Energy and Politics: BONEYARD

Table of Contents =

*--2010-2013sp: News of nrg&plt [LOOP on "China"] | For 2013sp+:News of nrg&plt G/nrg&plt.news/
*--Geographic Place Names
*--Biographies of some leading figures involved in nrg&plt
*--Companies, fields, refineries, pipelines & other energy institutions
*--Bibliography

2010-2013sp: News of nrg&plt

*2011:Facts and Details| "China, Russia, Oil and Natural Gas" [E-TXT]
*2011ja27: "Oil Companies are Lured by Russian Petroleum" [E-TXT]
*2011je:Platts spc rpt on RUS nrg.p xpt
*2011se27:Bloomberg essay on Russian grain-trade ports

<>2011oc11:BEIJING| Reuters dispatch by Gleb Bryanski =

Russia said Tuesday it was close to the final stage of a huge gas supply deal with China, in what would be a landmark trade agreement between the long-wary neighbors

A deal to supply the world's second biggest economy with up to 68 billion cubic meters of Russian gas a year over 30 years has long been delayed over pricing disagreements.

[68 billion cubic meters = 2 trillion, 400 billion cubic feet, or roughly twice the annual USA natural-gas exports to the whole world]

"We are nearing the final stage of work on gas supplies," [Russian Prime Minister Vladimir] Putin said during a visit to Beijing, his first overseas trip since announcing he was ready to reclaim the Russian presidency [this = Reuters' way of saying Putin will be a candidate for the office of President of the Russian Federation in the 2012 national elections].

Putin is hoping his two-day visit will help broaden trade with China, which he expects to grow to $200 billion in 2020 from $59.3 billion last year .

Earlier, his Deputy Prime Minister Igor Sechin said that there had been "significant" progress in the gas talks with Chinese Vice Premier Wang Qishan.

[...]

China's Xinhua state news agency praised Putin's visit as one that "will mark ever-deepening China-Russia cooperation." But the two giant neighbors have so far failed to seal a huge gas deal that has been negotiated for five years.

Russian state bank VEB [VneshEkonomBank ID] and the China Development Bank (CDB) [ID#1 | ID#2] signed a deal for the Chinese bank to invest $1.5 billion in building the first stage of [the Russian company] UC RUSAL's 750,000-tonne Taishet aluminum smelter [ID#1 | ID#2].

As well, the China Investment Corp agreed to invest $1 billion in a joint Russia-China Investment Fund [ID] set up in partnership with a Russian state-backed vehicle to promote direct investment.

[...]

Putin has brought an army of Russian executives including the CEOs of state-controlled energy firms Gazprom [ID#1 | ID#2] and Rsn.crp.nrg [ID#1 | ID#2] and aluminum producer UC RUSAL [ID'd best with acronym OK RUSAL| ID#1 | ID#2], all eager to exchange their wares for Chinese cash.

[...]

(Additional reporting by Chris Buckley and Sui-Lee Wee, Editing by Jonathan Thatcher)

*2011no01: "Occidental Accused of Funding War Crimes" [E-TXT]
*2011no16:Centre for European Reform| "Russ, China and the Geopolitics of Energy in Central Asia" [C.ASA] [E-TXT]
*2011no18:China in Central Asia|"Russia, China and the Geopolitics of Energy in Central Asia" [E-TXT]
*2011de28:WoP| "A Would-be Energy Axis Between Russia and China" [E-TXT] [RUS/CHN]

<>2012:WDC,CQPress(SAGE Publications)|_Russian foreign policy : interests, vectors, and sectors|>Gvosdev,Nikolas K and >Warsh,Christopher| ((noUO noSMT| Covers contemporary Russian policies towards the various regions of the world, but also looks at the interactions between the various constituencies that shape and influence Russian foreign policy| RUS under Putin seeks ~~EUR, but is ready to reach out to dynamic opportunities east and south))

*2012:Harvard Business School "Case Study" on Russian-Chinese energy relations [TXT] [RUS/CHN]
*2012:YouTube documentary, vs-fracking = "Unearthed: the fracking facade" [YouTube] [frk]
*2012mr13:EurActiv rpt on RUS xpt strategies

<>2012fe10:REUTERS| Michael Martina and Michael Hogan| "Asia giants join Iran diplomacy as sanctions hurt trade"

BEIJING/HAMBURG (Reuters) – China said on Friday it would send a senior official to Tehran to discuss Iran's nuclear standoff with the West [sic! see paragraph 2], and India indicated it would also weigh in, as Asia's two giants seek to head off new sanctions already playing havoc with trade.

New financial sanctions imposed by the United States and European Union [IE="The West"] are making it difficult for Iran to pay for staple food and other imports, causing hardship for its 74 million people with just weeks to go before an election.

Commodities traders revealed this week that Iran has resorted to barter trade - swapping gold bullion in overseas vaults or tankerloads of oil for food - to avoid payments problems in international banks over sanctions.

On the streets of Iran, prices for food in dollar terms have doubled or tripled in recent months.

In the latest evidence of trade disruption, metal traders said Iran's imports of steel for construction had collapsed because sanctions prevent buyers from obtaining the currency needed to purchase it.

The International Energy Agency, which monitors oil markets for developed countries, said on Friday EU oil sanctions and U.S. financial measures due to take effect over the course of the next several months were already hitting global trade flows.

In an analysis ominous for Tehran, the IEA also said there was enough oil supply worldwide to prevent a price shock if Iran is blockaded this year.

That makes it easier for Washington to impose harsh sanctions envisioned under a new law which requires President Barack Obama to assess the impact on energy markets before pressing ahead with its most draconian measures.

"The market in 2012 likely has sufficient supply-side flexibility" to adjust to any loss in Iranian volumes due to sanctions, its monthly report said. It cited softer demand growth, Saudi spare capacity and the resumption of supplies from Libya that were disrupted last year.

China's Foreign Ministry said on Friday Assistant Foreign Minister Ma Zhaoxu would head to Iran for talks on Sunday.

"We have consistently advocated dialogue as the only proper channel for resolving the Iran nuclear issue," ministry spokesman Liu Weimin told a regular news briefing. Ma will "have a further exchange of views with Iran over its nuclear program," he added.

China is one of six powers - along with Britain, France, Germany, Russia and the United States - negotiating with Iran over its nuclear program, which Western states say is aimed at building a weapon but Iran says is peaceful.

Those talks collapsed a year ago and show little sign of resuming. Iran refuses to negotiate over its uranium enrichment program and Western countries say there is no point in talking unless uranium enrichment is on the table.

China is also Iran's biggest trade partner, buying a fifth of Iran's oil exports last year.

If Iran is to endure sanctions without severe pain, it would need China to keep buying its oil and even increase its purchases to make up for lost sales to Europe. But China has been playing hardball with Iran, seeking steep discounts for oil, cutting its purchases this year by more than half and securing alternative supplies from Russia and Saudi Arabia.

Cuts in Chinese oil purchases make India the biggest buyer of Iranian oil this year. A payments system for trade between India and Iran was shut down last year under U.S. pressure. Under a new agreement, Iran is meant to accept 45 percent of the value of its oil in Indian rupees to buy Indian goods, but the system is not yet running while India decides how such transactions would be taxed. Indian traders have had difficulty receiving payment for rice and tea they send to Iran.

European Council President Herman Van Rompuy, visiting India, said the EU also wanted Delhi to help press Iran to give up its nuclear program to end sanctions.

"In order to achieve that result, you need more pressure on Iran, more sanctions on Iran," he said.

India's Prime Minister Manmohan Singh defended India's trade ties with Iran, and leant Delhi's backing to diplomacy.

"Iran is a close neighbor. It is an important source for our energy," he said. "There are problems with Iran's nuclear program. We sincerely believe that this issue can be and should be resolved by giving maximum scope to diplomacy."

HARDSHIP BEFORE VOTE

Iran is heavily dependent on imports to feed its people, buying 45 percent of its rice and most of its animal feed abroad. Trade problems caused by sanctions appear to be worsening inflation already high because of President Mahmoud Ahmadinejad's economic policies, which have replaced subsidies for basic goods with cash payments to families.

The result is severe hardship for many ordinary Iranians, with just three weeks to go before a parliamentary election that will pit Ahmadinejad's supporters against conservatives who oppose his economic reforms. Reformists - either barred or boycotting - are barely represented.

The election will be Iran's first since a presidential vote in 2009, when Ahamadinejad's disputed victory over reformist opponents triggered eight months of violent street protests. That uprising was put down by force, but since then the "Arab Spring" has shown the vulnerability of authoritarian governments in the region to public anger over economic hardship.

The latest disruptions in Iran's trade have been caused in part because agents in the United Arab Emirates were no longer permitted to act as middlemen and process payments for Iranian buyers of imported commodities.

Shipments of palm oil from Indonesia and Malaysia - which represent 90 percent of the global supply of the vegetable oil staple - have been halted. Grain ships have been diverted.

Iran is one of the world's biggest importers of billet, or semi-finished steel bars, used in construction. A steel trader at a Swiss metals trading house said: "Now you can feel the effects of the sanctions imposed by the U.S. and Europe... It is very difficult to do any business with Iran at the moment."

Boris Krasnojenov [Krasnoenov], an analyst with Moscow-based Renaissance Capital, said the collapse in trade with Iran was a major problem for Russian steel plants. It has depressed international prices, knocking nearly 10 percent off the price of Russian and Ukrainian steel over the past month.

There are signs that Iran is quickly finding new ways to circumvent sanctions, but these could mean paying over the odds for imports and selling exports at a discount. Barter is particularly inefficient.

One European grains trader told Reuters: "Iran is a rich country but has been caught by surprise by the sanctions and the decision by the United Arab Emirates not to allow the type of sanctions busting via Dubai which was commonplace in the past.

"The big trading houses are believed to have received crude oil and gold bullion as payment for past deals. The big boys have the ability and financial knowhow to quickly sell this on without suffering carry losses.

"No one really wants barter payments, but the Iranians appear to be getting their act together and are offering more financial payments in currencies apart from dollars or euros. Yen and Brazilian reals are being mentioned a lot."

Another trader said: "There is talk that banks in Bahrain are playing ball with Iran and helping out with payments. There is also talk that payments are being made via Venezuela."

(Additional reporting by
Manoj Kumar in New Delhi,
Silvia Antonioli and Claire Milhench in London,
Alfred Kueppers in Moscow;
writing by Peter Graff;
editing by Janet McBride)

<>2012sp: >Greenwald,Robert| "Iraq for Sale: The War Profiteers" YouTube | ((MIC IRQ | The story of what happens to everyday Americans when corporations go to war. || Acclaimed director Robert Greenwald (Wal-Mart: The High Cost of Low Price, Outfoxed and Uncovered) takes you inside the lives of soldiers, truck drivers, widows and children who have been changed forever as a result of profiteering in the reconstruction of Iraq. Iraq for Sale uncovers the connections between private corporations making a killing in Iraq and the decision makers who allow them to do so. || Brave New Films are both funded and distributed completely outside corporate America. Over 3000 people donated to make Iraq for Sale....
Experts in the film:
Shereef Akeel: Civil Rights Attorney
Scott Allen: Cruse, Scott, Henderson and Allen, LLP
Sarah Anderson: Institute for Policy Studies [W]
Keith Ashdown: Taxpayers for Common Sense [W]
Mark Benjamin [ID]: Journalist, Salon.com
Doug Brooks · (Interview transcript): International Peace Operations Association [W]
Pratap Chatterjee: Executive Director, CorpWatch [W] [ID]
Charlie Cray: Director, Center for Corporate Policy [W]
Jim Donahue: Director, Halliburton Watch [W] ((Hlb.bdg.crp))
Chris Farrell: Director of Investigation, Judicial Watch [W] [ID]
Alan Grayson [ID]: Anti-Fraud Attorney
Bunnatine Greenhouse [ID]: Former Chief Contracting Officer, US mlt.CoE
Chris Lehane: Crisis Communications Expert and Political Strategist [ID]
Charles Lewis: Former Executive Director, Center for Public Integrity [W] [ID]
Robert Pelton [ID] · (Interview transcript): Come Back Alive
Ralph Peters [ID]: Retired Lieutenant Colonel and Author
Massie Ritsch: Center for Responsive Politics [W] [ID]
Marie de Young: Former Halliburton/KBR Contract Administrator ..." [ID] ((Hlb.bdg.crp))
))

<>2012je01:LND and MVA, Reuters Tom Bergin and Douglas Busvine| “Russia offers to buy BP's $30 billion JV stake: source”

A Russian state firm has offered to buy BP Plc's (BP.L) half share in its Siberian joint venture, a source said on Friday, in what would amount to a stunning reversal for the British firm and a bold assertion of Kremlin control over the oil sector.

If a state entity acquires the stake, worth around $30 billion, it would signal a dramatic reorganization of Russia's oil industry, the world's largest, weeks after Vladimir Putin returned to the presidency.

Igor Sechin, CEO of state oil major Rsn.crp.nrg (ROSN.MM), denied considering buying out the stake in the TNK-BP (TNBP.MM) joint venture, which accounts for nearly a third of BP's output and has since 2003 been a cornerstone of its global strategy.

But two sources said Russian state energy holding company Rsn.crp.pg ROSNG.UL - which controls Rsn.crp.nrg - could serve as a vehicle to do the deal. " (Sechin) will try to buy this part through Rsn.crp.pg or another instrument," one source close to Rsn.crp.nrg told Reuters.

Selling out would cut BP loose from hostile partners and free it from an investment that had restricted its ability to pursue other opportunities in Russia.

BP did not say who had made what it called "unsolicited approaches" to buy the stake, but a source close to the matter said one of Russia's state-owned oil and gas firms was involved.

A source close to Gazprom (GAZP.MM), the state gas export monopoly, said he was not aware of any approach. Kremlin-friendly Surgutneftegas (SNGS.MM), whose $28 billion cash pile could back a deal, according to some analysts, declined comment.

TNK-BP is Russia's No.3 oil pmper and BP's stake [BP.crp.nrg] is one of the biggest foreign investments ever made in the country. It has earned BP huge profits, but has long been plagued by legal battles between BP and its Russian partners, the AAR consortium of billionaires.

A second source close to the situation said BP's board met on Thursday to discuss a specific approach and decided to press ahead with talks. The source did not say if that bid was Russian.

Putin, who returned to the presidency he occupied from 2000-2008, has long discouraged foreign companies owning strategic assets, limiting TNK-BP's ability to expand.

For BP, selling out would mean giving up annual dividends which hit $3.7 billion last year and losing around 30 percent of its oil and gas production, but would give it a cash pile to explore higher-growth ventures, perhaps even in Russia.

Funds raised would also help to fund the cost of cleaning up the 2010 Gulf of Mexico oil spill.

KREMLIN CAPITALISM

Given the Kremlin's desire to exert influence over the oil sector, analysts and bankers pointed towards state-backed players as the most likely buyers.

"We believe that the eventual buyer will have to be Russia - a 2 million barrels per day company ... is just too strategic for Russia to let fall into foreign hands," said Oswald Clint, oil analyst at brokerage Bernstein.

Sechin, a powerful former deputy prime minister, was appointed last week as CEO of Rsn.crp.nrg with what a source close to the group said was a mandate to transform the company into a national champion capable of competing on a global scale.

In Putin's last act as prime minister, he nominated Sechin to the board of Rsn.crp.pg, casting his trusted aide in dual executive and supervisory roles that could facilitate industry consolidation both inside Russia and abroad.

Putin, visiting Germany on Friday for talks with Chancellor Angela Merkel, took Sechin with him in his limousine from Berlin airport and the pair were seen engaged in close talks.

Sechin avoided an outright denial of interest in BP's TNK-BP stake when asked by reporters, saying: "We need to study all (the) information and only then take a decision."

AAR said it had received notice from BP of intent to sell the stake, and repeated its own offer to increase its holding.

BP's relationship with AAR is governed by a shareholders' agreement, but sources said this was unlikely to hinder a BP sale. BP said any deal would comply with the agreement.

Shares in BP rose as much as 5 percent before easing back to close 1.8 percent higher. Shares in TNK-BP's listed unit, which has a small free float, slumped by 10 percent on fears that a state takeover would be hurt minority shareholders.

"BP should exit and reinvest in more profitable areas with less political risk, if it can achieve something close to fair value for the stake," analyst Iain Reid at brokerage Jefferies said.

The proposed sale is an admission that attempts to reach an accommodation with AAR had failed. "We've worked hard to come up with a solution but haven't been able to do so," a third source close to the situation said.

LUCRATIVE HEADACHE

BP and AAR have had disputes almost since the creation of TNK-BP in 2003. In 2008, BP Chief Executive Bob Dudley, then CEO of TNK-BP, was forced to flee Russia after what he described as a campaign of harassment from AAR.

Last year, tension flared when BP signed an Arctic exploration deal with Rsn.crp.nrg. An arbitrator ruled that deal was in contravention of the shareholder agreement, under which BP was barred from dealings in Russia outside the joint venture.

BP offered to buy AAR out for around $32 billion, with a plan to subsequently sell the stake on to Rsn.crp.nrg, to settle the spat, BP sources said at the time. But the deal fell apart and the two partners landed in court.

One of the AAR billionaires, Mikhail Fridman, resigned on Monday as chief executive of TNK-BP, citing a breakdown in relations with BP, though BP sources said they believed the resignation was a tactic to force BP to buy out AAR's stake.

In a newspaper interview published on Thursday, Fridman said he would consider a sale.

AAR had previously mooted buying out BP and sources close to AAR have said they would be prepared to pay $25 billion for the stake.

BP initially invested almost $8 billion in cash, shares and assets to form TNK-BP with AAR, since when it has yielded BP $19 billion in dividends - on average around 10 percent of BP's annual profits - despite high Russian taxes on oil production.

Shortly after the venture was formed, Russia became more hostile to foreign and private-sector investment. And the Kremlin's preference to reserve larger fields for state-controlled groups has limited TNK-BP's ability to expand.

Although BP said it received more than one approach, it is hard to imagine private sector bidders attempting to win the stake, especially if the Kremlin wants a state firm to buy it.

However, even state players may have problems bidding. Gas export monopoly Gazprom has big investment obligations and Troika's Nesterov said even Rsn.crp.nrg could also struggle to raise the cash needed.

(Additional reporting by Melissa Akin, Megan Davies, Katya Golubkova, Denis Pinchuk and Polina Devitt in Moscow, with Gleb Bryanski in Berlin and Neil Maidment in London; Editing by Peter Graff and David Holmes)

*2012oc28:SourceWatch on nrg.c
*2012no01:George Hajjar, "Gulf states to invest $100 bn on 6000 km railway link" | ((rrd))
*2012de10:Natural Gas Europe| "The Gas Triangle: China, Russia and Europe" [E-TXT]

*2013:Panjiva| mpt/xpt xtx RUS/USA
*2013ja:Chesapeake CEO McClendon steps down after a year of tumult
*2013ja07:JRL| "NEWSLINK: Russia's Syria Support said to be a Losing Proposition"
*2013ja09:JRL|>Travin,Dmitrii| "Whatever happened to Russia's economic miricle?"
*2013ja18:JRL|>Medetskii,Anatolii| "BP Says U.S. to Outpace Russia for Oil Production"
*2013ja21:JRL| "Russian Energy Review in 2012: Consolidating State Control in an Uncertain Market"
| Many other JRL rtl~ "Tags" = [W] | Re.gzz [W] | Re.GazProm [W] | Re.Oil [W] | Re.Rsn.crp.nrg [W]
Twitter "tweets" re.nrg [W]

*2013ja24:TTL| "Chevron increases stake in Iraqi Kurdistan Oil" [TXT] IRQ nrg.p [MAP~]
*2013ja24:CSM| "Iraq oil tensions rise as BP enters Kirkuk fray" [E-TXT] BP.crp.nrg
*2013ja25:TTL| "Exxon enters the political fray" [E-TXT] ExxM.crp.nrg
*2013fe04:ArN| "Iraq oil exports rise to 2.359mBd in January"
*2013fe07:BBC| "Ukraine Rejects Gazprom Gas Bill"
*2013fe13:MarketWatch| "Russia Could Double Oil Supply to China" [E-TXT]
*2013fe13:Reuters| "Analysis: G20 Host Russia Struggles..."| ((stt&ekn Rsn.crp.nrg))
*2013fe13:LensBlog (NYT)| "Money for the Taking in the Niger Delta Swamps [pix]
*2013mr01:US issues Keystone pipeline report [E-TXT]
*2013mr06:VNZ prx Hugo Chávez [>QavH] (1954-2013) died [obits = W#1 | W#2 | W#3 | W#4 | W#5]
*2013my09:NYR:59-60|>McKibben,Bill| “Some Like it Hot” [E-TXT] ((ecx))

<>2013jy16:Forbes| "Rosneft at it Again, To Sink Billions More in New Oil Fields" [E-TXT]

<>2013fa:MXO| Labor unx~ join debates on [stt.fxx.vs-prv.fxx=] de-nationalization and privatization of energy sector of economy [E-TXT]

bxo dtf =
Biographies--??:

<>Bazhaev,Ziya| a{}b{}c{}d{}e{}q{98mr:otx Sidanko}

<>Mellon,Andrew|>MlnA| a{}b{}c{}d{}e{}n{}o{
}f{ MlnThomas
}s{
*1948:Privately printed|>MlnWL|_Judge Mellon’s Sons|((G.SMO cites))
}t{}8{}

<>Mellon,William Larimer Sr|>MlnWL| a{}n{}o{
}f{NOkin abv
}m{founded Gulf
}s{}t{}8{}

<>Nobel’,E. L| a{}b{}c{}d{}e{}n{}o{
}f{
}s{
}t{}8{}

<>Rockefeller,John Davison|>RkfJD| a{}b{}c{}d{}e{}n{}o{
}f{
}s{
}t{}8{}

<>Samuel,Marcus| a{853}b{}c{}d{}e{927}n{}o{
}f{
Jwx frm LND,ftr wlt mp-xpt|Saw sig. of tpt,bgn shpping nrg.c frm strong base in JPN|Soon perceived sig. of nrg.p|RUS had since 873:Allowed grn cmp~ to search fr nft in CAU
}m{
*1853:1927; Shell.crp.nrg fnd
}s{
*1960:LND, Barrie and Rockliff|>Henriques,Robert|_Marcus Samuel, First Viscount Bearsted and Founder of the 'Shell' Transport and Trading Company 1853-1927| (())
}t{}8{}

<>Viakhirev,Rem|>Vyakhirev,Rem I| a{934}b{}c{}d{}e{}n{}o{
}f{
}m{
*1992de:Ggzz.crp boss succeeded QdnV as QdnV bcm Mnr1: “chain-smoking Vyakhirev, 63, appears on the surface to be a fairly typical Soviet-style bureaucrat. He boasts of receiving the Order of Lenin. […] He often lapses into the vague language of a bureaucrat when answering questions”. [gzz.crn G/997se22: rtl]
}s{
}t{}8{}

<> | a{}b{}c{}d{}e{}n{}o{
}f{
}s{
}t{}8{}

<> | a{}b{}c{}d{}e{}n{}o{
}f{
}s{
}t{}8{}

<> | a{}b{}c{}d{}e{}n{}o{
}f{
}s{
}t{}8{}

<> | a{}b{}c{}d{}e{}n{}o{
}f{
}s{
}t{}8{}

<> | a{}b{}c{}d{}e{}n{}o{
}f{
}s{
}t{}8{}

<> | a{}b{}c{}d{}e{}n{}o{
}f{
}s{
}t{}8{}

<> | a{}b{}c{}d{}e{}n{}o{
}f{
}s{
}t{}8{}

<> | a{}b{}c{}d{}e{}n{}o{
}f{
}s{
}t{}8{}

<> | a{}b{}c{}d{}e{}n{}o{
}f{
}s{
}t{}8{}

<> | a{}b{}c{}d{}e{}n{}o{
}f{
}s{
}t{}8{}

<> | a{}b{}c{}d{}e{}n{}o{
}f{
}s{
}t{}8{}

<<

Corporations, companies and other energy institutions [nrg.crp~]---??:

<
>Esso|GO Exxon

<>Exxon|>Esso|>Exx.crp.nrg| a{}b{}c{}d{}e{}n{}o{nrg.f ekn cmp
}s{
*1977au15:Forbes| "Does Exxon Have a Future?"| ((G.SMO cites))
*1978je12:Forbes| "Exxon's Small Businesses"
}t{}8{}

<>Gazprom|>Ggzz.crp|Gzp| a{}b{}c{}d{}e{}n{}o{nrg.f ekn cmp}s{
}t{}8{}

<>Gulf Oil|>Gulf.crp.nrg| a{}b{}c{}d{}e{}n{}o{nrg.f ekn cmp
}r{
|>McCloy,John J., Nathan W. Pearson and Beverly Matthews. The Great Oil Spill, Report of the Special Review Committee of the Board of Directors of Gulf Oil Corporation. Chelsea House Publishers. NYC,1976|
|>Thompson, Craig. Since Spindletop. Gulf Oil Corporation, 1952. A history commemorating Gulfs first 50 years
}s{
}t{}8{}

<>Halliburton|>Hlb.bdg.crp| a{}b{}c{}d{}e{}n{}o{
}s{
}t{}8{}

<>Kellogg, Brown and Root|>KBR.bdg.crp| a{}b{}c{}d{}e{}n{}o{
}s{
}t{}8{}

<>Lukoil|>Luk.crp.nrg| a{}b{}c{}d{}e{}n{}o{nrg.f ekn cmp
}s{
}t{}8{}

<>Mobil|>Mob.crp.nrg| a{}b{}c{}d{}e{}n{}o{nrg.f ekn cmp
}r{
|_"Mobil I." unpublished company history covering 1866-1962
|_"Mobil II." unpublished company history covering 1866-1938
*1976jy-au|_Mobil World
}s{
*1976se:Fortune|>Ross,Irwin| "Public Relations Isn't Kid-Glove Stuff at Mobil"|
}t{}8{}

