanted sanctions lifted one way or the other in both countries as supplies tightened in the coming years, and therefore put increasing pressure on the U.S. government to do its worst or get out of the way. Regime change offered the greatest potential rewards if it could be done successfully, but, after many years of serious effort, the C.I.A. was no closer to the desired result in either country.

The real benefit of re-privatizing Middle Eastern oil production would be its potential profitability. The current production cost of oil in the Persian Gulf region is about $3 per barrel, so that the profits to be gained from a major production deal with a compliant government could be astounding. According to Ian Rutledge, the author of Addicted to Oil (2005), some Iraqi exiles approached the former head of ExxonMobil’s Persian Gulf operations in 2001 with just such a deal: “You can have our oil if we can get back in there”. By some estimates, Western oil companies could eventually earn greater profits on Iraq’s oil under such an arrangement than from the rest of their worldwide operations combined.

In any case, in the short term, the invasion of Iraq presented Western oil companies with a case of “Heads we win, tails you lose - and we still win”. A U.S. oil company executive made the optimistic assessment that Iraqi oil production could quickly be brought up from 2.5 million barrels per day to 4.5 million barrels per day. However, the worst-case scenario was that the war would have the opposite effect, disrupting Iraq’s oil exports and resulting in soaring oil prices and …record profits for oil companies. The latter is of course what has happened. Exports from Iraq’s southern oilfields have fluctuated around 1.4 million barrels per day, while the northern pipelines have been effectively shut down by sabotage since the invasion.

The only short-term outcome that would pose a real problem for the oil companies would be a regional war spreading to Saudi Arabia or other states on the Persian Gulf, but this has not happened. In the medium term, the minimum requirements for success are that some oil keeps flowing and that someone in the Green Zone confers legitimacy on favorable Western access to it. The transitional government passed a law opening any new Iraqi oilfield development to “production sharing agreements” with foreign companies, but only a few small firms, such as D.N.O. from Norway, have so far ventured into war-torn Iraq.

The long-term risk for Western oil companies is that a future Iraqi government will reverse laws permitting foreign investment in Iraq’s oilfields and restore full national ownership of its oil production. But the exiles are keeping their side of the bargain. Reuters reported in April that Ahmad Chalabi, who was for a crucial few months the oil minister in Iraq’s transitional government, was preparing to meet with ExxonMobil and Chevron executives at the International Energy Business Forum in Qatar, to offer them oilfield development contracts that included clauses intended to protect them from future re-nationalization. The outcome of these meetings has not been made public. In addition to huge but elusive potential profits, these contracts would give the oil companies and their cronies in Washington an even greater stake in the war.

Lily pads

On the strategic level, the question that the aggressive and illegitimate foreign policy of the United States is posing to the world and to history is, “Can the United States leverage its military superiority to extend U.S. economic and strategic dominance into the 21st century?” Most of the world finds this behavior as baffling as it is dangerous because, in general terms, history has already answered this question consistently and conclusively.

A sober reading of history such as Paul Kennedy’s in The Rise and Fall of the Great Powers (1987) makes it clear that economic factors dictate an ebb and flow to world affairs, and that the global economic and strategic balance is ultimately a function of relative economic position, not military strength. Rising powers by definition enjoy distinct structural advantages over established ones in this process because they can build from the ground up with the latest technology and brand new physical and societal infrastructures to seize the new opportunities of their time in history.

The time lag between economic success and extensive military commitments is an integral part of this process, and accentuates the advantage of emerging powers. Like the United States in 1900, China today finds itself in the enviable position of being able to focus on its dynamic economic growth without the cost of a worldwide military infrastructure. The Chinese economy is expected to surpass the U.S. economy as the largest in the world at some point in the next fifty years. Many other countries are making important contributions to the peaceful emergence of a multipolar world with accepted rules of international behavior, which is generally perceived as a good thing.

The historical record of past efforts by countries to extend regional or global economic dominance by the use of military force has been a tragic one for their own peoples and for the world at large. Chauvinistic notions of exceptionalism have been used to rally populations to support otherwise unthinkable slaughter. At best, these efforts have resulted in debilitating “overstretch” and bloody struggles with colonies seeking self-determination. At their worst, they have produced the most widespread and destructive wars in human history. They have always made the inevitable transition more painful for the country in question by isolating it internationally; draining its human and capital resources; racking up unpayable debts; delaying the steps necessary to embrace the future; and exacerbating underlying structural problems. In no case have they ever succeeded once the economic balance has begun to shift.

