Oil's not well in the Gulf


By Adm. Thomas H. Moorer,
Larry Elgin and
Dr. Steve Rinehart
© 2000 WorldNetDaily.com

This past Thursday, Dec. 21, Iraqi Defense Minister Lt.
Gen. Sultan Hashed Ahmed said his country could destroy
Israel and that it was ready to confront any aggression
against the Arabs. "Iraq can destroy Israel because it
possesses a large combat experience in dealing with all
possibilities," Ahmed told the weekly Al-Zawraa
newspaper in an interview to be published next week.

He said Iraq would not hesitate to send its armed forces to
defend an Arab country targeted by Israel. He said the
Iraq military was prepared to deal with any potential
aggression. He also said there could be no peace in the
Middle East until Israel returned the land to the
Palestinians. Ahmed said there was no military
coordination between Iraq and the other Arabs over a
potential conflict with Israel, but said that several states,
including Syria, were satisfied with Iraq's position on the
violence in the Middle East.

The day before that, Middle East News Line reported that
U.S. intelligence sources have confirmed reports that Iraqi
troops have again moved west toward the Syrian border.
They said more than a division appears to be deploying
with several hundred tanks but without air power.

Then, just yesterday, Friday, Dec. 22., Israel's military
intelligence chief , Maj.-Gen. Amos Malka, said Iraq seeks
to launch a missile attack as part of a regional war with
Israel and is looking for an opportunity to join an Arab
coalition with Syria in such a war. He said Baghdad is
reconciling with Syria, which sees Iraq as providing the
regime in Damascus with strategic depth. Iraq has also
mended its fences with Iran in order to pursue this war
against Israel.

It is important to keep our eye on the ball here. The worst
problem is not the likelihood of a direct missile attack on
Israel by Iraq. The real problem which this administration
has created is the coalition between Iraq and Arab states
that were our allies in the Gulf War and, as a product of
that coalition, the loss of control of the OPEC monopoly by
our staunchest allies in that war, Saudi Arabia and Kuwait
to a group comprised of Iraq, Iran, Venezuela and others
-- nations not on our side but which are increasingly allied
with communist China. Oil is the weapon we need to keep
our eye on.

On Oct. 14 , U.S. Secretary of State Madeleine Albright
had denied that we were obtaining Iraqi oil despite U.S.
Department of Energy statistics pinpointing Iraq as our
sixth largest supplier. In the first seven months of this year
we purchased 585,000 barrels per day of Iraq's oil. We
continued to develop this dependence up to the point, on
Nov. 30, when the flow of Iraqi export oil was halted by
Iraq, leading to their announcement the following day, on
Dec. 1, that they would export no more unless the buyers
would pay a 50-cents-per-barrel surcharge into a fund
outside the control of the United Nations Oil for Peace
Program. They will now spend the money not on food for
Iraqis, but on arms for Palestinians.

In the months leading up to this cut-off, the price of oil was
high, enabling Iraq to build up -- through its portion of the
U.N.-monitored sales and its black-market sales such as
those through the tanker truck pipelines into Turkey and
Jordan and small tanker movements outside the monitoring
system -- the cash reserves it needs to outwait us as we
seek to enforce the U.N. sanctions. Immediately upon
announcing the cut-off, it announced a long term contract
with India of unmonitored sales outside the U.N. system.

This is a further tightening of the Chinese and OPEC "oil
noose" around our national neck. It signals a strategic
victory for Iraq and a serious strategic loss for us. This is
so, not because we cannot compensate for the deprivation
of the Iraqi oil and bring the price down somewhat. For we
can, and we are. No, the strategic cost for us is that it is
Europe that is going to feel the tightening of the noose
more immediately, and is going to desert us, as it did
leading up to Vietnam, and is going to increase its logistical
cooperation with, and dependence upon, Iraq and China --
and Russia.

Daily our pilots are over Iraq supposedly keeping Saddam
Hussein "in the box" that we put him in during the Gulf
War. Our planes don't fire at Iraq's growing oil and power
industry, but it is this which is the present threat to us and
to our allies in the Middle East. It is this which Saddam
was building on our dollars even as he rebuilt his weapons
of mass destruction, which he won't even need unless we
counter this more immediate threat. It is this capability
which strips Europe from us so that it will assist him and
the Chinese and the Russians in a showdown, and not us.
The Arab nations are no longer prepared to ostracize Iraq
as they did under our leadership in the Gulf War. As of
Nov. 2, aircraft from Arab and European countries
continued to land at Baghdad's Saddam International
Airport in spite of a U.N. ban: Since the airport reopened
in August, planes from 40 countries have flown into the
Iraqi capital.

