RECOLONIZING THE
OIL FIELDS
Midnight Notes Collective
The Gulf War emerged out of the intersection of two basic tendencies of capitalism in the late 1980s: the "New Enclosures" and "recolonization" of land and the natural givens of the planet (as commented upon by other articles in this volume), and the decisive demise of various forms of state-led capitalist development (sometimes called socialist and/or fascist) from the Soviet Union to South Africa.
The names for the
mechanisms, strategies and plans devised to realize these tendencies are
multiple and make up the contemporary euphemistic vocabulary from the
"debt crisis" to "perestroika," from
"privatization" to "austerity," from
"free-markets" to "electoral democracy." But they found
their truth in the mass slaughter of Iraqi civilians and conscripts in the
early days of 1991 by the US/UN coalition's bombers, the Ba'thist
counterrevolutionary massacres throughout Iraq, and the torture and
disappearances of Palestinians in Kuwait.
From the energy crisis to
the debt crisis, capital has thrown all the nationalist and socialist deals
into crisis, and ushered in the New World Order under its official inaugurating
event, the Gulf War. It is obvious enough that the New World Order means that
the US is the undisputed superpower, that the US has acquired military hegemony
over the world: But power to do what? Hegemony over what? Midnight Notes looks
at the New World Order as a new capitalist strategy for accumulation:
accumulation of a proletariat and of profits with new planetary class
relations, new structures of profit-making, and new forms of work. As such,
this strategy has a history - its immediate history we attempted to outline in
the previous section - and it also has weaknesses which portend an uncertain
future. In this chapter we examine the Gulf War in some detail in the hopes that we might be better prepared to
resist the future wars which further capitalist development will inevitably
entail.
The war was not just a
symbolic beginning for the New World Order, it was a very real beginning with
substantive effects. The war and its aftermath centered around the commodity
that has been the fulcrum of class relations internationally in the post-WWII
period: petroleum. In this new era of recolonization, the oil commodity posed a
paradox to capitalist development: if the oil fields of the Persian Gulf
nations, the Soviet Union, Mexico, Angola and the other countries that had
decolonized Western capital between the 1920s and 1970s were to be recolonized
or "enclosed," then a whole new wave investment must be injected to
make them profitable. Yet the statist regimes that would be receiving this new
investment had to be hardened to reject any demand by the proletarians in and
around their oil fields for a share of the new wealth they would be
producing. Moreover, the proletarians themselves would have to be terrorized
into accepting a life of extreme poverty amidst vast accumulations of wealth.
This Gordian Knot of class
contradictions was decisively cut by the whole spectrum of violence and terror
available to contemporary capitalism, from the bombs burning Baghdad residents
in the depths of air-raid shelters, to the tanks the Ba'thists used to crush
rebels in Basra, to the CIA torture techniques tormenting Palestinians in
post-war Kuwait. The war created the greatest mass layoff in recent times; a
qualitative change in the militarization of the Mideast oil industry; a
re-engineering of Mideast class relations; a jump in investment capital (due to
the oil price rise); and a completely decimated and dominated country (Iraq)
that will serve as the new lesson for those governments that are incapable of
fulfilling capital's demands for austerity and recolonization. Whether this
great "solution" will create the conditions for an even more
inextricable knot is the question for the struggle of the next decade.
New Investment
The collapse of state socialism was nowhere more visible than in the oil industry. State-owned oil companies in Algeria, China, Mexico, Venezuela, Vietnam, and most importantly, the USSR, opened their doors to international capital in the 1980s. The businessmen of the US and Europe were joyous to see a "reopening of areas previously off-limits."' The states that nationalized their oil fields and pumps in the early 1970s have now been forced to surrender under financial pressure to the old oil companies of the colonial era.
But now the question for
these energy capitalists is: where are they going to get the capital to take
advantage of their new conquests? The drawback of falling oil prices in the
1980s was that oil companies' profits and investments were also restricted. If
the oil industry from the USSR to Venezuela faced declining production and
inefficient technologies, the Western oil companies did not have much money to
change that. Gorbachev told US oil executives, "We're expecting a lot from
you," but the massive petrodollar surpluses had disappeared.
The 1980s strategy of war,
debt, austerity and falling oil prices had achieved much byway of disciplining
various proletariats and devastating their national economies. But the wave of
struggles in the late 1980s and the lack of investment money for energy
capitalists indicated the limitations to its utility. Oil prices had to
increase over the 1990s to provide the basis for the new technological leap in
production. The OPEC countries, the US and European governments, and the USSR
were all in agreement that new investment was desperately needed in the global
oil industry to expand production and that the price of oil would have to
continue to move upwards over the 1990s. 2 It was a remarkable
unanimity considering that the same countries had pursued very conflicting
policies for decades. The director of OPEC said in 1990 that some $60 billion would
be needed by 1995 for such new investment in OPEC countries. Other estimates
were that over $60 billion would be needed just for the five major producers in
OPEC: Iran, Iraq, Saudi Arabia, Venezuela and Kuwait. In 1991, it was reported
that Venezuela alone was embarking on a five-year, $48 billion expansion
program.' Whatever the estimates, oil industry experts were concluding that
"even without the recent turmoil in the Middle East, higher oil prices -
about $40 a barrel - were almost a certainty for the late 1990S . 11
4
The two largest non-OPEC oil producers, the US and the USSR, have faced declining oil production and a declining rate of productivity over the past several years. Once the Soviet oil industry, the largest in the world, was put on the international market, capitalists were eager to tap into the oil fields. With the right reorganization of class relations, the Soviet oil industry can be transformed into a hub of the global oil market . 5 Some of the new investment money has already come from the petrodollars created by the surge in oil prices during and after the Gulf crisis. The down payments are being made: Saudi Arabia announced in the fall of 1990 that it was loaning the USSR $3 billion and the Kuwaiti government in exile announced in January 1991 (in the midst of the war) that it was sending a $1 billion loan.
