24 April 2004	Saturday	03 Rabi-ul-Awwal 1425

CARACAS: A year on, the invasion of Iraq has turned into a fiasco for long-term US goals to ensure access to steady, secure supplies of inexpensive crude oil and to start playing a decisive role in oil markets at the expense of the Organization of Petroleum Exporting Countries (OPEC).

Pumping and transporting oil in Iraq today are risky ventures, endangering the lives of foreign oil workers. Halliburton, the US construction giant that has benefited so handsomely from oil contracts in Iraq, has seen 29 employees and contractors killed.

Output is still lower than on March 20, 2003, when US and British forces launched the invasion of Iraq, while oil prices are one-third higher. The US benchmark West Texas Intermediate closed on Wednesday at just under 36 dollars a barrel, compared to last year's average price of 29 dollars, while the OPEC reference price basket stands at around 32 dollars, up from the 2003 average of 28 dollars and the 2002 average of 24 dollars.

Iraq's oil output stands at just over two million barrels a day, in a world that consumes 40 times that amount, and the remaining OPEC members - especially Saudi Arabia - have the ability to increase short-term production to meet the market's demands.

The invasion and occupation, "represent a fiasco, for a huge investment," Francisco Mieres, a Central University of Venezuela graduate school professor who specialises in the oil economy, told IPS.

"The United States hoped that a year (after the start of the war), Iraqi output would exceed three million barrels a day of crude oil that it could purchase for 15 dollars a barrel," he added.

Although US companies have obtained "a share of the Iraqi oil business virtually for free," for the United States, "the cost of guarding Middle East oil is extremely high," said Mieres.

Prior to the invasion, "the Pentagon was already spending 60 billion dollars a year maintaining its military presence in the Middle East. Although Saudi Arabia is selling crude to Washington at a discount of a dollar a barrel, military expenses drive up the actual cost of each barrel to around 200 dollars for the United States," he argued.

The invasion has added 87 billion dollars a year to the US defence budget at a time when the administration faces a public account deficit, Mieres pointed out. The average US citizen is paying for the disruption in the oil industry: petrol now costs them 1.76 dollars a gallon, 30 cents more than in March 2003, and prices are expected to continue rising before the November elections in which President George W. Bush is seeking re-election.

Democratic presidential hopeful John Kerry has even cracked jokes, saying gas prices are rising so high that when Bush and Vice-President Dick Cheney leave the White House in January, they will have to share a taxi.

On the oil front, "the United States obtained a military victory but a political defeat, because all signs indicate that soon there will be neither abundant oil nor low prices - and particularly not in Iraq," Vmctor Poleo, another professor who specializes in the economy of oil, told IPS.

"International oil prices will be dictated by scarcity. What will abound are conflicts over oil," said Poleo. Nor has the purported military victory "brought dividends for the United States in OPEC, which has not recognised the Iraqi Interim Governing Council and has given it only a voice but no vote in its meetings," said Mieres.

OPEC is made up of Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. Baghdad is excluded from the group's quota system and from decisions on increasing or cutting output.

"Even Saudi Arabia ... is distancing itself from Washington," said Mieres.. Before the OPEC meeting in March, Bush called the leaders of several Arab oil-exporting countries to urge them to boost production, but OPEC said no..

The strategy of using Iraq as a front man for the United States within OPEC has not worked. But it has brought lucrative business to US companies, especially "ones that have ties with the 'oil directorate' that is governing in Washington," said Poleo.

The companies include Halliburton, of which Cheney was CEO before becoming vice-president; ChevronTexaco, where Bush's National Security Adviser Condoleezza Rice was formerly an executive, and Unocal, Saic and Bechtel, which also have close ties to the Republican Party.

Halliburton is emblematic, because its subsidiary Kellogg, Brown & Root (KBR) was awarded some eight billion dollars worth of contracts in Iraq, including a 1.2 billion dollar deal for repairing oil industry infrastructure in the country's south. -Dawn/The Inter Press News Service.