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Pol/Econ Diplomacy
Pol/Econ: Alan Greenspan: City Slicker
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Tuesday, 18 September 2007 Written by Henry Midgley

Were they discussing Iraqi oil?
Alan Greenspan has made some rather unconventional friends recently. In his memoirs he argued that the Iraq war was about oil- he said that
"I'm saddened that it is politically inconvenient to acknowledge what everyone knows -- the Iraq war is largely about oil."

Greenspan should not be interpreted, as some naive columnists from the Guardian, have been saying that 'we went to war to get the oil'. Rather Greenspan suggested that the security of oil supplies was the key issue, he seems to be suggesting that America went to war to avoid another oil shock of the 1970s, to stabilise supply rather than gain control of the reserves. But is even that a plausible argument about the motivation for the Iraq war- and if it isn't, why did the Central Bank Chairman seem to think it was

The thesis that the Iraq war was all about oil has never seemed particularly convincing to me. For a start had the United States wanted to get its hands or its corporate hands upon that oil, there were much cheaper ways to do that than to invade. Invasion is an incredibly expensive enterprise and that could have easily been predicted as soon as the first gun fired. The United States government had no real need either to invade: Saddam Hussein needed to export his oil. Had the US made his readmission to the international community conditional on handing over contracts to American companies, Saddam would have complied. The dollars were more important to him than his opposition to the United States, indeed for a dictator trying to stay alive in a difficult region like the Middle East, ultimately the most important thing is to get hold of that oil revenue and start using it to arm yourself. Saddam therefore can be disposed of as a factor in this equation, if anything Iraq needed to export more than the rest of the world needed to import oil.

Greenspan however isn't really dealing with that point. His worry was not so much that Saddam would stop exporting oil or would be unconcerned with the export of oil, as that Saddam would use his reserves of oil to manipulate the price. In particular, Greenspan believed that Iraq would withhold oil strategically on the international market in order to provoke a price rise beyond 100 dollars. I will return to this motivation later- but I don't think it explains the US's conduct in Iraq since day one. Because if the United States had been so motivated by stability, they would not have proceeded to do what they did in the aftermath of the invasion. They would not have dismissed the Iraqi army and tried to build a democracy in Iraq, rather Americans would have strived to find another Baathist dictator, get stability and get out and reap the rewards of huge contracts. The point is that the Americans did not act as though stability of supply was their number one objective, they acted as though other things dominated their thinking.

The administration and its allies in Iraq were motivated by a large number of things- and obvious conflicts were present right from the beggining. Donald Rumsfeld and his deputy Paul Wolfowitz had different agendas at the Pentagon, Colin Powell had another agenda at the State Department as did the Vice President and in the midst the President had his own ideas, reflected in his rhetoric, about bringing freedom to the Middle East. I doubt we will fully know for many years anything but the outline of what happened in Iraq and how the factional battle turned out inside the administration- but briefly set out I think there was a rational for what happened in Iraq, and surprisingly I think oil was peripheral to it.

The rationale was that dictatorship and terrorism are linked. The argument goes thus: the dictatorships of the Middle East are the root of the problem of Islamic terrorism. It isn't something natural to either Muslims or Arabs to be terrorists, it is something natural to those living in tyrannies. If the central tyranny in the region is decapitated and replaced by a functioning democracy there is a chance that the example will spread and benificent consequences will follow from that. Its often forgotten how many proponents of the war like Christopher Hitchens wax lyrical about the Kurdish democracy in the North of Iraq, something one hopes that can be preserved out of the wreck. It should also be remembered that the most influential people on the administration were Iraqi exiles, Ahmed Chalabi for example, who fostered dreams of a Minnesotan democracy in Messopotamia. Furthermore it would, they hoped, provide an example within the Middle East that Western cultures of rights and democracy can be reconciled with Muslim populations, something that Osama Bin Laden is striving against. It will also provide the United States with a way to evacuate its forces from Saudi Arabia, the ultimate cause of Bin Laden's hatred of America, and furthermore would weaken the position both of Iran and Syria.

Alongside this there were genuine worries about weapons of mass destruction. I have never ceased believing and the evidence in the UK in particular from both the Hutton and Butler inquiries bears this out, that many of the key actors involved in the invasion of Iraq believed that Weapons of Mass Destruction would be found there. Tony Blair believed it for example. For Blair and those in the UK administration and I'm willing to wager many in the US administration, the worry was that given Saddam had these things (as they thought) he might either hand them to terrorists, or as he fell lose them to terrorists in a future situation. Blair talked of the nexus between failed states, weapons of mass destruction and terrorists enough to take him seriously. What he meant by that was that only a state could develop Weapons of Mass Destruction, but through instability it might lose them to another group.