In mid-1990, OPEC began
planning the price increase. Immediately before the Iraqi invasion of Kuwait,
the OPEC member countries met in Baghdad and came to an agreement. At the time
(July), oil had fallen to around $16-$17 a barrel but had dipped to $14 the
month before. The only disagreement between the countries was how much the
target price of oil would go up; whether it would be $21 per barrel as Saudi
Arabia wanted or $25 as Iraq advocated. The previous OPEC reference price had
been $18. Saudi Arabia largely dictates OPEC policy so its position won out.
The Iraqi oil delegation returned to Baghdad grumbling but incapable of defying
the larger producers at the bargaining table.
Iraq's National
Socialism and the Invasion
The events which follow
mid-July are full of paradoxes and require some effort to decode. The
Machiavellian aspects of the Gulf War are, of course, closed to us; what
transpired in various closed-door meetings in the White House, in Arabia's
palaces and in Baghdad offices is left for future historians to try to uncover.
For now we can simply infer motivations and reactions from what is publicly
known. The world of inter-state relations is one of cynicism, spying and
double-dealing, and so one must be careful not to be fooled. First let us
examine the logic of Iraq's invasion of Kuwait.
Immediately after the OPEC
meeting in mid-July, the Iraqi government began threatening to invade. Ever
since the end of the Iran-Iraq war, the Iraqi government had been trying to
negotiate with Kuwait on its debt and the ownership of a shared oil field. Its
demand that OPEC raise the price of oil was part of the same piece. The Iraqi
economy was in a deep crisis by 1988; the necessity of launching a massive
reconstruction effort was met with a total lack of state revenue.' Oil
constituted 95 percent of Iraq's export earnings and the falling prices over
the early to mid-1980s meant a severe shortfall of foreign exchange. So Iraq
tried to push for higher oil prices in OPEC and tried to push Kuwait into
granting concessions in the debt and the oil sharing agreement.
The Iraqi Ba'th Party had
one other front as well; this was the domestic front, i.e., to slash government
expenditure and privatize much of the public sector industry. From 1987
onwards, the Iraqi government was following a typical IMF-style plan of
austerity and privatization. Yet this plan failed and by 1990 the state was in
an even greater economic crisis than before; the reforms "plunged the
economy into such chaos that not even the experienced repressive apparatus of
the Bath Party could guarantee domestic political stability."' The reasons
for the plan's failure go to the heart of Iraq's motivations to invade Kuwait
and US motivations for attacking Iraq. The plan failed because the Iraqi
regime, given its institutional bases of support, was unable to impose the
conditions of austerity or attract private investors to take over state
industries.
The Ba'th Party since the
late 1960s had organized a police state where workers were under strict
surveillance and discipline. However, the whole security apparatus depended on
the state simultaneously providing for a relatively comfortable standard of
living. The Iraqi regime, before the late 1980s, never tried to implement a
radical austerity program. Ba'thist economic strategy throughout the 1970s and
'80s was "guns and butter" similar to the early war plans of the
German National Socialists in the 1930s. Oil revenues allowed the state to
sustain a distributive welfare state system while still investing in industrial
expansion. Because of this welfare and industrial growth, the Party "was
able to provide opportunities for social and economic advancement for many sections
of the middle classes and even to offer the possibility of social and economic
incorporation and advancement to social groups that had hitherto existed only
on the margins of society such as the urban poor and the rural migrants." a Moreover,
the whole patronage system for the Bath leadership was based in the public
sector industries. The Iraqi government could not impose austerity nor
privatization without committing political suicide.
Thus, the attempt at
austerity and privatization was half-hearted at best. Hussein's regime removed
price restrictions on basic food items in August 1988, but backed off after
facing much public anger. In April 1989, price controls were reestablished. 9
The 1990 budget was designed to be an austerity budget yet it still raised
civil service salaries by 60 percent and increased subsidies on food and basic
commodities by 113 percent. In fact, government spending on the whole
increased. The austerity was intended to come mainly through layoffs
of government and public sector employees.'° The Ba'th Party disbanded its
public sector trade union in 1987 in
an effort to deregulate the labor
market. The strategy was to keep wages high for those who had jobs while
creating many more unwaged, unemployed people.
Simultaneously, the Party
attempted to deregulate private investment and increase the role of private
investors, including foreign investors, in Iraqi production. The Iraqi state
controlled all the major sectors of industry and trade and so there was much to
privatize; in fact, it was trying
"to implement the most wide-ranging privatization program in the
developing world."" The end result, however, widely diverged from the
plan. Very little unemployment could be created and very little private capital
investment could be stimulated. The "liberalization" campaign after
1987-88 did not seriously change the Iraqi economy nor erode workers'
privileges.
