October, 2003

Regional Consequences of the US Presence in Iraq

Khaled Abdel-Azim

There will be far-reaching regional consequences to the US presence in Iraq. The establishment of US military bases there, on the borders of Syria, Turkey and Iran, has given the US control over the airspace in the eastern Mediterranean, the Gulf, Iran and the Caspian Sea. As a result, Turkey's strategic importance to the US has diminished and it is seeking to establish new alliances to bolster its regional position. The redeployment of US forces out of Saudi Arabia into Qatar as well as Iraq has been accompanied by severe US criticism of Saudi Arabia on many levels. US accusations against Syria and Iran have also placed these countries on the defensive, and forced them to moderate their traditionally radical stances to avoid becoming the next US military targets. One of the most influential tools that the US will employ to impose its new strategy in the Middle East, besides its military might, is the control it has over the production and transport of Iraq's oil. It is therefore worthwhile to explore this situation in some detail.

Saudi Arabia and Iraq together possess around 50% of the world's oil reserves, while the Gulf countries as a whole possess 75% of world oil reserves. Britain and Norway, meanwhile, will exit the oil export markets in 2007 after several decades as the two main oil-producing countries in the western world. And while the Gulf oil bloc is gaining strategic power, the demand for oil is increasing from North America, Europe and Asia.

From the American perspective, the Organisation of Petroleum Exporting Countries -Opec- is more or less an Islamic and Arab organisation, with Venezuela the only member not in either category. The Arab Islamic members are Saudi Arabia, Iraq, Kuwait, the United Arab Emirates, Qatar, Libya and Algeria, and the three non-Arab Islamic members are Iran, Nigeria and Indonesia.

With Iraq in a state of reconstruction, its oil will be vital to rebuild the country's economy, meaning that it will not be beneficial for the country in the coming five years to abide by Opec production quotas. As a result, the US could affect the balance in the Middle East oil market if it increases the rate of Iraqi oil production to 5m barrels per day. The $30bn to $40bn in investment that such an increase would require in the coming five years is an affordable figure for US oil companies.

It is also in the interest of the US to push up oil production levels in Iraq to compete with Saudi Arabia, and therefore limit the influence of Saudi Arabia on international oil policies. Washington may also encourage Iraq to withdraw from Opec, when it is able to produce 5m barrels of oil per day, in order to weaken the organisation's power by flooding the market with oil, causing a price crash similar to that which occurred in the 1990s. In a nutshell, the US will try to place Iraqi oil beyond the sphere of Arab influence - an idea confirmed by the US stance regarding the path of the pipelines for this oil.
The means of transporting Iraqi oil is influenced by the location of the oil wells and their proximity to the coast. Generally, there are three ways of transporting oil: via pipeline, by tanker directly from ports, and by truck. Iraq's northern oil wells are located in Kirkuk and Mosul and its southern ones in Basra. The British established an oil pipeline network in Iraq to provide the necessary supplies for their forces and to feed their economic expansion. In 1931, the Iraq Petroleum Company built a pipeline from Kirkuk, via Jordan, to the Mediterranean port of Haifa in Palestine. This 1,000km-long pipeline worked successfully until the 1948 war which resulted in the creation of the state of Israel.[1]

As the political situation became complicated, Britain closed the Haifa pipeline. During the second world war, the British authorities, in order to provide fuel supplies to their troops, added a number of branches to the Kirkuk pipeline, which stretched to the eastern coast of the Mediterranean at Banyas -Syria-, Tripoli -Lebanon- as well as at Haifa. The Kirkuk-Banyas pipeline was 890km long and the Kirkuk-Tripoli pipeline 850km.[2] Both pipelines worked for more than a quarter of a century, until rising tension between the Iraqi and Syrian Baath parties led Syria to close them in 1976, and again in 1982.

