Tag Archives: Saudi Arabia

True Oil Wars

Reference ID Created Released Classification Origin
07BAGHDAD2453 2007-07-25 05:57 2011-08-30 01:44 CONFIDENTIAL Embassy Baghdad

VZCZCXRO1627
OO RUEHBC RUEHDE RUEHIHL RUEHKUK
DE RUEHGB #2453/01 2060557
ZNY CCCCC ZZH
O 250557Z JUL 07
FM AMEMBASSY BAGHDAD
TO RUCNRAQ/IRAQ COLLECTIVE IMMEDIATE
INFO RUEHC/SECSTATE WASHDC IMMEDIATE 2415

C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 002453

SIPDIS

SIPDIS

E.O. 12958: DECL: 07/23/2017
TAGS: ECON ENRG IZ PREL
SUBJECT: CODEL BURGESS MEETING WITH MINISTER OF OIL HUSAYN
AL-SHAHRISTANI

Classified By: ECONOMIC MINISTER CHARLES P. RIES FOR REASONS 1.5 (b) an
d (d)

¶1. (C). SUMMARY. On July 22, Congressmen Michael Burgess
(R-TX), Steve King (R-IA), Jim Jordan (R-OH), John Carter
(R-TX), Kevin Brady (R-TX), and David Davis (R-TN) met with
Minister of Oil Husayn al-Shahristani to discuss issues
related to the state of Iraq,s petroleum infrastructure,
plans to improve the infrastructure and revitalize petroleum
exploration and production. Minister Shahristani
acknowledged the important role of the petroleum industry in
Iraq,s economy and the need for passage of the
hydrocarbon-related laws as signaling Iraq,s emergence as a
dominant petroleum producing country. END SUMMARY.

¶2. (C). Minister Shahristani introduced the topic of the
status of Iraq,s petroleum industry by observing that the
industry provides 93% of the country,s budget; that of the
500 known potential petroleum-bearing geophysical structures,
only about 80 have been evaluated and expected to make up the
majority of the 115 billion barrel reserve; and that of these
80 structures, 10 are “super giants,” 10 are “giants,” and 10
are “very large” structures. He also stated that most of
these 80 structures are currently in production although
perhaps not being optimally produced at this time.
Shahristani also predicted that of the 500 known structures,
300 will eventually produce commercial quantities of oil.

¶3. (C). Shahristani observed that even though private oil
companies have not been willing to work in Iraq as a result
of the security situation, the state-owned oil companies have
been able to drill some new wells. He also noted that while
the level of oil production in the country has not risen as
he desired, the rising price oil has allowed Iraq to more or
less maintain a level income from exports.

¶4. (C). Shahristani noted successes in having new meters
installed in the southern export facilities, but also noted
that if problems occur, it is likely the fault of the
American company that required an extra year to complete the
project. He predicted no interruption in oil exports from
the southern facilities, unless problems arise between Iran
and the United States. He encouraged the United States and
Iran to continue their dialogue to solve issues that impact
Iraq.

¶5. (C). A member of the Congressional delegation, having
toured the Bayji oil refinery yesterday asked what
infrastructure improvements were needed to increase the
refinery,s production potential. Shahristani stated that
while foreign companies were not willing to work in Iraq due
to the current security situation, he has asked that they
supply needed equipment, for example for the hydrocracker.
He also stated that he is attempting to replace trained
workers, originally from the south of the country, who have
fled the sectarian violence of the area.

¶6. (C). When asked about the Ministry of Oil,s budget,
Shahristani stated that he had a budget of $2.2 billion. He
complained that the Ministry of Finance had delayed the
allocation of funds for the first quarter of the year and
those funds were not available until the end of March. In
any event, he noted that by the second quarter, he had been
able to spend 25% of his budget and expects to spend 85% of
his budget by the end of the year.

¶7. (C). Shahristani explained that the Council of Ministers
had approved and sent to the Council of Representatives a law
that would encourage investment in Iraq,s oil refineries; he
expected a third reading of this law to occur soon. He
expressed support for the Framework Hydrocarbon Law stating
that “all the right elements were present in the law” and
promised that he would be in the Council of Representatives
(CoR) to explain the law. He also stated that while he could
not predict what the lawmakers would do, he anticipated its
eventual passage. He noted that he had already prepared a
list of those fields to be drilled and produced first.

¶8. (C). A member of the delegation asked about Chinese
exploration and production contracts. Shahristani answered
by explaining that there was one contract in existence with
the Chinese, which was legitimate and was signed by the
previous regime to develop a small field just south of
Baghdad (Adhab) and would produce no more than 100,000
barrels per day of heavy crude. He explained that under the
current draft of the framework Hydrocarbon law, such
contracts must be reviewed and meet the conditions of the new
law. He also stated that this contract would have to be
amended and that the production from this field was not for
export, but rather to supply crude oil to a refinery planned
to be constructed in the area by the Chinese.