<>Occidental Oil|>Occ.crp.nrg| a{}b{}c{}d{}e{}n{}o{nrg.f ekn cmp}s{
}t{}8{}

<>Oman Oil Company|>Oman.crp.nrg| a{}b{}c{}d{}e{}n{}o{nrg.f ekn cmp
}s{
}t{}8{}

<>Rosneftegazstroi|>Rsn.bdg.crp| a{}b{}c{}d{}e{}n{}o{nrg.f ekn cmp
}s{
}t{}8{}

<
>Royal Dutch Shell|GO Shell

<>Shell, Royal Dutch|>Shell.crp.nrg|>RShell.crp.nrg| a{}b{}c{}d{}e{}n{}o{
|>DShell.crp.nrg [>Deutsche Shell|
|>IShell.crp.nrg|>Shell Indiana|
|>SShell.crp.nrg|>Shell Senegal|
|>UShell.crp.nrg|>US Shell (Houston HQ)]
}g{
}r{
*1934mr:oc; The Shell Magazine| ((G.SMO cites))
|>Shell Briefing Service. "Chemicals Digest" November, 1976; "The Lubricants Business" September, 1977
|_The "Shell" Transport and Trading Company Limited. Survey of Activities of the Shell and Royal Dutch Group of Companies 1957. London: Alabaster Passmore and Sons, Limited, 1957
|>Barran, Sir David. "How Shell Works: Management Techniques in a Large International Group of Companies," a paper presented to the British Institute of Management, Shell Centre, London, 30 November 1967
*1957:Shell World:158-60 & 161-63| Godber, Lord Frederick. "I Remember ..."| Kessler, J.B. August. "I Remember ..."
*1975:LND,Shell Printing Ltd|>Royal Dutch/Shell. A Short History of the Royal Dutch I Shell Group of Companies|
}s{
*1953:1957; Leiden, E.J.Brill|>Gerretson,F.C|_The_History of the Royal Dutch Petroleum Company| 4vv| ((UO))
*1957:NYC, Appleton-Century-Crofts|>Beaton,Kendall|_Enterprise in Oil: A History of Shell Oil Company in the United States 1912-1955|
S7S:53-63
}t{}8{}

<>Sidanko| a{}b{}c{}d{}e{}n{}o{
}f{98mr:Bazhaev,Ziya gnr.dtr otx

<>Std.crp.nrg

<>Texaco|>Tex.crp.nrg| a{}b{}c{}d{}e{}n{}o{nrg.f ekn cmp
}r{
Annual Reports and Statistical Supplements.
*1977ja:The Texaco Star
}s{
*1978ap17:Forbes|"Rebuilding the House that Long Built"| ((G.SMO cites))
*1953:The Texas Company|>James,Marquis|_The_Texaco Story: The First Fifty Years 1902-52, The Texas Company
*1970:Nashville|>King,John O|_Joseph Stephen Cullinan|
}t{
}8{}

<> | a{}b{}c{}d{}e{}n{}o{
}s{
}t{}8{}

<> | a{}b{}c{}d{}e{}n{}o{
}s{
}t{}8{}

<> | a{}b{}c{}d{}e{}n{}o{
}s{
}t{}8{}

<> | a{}b{}c{}d{}e{}n{}o{
}s{
}t{}8{}

<> | a{}b{}c{}d{}e{}n{}o{
}s{
}t{}8{}

<> | a{}b{}c{}d{}e{}n{}o{
}s{
}t{}8{}

<> | a{}b{}c{}d{}e{}n{}o{
}s{
}t{}8{}

<> | a{}b{}c{}d{}e{}n{}o{
}s{
}t{}8{}

<> | a{}b{}c{}d{}e{}n{}o{
}s{
}t{}8{}

BBL---??:

Avramov on Khodorkovskii
Whale bbl
Misc. newer titles

<> Avramov,Konstantin| a{}n{<<- Yuk.crp.nrg}o{}
*:| “Yukos” & Khodorkovskii po-Amramovu, a grad.smn paper| ((

KONSTANTIN = LET’S TALK ABOUT TRANSLITERATION. THE PAPER IS VERY FINE, BUT IT NEEDS BETTER PRESENTATION, MORE PUNCH, AS WITH A BETTER, MORE POINTED INTRODUCTION AND A CONCLUSION THAT WILL REASSURE THE READER OF THE MAIN POINTS (in this file I’ve removed most of my critical comments on Avramov’s paper)

YUKOS

Incarceration of Mikhail Khodorkovsky, one of Russia’s leading businessman, and CEO of YUKOS, a company that produces one fifth of Russia’s oil, invoked mixed reactions around the world. The West saw Khodorkovsky’s arrest as another step by Russia’s President Vladimir Putin in his quest to centralize power by eliminating any possible political opposition. Putin’s actions sent shock waves throughout Western business circles as another sign of government encroachment into Russian private enterprise sphere. YUKOS situation was especially alarming since YUKOS was seen as one of Russia’s most open and transparent organizations. The Russian people were not quite as troubled by Khodorkovsky’s detention. Khodorkovsky was one person in a long line of Russian oligarchs that have been harassed or arrested by Putin since he took office. Dealing with the so-called “oligarchs” seemed to be the number one priority for Putin from the very start of his presidency.

Oligarchs first appeared in Russia during Boris Yeltsin’s controversial loans-for-shares program. The program was first designed to weaken the power of the “Red Directors,” people left over from the Soviet times who still controlled large parts of Russian industry. Loans-for-shares was suppose to take Russian industry away from the “Red Directors” and place it in the hands of young Russian entrepreneurs. Unfortunately, loans-for-shares turned into a complete sell off of majority of the Russian industry for unbelievably low prices. Khodorkovsky was able to buy YUKOS for three hundred and eight million dollars, while the real value was estimated at around thirty billion. This was not a bargain. This was robbery. Even American robber barons of the nineteenth and early twentieth centuries would have been astonished.

HOW CAN YOU SAY?

The result of loans-for-shares was further polarization of Russian society. While the oligarchs made billions of dollars and rivaled the Romanovs in their opulence, ordinary Russians were barely making enough to get by. When Putin began his crackdown on the oligarchs, majority of the Russian people did not see his actions as an assault on their freedoms but as a long delayed justice. How could they feel sorry for these ultra rich men when they have done little but display their wealth in front of a largely impoverished population? We will come back to this issue when we address Khodorkovsky’s letter from prison. The point to keep in mind is that Putin’s actions had wide public support.

So why is Khodorkovsky different? Is he not just another mafia-type who stole from Russia and now got what was coming to him? The answer is not a simple yes or no. Yes, Khodorkovsky got YUKOS for a song. Yes, he did make billions at the expense of the state, but unlike many other oligarchs, he managed to turn YUKOS into a company that was respected around the world. Khodorkovsky’s mafia ties were not as apparent, as for example, Boris Berezovsky’s, that is not to say that he had no mob ties. In order to climb to the top and stay at the top in the Russian business world, one must deal with shady elements at some point in time. Khodorkovsky looked like a bad boy gone good. Even his appearance did not resemble your usual red-faced Russian “businessman.” He was well groomed, well dressed and in general paralleled a Western style entrepreneur. Unlike Putin’s earlier attacks on the oligarchs, Khodorkovsky’s arrest brought up issues beyond business corruption. Putin’s assault on Khodorkovsky resembled an old fashioned grab for power. Previous attempts by Putin to reign in the oligarchs, and his questionable practices in doing so, could always be brushed away as Western paranoia, and Western support for corrupt oligarchs. Khodorkovsky’s imprisonment made one skeptical to the true desires of the Russian President. This was especially true in light of recent reforms that strike directly at the power of the Russian citizens to elect their officials.

Let us start with Putin’s vision for the future as he outlined it in his millenium address to the Russian people. First, Putin acknowledged that Russia fell behind more advanced countries of the West. The reason for the lag was Russian experience with “communism” that “was a road to a blind alley.” Putin stressed that Russian economic backwardness was “our payment for the brakes, and even a ban, put on the initiative and enterprise of enterprises and their personnel. And today we are reaping the bitter fruit, both material and mental, of the past decades.” Making an obvious excuse for Yeltsin, Putin stated that “We could not have avoided the main problems facing Russian society,” referring to numerous economic disasters Russia faced in previous years. This was also an attempt to forget the past and focus on the future.[2]

How, in Putin’s mind, was Russia to overcome this lag? Putin’s answer holds the key to many events that we see in Russia today, including the YUKOS affair. In Putin’s future, the government was to take a central role in the development of the country.

“Our state and its institutes and structures have always played an exceptionally important role in the life of the country and its people. For Russians, a strong state is not an anomaly which should be got rid of. Quite the contrary, they see it as a source and guarantor of order and the initiator and main driving force of any change…Russia needs a strong state and must have it,” said Putin.

It was clear that Russian government was to be the leading force of progress. While Putin condemned the Soviet system for leading Russian in the wrong direction, he failed to realize that initially the Bolsheviks also saw themselves as a force of advancement. It was not their intention to create the vast bureaucratic monstrosity of the Soviet Union. It was precisely their policies of centralization that led the Soviet Union into a dead-end. To use the old cliché: “The road to hell is paved with good intentions.”

It was not just the state that was suppose to lead the way, the Russian people had to get behind the government. Putin claimed that “The absence of civil accord and unity is one of the reasons why our reforms are so slow and painful. Most of the strength is spent on political squabbling, instead of the handing of the concrete tasks of Russia’s renewal.” Once again, it is easy to draw a parallel with the Bolsheviks who saw party factions as barriers on the road to a bright socialist future. Putin pronounced that Russian people, in their quest for stability “[H]ave begun to perceive and accept supra-national universal values which are above social, group or ethnic interests.” These statements run contrary to Madisonian idea of factions where factions are not to be eliminated but channeled in constructive direction, and Putin’s assumptions that Russia was eliminating group interests were absurd.

In the economic sphere, Putin suggested that Russia should focus on development of “high-technologies,” encourage investment, create a solid financial system, and limit corruption. The government was to be a central part of this process. “I mean to make the Russian state an efficient coordinator of the country’s economic and social forces that balances out their interests, optimizes the aims and parameters of social development and creates conditions and mechanisms of their attainment,” stressed Putin. He also mentioned the need to regulate the so-called natural monopolies. By natural monopolies he meant the energy sector and Russia’s natural reserves. Putin asserted that because these natural monopolies “determine the structure of production and consumer prices…[and] influence both the economic and financial processes, and the dynamics of the people’s incomes.”

NEW PARAGRAPH HERE. THIS IS AN IMPORTANT MOMENT IN YOUR ARGUMENT

Herein lies the essence for our understanding of the YUKOS affair. YUKOS was one of those natural monopolies, and when Putin felt that it was escaping government regulation, he decided to act.

Putin chose to employ loans-for-shares as foundation for his attack on Khodorkovsky. The disarray and confusion of the Yeltsin years created an environment in which many in Russia became susceptible to charges of embezzlement and corruption. This was particularly true of the oligarchs. Khodorkovsky was able to purchase YUKOS through MENATEP, a bank where Khodorkovsky was a controlling shareholder. MENATEP was also the organizer of the YUKOS auction, so an intermediary company, Laguna, was used in YUKOS acquisition.[3] Khodorkovsky addressed the issue in an interview with a Tomsk radiostation a few months prior to his arrest: “In principle, transfer of today’s laws to [Yeltsin] time, allows you or any one else to be charged with fraud if there is an inclination to do so. There lies the danger that unregulated law system of that period is being used today to make accusations.”[4] He was right, the rule of ex post facto law does not allow for use of present day laws to prosecute past actions. But the “unregulated law system” Khodorkovsky spoke of did not excuse him, at least morally and to a certain extent legally, from his questionable acquisition of YUKOS.

No matter the circumstances that surrounded the YUKOS purchase, it managed to transform itself into a company that was respected around the world. YUKOS switched to international accounting standards, more specifically to Generally Accepted Accounting Principles (GAAP.) The company employed a large staff of Western accountants and had its 2002 annual report audited by PriceWaterhouseCoopers. Khodorkovsky’s investment into YUKOS infrastructure produced impressive results, and YUKOS soon became forth-largest oil producing company on the globe.[5] Along with sound business practices, Khodorkovsky encouraged philanthropy. “YUKOS gave the ruble equivalent of $45 million to charity in 2002 and is projected to donate an equivalent of $50 million this year,” speculated one report. YUKOS also supported various programs for Russian specialists to visit and train in the West.[6]

2 July 2003, Platon Lebed, director of MENATEP, and a close partner of Khodorkovsky was arrested on charges of fraud. He was charged with abuse of state funds to obtain Russia’s largest phosphate extraction and enrichment plant, Apatit.[7] Lebed’s arrest was just a prelude to the main event, the arrest of Khodorkovsky. 7 July, a few days after Lebed’s detention, Khodorkovsky was called for questioning to the prosecutor’s office. Khodorkovsky classified his questioning as an attempt to “justify illegal actions by legal means.”[8]

11 July Prosecutor General ordered FSB (State Security Bureau) to conduct a search of YUKOS offices, similar searches were conducted at offices of another Russian oil company, Sibneft, that was involved in merger negotiations with YUKOS. Many other companies with YUKOS connections faced raids throughout the summer of 2003 as Russian President Vladimir Putin tried distancing himself from the case by classifying YUKOS investigation as a strictly law enforcement measure. “Everybody, including business, must get use to obeying the law. Nobody is free from obeying the law, even if he accumulated billions,” said Putin.[9] Few believed that in a country such as Russia, with an extremely powerful presidential office, a Prosecutor General could start a major investigation of the country’s largest oil company without presidential blessing. Lebed’s arrest and the high number of searches signaled the premeditated nature of the government assault on YUKOS.

Why? What did YUKOS do to arouse such a fierce response from the government? A number of speculations appeared. One popular theory that gained some popular ground in the West focused on Khodorkovsky’s ties to political opposition parties. Indeed, Khodorkovsky was giving a lot of money to liberal parties such as Gregory Yavlinsky’s Yabloko. While Yabloko was an opposition party, it was hardly in a position to challenge Putin's United Russia faction as was evident from Yabloko’s dismal performance in the 2004 Duma elections where it failed to win a single seat.

“What would be of more concern to Putin is if Khodorkovsky has been channeling money to the Communist Party (KPRF), which is a much greater electoral threat than SPS [Union of Right Forces] or Yabloko. The KPRF recently polled at 23 percent compared to United Russia’s 30 percent,” speculated CSIS (Center for Strategic and International Studies.) Although, CSIS also questioned the logic of such assumptions considering that the Communist Party was not in favor of wealthy oligarchs running Russia’s natural resources. “[Cooperation with Khodorkovsky] would be impossible for the KPRF. We have principles that are significantly different from Khodorkovsky’s,” claimed KPRF deputy chairman Ivan Melnikov.[10] So it is relatively safe to say that Khodorkovsky’s contributions to opposition parties was not the main reason for the YUKOS affair.

There were also rumors of Khodorkovsky’s ambitions for the post of the president, considering that Khodorkovsky was the richest man in Russia, who was heavily involved in philanthropic activities, it was a rather plausible scenario. A lot of times philanthropy is a sign of civic duty and what better way to perform a service to your country than to become the president, especially for a person of such wealth. What more, the timing of the government offensive against YUKOS corresponded to speculation of Khodorkovsky’s increasing political ambitions. However, Putin was still a rather popular figure in Russia and his hold on power and the media seemed strong enough to withstand any assault. Khodorkovsky himself rejected the theory that he was persecuted because of his political ambitions. “[I] completely exclude [this option.] Because as you well know, [elections] of March 2004 are predetermined,” was his reply to speculations of political persecution.[11] If Khodorkovsky had presidential desires he was likely to unveil them before 2008 elections. It made little sense for him to oppose a powerful Putin in 2004. Some might interpret the YUKOS affair as a preemptive strike by the Putin entourage. This theory does have some credibility if one is to look towards 2008 elections. It could also mean that Putin is clearing the way for his future successor who would continue Putin’s program. While credible, this theory is weakened by the timing. Certainly Putin must have other things to worry about. Why would he undermine Russian investment climate that he paid so much attention to in his millenium address, for vaguely defined goals of a distant future? Given the behind the scenes nature of Russian politics, Putin could have threatened Khodorkovsky in private, without jeopardizing Russian business environment.

Once we put aside theories of Khodorkovsky’s political aspirations, and Putin’s war on oligarchs, only one major theory remains. It was mentioned earlier in the paper that Putin intended to regulate the so-called “natural monopolies.” The YUKOS affair makes a lot more sense if one is to treat it from this perspective. Oil is Russia’s biggest export and Russian economy is largely dependent on country’s ability to sell oil on the world market. Basically, in order for Russian government to have an influence on domestic and foreign policy, it has to control, or at least influence Russian oil reserves.

[G/2003oc:] Rumors of a possible foreign takeover of YUKOS floated around for some time, as early as July 2003, Washington Post reported that government involvement in YUKOS might be connected to its possible purchase by Shell.[12] We can put aside Shell rumors as speculation, but ExxonMobil takeover was a serious business venture. What did this mean for Russia? YUKOS was Russia’s biggest oil company, pumping out around twenty-percent of the country’s oil. If an American company acquired YUKOS, it would mean that Russia’s biggest bargaining chip and the principal player in the Russian economy was now in control of a rival superpower. Some would argue that Russia lost its superpower status after the Cold War, however, this is still a tough argument to make, considering the size of Russian territory, oil reserves and other natural resources. Russian nuclear arsenal also makes it difficult to ignore Russia as a major player on the world scene.

Putin considers oil as one for the so-called “natural monopolies” that have a significant affect on Russian economy. Control of one of these “natural monopolies” by a foreign super-power must have raised grave concerns in the Kremlin. This concern was further elevated when one takes into account the fact that Russia’s fourth largest oil company, TNK-Sidanko was owned by BP-Amoco since December 2002. Oil privatization also ran contrary to government centralization drive in the field of energy that was exemplified in the case of Gazprom, a government natural gas monopoly.

American observers viewed centralization of Russian energy sector with concern. “The U.S. has a strategic interest in maintaining a robust Russian private sector, especially in energy. Private sector both disperses political power and drives economic growth…There are broader strategic implications as well; If Russia successfully implements a large, privately driven ptpt project, it will demonstrate yet again that the OPEC model of State-owned oil production is anachronistic and should be replaced by private ownership,” wrote the Heritage Foundation, commenting on Russian government’s resistance to private ptpt~.[13]

This is an obvious contrast of national priorities. When Americans write about “dispersal of political power” through privatization, it runs contrary to Putin’s accumulation of political power that was evident in his millenium speech. Another issue that Americans fail to mention, is America’s status as oil importer. It is advantageous for the U.S. to have private oil companies, especially ones controlled by the U.S. companies, as they will ensure the best possible energy solution for the U.S. Russia is an oil exporter and its priorities in the energy sector differ drastically from those of the U.S. It is in Russia’s interest to have tight control over the oil industry. A firm grip ensures that revenue is used for the benefit of all the Russian people, or at least oil companies are held socially responsible. As was mentioned earlier, government control of natural resources also benefits state foreign policy. So an argument that privatization of Russian energy sector is the only progressive option is only valid from an American perspective.

Putin’s handling of the YUKOS case leads us to conclude that he considers Russia’s natural resources as a tool for foreign policy, and more importantly as a medium through which he can institute domestic reforms. Prosecutor’s accusations against Khodorkovsky tend to focus on his control over YUKOS, rather than his personal misconduct. If Putin was trying to set an example of the rule of law, it would have made more sense to make Khodorkovsky’s acquisition of YUKOS the key issue. Instead, chief accusation against YUKOS deal with the company’s tax evasion that is measured on such a scale that Khodorkovsky has little choice but to transfer control of the company to the government. But before we get too far ahead of ourselves, let’s trace the YUKOS affair from the beginning.

It was already cited that Russian government arrested Platon Lebed, one of the key YUKOS figures, and carried out a number of raids/searches on various YUKOS offices. 25 October 2003, Khodorkovsky himself was arrested at gunpoint on a SBRn airfield, as expected, his arrest triggered a variety of reactions from utter dismay in the Russian business sector, to strong approval from several government members. People opposed to Khodorkovsky’s detainment accused Putin of crossing the line and using his power to crackdown on political rivals. “In this way, government showed us that in this country you can do anything you want, with whom you want, and if the freedom of a large businessman, the executive of the country’s largest company, can be taken away at any moment, than there is no guarantee that private property of citizens and companies will be safe,” weighted in Sergei Aleksashenko, former number two at Russia’s Central Bank, and current executive at Interros holding company. Former tax minister and a member on the board of directors of Gazprom, Boris Fedotov, saw nothing sinister in Khodorkovsky’s incarceration: “I welcome these actions and see nothing bad in the investigation of tax fraud that was widespread in the business world.”

Few had the objectivity, or the insight to spot the arrest for what it really was, a power move by the government to gain control of the country’s natural resources. Georgy Saratov, former advisor to the Russian President came close when he said that Khodorkovsky’s arrest was a “[S]howing of tendencies when bureaucracy and its most aggressive part are no longer satisfied with the bribes, they need the trees on which they [bribes] grow,” “Eggs are not enough, now they need the hens, the struggle is shaping over them.” Saratov was right to spot bureaucratic bid on YUKOS, however, the motives did not seem as sinister as he portrayed them. Putin does not come off as a man who is ot to stuff his pockets. He was a capable and an honest administrator under St. Petersburg mayor Anatoly Sobchak, and again under Boris Yeltsin, there is little reason to believe that greed was his motive in the YUKOS affair.[14] Reactions to Khodorkovsky’s arrest did not go without the usual comical twist of Vladimir Zhirinovski, who said: “I think that everybody who made more than a hundred million dollars, is a crook,” “a normal person in a normal economy can not earn such money in an honest fashion, all this had a criminal character and for this you must answer to the law.”[15] While funny, Zhirinovski’s statement makes one wonder if it is possible to make an honest hundred million dollars in Russia.

Foreign reaction was cautiously negative, the toughest response come from the U.S. State Department. “[This step] raises serious questions, dealing with the rule of law in Russia,” “We think that Russian authorities must remove doubts that YUKOS affair is politically motivated,” commented Richard Bayer, official spokesman of the State Department on 1 November 2003.[16] The next day, Igor Ivanov, Russian Foreign Minister, issued a rather strong response: “The U.S. is trying to put doubt on actions of judicial institutions. This is an interference in judicial actions of another country, that is unacceptable and can not be in normal conditions of a democratic society,” fired back Ivanov on Rossiya TV channel. He went on to accuse the U.S. of using double standards as the U.S. just went through a number of high profile corporate corruption cases.[17]

Ivanov’s comparison of Enron and WorldComm to YUKOS was rather loose because American judiciary system is not as dependent on the executive branch as is the case in Russia, although, Ivanov was right to point to American interference in Russia’s internal affairs. The motives behind Khodorkovsky’s arrest might have been questionable, but his guilt in financial machinations was just as solid as those of Enron executives who got a slap on the wrist after defrauding the public of hundreds of millions of dollars. Some might say that Enron case was a bigger farce since top executives had close ties to President Bush.

Russian population was not as concerned about the YUKOS affair, an expected reaction, given a strong dislike for the oligarchs among ordinary Russians. Russian people did not take kindly to oligarchs who managed to “earn” millions of dollars through shady schemes and were now flying in their private jets while the average Russian struggled to make ends meet. In the 5 November poll, fifty four percent rated Khodorkovsky’s arrest in positive terms and only thirteen percent had a negative reaction. The same poll revealed that twenty eight percent thought Khodorkovsky was arrested due to his unlawful actions, twenty four percent blamed YUKOS as a company, and lonely eleven percent saw Khodorkovsky’s political ambitions behind his arrest.[18] Poll results were not a surprise to Khodorkovsky himself. Back in his July 2003 interview, he mentioned that most of the public was behind Putin, “They deserve this, those oligarchs,” was Khodorkovsky’s prediction of the public response, and judging from the polls he was not too far off.

During his stay in prison, Khodorkovsky had some more time to ponder about the causes of such a negative public reaction towards the oligarchs, and in the fine Russian tradition, he wrote a prison article titled “Crisis of Russia’s Liberalism.” He later denied writing this piece but still confessed that he agreed with everything it said, so for argument’s sake, we will attribute the work to Khodorkovsky. The thrust of his argument condemned Russian liberals who abandoned the rest of the population in their quest for comforts. “It is their servility ingrained on the genetic level, their readiness to ignore the Constitution for the sake of another helping of sturgeon. Russian liberals have always been like that,” claimed Khodorkovsky. He also chastised Russian business interests for their failure to stand up for the people, although, he was quick to point out that liberal and business interests are not the same. To summarize, Khodorkovsky accused Russian leadership of abandoning the people and laying the foundation for the rise of Putin who was not liberal but at least he cared about the welfare of the average person. Khodorkovsky urged Russian liberals and businessman to get behind Putin, the only credible leadership force, and begin the process of rebuilding Russia.[19]

Khodorkovsky’s article made a lot of sense and seemed noble enough to have been written by Ghandi, unfortunately we must keep in mind that it was written in prison. Where were Khodorkovsky’s high-minded ideas and aspirations before? Khodorkovsky’s tone sounded too condescending, as he spoke of those greedy liberals elbowing each other to get the biggest piece of sturgeon, but did he not acquire YUKOS by illegal means and grew filthy rich as a result.

Putin kept quiet about the case, keeping in line with his earlier statements that this was a strictly judicial affair. His 2003 state of the nation address was surprisingly dull and made no reference to the YUKOS case. Putin spoke of steady progress in economic sector and identified existing problems including Chechnya, and the cumbersome bureaucracy. He promised to devote a lot of energy to the Army as it was the insurer of Russian power status in the world, and emphasized greater unity in the government because “Sometimes deputies who claim to be liberals and advocates of progressive economic theories in real life vote for bills that ruin the state budget. And they understand what they do. Those who shamelessly name businessman robbers and blood-suckers blatantly lobby for big companies.”[20] These were rather chilling remarks from a self-proclaimed supporter of democracy, but as we saw from Putin’s millenium address, true democracy was to play a secondary role in the unified national push for recovery.