So the Machiavellian views trumpeted in the Defense Planning Guidance (1992), the Project for a New American Century, and subsequent U.S. National Security Strategy and National Defense Strategy documents in fact describe the dismally predictable and ultimately self-destructive behavior of a great power at this point in its history. This behavior is particularly dangerous in this case because of the weapons that exist today, conceivably threatening the very survival of the human race. Even if the United States does not launch or precipitate a nuclear holocaust, the drain on the world’s resources from war and militarism at such a critical time in its ecological history could ultimately be just as devastating to life on Earth.

As they revolve lazily at the edge of this whirlpool, U.S. policymakers have confidently lashed themselves to the sturdiest piece of flotsam at hand: the obvious fact that oil is going to be increasingly scarce, valuable and strategically important for at least the next thirty years. In this they seek the means to do what has never been done, to transform the destructive power of the most lethal weapons ever manufactured into extended economic power and thereby to buck the tides of economic history. By invading and occupying Iraq, the United States has signaled its determination to use military force to control the world’s dwindling supply of oil in pursuit of its perceived economic and strategic interests, regardless of accepted principles of sovereignty, ownership and international law.

“Lily pads” are a new generation of U.S. military bases strategically positioned and designed to play an integral role in this grand scheme. The U.S. is building four large lily pads in Iraq, classified as Contingency Operating Bases and including extensive Air Force facilities, and eight or ten smaller ones called Enduring Bases. But what is new and different about these bases? There are already about 900 U.S. military installations in other countries all over the world, and most of them have been there for decades.

The first difference is their locations. The prototype lily pad, Camp Bondsteel in Kosovo, is close to a new oil pipeline, and the Pentagon has developed the lily pad concept specifically with the Middle East and other oil-rich areas in mind. The most striking difference however lies in their relationship with the areas surrounding them. U.S. bases of the previous generation enjoy an intimate relationship with their surroundings, if a bit too intimate at times. Local people work on base. U.S. personnel travel or even live off base. For better or worse, the bases are a symbiotic part of the local environment. But lily pads are different.

As the name implies, a lily pad is an island, existing independently of what surrounds it. Thomas Ricks of the Washington Post visited the largest lily pad in Iraq, Balad Air Base, and wrote about his impressions (Biggest base in Iraq has small town feel, 2/6/06). He described a place in the middle of Iraq where there are 20,000 U.S. troops but no Iraqis. The cafeteria workers and janitors are from India, Bangladesh, Nepal and Sri Lanka. The PX sells iPods and televisions, and there is a Subway, a Pizza Hut, a Popeye’s, a “Green Beans” Starbucks-type coffee shop and a 24-hour Burger King.

All supplies for the lily pads in Iraq come from outside the country, delivered by air or trucked in by convoy from Kuwait or Turkey, and yet a military dietitian told Ricks that soldiers typically put on about 10 lbs. during their deployments at Balad. The many Americans who never venture out into the real Iraq during their deployments can nonetheless enjoy the Iraq-themed miniature golf course, complete with Bremer walls, concertina wire and “what appears to be a tiny detainee cage”.

Robert Fisk, the Middle East correspondent of the Independent, who has lived in Lebanon for thirty years, compares American lily pads to the crusader castles whose ruins dot the landscape of the region. Fisk suggests that a U.S. soldier looking out from his lily pad is as disconnected and alienated from the world around him as a European crusader peering through an arrow-slit in his castle wall 800 years ago.

