The Oil War

As the United States gears up for an attack on Iran, one thing is certain:the Bush administration will never mention oil as a reason for going to war. Asin the case of Iraq, weapons of mass destruction (WMD) will be cited as theprincipal justification for an American assault. "We will not tolerate theconstruction of a nuclear weapon [by Iran]," is the way President Bush putit in a much-quoted 2003 statement. But just as the failure to discover illicitweapons in Iraq undermined the administration's use of WMD as the paramountreason for its invasion, so its claim that an attack on Iran would be justifiedbecause of its alleged nuclear potential should invite widespread skepticism.More important, any serious assessment of Iran's strategic importance to theUnited States should focus on its role in the global energy equation.

Before proceeding further, let me state for the record that I do not claimoil is the sole driving force behind the Bush administration's apparentdetermination to destroy Iranian military capabilities. No doubt there are manynational security professionals in Washington who are truly worried about Iran'snuclear program, just as there were many professionals who were genuinelyworried about Iraqi weapons capabilities. I respect this. But no war is everprompted by one factor alone, and it is evident from the public record that manyconsiderations, including oil, played a role in the administration's decision toinvade Iraq. Likewise, it is reasonable to assume that many factors -- againincluding oil -- are playing a role in the decision-making now underway over apossible assault on Iran.

Just exactly how much weight the oil factor carries in theadministration's decision-making is not something that we can determine withabsolute assurance at this time, but given the importance energy has played inthe careers and thinking of various high officials of this administration, andgiven Iran's immense resources, it would be ludicrous not to take the oil factorinto account -- and yet you can rest assured that, as relations with Iranworsen, American media reports and analysis of the situation will generallysteer a course well clear of the subject (as they did in the lead-up to theinvasion of Iraq).

One further caveat: When talking about oil's importance in American strategicthinking about Iran, it is important to go beyond the obvious question of Iran'spotential role in satisfying our country's future energy requirements. BecauseIran occupies a strategic location on the north side of the Persian Gulf, it isin a position to threaten oil fields in Saudi Arabia, Kuwait, Iraq, and theUnited Arab Emirates, which together possess more than half of the world's knownoil reserves. Iran also sits athwart the Strait of Hormuz, the narrow waterwaythrough which, daily, 40% of the world's oil exports pass. In addition, Iran isbecoming a major supplier of oil and natural gas to China, India, and Japan,thereby giving Tehran additional clout in world affairs. It is these geopoliticaldimensions of energy, as much as Iran's potential to export significantquantities of oil to the United States, that undoubtedly govern theadministration's strategic calculations.

Having said this, let me proceed to an assessment of Iran's future energypotential. According to the most recent tally by Oil and Gas Journal,Iran houses the second-largest pool of untapped petroleum in the world, anestimated 125.8 billion barrels. Only Saudi Arabia, with an estimated 260billion barrels, possesses more; Iraq, the third in line, has an estimated 115billion barrels. With this much oil -- about one-tenth of the world's estimatedtotal supply -- Iran is certain to play a key role in the global energyequation, no matter what else occurs.

It is not, however, just sheer quantity that matters in Iran's case; no lessimportant is its future productive capacity. Although Saudi Arabia possesseslarger reserves, it is now producing oil at close to its maximum sustainablerate (about 10 million barrels per day). It will probably be unable to raise itsoutput significantly over the next 20 years while global demand, pushed bysignificantly higher consumption in the United States, China, and India, isexpected to rise by 50%. Iran, on the other hand, has considerable growthpotential: it is now producing about 4 million barrels per day, but is thoughtto be capable of boosting its output by another 3 million barrels or so. Few, ifany, other countries possess this potential, so Iran's importance as a producer,already significant, is bound to grow in the years ahead.

And it is not just oil that Iran possesses in great abundance, but alsonatural gas. According to Oil and Gas Journal, Iran has an estimated 940trillion cubic feet of gas, or approximately 16% of total world reserves. (OnlyRussia, with 1,680 trillion cubic feet, has a larger supply.) As it takesapproximately 6,000 cubic feet of gas to equal the energy content of 1 barrel ofoil, Iran's gas reserves represent the equivalent of about 155 billion barrelsof oil. This, in turn, means that its combined hydrocarbon reserves are theequivalent of some 280 billion barrels of oil, just slightly behind SaudiArabia's combined supply. At present, Iran is producing only a small share ofits gas reserves, about 2.7 trillion cubic feet per year. This means that Iranis one of the few countries capable of supplying much larger amounts of naturalgas in the future.

