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	<title>Dissident Voice &#187; Dilip Hiro</title>
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	<link>http://dissidentvoice.org</link>
	<description>a radical newsletter in the struggle for peace and social justice</description>
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		<title>How the Bush Administration&#8217;s Iraqi Oil Grab Went Awry</title>
		<link>http://dissidentvoice.org/2007/09/how-the-bush-administrations-iraqi-oil-grab-went-awry/</link>
		<comments>http://dissidentvoice.org/2007/09/how-the-bush-administrations-iraqi-oil-grab-went-awry/#comments</comments>
		<pubDate>Thu, 27 Sep 2007 12:01:52 +0000</pubDate>
		<dc:creator>Dilip Hiro</dc:creator>
				<category><![CDATA[Middle East]]></category>
		<category><![CDATA[Oil]]></category>

		<guid isPermaLink="false">http://www.dissidentvoice.org/2007/09/how-the-bush-administrations-iraqi-oil-grab-went-awry/</guid>
		<description><![CDATA[Here is the sentence in The Age of Turbulence, the 531-page memoir of former Federal Reserve chief Alan Greenspan, that caused so much turbulence in Washington last week: &#8220;I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil.&#8221; Honest and accurate, it had the resonance [...]]]></description>
			<content:encoded><![CDATA[<p>Here is the sentence in <em>The Age of Turbulence</em>, the 531-page memoir of former Federal Reserve chief Alan Greenspan, that caused so much turbulence in Washington last week: &#8220;I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil.&#8221; Honest and accurate, it had the resonance of the Bill Clinton&#8217;s election campaign mantra, &#8220;It&#8217;s the economy, stupid.&#8221; But, finding himself the target of a White House attack &#8212; an administration spokesman labeled his comment, &#8220;Georgetown cocktail party analysis&#8221; &#8212; Greenspan backtracked under cover of verbose elaboration. None of this, however, made an iota of difference to the facts on the ground.</p>
<p>Here is a prosecutor&#8217;s brief for the position that &#8220;the Iraq War is largely about oil&#8221;:</p>
<p>The primary evidence indicating that the Bush administration coveted Iraqi oil from the start comes from two diverse but impeccably reliable sources: Paul O&#8217;Neill, the Treasury Secretary (2001-2003) under President George W. Bush; and Falah Al Jibury, a well-connected Iraqi-American oil consultant, who had acted as President Ronald Reagan&#8217;s &#8220;back channel&#8221; to Iraqi President Saddam Hussein during the Iraq-Iran War of 1980-88. The secondary evidence is from the material that can be found in such publications as the <em>New York Times</em> and the <em>Wall Street Journal</em>.</p>
<p>According to O&#8217;Neill&#8217;s memoirs, <em>The Price of Loyalty: George W. Bush, the White House</em>, and the <em>Education of Paul O&#8217;Neill</em>, written by journalist Ron Suskind and published in 2004, the top item on the agenda of the National Security Council&#8217;s first meeting after Bush entered the Oval Office was Iraq. That was January 30, 2001, more than seven months before the 9/11 attacks. The next National Security Council (NSC) meeting on February 1st was devoted exclusively to Iraq.</p>
<p>Advocating &#8220;going after Saddam&#8221; during the January 30 meeting, Defense Secretary Donald Rumsfeld said, according to O&#8217;Neill, &#8220;Imagine what the region would look like without Saddam and with a regime that&#8217;s aligned with U.S. interests. It would change everything in the region and beyond. It would demonstrate what U.S. policy is all about.&#8221; He then discussed post-Saddam Iraq &#8212; the Kurds in the north, the oil fields, and the reconstruction of the country&#8217;s economy. (Suskind, p. 85)</p>
<p>Among the relevant documents later sent to NSC members, including O&#8217;Neill, was one prepared by the Defense Intelligence Agency (DIA). It had already mapped Iraq&#8217;s oil fields and exploration areas, and listed American corporations likely to be interested in participating in Iraq&#8217;s petroleum industry.</p>
<p>Another DIA document in the package, entitled &#8220;Foreign Suitors for Iraqi Oilfield Contracts,&#8221; listed companies from 30 countries &#8212; France, Germany, Russia, and Britain, among others &#8212; their specialties and bidding histories. The attached maps pinpointed &#8220;super-giant oil field,&#8221; &#8220;other oil field,&#8221; and &#8220;earmarked for production sharing,&#8221; and divided the basically undeveloped but oil-rich southwest of Iraq into nine blocks, indicating promising areas for future exploration. (Suskind., p. 96)</p>
