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Secret U.S. Plans For Iraq's OilSpark Political Fight Between Neocons and Big Oil

AMY GOODMAN: In an explosive new report for BBC Television Newsnight, investigative journalist Greg Palast charges that President Bush was planning to invade Iraq before the September 11th attacks and was considering two very different plans about what to do with Iraq’s oil. The plans reportedly sparked a political fight between neoconservatives and big oil companies.
Greg Palast joins us in our firehouse studio and we air his exclusive report for BBC Newsnight, “Secret U.S. Plans For Iraq’s Oil.”
President Bush was planning to invade Iraq before the September 11th attacks and was considering two very different plans about what to do with Iraq’s oil. The plans sparked a political fight between neoconservatives and big oil companies and may help explain the recent appointments of Paul Wolfowitz to head the World Bank and John Bolton as ambassador to the United Nations. That’s the explosive charge in an expose by investigative reporter Greg Palast. This exclusive report aired on the BBC last week. This is the first time it is being showed in the United States.
Secret U.S. Plans For Iraq’s Oil
Greg Palast, investigative reporter. Check out his website at

AMY GOODMAN: This exclusive report aired on the BBC.
PROTESTERS: No blood for oil!
PROTESTERS: Don’t attack! Don’t attack Iraq!
PRESIDENT GEORGE W. BUSH: Do not destroy oil wells.
PROTESTERS: No blood for oil!
PROTESTERS: Don’t attack! Don’t attack Iraq!
ARI FLEISCHER: The ongoing aspects of Operation Iraqi Liberation.
PROTESTERS: No blood for oil!
PROTESTERS: Don’t attack Iraq!
TONY BLAIR: The action has nothing to do with oil or any of the other conspiracy theories put forward.
GREG PALAST: Some people believe George Bush had a secret plan for Iraq’s oil. It’s not that simple. In fact, we found two plans. While there was a hot war being fought in Iraq, here in Washington, there was a cold war being fought. On one side, the Pentagon and its neo-con friends, and on the other, the State Department and its allies in big oil.
GREG PALAST: January 2001, George Bush waltzes into office on a gusher of oil money, swearing that the U.S. has no plans to remake any nation. Yet at the same time, on the other side of the U.S.A., a secret meeting was in the works to plan for the invasion of Iraq to overthrow Saddam and to decide what to do with Iraq’s oil. Across the bridge from San Francisco, the State Department convened the meeting in this house, a bit of Baghdad in America. Falah Aljibury is an Iraqi exile who acted as Ronald Reagan’s back channel to Saddam’s regime. He hosted those early war councils for the Bush team.
FALAH ALJIBURY: It is an invasion, but it will act like a coup. The original plan was to liberate Iraq from the Saddamists and from the regime, to stabilize the country. A leader, an Iraqi leader known for his decency and ability to work with the allied forces, will step forward.
GREG PALAST: Aljibury, a key link between big oil, big finance and OPEC, interviewed the candidates for a strongman to replace Saddam in advance of the invasion.
FALAH ALJIBURY: This transitional leader that we have interviewed before will come in, head all of the government systems, and quickly bring the people back to work.
GREG PALAST: In other words, just topple Saddam. Most Baathists would stay in power. As for the oil fields, the state would keep ownership. But after September 11, Washington’s power center shifted to the right. Paul Wolfowitz and his neo-cons were now in charge. News Night learned they junked plan A, the quick coup. The neo-cons wanted to use the invasion of Iraq to end the Arab stranglehold on oil. They aimed to bring down the criminal OPEC monopoly.
ARI COHEN: OPEC is a cartel. As a cartel, it regulates the output and it tries to get the price as high as possible for its members without destroying the goose that is laying the golden eggs. So, OPEC, the Organization for Petroleum Exporting Countries, would behave in a way that, at least in this country (in the United States), would be prosecutable.
GREG PALAST: At the heart of the “smash OPEC” scheme was a radical plan, which we discovered in this document, completed a month before the invasion, for the privatization of all Iraq’s assets, especially in the oil and supporting industries.
ARI COHEN: By having massive oil holdings in private hands that are not marching to the drumbeat of OPEC, you weaken OPEC politically and you improve the lot of a consumer and of western economy, in general.
GREG PALAST: Chatter about the sell-off plan boosted accusations that the invasion was aimed at seizing Iraq’s oil.
ROBERT EBEL: The thought was, “Why are you going into Iraq? It’s about oil, isn’t it” And my response was, “No, it’s about getting rid of Saddam Hussein. The morning after, it’s about oil.”