Obviously there were other motivations alongside this- some members of the Bush administration just wanted revenge on Saddam, others like Michael Ledeen (a pundit from outside the administration) thought that America ought to go and take some small country and thump it every ten years and yes there may have been some people in the administration who were concerned about the security of the oil supply. However one wonders quite how much they were concerned about the Iraqi oil and how much about the security of the oil regionwide. Iraqi Weapons of Mass Destruction could destabilise a region full of oil and in that sense the fear about regional insecurity, is as Matt Yglesias points out, a fear about what Saddam could do to oil supply. A stable democratic Iraq as a side result would have the effect of stabilising oil revenues for the West, and victory over the jihadist opponents of Western capitalism would promote the profit not only of those in the Middle East but also their ability to sell oil on Western markets.

Why though be so sanguine in dismissing the views of Mr Greenspan? This comes back to my second question, why would Greenspan believe this or want to say it. Well the words are taken from his book, but in an interview with Mr Woodward of the Washington Post, Mr Greenspan has clarified his views. Mr Greenspan's reported statement to Mr Woodward was
"I was not saying that that's the administration's motive," Greenspan said in an interview Saturday, "I'm just saying that if somebody asked me, 'Are we fortunate in taking out Saddam?' I would say it was essential."

That statement presents a slightly different view of what Mr Greenspan was saying. He was saying that the destruction of Saddam was 'fortunate' because of the oil issue. Indeed later in the same interview he denies that any administration official ever told him that oil supply was crucial to it. The impression I receive from that interview is that Greenspan was outside the whole decision.

Greenspan is through his book attempting to define what the Iraq war was about after it happened, having not really participated in the decision. His reasons for doing this are clear as well. Greenspan wants to define the decision to go to war, because the course of the war is at the moment up for grabs in the United States. Greenspan is a canny political operator. He has his own ends in mind. As someone who seems immune from the neo-conservative virus, and as a pragmatic financial operator, it seems to me more than likely that this was an attempt to remind people about the oil reserves in Iraq and their importance to global energy security. A reminder that Greenspan may conceive some Democrats might need at present- however his comment has boomeranged spectacularly, providing the more insane parts of the left with credence to their views.

We must also recognise that this may well have been the reason that Mr Greenspan supported the war. People, even at the top of government, have different ideas about why things should happen and support things for different reasons. The US government during the period of the invasion of Iraq and the UK government are classic examples. Did Donald Rumsfeld care about Iraq for the same reasons as Anne Clywd? Both supported it. But the veteran defence secretary may have had an eye on the balance of power more than the leftwing firebrand for whom human rights is a religious cause. Greenspan therefore may be pronouncing his own reasons for supporting the war, reasons which have nothing to do with the official reasons that the war happened. That interpretation becomes even clearer once one realises that Greenspan confesses that no administration official ever suggested this reason to him for the invasion.

Greenspan's comments have given a respectability to conspiracy groups on the left who will believe that oil is the root of any American policy in the Middle East. The problem with the 'its the oil stupid' reaction is that it can be used for any plausible US policy unless it is combined with evidence. Given that people much closer than Greenspan to the US decision seem to have been concentrating on other problems and issues- terrorism, democratisation, the regional balance of power- and given the counter intuitive nature in terms of costs to the US itself it does seem an implausible argument. It won't stop people making it, and for them Greenspan's revelation will be an affirmation like no other.

Ultimately Mr Greenspan's comments tell us more about Mr Greenspan than about anyone else. He believed that the war was justified because of global oil supply worries. Did anyone else? It doesn't seem so from the evidence we have at the moment. As I have said that may need to be revised in the light of further disclosure- one day we will have the records of what went on in meetings between President Bush and his advisors and there will be surprises. But at the moment I think its reasonable to say that there were a variety of justifications for the war current amongst those making policy. There were those who believed in a democratisation project. There were those worried about terrorists getting WMD. There were those worried about the regional balance of power. It now appears there was one peripheral figure worried about the oil price. There were probably people concerned about a mixture of the four (I would suggest mostly the first three) with different emphasis depending on their views of the world.

What I think we can definitely say is that the Iraq war was not only about Oil. Its comforting to believe in a great conspiracy running the world to their own benefit, its less comforting to realise the truth that the world is run through a mixture of motives by a group of fallible and flawed human beings.