<p>According to high flying, oil insider Falah Al Jibury, the Bush administration began making plans for Iraq&#8217;s oil industry &#8220;within weeks&#8221; of Bush taking office in January 2001. In an interview with the BBC&#8217;s <em>Newsnight</em> program, which aired on March 17, 2005, he referred to his participation in secret meetings in California, Washington, and the Middle East, where, among other things, he interviewed possible successors to Saddam Hussein.</p>
<p>By January 2003, a plan for Iraqi oil crafted by the State Department and oil majors emerged under the guidance of Amy Myers Jaffe of the James A. Baker III Institute for Public Policy at Rice University. It recommended maintaining the state-owned Iraq National Oil Company, whose origins dated back to 1961 &#8212; but open it up to foreign investment after an initial period in which U.S.-approved Iraqi managers would supervise the rehabilitation of the war-damaged oil infrastructure. The existence of this group would come to light in a report by the <em>Wall Street Journal</em> on March 3, 2003.</p>
<p>Unknown to the architects of this scheme, according to the same BBC <em>Newsnight</em> report, the Pentagon&#8217;s planners, apparently influenced by powerful neocons in and out of the administration, had devised their own super-secret plan. It involved the sale of all Iraqi oil fields to private companies with a view to increasing output well above the quota set by the Organization of the Petroleum Exporting Countries (OPEC) for Iraq in order to weaken, and then destroy, OPEC.</p>
<p><strong>Secondary Evidence</strong></p>
<p>On October 11, 2002 the <em>New York Times </em>reported that the Pentagon already had plans to occupy and control Iraq&#8217;s oilfields. The next day the <em>Economist</em> described how Americans in the know had dubbed the waterway demarcating the southern borders of Iraq and Iran &#8220;Klondike on the Shatt al Arab,&#8221; while Ahmed Chalabi, head of the U.S.-funded Iraqi National Congress and a neocon favorite, had already delivered this message: &#8220;American companies will have a big shot at Iraqi oil &#8212; if he gets to run the show.&#8221;</p>
<p>On October 30, <em>Oil and Gas International</em> revealed that the Bush administration wanted a working group of 12 to 20 people to (a) recommend ways to rehabilitate the Iraqi oil industry &#8220;in order to increase oil exports to partially pay for a possible U.S. military occupation government,&#8221; (b) consider Iraq&#8217;s continued membership of OPEC, and (c) consider whether to honor contracts Saddam Hussein had granted to non-American oil companies.</p>
<p>By late October 2002, columnist Maureen Dowd of the <em>New York Times</em> would later reveal, Halliburton, the energy services company previously headed by Vice President Dick Cheney, had prepared a confidential 500-page document on how to handle Iraq&#8217;s oil industry after an invasion and occupation of Iraq. This was, commented Dowd, &#8220;a plan [Halliburton] wrote several months before the invasion of Iraq, and before it got a no-bid contract to implement the plan (and overbill the U.S.).&#8221; She also pointed out that a <em>Times</em>&#8216; request for a copy of the plan evinced a distinct lack of response from the Pentagon.</p>
<p>In public, of course, the Bush administration built its case for an invasion of Iraq without referring to that country&#8217;s oil or the fact that it had the third largest reserves of petroleum in the world. But what happened out of sight was another matter. At a secret NSC briefing for the President on February 24, 2003, entitled, &#8220;Planning for the Iraqi Petroleum Infrastructure,&#8221; a State Department economist, Pamela Quanrud, told Bush that it would cost $7-8 billion to rebuild the oil infrastructure, if Saddam decided to blow up his country&#8217;s oil wells, according to <em>Washington Post</em> reporter Bob Woodward in his 2004 book, <em>Plan of Attack</em> (pp. 322-323). Quanrud was evidently a member of the State Department group chaired by Amy Myers Jaffe.</p>
<p>When the Anglo-American troops invaded on March 20, 2003, they expected to see oil wells ablaze. Saddam Hussein proved them wrong. Being a staunch nationalist, he evidently did not want to go down in history as the man who damaged Iraq&#8217;s most precious natural resource.</p>
<p>On entering Baghdad on April 9th, the American troops stood by as looters burned and ransacked public buildings, including government ministries &#8212; except for the Oil Ministry, which they guarded diligently. Within the next few days, at a secret meeting in London, the Pentagon&#8217;s scheme of the sale of all Iraqi oil fields got a go-ahead in principle.</p>