Hussein and the Bath Party inner circle were certainly not trying to be anti-IMF renegades. All the Mideast states were introducing austerity and privatization programs and Iraq's program was exceptional only in its scale." Iraq was trying to accommodate the IMF's sponsors for, among Gulf states, the Iraqi government, after Saudi Arabia, maintained the largest import-export trade with European and Japanese corporations. After 1988, the Iraqi government had plans, like all the oil-producing states, for a new cycle of industrial expansion that was completely reliant upon foreign capital assisting with financing and technology." The Iraqi government also had ambitious plans for military growth. Iraq had served the interests of Western capital for the previous decade with the war on Iran and Hussein did not imagine Iraq's own military program to be inherently antagonistic to the US, Europe and Japan's interests. (Recall that in 1987 Hussein intentionally brought the US Navy into the Persian Gulf.) But Hussein was clearly an inadequate cop; he couldn't even enforce debt and austerity within Iraq.
The Iraqi regime was highly unstable in the new capitalist terms of the Debt Crisis period and this instability was affecting the entire region. After being unable and unwilling to take out the debt crisis on the Iraqi workers, the Ba'th Party next tried to make the Kuwaiti ruling group pay. The questions of Kuwaiti war loans and oil sharing agreements became ever more important as potential "outs." The Iraqi regime was incapable of effectively confronting its own working class and so was making demands on the bankers and oil sheiks of Kuwait. This was and is a continuing problem for international capital - and a problem which every indebted government in the Mideast could be expected to share. While every country from Morocco to Pakistan was imposing austerity, there would always be the tendency of the governments to point at the riches of the Gulf and demand a pan-Arab or Islamic redistribution of wealth. These regimes would be tempted away from the task of restructuring their own national systems of accumulation and look towards the Gulf states' wealth to bail them out.
Thus, Iraq's state socialist model resulted in the antithesis of the 1980s IMF paradigm for
accumulation: the state was the country's primary employer, public sector
workers were accustomed to a relatively affluent life, austerity measures could
not be easily implemented, and the regime was trying to evade the fate of the
other Mideast states like Jordan and Algeria (riots and chronic political
instability) by turning towards Gulf oil wealth.
This was not the type of example
capitalistplanners in the US and IMF wanted to give to other workers, for
Ba'thist national socialism was still too socialist for them.
A Common Cause
The motivation for Iraq's
invasion then is more or less clear. It was to save Iraq's economy and the
Ba'th party's political future. It was to cancel Iraq's $40 billion
debt with Kuwait, loot some of its wealth, and stake a claim to some of
Kuwait's oil fields. But we still need to consider why the Iraqi government
thought an invasion would have some chance of success.
A common explanation for
the Gulf War is that it was a set up job; Hussein was duped into invading
Kuwait by the US government's statements of indifference and then caught by
surprise when the US actually sent in the troops. However, the Iraqi government
had to know that a US military response was possible, regardless of the US's
words, by the simple fact that Kuwait was a country whose petrodollars were
important to Western banks and stockmarkets. The Kuwaiti government had refused
to negotiate with Iraq over its debt and the shared oil field since 1988, and
had remained adamant even with 100,000 Iraqi troops on its border in late July
1990. It was clear just from this situation that Kuwait had some external
assurances. If that were not enough, Kuwaiti officials were at times open about
US backing. On July 30, the Kuwaiti foreign minister told a Jordanian
delegation, "We are not going to respond to [Iraq] ... if they don't like
it, let them occupy our territory ... we are going to bring in the Americans."
If Jordan's government knew of this, one can be certain that the Iraqi
government also knew. '5
We should work from the logical assumption that the Iraqi government knew that a US military response was likely. This was a dicey situation for both the Ba'th Party and Kuwait's Sabah ruling family in one sense, but, in another, neither had much to lose. These governments were both facing internal threats that only extraordinary methods could resolve. The Kuwaiti state was facing chronic internal instability that a decisive military shock of class relations might alleviate and the Ba'th Party was in a situation where it either had to lose power by selfdestructing its national socialist apparatus or face a potential military response from the US. Hussein went ahead with the invasion either expecting that there would be no serious counter-attack or that such a US attack would help him consolidate Bath Party power and impose the type of austerity the IMF was demanding. Neither Hussein nor Sabah could lose if the US intervened, or so the game-theoretic matrices intoned.
There was no reason for
either the Ba'th Party or the Sabah family to think the US would destroy them
in the case of a military intervention. For the past decade, the US government
had been backing both. All the way until a month before Iraq invaded Kuwait,
the US government was arranging credit for the Ba'th regime. >From 1983-90, the US Agriculture Department provided Iraq with $5 billion in credit and loans to purchase US
agricultural goods. '6 After 1987, the US was
Iraq's number two source of imports. The Iraqi government had reason to believe
that the US would either allow it a negotiated way out of Kuwait or would fight
a war in such a way as to leave the Ba'thists in power. As in 1987, Hussein was probably hoping the US would intervene
to help the Ba'thists cope with their own crisis.
In fact, the Iraqi government was certainly aware of the that the US would seize the opportunity to station troops in the Gulf. For all of Hussein's anti-imperialist rhetoric, his action was precisely what international capital needed. Just as the latter's rhetoric of national sovereignty and human rights was entirely specious, there is no reason to assume that Hussein's rhetoric of anti-imperialism was anything more than the opposite: an invitation to the US to help the Ba'th Party get out of its crisis. (Such scenarios are actually rather common in the history of wars between nation-states.) Indeed, if we look at how the war was actually fought - if what happened can be called a war - then we find that Hussein and the Ba'th Party really didn't lose. Much of Iraq was destroyed and the ruling party was further subordinated to international capital, but it is still in power and was deliberately kept in power by the US military.
