Friday, April 11, 2003

Royal Institute of International Affairs looks at the charges of 'war for oil'.

"The present US-led military campaign against Iraq is not a war for Iraq's oil," the Royal Institute of International Affairs (RIIA) said in a study on Iraq's oil.

Analysts at the RIIA said that even with sustained investment over several years, Iraq's total oil production could only ever be raised to six percent of the world's total, three times less than Saudi Arabia's total production potential and half the size of Russia's.

The institute also rejected the idea that ensuring a cheap and secure flow of oil to markets was the prime driver behind the US action, noting that Washington did not intervene to stop strikes earlier in this year in Venezuela, which drastically slowed down Caracas' oil production.

"Arithmetically, Venezuela's oil is more important to America's oil security than Iraq's, taking up a share of 14 percent of imports against Iraq's seven percent," it said.

The authors of the study, Valerie Marcel and John Mitchell, went on to dismiss concerns that the United States will allow its own oil giants to carve up Iraq's oil fields for themselves after the war.

"American companies have voiced their preferences in Washington, but so far, American foreign policy has not done very much for the oil majors.

"US sanctions against Iran and Libya have barred access of American companies to those markets, while European and other countries have had a freer hand to invest in these oil rich countries," it noted.

By contrast, the first Gulf War of 1990-1991 - prompted by Saddam Hussein's invasion of Kuwait - was largely a war about controlling oil supplies, the RIIA said.

"By invading Kuwait, Iraq controlled the production of 5 million barrels of oil a day, doubling its reserves. Iraq's own oil is much less important," the analysts said.

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