<p>The Bush administration&#8217;s assertions that oil was not a prime reason for invading Iraq did not fool Iraqis though. A July 2003 poll of Baghdad residents &#8212; who represented a quarter of the Iraqi national population &#8212; by the London <em>Spectator </em>showed that while 23% believed the reason for the Anglo-American war on Iraq was &#8220;to liberate us from dictatorship,&#8221; twice as many responded, &#8220;to get oil&#8221;. (Cited in Dilip Hiro, <em>Secrets and Lies: Operation &#8220;Iraqi Freedom&#8221; and After</em>, p. 398.)</p>
<p>As Iraq&#8217;s principal occupier, the Bush White House made no secret of its plans to quickly dismantle that country&#8217;s strong public sector. When the first American proconsul, retired General Jay Garner, focused on holding local elections rather than privatizing the country&#8217;s economic structure, he was promptly sacked.</p>
<p><strong>Hurdles to Oil Privatization Prove Impassable</strong></p>
<p>Garner&#8217;s successor, L. Paul Bremer III, found himself dealing with Philip Carroll &#8212; former Chief Executive Officer of the American operations of (Anglo-Dutch) Royal Dutch Shell in Houston &#8212; appointed by Washington as the Iraqi oil industry&#8217;s supreme boss. Carroll decided not to tinker with the industry&#8217;s ownership and told Bremer so. &#8220;There was to be no privatization of Iraqi oil resources or facilities while I was involved,&#8221; Carroll said in an interview with the BBC&#8217;s <em>Newsnight</em> program on March 17, 2005.</p>
<p>This was, however, but a partial explanation for why Bremer excluded the oil industry when issuing Order 39 in September 2003 privatizing nearly 200 Iraqi public sector companies and opening them up to 100% foreign ownership. The Bush White House had also realized by then that denationalizing the oil industry would be a blatant violation of the Geneva Conventions which bar an occupying power from altering the fundamental structure of the occupied territory&#8217;s economy.</p>
<p>There was, as well, the vexatious problem of sorting out the 30 major oil development contracts Saddam&#8217;s regime had signed with companies based in Canada, China, France, India, Italy, Russia, Spain, and Vietnam. The key unresolved issue was whether these firms had signed contracts with the government of Saddam Hussein, which no longer existed, or with the Republic of Iraq which remained intact.</p>
<p>Perhaps more important was the stand taken by Grand Ayatollah Ali Sistani, the senior Shiite cleric in the country and a figure whom the occupying Americans were keen not to alienate. He made no secret of his disapproval of the wholesale privatization of Iraq&#8217;s major companies. As for the minerals &#8212; oil being the most precious &#8212; Sistani declared that they belonged to the &#8220;community,&#8221; meaning the state. As a religious decree issued by a grand ayatollah, his statement carried immense weight.</p>
<p>Even more effective was the violent reaction of the industry&#8217;s employees to the rumors of privatization. In his <em>Newsnight</em> interview Jibury said, &#8220;We saw an increase in the bombing of oil facilities and pipelines built on the premise that privatization is coming.&#8221;</p>
<p>In the immediate aftermath of the invasion, much equipment was looted from pipelines, pumping stations, and other oil facilities. By August 2003, four months after American troops entered Baghdad, oil output had only inched up to 1.2 million barrels per day, about two-fifths of the pre-invasion level. The forecasts (or dreams) of American planners&#8217; that oil production would jump to 6 million barrels per day by 2010 and easily fund the occupation and reconstruction of the country, were now seen for what they were &#8212; part of the hype disseminated privately by American neocons to sell the idea of invading Iraq to the public.</p>
<p>With the insurgency taking off, attacks on oil pipelines and pumping stations averaged two a week during the second half of 2003. The pipeline connecting a major northern oil field near Kirkuk &#8212; with an export capacity of 550,000-700,000 barrels per day &#8212; to the Turkish port of Ceyhan became inoperative. Soon, the only oil being exported was from fields in the less disturbed, predominately Shiite south of Iraq.</p>