Events following Khodorkovsky’s arrest left little room for doubt about Putin’s intentions of establishing a firm government control over YUKOS. 26 May 2004, Moscow court ruled that YUKOS owned more than ninety-nine billion rules (around three and a half billion dollars) to the Russian government. The ruling found YUKOS delinquent on counts of not paying around forty-eight billion rubles in taxes and issued fines and penalties to the tune of fifty-two and a half billion rubles.[21] As we can see, in this case the fines exceed the amount of tax owned, pointing to a rather clumsy attempt by the court to artificially raise YUKOS’s penalty. This was not an accident, or a bid to extract more money from the oil giant, the court ruling aimed to bankrupt YUKOS so as to allow the government to gain controlling share of the company.

Khodorkovsky, no doubt intuitively aware of government desires, fried back with a suggestion of a compromise. “If the government finds it necessary and interesting to save YUKOS from bankruptcy, than they can unfreeze the portion of YUKOS shares that belong to me and my partners. And than we are ready to voluntarily give them up to YUKOS management so they can pay off the company’s tax debt,” offered Khodorkovsky.[22] Some in the Russian government speculated that Khodorkovsky could cover YUKOS bill, by than the amount doubled to eight billion dollars, from his own pocket. Khodorkovsky was the wealthiest man in Russia and was likely to be worth several billion dollars but he must have understood the goal of the YUKOS affair. The government was not looking for fiscal responsibility, it had its sights on the company itself. If Khodorkovsky was to reveal the true extent of his wealth, prosecution was liable to arrest those accounts as delinquent, and Khodorkovsky would be left high and dry without YUKOS or money. “When a high ranking jurist like Russian General Prosecutor, Vladimir Ustinov, claims that I could pay YUKOS tax debt, artificially bloated to astronomical seven billion dollars, from my personal funds, than he suffers from a lack of qualified economic assistants,” said Khodorkovsky, putting situation in perspective.[23]

The dismantling of YUKOS began in October 2004 when Russian authorities announced that Yuganskneftgas, company that accounted for sixty percent of all YUKOS oil, was to be auctioned off at the starting price equal to the amount of YUKOS’s debt to the government. This was a rather low starting bid, considering independent German company, Dresdner Kleinwort Wasserstein, estimated YUKOS’s worth to be around fifteen to seventeen billion dollars.[24] Some might wonder whether the starting bid really matters if the company is sold at an auction.

Yes, YUKOS will be sold at an auction but there are a number of things to keep in mind. YUKOS affair showed that Russian government does not respect private property rights if they interfere with government policy, making Yuganskneftgas purchase a significant risk. Second, government was bound to place all kinds of restrictions on the manner in which the auction is to be conducted. So the starting price becomes a significant factor if we take into account that in the most likely scenario, the Russian government will purchase YUKOS through subsidiaries, or a government monopoly such as Gazprom. Basically, this is an easy way for the government to seize YUKOS. “Today few skeptics remain that Kremlin is not interested in YUKOS paying off taxes and staying a float. Authorities want to dismantle the company and seize its shares, beginning with Yuganskneftgas, the main subsidiary producer of YUKOS,” reported Financial Times on 16 November 2004.[25]

After the fog of initial speculations of political overtones faded away, Putin’s intentions became clear. Keeping true to his millenium goals, Putin is slowly enlisting the whole country in his drive to make Russia a modern country. This is evident from the YUKOS affair and his recent governmental reforms where the President will now appoint regional governors. Total centralization of Russian energy sector does not appear to be Putin’s goal. The goal is to subjugate the energy sector under tight government control.

A side note of the YUKOS affair is the Russian move away from American influence on Russian internal economic sphere. Earlier in the paper it was revealed that the YUKOS affair foiled a possible takeover of the company by American ExxonMobil. This move can be construed as Kremlin’s unwillingness to allow foreign investment in the Russian energy sector. However, in April and November 2004, Financial Times reported that Total, a French company, and Italian company ENI were holding talks with the Russian government on obtaining twenty five percent stake in Sibneft, and a large share package of other Russian oil companies.[26] These rumors suggest that this is an attempt by the Kremlin to limit American and British influence on Russia.

What are we to expect in the future? The YUKOS affair will probably end with Khodorkovsky’s release in early 2005 after paying a relatively light fine. YUKOS will be disbanded and sold off to government controlled institutions. Putin will continue with his power centralization attempts until the whole country is firmly under presidential control. The energy sector takeover will progress in the same fashion, as is evidenced from Kommersant article that suggested that other Russian oil companies are facing tax evasion charges.[27] Putin’s efforts are of such magnitude that they cast a shadow on the 2008 presidential elections. The scope and complexity of reforms demand a united effort on a prolonged time scale, leaving Putin few choices for 2008. He can change the Constitution and elect himself to a third term, or place one of his trusted associates in the presidential seat; either option excludes truly democratic elections in 2008. While Putin’s intentions for reform seem noble, there is no guarantee that a lesser man or a man with less benign intentions could not come to power in the overly centralized Kremlin.   

((

<>Cooper.OIL [ID] Intro (pp.1-12) =

On November 25, 2006, U.S. vice president Dick Cheney flew to Riyadh for talks with King Abdullah of Saudi Arabia, the elderly autocrat whose desert kingdom is home to one fifth of the world's proven oil reserves and is the largest producer within OPEC, the Organization of Petroleum Ex­ porting Countries, the oil producers' cartel. The king was evidently in need of reassurance from his American allies. Earlier in the month the U.S. war effort in Iraq had been dealt a setback after voters in midterm elections routed Republican incumbents and turned control of the Congress over to Democrats. Almost immediately, President George W Bush accepted the resignation of Cheney's partner in power Secretary of Defense Donald Rumsfeld, and offered "to find common ground" with critics of his admin­ istration's handling of the war. For the first time in six and a half years the talk in Washington was not of victory in Iraq but of an orderly withdrawal of coalition forces. The Saudis expressed concern that their neighbor and historic rival Iran would take advantage of the U.S. departure to assert its regional ambitions. Saudi Arabia's ambassador to Washington, Prince Turki al-Faisal, bluntly reminded the White House that "since America came into Iraq uninvited, it should not leave Iraq uninvited."

The price of oil also came up in the vice president's meeting with Saudi officials. Over the summer of 2006 world energy markets had tightened, driving prices to record levels. Soaring fuel prices threatened America's prosperity and the economies of its trading partners. Oil as high as $78 a barrel also posed a challenge to U.S. foreign policy in the Middle East, where oil producers reaped windfall profits. The Bush White House was especially concerned about what the government of Iran would do with its new billions. "Iran's profits from oil rose last year to more than $45 billion from $15 billion, surging at a rate not seen since 1974, when the country's oil revenues tripled," reported The New York Times. The surge in Iranian oil profits was accompanied by a marked upswing in regional tensions and violence that included a ferocious month-long war fought in Lebanon between Israel and Hezbollah, the Shi'a group whose leaders re­ ceived political cover and financial and military backing from Tehran. The prospect of President Mahmoud Ahmadinejad using his country's oil rev­ enues to speed up Iran's nuclear program, strengthen the Iranian military, and arm Hezbollah in Lebanon, the radical Hamas Islamic group based in Gaza, and pro-Iranian Shi'a militias in Iraq, was anathema to officials in Washington and Riyadh. The Saudi royal family had seen this before. Back in the 1970s Shah Mohammad Reza Pahlavi of Iran had been the driving force behind high oil prices that he hoped would transform Iran into an economic and military powerhouse. Only the 1979 Islamic Revolution had put paid to the Shah's ambitions to dominate the Persian Gulf, West Asia, and the Indian Ocean.

Although President Ahmadinejad would have never dared admit it, there were striking parallels between his effort to project Iranian petropower under the guise of pan-Islamism, and the Shah's earlier drive to revive Iran's long dormant Persian aspirations. Their strategic visions overlapped in ways that suggested some striking continuities. Both leaders saw Iran as the regional hegemon. They identified oil revenues and nuclear power as the keys to attaiuing international stature and domestic self-reliance. They relished provoking the same Western powers that at one time had treated Iran like a colonial vassal. Perhaps their most obvious shared trait was a King Midas complex. Like the Shah, Ahmadinejad was a big spender who believed that high oil prices freed him from the need to practice fiscal restraint. "Critics said that his plans for generous spending to create jobs and increase salaries were politically motivated and fiscally unsound," noted one observer. "His budget relied on high oil profits likely to invite infla­ tion." The Iranian central bank proposed a $40 billion fiscal stimulus that included subsidies for families and newlyweds.

Ahmadinejad's spendthrift ways presented King Abdullah of Saudi Arabia with a golden opportunity. With petroleum responsible for 80 percent of income from exports, Iran's economy was perilously exposed to an un­ expected price fluctuation in the oil markets. Tehran confidently expected consumer demand for oil to stay high, guaranteeing equally high prices. But what would happen to Iran's budget assumptions if oil prices suddenly plunged? Oil-producing countries base their spending plans and financial estimates on oil prices not falling below a certain threshold. If prices do sud­ denly plunge below that level-and if producers have not left themselves with enough of a financial cushion to absorb the blow from lost export receipts-the potential exists for a fiscal meltdown. Billions of dollars in an­ ticipated revenue would disappear. Tehran would be forced to economize and decide whether to spend money on guns or butter-whether to lavish aid on Hezbollah and Hamas or to prop up the complex system of food, fuel, housing, and transportation subsidies that keeps Iran's middle class in check. Removing the subsidies would increase the potential for protests and clashes between security forces and opposition groups.

Only one country had the means and the motive to engineer a price cor­ rection on that scale. With its giant petroleum reserves and untapped pro­ duction capacity, Saudi Arabia could flood the market by pumping enough surplus crude into the system to break the pricing structure and drive prices back down. The Saudi royal family has always understood that petropower is about more than creating wealth, developing its economy, and preserving power. Oil is also the Saudis' primary weapon of national self-defense and the key to their security and survival. Flooding the market is economic war­ fare on a grand scale, the oil industry's equivalent of dropping the bomb on a rival. A flooded market and lower prices would inevitably result in billions of dollars in lost revenues to the Saudis. However, the threat from Ira!) was seen as outweighing that loss, and by late 2006 King Abdullah was prepared to tap Saudi oil reserves.

"A member of the Saudi royal family with knowledge of the discus­ sions between Mr. Cheney and King Abdullah said the king had presented Mr. Cheney with a plan to raise oil production to force down the price, in hopes of causing economic turmoil for Iran without becoming directly involved in a confrontation," reported The New York Times. Flooding the market would "force [Iran] to slow the flow of funds to Hezbollah in Leba­ non and to Shiite militias in Iraq without getting directly involved in a con­ frontation." The Saudis may also have had in mind a second motive. From past experience they knew that if oil prices stayed too high for too long, the United States would be forced to reduce its consumption of foreign oil and take steps to encourage energy conservation and diversification. Less reli­ ance on Saudi oil would translate into a reduction in Saudi strategic lever­ age over U.S. policy toward Israel and the Middle East.

On November 29, 2006, four days after Cheney's return to Washington, The Washington Post published an essay by Nawaf Obaid, a prominent se­ curity adviser to the Saudi government and adjunct fellow at Washington's Center for Strategic and International Studies. Obaid's article warned that one of the consequences of a sudden U.S. withdrawal from Iraq would be "massive Saudi intervention to stop Iranian-backed Shiite militias from butchering Iraqi Sunnis." Obaid reminded his readers that "as the eco­ nomic powerhouse of the Middle East, the birthplace of Islam and the de facto leader of the world's Sunni community (which comprises 85 percent of Muslims), Saudi Arabia has both the means and religious responsibility to intervene." Buried in Obaid's article was a chilling threat that officials back in Tehran could not have failed to miss:

Finally, Abdullah may decide to strangle Iranian funding of the militias through oil policy. If Saudi Arabia boosted production and cut the price of oil in half, the kingdom could still finance its current spending. But it would be devastating to Iran, which is facing economic difficulties even with today's high prices. The result would be to limit Tehran's ability to continue funneling hundreds of millions each year to Shiite militias in Iraq and elsewhere.

Obaid's article drew my attention because for several months I had already been studying the impact of an earlier little known and less under­ stood intervention by the Saudis in the oil market. In 1977, one year before the outbreak of revolutionary unrest in Iran, oil markets had been para­ lyzed by a bitter split among members of OPEC over how much to charge consumers. The Shah of Iran had proposed a 15 percent price hike for the coming year. King Khalid of Saudi Arabia had resisted the Shah's entreaties and argued that no price increase was warranted at a time when Western economies were mired in recession. The Shah won the day and persuaded the rest of OPEC to join him in adopting a double-digit price increase for 1977. The Saudi response was swift and ruthless. Riyadh announced it would take drastic steps to ensure that Iran's new price regime never took effect. It would do this by exceeding its production quota, pumping surplus oil onto the market, and undercutting the higher price offered by its competitors. Overnight, Iran lost billions of dollars in anticipated oil revenue. The Shah's government, reeling from the blow, was forced to take out a bridge loan from foreign banks. It made deep cuts to domestic spending in an attempt to balance the books and implemented an austerity plan that threw tens of thousands of young Iranian men out of work and into the streets. The economic chaos that ensued helped turn Iranian public opinion against the royal family.

Thirty years later, all the indications were that Saudi Arabia was pre­ pared to replicate its earlier feat. There is still much that we don't know about U.S.-Saudi efforts to destabilize Iran's economy during President Bush's last two years in office. 'What we do know is that the Saudi govern­ ment publicly reacted to the uproar over Nawaf Obaid's article by formally severing its ties with the consultant. Diplomatic observers in Washington understood that this was part of a much bigger game. "[Obaid] is widely expected to return to the government in some capacity," noted one expert. "The Saudi government disavowed Mr. Obaid's column, and Prince Turki canceled his contract," reported The New York Times. "But Arab diplomats said Tuesday that Mr. Obaid's column reflected the view of the Saudi gov­ ernment, which has made clear its opposition to an American pullout from Iraq." Then, one week later, Saudi Arabia's ambassador to Washington, Prince Turki, lost his job and was abruptly summoned home.

'What was going on here? 'What message was King Abdullah trying to send Tehran and Washington? The best way to understand Saudi policy and what happened next is to follow the price of oil over the next two years. Saudi Arabia's budget for 2007 was reportedly based on oil prices not fall­ ing below $42 a barrel and production of 9 million barrels a day. By the summer of 2007, despite efforts to restrain their momentum, prices had returned to their earlier peak from a year before of $78. Publicly at least, OPEC members pledged not to allow oil to surpass $80 a barrel. Yet by the end of November 2007 the price of a barrel of oil had rocketed to $98. InJanuary 2008, President Bush personally appealed to King Abdullah to practice price restraint-the U.S. economy was beginning to show signs of buckling under the strain of high oil prices, mortgage foreclosures, credit defaults, and shaky banks.

The Saudis, eager to reel in Ahmadinejad, opened the spigots and ex­ ceeded their OPEC production quota by 250,000 barrels a day. It turned out not to be enough. The Saudis cranked up their production yet again, this time from 9.2 million barrels a day to 9.7 million barrels. The price of a barrel of oil broke the $100 ceiling in April, $118 in Mav. and finally topped out at $147.27 in July. Prices then fell sharply as Saudi oil flooded the system even as the U.S. economy sharply contracted. By September, when oil had retreated in price to $107 a barrel, it was the turn of President Ahmadinejad to display anxiety.The Iranians had wrongly assumed that the price of oil would not fall below $90 a barrel. They appealed to the Saudis to hold the line on prices. King Abdullah responded by keeping the spigots open and collapsing OPEC's pricing structure. By December, the price of oil had retreated to $43 a barrel. Satisfied, the Saudis reduced output to 8.5 million barrels a day.When prices plunged to $33 in January 2009, the Sau­ dis cut production still further, this time to 8 million barrels. The Iranian regime entered a crucial presidential election year having sustained a devas­ tating reversal of economic fortune. The fraudulent outcome of its midyear election was accompanied by economic contraction and the worst political unrest since the fall of the Shah three decades earlier.

In the meantime I had located documents that revealed that President Gerald Ford and top White House officials had been closely involved in the first Saudi effort to flood the market in 1977. The documents raised the puzzling question of why the United States would back a covert effort to manipulate oil markets knowillg it would damage Iran's economy and hurt its close ally the Shah. Presidents Richard Nixon and Ford each hosted the Shah at the White House, praised him as a statesman and friend, and fur­ nished him with advanced weapons systems, thousands of military advisers, and even offered to sell Iran nuclear reactors. The documents raised the prospect of a secret crisis in relations at the highest levels, and that previ­ ously unknown tensions had led to a high-stakes showdown over oil prices and the long-term future of the• OPEC cartel. As I wrote in the October 2008 Middle East Journal:

While much scholarly focus has been on the internal political, cul­tural, economic and social origins of the revolution, the role of state finances-and oil revenues in particular-has received far less atten­ tion. The Iranian revolution shared similarities with two other great revolutions: France in 1789 and Russia in 1917. All three upheavals were preceded by fiscal crises. In Iran's case the dramatic revenue fluctuations of 1977 were acknowledged and duly noted at the time by Tehran-based foreign correspondents. But the underlying rationale for Saudi Arabia's decision to torpedo the December 1976 OPEC oil price increase, and particularly the Ford administration's role in that fateful decision, has not been explained until now.

My search for understanding uncovered a hidden history of U.S.­ Iran-Saudi oil diplomacy from 1969 to 1977, the backstory of the crucial eight-year period when the United States went from being the world's number one oil producer to the biggest importer of petroleum, and when Saudi Arabia's House of Saud replaced Iran's Pahlavi king as Washington's indispensable ally in the Persian Gulf. Here, finally, is the inside story of how two American presidents, Richard Nixon and Gerald Ford, dealt with Iran and Saudi Arabia as they grappled with the challenges of America's growing dependence on foreign sources of energy, how Nixon's handling of U.S.-lran relations in particular during the energy crisis of the early 1970s set the scene for a potentially catastrophic financial crisis in the waning days of Ford's administration, and why Ford eventually felt he had no choice but to throw his support behind a remarkable plan to break the power of OPEC with the help of the Saudis.

My book makes clear that the U.S.-Saudi oil coup directed against the Shah's leadership of OPEC was not a conspiracy intended to topple him from Iran's Peacock Throne. Revolutions are highly complex phenomena that cannot be simplified in conspiratorial terms or explained simply by one or two trigger causes. Yet there is no denying that the U.S. decision to break OPEC caused significant problems for the Shah, and at the worst possible time. It dealt a severe psychological blow to him by undermining his stature as OPEC's leader and creating a perception of political weakness at home and abroad. It signaled a loss of control by the Shah over Iran's primary source of state revenue. And it shook the foundations of Iran's troubled economy just as domestic unrest against the Shah was beginning to crest. U.S.-Saudi collusion to break OPEC from the inside and deliver it into Saudi hands turned out to be a disaster for U.S. interests. Although not wholly to blame for the economic chaos that engulfed Iran on the eve of the revolution, the U.S.-Saudi oil coup against OPEC intensified and ac­ celerated the process of collapse in Iran.

The Oil Kings is a multilayered narrative written through the prism of U.S. oil policy. The book can be interpreted in different ways: as a parable on the corrupting influence of oil on America's national security policy; as a lesson in the limits of American power in the wake of the retreat from Viet­ nam, the Watergate scandal, and the energy crisis of the 1970s; as a contest of personalities such as Nixon, the Shah, Sheikh Ahmed Zaki al-Yamani of Saudi Arabia, Secretary of State Henry Kissinger, Secretary of Treasury William E. Simon, and defense secretaries James Schlesinger and Donald Rumsfeld; as an autopsy on empire, in this case Iran's Pahlavi dynasty, and how the fortunes of the Persian crown rose and fell with the oil market; as the triumph of nationalism in settling scores between old rivals Iran and Saudi Arabia; and as a cautionary tale of what happened between friends oflong standing and to old alliances when the geopolitics of the Cold War collided with the reality of the oil market and the global economy, whose rough outline was only just beginning to take shape in the mid-1970s. It is a narrative that internationalizes U.S.-Iran relations and Iran's revolution by placing bilateral and internal events in a strategic and geopolitical context outside the boundaries of the Persian Gulf. I found it impossible to address tensions between the United States and Iran over oil prices without also taking into consideration events in faraway Great Britain, France, Portugal, Italy, Spain, and Canada. How these events affected bilateral relations be­ tween Washington and Tehran will no doubt be debated for a long time to come by scholars in the field.

The narrative includes stories told for the first time, that, for example, illustrate the extraordinary degree of Iranian involvement-not to men­ tion outright manipulation-in U.S. politics and foreign policy in the 1970s, and the extent to which the tentacles of the oil states of the Middle East reached right into the Oval Office to influence presidential decision making to an astonishing degree on domestic and foreign policy. We now know that the U.S. response to the 1971 India-Pakistan War, the 1972 U.S. presidential election, the Arab-Israeli War of 1973, the 1973-74 Arab oil embargo, the 1974-75 oil shock, the 1975 Middle East peace shuttle, and the 1976 U.S. presidential election all had an Iranian component. This book provides answers to long-standing questions about U.S.-Iran military contingency planning, the Ibex spy project, Iran's nascent nuclear program, and the mysterious dealings of Colonel Richard Hallock. It settles debates over the nature of the secret deals worked out between President Nixon and the Shah regarding oil prices and arms sales, the extent to which White House officials were aware of the terrorist threat to U.S. nationals in Iran, awareness of the rising opposition to the Shah from his own people, and whether anyone in the White House had any prior knowledge of the Shah's secret treatments for the cancer that eventually took his life.

Secretary of State Henry Kissinger once famously described the Shah of Iran as "that rarest of leaders, an unconditional ally, and one whose under­ standing of the world enhanced our own." For thirty years, we have had to take Kissinger's word for it. In the 1970s he concluded an array of highly secret deals with the Shah worth billions of dollars involving the transfer of men, money, and machinery on a scale that even today is almost unimagina­ ble. Where exactly did all that national treasure go? How was it expended? In three volumes of memoirs totaling 3,955 pages and including 193 pho­ tographs of the former secretary of state with every world leader, foreign minister, and ambassador of note except the Shah of Iran in the 1970s, one wonders why Kissinger was photographed with a flock of geese in China but not pictured in the company of the man he claimed to so admire?

His books tell us nothing of substance about the intimate workings of his remarkable relationship with Shah Mohammad Reza Pahlavi. As an example, Kissinger devotes only three sentences to a secret bilateral oil deal that is a major focus of the second half of my book. British author William Shawcross once observed that "readers who seek understanding of the [U.S.-Iran] debacle will not find it in Kissinger's memoirs any more than in Nixon's before him. Indeed, the way in which the two men treat Iran shows how terribly inadequate autobiographies can be as points of reference, let alone accounts of history. . . .This skimpy treatment can be explained only by a desire to conceal." Kissinger was not alone. As Shawcross notes, Nixon made only two brief references to the Shah in his autobiography, precisely two more than his successor, Gerald Ford, in his autobiography. Richard Helms, the man who represented their interests as U.S. ambassador in Teh­ ran, wrote a memoir that is a masterpiece of dissembling and obfuscation. I wondered: if the Shah was worth defending, why was he not worth talking about?

My book utilizes the declassified meeting notes of General Brent Scow­ croft, Kissinger's deputy and eventual successor to the post of national security adviser. Scowcroft attended every meeting of importance in the White House that pertained to oil, Iran, and Saudi Arabia during the pe­ riod from late 1973 to the end of January 1977. I also drew on the declas­ sified transcripts of Kissinger's White House telephone conversations; the translated diaries of the Shah's senior adviser, Imperial Court Minister Amir Asadollah Alam; the diaries of former chairman of the U.S. Federal Reserve Arthur Burns; thousands of pages of declassified cables, policy briefs, and memoranda from the State Department, the Defense Department, the CIA, the National Security Council, and the Federal Energy Administra­ tion; Nixon's and Ford's personal correspondence with foreign heads of state including the Iranian and Saudi monarchs; approximately sixty bound volumes containing more than one thousand newspaper and magazine artered on the edge of a double-dip recession as govermnents in Europe slid toward insolvency. It is a scenario that may sound familiar today.

To paraphrase the great historian Barbara Tuchman, America's tortured relations with the oil producers of the Persian Gulf have to date been one long march of folly. As we enter the second decade of the twenty-first century, more and more it is a march that is beginning to feel forced. The United States now imports almost two thirds of its oil from overseas and has gone to war twice in less than fifteen years to secure its Persian Gulf oil lifeline. "I am saddened that it is politically inconvenient to acknowledge what everyone knows: the war in Iraq is about oil," Alan Greenspan wrote with admirable frankness in his memoir. He continued:

Thus, projections of world oil supply and demand that do not note the highly precarious environment of the Middle East are avoiding the eight-hundred-pound gorilla that could bring world economic growth to a halt. I do not pretend to know how or whether the turmoil in the Middle East will be resolved. I do know that the future of the l\!liddle East is a most important consideration in any long-term energy forecast. . . . Until industrial economies disengage themselves from, as President George W. Bush put it, "our addiction to oil," the stability of the industrial economies and hence the global economy will remain at risk.

The American economy's chronic addiction to cheap oil is obvious. Less well known is the story of when that addiction began and why the United States became so reliant in particular on Saudi Arabia for its continued goodwill and cooperation. The same is true of America's toxic relationship with Iran. The two countries have been at each other's throats for so long now that it seems hard to believe they were ever allies-let alone partners in a secret contingency plan to invade Saudi Arabia and seize its oil wealth. Until these tensions are resolved, and until both countries come to terms with their complicated shared history, it seems inevitable that the tree of American-Iranian relations will bear poisoned fruit for many years to come.

The proud man at the center of the events in this book still looms large in our collective conscience. More than thirty years have passed since Shah Moharmnad Reza Pahlavi of Iran left the world stage as a stateless refugee. The story of his triumphant rise and equally spectacular fall is a cautionary tale for other statesmen seeking to emulate his achievements. The question is often asked: Where did it all go wrong for the Shah? There is no single turning point in his fortune, though a good place to start may be in the spring of 1969, when the Iranian king traveled to Washington to attend the funeral of former U.S. president Dwight Eisenhower. It was a trip that did not at the time appear to hold any great significance, either for the Shah or for his host, Richard Nixon, who had been president for just two months. Only now can we see that the Shah's trip was an important early signpost on the road leading to revolution.