All through November and into December, while America
was preoccupied with the Clinton-Gore attempts to
reverse the results of the Nov. 7 election and our news
media were occupied 24 hours a day with that effort,
Saddam's destruction of the sanctions regime against him
increased. He is shredding it with impunity in a carefully
built up and orchestrated effort which is the culmination of
years of "expanding the envelope." Openly defying the
U.N. and daring it to do anything about it, Iraq has started
shipping oil in a pipeline to Syria. The slapping of a
surcharge on its oil exports in violation of the U.N.
mandate is a well thought out final step to destruction of
the sanctions as an effective containment. Saddam has
taken control of the revenues from the oil exports to do
with as he pleases. He knows that with the price of oil at
its present level, the portion of the sale price that
previously went into the U.N. controlled program "for
peace" but that is now under his control, makes up for the
lesser amount of oil which he may export until such time
as we are powerless to make sanctions work in even a
token manner.

One of communist China's state-owned, but now
Western-style, integrated oil giants has purchased 40
percent of Iraq's oil company. Already one of the largest
oil companies of our ally, France, is in the game in a big
way, improving the technology of Iraqi oil production for oil
commitments outside the sanctions.

So much for the defeated and vanquished in the Gulf War.
How are things going with our victorious allies, the Saudis,
whom we saved from Iraq's conquest and despotism,
along with Kuwait?

Well, in financing so much of the Gulf War victory, the
Saudis incurred a huge debt, which they then increased
greatly by undertaking to arm themselves with the most
expensive U.S. weaponry. As a result of that and the price
of oil staying so low during the years leading up to the
present steep rise, the Saudis, despite their vast oil
reserves, still the largest in the Middle East by far, are in
debt and have not, at present, the infrastructure to
produce, refine and ship much additional oil. The begging
of the Saudis by Clinton and his energy secretary and the
refusals of these requests are a charade.

For 10 years the Saudis have been running deficits from
which they are only beginning to recover with the new
high oil prices. In the past two years they have had deficits
of 24 billion. In the low price years of 1996 and 1997 they
canceled all of their upstream and refining projects except
for two. They don't have the additional super tankers,
refinery expansions and terminal facilities to increase their
production as is assumed. They cannot pay off what they
currently have installed in petrochemical plants much less
push for immediate expansion of their facilities and
capacity unless we were to fund it with massive aid.
Saddam Hussein is flush with cash but the Saudis are not.
If the Saudis lower the price to help us, they hurt their own
economy and risk going back to the financial downturn
from which they are emerging.

We have previously pointed out that our forward planning
for oil assumed additional large production from
Venezuela, which is no longer there because President
Chavez and his government are in league with the
communist Chinese and Castro, not us. Now it is becoming
clear that another key part of our assumption about oil
supplies for any military efforts we must undertake is also
collapsing. The Saudis cannot just up their production and
provide us with oil and they cannot any longer lead the rest
of OPEC in doing so. They are locked into a position
where the only leadership which they can exert in order to
control their dominance of OPEC is to outspend Saddam
Hussein and the Iranians in giving money to the
Palestinians for the destruction of Israel, which is what
they are doing. This situation has not solidified our
lightening-strike military victory over Saddam in 1991; it
has undone it, and we will be hard put to get it back.

The coalition which President Bush skillfully built up with
such success that it even locked the Iraqis out of satellite
intelligence has been shattered. We may never see it
again. President Clinton began this early on with his
militarily silly 27-cruise-missile strike against Iraq, which
had no viable military function but which boosted his
domestic polling numbers while it began the process of
destroying our strategic accomplishments and boosting
those of the Chinese communists. It appears that the Gulf
War is no more over than the Cold War. Under Clinton
both have been revived and we are on the losing side. It is
now only a matter of a few years before we will be forced
out of the Persian Gulf unless some effective steps are
taken to reverse what Clinton has done and turn back the
forces which he has set in motion. At this point this can
best be done by skillfully beginning the removal of the oil
noose from around our necks.



Adm. Thomas H. Moorer (U.S. Navy, ret.) is a former
chairman of the Joint Chiefs, chief of Naval
Operations, commander in chief Pacific, supreme
Allied commander Atlantic and commander in chief
Atlantic Fleet. He is the Honorary Chairman of U.S.
Defense-American Victory in Washington, D.C. Larry
Elgin, JD, is the Chairman of USD-AV. Dr. Steve
Rinehart, Ph.D., has an extensive background both in
the oil business and in weapons systems. He is in
charge of USD-AV's Truth About Oil Project.
SOURCE:
http://www.worldnetdaily.com/bluesky_excomm/20001223_xex_oils_not_wel.shtml 

Adm. Thomas H. Moorer