<p>In September 2003, President Bush approached Congress for $2.1 billion to safeguard and rehabilitate Iraq&#8217;s oil facilities. The resulting Task Force Shield project undertook to protect 340 key installations and 4,000 miles (6,400 km) of oil pipeline. It was not until the spring of 2004 that output again reached the pre-war average of 2.5 million barrels per day &#8212; and that did not hold. Soon enough, production fell again. Iraqi refineries were, by now, producing only two-fifths of the 24 million liters of gasoline needed by the country daily, and so there were often days-long lines at service stations.</p>
<p>Addressing the 26th Oil and Money conference in London on September 21, 2005, Issam Chalabi, who had been an Iraqi oil minister in the late 1980s, referred to the crippling lack of security and the lack of clear laws to manage the industry, and doubted if Iraq could return to the 1979 peak of 3.5 million barrels per day before 2009, if then.</p>
<p>Meanwhile, the Iraqi government found itself dependent on oil revenues for 90% of its income, a record at a time when corruption in its ministries had become rampant. On January 30, 2005, Stuart W. Bowen, the special inspector general appointed by the U.S. occupation authority, reported that almost $9 billion in Iraqi oil revenue, disbursed to the ministries, had gone missing. A subsequent Congressional inspection team reported in May 2006 that Task Force Shield had failed to meet its goals due to &#8220;lack of clear management structure and poor accountability&#8221;, and added that there were &#8220;indications of potential fraud&#8221; which were being reviewed by the Inspector General.</p>
<p>The endorsement of the new Iraqi constitution by referendum in October 2005 finally killed the prospect of full-scale oil privatization. Article 109 of that document stated clearly that hydrocarbons were &#8220;national Iraqi property&#8221;. That is, oil and gas would remain in the public sector.</p>
<p>In March 2006, three years after the Anglo-American invasion of Iraq, the country&#8217;s petroleum exports were 30% to 40% below pre-invasion levels.</p>
<p><strong>Bush Pushes for Iraq&#8217;s Flawed Draft Hydrocarbon Law</strong></p>
<p>In February 2007, in line with the constitution, the draft hydrocarbon law the Iraqi government presented to parliament kept oil and gas in the state sector. It also stipulated recreating a single Iraqi National Oil Company that would be charged with doling out oil income to the provinces on a per-capita basis. The Bush administration latched onto that provision to hype the 43-article Iraqi bill as a key to reconciliation between Sunnis and Shiites &#8212; since the Sunni areas of Iraq lack hydrocarbons &#8212; and so included it (as did Congress) in its list of &#8220;benchmarks&#8221; the Iraqi government had to meet.</p>
<p>Overlooked by Washington was the way that particular article, after mentioning revenue-sharing, stated that a separate Federal Revenue Law would be necessary to settle the matter of distribution &#8212; the first draft of which was only published four months later in June.</p>
<p>Far more than revenue sharing and reconciliation, though, what really interested the Bush White House were the mouthwatering incentives for foreign firms to invest in Iraq&#8217;s hydrocarbon industry contained in the draft law. They promised to provide ample opportunities to America&#8217;s Oil Majors to reap handsome profits in an oil-rich Iraq whose vast western desert had yet to be explored fully for hydrocarbons. So Bush pressured the Iraqi government to get the necessary law passed before the parliament&#8217;s vacation in August &#8212; to no avail.</p>
<p>The Bush administration&#8217;s failure to achieve its short-term objectives does not detract from the overarching fact &#8212; established by the copious evidence marshaled in this article &#8212; that gaining privileged access to Iraqi oil for American companies was a primary objective of the Pentagon&#8217;s invasion of Iraq.</p>]]></content:encoded>
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		<item>
		<title>America of the Downward Slope</title>
		<link>http://dissidentvoice.org/2007/08/america-of-the-downward-slope/</link>
		<comments>http://dissidentvoice.org/2007/08/america-of-the-downward-slope/#comments</comments>
		<pubDate>Thu, 23 Aug 2007 12:01:04 +0000</pubDate>
		<dc:creator>Dilip Hiro</dc:creator>
				<category><![CDATA[Imperialism]]></category>

		<guid isPermaLink="false">http://www.dissidentvoice.org/2007/08/america-of-the-downward-slope/</guid>
		<description><![CDATA[With the collapse of the Soviet Union in 1991, the United States stood tall &#8212; militarily invincible, economically unrivalled, diplomatically uncontestable, and the dominating force on information channels worldwide. The next century was to be the true &#8220;American century,&#8221; with the rest of the world molding itself in the image of the sole superpower.