A.S.C.
Piraeus, Greece, 2010

<>_The_Environment and World History|>EWH| EBy >Burke,Edmund,III and >Pomeranz,Kenneth [E-TXT] *2009:B.CA,UCP| ((ndr.sbk ecx nrg&plt wrl.hst| ToC=
Introduction : world history and environmental history / Kenneth Pomeranz
The big story : Human history, energy regimes, and the environment / Edmund Burke III
Toward a global system of property rights in land / John F. Richards
The transformation of the Middle Eastern environment, 1500 B.C.E.-2000 C.E. / Edmund Burke III
The transformation of China's environment, 1500-2000 / Kenneth Pomeranz
The Rhine as a world river / Mark Cioc
[...] Colonial rice frontiers and their environmental impact on the great river deltas of mainland Southeast Asia / Michael Adas
Beyond the colonial paradigm : African history and environmental history in large-scale perspective / William Beinart
Environmental histories of India : Of states, landscapes, and ecologies / Mahesh Rangarajan
Latin American environmental history : A shifting old/new field / Lise Sedrez
The predatory tribute-taking state: A framework for understanding Russian environmental history / Douglas R. Weiner
EWH examines how humans have shaped the global environment in ways that were previously unimaginable. EWH offers an overview of global environmental history throughout the past 500 years. Contributors examine connections between environmental change and other major aspects modern world history: population growth, commercialization, imperialism, industrialization, the fossil fuel revolution, ETC
))

<>Everest.OIL [ID] excerpts from its Introduction:4-17 Laying out the fabrication in USA of reasons to attack IRQ in 2003 =

Establishment agitation for war on Iraq and greater global empire began in the 1990s. The 1991 collapse of the Soviet Union was a geopolitical earthquake that suddenly left America the world's only imperial superpower. Officials in the George H.W. Bush admin­ istration began mapping out a "new world order" of unchallengeable U.S. global dominance which the 1991 "Desert Storm" war on Iraq, called by the Pentagon "a defining event in U.S. global leadership," was intended to initiate.

This vision was articulated most directly in the Defense Department's 1992 "Defense Planning Guidance." Written by Paul Wolfowitz, Lewis Libby and Zalmay Khalilzad under the direction of then-Defense Secretary Dick Cheney-all later top officials in the Bush II administration-the document argued that the U.S. should insure "that no rival superpower is allowed to emerge in Western Europe, Asia or the territory of the former Soviet Union" and that the United States remain the world's predominant power for the indefinite future. The Defense Guidance envisioned accomplishing these far-reaching objectives by preemptively attacking rivals or states seeking weapons of mass destruction, strengthening U.S. con­ trol of Persian Gulf oil, and refusing to allow international coalitions or law to inhibit U.S. freedom of action.

Yet over the next years it became clear that Desert Storm did not usher in the era of unchallenged U.S. supremacy that Washington hoped for-globally or in the Middle East. For various reasons, which we will explore in subsequent chapters, the 1992 Defense Guidance's vfaion was not fully implemented during the Bill Clinton years. In Iraq, Saddam Hussein remained in power, by the late 1990s Washington's strategy of strangulation pending regime change was unraveling, and the U.S. was facing the prospect of a serious setback in a region key to its global standing. These developments generated enormous frustration within the Clinton administration and outrage among former Reagan and Bush I officials and other powerful currents within the U.S. corporate-political elite, who believed that Clinton was squandering America's global predominance.

While out of office, the strategists of American predominance continued to elaborate and promote their global agenda-and call for more aggressive action against Iraq. Often working through right-wing think tanks, such as the American Enterprise Institute and the Washington Institute for Near East Policy, or prominent pub­ lications like the Wall Street Journal and the media monopolist Rupert Murdoch-funded Weekly Standard , they churned out a stream of com­ mentaries, strategy papers, articles, and books over the decade. In 1995, for example, Khalilzad wrote From Containment to Global Leadership, which amplified the theme of U.S. global hegemony.

In 1996, William Kristo!, former Vice President Dan Quayle's chief of staff and then-editor of the Weekly Standard, and Robert Kagan, another former Reagan official, published an influential article along the same lines in Foreign Affairs titled "Toward a Neo-Reaganite Foreign Policy." That same year, Richard Perle, another former high level Reagan official, along with Douglas Feith and David Wurmser, later officials in the Bush II Pentagon and State Department respec­ tively, produced a strategy paper for Israeli Likud Party leader Benjamin Netanyahu titled "A Clean Break: A New Strategy for Securing the Realm," which called for radically reshaping the Middle East and removing the Hussein regime in Iraq. Wolfowitz, meanwhile, opined in the Wall Street Journal that the U.S. needed to go beyond "containing" the Hussein regime, and the 2000 Republican party platform called for "a comprehensive plan for the removal of Saddam Hussein."

As discussed below, many of these officials, pundits and strategists would work with the "Project for a New American Century," organized by Kristo! in 1997. Its stated mission was shaping "a new century favorable ro American principles and interests." In September 2000, it issued a major study titled "Rebuilding America's Defenses, Strategy, Forces and Resources For a New Century" whose contributors would read like a who's-who of the Bush II administra­ tion, including the authors of the 1992 Defense Guidance, Wolfowitz and Libby. "Rebuilding" expanded and updated the Guidance's themes and would become a template for the grand strat­ egy embarked on by the Bush II administration.

These strategists, some of whom are labeled neo-conservatives ("neocons") or neo-Reaganites, do not constitute an isolated fringe group, but represent the currently dominant thinking in the U.S. capitalist political establishment on how to deal with the potential opportunities as well as deep challenges confronting their system at home and abroad.

The "Humble" Empire Searches for an Excuse

George W. Bush's seizure of the U.S. presidency in 2000 brought those clamoring for more aggressive action against Iraq and for greater empire back into power. Bush II had campaigned on the promise of a more modest foreign policy: "If we're an arrogant nation, they'll resent us," he said. "If we're a humble nation but strong, they'll welcome us."12 It would tum out that "humble" was unrelated to his real intentions.

Bush II packed his administration with the strategists of more assertive and expansive empire. Dick Cheney became Vice President, with Libby his top assistant. Donald Rumsfeld was named Secretary of Defense, and he made Wolfowitz, Feith, and Stephen Cambone his top deputies, and appointed Richard Perle as chairman of the Defense Policy Board, a group of some 30 high-level ex-offi­ cials and strategists that advises the Pentagon. Khalilzad was made Special Assistant to the President for Near East, South West Asian, and North African Affairs, and would become U.S. emissary to the Iraqi opposition shortly before the war of 2003. Colin Powell, the Chairman of the Joint Chiefs of Staff under Bush, Sr., became Secretary of State.

As soon as his administration took the reins of power in January 2001, it began looking for ways to strike out more forcefully around the world-including against Iraq. The sequence of events shows that Sept. 11 would become the catalyst and opportunity to realize these strategic objectives, long in the works. More than eight months earli­ er, half of Bush, Jr.'s first national security meeting was spent on Iraq and the Persian Gulf.13 Shortly before, the Wall Street Journal had called reversing "the slide in the Western position against Iraq" Washington's most urgent foreign policy priority.14 At the Pentagon, Rumsfeld and Wolfowitz immediately began studying military options for ousting Hussein. IS Containment, in their view, was no longer an option. First, it was breaking down, and second and more important­ ly, their broader global agenda demanded regime change and a radical transformation of the Middle East status quo. Former Reagan official and Bush II supporter Kenneth Adelman spoke to the global, tone­ setting considerations of U.S. actions against the Hussein govern­ ment: "Ideally, the first crisis would be something with Iraq. It would be a way to make the point that it's a new world."

The new administration also stepped up efforts to link the Hussein regime to al Qaeda-months before Sept. 11, 2001. U.S. intelligence had been attempting to find such a link since the first World Trade Center bombing in 1993, yet according to both The New York Times and the Wall Street Journal, nothing had turned up. Now, in early 2001, the attempt began afresh. The Wall Street Journal reported: "when the Bush administration took office in 2001, officials at the Pentagon immediately began peppering intelligence agencies with requests for studies on Baghdad's links to terrorism. At a meeting of senior administratioµ officials in April 2001 to discuss al Qaeda, a top Defense Department official asked Mr. Clarke [the National Security Council's counter-terrorism coordinator] about whether Iraq had connections to Mr. bin Laden's group. Mr. Clarke said no, according to two people in the room."

In July 2001, the Wall Street Journal editorialized for "swift and serious measures to remove Saddam Hussein from power" 19 and reported that, "Senior officials have held almost weekly meetings on the issue to discuss whether to push for the [Hussein] government's ouster." In August 2001, the U.S. launched its most savage air attack on Iraq in six months.

The Washington Post reported that the week before Sept. 11, Cheney was "worried about the strength of our whole position in the Middle East-where we stood with the Saudis, the Turks and others in the region.

"The Pearl Harbor of the 21st Century"

Then came Sept. 11, 2001. Some five hours after hijacked jets crashed into the World Trade Center and then the Pentagon, Rumsfeld told an aide to begin drawing up plans for war-on Iraq. That afternoon the CIA concluded that it was "virtually certain" that the bin Laden network was responsible, not Iraq or other states,23 but Rumsfeld wanted to know if U.S. intelligence was also "good enough hit S.H. [Saddam Hussein] at same time. Not only UBL [OBL-Osama bin Laden]." His admonition: "Go massive. Sweep it all up. Things related and not."

Rumsfeld's orientation would encapsulate the U.S. govern­ ment's response. Sept. 11 triggered a kind of "big bang" in U.S. global policy. In the hours, days and weeks afterward, the Bush team con­ solidated a decade of geopolitical planning and debate into a new grand strategy and launched an unbounded "war on terror" to imple­ ment it, a war whose varied objectives rapidly expanded far beyond its designated Sept. 11 origins. And Iraq was a key initial target.

The Washington Post's Bob Woodward reports that beginning hours after the Sept. 11 attacks and continuing over the ensuing week, top Bush officials held a series of secret discussions to hammer out their response. Woodward's descriptions and, more importantly, the 2003 war on Iraq that ensued 18 months later, make clear that neither punishing those responsible for Sept. 11 nor preventing future attacks were the Bush team's central and overriding goal.

Instead, Bush and his "war cabinet"-which included Vice President Cheney, Defense Secretary Rumsfeld, National Security Advisor Condoleezza Rice, Secretary of State Colin Powell, CIA Director Tenet, and often Deputy Defense Secretary Paul Wolfowitz-worked to translate the shock and grief of Sept. 11 into a mandate for a broad, ongoing war for greater empire.

On the morning of Sept. 11 Bush had stated simply that the U.S. would "hunt down and punish those responsible for these cow­ ardly attacks." By the end of that day, however, the Bush II war cab­inet had decided to seize the moment to strike out against a variety of governments and anti-U.S. political forces and to embark on their larger global agenda.

On the evening of Sept. 11 Bush addressed the country. While drafting the speech, he and Rice decided to include a declaration targeting states, not just those responsible for that day's attacks. She argued, "First words matter more than almost anything else." Bush agreed: "We've got to get it out there now." So that night Bush declared: "We will make no distinction between the terrorists who committed these acts and those who harbor them." The Washington Post noted, "The declaration was a huge step for the administra­tion...What he outlined that night from the Oval Office committed the United States to a broad, vigorous and potentially long war against terrorism, rather than a targeted retaliatory strike."

The Bush leadership felt the need to respond to Sept. 11 with a vengeance in order to graphically demonstrate U.S. will and "cred­ibility," because its standing around the world is based largely on its military might and demonstrated willingness to use it. These had been challenged on Sept. 11. There is a strong possibility that the attacks were aimed at America's presence and actions in the Middle East, as Christopher Layne put it in the Los Angeles Times: "Al Qaeda's actions were coolly calculated to achieve well-defined geopolitical objectives: the removal of the U.S. military presence from the Persian Gulf (and in particular from Saudi Arabia) and an alteration of the U.S. stance in the Israeli-Palestinian conflict. In other words, Al Qaeda's goal was to undermine U.S. hegemony."27 As Bush said later, he wanted to show "the world that there had been a fundamental change in U.S. policy."

Responding with overwhelming violence (first on Afghanistan, later on Iraq) was inextricably linked with Washington's broader global agenda, which called for employing American military pre­dominance to forcibly recast global economic, political and military relations. Rice, who would draft the official version of this new grand strategy, later spelled out the Bush regime's view of the post­ Sept. 11 mix of necessity and opportunity, which was grounded in a decade of geopolitical strategizing:

[A]n earthquake of the magnitude of 9/11 can shift the tectonic plates of international politics .... The international sys tern has been in flux since the collapse of Soviet power. Now it is possible-indeed probable-that that transition is coming to an end. If that is right, then...this is a period not just of grave danger, but of enormous opportunity...to create a new balance of power that favored fteedom.

Bush and company discussed the need to act quickly "to capi­ talize on international outrage about the terrorist attack."30 They realized the attacks gave them a once-in-a-lifetime political oppor­ tunity to act forcefully to "shift the tectonic plates" of global power. One top Bush official who wished to remain anonymous told the New Yorker's Nicholas Lemann, Sept. 11 was a "transformative moment" not because it "revealed the existence of a threat of which officials had previously been unaware," but because it "drastically reduced the American public's usual resistance to American military involvement overseas, at least for a while ... Now that the United States has been attacked, the options are much broader. "

On the morning of September 12, Bush again escalated his rhetoric: the attacks "were more than acts of terror. They were acts of war."32 On September 20, 2001, in an address before a joint ses­ sion of Congress, Bush pushed the envelope further still by commit­ ting the U.S. to an ongoing "war on terror" against "every terrorist group of global reach," and "any nation that continues to harbor or support terrorism." He then issued an ultimatum to the Taliban gov­ ernment of Afghanistan, where Al Qaeda had a base of operations. The U.S. initiated war on Afghanistan October 7, 2001.

The Worldwide Attack Matrix Reloaded

By this time, Bush had already signed a top-secret "Worldwide Attack Matrix" mandating covert counter-insurgency operations in 80 different countries. The Washington Post commented that the plan "would give the CIA the broadest and most lethal authority in its history."34 Bush didn't define "tettorism" in his address to Congress, and his administration has rarely done so publicly in order to maximize its freedom to apply the term to whomever it sees fit, whether Palestinian fighters, Islamic fundamentalists, radical nationalists, Maoist guettillas, states standing in the way of U.S. designs, or even Iraqis resisting the invasion and occupation of their own country.

In his address to Congress on September 20, 2001, Bush's only reference to Iraq was a brief mention of the 1991 Gulf War. It has since been revealed that his war cabinet had already been debating whether to immediately attack Iraq for over a week, and Bush had already directed the Pentagon to begin initial war planning.

These discussions began on September 12, 2001, the morning after the attacks. According to the Washington Post, they centered on whether to "take advantage of the opportunity offered by the ter­ rorist attacks to go after Hussein immediately."35 Bush's top advisors reportedly agreed in principle, but there were differences over tim­ ing.

On September 17, 2001, after six days of debate, the Bush team decided not to strike Iraq-yet. The enormity of their emerging agenda demanded a step-by-step approach, and according to the Washington Post, they felt they would "need successes early in any war to maintain domestic and international support." As Bush told Woodward, "[I]f we could prove that we could be successful in this theater [Afghanistan], then the rest of the task would be easier. If we tried to do too many things-two things, for example, or three things-militarily, then...the lack of focus would have been a huge risk." That day Bush signed secret orders authorizing war on Afghanistan and instructing the Pentagon to begin planning for bat­tle in lraq.

Bush also told the Washington Post that he wanted to make sure that the U.S. Iraq policy was not shaped by a desire to finish what his father hadn't, or, even more importantly, by the approach taken by his father's administration (explored in chapter 5): "one of the things I wasn't going to allow to happen is, that we weren't going to let their previous experience in this theater dictate a rational course for the new war." Here, we can probably take Bush at his word: in his view he had much bigger fish to fty-a global empire to extend­ and doing so meant breaking with significant aspects of the Bush, Sr. strategic vision.

Creating Pretexts at Hawk Central

As these discussions were going on within the administration, advocates of war on Iraq and greater global hegemony, in and out of government, began a concerted campaign-publicly and behind the scenes-to make sure that Iraq was indeed targeted in phase two of the war on terror. This campaign was not predicated on Iraqi involvement in Sept. 11, but on the geopolitics of global domi­nance.

The Pentagon became "hawk central" and kicked off the drive for war just eight days after the Twin Towers collapsed, with a September 19-20 meeting of the Defense Policy Board. The New York Times reported that the Board met behind closed doors "for 19 hours to discuss the ramifications of the attacks of Sept. 11. The members of the group agreed on the need to tum to Iraq as soon as the initial phase of the war against Afghanistan and Mr. bin Laden and his organization is over."

Following the meeting, these war plotters dispatched former CIA chief James Woolsey to London on "a mission," the New York Times reported, to gather "evidence" linking Hussein to the September 11 attacks. Woolsey then began raising various charges against Iraq: that Iraqi agents met with Mohammed Atta, the alleged "ringleader" of the September 11 attacks; that Iraq provided fake passports for all 19 hijackers; that an Al Qaeda member trav­ eled to Baghdad in 1998 to celebrate Saddam Hussein's birthday; that Iraq trained Al Qaeda members; and that Iraq was linked to anthrax mailed to U.S. Senators in October 2001. There was no real proof for any of these charges, as detailed in the appendix here-in fact it later turned out that the most likely source for the anthrax let­ ters was someone associated with the U.S. military.41 Yet these charges were widely repeated in the mainstream U.S. media nonetheless.

The day the meeting concluded, just nine days after Sept. 11, Defense Policy Board members and other prominent right-wingers, including columnists Kristal and Charles Krauthammer, drafted an open letter to Bush arguing, "Even if evidence does not link Iraq directly to the [September 11] attack, any strategy aiming at the eradication of terrorism and its sponsors must include a determined effort to remove Saddam Hussein from power in Iraq. Failure to undertake such an effort will constitute an early and perhaps deci­sive surrender in the war on international terrorism." (emphasis added)

Deciding on War: By November 2001

The "attack Iraq" drumbeat continued over the next months, and the quick U.S. victory in Afghanistan further emboldened hawks in the Bush administration. One official told the Wall Street Journal, "the idea of waging a similar small war in Iraq 'stopped look­ ing unthinkable. "' David Frum, the former White House speech writer who coined the phrase "axis of evil" and authored The Right M an: The Surprise Presidency of George W. Bush, described the arro­ gance surging through the corridors of power: "If a few hundred men and a few dozen planes could overthrow the Taliban, what might ten thousand men and a few hundred planes do in Iraq? Or a hundred thousand men and a thousand planes do to the whole Gulf? It sud­ denly seemed that American power could do anything.

By late October or early November 2001, some seven weeks after Sept. 11, the Bush war cabinet secretly decided to move against the Hussein regime, according to reports in the Wall Street Journal, USA Today, and the New Republic. By then, the Taliban had been defeated in Afghanistan and Vice President Cheney, who the Wall Street Journal reported had become Bush's "war counselor," had joined Rumsfeld and Wolfowitz in urging war on lraq.

In December 2001, the New Republic noted that after late October 2001 the debate within the Administration was no longer over "whether to extend the war to Iraq-that question has largely been settled."46 On September 12, 2002, USA Today reported, President Bush's determination to oust Iraq's Saddam Hussein by military force if necessary was set last fall.... He decided that Saddam must go more than 10 months ago; the debate within the administration since then has been about the means to accomplish that .... The course advocated by Rumsfeld and Cheney became policy, despite concerns by Powell and oth­ ers... But whatever the response, aides say the president's determination to oust Saddam-the decision he made in the seven weeks following the attacks on Sept. 11-hasn't wavered.

The Washington Post and Time magazine paint a similar picture, but report that the decision to wage war probably came in the spring of 2002. According to the Washington Post: "Then, in April, Bush approached Rice. It was time to figure out 'what we are doing about Iraq,' he told her, setting in motion a series of meetings by the prin­ cipals and their deputies. 'I made up my mind that Saddam needs to go,' Bush hinted to a British reporter at the time."

It may be impossible at this moment to precisely trace the evo­lution of the decision to go to war because, as USA Today reports, it was very closely held and made "without a formal decision-making meeting or the intelligence assessment that customarily precedes such a momentous decision"-and hence without the paper-trail and possibility of leaks that accompanies the process.

However, given other administration actions, it seems most likely that by late October or early November 2001 the Bush admin­ istration had decided to move against Iraq in phase 2 of its "war on terror." Bush's January 2002 State of the Union speech targeted Iraq as part of an "axis of evil," and early in 2002 Bush directed the CIA to: step up its financial, military and organizational support for anti­ Hussein forces; increase intelligence gathering in Iraq; and plan for the possible use of the CIA and U.S. Special Forces to track down, capture or kill Saddam Hussein.

The meetings and decisions which reportedly took place in April 2002 may well have decided upon a massive assault, as opposed to other means of removing Hussein, or choosing between specific military options. In either case, the choice for war was made months before the U.S. attempted to legitimize its decision by going to the UN, enacting Resolution 1441, and dispatching weapons inspectors to lraq.

War First, Evidence Later

[They] lied comfortably, and whenever cornered there was no hesitation in lying, and repeating lies, and not caring about [whether] what they repeated was true or false.

Former Washington Post executive editor Ben Bradlee's description above of the Nixon White House applies doubly to the Bush II White House, Pentagon, State Department, and CIA. Their campaign for war on Iraq took official lying to new depths of cynicism, brazenness, double-speak, and hypocrisy.

The Bush case against Iraq rested on two lies, repeated early and often: first, that Saddam Hussein was linked to Al Qaeda and the attacks of Sept. 11, and second that his possession of dangerous chemical, biological, and possibly nuclear weapons posed a "grave and growing danger" to the Middle East and to the United States itself. The case was made directly by raising the specter that Iraq "could provide these arms to terrorists, giving them the means to match their hatred ...the price of indifference would be catastroph­ic," as Bush did in his 2002 State of the Union address.53 It was also made indirectly by mentioning Sept. 11 in one breath and Iraq in the next in textbook bait-and-switch fashion.

In fact, U.S. intelligence agencies were well aware, long before Sept. 11, that it was very unlikely that there was any real connec­ tion between Iraq and Al Qaeda. In February 2002, the New York Times reported that the CIA has "no evidence that Iraq has engaged in terrorist operations against the United States in nearly a decade, and the agency is also convinced that President Saddam Hussein has not provided chemical or biological weapons to Al Qaeda terrorist groups."54

A Congressional commission set up in February 2002 to investi­gate the 9/11 attacks found no Iraqi connection, but did find a Saudi connection. According to commission member and former Senator Max Cleland (D-Ga.), the Bush administration delayed the release of their report until after Iraq was invaded and conquered for fear its findings would undermine the government's rationale for war.

As a result of such deceptions, 69 percent of the U.S. public still believed Saddam Hussein was probably involved in Sept. 11 according to a Washington Post poll done in September 2003, two years after the attacks. Two weeks after these poll numbers were released, and some six months after the U.S. invaded Iraq, Bush and Rumsfeld were forced to admit-due to lack of evidence and the steady unraveling of their pretexts for war-that there was no evi­ dence of Iraqi involvement in Sept. 11.

Even before the war, it was clear that U.S. claims concerning Iraq's military strength and its possession of weapons of mass destruc­ tion were wildly "sexed up," if not outright fabrications.

In his January 2003 State of the Union speech, Bush warned that Saddam Hussein had or could have "biological weapons mate­rials sufficient to produce over 25,000 liters of anthrax; enough doses to kill several million people ...materials sufficient to produce more than 38,000 liters of botulinum toxin; enough to subject millions of people to death by respiratory failure...materials to produce as much as 500 tons of sarin, mustard and VX nerve agent...upwards of 30,000 munitions capable of delivering chemical agents." He claimed that during the 1990s, the Hussein regime had "an advanced nuclear weapons development program," and then uttered what would become 16 infamous words: "The British government has learned that Saddam Hussein recently sought significant quan­tities of uranium from Africa."

Months before, however, a September 2002 assessment by the Defense Intelligence Agency, the Pentagon's primary intelligence arm, concluded that there was "no definitive, reliable information" that Iraq either possessed or was manufacturing chemical or biolog­ical weapons.

In 1998, five years before Bush made his nuclear claims, the International Atomic Energy Agency had certified that Iraq no longer had a nuclear weapons program. A year before Bush's speech, former Ambassador Joseph Wilson traveled to Niger at the behest of the CIA to investigate the claim that Iraq had attempted to buy ura­nium; he found that it was "highly doubtful that any such transac­ tion had ever taken place," and reported as much to the Bush administration.60 Meanwhile, the Iraqi government denounced charges that it had or would soon have nuclear weapons as a "huge clamour fabricated by the President of the United States" and "the biggest and most wicked slander against Iraq."

After the 2003 war, a team of 1,400 U.S. and British experts scoured Iraq for banned weapons. After four months of searching, none were found.62 The failure to find any chemical, biological or nuclear weapons or prohibited missiles made a number of things crystal clear:
• first, that no matter what the U.S. finds or doesn't find in Iraq (and most arms experts now feel the U.S. will never find any WMD because they were destroyed by the Hussein regime in the early 190s ), the U.S. had no valid intelligence showing that Iraq possessed chemical, biological, or nuclear weapons; • second, that the Bush team knew full well that Iraq was not a grave and growing danger;
• third, most, if not all of the Bush administration's specific charges, detailed in the appendix, were deliberate exaggera­ tions, distortions or outright fabrications; and
• fourth, that the United States government had been lying about Iraq's purported WMDs for over a decade, as examined in chapter 7.

The Pentagon leadership was so determined to wage war on Iraq that in October 2001 it set up a new intelligence/operations arm-the Office of Special Plans-directly under the control of Deputy Defense Secretary Wolfowitz and Undersecretary of Defense for Policy Feith. This Office reportedly played a key role in slanting, spinning and concocting "intelligence" that could be used to justify war, and propagating it to the White House and the media.

During the year before the 2003 war, Vice President Cheney pursued a similar objective by paying a number of visits to the CIA to "investigate" the work of analysts assessing Iraq's weapons and possible ties to Al Qaeda. The analysts later reported feeling pres­ sured to skew their findings to fit the White House agenda on Iraq.64 As we'll examine in the course of this book, this is but the lat­est chapter in Washington's long history of misusing, distorting, and concocting "intelligence" in order to achieve its objectives in the Persian Gulf.