There is a military rationale for all this. The runway at Balad is reportedly the second busiest in the world after the main runway at Heathrow Airport, but its traffic is not limited to passenger and cargo planes. This is an offensive base in hostile territory, dispatching warplanes loaded with bombs and ammunition to attack targets all over central Iraq. This role is expanding as the U.S. relies less on ground forces and more heavily on aerial assault, and this will continue indefinitely for as long as this policy is maintained. The CENTAF Airpower Summary currently reports fifty or sixty close-air-support missions flown each day in Iraq. You can track the continuing escalation of the air wars in Iraq and Afghanistan through these daily reports at

As the oil supply declines in the coming years, lily pads in Iraq and throughout the world have a specific military purpose, to mount offensive operations as opportunities arise to impose new political and commercial regimes in the name of stability and the needs of an oil-thirsty world. By design however, the lily pads are not dependent on the stability of the areas that surround them, and so the fate of the Iraqi people is only of indirect relevance to this policy. The lily pads are designed to stay afloat, small town feel and all, even as they turn the world around them into a sea of death and destruction.

As we get used to B-2 bombers circling the globe on bombing runs to the Middle East, it is easy to forget that the fighter planes that provide close-air-support for U.S. ground troops have a much shorter range. The tactical radius of an F-16 loaded with six bombs is only 360 miles, which is why Israel can’t launch a decisive attack on Iran with conventional weapons. The lily pads are therefore critical to the U.S. strategy to use military force to control Middle Eastern oil.

As with the oil that the lily pads in Iraq are designed to capture, their chief vulnerability is political, that a future Iraqi government will ask the U.S. to withdraw its forces and surrender the lily pads, presenting the U.S. with a stark choice between withdrawal and Regime Change II.


This brings us to the third U.S. objective, the “political process” that takes place in the Green Zone, the super lily pad where the crown jewel of the occupation, the $600 million U.S. Embassy, is being built. In 1990, U.S. National Security Advisor Brent Scowcroft advised against an invasion of Iraq because, sooner or later, the Iraqis would demand an election, which “our guys will lose”. The purpose behind all the reactive twists and turns of U.S. policy in Iraq has been not so much to form a sovereign government as to prevent the formation of the government Scowcroft predicted, one that will undermine the primary goals of U.S. policy by asking the U.S. to withdraw its forces or by reasserting Iraq’s ownership of its oil.

So how does the U.S. do this? Two years ago, I suggested to a friend who is a military historian and a supporter of the war in Iraq that the U.S. is simply following a classic “divide and conquer” strategy. He responded, “How else do you do it?” I answered that you don’t, to which he replied, “But we are doing it”.

It was necessary from the outset for the United States to find some basis on which to divide the people of Iraq to create a constituency for exiles who would implement U.S. policy. The Kurds were natural allies for the U.S. but they only comprise 20% of the population and are concentrated in one corner of the country. While Sunnis and Shiites have coexisted in central Iraq for centuries and educated secular Iraqis do not identify themselves primarily by sect, the more isolated Shiites in the south provided a constituency that could be mobilized by formerly exiled Islamist leaders and American promises of political power.

Although Shiites from southern Iraq have played a significant role in U.S. plans, Shiite Islamist political parties were not the first choice of U.S. policymakers to lead an Iraqi puppet government. In 1998, 40 Americans who shaped what soon became U.S. policy signed a letter to President Clinton asking the U.S. government to “recognize a provisional government of Iraq based on the principles and leaders of the Iraqi National Congress” (Ahmad Chalabi et al.). The signatories included Rumsfeld, Wolfowitz, Carlucci, Perle, Armitage, Feith, Abrams, Bolton and Khalilzad.

By June 2004, Chalabi had become an embarrassment to his American supporters, who may in any case have preferred to place him in a less visible role than that of Prime Minister. So Iyad Allawi, a C.I.A. agent who led another exile group called the Iraqi National Accord, was installed as Interim Prime Minister, over the objections of U.N. representative Lakhdar Brahimi who was nominally in charge of the selection process. As Brahimi put it, “Bremer is the dictator of Iraq. He has the money. He has the signature. ... I will not say who was my first choice, and who was not my first choice ... I will remind you that the Americans are governing this country."

The U.S. viewed Allawi as a strongman who could impose order and Iraqis soon knew him as “Saddam without the mustache”. His tenure coincided with that of U.S. Ambassador John Negroponte. Together they oversaw some of the most sinister developments of the occupation, including the meticulously planned and executed massacre in Fallujah and the formation and training of the Interior Ministry Special Police Commandos. The Allawi/Negroponte administration set in motion an orgy of extrajudicial killing and torture that continues to this day.