GREG PALAST: In the run-up to war, the administration sent Ebel to meet with Fadhil Chalabi, a leader of the Iraqi exile opposition. Chalabi embraced the sell-off of Iraq’s oil.
ROBERT EBEL: These people had been out of Iraq for some time. Chalabi was the senior person. They felt that was the way to quick growth, to privatize, to get, you know, lots of companies in, get them spending money to develop production.
GREG PALAST: Resistance to the plan to sell off Iraq’s oil bubbled up from a most unlikely source: U.S. oil chieftains. Former Shell C.E.O. Philip Carroll was called up long before the tanks rolled.
PHILIP CARROLL: I received a call from someone in the Pentagon saying that they were doing some contingency planning in association with the possibility of war in Iraq. They needed some help and assistance from someone who had spent time in that industry.
GREG PALAST: But the oil man refused to carry out the neo-con plan.
PHILIP CARROLL: There were models everywhere from the total privatization to partial privatization, etc., etc. There were all sorts of ideas floated about the economy of Iraq and what ought to be done. I was very clear that there was to be no privatization of Iraqi oil resources or facilities while I was involved. End of statement.
GREG PALAST: Even some of those who plotted Saddam’s overthrow complained that privatization plans added fuel to the insurgency, costing American, British, and Iraqi lives.
FALAH ALJIBURY: Insurgents and those who wanted to destabilize a new Iraq have used this as means of saying, “Look, you’re losing your country. You’re losing your leadership. You’re losing all of your resources to a bunch of wealthy people. A bunch of billionaires in the world want to take you over and make your life miserable.” And we saw an increase in the bombing of oil facilities, pipelines, of course, built on — built on the premise that privatization is coming.
GREG PALAST: So, how is the State Department going to douse the flames? Here in Houston, the oil capital of America, the industry wasn’t too happy about what was going on. BBC Newsnight discovered that big oil chieftains in Iraq demanded a new policy. The job fell to the Texas think tank, founded by Jim Baker, one-time secretary of State, whose law firm now represents George W. Bush, the government of Saudi Arabia, and Exxon Oil.
AMY JAFFE: The bottom line is, we were very concerned about the perceptions that somehow we were doing this to steal the oil. You cannot use military means to impose privatization. It has to come from the society below; that has to be what the country wants to do. We were very concerned that there were going to be images on Al Jazeera TV, or in Western media that was very to the left, showing the Americans standing with military uniforms on in the oil fields.
GREG PALAST: The State Department reluctantly handed us the plan, confidential until now, drafted by Jaffe. There are seven options given to Iraq’s future governments, not a single one privatization. The neo-con scheme was dead because taking on OPEC and forcing down the price of petroleum did not suit big oil.
AMY JAFFE: I’m not sure that if I were the chairman of an American company and you put me on a lie detector test that I would say that I thought high oil prices were bad for me or my company.
GREG PALAST: So I asked Shell’s former boss if the neo-con’s agenda matched that of the oil industry.
PHILIP CARROLL: They’re absolutely poles apart. Many neo-conservatives are people who do have certain ideological beliefs about markets, about democracy, about this, that and the other. International oil companies, without exception, are very pragmatic, commercial organizations. They don’t have a theology. They don’t have a doctrine. They are going to do what is in the best interest of their shareholders.
GREG PALAST: Americans have never paid so much for gasoline. Big oil execs are grinning. They’ve never seen such big profits. The neo-cons say we missed the chance to stop this run-up in oil prices. All we had to do was sell off Iraq’s oil fields. But big oil killed it.
PHILIP CARROLL: The question, both politically and economically, would be so complex and so difficult that I don’t think anyone really serious would think about trying to privatize it.
ARI COHEN: In that case, let’s go and nationalize Shell, to follow his logic. I think that in the late 20th century, early 21st century, to compare government-run industries with privately run industries, it’s a no-brainer, as we say. The comparison is in favor of privately owned oil, privately owned assets.
PHILIP CARROLL: I would agree with that statement. To privatize would be a no-brainer. It would only be thought about someone — by someone with no brain.
GREG PALAST: Headless or heartless, America has given Iraq a state-controlled oil monopoly, big oil and OPEC will have their $56-a-barrel oil, and Wolfowitz and the neo-cons are looking for new jobs.
AMY GOODMAN: That report by investigative journalist Greg Palast, who joins us now in our Democracy Now! studio.
Welcome, Greg Palast.
GREG PALAST: Glad to be here, Amy.
AMY GOODMAN: An explosive report on these two plans. And tie them in now to the nomination of John Bolton to be U.S. Ambassador to the United Nations and Paul Wolfowitz to head the World Bank.