The Bombing and the
Massacre
The US military began bombing Iraq on January 17. The targets of this bombing campaign were primarily Iraqi civilians and not military installations. It had nothing to do with the various stated goals the US government gave for its intervention: defending Saudi Arabia, liberating Kuwait and destroying Iraq's military. US pilots were dropping bombs on factories, bridges, roads, telephone exchanges, water treatment centers, houses and office buildings. Ultimately, everything and everyone in Iraq was a target. The only goals that one can infer from the intended pattern of the bombing and its indiscriminate result were the destruction of Iraq's infrastructure and the decimation of its civilian population through starvation and disease. By ruining the public water and sewage systems, the US was practicing a modern form of germ warfare that would have impressed the Mongols who sabotaged Baghdad's aqueducts in 1258. After blasting Iraq, the US then slaughtered Iraqi troops retreating from Kuwait on February 25-26. From the cluster bombs, the incendiary bombs and the explosion of the vehicles' gas tanks, Highway 80 from Kuwait City to Basra was rendered into a linear version of a Nazi death camp. The Iraqi conscripts that the US/UN troops killed in Kuwait were working class men. Hussein had thrown about 150,000 soldiers into Kuwait, many of them with little training. Some had been recently picked up off city streets. Most were Kurds and Shi'i who had the least amount of loyalty to Hussein's regime." The more reliable army units were kept in the rear. It is not surprising that many Iraqi troops rebelled and deserted en masse once the US attack began. They had been dumped in Kuwait with little payment and food by a government they never really supported. Thus, in Kuwait, the US military massacred the working poor of Kurdistan and southern Iraq. US intelligence knew exactly who its victims were. Public reports even before February noted that the frontline soldiers were less soldiers than men who happened to be wearing a military uniform. By massacring the retreating troops, the US was destroying the men who would have been the main force of the revolt within Iraq. Those troops that did manage to make it back to Iraq alive often returned with their guns and became the leaders of the anti-Ba'th attacks. The Kurds and Shi'i who were the majority of the retreating troops were planning on turning their guns on the Ba'th Party, which must have heaved a sigh of relief to learn that so many of their conscripts had been slaughtered. Nevertheless the working class uprisings in Iraq gained strength immediately after the war and the US was forced to militarily intervene in northern Iraq, a maneuver designed (in collaboration with Kurdish nationalist leaders) to prevent the internationalization of the rebellion and free the Iraqi military to sweep up in the south."
The US military did not
attack the core of the Iraqi military and left the Iraqi regime largely intact.
All the talk about destroying the power of the Iraqi military and overthrowing
Hussein turned out to be hollow. The government's stated reason for stopping
was yet another redefinition of the goals of the military action. Bush began
arguing that the only goal was to evict Iraq from Kuwait - a goal which sounded
strange to everyone, especially the soldiers, when the US, British and French
air forces had just spent the last month bombing civilian targets in Iraq.
So why did the US not continue the attack into Iraq? Simply put, the US government and its allies wanted to maintain a police state in Iraq and the only organization that could guarantee these goals was the Ba'th Party.' 9 Capitalist planners were not interested in a centralized government alone, but one that could impose IMF-austerity. All of the oil producing states are now in the process of imposing some level of IMF-directed austerity plans. These plans cannot be imposed except with a police state. So Hussein's government in Baghdad was salvaged by the US administration as a deliberate policy. The left critics of the US war have not tired of pointing out the hypocrisy of advertising the war as a fight against "Hitlerism" and then allowing this "Hitlerism" to remain in power. However, these critics have not explained the reason for the hypocrisy. US policy was very consistent: massacre the recalcitrant elements of the Iraqi working class and then keep the Iraqi police state intactas long as it agreed to the conditions of austerity.
This double maneuver
partially reveals the Bush Administration's motivation for combat beyond the
simple stationing of troops in the Gulf. The war was not an attack on Iraq as a
nation-state, it was an attack on the Iraqi working class and a defense of an
Iraqi police state (even though the police state has been weakened and is
entirely dependent upon the whim of the US government, it remains in place and
functioning). One motivation for the war was the desire to destroy the basis of
working class power in Iraq and fundamentally alter the relationship between
capital and labor. Before the war, many Iraqi workers had a kind of informal
and tacit social contract with the Iraqi government. But the US achieved what
the Ba'th Party was unable to do alone: annul the social contract and render the
workers free to starve and the state and private capital free to accumulate.
Iraq as IMF Paradigm
Iraq was transformed into
a model for IMF-directed development by the Gulf War. The starvation and
disease has created a kind of blank slate for class relations. Iraq is the
experiment: just how far can the austerity strategy go? Being virtually
surrounded by US troops, the Iraqi government is being told that it may sell
its only export commodity, oil. However, it will not be allowed to profit a
penny from its sale. The conditions laid on Iraq will force the Iraqi
government into producing oil with slaves. This is the endpoint: the approach towards infinity for capital's
austerity strategy. Of course, oil will not be produced today in Iraq if the
workers do not receive at least a subsistence wage (monetary or not) and the
state's oil corporation receives at least a slight rate of return. But capital
is looking at the asymptotic lines on their graphs and wondering just how far
down the line they can go and still get the oil.