The failure of the U.S. occupation to conjure any illusion of legitimacy among the people of Iraq has tainted exiles like Chalabi and Allawi who were flown in with the invasion forces. When an election was finally held in January 2005, Allawi’s Iraqi National List lost spectacularly. Officially, it received 14% of the votes, but many Iraqis believed it would have been in single digits without extensive election fraud. For the next election in December 2005, Allawi incorporated a kaleidoscope of Sunni, Communist, Socialist, Syrian and Turkmen parties into his list but did even worse, receiving only 8% of the votes.

This has left the U.S. with little choice but to more directly exploit the political aspirations of the Shiite Islamist parties. The Dawa Party, now headed by Prime Minister Nouri al-Maliki, was the original Iraqi Islamist party founded by Muhammad Baqr al-Sadr to oppose atheism and secularism in Iraq; SCIRI (the Supreme Council for the Islamic Revolution in Iraq), headed by Abdel Aziz al-Hakim, was an offshoot of Dawa founded in exile in Iran on the Iranian theocratic model, and is now the largest Islamist party in Iraq; al-Sadr’s nephew, Muqtada al-Sadr has formed another offshoot of Dawa and also commands a huge following.

The Fadhila (Virtue) Party is smaller than its three former partners in the United Iraqi Alliance, but it poses a particular problem for the occupation authorities and the aspirations of Western oil companies because it has effective control of local government in Basra province along with most of the functioning components of Iraq’s oil industry. Fadhila had hoped to secure the post of Oil Minister in the new government. It withdrew from the government when it did not get it, complaining about the dominant role of U.S. officials in the process. Fadhila is now threatening to cut oil production to half a million barrels per day for domestic consumption and to suspend all oil exports. The central government has responded with a threat of its own to attack Fadhila in Basra, probably using forces loyal to SCIRI’s Badr Brigades militia. This could be ugly, even by the horrific standards of the U.S. occupation, and the political consequences could also be explosive.

All the Shiite Islamist groups have close ties with Iran, so the U.S. dares not give any of them free rein. Instead U.S. officials play them off against the Kurds, the Sunnis and each other to maintain a balance of power in which the U.S. retains the upper hand. Whenever the U.S. has tried to marginalize any group or individual - the Sunnis, al-Sadr, Chalabi, Fadhila or former members of the Baath Party and the Iraqi Army - it has ended up having to rehabilitate them either to prevent them becoming a significant additional anti-American force or to balance other groups that might otherwise become too powerful to control. The U.S. is currently staking out a position with the Shiites as their protector from the Sunnis, and with the Sunnis as their protector from the Shiites – an honest broker in a conflict of its own making!

According to a comprehensive poll by the Program for International Policy Attitudes at the University of Maryland (1/31/06), large majorities of Iraqis support the Arab League’s call for a timetable for U.S. withdrawal (87%); blame the U.S. for Iraq’s continuing decomposition; and believe that security (67%); public services (67%); and political cooperation between factions (73%) will improve and violence will decrease (64%) if U.S. forces leave. This last number rises to 72% if Iraqi Kurds are excluded from the sample. However, 80% of Iraqis believe that the U.S. plans to maintain a permanent military presence in their country, and 76% believe that the U.S. would refuse to leave if requested to do so by an Iraqi government. 88% of Sunnis, 41% of Shiites and 16% of Kurds support armed resistance to the U.S. occupation – this support has increased steadily among all groups since the invasion.

The only way for the U.S. to maintain its primary objectives in the context of such a lack of legitimacy is to keep shuffling the deck and offering incentives for different political factions to keep playing its game. How long this is politically and diplomatically tenable remains to be seen.


Outside the Green Zone, U.S. forces have joined Special Police Commandos in assaults on neighborhoods in Baghdad and continue to attack towns in Anbar and Salahuddin provinces, but the persistent escalation of violence by U.S. forces seems to be by default rather than by design. After 18 months of combat in Ramadi, U.S. Marines compare it to the Battle of Stalingrad, accepting their own role as that of the German invaders. The scale of the battle is mercifully smaller, but the nature of the fighting is similar: two armies hunting each other through the other-worldly landscape of a ruined city, with snipers, booby traps and U.S. air forces as the deadliest weapons, and civilians as the principal victims.