Yet, with [...]]]></description>
			<content:encoded><![CDATA[<p>With the collapse of the Soviet Union in 1991, the United States stood tall &#8212; militarily invincible, economically unrivalled, diplomatically uncontestable, and the dominating force on information channels worldwide. The next century was to be the true &#8220;American century,&#8221; with the rest of the world molding itself in the image of the sole superpower.</p>
<p>Yet, with not even a decade of this century behind us, we are already witnessing the rise of a multipolar world in which new powers are challenging different aspects of American supremacy &#8212; Russia and China in the forefront, with regional powers Venezuela and Iran forming the second rank. These emergent powers are primed to erode American hegemony, not confront it, singly or jointly.</p>
<p>How and why has the world evolved in this way so soon? The Bush administration&#8217;s debacle in Iraq is certainly a major factor in this transformation, a classic example of an imperialist power, brimming with hubris, over-extending itself. To the relief of many &#8212; in the U. S. and elsewhere &#8212; the Iraq fiasco has demonstrated the striking limitations of power for the globe&#8217;s highest-tech, most destructive military machine. In Iraq, Brent Scowcroft, national security adviser to two U.S. presidents, concedes in a recent op-ed, &#8220;We are being wrestled to a draw by opponents who are not even an organized state adversary.&#8221;</p>
<p>The invasion and subsequent disastrous occupation of Iraq and the mismanaged military campaign in Afghanistan have crippled the credibility of the United States. The scandals at Abu Ghraib prison in Iraq and Guantanamo in Cuba, along with the widely publicized murders of Iraqi civilians in Haditha, have badly tarnished America&#8217;s moral self-image. In the latest opinion poll, even in a secular state and member of NATO like Turkey, only 9% of Turks have a &#8220;favorable view&#8221; of the U.S. (down from 52% just five years ago).</p>
<p>Yet there are other explanations &#8212; unrelated to Washington&#8217;s glaring misadventures &#8212; for the current transformation in international affairs. These include, above all, the tightening market in oil and natural gas, which has enhanced the power of hydrocarbon-rich nations as never before; the rapid economic expansion of the mega-nations China and India; the transformation of China into the globe&#8217;s leading manufacturing base; and the end of the Anglo-American duopoly in international television news.<br />
<strong><br />
Many Channels, Diverse Perceptions</strong></p>
<p>During the 1991 Gulf War, only CNN and the BBC had correspondents in Baghdad. So the international TV audience, irrespective of its location, saw the conflict through their lenses. Twelve years later, when the Bush administration, backed by British Prime Minister Tony Blair, invaded Iraq, Al Jazeera Arabic broke this duopoly. It relayed images &#8212; and facts &#8212; that contradicted the Pentagon&#8217;s presentation. For the first time in history, the world witnessed two versions of an ongoing war in real time. So credible was the Al Jazeera Arabic version that many television companies outside the Arabic-speaking world &#8212; in Europe, Asia and Latin America &#8212; showed its clips.</p>
<p>Though, in theory, the growth of cable television worldwide raised the prospect of ending the Anglo-American duopoly in 24-hour TV news, not much had happened due to the exorbitant cost of gathering and editing TV news. It was only the arrival of Al Jazeera English, funded by the hydrocarbon-rich emirate of Qatar &#8212; with its declared policy of offering a global perspective from an Arab and Muslim angle &#8212; that, in 2006, finally broke the long-established mold.</p>
<p>Soon France 24 came on the air, broadcasting in English and French from a French viewpoint, followed in mid-2007 by the English-language Press TV, which aimed to provide an Iranian perspective. Russia was next in line for 24-hour TV news in English for the global audience. Meanwhile, spurred by Venezuelan President Hugo Chavez, Telesur, a pan-Latin-American TV channel based in Caracas, began competing with CNN in Spanish for a mass audience.</p>
<p>As with Qatar, so with Russia and Venezuela, the funding for these TV news ventures has come from soaring national hydrocarbon incomes &#8212; a factor draining American hegemony not just in imagery but in reality.</p>
<p><strong>Russia, an Energy Superpower</strong></p>