What all this means is that Iran will play a critical role in the world'sfuture energy equation. This is especially true because the global demand fornatural gas is growing faster than that for any other source of energy,including oil. While the world currently consumes more oil than gas, the supplyof petroleum is expected to contract in the not-too-distant future as globalproduction approaches its peak sustainable level -- perhaps as soon as 2010 --and then begins a gradual but irreversible decline. The production of naturalgas, on the other hand, is not likely to peak until several decades from now,and so is expected to take up much of the slack when oil supplies become lessabundant. Natural gas is also considered a more attractive fuel than oil in manyapplications, especially because when consumed it releases less carbon dioxide(a major contributor to the greenhouse effect).

No doubt the major U.S. energy companies would love to be working with Irantoday in developing these vast oil and gas supplies. At present, however, theyare prohibited from doing so by Executive Order (EO) 12959, signed by PresidentClinton in 1995 and renewed by President Bush in March 2004. The United Stateshas also threatened to punish foreign firms that do business in Iran (under theIran-Libya Sanctions Act of 1996), but this has not deterred many largecompanies from seeking access to Iran's reserves. China, which will need vastamounts of additional oil and gas to fuel its red-hot economy, is payingparticular attention to Iran. According to the Department of Energy (DoE), Iransupplied 14% of China's oil imports in 2003, and is expected to provide an evenlarger share in the future. China is also expected to rely on Iran for a largeshare of its liquid natural gas (LNG) imports. In October 2004, Iran signed a$100 billion, 25-year contract with Sinopec, a major Chinese energy firm, forjoint development of one of its major gas fields and the subsequent delivery ofLNG to China. If this deal is fully consummated, it will constitute one ofChina's biggest overseas investments and represent a major strategic linkagebetween the two countries.

India is also keen to obtain oil and gas from Iran. In January, the GasAuthority of India Ltd. (GAIL) signed a 30-year deal with the National IranianGas Export Corp. for the transfer of as much as 7.5 million tons of LNG to Indiaper year. The deal, worth an estimated $50 billion, will also entail Indianinvolvement in the development of Iranian gas fields. Even more noteworthy,Indian and Pakistani officials are discussing the construction of a $3 billionnatural gas pipeline from Iran to India via Pakistan ¬ an extraordinary stepfor two long-term adversaries. If completed, the pipeline would provide bothcountries with a substantial supply of gas and allow Pakistan to reap $200-$500million per year in transit fees. "The gas pipeline is a win-winproposition for Iran, India, and Pakistan," Pakistani Prime MinisterShaukat Aziz declared in January.

Despite the pipeline's obvious attractiveness as an incentive forreconciliation between India and Pakistan -- nuclear powers that have foughtthree wars over Kashmir since 1947 and remain deadlocked over the future statusof that troubled territory -- the project was condemned by Secretary of StateCondoleezza Rice during a recent trip to India. "We have communicated tothe Indian government our concerns about the gas pipeline cooperation betweenIran and India," she said on March 16 after meeting with Indian ForeignMinister Natwar Singh in New Delhi. The administration has, in fact, provedunwilling to back any project that offers an economic benefit to Iran. This hasnot, however, deterred India from proceeding with the pipeline.

Japan has also broken ranks with Washington on the issue of energy ties withIran. In early 2003, a consortium of three Japanese companies acquired a 20%stake in the development of the Soroush-Nowruz offshore field in the PersianGulf, a reservoir thought to hold 1 billion barrels of oil. One year later, theIranian Offshore Oil Company awarded a $1.26 billion contract to Japan's JGCCorporation for the recovery of natural gas and natural gas liquids fromSoroush-Nowruz and other offshore fields.

When considering Iran's role in the global energy equation, therefore, Bushadministration officials have two key strategic aims: a desire to open upIranian oil and gas fields to exploitation by American firms, and concern overIran's growing ties to America's competitors in the global energy market. UnderU.S. law, the first of these aims can only be achieved after the President liftsEO 12959, and this is not likely to occur as long as Iran is controlled byanti-American mullahs and refuses to abandon its uranium enrichment activitieswith potential bomb-making applications. Likewise, the ban on U.S. involvementin Iranian energy production and export gives Tehran no choice but to pursueties with other consuming nations. From the Bush administration's point of view,there is only one obvious and immediate way to alter this unappetizing landscape-- by inducing "regime change" in Iran and replacing the existingleadership with one far friendlier to U.S. strategic interests.