GREG PALAST: Well, only in weird Bush world is nomination to the presidency of the World Bank considered a punishment job. Basically Wolfowitz is being tossed out head first out of the Pentagon because he decided to take on one enemy too big for his own teeth, which is big oil.
The main spoils of the war in Iraq is a seat on OPEC. It’s not just the fields; it is a seat on OPEC. What do we do with that seat? The neo-cons wanted to use our control of Iraq’s oil to smash OPEC, to smash the power of what they see as an Arab-controlled monopoly and Saudi Arabia. Unfortunately, that also meant smashing $56-a-barrel oil prices, and the oil industry was deeply unhappy.
So, there was a neo-con plan put out. In fact, you broke the report here two years ago when we were on the air saying that there was a plan to privatize and sell off all of Iraq’s oil fields. There was. Then Phil Carroll of Shell Oil was assigned by George Bush to baby-sit the situation in Iraq. The oil man went in and said there ain’t going to be no privatization on my watch. We don’t work that way.
You have to understand, oil companies, when they privatize, the big oil companies never get it, it’s always the cronies of Chalabi and who’s ever in power in any country. So, the oil companies did not want to be locked out, so they weren’t going to go along with it.
Plus, they didn’t like the neo-con idea that if there was privatization, and production would be ramped up, OPEC would be destroyed, oil prices would fall apart, and that would be the end of record profits for the oil companies.
So, a new report was secretly ordered up by a guy named Rob McKee, who took the Shell man’s place. McKee is from ConocoPhillips, paid $25 million by Conoco in his last year there, assigned by Bush to Iraq to the oil ministry there. And he ordered up a new study which was done by the Jim Baker Institute.
Now Jim Baker represents Exxon and the Saudi government. And the Baker Institute people, and the people they worked with, came up with a report that said that there would be a state-controlled company, which would be very OPEC-friendly, very oil company-friendly and would establish profit sharing agreements with international oil companies. And that was their recommendation. Privatization was dead out, and they were just livid about Wolfowitz.
The woman who is the chief guider on that project said, you know, here’s Wolfowitz talking about democracy, yet he wants to do what 99% of Iraqis don’t want. The oil companies don’t want to own oil fields in flames. So, basically Wolfowitz came up against big oil and his cronies, Doug Fife and the others. So, their privatization plans, because they kept pushing them, just absolutely killed them off.
And we also got, of course, a story that you saw at the beginning, that at the very beginning of the war, in fact, even before Bush was inaugurated, but within a couple of weeks, there was a meeting of oil industry people, associated with Iraq, planning the overthrow of Saddam. An invasion which would look like a coup d’etat. We would actually send in the 82nd Airborne and replace Saddam, just give a new dictator his mustache, the Baathists would stay in power, nothing would change. It was in and out.
I think people got the wrong impression with Bob Woodward’s book: Colin Powell did not oppose the invasion of Iraq. They were planning this from, like I say, the second week in office. Powell and the State Department people were opposing a long occupation and a remaking of Iraq. They just wanted to get rid of the top guy. They were quite happy with the Baathists, and they wanted to keep the oil flowing, and they didn’t want this type of situation we have now with a bloody, brutal occupation, which is also, you know, jamming up the oil fields and creating a major problem.
So that, again, it is the State department simply had a different plan for invasion than the neo-cons. But after September 11, the neo-cons kind of seized control of policy. Now we’ve had a new kind of policy coup d’etat by big oil and the — and OPEC allies in the government. They’re in charge now.
AMY GOODMAN: It’s also hard to believe that John Bolton becoming U.S. Ambassador to the United Nations is any kind of step down.
GREG PALAST: For them, you know, it is pushing the Bush policy. But you have to understand that the real levers of power are not in these public jawboning jobs. The real levers of power are behind those closed walls. So Wolfowitz had his power. He now has to take his hands off the levers, and Bolton is now in a position where he is told what to say, and he is not a person setting policy.
The neo-cons understand what’s happening here, and they are screaming bloody murder. But they’re all being purged. This is a very big change in U.S. policy toward people like Negroponte, who are State Department establishment, oil-friendly, OPEC-friendly, Saudi-friendly.
AMY GOODMAN: Well, on that note, I want to thank you very much for being with us. The investigation, a joint BBC-Harper’s magazine investigation. Greg Palast’s latest piece out today in the April edition of Harper’s magazine, called “OPEC on the March: Why Iraq Still Sells Its Oil A la Cartel.”
Thank you, Greg.
GREG PALAST: You’re welcome.
Greg Palast is the author of the New York Times bestseller, “The Best Democracy Money Can Buy.” View his writings at
Leni von Eckardt contributed investigative research for this project.

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