<p>Under President Vladimir Putin, Russia has more than recovered from the economic chaos that followed the collapse of the Soviet Union in 1991. After effectively renationalizing the energy industry through state-controlled corporations, he began deploying its economic clout to further Russia&#8217;s foreign policy interests.</p>
<p>In 2005, Russia overtook the United States, becoming the second largest oil producer in the world. Its oil income now amounts to $679 million a day. European countries dependent on imported Russian oil now include Hungary, Poland, Germany, and even Britain.</p>
<p>Russia is also the largest producer of natural gas on the planet, with three-fifths of its gas exports going to the 27-member European Union (EU). Bulgaria, Estonia, Finland, and Slovakia get 100% of their natural gas from Russia; Turkey, 66%; Poland, 58%; Germany 41%; and France 25%. Gazprom, the biggest natural gas enterprise on Earth, has established stakes in sixteen EU countries. In 2006, the Kremlin&#8217;s foreign reserves stood at $315 billion, up from a paltry $12 billion in 1999. Little wonder that, in July 2006 on the eve of the G8 summit in St Petersburg, Putin rejected an energy charter proposed by the Western leaders.</p>
<p>Soaring foreign-exchange reserves, new ballistic missiles, and closer links with a prospering China &#8212; with which it conducted joint military exercises on China&#8217;s Shandong Peninsula in August 2005 &#8212; enabled Putin to deal with his American counterpart, President George W. Bush, as an equal, not mincing his words when appraising American policies.</p>
<p>&#8220;One country, the United States, has overstepped its national boundaries in every way,&#8221; Putin told the 43rd Munich Trans-Atlantic conference on security policy in February 2007. &#8220;This is visible in the economic, political, cultural and educational policies it imposes on other nations…This is very dangerous.&#8221;</p>
<p>Condemning the concept of a &#8220;unipolar world,&#8221; he added: &#8220;However one might embellish this term, at the end of the day it describes a scenario in which there is one center of authority, one center of force, one center of decision-making…It is a world in which there is one master, one sovereign. And this is pernicious.&#8221; His views fell on receptive ears in the capitals of most Asian, African, and Latin American countries.</p>
<p>The changing relationship between Moscow and Washington was noted, among others, by analysts and policy-makers in the hydrocarbon-rich Persian Gulf region. Commenting on the visit that Putin paid to long-time U.S. allies Saudi Arabia and Qatar after the Munich conference, Abdel Aziz Sagar, chairman of the Gulf Research Center, wrote in the Doha-based newspaper <em>The Peninsula</em> that Russia and Gulf Arab countries, once rivals from opposite ideological camps, had found a common agenda of oil, anti-terrorism, and arms sales. &#8220;The altered focus takes place in a milieu where the Gulf countries are signaling their keenness to keep all geopolitical options open, reviewing the utility of the United States as the sole security guarantor, and contemplating a collective security mechanism that involves a host of international players.&#8221;</p>
<p>In April 2007, the Kremlin issued a major foreign policy document. &#8220;The myth about the unipolar world fell apart once and for all in Iraq,&#8221; it stated. &#8220;A strong, more self-confident Russia has become an integral part of positive changes in the world.&#8221;</p>
<p>The Kremlin&#8217;s increasingly tense relations with Washington were in tune with Russian popular opinion. A poll taken during the run-up to the 2006 G8 summit revealed that 58% of Russians regarded America as an &#8220;unfriendly country.&#8221; It has proved to be a trend. This July, for instance, Major Gen Alexandr Vladimirov told the mass circulation newspaper <em>Komsolskya Pravada</em> that war with the United States was a &#8220;possibility&#8221; in the next ten to fifteen years.</p>
<p><strong>Chavez Rides High</strong></p>
<p>Such sentiments resonated with Hugo Chavez. While visiting Moscow in June 2007, he urged Russians to return to the ideas of Vladimir Lenin, especially his anti-imperialism. &#8220;The Americans don&#8217;t want Russia to keep rising,&#8221; he said. &#8220;But Russia has risen again as a center of power, and we, the people of the world, need Russia to become stronger.&#8221;</p>
<p>Chavez finalized a $1 billion deal to purchase five diesel submarines to defend Venezuela&#8217;s oil-rich undersea shelf and thwart any possible future economic embargo imposed by Washington. By then, Venezuela had become the second largest buyer of Russian weaponry. (Algeria topped the list, another indication of a growing multipolarity in world affairs.) Venezuela acquired the distinction of being the first country to receive a license from Russia to manufacture the famed AK-47 assault rifle.</p>