That the Bush administration seeks to foster regime change in Iran is not inany doubt. The very fact that Iran was included with Saddam's Iraq and Kim JongIl's North Korea in the "Axis of Evil" in the President's 2002 Stateof the Union Address was an unmistakable indicator of this. Bush let hisfeelings be known again in June 2003, at a time when there were anti-governmentprotests by students in Tehran. "This is the beginning of people expressingthemselves toward a free Iran, which I think is positive," he declared. Ina more significant indication of White House attitudes on the subject, theDepartment of Defense has failed to fully disarm the People's Mujaheddin of Iran(or Mujaheddin-e Khalq, MEK), an anti-government militia now based in Iraq thathas conducted terrorist actions in Iran and is listed on the State Department'sroster of terrorist organizations. In 2003, the Washington Post reportedthat some senior administration figures would like to use the MEK as a proxyforce in Iran, in the same manner that the Northern Alliance was employedagainst the Taliban in Afghanistan.

The Iranian leadership is well aware that it faces a serious threat from theBush administration and is no doubt taking whatever steps it can to prevent suchan attack. Here, too, oil is a major factor in both Tehran's and Washington'scalculations. To deter a possible American assault, Iran has threatened to closethe Strait of Hormuz and otherwise obstruct oil shipping in the Persian Gulfarea. "An attack on Iran will be tantamount to endangering Saudi Arabia,Kuwait, and, in a word, the entire Middle East oil," Iranian ExpediencyCouncil secretary Mohsen Rezai said on March 1st.

Such threats are taken very seriously by the U.S. Department of Defense."We judge Iran can briefly close the Strait of Hormuz, relying on a layeredstrategy using predominantly naval, air, and some ground forces," ViceAdmiral Lowell E. Jacoby, the director of the Defense Intelligence Agency,testified before the Senate Intelligence Committee on February 16th.

Planning for such attacks is, beyond doubt, a major priority for top Pentagonofficials. In January, veteran investigative reporter Seymour Hersh reported inthe New Yorker magazine that the Department of Defense was conductingcovert reconnaissance raids into Iran, supposedly to identify hidden Iraniannuclear and missile facilities that could be struck in future air and missileattacks. "I was repeatedly told that the next strategic target wasIran," Hersh said of his interviews with senior military personnel. Shortlythereafter, the Washington Post revealed that the Pentagon was flyingsurveillance drones over Iran to verify the location of weapons sites and totest Iranian air defenses. As noted by the Post, "Aerial espionage[of this sort] is standard in military preparations for an eventual airattack." There have also been reports of talks between U.S. and Israeliofficials about a possible Israeli strike on Iranian weapons facilities,presumably with behind-the-scenes assistance from the United States.

In reality, much of Washington's concern about Iran's pursuit of WMD andballistic missiles is sparked by fears for the safety of Saudi Arabia, Kuwait,Iraq, other Persian Gulf oil producers, and Israel rather than by fears of adirect Iranian assault on the United States. "Tehran has the only militaryin the region that can threaten its neighbors and Gulf security," Jacobydeclared in his February testimony. "Its expanding ballistic missileinventory presents a potential threat to states in the region." It is thisregional threat that American leaders are most determined to eliminate.

In this sense, more than any other, the current planning for an attack onIran is fundamentally driven by concern over the safety of U.S. energy supplies,as was the 2003 U.S. invasion of Iraq. In the most telling expression of WhiteHouse motives for going to war against Iraq, Vice President Dick Cheney (in anAugust 2002 address to the Veterans of Foreign Wars) described the threat fromIraq as follows: "Should all [of Hussein's WMD] ambitions be realized, theimplications would be enormous for the Middle East and the United States. ...Armed with an arsenal of these weapons of terror and a seat atop 10 percent ofthe world's oil reserves, Saddam Hussein could then be expected to seekdomination of the entire Middle East, take control of a great portion of theworld's energy supplies, [and] directly threaten America's friends throughoutthe region." This was, of course, unthinkable to Bush's inner circle. Andall one need do is substitute the words "Iranian mullahs" for SaddamHussein, and you have a perfect expression of the Bush administration case formaking war on Iran.

So, even while publicly focusing on Iran's weapons of mass destruction, keyadministration figures are certainly thinking in geopolitical terms about Iran'srole in the global energy equation and its capacity to obstruct the global flowof petroleum. As was the case with Iraq, the White House is determined toeliminate this threat once and for all. And so, while oil may not be theadministration's sole reason for going to war with Iran, it is an essentialfactor in the overall strategic calculation that makes war likely.

Michael T. Klare is a professor of peace and world security studies atHampshire College, USA and the author of Bloodand Oil: The Dangers and Consequences of America's Growing Dependency onImported Oil (Metropolitan Books). Courtesy, Tomdispatch.Com