In reality and all along, the administration saw a weakened Iraq -- a country of 25 million the size of the State of California which had been battered by 20 plus years of war and 12 years of sanc­tions -- as a target of opportunity, not a growing threat. The New York Times reported in September 2002 that the "Bush administra­tion's decision t o force a confrontation ...reflects its low regard for Iraq's conventional armed forces... American officials are confident that United States forces would quickly prevail" in war.

Rumsfeld and other Pentagon officials "argued that U.S. mili­tary forces would overwhelm Iraq's rusting army," USA Today report­ed. In fact, Iraq's military was held in such low regard that Rumsfeld explored attacking as early as August 2002. "The mission would be relatively easy to execute... Rumsfeld envisioned a surgical strike using relatively few troops, many of them from special operations forces." After much internal debate, military planners decided to deploy a more robust force. The Bush II war cabinet calculated that a quick and overwhelming victory over Iraq would give further momentum and legitimacy to their "war on terror."

Like Alice in Wonderland's Queen of Hearts who screamed, "sen­tence first -- verdict afterward ...off with her head," Bush first decided to decapitate Iraq, then searched for "evidence" to justify it. His administration may even have been gambling that something would turn up after U.S. forces took Iraq that could then be used to vali­date the war ex post facto. This was even acknowledged in some mainstream accounts: USA Today reported that the administration's internal debate over Iraq "left the impression with some that Bush was searching for a justification after deciding to target Saddam."

<>Henriques,Robert| G/Samuel

<>Kaufman.OIL=3-15 Introduction defines key concepts stt&ekn, or more specifically, stt&crp
*--Kaufman.OIL does this w/a critical survey of the bibliography as of 1978 [hst.gph] related to these 2 key concepts
*--stt&ekn is the acronym for governmental involvement in economic issues, but also its reverse = Business or market influence on government
*--stt&crp is the acronym for government involvement in the actions of large corporations (for us, mainly nrg.crp~), but it too stands for its reverse = Large corporations' influence or dominance over governmental decision making
*--Here are excerpts from Kaufman.OIL=3-15 with several links to the page nrg&plt =

Critical analysis of the oil industry is, however, by no means new. [stt&ekn=] As one writer has pointed out, a persistent theme in social science literature since the end of the nineteenth century has been the control of large corporations over the nation's polity and economy. Because the oil industry has been so highly visible and its operations and products so essential to survival in a technologically-oriented society, oil has been singled out as perhaps the classic example of a corporate enterprise able to subvert social institutions and to blend private power with national interest in a way that makes the two almost indistinguishable. 3

{_{ 3. *1977sp:Diplomatic History=170-71|>Kane,N.Steven| "Corporate Power and Foreign Policy: Efforts of American Oil Companies to Influence United States Relations with Mexico, 1921-1928"}_}

Two important and well-received studies -- one written before and the other after the revelations by the Church Committee on Multinational Corporations [ID] -- indicate the tenor of the charges against the oil industry. The first of these, G/Engler.Politics | G/Blair.CONTROL

[stt&ekn stt&crp=] The theme of private power so prevalent in the literature on the oil industry, however, raises serious problems concerning the manner in which oil has been able to maintain its influence over public policy. More specifically, it calls for clarification of the precise relationship between business and government. Granted, for example, the enormity of oil's influence within the public domain (an assumption accepted as fact in this study), it is still not enough merely to state that the oil industry has been able to subvert social institutions for corporate needs by integrating the private with the public interest. The process by which that has come about, including the structural development of the industry, and the exact nature and extent of industry influence over public policy need to be determined. For example, [1] has the oil industry been a "natural monopoly" that, because of the nature and costs of oil technology and markets, required a small number of larger firms to dominate the production, refining, and distribution of oil since the turn of the century? Or has this situation come about because of [2] public policy favorable to the integrated major firms at the expense of the smaller independent firms? If the latter is the case, what are the considerations that have gone into the making of public policy? What has been the [3] interrelationship between public and industrial officials? What role has public convenience or bureaucratic lethargy played? What about the [4] influence of national-security and other foreign-policy considerations on the international treatment of the multinational giants? || Answers to [#1] the first of these questions has been more explicit than answers to the latter [##2-4]. [Kaufman.OIL:3-15]

[G/Adelman]

[stt.cxx mpy prv.vs-pbl=] However, most of the recent [1978] literature on the oil industry has challenged the natural-monopoly theory of oil integration, attributing oil's concentration of power instead to a variety of causes essential to which has been the relationship between private and public interests (to which reference has already been made). Christopher Rand, for example, talks about "making democracy safe for oil," by which he means primarily big oil.  [G/Solberg.OIL] Similarly, [G/Blair.CONTROL],

Regarding the reasons for government's benevolent attitude toward the oil industry, there is less clarity and more inconsistency. [stt&ekn & mlf=] In general, most writers have denied a conspiratorial view of business-government relations by which the oil industry may actually have controlled—through bribery, influence peddling, or other illicit practices—public officials in policy-making positions. Rather, they have stressed other considerations such as the presumptions of a private-enterprise economy, a mutuality of public-private interests, and federal indifference (the latter point being somewhat inconsistent with the former). Nevertheless, by their emphasis on the private power of oil they have suggested more than a simple dereliction of public responsibility [a point stressed by Sampson.Seven=312-13] and they have cited enough instances of collusion to support at least a partial conspiratorial analysis. Engler's comments on the "permeability of oil" on national politics, his later revelations about illicit campaign contributions, ... and insinuation of payoffs with respect to import-quota legislation in the 1950s all indicate serious conflicts of interest at the highest levels of government to say nothing of similar conflicts within the oil-producing states where the evidence in this respect is even more sharply delineated [Engler.Politics=341-71; Engler.Brotherhood=57-83; Solberg.OIL=171-74 and 216-17; Blair.CONTROL=13-15]

This centrality of the power thesis to the recent literature on oil has been important in exposing the control oil has been able to assert over public policy; the blending of private power and the national interest has been so strongly established that it seems unlikely to be contested successfully in the near future, while the question of conflict of interest raises doubts about the integrity of even some of the nation's highest elected officials.

Nevertheless, the power thesis has tended to detract from the two-way nature of the existing public-private relationship even in the case of those writers who have recognized the mutuality of public-private interests. By depicting government, passively or actively, as the agent of oil, this thesis has implied a subservience of the public to the private sector that is not entirely warranted, even as it has underestimated some of the pressures and rationales for government's solicitation of business. Nowhere has this been more true than in the realm of foreign policy.

[stt&crp plt.irx=] In fairness to the literature on oil, it should be stated that most writers have acknowledged, at least in passing, the nation's larger foreign-policy concerns and the uses that the federal government sought to make of the multinational oil corporations to achieve foreign-policy objectives, especially in the Mideast. [G/Sampson.Seven] As Sampson's remarks suggest, however, his emphasis is more on the role of the big oil companies in influencing federal policy than on the reverse. [S&S:especially p. 212. See also Solberg.OIL:183-207; Rand.dmk:9; 1| Engler.Politics:247-66]

[... G/Blair.CONTROL for Kaufman.OIL pgf crt of Blair bcs of his insufficient attention to "national interests"]

[plt.irx & ntn.stt INX=] Despite Blair's cursory dismissal of the national security issue as having any major influence on the nation's oil policy and the tendency of other writers to subordinate foreign-policy concerns to the predominant influence of oil, several recent accounts on foreign policy (as well as some earlier works) suggest an alternative analysis. They indicate strongly that rather than being subservient to the oil industry, policy makers used the oil companies to serve national-security objectives. Moreover, they show that oil tended to follow the lead of the federal government in foreign-policy matters, and that although there was frequently a mutuality of public-private interests in foreign affairs, this was not always so. Under these circumstances it was oil that deferred to public policy rather than the other way around. An excellent example of this type of analysis is an article by N. Stephen Kane, "Corporate Power and Foreign Policy: Efforts of American Oil Companies to Influence United States Relations with Mexico, 1921-1928." A senior historian in the Department of State, Kane rejects the notion that the international objectives of the oil corporations have been identical with the nation's foreign policy or that the stt.dpt conceded to the priorities set forth by the petroleum industry. To the contrary, he argues that, for a variety of reasons, including a deliberate effort to liquidate previous interventions in Latin America and a concern "for the totality of American interests abroad rather than particular firms or groups of firms," the stt.dpt resisted the vigorous efforts by the large oil companies to secure its aid against export-tax decrees imposed by Mexico in 1921, even forcing the companies to negotiate directly with the Mexican government. Moreover, although the department did assume a compromise role in 1927 in the long festering dispute between Mexico and the companies involving confirmatory cns~ to subsoil rights on land claimed by the oil interests, it did so reluctantly and then resisted efforts by the larger companies for a settlement more satisfactory to them; this resulted in an erosion of oil's strategic position with respect to the Mexican government. "[I]t seems reasonable to conclude," Kane therefore states, "that the stt.dpt effectively influenced the oil companies." [Kane, "Corporate Power and Foreign Policy," pp. 170-98]

Although placing greater stress on the mutuality of public-private interests between oil and the federal government and commenting that stt.dpt policy in the Mideast discriminated in favor of more powerful companies, Michael Hogan reaches a somewhat similar conclusion in his essay "Informal Entente: Public Policy and Private Management in Anglo-American Petroleum Affairs, 1918-1924." In conjunction with the oil companies, the stt.dpt sought an Anglo-American rapprochement in oil matters after WW1 to replace existing oil rivalries. Rejecting the British preferential system of statist control and financing of oil, the United States favored an informal entente predicated on the institutionalizing of private relationships between British and American oil interests including cooperative arrangements in Latin America and the Mideast. For the sake of Anglo-American cooperation the United States eventually scuttled its policy of oil impartiality abroad and even accepted a closed door in Mesopotamia (Iraq). Hogan notes that this amounted to a surrender of official policy to private initiative. Still, throughout the period 1918-24 the stt.dpt was at least as instrumental as the oil companies in determining Mideast (and Latin American) oil policy. As Hogan also comments:

... for men like [Secretary of Commerce Herbert] Hoover and [Secretary of State Charles Evans] Hughes, the organization of [large oil concerns] into a pattern of "fair cooperation" was not only the key to continued modernization and expansion, but also the way to eliminate one of the most "fruitful" causes of war. The best system, as they and similar policy makers saw it, was one in which government and business joined forces; the former creating the "opportunity" for private expansion, the latter taking responsibility for the "active and intelligent" management of its own affairs.

[Michael J. Hogan, "Informal Entente: Public Policy and Private Management in Anglo-American Petroleum Affairs, 1918-1924," 1974su:BH.rvw#48[?]:187-204. See also Hogan, Informal Entente: The Private Structure of Cooperation in Anglo-American Economic Diplomacy, 1918-1928 (Columbia, Mo., 1977), pp. 159-85. For an analysis of American Mideast policy as it began to develop toward the end of WW2, which also stresses the themes of informal entente and public policy through private management, see DeNovo, "Culbertson Economic Mission"]

[stt&crp gvt bzn INX in irx=] Mutuality of interests [prior to WW2] G/Anderson,Irvine| What these writers indicate then is the need to examine foreign oil policy as much from the vantage point of Washington as from the oil skyscrapers in New York or Houston. Without generally denying a mutuality of public-private interests, they suggest strongly that the current emphasis on the intimate relationship between oil and government tends to obfuscate the rationale behind policy formulation and that the prevalent theme of oil power and control can be distorting. In this respect, while doing little to lift the charge of federal irresponsibility in government's use of oil to achieve foreign-policy objectives, they make clear that the locus of decision making remained in Washington and that the government was not adverse to following a policy contrary to the wishes or interests of the larger oil firms when deemed in the national interest. Many of these same themes have been stated in earlier works [dealing w/Mideast] such as John A. DeNovo's American Interests and Policies in the Middle East, 1900-1939 (1963); Nash.United (1968); and Klebanoff.Mideast. [D.AI&P, especially pp. 167-209 and 383-94; Nash.United:49-71 and 188-89; Klebanoff.Mideast, especially pp. 218-21. Klebanoff's work was actually completed in 1973, before the energy crisis of that year. The subtitle is therefore deceiving. See also DeNovo,"Movement]

The oil cxx case of 1953-68 also supports such an analysis of [stt&ekn irx=] business-government relations in the formulation of foreign oil policy. In 1953 the Department of Justice brought a civil vs-fdu suit against the United States' five major oil corporations: Std.crp.nrg of New Jersey (Exxon), Socony Mobil (Mobil), Std.crp.nrg of California (Socal), Texaco, and Gulf Oil. The suit charged these multinational giants, along with two alleged co-conspirators, Royal Dutch Shell and Anglo-Iranian Oil (now British Petroleum) [AI.crp.nrg BP.crp.nrg], with violation of the nation's vs-fdu.lwx by having engaged in a worldwide combination to restrain and monopolize United States domestic and foreign commerce in nrg.pc oil and petroleum products. [l&r and u&d=] The suit sought relief through divestiture of the defendants' joint-production, refining, ptpt, and marketing operations. The suit continued for fifteen years before the Justice Department decided in 1968 to drop its charges against the two last defendants, Mobil and Socal. In the interim Justice obtained consent decrees from Texaco, Gulf, and its principal defendant, Exxon. However, the decrees were limited largely to the [cxx] areas of joint marketing and price fixing. Specifically excluded were joint operations in production, transportation, and refining— accounting, for example, for the continued operations of the Arabian- American Oil Company (Aramco), which was jointly owned by Texaco, Socal, Exxon, and Mobil.

The history of the cxx case makes clear just how successful the large integrated firms were in controlling the flow of oil from the Mideast. In this respect it underlines the mutuality of interests between government and oil in the 1950s and 1960s and oil's ability to harness public concerns for private ends. It supports strongly, therefore, those who have argued government dereliction of responsibility in seeking to use the oil companies to achieve foreign-policy objectives.

Nevertheless, the cxx case also reveals a more complex rationale behind oil policy than simply government's obeisance to the interests of the petroleum industry. More specifically, it suggests the pervasive (and perversive) nature of the CWX in determining the course of United States foreign (and domestic) policy. In the oil cxx case, prosecution of the Mideast multinational giants was made subordinate to a perceived Soviet threat in the Third World and to the need of insuring a cheap supply of energy to the Western powers and Japan in light of the expanding nature of the war. In this way the Cold War was able to intrude into the domestic affairs of the United States, modifying and distorting basic principles and programs on behalf of an enlarged concept of national interest and security.

This book is a history of the oil cxx case from its inception in 1952 to its final resolution in 1968. While focusing narrowly on the cxx case, I also try to place it in the broader framework of irx vs-fdu development in the era of the CWX. Simply stated, my thesis is that the nation's broad concept of national INX and national security for the most part destroyed the value of the oil cxx case insofar as Mideast oil was concerned. [Is this not a disappointing and garbled "Simply stated"?]

[stt&crp=] It should be clear then that although I am in sympathy with much of the analysis of the recent literature on the oil industry, including its emphasis on the power and control of oil, I am persuaded of the need for a more balanced approach to the history of oil-government relations, especially in the field of foreign affairs. I am concerned particularly by the type of shallow analysis characterized by polemical devices such as the rhetorical question, innuendo, and a tone of "guilt by association" that has become apparent in even some of the best new works on oil.

An example of this type of analysis is... [G/Engler.Brotherhood for 2-pgf crt] The conflict between the Departments of State and Justice over the policy to follow toward the Mideast multinational oil corporations during the oil cxx proceedings and the agony felt within the Justice Department as it was compelled to limit its proceedings to marketing operations will become clear in the following pages.

Yet, so strong has become the case against the oil industry that to suggest even a modification of the power thesis is at best to risk the charge of naiveté. Assuming this risk, it seems to me that the public record cannot simply be ignored, especially when the alternative is based on unsubstantiated assumptions involving questionable methodology. That the oil industry may have generally received what it wanted during the Eisenhower administration may be true, as Engler remarks, for example (although his statement hides the complexity of oil interests in the 1950s), as may be the additional statement that President Eisenhower was the personal beneficiary of oil largesse.²² But there remains the methodological problem of implicitly relating the two.²³

Insofar as the oil cxx case [the central topic of Kaufman.OIL] is concerned, the public record indicates strongly that this relationship cannot be shown.²⁴

[ftn#24. Yet, the relationship is still made. [G/Solberg.OIL] Other accounts of the cxx case are even less explicit (or implicit?) in explaining the final outcome of the suit. But their assumptions are clear. "Weak as they were, the [final] consent judgments apparently were still considered potentially troublesome by Exxon and Gulf and hence were further relaxed" [Blair.CONTROL:771-76]. In contrast, although not commenting directly on the suit, Christopher T. Rand notes that, "All over the world, Exxon men reputedly trundled [the final consent decrees] out whenever asked to participate in an undertaking they did not find congenial." Rand.dmk:280. [Sampson.Seven= re.SNT.MC & SNT.MO || Only Anthony Sampson emphasizes the national-security aspects of the case, pointing to differences between the Departments of State and Justice over prosecuting the case, and concluding, "But between the two extreme positions, of either totally supporting the cluster of companies, or breaking them up, neither side really faced the problem, what the relationship between the companies and government should be" [Sampson.Seven=125]. On the cxx case, see also Engler.Politics:212-17.
25... G/Blair.CONTROL ]

Instead, it [the oil cxx case] reveals a president deeply worried by matters of national security, fearful of the possibility of Soviet penetration in the Mideast, and committed to maintaining the flow of Mideast oil to Europe even to the point of probing the possibility of war for that purpose. Other factors may have influenced Eisenhower's policies with respect to the oil industry, such as in the case of oil import quotas, but even here the president's expressed concern for national security appears genuine and consistent with overall administration policy toward the Cold War. The same can be said about Eisenhower's predecessor, Harry S. Truman.

.... [Kaufman.OIL 2-pgf crt of Blair.CONTROL put w/Blair]

[...]

[Here is the Kaufman.OIL concluding pgf (with its one footnote excluded) abt nrg&plt.irx nrg&plt.dms =] The dismissal of the suit against Socal and Mobil brought to an end one of the longest vs-fdu suits in Justice Department history. Throughout its litigation the case had been marred by a continuous pattern of frustration and constraints growing out of the hardening CWX with the Soviet Union. Administration and other public leaders, believing that the United States had the responsibility for containing Soviet (Communist) expansion throughout the world, had subordinated questions of [foreign.trd] foreign commerce, including vs-fdu matters, to the conceived exigencies of national defense and security. Consequently, the Cold War was able to intrude into the domestic affairs of the United States, modifying and distorting long-held principles and programs on behalf of an enlarged postwar concept of the national interest. In the oil cxx case the nation's commitment to halt antitrust activity in foreign as well as domestic commerce was made subordinate to a perceived Soviet threat in the Twrl and to the need to insure a cheap supply of energy in light of the expanding Cold War. The result was, finally, internal administration tensions and a bifurcation of policy—on the one hand prosecuting violators of the vs-fdu.lwx~ while, on the other, allowing, even encouraging, violations when conceived to be in the interests of national defense and security.

NOTES (to Introduction):15-18

*2013au20:ERG|>Urquhart,Alvin| [EEE=] "Transition to sustainability hard but essential"| ((F/[/ for SAC editor's bracketed commentary and links Urquhart's text =

At the level of microeconomics [ID], “jobs, jobs, jobs” is most important to the middle and working classes. At the level of macroeconomics {ID}, “growth, growth, growth” is most important to the supporters of capitalism. And at the level of ecology [ID] and evolution, “sustainability, sustainability, sustainability” is most important to all life on Earth.

Concern with the impossibility of maintaining both continued unlimited economic growth [ID phrase (wrd~)] and a sustainable Earth must become apparent to all thinking citizens of the planet. And to create and maintain worthwhile jobs [ID concept of wrk] on a sustainable Earth must become a priority.

Until the industrial revolution [ID], humans depended on the use of renewable resources [ID phrase (wrd~)] to sustain life. Growth was episodic and localized. Human populations [nsx] grew to about 250 million at the beginning of the Christian Era, and to only 1.5 billion in the 1850s.

But in the ensuing 160 years, the Earth’s population has grown exponentially to more than 7 billion. This growth is underlaid by relentless mining of nonrenewable resources [ID phrase (wrd~)] and largely fueled by [nrg.c nrg.p nrg.g] coal, oil and natural gas deposits that were formed in the geologic past. [?? new perspectives on this issue]

Today, economic growth is founded on the consumption of both nonrenewable and renewable resources. Nonrenewable resources can be seen as being in ever shorter supply or as increasingly more expensive. Yet we continue to exploit them [?? consume them] as if they were infinite.

Renewable resources, too, are being altered [ecx pqv wtr lsn] through such actions as soil erosion, water overuse, forest destruction, overgrazing and overfishing. Unwanted byproducts — waste and pollution — result from increased growth and consumption.

To maintain current patterns of consumption and associated pollution, [ecx&pbl] extinctions and rapid entropy can lead only to extraordinarily unpredictable natural and social consequences. Even the [ecx.warm] unpredictable consequences of climate warming are only now beginning to be recognized.

[SAC edt entered following boldface highlight of author's "basic question" = ]

The basic question that arises from these facts is how to shift from an economy based on growth and consumption to one that supports ordinary people’s lives while sustaining natural ecological conditions and the slow, natural processes of evolution. The fundamental answer is to reduce growth and consumption and at the same time provide food, shelter, health and emotional and intellectual stimulation to all humans.

But how?

[SAC edt again highlights key answer to question "But how?" = ]

The [microeconomic] mantra of economic growth, which is fundamental to contemporary free market capitalism [ID phrase (wrd~)], must be replaced by an economics of sustainability. Sustainability means that [?requires that] macroeconomics has to be placed in the broader context of the Earth’s ecology and be measured in other than monetary [ID] terms.

[nrg rather than fnc = ] Today’s markets do not recognize the inherent wealth of natural resources, calling them externalities. However, in terms of ecological economics [ID phrase (wrd~)], natural resources have primary value in providing the basic flows of energy and materials that support life on Earth. A standard measure of energy — not money — is required to transcend the boundary [??wc? "transcend boundary"?] between ecology and the market economy. [??Doesn't Urquhart mean something like "A standard measure of energy, an environmental measure -- not money -- must be substituted for the narrow financial measures that dominate market economies"?]

Within a sustainable macro economy [=??why space here?], economic priorities need to be reordered. Today, average Americans consume more than 38,000 pounds each year of new materials and have the energy equivalent of about 300 slaves [=ID this long phrase] working for them — every day, around the clock. Individuals, corporations and local, state and national governments must consume lesser amounts of the Earth’s materials and depend on many fewer energy slaves.

Consumption for energy-rich nonproductive items — such as “national defense” [ID] and [pzn.wlt=] personal luxuries, large and small — needs to be re-evaluated in light of both what they contribute to society [=ID phrase "contribute to society"] and what they extract from the ecologic health of the planet. In the playing out of micro economies [=space?], jobs still should be of prime importance. But they must not be based on the growth of consumptive industries [??ID phrase].

Supported by renewable resources, supplemented by much smaller amounts of nonrenewable material and energy, micro economies need to prioritize and create jobs in [skz lsn] sustainable agriculture, forestry, fishing and animal husbandry — jobs that will provide the necessities of life [=ID phrase] and also provide surpluses for [edc hlt spt rlg] education, health, recreation and spiritual sustenance. Participation in non-consumptive activities [ID phrase ~~phrase abv] can enable personal satisfactions. [wlt&bdn=] And redistribution of wealth [=!! ID phrase] can assist in developing a sustainable life for those who now live in poverty.

It is hard to imagine a world in which exponential growth is not the goal by which [??goal by which?] societies and individuals live. But to continue our current economic dreams is to ignore the fact that energy and mineral resources are limited and pollution and extinctions will continue to increase.

The transition to a sustainable Earth in which all its inhabitants live a healthy and inspirited life will be extraordinarily difficult.

*1952je24:USA Attorney General|_ Memorandum for the Attorney General relative to a request for Jury authorization to investigate the international oil cartel| ((SOURCE: Department of Justice File, 60-57-140. Printed in Kaufman.OIL=123-36 (Appendix B)

Investigations conducted by the Department of Justice, the Federal Trade Commission, the United States Senate's Special Committee Investigating the National Defense Program and the Swedish Oil Administration have revealed the existence of a series of agreements among the seven largest oil companies in the world to divide markets, to distribute on a quota basis, to fix prices and to control the production of oil throughout the world. These agreements are in violation of the vs-fdu laws of the United States.

The seven principal international oil companies are Standard Oil Company (New Jersey), Standard Oil Company of California, The Texas Company, Socony-Vacuum Oil Company, Inc., Gulf Oil Corporation, Royal Dutch Shell group and Anglo-Iranian Oil Company [AI.crp.nrg].

The facts subsequently set forth in this memorandum disclose that these companies have been engaged in arrangements, agreements and understandings which have been designed to and which in fact have restrained and monopolized foreign trade in crude oil and petroleum products, including the import and export trade of the United States.

1. WORLD OIL RESOURCES AND THEIR CONTROL

The seven principal international oil companies directly control 66.75% of the oil reserves of the world, which amount to approximately 78 million barrels. Six of the seven companies control 33.6% of the reserves of the United States, which are estimated at 28 billion barrels. Throughout, the world 9.5 million barrels of crude oil are produced per day, of which¹ the United States produces 56.73%. The seven international companies produce about 50% of the world production. In such countries as Venezuela, Colombia, Peru, Kuwait, Saudi Arabia, Iran, Bahrein, Burma, and Borneo one or more of the seven companies produce 100% of the oil. In 1950 six of the seven companies produced 36% of the crude oil in the United States. As late as 1946 five of the international companies obtained 58% of their crude oil in the United States and 42% abroad. However, in 1950 the same companies reduced their domestic production to 42% of their requirements and obtained 58% abroad. While exports of oil from the United States are continuously reducing, imports have increased to nearly one million barrels per day, which reflects the increasing dependence of this country on foreign production. In 1925 the average posted price for a barrel of crude oil at the well in the United States averaged $1.68; this average declined to $0.67 in 1933; leveled off at $1.00 per barrel in 1934; and in 1948 the average price increased to $2.60 and has remained at that figure to the present day. The American Gulf Coast price for a barrel of crude oil today averages $3. The average price is arrived at by adding to the well price the cost of transportation by ptpt to the terminals on the Gulf Coast. The American Gulf Coast price has become an inflexible world base price.