The US/UN military
operation and the imposition of trade sanctions has put the Iraqi government
into the logic of triage: How many and who will starve? The Iraqi government, for example, recently debated
budget cuts. But the National Assembly is still operating by the old national
socialist logic and so is demanding pay increases for civil servants, higher
pensions, more child welfare spending and a renationalization of bread
bakeries. The Finance Minister, however, has rejected pay increases and similar
"inflationary spending." The government is continuing many welfare
programs for the moment: it is operating a food rationing system to ensure that
everyone has a basic subsistence level of food and it is planning on
subsidizing food prices for the upcoming year to the tune of $7 billion. Much
of the infrastructure is being repaired and the oil industry is, according to
government figures, producing 450,000 barrels a day, which is just enough to meet domestic consumption.
(Immediately before the war Iraq was producing close to 3 million barrels per
day.) But in the absence of international trading and foreign loans, prices
will continue to rise (inflation is now in the hundreds of percent) and
domestic production will fall even further. The continuation of sanctions will
force the Iraqi government into reneging on all its national socialist deals
with the Iraqi workers.
Sanctions are part of the
strategy of transforming Iraq into a paradigm of austerity in a period of
rising oil prices. The US government has put Iraq back into a colonial
situation where the US has the power to make all decisions regarding Iraq's
integration into the world market: what it can sell, when, with whom and how
much. Additionally, the US government is in the position to control the
division of the revenue from the sales. By maintaining the sanctions, the US is
enforcing a colonial relationship upon Iraq and making it the epitome of the
global "no-deals" strategy, while keeping the onus of imposing
austerity off the Bath Party. It would be as if the Nazi Party remained in
power after its defeat in WWII and imposed reparations and disarmament (which,
in a way, did happen). Most
likely the sanctions will be lifted, not when Iraq agrees to any new
elimination of a weapons system or a new inspection of its arms sites, but when
it agrees to sell the oil on the US/UN terms.
To sell a commodity and
not make a profit; this is a situation with which many primary commodity
exporting countries can identify. The bauxite is mined or the coffee is grown
in one's country and yet, after the international banks have been paid, one
winds up further in debt. To remedythe situation, capital not only demands, but
coerces the governments to attack the workers: to reduce wages and benefits, to
cut all government spending. The gods of accumulation in Washington, D.C.,
London, Bonn, Paris and Tokyo are now commanding their minions throughout the
globe to squeeze every last penny from their workers and be content with a tiny
commission. These gods can now point to Iraq for pedagogical purposes.
Beyond Iraq: The Gulf
War as Imposition of Perestroika
So far we have discussed
the Gulf War in relation to Iraq's class relations. Now we should regard the
war in relation to the class relations of the oil producing states as a whole.
The war was not just intended to decimate the Iraqi working class and enforce
an extreme form of austerity in Iraq, it was also intended as an attack on the
oil producing working class, especially the migrant and non-citizen laborers.
Observe what the war on Iraq accomplished: Kuwait expelled most of the
Palestinians working there and the Palestinian population is soon expected to
decline to 40,000 - from a pre-war population of roughly 400,000; Saudi Arabia
expelled around one million Yemeni workers, and over a million Egyptian workers
were displaced from Iraq and Kuwait. All of these displacements are now
allowing the various Persian Gulf countries to implement what they call
"rationalizations of the workforce."
It is clear that capitalist planning needs higher oil prices over the 1990s. But if the price is to double over the next decade, capital has to ponder the stability of the regime of accumulation based on these price increases. Economic planners in the US and Europe remember the experience of the 1970s. After the 1973-74 hike, they were projecting steady price increases over decades. However, as noted in "Oil, Guns and Money," they were forced to retreat by 1980. Morse, who, as editor of Petroleum Intelligence Weekly, is perhaps our best guide to capitalist planning in this regard, assumes that oil will reach $40 by the year 2000. He recognizes that the real issue is not whether the price can be raised but whether the prices can be sustained once raised: "Even if oil prices fall again to less than $20 a barrel after the current crisis is resolved, it seems largely irrelevant to ask whether such prices can remain stable or increase only modestly. It is time to address the question of how oil markets and the structure of the oil industry will react to steep price increases.” 20
A major fear concerning
"the structure of the oil industry" is the effect of such steep
increases on the oil-producing states. From Venezuela to Libya to Indonesia,
revenues are going to rise. Will this capital be "wasted" as in the
1970s on wages and government spending? Will the people be controllable as
poverty persists in the midst of vast accumulations of wealth? Will the regimes
of these states use the new wealth to undermine the power of the IMF/World
Bank/Pentagon troika or can they be further ensnared in interest payments and
arms purchases?
The present situation in
Iran exemplifies these queries. True to its "pragmatic" turn, the
Iranian government is pledging that its oil revenue will not be distributed
among the people but will instead be used for paying Japanese, Korean and
Western corporations to help build new industrial facilities. Wages will be
lowered as more multinational firms are paid-off. The government has, in the
past two years, attempted a total overhaul of the government: it has devalued
the currency, opened up the foreign exchange market and encouraged private
foreign and domestic capital to invest. The whole program amounts to an Iranian
version of perestroika. In fact, demonstrations this past year by Iranian
workers with their empty pockets turned out are reminiscent of price protests
in the former Soviet Union.