<p>By channeling some of his country&#8217;s oil money to needy Venezuelans, Chavez broadened his base of support. Much to the chagrin of the Bush White House, he trounced his sole political rival, Manuel Rosales, in a December 2006 presidential contest with 61% of the vote. Equally humiliating to the Bush administration, Venezuela was, by then, giving more foreign aid to needy Latin American states than it was.</p>
<p>Following his reelection, Chavez vigorously pursued the concept of forming an anti-imperialist alliance in Latin America as well as globally. He strengthened Venezuela&#8217;s ties not only with such Latin countries as Bolivia, Cuba, Ecuador, Nicaragua, and debt-ridden Argentina, but also with Iran and Belarus.</p>
<p>By the time he arrived in Tehran from Moscow (via Minsk) in June 2007, the 180 economic and political accords his government had signed with Tehran were already yielding tangible results. Iranian-designed cars and tractors were coming off assembly lines in Venezuela. &#8220;[The] cooperation of independent countries like Iran and Venezuela has an effective role in defeating the policies of imperialism and saving nations,&#8221; Chavez declared in Tehran.</p>
<p>Stuck in the quagmire of Iraq and lashed by the gusty winds of rocketing oil prices, the Bush administration finds its area of maneuver woefully limited when dealing with a rising hydrocarbon power. To the insults that Chavez keeps hurling at Bush, the American response has been vapid. The reason is the crippling dependence of the United States on imported petroleum which accounts for 60% of its total consumed. Venezuela is the fourth largest source of U.S. imported oil after Canada, Mexico, and Saudi Arabia; and some refineries in the U.S. are designed specifically to refine heavy Venezuelan oil.</p>
<p>In Chavez&#8217;s scheme to undermine the &#8220;sole superpower,&#8221; China has an important role. During an August 2006 visit to Beijing, his fourth in seven years, he announced that Venezuela would triple its oil exports to China to 500,000 barrels per day in three years, a jump that suited both sides. Chavez wants to diversify Venezuela&#8217;s buyer base to reduce its reliance on exports to the U.S., and China&#8217;s leaders are keen to diversify their hydrocarbon imports away from the Middle East, where American influence remains strong.</p>
<p>&#8220;The support of China is very important [to us] from the political and moral point of view,&#8221; Chavez declared. Along with a joint refinery project, China agreed to build thirteen oil drilling platforms, supply eighteen oil tankers, and collaborate with the state-owned company, Petroleos de Venezuela S.A. (PdVSA), in exploring a new oilfield in the Orinoco Basin.</p>
<p><strong>China on a Stratospheric Trajectory</strong></p>
<p>So dramatic has been the growth of the state-run company PetroChina that, in mid-2007, it was second only to Exxon Mobil in its market value among energy corporations. Indeed, that year three Chinese companies made it onto the list of the world&#8217;s ten most highly valued corporations. Only the U.S. had more with five. China&#8217;s foreign reserves of over $1 trillion have now surpassed Japan&#8217;s. With its gross domestic product soaring past Germany&#8217;s, China ranks number three in the world economy.</p>
<p>In the diplomatic arena, Chinese leaders broke new ground in 1996 by sponsoring the Shanghai Cooperation Organization (SCO), consisting of four adjoining countries: Russia and the three former Soviet Socialist republics of Kazakhstan, Kyrgyzstan, and Tajikistan. The SCO started as a cooperative organization with a focus on countering drug-smuggling and terrorism. Later, the SCO invited Uzbekistan to join, even though it does not abut China. In 2003, the SCO broadened its scope by including regional economic cooperation in its charter. That, in turn, led it to grant observer status to Pakistan, India, and Mongolia &#8212; all adjoining China &#8212; and Iran which does not. When the U.S. applied for observer status, it was rejected, an embarrassing setback for Washington, which enjoyed such status at the Association of South-East Asian Nations (ASEAN).</p>
<p>In early August 2007, on the eve of an SCO summit in the Kyrgyz capital of Bishkek, the group conducted its first joint military exercises, codenamed Peace Mission 2007, in the Russian Ural region of Chelyabinsk. &#8220;The SCO is destined to play a vital role in ensuring international security,&#8221; said Ednan Karabayev, foreign minister of Kyrgyzstan.</p>