When Bashar Al-Assad took office in Syria, a calmer atmosphere allowed for pumping to start once again through the Kirkuk-Banyas pipeline, and the 200,000 barrels pumped through Syria each day saw the country accrue an estimated $1bn a year in revenue. However, after US and British troops entered Iraq, US secretary of defence Donald Rumsfeld gave orders to close the pipeline to Banyas, claiming that pumping Iraqi oil through it was a violation of the sanctions imposed on Iraq since 1990.[3] Lebanon then realised that Iraqi oil would not be pumped to its coastal cities of Tripoli and Sidon.
A surprise was in store, however. It was not long before Binyamin Netanyahu, Israel's minister of finance, announced - during a finance and business forum in London in June 2003 - that he soon expected to reactivate pipelines between Iraq and Israel and that the Israeli government had begun studying the possibility of reopening the pipeline between Kirkuk and Haifa. He said that renewing this pipeline would reduce the cost of importing oil for Israel by 25%, and that the part of the pipeline located in Israel was in good condition.[4]

A spokesman for Israeli infrastructure minister Joseph Paritzky announced that the minister would discuss during a visit to Washington the possibility of re-launching the oil pipeline that linked Kirkuk to Haifa port before the creation of Israel in 1948. The pumping of Iraqi oil to Syria and Lebanon was then stopped, with the resumption of pumping through the Haifa pipeline to Israel, via Jordan, looking more and more likely.[5]

As a result of Syria's refusal to pump Iraqi oil to the Mediterranean in the late 1970s and early 1980s, the former Iraqi regime transported the oil from its northern territories to the Mediterranean coast through two pipelines across Turkey to the port of Ceyhan, for which Ankara received hefty revenues.[6] This pipeline, built between 1977 and 1986, is now the vital supply line for the US.

The oil of southern Iraq, from Basra, used to be transported by tanker from the Persian Gulf. However, after the outbreak of war between Iran and Iraq, the Iranian air force focused attacks against tankers transporting Iraqi oil. Iraq's alternative to the Gulf waters was the IPSA I and II pipelines, which cut through the desert of Saudi Arabia to the Red Sea, where the oil was loaded onto medium-sized tankers to transit the Suez Canal. After the Iraqi invasion of Kuwait, Saudi Arabia closed the two IPSA pipelines, and nothing has been said of their reopening since US troops entered Iraq, even though these pipelines are in good condition.

The US ships the oil of southern Iraq on huge tankers from the Gulf port of Bakr, which means the oil will go either to Asia or North America. The huge vessels that take oil to the US and Canada are obliged by their size to go through the Ras Al-Raja Al-Saleh path to the Atlantic Ocean, unable to transit the Suez Canal.

The geo-strategic map, then, could change dramatically. The oil of northern Iraq looks set to flow through Turkey and Israel rather than Syria and Lebanon. The pipelines from Kirkuk to the Mediterranean ports of Ceyhan and Haifa allow oil to continue to Europe directly. The oil of southern Iraq, meanwhile, will not pass through Saudi Arabia or the Suez Canal, but will be transported from the Gulf to Asia or North America on the Ras Al-Raja Al-Saleh-Atlantic route, thereby completely bypassing the Arab region.

Saudi Arabia cannot be unaware of the implications of the US military presence in the Gulf, and of a strong Israeli presence in the new Iraq. Within five years to a decade, the US and Israel will most probably be manipulating Iraqi oil with the aim of curtailing Saudi influence on international oil policy.

In this context, it was indeed wise of the Gulf Cooperation Council -GCC- to welcome members of the Iraqi Governing Council on their tour in five Gulf countries.[7] Including the new Iraq in the GCC will help reinforce the Gulf coalition against the expected assault on its unity from outside powers. In another show of Arab solidarity, Saudi Arabia, Kuwait and the UAE have been supplying Jordan with 100,000 free barrels of oil per day since the beginning of the war on Iraq, to compensate the country for the loss of the Iraqi oil it used to receive.[8]

References:
[1] Louis Blin, Le Pétrole du Golfe: Guerre et Paix au Moyen-Orient, Editions Maisonneuve & Larose, 1996, p93
[2] Louis Blin, Le Pétrole du Golfe, op.cit, p94
[3] News agencies -Washington and London-, 15 April 2003
[4] Reuters, London, 20 June 2003
[5] French News Agency, Jerusalem, 25 August 2003
[6] Louis Blin, Le Pétrole du Golfe, op.cit., p95
[7] French News Agency, Baghdad, 28 August 2003
[8] News agencies -Kuwait-, 5 August 2003