The Iranian government is
also holding talks with the Gulf states on its military and political integration
into the Gulf Cooperation Council.'' The Iranian military is, now that Iraq's
military has been badly damaged, the largest in the region (excluding
Turkey's). Some sort of arrangement will be devised between the US military in
Saudi Arabia and the Iranian military for a new regional approach to the
imposition of austerity combined with industrial expansion.
But all does not bode well
for the US, the Gulf states and Iran's plans. In the middle of the
confrontation between Iraqi and US troops in January 1991, thousands of Iranian
oil workers went on strike, demanding an indexing of wages to inflation,
guarantees for housing and food, and changes in the labor laws. The government
told the workers to end the strike in the interest of "national security."
Pointing to the threat of war just across the border, the government
blackmailed the workers into returning to work." A large-scale strike in
the steel industry in 1990, involving tens of thousands of workers, also
radiated the potential for a serious disruption in the Iranian government's
plan for austerity.
The Gulf War engendered a
vast devaluation of the oil producing proletariat, but this devaluation was an
important reason for the war. It was not merely a by-product of the war, it was
at the core of international capital's motivations for pressuring the Iraqi
Ba'th Party into the game theoretic solution: war. Just as the 1973 leap in
investment and expansion required the Arab-Israeli war to further weaken the
working class in the Mideast, the planned 1990 leap required yet another war.
The three groups of workers explicitly targeted in the war were the Iraqis, the
Palestinians and the Yemenis: three of the most educated and politicized groups
of workers in the region, the three vanguards, so to speak, of the workers
within the Mideast social factory. The oil industry's need for a disciplined,
acquiescent workforce is paramount given the capital intensive nature of
production, which may easily approach $10 million per worker on an offshore
production platform." With so much capital invested in all the facilities
in the Gulf, it only takes one worker with a "bad attitude," with
some gripe against the Gulf states, with some political agenda, to create a lot
of damage.
The stated reasons for the
attacks on the Iraqi workers we have already seen to be specious. The stated
reasons for the expulsion of the Palestinians from Kuwait and the Yemenis from
Saudi Arabia were equally specious. Kuwaiti, Saudi Arabian and US governments
portrayed the expulsions as simply revenge for the workers' supposed support
for the Iraqi aggression. There are two problems with this excuse: First, the
GCC states and the US had been planning on reorganizing and reducing their
labor force even before Iraq's invasion of Kuwait. The need to decompose the
oil-producing proletariat in the Middle East has been long discussed and is
nothing new. The IMF has continually informed the GCC states that there were
too many parasites in their countries leeching off all the oil wealth. The
harassment and expulsion of Palestinians from Kuwait and other Gulf states
during the war is not only because they have been deemed parasitic, but also
because they are politically "unreliable." "While Palestinians
are important additions to the educated populations of many Arab states, they
are also perceived as political risks, as time bombs waiting to explode and
destroy the remaining traditional monarchies that control the richest Arab
states." 24
Secondly, neither Yemenis
nor Palestinians uniformly and unequivocally supported the Iraqi invasion.
Besides, none of them were ever given much of an opportunity to express
themselves on the matter, in the press, on the streets, or anywhere else. Their
political representatives, the PLO and the Yemeni government, never expressed
support for the Iraqi invasion. Both expressed neutrality. What the two
national groups generally supported was an anti-imperialist and egalitarian
politics. Their ideologies led them to a partial support for the invasion since
it appeared to be an action against those who had helped the Israeli state to
expropriate and oppress the Palestinians and against the GCC states which had
accumulated so much wealth in the midst of mass poverty. However, most of them
were aware of how little support the Iraqi Ba'thists had given the Palestinians
before the invasion and how much support they had given the US, European and
Soviet government. Thus, they were expelled or attacked, not for their support
of the invasion, which was nearly non-existent, but for their lack of it, i.e.,
for their critical and rational political beliefs. The Gulf states plan to
replace Palestinian and Yemeni workers with Asian workers: Filipino, Sri
Lankan, Bangladeshi, etc. These Asian workers are on the low end of the Gulfs
wage hierarchy." The technical workers among the Palestinians (the
bankers, doctors, engineers, etc.) are to be replaced by Gulf state citizens,
Europeans and North Americans. Kuwait is now setting the example by contracting
with international firms, the majority of them from the US, for its
reconstruction effort. These firms are bringing in highly skilled workers from
Europe and US. Thus, a new paradigm is emerging where relatively high-paid
Western workers are combined with very low wage Asian workers. The intermediate
stratum of workers from the area is being shrunk and devalued. The polarization
of the wage scale is being deepened as has happened throughout the planet.
The Leap in Investment
Immediately after the
conclusion of the massacre of Iraqi workers in Kuwait and anti-Ba'th
insurrections in Iraq, the Saudi Arabian state initiated the planned
"modernization" of its oil industry. This Saudi campaign to increase
the production and productivity of the industry is the largest since the
expansion of the oil boom years in the mid-1970s. The projected increase in
expenditure is $15 billion for oil field development by the mid-1990s
and $10 billion for oil refineries by the end of the decade. 26
During the war, the Saudi Arabian oil industry increased its daily output to
around eight million barrels which was nearly the limit of its productive
capacity. But the new plans call for a daily production of ten million barrels
as a normal output. It is the leading component of the world-wide oil
industry's commitment to a leap in the technological level of production.