I previously reported (The Dirty War in Iraq, Z Magazine, November 2005) that there is no meaningful distinction between Kurdish or Shiite militias and most U.S.-trained Iraqi forces. Bayan Jabr of SCIRI, who was the Interior Minister in the transitional government, has strong ties to his party’s Badr Brigades militia, which spent twenty years training in Iran for the role they are now playing in Iraq. Most Interior Ministry Special Police Commandos are members of the Badr Brigades, and they are the forces most frequently linked to torture and extrajudicial killings in and around Baghdad.

The formation of the Special Police Commandos is credited to the Interior Ministry’s senior U.S. advisor, Steven Casteel, a former D.E.A. agent who previously worked with right-wing paramilitary forces in Colombia. The Special Police Commandos received their initial training under the supervision of retired Colonel James Steele before being unleashed on the people of Baghdad a year ago. Steele was the commander of the U.S. Military Advisor Group during the civil war in El Salvador in the 1980s.

Jabr and Casteel have used the spurious distinction between Special Police Commandos and militias to evade any personal responsibility for the horrendous crimes carried out by these forces under their command. The new Interior Minister, Jawad al-Bolani, is an associate of Muqtada al-Sadr and spoke against the U.S. occupation as a member of parliament. There are plenty of Mehdi militiamen in the Special Police Commandos too, and his appointment may give them the upper hand within the Interior Ministry forces.

U.S. actions and statements designed to distance U.S. authorities from the actions of Shiite militias are contradicted by reports from Iraqis in the Adhamiya and Dora districts of Baghdad. These reports describe joint operations in which a neighborhood is sealed off, electricity is cut off and cell phone networks are jammed. Special Police Commandos attack the neighborhood, while U.S. forces observe on the ground and from helicopters. The militiamen detain any young men they can capture. Relatives and neighbors know that they will not see many of these young men again unless they are later asked to identify their tortured bodies at the morgue, so these sweeps generate fierce resistance. When centers of effective resistance are identified, U.S. forces follow up the attacks with heavier weapons and close-air-support.

Far from terrorizing the population into submission, the brutality of U.S. actions continues to alienate Iraqis, most of who do not see the extrajudicial killings in Haditha as an isolated incident. Escalation of air strikes and other violence only stiffens resistance and hastens the day that an Iraqi government will ask the U.S. to withdraw its forces. One can only hope that a combination of political and diplomatic pressure could persuade the U.S. government to comply with such a request. Unfortunately, it seems more likely that it would try to preempt this by declaring the failure of the “democratic” process. It could then revert to more direct rule and further escalation of the war. After all, that is what the lily pads are for.

Two thousand five hundred American soldiers, hundreds of other foreigners and hundreds of thousands of Iraqis have already died as a result of the U.S. war of aggression in Iraq. When one considers the objectives of the war and weighs them against its cost in human lives and human suffering, one has to conclude, as did the judges at Nuremberg, “To initiate a war of aggression, therefore, is not only an international crime; it is the supreme international crime differing only from other war crimes in that it contains within itself the accumulated evil of the whole”.

The people of the United States have a responsibility to stop the war and the larger strategy that it is part of, and to hold American war criminals accountable for their crimes. If we cannot fulfill these fundamental responsibilities as international citizens, we should not be surprised at the inevitable consequences – unwinnable wars, wasted and tragic sacrifice, terrorism, international isolation, crushing debt, helplessness in the face of economic and ecological crisis, and the failure of the political process, not in Iraq, but in the United States.

If Americans cannot assume responsibility for curbing our venal and murderous political and business leaders, we are effectively leaving the job to Hu Jin Tao, Ayatollah Ali Khamenei, Hugo Chavez and armed resistance movements in Iraq and other countries, employing quite different methods than the ones we might choose. We still have a choice, but, as Gabriel Kolko wrote in Century of War (1994), “there are no easy solutions to the problems of irresponsible, deluded leaders and the classes they represent, or the hesitation of people to reverse the world’s folly before they are themselves subjected to its grievous consequences. So much remains to be done - and it is late”.