2. HOW WORLD CONTROL WAS ACHIEVED

Agreements among the dominant oil companies of the world were entered into as early as 1928 and as late as November, 1948. The continuing vigor of the agreements is indicated by the fact that an official observer at the World Petroleum Congress, in a special report entitled The Third World Petroleum Congress filed with the Select Committees on Small Business, United States Senate and United States House of Representatives, on December 29,1951, found that the same companies were carrying out their illegal programs at the present time by supplying the increasing world demand on the basis of the allocation of world markets to areas of production controlled by the seven companies.

Thus, the increase in United States consumption is to be supplied by Caribbean and Canadian production rather than through an increase of domestic production. The European and Asian demand is to be supplied by the Middle East. Since United States Gulf Coast prices quoted and paid for crude oil and petroleum products are adopted by the conspirators as the basis for world prices, the curtailment of domestic production serves to keep prices high throughout the world.

THE "ACHNACARRY AGREEMENT" OF 1928

Standard and Shell were for many years and still are the two dominant concerns in international petroleum trade, each being fully integrated through subsidiaries in all branches of the petroleum industry in practically every country of the world. During the 1920s, the two companies expanded rapidly, each acquiring important producing properties and establishing many new sales outlets. As a result, they found themselves competing vigorously throughout the world, often cutting their prices to secure or retain accounts.

During this early period, Anglo-Persian Oil Company (now Anglo-Iranian), in which Shell owned a minor interest, began developing its concession in Persia and looking for new markets for its production. Walter Teagle of Standard and Sir Henri Deterding, managing director of Shell, made numerous visits to England and the United States, in the interest of concluding a cooperative working arrangement among the three competitors.

Finally, in September 1928, the three companies entered into the "Achnacarry Agreement" to eliminate competition among themselves, to prevent overproduction, to divide world markets on an "as is" basis, and to use common management associations, with penalties to be assessed for violation of assigned quotas. In working out this agreement, they selected the year 1928 as the base period for measuring the relative business positions of the companies in the various world markets. Because of Standard's fear of the American vs-fdu.lwx~, the parties purposely refrained from signing the final agreement.

THE "RED LINE AGREEMENT" OF 1928 --
AND OTHER IMPLEMENTING AGREEMENTS [cxx=]

The "Achnacarry Agreement" was implemented by the "Red Line Agreement," negotiated at approximately the same time; the temporary use of an Export Petroleum Association under the Webb-Pomerene Act; the "Memorandum for European Markets of 1930"; the "Draft Memorandum of Principles of 1934"; and numerous local agreements. All of these documents, when taken together as a whole, formed a rigid code of rules for the control of world oil at high prices by a few corporations. When competition from outside the group was experienced, the invading company was either destroyed or taken in as a party for a small quota of the total business in a limited area.

The "Red Line Agreement" of 1928 was entered into for the purpose of controlling all of the crude oil reserves in what was then Asia Minor and Arabia. Standard, Anglo-Iranian and Shell took in Socony-Vacuum Oil Company, C. S. Gulbenkian, and a French company which had acquired a small concession by reason of the San Remo Treaty.

In 1928, Standard Oil Company submitted to the Federal Trade Commission a plan for the Export Petroleum Association, Inc. to engage solely in export trade under the provisions of the Webb-Pomerene Export Trade Act. The stock of this Association was held by 15 American oil companies, including the Shell group. Practically the first action of the Export Association was the adoption of the basing point pricing system of the "Achnacarry Agreement." After investigation by the Federal Trade Commission, the Association collapsed because it was found that it was operating in violation of the Webb-Pomerene Export Trade Act. The Association frankly admitted in its correspondence with the Commission that the "as is" positions of its principal members were to be maintained by all members. "As is" positions were defined by the Association to mean, "the ratios established by the 1928 performance."

The "Memorandum for European Markets of 1930" followed the collapse of the Export Association and the importation into the United States by Shell of large quantities of low cost oil from VNZ. This [cxx] document, negotiated by the same three international companies, established quotas for marketing, and local price-fixing arrangements.

"DRAFT MEMORANDUM OF PRINCIPLES 1934" ("DMOP")

The activities of Shell and Standard became so far flung that finally it became necessary to promulgate the "Draft Memorandum of Principles of 1934" for the guidance of the local representatives of the parties to the "Archnacarry Agreement." All of the arrangements were stipulated to be of indefinite duration unless terminated by one month's notice. Each participant, including outside concerns, was to be allotted a percentage quota of the total consumption for each petroleum product for every country or area during a 12-month period. The 1928 volume of business, adjusted for future increases in consumption, was adopted as the "as is" basis. Each participant placed a representative on the "London Committee" charged with interpreting rules and settling disputes.

Local meetings to be attended by the managing directors of the operating subsidiaries were to be held once a month. At these meetings, each participant was to present its invoiced deliveries. Outsiders' deliveries were to be estimated. Then the total consumption was to be estimated and the percentage of each participant in the total trade agreed upon. Each paricipant was bound to maintain his allotted position in the market and to avoid over and under-trading in relation to other participants, but overtrading in relation to outsiders was encouraged.

After arriving at the basic agreement, Standard established in England a group of executives known as the "London Counsel" (later incorpo-rated under the name International Association for Petroleum Industry, Ltd.), to be constantly available for conferences and negotiations with Shell. This arrangement was made in an effort to remove the management of Standard's foreign marketing from the jurisdiction of the United States vs-fdu laws. At the present time the principal office of Standard in New York continues to make all important decisions and the London office serves merely in a liaison capacity.

In order for the American participants in the "Achnacarry Agreement" to carry out their obligations without too many of the American concerns becoming signatory parties to the Agreement, joint ventures were created among the American companies. For instance, Standard Oil (New Jersey) and Standard Oil Company of New York organized Standard-Vacuum Oil Company to conduct integrated operations in the Far East.

The same companies organized International Aviation Associates in 1936, later known as "Intava," for the purpose of jointly distributing aviation products in foreign countries. The arrangement provided, among other things, that the two companies should sell their products under a common name and in fixed relative amounts, that the distributive facilities of both concerns should be utilized, and that the profits resulting therefrom should be divided according to certain agreed-upon percentages for each product sold. The arrangement was integrated with the "DMOP" of 1934. Much of the aviation gasoline and all of the aviation lubricants and special products sold through “Intava” have been exported from the United States.

SHARING THE MARKET WITH OTHER COMPANIES

In certain parts of the Western Hemisphere, Standard and Shell in carrying out the "DMOP" had to share the market with other American companies. For instance, as early as 1930 the two companies found The Texas Company and The Atlantic Refining Company doing business in Brazil. Pursuant to the "DMPO" principles, Texas and Atlantic were allowed to participate, and sales quotas were fixed for all four companies, such quotas applying both to those petroleum products shipped from the United States and to those shipped from foreign points. El Salvador, Standard and Shell had originally divided the total business between themselves, but on January 1,1938, Shell agreed to withdraw from Central America in return for Standard's temporary withdrawal from Venezuela. Standard thereupon took in The Texas Company and Standard of California as participants in the local cxx. In the Dominican Republic the cxx was originally composed of Shell, Standard, Texas and Trinidad Leaseholds, Ltd., who established quotas, allocated customers and fixed the exact prices at which customers could be supplied. The Sinclair Refining Company invaded the Dominican Republic and for a short period a concerted effort was made to drive Sinclair out of the market. Upon failure of this effort, the parties persuaded Sinclair to become a member of the cxx and assigned to it a "DMOP" quota.

OPERATIONS UNDER THE "RED LINE" AGREEMENT

In 1933 Standard Oil Company of California obtained a petroleum concession in Saudi Arabia which is located wholly within the territory embraced in the "Red Line Agreement." A short time later the concession was transferred to Arabian American Oil Company (Aramco), of which Standard of California and The Texas Company became joint owners. Aramco developed a reserve estimated at nine billion barrels and built a refinery on the PER.G. With low cost of production, these operations became extremely profitable.

At the same time, the two owners of Aramco were upsetting, to a certain extent, the "Achnacarry" and "DMOP" principles. On the excuse that Aramco's owners were "unable to finance" a ptpt to the Mediterranean, Standard Oil Company (New Jersey) and Socony-Vacuum Oil Company, Inc. were admitted to partnership in Aramco. Standard brought 30% of Aramco stock and Socony 10% and both agreed to guarantee loans totalling $273,000,000, made from a group of American banks. They also became parties with The Texas Company and Standard of California to a series of joint contracts for the purchase of oil from Aramco for a period of 18 years, in proportion to their stock holdings (i.e., the ratio 3:3:3:1). This provided for the transfer of effective control of Aramco to the two American companies, Jersey and Socony, which were the American partners in the Iraq Petroleum Company deal under the "Red Line Agreement."

In November 1948 a new "Red Line" agreement was negotiated. It merely reaffirmed the old arrangement with the exception of allowing Gulbenkian certain additional rights in settlement of his claim that the taking of the concession by Aramco in Saudi Arabia amounted to a breach of the original 1928 agreement. Throughout World War II the basic principles contained in the various agreements were maintained, except as the necessities of war forced readjustments.

Following the 1947-1948 agreements, the international companies began entering into contracts with one another for the purchase and sale of oil between themselves to even up the control of various oil producing areas among the participants.

Gulf Oil Corporation, which was not a party to the "Red Line" or Aramco arrangements, entered into an agreement with Shell in May 1947 by which Gulf would sell to Shell over a 12-year period increasingly large quantities of oil produced in Kuwait, outside the "Red Line" area, in which Gulf had a partnership with the Anglo-Iranian Oil Company. Gulf did not have a position in the European and African markets. Shell needed Gulf’s oil to preserve its "as is" position in those markets.

Following Gulfs contract with Shell, Anglo-Iranian in turn made a series of agreements with both Standard Oil Company (New Jersey) and Socony-Vacuum in September 1947 and March 1948 to sell to the latter two companies, over a 20-year period, large quantities of Iranian production (amounting to over one billion barrels) at a "cost plus" price, the "plus" being fixed at a definite percentage of profit throughout the 20-year period. The contract between Standard and Anglo-Iranian provided that Standard could not distribute any of this purchased oil east of the Suez. In March 1948 an agreement between Anglo-Iranian and Socony, covering 300,000,000 barrels of oil over a 20-year period, stipulated that purchases under this particular agreement would be imported into the United States.

3. THE WORLD CARTEL IN ACTION

MARKETING

Information has been received by the Department to the effect that the marketing quotas and the prices for the various foreign countries are determined by representatives of the American participants and Shell who meet in New York City four times yearly. We also are informed that a group of oil company representatives known only by the initials "C.A.C." began operations in New York City on approximately March 31,1950. This group is described as a private purchasing agency which purchases petroleum products in the United States to fill the orders of the cxx members for shipment to Europe.

Following the expulsion of Anglo-Iranian Oil Company from Iran, Asiatic Petroleum Company, Ltd. (a Shell subsidiary) has been purchasing large quantities of petroleum products in the United States to fill the orders of Anglo-Iranian and Shell for shipment to the Eastern Hemisphere. It is understood that this organization has the cooperation of the American companies who are parties to the "DMOP" arrangement in finding supplies in the United States to fill such orders.

[EEE=] Many of the presently existing "spot shortages" of petroleum products in this country are alleged to be due to the purchasing activities of both "C.A.C." and Asiatic. The result, whatever the purpose, is to sustain the "spot market" at the highest prices in history.

REFINING

The basic arrangements entered into under the "Achnacarry Agreement" appear to extend into the refining branch of the industry, as well as production and marketing. In the catalytic refining and the coal hydro-generation processes fields, Standard, in dealing with I. G. Farben as early as 1928, took in Shell and Anglo-Iranian as partners in developing and licensing the processes through the world.

Shell became a 50% partner in International Hydro Patents Company and shared with Standard the right to license the process, but "it was agreed that licenses should not be issued to an extent or in a manner to disturb the existing marketing position of the respective companies." Provision was also made for the inclusion, in the future, of Anglo-Iranian upon a basis proportionate to its existing marketing position. In 1938, the IHP Company Agreement was extended to include the hydrocarbon synthesis field for the world, outside the United States and Canada, and Standard and Shell again obtained complete control throughout the world, outside of Germany, of all important processes for the synthetic production of petroleum products.

PATENTS

In 1938 and 1939, Standard and Shell negotiated with the principal American oil companies the Catalytic Agreement (generally called CRA), which became effective in September 1939. Under the terms of this agreement, Standard Oil (New Jersey), The Texas Company, Standard Oil (Indiana), Shell Development Company, Universal Oil Products Company, and M. W. Kellogg Company formed a pool of patents covering the fluid catalytic cracking process. Anglo-Iranian Oil Company was designated as a "cooperative" party to the agreement.

It was the purpose of this pool to gather together all patents, inventions and "know-how" relating to catalytic refining processes and license the use of the same throughout the world on terms and conditions which were plainly in violation of the vs-fdu.lwx~. The correspondence and memoranda found in Standard's files indicated that licenses granted outside of the United States were to be only to those companies who either already enjoyed an "as is" position under the "DMOP" arrangements or who would agree to sell most of their production under such licenses to participants in the "DMOP" arrangement.

On March 25,1942, a criminal information was filed by the Department of Justice against the Standard Oil Company, its subsidiaries and certain of its officers, alleging Sherman Act violations in the execution of and operations under the various agreements. The defendants entered pleas of nolo contendere and paid substantial fines. On the same date a consent decree was entered to a complaint outlawing the CRA and hydro-genation arrangements. Immediately thereafter, the Petroleum Administration for War found it necessary to recreate the CRA arrangement in order to obtain aviation gasoline to prosecute the war. Between August 7, 1942 and October 15,1945 this agreement had immunity from the vs-fdu.lwx~ under Public Law 603. Since that date, numerous attempts have been made by this Department to liberalize and make the agreement ineffective but this has been difficult, particularly for the reason that patent rights granted under the agreement run for the life of the patents.

EFFECT OF CARTEL ON PROSECUTION OF WORLD WAR II

In 1944, the United States Navy attempted to buy petroleum products on the PER.G for fueling the American fleet. Aramco offered to supply the Navy, for delivery in Navy tankers at the PER.G, petroleum products on the basis of the United States Gulf Coast price. Navy procurement officers attempted to negotiate a price on the basis of lower Aramco costs but were unable to get Aramco to agree. Finally, on September 15, 1945, at a time when petroleum products were in critically short supply, a contract was entered into with Aramco to purchase motor fuel, Navy fuel oil and Diesel oil at the minimum U.S. Gulf Coast prices for products of similar grades in tanker lots. Prior to this date, other American companies had sold to the Navy at lower prices on a negotiated basis.

The pricing arrangements entered into between the companies operating in the Middle East removed any competitive effort. These privately negotiated purchases by the Navy resulted in the exaction of high prices without any relationship whatever to the low cost of producing oil in the Middle East area. While the United States was being charged $1.05 per barrel, sales were being made by Aramco to both affiliated companies and to the Japanese at $0.74 and $0.84 per barrel. The Special Senate Committee Investigating the National Defense Program, in its report entitled "Navy Purchases of Middle East Oil (1948), found that, between January 1942 and June 1947, the subsidiaries of Standard Oil Company of California and The Texas Company sold $70,000,000 worth of petroleum products to the United States Navy, which total price was about 38 1/2 million dollars higher than prices charged to other purchasers.

The Federal Trade Commission has collected information to show that, while these prices were being charged to the Navy, the Standard Oil Company of California was making a net profit of $0.84 to $0.95 a barrel on its share of oil produced in the Middle East and was able to do so because of the aforementioned series of agreements which eliminated any threat of competition from any company in the world.

Again in February and May 1950, when all the above arrangements were in full effect, the United States Navy requested bids from five subsidiaries of the American companies. In response to this invitation for bids, identical prices were quoted. The pricing arrangements entered into between the companies operating in the Middle East prevented these companies from competing with one another even for Government business.

Following Pearl Harbor the Petroleum Administrator for War set up the Foreign Operations Committee to work out oil supply arrangements for foreign areas not controlled by the enemy and for meeting the requirements of United Nations armed forces. Such committee consisted of 14 members, 12 representing American companies and two British nominees representing Shell and Anglo-Iranian. Eighteen sub-committees were appointed. The same individuals whom the record shows to have been most active in carrying out the "DMOP" arrangements were members of these committees. Allocations of supplies were worked out on a percentage basis to the second decimal point and were identical in character with those found in the files of the companies for operations prior to Pearl Harbor.

EFFECT OF CARTEL ON POST-WAR FOREIGN ECONOMIC PROGRAM

Under the EGA program, large quantities of petroleum products have been purchased from the seven international companies which control and fix the world price of oil. The United States taxpayer pays for this through the funds appropriated for foreign military and economic aid. The 30th EGA report, covering the period April 1948 to November 1950, shows that procurement authorizations for petroleum and petroleum products amounted to $1,070,000,000, more than 11% of the total ECA commodity procurement authorizations. Of the total authorizations for petroleum, $384,000,000 represented purchases in the Middle East and $395,000,000 represented purchases in Latin America. It is interesting to note that approximately $724,000,000 of petroleum authorizations were destined to the countries in which Standard, Shell and Anglo-Iranian have maintained dominant positions. Mutual Security Administration, the successor to EGA, is seeking recovery of many millions of dollars from the American companies as "over charges" amounting to as much as 32 cents per barrel on crude oil.

4. [EEE=] DOMESTIC PRODUCTION CURTAILMENT TO SUSTAIN GULF COAST PRICE "CONSERVATION LEGISLATION"

The Federal Trade Commission [>FTC], during its recent investigation, collected considerable evidence to sustain the conclusion that a great part, if not all, of the domestic effort to conserve petroleum through the "Conservation Commission" has been used to carry out the "conservation principle" of the "Achnacarry Agreement" as a support for maintaining high world prices for petroleum. It links Sir John Cadman, Sir Henri Deterding and the American Petroleum Institute to a program, beginning in December 1928 (three months after the "Achnacarry Agreement"), to raise the price of crude oil in the United States, not by a price-fixing agreement which would be illegal under the vs-fdu.lwx~ but by selling to the Federal as well as the State Governments the theory that to permit crude oil to be produced in unlimited amounts would result in unreasonably low prices and that this in turn would be a waste of this natural resource.

During 1928 and 1929, the American Petroleum Institute [>API] sponsored a conservation plan in the United States with the understanding that Deterding, Cadman and Standard would "cooperate" in the foreign fields. The effort of the cxx to set up private oil conservation plans in the United States suffered a setback when Attorney General Mitchell, in a letter to Secretary of Navy Wilbur, who was acting as chairman of the Federal Oil Conservation Board, rules (sic) that neither the Federal Oil Conservation Board nor any Government officials had "authority to approve any action which is contrary to an Act of Congress or to the vs-fdu.lwx~ of any State."

The American Petroleum Institute immediately began lobbying among the legislatures of the oil producing States for a State conservation and proration law. By 1935 a great number of States had adopted such laws.

Then followed the passage of the "Connolly Hot Oil Law" supporting the State conservation laws, and finally the Congressional approval of the Interstate Oil Compact. Since practically all the States have rules that selling oil at a low price is economic waste is a violation of State laws, the conservation program has become merely a price-fixing mechanism.

PRICE-FIXING [cxx=]

Meanwhile, the world oil cxx has been using as its base price the quotation of Platt's Oilgram for the sale, on the American Gulf Coast, of a barrel of oil produced under conservation programs in the four adjacent States. Without a conservation program, the price of American oil would have been reduced to a truly competitive level. Since the cost of production outside of the United States is far below that within the United States, the adoption of the Gulf Coast price for crude oil has netted the parties to the conspiracy hundreds of millions of dollars profit on oil produced at low cost in foreign countries and sold in world trade at an inflexible price based on the high American Gulf Coast price.

5. THE ROLE OF THE WORLD CARTEL IN THE DEFENSE EFFORT

When the Iranian Government cancelled the concession contract of the Anglo-Iranian Oil Company in June 1951, the oil companies immediately took the position that, in order to carry out the defense efforts of this country, it was necessary to grant the American companies immunity from prosecution under the vs-fdu.lwx~ in order to relieve the "tremendous world shortage" which resulted from the cessation of production in Iran. In 1950, when world production amounted to 9.5 million barrels a day, Iran was producing roughly 7% of such production.

In June 1951, the Petroleum Administration for Defense sponsored a voluntary agreement to receive vs-fdu immunity under Sec. 708 of the Defense Production Act for overseas operations by the oil companies, permitting the allocation of markets, the use of agreed upon supply schedules for the world outside of the United States, the regulation of production of world oil in all foreign countries, the regulation of imports and exports in the United States by agreement among the companies and any other mechanism which the world oil companies determined was necessary to offset the effect of the loss of Iranian production.

While it is true that certain international oil companies receive immunity from prosecution under the vs-fdu.lwx~ for activities which are approved under the voluntary agreement, such immunity does not extend to any past actions under the cxx arrangement and only to those future cxx actions which may be identical with activities receiving vs-fdu approval.

The Department of State takes the position that it will not interfere in any way with enforcement of the vs-fdu.lwx~, but that institution of proceedings may have the effect of impairing the foreign-policy aims of that Department in the Middle East, since it may encourage groups urging nationalization and renegotiation of concession agreements.

6. CONCLUSIONS AND RECOMMENDATIONS [cxx in re. l&r and u&d=]

In view of the foregoing, there are reasonable grounds to believe that one American oil company (Std.crp.nrg (New Jersey)) and its foreign subsidiaries joined with two foreign oil companies (Shell.crp.nrg and AI.crp.nrg) in 1928 to establish a world cxx in oil; that shortly thereafter four competing American oil companies (Socony, Gulf, Standard of California and Texas) joined the cxx; that several more American companies, doing a foreign business, have shared in the cxx operations over the past 20 years; and that logical extension and continuance of the basic agreement have resulted in (1) control of all major oil producing areas in the world; (2) control of all refining operations in the world; (3) control of all patents, know-how and technology covering refining processes; (4) division of world markets; (5) maintenance of non-competitive prices for oil and its products throughout the world; and (6) control of oil transportation by ptpt and [wtpt] tanker.

It is recommended that a grand jury be convened in the Southern District of New York to inquire into the foregoing facts, and, if these facts are established and the grand jury so directs, that a criminal indictment be returned against the American oil companies and either the foreign companies or their subsidiaries found in the United States; and that a civil suit be filed contemporaneously do dissolve the cxx, to dissipate the allocation and price-fixing arrangements as illegal, and to enjoin any possible future agreements, arrangements or action designed to recreate or to result in any activities eliminating competition in the petroleum industry.

*1953ja:WDC|Report by the [USA] Departments of State, Defense and the Interior on security and international issues arising from the current situation in petroleum.

SOURCE: United States Congress, Senate, Committee on Foreign Relations, Hearings, Multinational Corporations and United States Foreign Policy, Part VIII (Washington, D. C., 1975), pp. 3-9. Reprinted in Kaufman.OIL=145-57 (Appendix D)

THE PROBLEM

1. The Justice Department has begun a judicial process which can be expected to lead to the indictment and trial of the principal international American oil companies on charges of criminal violations of American law in their foreign operations. There is serious danger that the trial of these oil companies on criminal charges would be harmful to critical American foreign policy objectives. No responsible official can assert either that American law should be wholly inapplicable to the foreign operations of these oil companies or that our critical foreign policy objectives should be placed in jeopardy. The problem is to determine the course of action which in these circumstances will best serve the overall national interest.

IMPORTANCE OF PETROLEUM

2. Oil is vital to the United States and the rest of the free world both in peace and war. The complex industrial economies of the western world are absolutely dependent upon a continuing abundance of this essential source of energy. And expanding economies, whether modern and progressive, or backward and underdeveloped, require ever increasing quantities of petroleum.

3. No other nation relies upon petroleum to such an extent as the United States. Petroleum and natural gas supply roughly 50 percent of the vast amount of the total energy consumed in the United States; our vital transportation system is far more heavily dependent upon oil. National consumption of petroleum is at a rate of more than seven million barrels per day. This is over 60 percent of current world demand. By 1955, United States consumption is expected rise to nine million barrels per day, and by 1975, to 13.7 million barrels per day.¹ Until recently the United States supplied its own requirements from its own indigenous resources. But this could not continue indefinitely. Proved oil reserves in the United States are now less than one-third of the world's total. In 1948, because of the tremendous increase in demand, the United States became a net importer of oil. Assuming the continuing high level of domestic exploration and development by a vigorous and healthy United States petroleum industry, it is estimated that by 1975 the United States will be using 2.5 million barrels daily more than it produces and this difference will have to be drawn from foreign sources. Without a vigorous and expanding domestic oil industry, the availability of foreign oil would be even more critical.

4. The free world is currently increasing its use of petroleum at an even greater relative rate than the United States. Since World War II foreign demand for petroleum in the free world has increased at a rate of about 14 percent annually, compared with an increase of about 7 to 8 percent a year in the United States. In, total terms, foreign demand for petroleum has doubled since the end of World War II. The recovery and development of the free world at its current vigorous rate would be impossible without petroleum in ever increasing quantities. Although future increases in foreign demand are not expected to continue at the high post-war rates, they are nevertheless estimated at roughly double the rate of increase in demand in the United States. By 1975 demand from free European nations alone is estimated at 4.0 million barrels per day. With production of only about 0.3 million barrels per day, Europe's deficit to be supplied from non-European and non-United States sources will amount to 3.7 million barrels daily.

¹ All estimates for 1975 are drawn from the Paley Commission Report.

5. The total import requirements of the United States and Europe combined thus are estimated at 6.2 million barrels per day by 1975.

6. In war, petroleum is absolutely vital. It is indispensable to every military operation. In World War II, 60 percent of the total tonnage which the United States moved overseas consisted of petroleum products. The petroleum which remained at home and went to defense-supporting civilian activities was no less essential to the successful prosecution of the war.