The present number two oil
producer in OPEC, Iran, has also embarked on a massive expansion in its oil
industry and its industrial capacity as a whole. At the moment, Iran is pumping
about three million barrels of oil per day. It had begun the expansion before
the Gulf War, but the vast oil profits made during the war has enabled Iran to
devise even more ambitious plans. The rise in oil prices led to a gain of about
$4 billion for the Iranian government in the five months after the Iraqi
invasion of Kuwait. This windfall profit gave Iran the means to increase its
investment in its oil industry. Over the next two years, Iran has plans to
spend $2 billion to increase oil production capacity by one million barrels a
day (so that total capacity will be raised from four to five million per
day).27' This expansion in the oil industry is now being done in an entirely
different way than Iran's former expansion under the Shah's government in the
1970s. The government of President Rafsanjani has committed itself to imposing
stringent austerity measures. The government has been developing closer ties
with the IMF and has been accorded a good deal of praise in recent IMF scouting
reports on the country's economy. The IMF report of early 1990 gave the country
its first positive rating since the 1979 revolution.28
When OPEC met after the
war, Saudi Arabia was able to dictate the terms, since two major oil producers
were out of commission (Iraq had been the number two oil producer in OPEC and
Kuwait number seven). Saudi Arabian rulers increased their quota and now have a
stronger control over OPEC than ever before. Meanwhile, the continuing crisis
in the former USSR implies that capitalists will wait before risking higher investments
in the Russian oil fields, hence ensuring Saudi dominance for some time.
Clearly, the Gulf War has made Saudi Arabia the unquestioned arbiter of oil
prices and also the pacesetter for the level of technology necessary for any
country to operate a modern competitive oil. 29
The increased power of
Saudi Arabia in the international oil market directly translates into greater
power for the US government to control the oil price. For the US government has
a controlling influence over the country's state-run oil industry, Saudi
Aramco, and its financial ministry, SAMA. The contracts for the expansion of
the Saudi oil industry and the sales of US weapons to the Saudi military make
Saudi Arabia an angel of salvation for US capital.
There is no irony to the
fact that at the heart of international capitalism today lies an apparently
anachronistic and theocratic despotism resting on a vast system of indentured
servitude. The more capital develops productivity through oil-based
mechanization, the less need there is for direct human labor. But since capital
is nothing but objectified human labor, it must make people work ever harder
and longer inside and outside of the oil fields. Just as people realize they
need not work as much as before, they find themselves working harder or
excluded from the world's wealth altogether. This intrinsic contradiction of
capitalist development can only be regulated for capital through ever more wars
and policing. The slaughter and starvation of the Iraqi people and the uprooting
of millions in the Mideast were the necessary preconditions of the most recent
industrial expansion. Every round of capitalist development requires a
simultaneous wave of expropriation. The Gulf War was part of capitalism's most
recent phase and it appears to have emerged victorious.
The US government is
completely prepared for the requisite long-term occupation of the Gulf, and
from its bases there and in Turkey, Diego Garcia in the Pacific Ocean, and
Kenya, it will be capable of intervening in not just the Persian Gulf area, but
also Africa and Asia. However, all of the US government's coalition partners
are extremely unpopular governments. Morocco's monarchy, Egypt's despotism,
Syria's dictatorship and Turkey's military rule (with transparent civilian
fronts), are the US's best allies now but obviously the majority of the
population in all four of these countries was opposed to the US war on Iraq. In
Egypt the government closed the schools and canceled sporting events in the
fall of 1990 simply because it was terrified of the people gathering in one
place. In the October 1990 election, the government banned the main opposition
parties, who had all condemned the US occupation of the Gulf.
The Gulf states' rulers
themselves are especially vulnerable after the war, since they are almost
universally despised for their greed and subservience. They will have to rely
on the US even more than before to protect their oil fields from sabotage,
their borders from foreign attack, and their citizens from "dangerous"
political ideas. Energy capitalists are planning oil price increases over the
next decade but the political struggles in the oil producing areas could cause
this renewed experiment in price hikes to blow up in their face, even though
these increases are going to be accompanied by US and European troops. Nearly
all the countries in the Mideast were colonized by European powers and who can
forget the bombings, the beatings, and the humiliation? The present US-led
occupation is nothing more than a return to a banished era. Though some
alchemical mixtures of oil and blood can create enormous profits, others can
touch a revolutionary flashpoint.
Notes
1. Edward Morse, "The
Coming Oil Revolution," Foreign Affairs, Winter 1990, p. 49.
2.
Literature
on the international oil industry is filled with references to the relative
lack of investment in the 1980s and a decline in the relation between output
and capacity. Pierre Terzian for example, notes, "Without a rise in energy
prices we would have reached a situation where there could well have been a
shortage of oil production capacities and probably of gas as well within three
or four years, by 1995 at the latest." Journal of Palestine Studies, Winter 1991, p. 102. See
also, Dimitrio Koutsomitis, "Petroleum Price Trends to the Year
2000," Opec Review, Autumn 1990.
3.
New York
Times, 16
September 1991.
4.
Morse, op cit, p. 36.
6. Ann Reilly Dowd, "Oil
from Russia," Fortune, 22 October 1990.