<p>In late 2006, as the host of a China-Africa Forum in Beijing attended by leaders of 48 of 53 African nations, China left the U.S. woefully behind in the diplomatic race for that continent (and its hydrocarbon and other resources). In return for Africa&#8217;s oil, iron ore, copper, and cotton, China sold low-priced goods to Africans, and assisted African counties in building or improving roads, railways, ports, hydro-electric dams, telecommunications systems, and schools. &#8220;The western approach of imposing its values and political system on other countries is not acceptable to China,&#8221; said Africa specialist Wang Hongyi of the China Institute of International Studies. &#8220;We focus on mutual development.&#8221;</p>
<p>To reduce the cost of transporting petroleum from Africa and the Middle East, China began constructing a trans-Burma oil pipeline from the Bay of Bengal to its southern province of Yunan, thereby shortening the delivery distance now traveled by tankers. This undermined Washington&#8217;s campaign to isolate Myanmar. (Earlier, Sudan, boycotted by Washington, had emerged as a leading supplier of African oil to China.) In addition, Chinese oil companies were competing fiercely with their Western counterparts in getting access to hydrocarbon reserves in Kazakhstan and Uzbekistan.</p>
<p>&#8220;China&#8217;s oil diplomacy is putting the country on a collision course with the U.S. and Western Europe, which have imposed sanctions on some of the countries where China is doing business,&#8221; comments William Mellor of Bloomberg News. The sentiment is echoed by the other side. &#8220;I see China and the U.S. coming into conflict over energy in the years ahead,&#8221; says Jin Riguang, an oil-and-gas advisor to the Chinese government and a member of the Standing Committee of the Chinese People&#8217;s Political Consultative Council.</p>
<p>China&#8217;s industrialization and modernization has spurred the modernization of its military as well. The test-firing of the country&#8217;s first anti-satellite missile, which successfully destroyed a defunct Chinese weather satellite in January 2007, dramatically demonstrated its growing technological prowess. An alarmed Washington had already noted an 18% increase in China&#8217;s 2007 defense budget. Attributing the rise to extra spending on missiles, electronic warfare, and other high-tech items, Liao Xilong, commander of the People&#8217;s Liberation Army&#8217;s general logistics department, said: &#8220;The present day world is no longer peaceful and to protect national security, stability and territorial integrity we must suitably increase spending on military modernization.&#8221;</p>
<p>China&#8217;s declared budget of $45 billion was a tiny fraction of the Pentagon&#8217;s $459 billion one. Yet, in May 2007, a Pentagon report noted China&#8217;s &#8220;rapid rise as a regional and economic power with global aspirations&#8221; and claimed that it was planning to project military farther afield from the Taiwan Straits into the Asia-Pacific region in preparation for possible conflicts over territory or resources.</p>
<p><strong>The Sole Superpower in the Sweep of History</strong></p>
<p>This disparate challenge to American global primacy stems as much from sharpening conflicts over natural resources, particularly oil and natural gas, as from ideological differences over democracy, American style, or human rights, as conceived and promoted by Western policy-makers. Perceptions about national (and imperial) identity and history are at stake as well.</p>
<p>It is noteworthy that Russian officials applauding the swift rise of post-Soviet Russia refer fondly to the pre-Bolshevik Revolution era when, according to them, Tsarist Russia was a Great Power. Equally, Chinese leaders remain proud of their country&#8217;s long imperial past as unique among nations.</p>
<p>When viewed globally and in the great stretch of history, the notion of American exceptionalism that drove the neoconservatives to proclaim the Project for the New American Century in the late 20th century &#8212; adopted so wholeheartedly by the Bush administration in this one &#8212; is nothing new. Other superpowers have been there before and they, too, have witnessed the loss of their prime position to rising powers.</p>
<p>No superpower in modern times has maintained its supremacy for more than several generations. And, however exceptional its leaders may have thought themselves, the United States, already clearly past its zenith, has no chance of becoming an exception to this age-old pattern of history. </p>]]></content:encoded>
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