Greg Muttitt worked for many years with the arts and social justice charity Platform, exposing the global impact of the oil industry. His first book, based on almost a decade of research, is Fuel on the Fire: Oil and Politics in Occupied Iraq. It provides a forensic, behind-the-scenes account of the struggles over Iraq’s oil prior to the 2003 invasion and during the ensuing occupation.

In the first of a three-part interview with NLP's Ed Lewis, here he outlines his view of the real significance of Iraq’s oil in motivating the war in 2003. In his analysis, it is not corporate power or profit, but the global oil price, which takes centre stage. Parts 2 and 3 of this interview are here and here.

Can you start by telling us what your research has shown about the real aims behind the Iraq War and how your analysis adds something to some of the existing sceptical critiques of those aims that are out there?

When my book first came out there was quite a bit of news coverage, especially in the Independent. On the comments slot under the articles, one of the reactions was ‘tell us something new’. And when I first got involved in Iraq, which was in February 2003 in the march against the war, it was quite obvious to me, as it was to most people, that oil was at the centre of this.

So what does the book add? Well the first thing is that it tries to lay out very clearly what actually happened. That meant answering the questions I was asking myself when I was on that march – ‘if this is about oil, or to a large extent about oil, as it seems to be, how’s that going to play out? What’s going to happen next? How are they going to achieve what they want with oil? What’s it going to look like, what they want to achieve with oil?’ So the book goes into that. In terms of if it’s going to decide the debate about was it a war for oil or wasn’t it a war for oil, I think everyone’s made up their mind on this already, one way or the other. The response is more likely to be “ah, so that’s how it worked” than “oh, so it was a war for oil”.

Still, one thing that keeps surprising me is the extent to which the governments at the time and even mainstream commentators now really insisted, and insist, that it had nothing to do with oil – which to me is a far more absurd and far-fetched notion than they were trying to say the war for oil argument was. Don Rumsfeld in 2003 said ‘It has nothing to do with oil, literally nothing to do with oil’. Now that is as far as I’m concerned a completely indefensible position. It doesn’t make any sense whatsoever.

So what I’ve got is not some grand political or economic argument for why it was a war for oil after all, but a story of how oil interests were actually pursued – and the struggles that they led to. For example  I’ve got British government strategy documents, where they say Britain has a vital interest in Iraq’s oil – this is during the course of the occupation, and they set out how they’re going to achieve that interest; I’ve got the meetings between oil companies and the government in the run-up to the war where BP says it’s “desperate to get in there”; and I’ve got the policy documents as they evolved under the occupation, mainly authored, or at least heavily influenced, by the Americans and the Brits.

I’ve got that, but I think perhaps what’s newer and most interesting is that the oil agenda is not as simple as we might have imagined it. I think the debate, if you can call it that, about whether it was a war for oil has traded on the fairly simplistic notion of a resource war, in which we go up there, we load up our ships full of oil, bring it back to Britain or America, and there we’ve got our loot. Think of the conquistador, stealing gold from the new world in the 16^th century. But it doesn’t work like that.

And it only partly works by making sure our own companies get a share of the spoils.

You describe that as a secondary aim.

Yes. I think contracts for their own companies was very much a secondary aim. In the pre-war meetings between the British government and British companies, certainly the companies are asking for the government’s help to make sure they get their share of the spoils and the government is agreeing that it will help them in that. But that I think is a secondary objective – the primary objective for the governments was and is to expand world oil production as a whole. This is because governments have an immediate concern about the impact of the oil price on their economies. It drives inflation and as the economist James Hamilton has established, ten of the eleven post-Second World War recessions in the US were immediately preceded by a spike in the oil price. Now that I think is a more immediate strategic concern for the US and UK governments than making sure their corporations are doing well. Of course, it’s no more legitimate as a reason to start a war. And in the short term they clearly failed – oil prices reached $150 in 2008, prompting the latest recession. Whether they succeed or fail in the long term remains to be seen.

Their problem is that oil producing countries generally have an interest in having a moderate level of production, so that the oil price stays high and they get higher revenues over a longer period of time, whereas the West’s interest is in increasing production in the short term. One way of squaring that difference of interests in the rate of oil production is to have it run by the multinationals to have massive foreign investment in it, meaning Western technology and Western capital, which would increase the rate of production, with the impact on the oil price.

Meanwhile the companies, of course, want to expand their own production. So, what you see there is a really close meshing between the oil companies’ interest, which is expansionist, and the governments’ interest, which is also expansionist, but with a slightly different end goal – to expand overall production.

You quote the British government saying that the interests ‘march together’.

Yeah, they said that in the 1960s, but that’s still the case now.

If it’s about expanding global oil production why would getting into Iraq make such a big difference?

Let’s start simply. Iraq has 10% of the world’s known oil. If you add together Iraq and four other countries around the Persian Gulf – Iran, Kuwait, Saudi Arabia and the Emirates – the total is more than 60%. Iraq is at the very centre of that – if you look at the Persian gulf it’s in the shape of an arch, Iraq is the keystone – the position from which you can influence the whole region.

Those countries (with the partial exception of the Emirates)nationalised their oil industries in the 1970s, which was a very popular act on their part among their populations. It’s one of the most popular things they did. 60% of the world’s oil is there, another 15-20% in countries like Venezuela and the rest of Latin America and some in the Soviet Union. It basically means a majority of the world’s known oil reserves are off-limits to the multinationals. So the multinationals’ opportunities for growth are very constrained. That’s why they keep pushing ever further offshore into deepwater, with all of the consequences of that as we saw last year in the Gulf of Mexico.