7. One illustration, among
many, of Iraq's debt crunch was its halting of loan payments to French banks in
October 1988. Iraq defaulted on already rescheduled debt and even on debt
ineligible for rescheduling. It owed French banks $4 billion. MEED, 10 February
1989, p. 14.
Kiren
Chaudhry, "On the Way to Market: Economic Liberalization and Iraq's
Invasion of Kuwait," Middle East Report, May-June 1991, p. 14.
8. Marion Farouk-Sluglett and
Peter Sluglett, Iraq Since 1958: From Revolution to Dictatorship (New
York: I.B. Tauris and Co., 1990), p. 230. Also see: Joe Stork, "Class,
State and Politics in Iraq," in Berch Berberoglu, ed., Power and
Stability in the Middle East (London: Zed Press, 1989); and 'Isam
al-Khafaji, "Iraq's Seventh Year: Saddam's Quart d-Heure?," Middle
East Report, March -April 1988.
9.
MEED, 12 May 1989, p. 15.
10.
The Economist Intelligence Unit Country Report: Iraq, No.2, 1990, p. 12.
11.
Kiren Chaudhry, "On the Way to Market: Economic Liberalization and Iraq's
Invasion of Kuwait," Middle East Report, May-June 1991. Also see
Sluglett and Sluglett, Iraq Since 1958, pp. 277-80.
12.
For IMF-aligned views on austerity and recolonization in the Mideast, see: Said
Einaggar, ed., Privatization and Structural Adjustment in the Arab Countries
(IMF, 1989).
13. Iraq's reconstruction
plans were perhaps the Mideast's largest: $6 billion for the oil industry in
order to double its export capacity and $40 billion over a five year period for
general industrial construction. The Economist, 30 September 1989.
14.
Gen. Manuel Noriega's regime was overthrown by the US in 1989 because of a
similar incapacity to impose IMF austerity plans on Panama. His power rested on
the state sector and on providing a decent standard of living to a sizable
section of Panamanians. Like Hussein, his attempts at "structural adjustment"
in the late 1980s were complete failures. As in Iraq, the US directed its
firepower at the poor during the attack and afterwards retained the previously
existing police structure.
15. See Village Voice,
5 March 1991. The same article describes how the US government encouraged the
Kuwaiti ruling class to adamantly oppose Iraqi state demands for a cancellation
of its debt and a renegotiation of the ownership of the Rumaila oil field. In
November 1989, the chief of the Kuwaiti monarch's security forces visited CIA
headquarters outside of Washington, D.C., and met with the CIA's director,
William Webster. The record of this meeting was found in Kuwaiti government
files after the Iraqi invasion. The Kuwaiti security head reported that
"we agreed with the American side that it was important to take advantage
of the deteriorating economic situation in Iraq in order to put pressure on
that country's government to delineate our countries' common border."
16. Guardian, 5 June 1991.
17.
John Pilger, New Statesman and Society, 12 April 1991, p. 6. See also Ten
Days That Shook Iraq: Inside Information From An Uprising, BM Cat, London,
WC IN 3XX, UK, and The Kurdish Uprising And Kurdistan's Nationalist Shop
Front And Its Negotiations With The Baathis/Fascist Regime, BM Blob,
London, WC IN
3XX, UK. In
the war with Iran, Hussein's tactic was to put the expendable population, like
the Kurds, on the frontline while keeping the more reliable and better-paid
units to the rear. The purpose of the "elite" units was not to fight
Iran so much as to prevent other Iraqi units from deserting. Many of the
frontline troops surrendered to Iran rather than fight (which accounts for the
fact that at the end of the war Iran had 75,000 Iraqi prisoners of war - seven
times the number of Iranian POWs). Cf. Dilip Hiro, "Chronicle of the Gulf
War," MERIP Reports, July-September 1984. p. 8.
18. See Hanna Batatu,
"Iraq's Underground Shi'a Movements: Characteristics, Causes and
Prospects," The Middle East Journal, Autumn 1981.
19. MEED, 26 July 1991, p. 4.
20. Morse, op cit, p. 46. Emphasis ours. 21 MEED, 22 February 1991.
22.
Labor Solidarity, quarterly publication of the Labor Committee on Iran
(PO Box 241412, Los Angeles, CA, 90024), spring 1991, p. 3.
23.
Jon McLin, Social and Economic Effect of Petroleum
Development (Geneva: ILO), p. 55.
24. Mary Ann Tetreault, The
Organization of Arab Petroleum Exporting Countries (Westport, CT: Greenwood
Press, 1984), p. 98. See also Abdel Majid Farid and Hussein Sirriyeh, eds., The
Decline of Arab Oil Revenues (London: Croom Helm,
1986), p. 102. In 1986, Yorke and Turner foreshadowed the events of 1991:
"In the future the Gulf governments can be expected to deport any known
political activists and to terminate the permits of as many Lebanese, Iraqi,
Syrian and Palestinian workers, as well as other workers of Iranian origin, as
they feel is politically possible."
25. Peter Woodward, Oil and
Labor in the Middle East: Saudi Arabia and the Oil Boom, (New York:
Praeger, 1988), pp. 46-49.
26. MEED, 7 June 1991. 17 MEED, 1 March 1991. 28 Ibid.,
p. 9.
27. "Saudis Back in Control," Financial Times, 14 March 1991.