7. With the increase in demand that will occur under war conditions, the successful conduct of a major war by the United States and its allies will be dependent upon continuing availability of foreign petroleum supplies. Due to the continually expanding world demand, the more extensive use of oil-powered military equipment, and the use of heavier oil consuming equipment, such as jet aircraft, the farther in the future such a war occurs, the more critical is access to foreign petroleum. Major sources of foreign oil are now indispensable to the economy of Europe and in the future may become indispensable even to the peacetime economy of the United States.

FOREIGN SOURCES OF PETROLEUM

8. There are only two known areas which can supply the import requirements for petroleum in the other countries of the free world. These are the Middle East and the Caribbean area, largely Venezuela.

9. The greatest known petroleum reserves in the world are those of the Middle East. They are now conservatively estimated at some 52 billion barrels out of total world reserves of about 101 billion barrels. Venezuelan oil is of special strategic value, due to its location behind the screen of our Caribbean chain of defenses, across sea routes relatively easy to keep open. It is closer than Texas to our Atlantic Coast consuming area. Venezuela alone is able to supply most of the foreign oil essential to the United States in time of war. In addition to our own import needs, Venezuela supplies substantially all of the import requirements of the Western Hemisphere outside the United States.

10. Since the United States is today a small net importer of petroleum, it is not now making any contribution toward meeting crude oil demand in the rest of the world. That demand, including the United States' deficit, of about 5 million barrels per day, is being supplied at the rate of slightly less than 2 million barrels per day from Venezuela, slightly more than 2 million barrels per day from the Middle East, and about 1 million barrels daily from the remainder of the free world.

11. Since Venezuela and the Middle East are the only sources from which the free world's import requirements for petroleum can be supplied, these sources are necessary to continue the present economic and military efforts of the free world. It therefore follows that nothing can be allowed to interfere substantially with the availability of oil from those sources to the free world.

12. With the exception of Iran, the production of oil in those areas is almost entirely in the hands of United States and United Kingdom nationals.² These nationals have provided the ingenuity, capital, and technology to bring forth production from those areas on the tremendous scale required to fulfill world requirements. As matters now stand, they alone are capable of maintaining and expanding the production of those areas to meet the rising demand for petroleum of the free world. If United States and United Kingdom companies were for any reason expelled from Venezuela and the Middle East, the oil from those areas would to a serious extent be lost to the free world.

² "United Kingdom" or "British" in this section includes British-Dutch interests.

13. Where areas have fallen under Soviet domination, such as in Rumania, eastern Austria, Hungary, Czechoslovakia, and Poland, the oil has been lost to the free world. [NB! “lost”] Almost the same result has followed from the expulsion of American and British oil companies from other countries for other reasons. Iran is the most recent example of nationalization. The repercussions of this action have led to an interruption in the flow of a substantial quantity of oil to the free world. While the initial interruption in such cases is caused by negotiating difficulties, the longer-run factors are know-how and capital. The record of nationalization and governmental operations in such countries as Bolivia, Mexico, and Argentina has shown that vigorous expansion of production does not occur, despite excellent prospects.

14. American and British oil companies thus play a vital role in supplying one of the free world's most essential commodities. [French companies, etc.?] The maintenance of, and avoiding harmful interference with, an activity so crucial to the well-being and security of the United States and the rest of the free world must be a major objective of United States Government policy.

15. Since the United States is the greatest consumer of petroleum and its products in the world (60% of total world consumption) now and for the foreseeable future, it is vastly important that the operations of the great oil fields of the world remain as far as possible in the hands of American-owned companies. [What just happened to “British”?] We are gradually increasing imports. To be assured of these imports, and to ensure that this outstanding example of American investment abroad continues to make its great contribution to the American economy and the economies of other countries, it is essential that the American companies have full opportunities for profitable and expanding operations.

UNITED STATES FOREIGN POLICY OBJECTIVES

16. The operations of American oil companies abroad have profound effects on the conduct of American foreign relations. In the first place, oil is the principal source of wealth and income in the Middle Eastern countries in which the deposits exist; their economic and political existence depends upon the rate and terms on which oil is produced. American oil operations are, for all practical purposes, instruments of our foreign policy toward these countries. These oil producing countries are on or near the borders of the Soviet Union. For this reason and because of certain local conditions the Middle East comprises one of the most explosive areas of the world. The oil companies are in a position of great influence upon our relations with the peoples and governments of these countries. What they do and how they do it determine the strength of our ties with the Middle Eastern countries and our ability to resist Soviet expansion and influences in the area.

17. A major corollary of this is the fact that the internal economic development of these countries depends in good measure upon the operating policies of the oil companies. The United States has been pressing for economic development in the backward areas not solely for humanitarian reasons, but also on the assumption that economic growth contributes to political stability. Oil operations can accelerate that growth, and their cessation can block it. The rate of such growth depends to an important degree on the policies the oil companies follow. They can help or injure the political stability we need in the area.

18. A third factor which interrelates our foreign policy objectives to the operations of the international oil companies is their role as a supplier of western Europe's needs. The terms on which these needs are supplied are critical to the strength and balance-of-payments position of this area which is vital to our security.

19. The operations of the oil companies are also important to our foreign policy objectives in a more fundamental way. At this moment and for some time to come, the United States and the Soviet Union will be engaged in a struggle to capture the support and the allegiance of political groups throughout the free world. We shall be arguing the case for freedom and dignity of the individual and freedom of enterprise, and we shall claim the virtues of our system in providing well-being and economic growth. The activities of the United States Government in petroleum must be handled in such a way as to avoid giving strength to the claim that the American system is one of privilege, monopoly, private oppression, and imperialism.

20. In this struggle of ideas on which our security depends, the oil companies of the United States play a significant role. Their operations extend throughout the free world. They are by far our largest overseas investment. In many foreign countries, they are the principal contact of the local inhabitants with American enterprise. What such people think of the oil companies, they think of American enterprise and the American system; we cannot afford to leave unchallenged the assertions that these companies are engaged in a criminal conspiracy for the purpose of predatory exploitation.

FOREIGN IMPACT OF FTC REPORT AND ANTITRUST ACTION

21. Before the publication of the FTC Report, the international oil companies have frequently been attacked in underdeveloped countries by governments and private groups on various grounds, and in some cases have been subjected to nationalization or lesser forms of harassment. Even in more developed areas the companies have been feared by existing local vested interests, in part because of their superior efficiency, greater technological abilities, and their great size, necessary for the vast scale of these foreign operations, and in part because they represented a broader and sometimes more vigorous and competitive approach. The companies in some cases have successfully resisted attacks from these sources; in others they have not been so fortunate. In either event, they have for a long time, because of the success of their operations, been vulnerable to the possibility that any derogatory information about them is likely to be seized upon by some elements somewhere in the world, to their disadvantage. The problem in part is to reduce this vulnerability of American oil companies to future attacks.

22. The governments from which the United States has heard officially and directly regarding the FTC Report and the vs-fdu action have been those of the United Kingdom, the Netherlands, France, and Saudi Arabia. In each case, except France, the communications dealt with the question of making documents available to the Grand Jury in the vs-fdu investigation.

23. The United Kingdom Government instructed the Anglo-Iranian Oil Company and subsidiaries of other companies located in the United Kingdom to the effect that documents not relating to business in the United States should not be presented to the Grand Jury except with the approval of the British Government. These instruction [sic] have been made a part of the official record of the court proceeding.

24. The Netherlands Government, according to an aide memoire of December 4, 1952 presented to the Department of State, has instructed all Netherlands oil companies not to furnish any documents in response to the subpoena.

25. The FTC Report and the vs-fdu action have been duly noted in the press in many countries. In most cases there has been some editorial comment, mostly in Venezuela and the United Kingdom. The press reports appear primarily to be based on wire services' accounts in the United States, and quote rather widely the reactions of the American oil companies, including references to the attempts to quash subpoenas, and predictions of unfavorable foreign reactions. In the United Kingdom, the FTC Report and the vs-fdu action have been thoroughly covered in the press, and most of the editorial comment has revealed a lack of sympathy for United States vs-fdu.lwx~ and apprehension over their possible application to British companies.

26. In Venezuela, the only Latin American country where any comment had developed, there has been an unfavorable press reaction, and a suggestion that perhaps a Venezuelan Government investigation of company activities should be undertaken.

27. Middle Eastern reaction in the press has not been highly significant, although apprehension has been expressed that successful vs-fdu action might decrease oil revenues for the Arab states. The communist, left-wing, and extreme nationalist newspapers have made some unfavorable comments.

28. The Soviet telegraph agency has printed two articles, and Radio Baku has made one propaganda broadcast, which found in the charges of the FTC Report and the vs-fdu action evidence of American monopolistic imperialism. Revelations which might be made in the course of the current Grand Jury proceedings, or as a result of a criminal indictment and trial, could doubtless be used and distorted by Soviet agencies in such a way as to injure seriously the prestige and security of the United States.

29. This entire situation is fraught with great potential danger to the national interests of the United States. For example, expressed reactions to date in Venezuela, many of which do not voice the threat of nationalization, are less important than the potential reaction which can well develop. The national economy and Government finances are dependent upon the oil industry, and political forces have unanimously backed radical overhaul of the present petroleum laws and the sharp upward revision of the benefits from petroleum to the nation. All political parties in opposition to the Government agree that ultimate nationalization of petroleum is their goal, to be achieved as soon as possible. The opposition has utilized the criminal proceedings to charge the present Government with incompetence and indifference in administering the national wealth, and has placed it in the position of sole Venezuelan defender of the foreign oil companies. A Government commission has already been appointed to investigate the companies' pricing practices, which are an essential feature of any cxx agreement. Since the present Government is aware of the benefits the industry brings to Venezuela and that the Venezuelans themselves lack the technical skill and marketing facilities to take over the industry, it has pursued a temperate course against its critics which, however, has dismally failed to stem the tide of criticism. The Embassy in Caracas has reported that the [oil] companies' broad programs for better public relations and cooperation with the Government have been set back years by the FTC allegations against them. In sum, the criminal action may well renew an era of recrimination and hatred, and stimulate a movement toward anti-Americanism and nationalization of all important foreign investments, including also those in iron ore. Indictment and prosecution would accelerate this trend.

30. The Middle Eastern countries were so long subjected to foreign political and economic control that the motives of any foreign enterprise are still suspect. Although the oil companies are doing much to allay this suspicion, the success of their operations nevertheless invites envy and dislike. Furthermore, anti-Westernism and [!?] anti-Americanism are widespread in the Middle East. These are the basic factors, and they are complicated by the feudal or semifeudal structure of Arab society, in which certain groups may seek to avert or resolve existing frictions by resort to anti-Westernism. The FTC Report and the vs-fdu action add fuel to the flame. [Argument mounts = legal prosecution of the crime is maybe worse than the crime.]

31. In both Venezuela and the Middle East a wave of economic nationalism which might endanger American interests is entirely possible. Once such powerful political and emotional forces are unleashed, it is difficult or impossible to restrain them. The developments in Iran are an example.

32. There is, of course, no way of preventing adverse reactions arising from the FTC Report, because it has been published and widely disseminated. Therefore, it is hard to assess the full foreign implications of dropping or appearing to drop the vs-fdu action.

33. The United States is waging a constant struggle to dispel the concept, very much alive not only among communists but also in non-communist circles of the free world, that capitalism is synonymous with predatory exploitation. On the more positive side we seek to make the point that freedom of competitive enterprise is the economic counterpart of the concept of freedom of the individual in the political and social spheres. We have sought to lead the way toward a wide acceptance of this American way of life, and one of our best arguments has been that the productive achievements of the American economy have been attained largely as a result of the competitive system. Notwithstanding the constant action of the oil companies to expand production at home and abroad, there would be a risk that a United States failure to follow up our vs-fdu approach with respect to other aspects of oil company operations would be regarded as hypocrisy. This might add to the distrust of capitalism and free enterprise on the part of many elements in the world, and could impair not only the immediate position of the oil companies abroad, but also the broader interests of the United States as a whole. [Interesting twist on argument so far? Prosecution according to the specifics in the FTC Report will raise the question, “Why are not all criminal features of international oil being prosecuted?”]

34. One of the most disadvantageous features of the current vs-fdu action, in terms of foreign impact, is the fact that an investigation leading to a criminal indictment by a Grand Jury has been initiated. Although under American law a person or a corporation accused of criminal action is presumed innocent until judged guilty, this point is often overlooked by foreign observers. An indictment by a Grand Jury on the complaint of the United States Government, alleging crimes by the leading oil companies and their executives, is almost as effective in foreign propaganda terms as a decision finding the oil companies guilty as criminals and conspirators. This obviously harms the prestige of the companies in other countries, and can very well lead to an adverse effect upon the interests of the United States. Thus, it is concluded that American interests abroad will be adversely affected by the continuation of the present Grand Jury proceedings. Alternative means for dealing with this problem in the light of the foregoing considerations are developed below.

RESOLUTION OF PROBLEMS

35. The objectives of the United States in foreign petroleum require the continuance and expansion of the flow of oil from producing to consuming areas in the free world. United States foreign policy calls for the promotion of political and economic stability and development in the Middle East, Latin America, and other underdeveloped areas. American policy in free Europe requires maximum availability of oil at reasonable prices. United States domestic policy requires compliance with the vs-fdu.lwx~ on the part of the petroleum industry. The extent to which the vs-fdu.lwx~ apply to the foreign activities of petroleum companies is not clear, and judgment on this issue can be rendered only by the courts. The publication of the FTC Report and the initiation of the vs-fdu action have thus far had some adverse effect upon foreign opinion, on our national security, and on our foreign relations. Potentially great difficulties may arise as a result of the simultaneous pursuit of our security, foreign policy, and law enforcement objectives, unless adequate correlation is achieved. The purpose of the Government should be to seek the best means of moving toward all United States objectives effectively and simultaneously.

36. The point has been made above that a criminal indictment and trial of companies which are a major factor in American business abroad can scarcely be conducive to the development of confidence in American business institutions. [Again, prosecution of the crime is the problem; the crime itself seems to pose no threat to anyone.] A good deal of the difficulty caused by this fact could be removed if the criminal action were terminated, and any relief which the United States Government decides to seek were pursued in a civil suit, which might lead to a consent decree. In this way a trial might well be avoided, and hence a great reduction in the number of possible sensational disclosures brought about. Foreign reactions to a civil rather than a criminal action should be substantially less adverse to United States interests.

37. A second aspect of the difference between a civil and criminal action lies in the importance of correcting evils in this sensitive field, if they exist. [Finally, the gravity of the accused crime is addressed.] Correction of any evils which may exist should in fact promote United States security and economic objectives in the foreign field. A criminal action such as that now under way leads to no substantial corrective measures unless and until it is supplemented by a civil action, resolved either through a court judgment or through the negotiation of a consent decree. At the same time, whenever there is a violation of the vs-fdu.lwx~, a civil action ensures adequate enforcement. It entails less publicity, and brings corrective action more promptly.

38. A third consideration affects United States national security and foreign relations. While it is of paramount importance that American petroleum interests abroad act in a manner consistent with the foreign policy of the United States, industry expects Government support abroad and is entitled to such support, except when it acts contrary to our national interests. In many fields no legal or formal control over the action of American private interests abroad is exercised by this Government. This is in accord with the view that a minimum of regulation and control is an accepted American principle. On the other hand, this means that if Government and industry are to act together to promote foreign policy and security objectives in petroleum, there must be a basis of mutual confidence between them. Criminal proceedings are not likely to produce such confidence between the two parties in this dispute.

39. The fact that the FTC Report has been published and the vs-fdu action begun creates a series of issues between industry and Government. These issues must be resolved if the groundwork for future cooperation between them is to be laid. [Could this be a threat?] Corrective action, if and where needed, and a clearer picture of the interpretation and application of the law should make this vital cooperation possible.

40. The problem of international petroleum, with all its complex and diverse elements, should be reviewed by the responsible executive departments. A commission consisting of the Secretaries of State, Defense, Interior, and Commerce should be created to give careful attention to the interrelationships of vs-fdu, security, and foreign policies in petroleum. The commission should have as its specific task the development of recommendations to the President on changes, if any, in oil company practices or structure required by security, economic, and political considerations in the foreign field, which changes would have a bearing upon the remedies that might be sought in an vs-fdu suit, the commission's work should be of a classified nature, and it should be required to report on this subject within a specified period of time, for example 90 days from the time of appointment.

41. The commission's report could be used by the President as he saw fit, and presumably would be useful to the Attorney General in developing the specific form of relief which might be sought from the companies. The Attorney General will no doubt wish to have a reasonable measure of latitude, but the commission could well demarcate certain areas of primary importance in the foreign policy and security fields.

42. If this program—terminating the criminal action and establishing a Cabinet commission with the foregoing terms of reference—were put in effect, a careful and explicit statement should be made to the public both at home and abroad. This statement should explain why the criminal action was being terminated and what the Cabinet commission would be expected to do, and assure the world that security and foreign policy considerations would be major factors in the determination of United States action in international petroleum.

43. The Departments of State and Defense submit the following recommendations to the National Security Council:

a. The Grand Jury proceedings now under way should be terminated.

b. The President should appoint a Commission of the Secretaries of State, Defense, Interior, and Commerce (the Attorney General should be invited to attend the sessions of the Commission, and to participate to the extent considered appropriate by him and the Commission) to develop recommendations regarding our national objectives and policies in security, economic and political fields which have a bearing on the application of United States vs-fdu.lwx~ to the overseas operations of United States oil companies, and to the remedies to be sought in a civil vs-fdu suit.

c. The President should instruct the Attorney General to prepare a complaint as a basis for a civil action under the vs-fdu.lwx~, if in the judgment of the latter this action is warranted, copies to be transmitted to the members of the Commission mentioned in recommendation b for their information as soon as practicable after completion but in any event at least 10 days before it is publicly filed.

d. An announcement of this course of action should be made by the President.

44. The Department of the Interior concurs in the foregoing report (not including its recommendations in paragraph 43), the report being generally in accord with the memorandum of the Secretary of the Interior (NSC 138), but the Department of the Interior does not either approve or disapprove the recommendations in paragraph 43 and does not join therein.

*1953se10:USA State Department, Richard Funkhouser [Wki ID] revision of jy03:memo [cns stt&crp] = Internal State Department Memoranda—Analysis of Middle Eastern oil concessions and their implications for U.S. foreign policy

SOURCE: United States Congress, Senate Committee on Foreign Relations, Hearings, Multinational Corporations and United States Foreign Policy (Washington, D. C., 1975), pp. 135-39. Printed in KCC:161-70 (Appendix F)

To: Ne-Mr. Hart.
From: NE—Mr. Funkhouser.
Subject:Middle East oil policy considerations.
July 3,1953 (revised September 10,1953).

1. The history of agreements on Middle East oil is not encouraging. Past agreements have been either restrictive, counter-productive or ineffective:

(a) The San Remo agreement arbitrarily divided Middle East oil between the British and French. The United States Government spent several years breaking up this "duopoly," only to replace it by what even oil men consider an undesirable "oligopoly," e.g. IPC.

(b) The State Department's "Open Door Policy" negotiations with the British Government in the 1920s were officially interpreted as a landmark in improving the competitive aspects of Middle East oil development and in establishing U.S. oil companies in the Middle East. C. S. Gulbenkian, however, calls the "O.D.P." "eyewash," and writes in his memoirs that "never was the open door so hermetically sealed." "If the U.S. companies had not been allowed into the British French Mesopotamian concessions they would have broken in," because of the tenuous and controversial grounds on which the British-French concession was based. Gulbenkian argues that this action established a most effective cxx in which maximum prices and profits were realized.

(c) The intercompany Red Line Agreement of 1926 prevented the major oil companies from competing against each other for concessions or oil purchases in the Middle East. This helped retard production in Iraq, Kuwait, Saudi Arabia, Qatar and the Neutral Zone for ten to twenty years. It contributed heavily to public mistrust of the international oil business which is haunting the oil industry today in the area.

(d) The Anglo-American Oil Agreement of 1946 was abortive. The United States Government with its companies controlling only 5% of Middle East production wanted to remove British restrictions to competition. The United Kingdom Government wanted an agreement which would maintain the status quo and guarantee respect for concession contracts. The eviscerated compromise was meaningless but even that caused domestic producers in the United States to fear that they might be subjected to some international control. The agreement was pocketed by Senator Connolly. Meanwhile, American companies by their own competitive efforts and without such an agreement have gained control of 66% of Middle East production. (This might be 90% if United States companies wished to deal with Iran.)

(e) United States Government efforts (1946-1948 and later) to spell out an oil policy have been abortive. [vs-fdu.lwx =] The Department of State has not been able to agree on oil policy within its own walls, let alone develop substantive agreement between other agencies. Probably the major impasse comes down to whether the principles of the Sherman Anti-Trust Act are good or not good for the world and oil.

2. There are other reasons for this dilemma regarding agreement on oil. One is that there are few outside the oil industry who are well informed on oil; company officials by their nature cannot be completely disinterested and objective. Secondly, two realistic and resourceful oil executives when put together traditionally retreat to caution and conformity. These qualities are not helpful in accommodating the dynamic oil industry to the rapidly changing conditions in the Middle East. Thirdly, the Departments of the United States Government, as well as oil companies, seem to find it difficult to agree formally to the difficult courses of action always required. Formal discussions and agreements on oil turn out to be defensive and try to insulate the oil industry from trends abroad in the world. Nationalism as applied to the oil industry and interpreted by the industry becomes a scheme of local radicals who "wish to kill the goose that lays the golden eggs." Consequently, oil policy discussions tend towards the restrictive, the unrealistic and the unimaginative. Lastly, oil agreements seem always to be between parties that have the oil and consequently cannot take into account adequately the interests which cause the trouble. The result is that agreements on oil are suspect in the public mind and "agreements" become in themselves self-defeating. This would certainly apply to any U.S.-U.K. agreement on Middle East oil at either the company or the government level.

3. It is thus more than possible that the results of United States and United Kingdom oil company collusion or cooperation, as HMG [Her Majesty’s Government, i.e., the governing Cabinet in London] is recommending, would produce something bad rather than good. United States oil history and legislation would support this suggestion. The facts and findings of the FTC report, notwithstanding its highly slanted and non-objective approach, are pertinent in this respect. It should be remembered that the NSC and individual departments of government did not attempt to evaluate the substance of the report or its validity but only objected to its publication. Critical problems raised by real or alleged collusion among oil companies remain to be settled.

4. Oil companies are now insisting that the anti-trust law suit is the root of all their Middle East troubles. This point should be most carefully evaluated. While it is obvious that ME officials will take advantage of every available weapon in their negotiations, it is unrealistic to equate oil company difficulties in the area to the law suit alone. Oil companies were under greater pressure in the two-year period preceding the FTC report and lawsuit than they have been in the succeeding period, e. g. AIOC [Anglo-Iranian Oil Company] concession was cancelled in 1951; Aramco told the Department that American lives were endangered by Saudi Arabs in 1950, IPC narrowly escaped nationalization in 1949. A reflection of the deepseated problems discussed in the FPC [sic] report could be found in these serious crises, but neither the report itself nor the lawsuit played any role in these difficulties since they were unborn. Similarly, it was easy to predict, as both Department and oil company officials did on repeated occasions, that the ptpt and pricing policies of ME companies were most vulnerable to local attack on grounds of precedents elsewhere. Industry representatives recognized this situation, and current Aramco action squarely faces these facts. The vs-fdu action has of course contributed to local suspicion of companies in the area, but this is neither particularly new nor is it certain that it is one of the basic contributing factors to instability in Middle East oil. Solutions aimed at removing what may be marginal factors in this equation may be either counter-productive domestically and abroad or dangerously tangential during a critical period when the real sources of trouble must be analyzed and corrected.

5. It is possible to be equally skeptical about constructive results from collusion or cooperation between Arab states on oil. Their self-interest lies not only in increased control of the industry with the attendant hazards to the West, but specifically in increased prices which could adversely affect the viability of all oil consuming states, particularly our European allies. Such repercussions would hardly cause concern among Arab Governments which feel the West has taken too much profit from Arab oil to [sic] long.

6. Collusion or cooperation between Arab states and oil companies together might well compound the disadvantages of paragraphs three and four. There might be a pronounced mutuality of interest in higher prices, supported by controlled or restricted production. Direct repercussions could increasingly with time affect the American consumer. With the center of gravity of the world's oil moving from the United States to the Middle East, matters of price and supply may eventually be determined in the Arab world and the unpleasant day may come when Arab states can double oil prices and get away with it.

7. Collusion or cooperation between oil companies, Arab states and HMG might further compound the problem. As British Embassy representatives have suggested, HMG's Treasury might welcome higher priced Middle East oil. A case could be made that the consumer would find himself up against a formidable "super-cxx." Competition in the international oil industry could under the circumstances suffer a serious blow. It is possible that big companies would get bigger, small companies smaller, fewer would control more, until the point of serious conflict with the rest of the world, the result of which could cause world repercussions much greater than anything now faced.

8. Mr. Duce believes that such a group, however, could get together for constructive purposes. He refers to the operations of the Texas Railway Commission which endeavors to conserve dwindling reserves and to avoid unsound production practices. It should be remembered, however, that the Commission was developed within the narrow limits of one area which had experience in producing oil in vast quantities for fifty years. The problem in the Middle East seems to be quite different. The Arabs are not interested in conservation. Their complaint is that their oil has been conserved too long. Their production has been restricted during a most lucrative half of the twentieth century and now they may well wish to spread their oil all over the world. Arab states may eventually be more concerned with competition from other sources of power than with depletion of their 70 billion barrels of proved resources which probably cannot be over-produced in the foreseeable future.