At the same time while the majority of the world’s oil reserves are controlled by nationalised oil industries, by governments, that means that over time, as there are diminishing returns elsewhere, an ever greater share of production is going to go to these governments that control their oil industries. With that, we can expect greater strategic influence by oil producing countries, and they expect an ever rising oil price – both of which Western governments don’t like

So the idea was: firstly, Iraq itself, with 10% of the world’s oil reserves. If we can produce that fast under multinationals, that will have a big impact on oil markets. Secondly, and this is quite clear in some of the documents I saw, use Iraq as a ‘strong exemplar’, the British government called it, for the rest of the region. Use it as a ‘beachhead’, the oil companies’ lobbyists called it, for influencing those other countries and ideally they hope reversing all of the nationalisations across the region.

How could getting into Iraq enable that to happen?

Again, I’ll give you a slightly complex answer if you’ll forgive me. The oil market is cyclical, and there’s a big level cycle that operates, which has a period of 10 or 15 years. And roughly speaking when the oil price is low, for instance as it was in the late ‘90s or the late ‘80s, the governments of oil producing countries, which are heavily dependent on oil exports, are struggling for revenues. They can’t fund their services or in many cases their security infrastructure – the things they need to spend government money on, they can’t do when the oil price is low.

That creates a dynamic where each of them is trying increase its production to get a bit more revenue. OPEC becomes neutered as an economic force, as all of its members breach their quotas, they squabble about what their quotas should be, and you get an equilibrium of low oil prices and it tends to stay there. This is why for instance at times of very low price commentators tend to say ‘oh, it’s going to be low forever’. The Economist, in 1998, said that there would never be another high oil price. Conversely, at times of high oil price, such as now, people say ‘well it’s never going to come down again’. You see that in the strength of the advocates of the peak oil theory at the moment. They say this is structural.

At times of high price, the producing governments who control most of the world’s oil say: ‘we’ve got as much revenue as we can spend. Why extract more, especially if extracting more might even bring down the price and wouldn’t even be in our long term interests? Actually we’re quite happy with what we’ve got at the moment.’ And alongside that: ‘well we don’t need the multinationals, because we don’t need to produce any faster than this, we’re fine with our own technology’. So this locks in an equilibrium of high price. It tends to be either one major disruptive event, or more often two major disruptive events, that moves it between cycles.

What I think the Western strategic oil interests were hoping is that the Iraq war would be that disruptive event that moves us from a high price phase of the cycle to a low price phase, because of the scale of its resources.

Which would get the supply up from other countries as well.

If they succeed in expanding Iraq’s oil production as much as they hope to and as much as the current contracts in Iraq suggest they might (or should), if it brings down the oil price again, Iraq’s neighbours will see Iraq and they’ll see ‘oh, they’re producing a lot more than us’. Therefore they need to compete with Iraq on production rates. So basically, what the West is hoping is that they’ll get this pack mentality where all of them start increasing their production and inviting foreign investment because it’s back into a low-price cycle in which they want to increase their production rates, they need Western technology to do so, and so on.

And you’ve found evidence for this kind of strategic thinking in internal documents, planning documents in the US going back a number of years prior to the invasion?

You see discussion of the strategic interest in Iraq’s oil going back, certainly to the ‘70s. Paul Wolfowitz was talking about Iraqi oil in 1979, the year that Saddam came to power, the year of the Iranian revolution. There are a couple of historical chapters at the beginning of the book in which I trace how the expressions of strategic interest in Iraq’s oil within the US administration consistently grow from  the late 70s. They grow more and more strongly – they are resonating extremely powerfully in the late 90s, leading to the election of George Bush, and then more strongly still when many of those advocates of intervention in Iraq, or at least a muscular policy towards Iraq, become foreign policy officials in the Bush administration.

So there’s a constant growing of this interest, and in the months immediately before Bush was elected and in the couple of months afterwards, there were a lot of strategy documents within US government circles and around US government circles which were articulating precisely what I’ve described, that there is a strategic concern about meeting growing demand under a situation of constrained supply. These documents were saying we need to open up to foreign companies production in, for instance, Iran, we need to break the sanctions on Libya and most importantly we need to break the sanctions in Iraq. This was very clear. 

This was coming from Britain as well. British strategy documents on what to do with Iraq’s oil, they suggested that we shouldn’t destroy OPEC, as some of the neo-cons in the US wanted, but instead keep Iraq within OPEC, turn it into an advocate of low prices within OPEC and produce at rates that make any system unviable. OPEC would still exist but would become largely irrelevant. . So both governments were absolutely thinking about this. They were not saying so in public, but it’s quite clear in their strategy.

One option from what you’ve laid out, it might seem, would be to remove the sanctions and to try and convince Saddam to open up to foreign investment.  Were their reasons for not doing this that politically it would not be acceptable to have such a volte face about Saddam, or because it would mean empowering someone who was a bit of a loose cannon?

I think we need to be clear about Saddam. Saddam wasn’t opposed to foreign companies running the Iraq oil industry. He signed two contracts in the ‘90s with Chinese and Russian companies, he negotiated them with a whole chunk of others including European ones. Ideologically he was opposed to foreign involvement in the oil industry back in the late ‘50s and the early ‘60s. Certainly by the time he was President, and even perhaps before, I think any ideological concerns he may have had took very much a back seat to his primary consideration, which was keeping himself in power. I think that was all Saddam cared about. So in the ‘90s, he signed these deals with Russian and Chinese companies to split the UN Security Council. But also he was trying to get income while Iraq was under sanctions. So I think it would be wrong to say that Saddam represented Iraqi views that their oil should remain in the public sector.

I don’t think there was persuasion required there. Saddam would do what was in his interests.

However, I think that there was a concern that if they were to encourage foreign investment in Iraq under Saddam, they would have a leader, a regime that was very clearly anti-Western and when it was in its interests might perhaps tear up those deals, or might use the revenues to assert military power in the region and undermine US interests in that way.