9. One of the tested solutions to oil problems has been, on the other hand, the development of conditions under which competitive forces are encouraged to operate more freely on each other. Some oil executives and economists, for example, believe that AIOC [Anglo-Iranian Oil Company] might never have been nationalized if they had had competitors in Iran. There is a certain safety in numbers; it has worked in the United States and in Venezuela. If Jersey, Socony or Shell and several independent groups of whatever nationality had been producing oil in Iran the following might have developed: (a) there would have been no monopoly, which is ideally easy to nationalize, (b) AIOC would have been kept on its toes and been abreast of changing conditions in the world, (c) Iran would have profited from greater production, greater activity and greater revenues, (d) AIOC would not have been blamed for everything that went wrong in Iran. The Department has in the past, as have individual oil company officials, urged IPC and Aramco to relinquish greater parts of their 400,000 square mile concessions in the Middle East, for this reason. The Department has been partially successful with IPC and a strong case can be made that the action has been helpful in reducing tensions in the area. AIOC, of course, helped save itself from expropriation in 1933 by giving back 400,000 of its 500,000 square miles monopoly, but then unfortunately did everything in its considerable power to keep out competitors. Aramco by its own admission could have avoided jumping to the 50-50 profit-sharing agreement if they had given up a large part of their concession in 1950, as asked by the Saudis and generally supported by the Department. This issue may be difficult for the company to sidetrack indefinitely.

10. However, oil company management, like HMG, too often appears to think time is on their side and with notable exceptions may take required action too late. Concession contracts like the British Empire will continue to undergo "surprising" attacks and "crises" and, like the British Empire, probably cannot be protected by guns or governments but only by enlightened thought, understanding and compromise. Enlightened oil company policies, knowledge and application of public relations, government relations, labor relations practices proven effective elsewhere in the world, forthrightness (such as has not been overdone to date in the recent Aramco price and the IPC ptpt negotiations), education and other specific lines of action spelled out in the Department's draft Middle East Policy paper dated September 10,1950 would seem to provide companies with the best possibility of riding out these crises and changing with change.

11. However, with oil company policies as they have occasionally been in the past, with the Arab coming into his own with a vengeance, with the historic precedents for colonies to go through the nationalistic stage before arriving at the international approach required for Mr. Duce's Oil Plan [sic]. IPC and Aramco local producing operations may well be nationalized or at least "reversed" in time. The equation may be that the nationalization date equals X (time for present generation to develop Arab oil "experts"), plus Y (completion of the large investments and installations needed to produce in quantity), plus Z (a hardheaded bargaining position on the part of oil company management). Z is dangerous variable, Y is probably here, and X is moving along fast. Irresponsible Arab nationalism and distrust of Western governments and oil companies appear to be "constants" in this equation. General Smith told Mr. Duce virtually the same thing when he said "natural resources invite nationalization."

12. In this regard it may be a false conclusion to consider that the Iranian catastrophe will deter others from following suit. On the contrary, it might be argued that other Middle East states (a) strongly sympathize with what they consider a courageous defiance of the West, (b) now more clearly recognize the extent to which oil companies and Western governments can and will penalize the oil state by boycott and (c) will consequently move more carefully but more relentlessly towards breaking this "foreign control" of their countries and their resources. To think that the Arab masses will learn a lesson from the Iranian debacle may be unrealistic.

13. Oil companies and/or Western governments might consequently be making useful plans at this moment to handle such a situation should it develop despite all efforts to the contrary, i.e., how to carry on trade in the Middle East in a situation in which producing "concessions" are drastically altered. General Smith's "management contracts" proposals might well be given secret study by industry and/or government, but it is difficult to have confidence that such planning for the worst can be successfully undertaken, particularly en masse as Mr. Duce suggests.

14. Perhaps serious study would indicate that nationalization or "reversal" of all Middle East producing properties might not ipso facto mean doom as oil companies claim. It is possible that the same oil might be available to the same consumers and to the same oil companies in the same quantities. There would appear to be no real alternate sources of consumers or companies. [cns=] A case might even be made that there would be fewer tensions in our relations with the Middle East and a more profitable and stable international oil industry if the companies worked through the reverse type of concession, i.e., the management contract advanced by General Smith and advocated by such successful oil executives as Mr. Brantly of ECA and Texas. What are needed are oil men with the vision to be able to accommodate their thinking to changing oil conditions in unorthodox times and in an unorthodox area. (I am convinced the industry not government must lead in this.) That ability to accommodate is best developed under an environment of free competition rather than from efforts to "hold the line," which seldom succeed. The "hold the line," "big stick," "force," "British," "Kennan" school has however many supports in and out of industry; its adherents increase with frustration, exasperation and crisis in the area. I can't believe it is the answer or that it will work in 1953 in Asia. Its record, as illustrated best by past AIOC-U.K. policy in the Middle East, is unenviable in terms of end results. Its contribution to the difficulties now found in the area seems large. Such a policy even appears commercially unsound, judging by the profitability of the American company approach to Middle East oil problems. Furthermore, the identification of foreign companies with their foreign governments has not helped British company stability in the area, while a case can be made that Aramco's independence of the U.S. Government was not only responsible for the granting of the Aramco concession in the first place but has been a carefully nurtured concept of the company in its present highly successful operations. U.K.-AIOC singleness of purpose only served to close both minds to the realities of the Iranian situation and resulted in the wrong answer. Such a policy has also helped convince Iranians that soverign [sic] control of their own country is meaningless in the face of foreign government involved in commercial affairs.

15. In several years, events in the area may be recognized as sufficiently serious to require the type of international study and cooperation recommended six years ago by John Loftus [ID]. It will be remembered that Mr. Loftus gave his speech in Pittsburgh suggesting that the international oil business might wish that they had an international forum where international order in the industry and international rules to protect their investments might be slowly developed. Mr. Loftus was rash enough to suggest that to be effective such an international instrumentality should give full representation to the consuming as well as producing nations. He was violently attacked by segments of the industry at that time; there are indications, however, that Sir William Fraser and others may be less violent on the subject now.

16. Meanwhile, the most practicable line of action remains, in my opinion, a full informal exchange of ideas between individual Departmental officials and individual oil company executives. This at least has worked on important occasions in the past.

(a) NBA representations in 1948 to individual officials of Jersey, Socony and the British and French Embassies in Washington successfully brought about the first royalty increase in the Middle East in 15 years. A strong case can be made that nationalization of IPC in Iraq was avoided by this "semiofficial" approach.

(b) Informal Department representations to the U.S. companies operating in the area (1947-1949) were instrumental in bringing about the relinquishment of a number of concessions, including, the Kuwait Neutral Zone. A strong case can be made that by this action, stability in Middle East oil as well as competition in Middle East oil was increased.

(c) Informal exchange of views between Department representatives and Middle East oil company executives (1949-1950) played a significant role in the adoption in the Middle East of the Venezuelan profit-sharing agreement as well as other progressive company practices in Venezuela.

(d) Informal exchange of views between Department representatives and individual United States oil officials (1952-1953) played a role in the development of the new "tariff approach of the United States companies to Middle East ptpt problems.

17. It is meanwhile to be deplored that there seems to be an increasing tendency among modern-day oil executives to seek increased government control, business [sic] and does not reflect the attitude of the aggressive leaders who won the petitive virility and survival powers. This present-day desire to protect the status quo in place of disrupting the status quo would seem to be a sign of old age in business and does not reflect the attitude of the aggressive leaders who won the concessions in the first instance. If this is true, such companies as IPC and Aramco may look forward to the ignominous end of the unversatile dinosaur family that sank in the mud when the weather changed.

18. A strong case can be made that increased government involvement and control is inevitable in international oil. It seems almost certain that Arab Governments will exercise increasing control, and the argument perhaps could be made that in view of this inevitability United States and United Kingdom Governments should get into the act in order to make such control as harmless as possible. However, it is hoped that this unfortunate alternative can be postponed, and that every effort will be made to fight government encroachment into the oil business. This can best be done by increasing the competitive environment in international oil and by forcing oil companies to develop their own biceps by punching each other in the nose occasionally. They are getting along awfully well these days.

19.1 would, therefore, reach the conclusion that any study of "proposed solutions" to Middle East oil problems include an evaluation of the following "muscle building techniques" which have produced beneficial results, both commercial and political, in the past:

• Aramco and IPC might be completely freed from control of parents and might sell to all comers as producing companies.
• Aramco and IPC might relinquish all concession areas not currently in production.
• Pipeline companies might be completely freed from control of producing companies and parents and become "common carriers" in competition with tankers.
• Middle East governments might be urged to favor bids on new areas by companies without Middle East production.
• Every encouragement might be given to independents to move Iranian oil.
• These examples of "nose-punching techniques" have each been suggested to me by industry (major company) officials.

20. Lastly, it is of critical importance to the success of any approach that oil men be handled most carefully and diplomatically. Oil officials seem overly sensitive to any indication that the industry isn't perfect. It may be necessary to "agree" with them before attempting to draw criticism of their own operations and possible solutions from them. It is probable that government officials start with two strikes in any objective discussion of oil problems. Emotion, pride, loyalty, suspicion make it difficult to penetrate to reason. Oil men tend to divide government people as either "for them" or "against them" and the initial adverse impression seems to get around fast and make solutions most difficult to reach.

))

Whale bbl

<>Dow,George Francis|
*1925:MA Salem, republished, 1985:Dover|_Whale Ships and Whaling: A Pictorial History| ((OWN))

<>Robotti,Frances Diane|
*1962:NYC|_Whaling and Old Salem (A Chronicle of the Sea)| ((OWN 27-8 30 123 125 126 187 188 191 193 201-2 203 205 207 224-5 228 233 245 246))

<>Sanderson,Ivan T| a{}n{}o{
*1956:NYC, Bramhall House|_Follow the Whale| ((OWN| 13 21 78 79 80 86 103 104 106 107 108 109 110 111 113 114 116 118 138 150 152 164 166 181 183 192 193 224 251 254 256 260 306 325 340))

<>Stackpole,Edouard A| a{}n{}o{}
*1972:U.MA.Press|_Whales & Destiny: The Rivalry between America, France and Britain for Control of the Southern Whale Fishery, 1785-1825| ((OWN))

*1950:NYC,Newcomen Society|_William Rotch (1734-1828) of Nantucket, America's pioneer in international industry

<>Stevens,William O|
*1936:NYC|_Old Nantucket: The Faraway Island} ((OWN ch3 “The Gold Age of Whaling”:27-51))

<>Williams,Harold, ed|
*1964:Boston|_One Whaling Family| ((OWN being the 1858:1861; journal of Williams,Eliza Azella accounting the voyage of the Florida, plus a description of 1872:the great loss of 23 ships in Arctic ice; plus 1873:1874; voyage of the Florence by Williams,William Fish))

NEWER and BRIEF TXT~

<>*1994fe27:MGW:15 translated Le Monde| Michele Maringues reports from Port Harcourt =

The Ogoni people are stepping up their campaign for a larger share of their country's revenues.

ONLY EIGHT months ago the market place in Kaa, some 60 kilometres south of Port Harcourt, was a bustling [sic] with traders. Today all that remains is a desolate ruin where a piece of torn galavanised sheeting occasionally hums in the wind — a terrible testimony to the tensions undermining a region vital for Nigeria's oil production.

For more than a year, the Nigerian army has been on a state of full alert in the 650 square kilometres of Ogoni country where the Ogoni population barely amounts to 500,000. Nigeria's oil is carried through this luxuriant country in pipelines to the Bonny terminal.

There are road checkpoints, and soldiers both to protect the oil technicians and prevent another outbreak of ethnic violence between the Ogonis and the neighbouring Andonis.

I.ast July, following incidents al the height of the presidential election campaign, the Andonis massacred Ogoni fishermen returning from Cameroon, then launched an all-out attack on Kaa, blowing up places of worship, homes and schools. The fighting continued until September, leaving 438 Ogonis and 123 Andonis dead.

The two communities had been living in peace for the last 40 years. Who provided the Andonis with the explosives and the automatic weapons used so devastatingly in the Kaa attack? Much the same sort tack on an Ogoni neighbourhood in Port Harcourt, an attack tarried out this time by another tribe, the Okrikas. This left some 60 dead and reduced to ashes a whole section of the vast market, where Ibo and Ogoni traders used to work side by side.

"It's Shell's filthy war," say the Ogonis, accusing, without any proof, the powerful Anglo-Dutch company of fomenting inter-ethnic strife with the help of the former Rivers State governor, Rufus Ada-George, an Okrika.

[More on Shell in Nigeria (W#1 | W#2 ) ]

In fact, the Ogonis are upsetting many people. For the last two years, this humble and obscure community, one of the most backward living in the Niger delta, has been spearheading a campaign in favour of environmental rights in the Third World and the defence of oppressed minorities. Behind them there are not only the other ethnic minorities of the southeast who form the bulk of Nigeria's population, but also all those who challenge the supremacy of the three dominant groups — the Hausa-Fulani in the north, the Yoruba in the west and the Ibo in the south — and demand a fairer share of the country's wealth.

Many Nigerians cannot accept the fact that the government is spending billions on constructing the federal capital Abuja, with its expressways, conference centres and a presidential palace, while their villages still lack proper roads, schools, running water and electricity.

“The Nigerians don’t work, they don’t collect taxes, all they do is sit around waiting for the oil money to see how much of it the ‘Thief of Abuja’ (the Nigerian head of state) is going to leave them," quipped Ken Saro-Wiwa, 52. founder of the Movement for the Survival of the Ogoni People (Mosop).

[Nigerian Oil]

Before the Biafra succession in 1967, when the Ibos took the initiative, over 90 per cent of the oil produced in the southeast of the country came from non-Ibo territories, he pointed out. In 1970, the oil-producing Nigerian states were still receiving 45 per cent of the oil revenues.

Then, under General Ibrahim Babangida's regime (1985-93) their share fell to 1.5 per cent, then doubled last year when public protests became too great. "They leave us 3 per cent of the oil and 100 per cent of the pollution," said Saro-Wiwa.

In the autumn of 1992, Mosop gave the oil firms an "ultimatum". It demanded £18 billion in owed dues from Shell and Chevron and their Nigerian partner, the Nigerian National Petroleum Company (NNPC), plus £4 billion compensation for the environmental damage inflicted over the last 30 years. On January 4, 1993, when all public protests were banned, between 150,000 and 200,000 took part in a peaceful march through Ogoni country.

[More on Chevron in Nigeria = http://www.reuters.com/article/2013/09/24/us-chevron-nigeria-idUSBRE98N0CY20130924 | http://www.bloomberg.com/news/2013-07-30/shell-flees-to-nigerian-offshore-fields-amid-onshore-woes.html ]

A few weeks later, with an army clamp-down on the region, Mosop again succeeded in organising a "civic vigil" with the traditional religious chiefs. After several bloody incidents, Shell was forced to close down all its Ogoni oil wells. In May, the federal government issued a decree laying down the death penalty for anyone who threatened Nigeria's unity.

WHEN the military regained power last November [1993], it forced Governor Ada-George to resign and this opened new prospects. Sweeping aside the hesitations of the "northerners", the new head of state, General Sani Abacha, promised to hold a constitutional conference in March for re-establishing Nigeria on more equitable bases.

In January. General Abacha sent Donald Etiebe and Alex Ibru, his oil and home ministers respectively (both members of delta minorities), to Rivers State as a sign of good will and similar visits are planned to the other oil-producing states.

Everybody now feels that it is time to get around the table, starting with the constitutional conference promised for March.

Three follow-up websites =
(1) W#1
(2) W#2 (F/March 2008/)
(3) W#3 (F/fuel subsidy/ and F/privatisation/)

<>2013my09:NYR:59-60|>McKibben,Bill| “Some Like it Hot”, a review of =

*:|>National Research Council|_Climate and Social Stress: Implications for Security Analysis, edited by John D. Steinbruner, Paul C. Stern, and Jo L. Husbands, available at nap.edu/catalog

*2012no:|>Potsdam Institute for Climate Impact Research and Climate Analytics, for the World Bank|_Turn Down the Heat: Why a 4°C Warmer World Must Be Avoided, report available at climatechange.worldbank.org

*2013wi:Daedalus|>Oreskes,Naomi and >Conway,ErikM |_The_Collapse of Western Civilization: A View from the Future

And the heat goes on. In the last few weeks [early 2013], new data from the CryoSat satellite system have shown that there's only one fifth as much sea ice in the Arctic as there was in 1980. New data from the carbon dioxide monitors on the side of Mauna Loa in Hawaii showed the second-greatest annual leap in atmospheric CO2 ever recorded. A new study of temperature records dating back 11,000 years showed that the planet is currently heating up fifty times faster than at any point during human civilization. New data from the Arctic showed that over the last thirty years vegetation zones have moved seven degrees latitude further north. In other words, the planet continues to show the effects of the early stages of global warming, and those effects are very large. If the one-degree Celsius rise in temperature observed so far is enough to melt the Arctic, we have to ask what further increases will bring.

We will, sadly, find out. At this point, almost all observers agree that because of the inertia in our political and economic systems, it would take an all-out effort to hold temperature increases below two degrees Celsius, the red line that the international community drew at Copenhagen in 2009. And there is no sign of that all-out effort; instead, there's a constant push to drill and frack and mine for more oil and gas and coal. Instead, also in the last few weeks, Exxon CEO Rex Tillerson announced that the company would double the acreage it is currently exploring looking for new oil.

Meanwhile, a new oil find in California was reported to be four times larger than the new oil patch in North Dakota, which was itself compared to Saudi Arabia. And that's just in the US—in Australia, a new find of shale oil in the Ackaringa Basin was estimated to be even larger than the tar sands of Canada, with estimated recoverable reserves worth as much as $20 trillion.

The mighty political power of the fossil fuel industry has so far been enough to obliterate reason—we're now a quarter-century past the day when NASA scientist James Hansen1 first announced in Congress that it was "time to stop waffling so much and say that the evidence is pretty strong that the greenhouse effect is here." Those twenty-five years have seen no real climate legislation passed by our Congress. A few countries—notably Germany, which is now supplying 22 percent of its energy needs with renewable sources, and headed for more than 40 percent within a decade—have made good-faith efforts. But in most places the fossil fuel industry has prevailed, both by funding disinformation campaigns and by purchasing the affections of enough legislators to make sure the status quo persists. One sounds like a broken record for saying this, but so far democratic systems (and pretty much every other kind of system) have proven no match.

{_{ 1. In early April [2013] Hansen announced his retirement from NASA, an agency he joined as a young scientist in 1967. He, more than anyone else, was responsible for the development of the climate science the world is currently ignoring.}_}

There is, therefore, something both noble and despairing about the new volumes under review. They represent the inertia of our academic and bureaucratic systems, which continue to churn out warning after ever-more-detailed warning about our plight. It's possible that their main use will be for historians, as proof that the alarm had indeed been sounded. But one must at least hope that they will be read and heeded— one must hope, that is, that we're still capable as a species of recognizing on-coming catastrophe and heading it off before it reaches its fullblown form.

The National Research Council, first. Were there an award for writing in dry, jargon-dense prose whose deadened rhythms mask the urgency of the message, this report would surely win. Still, this volume, which was "prepared at the request of the US intelligence community," contains information as sobering as it is sober. Its basic take is that

given the available scientific knowledge of the climate system, it is prudent for security analysts to expect climate surprises in the coming decade, including unexpected and potentially disruptive single events as well as conjunctions of events occurring simultaneously or in sequence, and for them to become progressively more serious and more frequent thereafter, most likely at an accelerating rate.

That is to say, things are bad already and getting worse. In particular, the report warns of the effects of climate change on water supplies in critical river basins, the risk of famine as crops fail, the disruption caused by surges of refugees migrating away from catastrophes, and the spread of pandemic diseases. The latter section includes a particular focus on yellow fever, whose mosquito carrier, Aedes egypti, has, the authors report, spread to cover an area of 2.5 billion people. "The possible return of outbreaks of urban yellow fever is a serious potential public health risk in Africa and South America," they conclude.

Urban yellow fever results in large, explosive epidemics when travelers from rural areas introduce the virus into areas with high human population density...affecting up to 20 percent of the population with high case-fatality rates.

Reading even dry reports like that makes it easier to understand why security agencies are, in fact, ever more worried about climate change. It makes systems unstable—wherever there's al-ready risk of trouble, it's a "threat multiplier." (In fact, the NRC report quotes a number of studies suggesting a link between drought-induced rises in food prices and the Arab Spring.) And this concern is not confined to analysts toiling away in the basement. Last month, in an interview with The Boston Globe, the US Navy's senior Pacific commander, Samuel J. Locklear III, said that climate change "is probably the most likely thing that is going to happen ... that will cripple the security environment, probably more likely than the other scenarios we all often talk about," such as a North Korean nuclear bomb or Chinese computer hacking. "You have the real potential here in the not-too-distant future of nations displaced by rising sea level," Locklear said. "Certainly weather patterns are more severe than they have been in the past. We are on super typhoon twenty-seven or twenty-eight this year in the Western Pacific. The average is about seventeen."2

{_{ 2. See Bryan Bender, "Chief of US Pacific Forces Calls Climate Biggest Worry," The Boston Globe, March 9, 2013.}_}

Other military leaders, he added, were thinking along the same lines. "We have interjected into our multilateral dialogue—even with China and India—the imperative to kind of get military capabilities aligned [for] when the effects of climate change start to impact these massive populations," he said. "If it goes bad, you could have hundreds of thousands or millions of people displaced and then security will start to crumble pretty quickly."

If the military is worried, so are the financiers [fnc]. The World Bank is under new leadership—last year President Obama nominated Jim Yong Kim as the bank's new president, and from the start he made it clear that climate change would be a priority. “It is my hope that this report shocks us into action,” he begins his foreword to Turn Down the Heat, published last autumn. His team points out that the current policies of world governments, our own included, guarantee that we'll rush past a two-degree increase and end up with a world at least four degrees warmer. Since that outcome is not yet foreordained—a dramatic effort to change those policies and hence cut emissions could still keep us below two degrees, his team concludes—the volume is an effort to show the consequences of failure. The "4°C scenarios are devastating," he writes.

The inundation of coastal cities; increasing risks for food production potentially leading to higher malnutrition rates; many dry regions becoming dryer, wet regions wetter, unprecedented heat waves in many regions, especially in the tropics; substantially exacerbated water scarcity in many regions; increased frequency of high-intensity tropical cyclones; and irreversible loss of biodiversity, including coral reef systems.

The World Bank's list, in other words, is not that far from the intelligence community's, though the bank report does focus most of all on the changes that will make life all but impossible for the poor. Take "extreme heat," which sounds fairly abstract. But a world warmer by four degrees, this analysis points out, "will consistently cause temperatures in the tropics to shift by more than 6 standard devia-tions for all months of the year." By 2080, the coolest months of the year will be substantially warmer than the warmest months now, and we would experience "a completely new class of heat waves, with magnitudes never experienced before in the 20th century."

Some sense of what that might mean comes from a National Oceanic and Atmospheric Administration study published in February: the rise in heat and humidity we've already experienced, it found, has reduced by about 10 percent the amount of outdoor work humans are able to do. That percentage could double by midcentury, and by its end the average person would find his pro-ductivity cut by a third. The killing heat would extend into the mid-latitudes— in the Lower Mississippi Valley, for instance, conditions would "prevent any safe level of sustained work," according to the study.

This is the sort of trauma wise civilizations might wish to avoid. Indeed, as Kim says in his introduction to the World Bank report, "even for those of us already committed to fighting climate change, I hope it causes us to work with much more urgency." But that urgency is not really on display (even perhaps at the World Bank, which continues to finance large-scale coal projects).

In the US, the most visible battle continues to be over the fate of the Keystone Pipeline, and so far the powers that be in Washington have shown little inclination to block it, even though most of the country's climate scientists have described it as folly. (I've been personally involved in this fight, through 350.org, a climate advocacy organization I helped to found.) In mid-February, the State Department issued a preliminary finding showing the pipeline would have minimal environmental impact, but it required such tortured logic (essentially concluding that the same amount of oil would leave the tar sands if the pipeline was built or not) that support for the enterprise has begun to waver in some establishment circles.

At The New York Times one columnist, Joe Nocera, described critics of Keystone (full disclosure: myself included) as "boneheaded" and argued that a carbon tax would make tar sands oil "more viable." He then was forced to retract large parts of his column because he'd gotten the math upside down. Another Times writer, Thomas Friedman, urged opponents to handcuff themselves to the White House fence. ("Who," he asked, "wants the US to facilitate the dirtiest extraction of the dirtiest crude from the tar sands in Canada's far north?") The paper's editorial board broke the tie, declaring:

A president who has repeatedly identified climate change as one of humanity's most pressing dangers cannot in good conscience approve a project that—even by the State Department's most cautious calculations—can only add to the problem.

In so doing, the Times echoed an important recent essay on Grist.org by a 350.org board member, K.C. Golden, who is policy director at Seattle's Climate Solutions group. Golden declared a "Keystone Principle":

Specifically and categorically, we must cease making large, long-term capital investments in new fossil fuel infrastructure that "locks in" dangerous emission levels for many decades. Keystone is both a conspicuous example of that kind of investment and a powerful symbol for the whole damned category.

That is to say, we have to do many things to slow global warming: tax carbon, build renewables, spur conservation. But if you want a world where emissions are going down, you simply can't build a pipe designed to last forty years. Or, less elegantly: When you're in a hole, stop digging.

For the moment, the digging continues apace. And if it goes on much longer, the most prescient new piece of writing may come from Naomi Oreskes and Erik Conway, in the pages of the winter issue of Daedalus, the journal of the American Academy of Arts and Sciences. The Academy (to which I belong) is not usually much more playful than the World Bank or the National Research Council; it too tends to produce Large Reports. But this small essay from two historians of science is a mordant and fascinating exception. It's a report looking back from 2373 and attempting to explain our inaction on climate, concluding that "a second Dark Ages had fallen on Western civilization, in which denial and self-deception, rooted in an ideological fixation on 'free' markets, disabled the world's powerful nations in the face of tragedy." It invents a great many fancies—2021 is the "year of perpetual summer," for instance, with livestock and pets keeling over in the heat around the world—all eventually leading to a "Great Collapse."

This account, I am sure, was finished before the events of January 2013, when a heat wave of completely unprecedented proportion baked the entire continent of Australia day after day, and required the country's meteorological agency to add two new colors to its charts to reflect the unheard-of heat. The Aussies have taken to calling this record year, which also featured towering wildfires and huge floods, the "angry summer." It sounds both biblical and like something out of science fiction, but it is painfully real. What remains to be seen is whether reality still has any traction in our public life.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|