BAGHDAD 00002453 002 OF 002

¶9. (C). A member of the delegation asked if the Iraqi
people understood that they could become rich from the
development of their petroleum resources, if only they would
cooperate with each other. Shahristani responded that the
people will not understand the details of the various
hydrocarbon-related laws, but will follow the impressions
created by others and the media. He proceeded to explain
that several local media stations are supported by members of
Saddam,s regime, living mostly in Jordan now, and by the
Saudis and Emirates. He characterized as more damaging, the
influence of Al-Jazeera. He stated that, in his opinion,
Saudi Arabia feels threatened by the prospect of a
significant Iraqi contribution to the international oil
market; Iraq was not a threat to the Saudis as long as
exports remained no greater than 2 to 3 million barrels.

¶10. (C). When asked about exports in the north, Shahristani
noted that the exports brought in about $400,000 per day and
that the Bayji refinery has limited production capacity.
(Note: In the absence of more explanation that was not
provided to the delegation, this statement appears at odds
with the fact that the export pipeline to Turkey operates
only intermittently. Also, the Bayji refinery capacity is
limited primarily by unreliable electricity supply and
limited heavy fuel oil storage capability. End Note.)
Shahristani also noted that northern exports were at the
mercy of the security situation. He stated that the
Strategic Infrastructure Brigades (SIBs) were established by
a “leader of the insurgency” and that he informed the
multi-national forces of this fact. He also stated that
contrary to the opinion of the multi-national force
commanders, the SIBs cannot be retrained to an effective
status. Shahristani stated his expectation that a new effort
to contract with local tribal leaders for security of the
pipelines will be more effective and lead to a resumption of
northern exports in one to two months.

¶11. (C). Addressing Congressional benchmarks, Shahristani
said that he expected the Framework Hydrocarbon and Revenue
Management Laws to proceed in tandem to the CoR and will be
debated together. He assessed that the refinery investment
law, already in the CoR, will be passed soon. He stated that
the Kurdish Regional Government (KRG) has reservations about
the Revenue Management Law, but that KRG representatives will
be in Baghdad in a week, and that he expected the law will go
to the CoR within the next 2 to 3 weeks. He also stated
that, while no one has objection to the Revenue Management
Law in principle, Sunni factions were attacking it for
political reasons. Shahristani stated that there was also
strong Sunni opposition to the Framework Hydrocarbon Law, but
that he agreed with Ambassador Crocker that some Sunni
support for the law was needed.

¶12. (C). Shahristani was asked what he was doing to secure
the petroleum infrastructure in the event coalition forces
left Iraq. He responded that a withdrawal would not impact
the southern pipelines and other facilities since Coalition
Forces are not now protecting those facilities. As for the
northern facilities, he stated that the Bayji refinery could
be shut down, but that would have consequences equally
adverse for the insurgency.

¶13. (C). Shahristani reiterated that he was working hard to
meet the benchmarks, that half of the benchmarks were met and
that the other half could be met if government,s efforts
were supported by the Sunnis, Saudi Arabia, and other Gulf
states. He requested that the USG pressure these other
entities to stop supporting the groups opposing Iraq,s
efforts to meet the remaining benchmarks.

¶14. (C). Minister Shahristani concluded the meeting with an
expression of determination that Iraq will export to the
world oil market “its fair share of resources.” He stated
that he wanted the American public to know that this conflict
was not about oil, but about Islamic fundamentalism. He also
stated that Al-Qaeda was a long-term problem for the world.

¶15. (C). CODEL Burgess did not have an opportunity to clear
this cable.

Reference ID Created Released Classification Origin
07BAGHDAD3071 2007-09-12 06:02 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Baghdad

VZCZCXRO4961
PP RUEHBC RUEHDA RUEHDE RUEHIHL RUEHKUK
DE RUEHGB #3071/01 2550602
ZNR UUUUU ZZH
P 120602Z SEP 07
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC PRIORITY 3336
INFO RUCNRAQ/IRAQ COLLECTIVE

UNCLAS SECTION 01 OF 03 BAGHDAD 003071

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: EPET EINV ENRG IZ
SUBJECT: HUNT OIL SIGNS AGREEMENT WITH KRG UNDER KRG OIL LAW

SENSITIVE BUT UNCLASSIFIED. NOT FOR INTERNET DISRIBUTION. PROTECT
SOURCES.

This is a Kurdistan Regional Reconstruction Team (RRT) cable.

SUMMARY
——-

¶1. (SBU) The Kurdistan Regional Government (KRG) recently signed a
production sharing contract (PSC) with Hunt Oil Company that covers
oil exploration and production in “the Dohuk area.” Comments by
Hunt officials indicate that the block is actually in the Ninewa
Governorate’s northern administrative districts. The PSC marks the
first oil deal signed by the KRG, following enactment of the
Kurdistan Region’s hydrocarbons law on August 6, 2007. Considerable
legal ambiguity surrounds the PSC with Hunt Oil, as the districts in
northern Ninewa to be explored by the company are classified as
“disputed territories” under the Iraqi constitution. A senior Hunt
Oil manager told RRT Erbil’s Team Leader that northern Ninewa
province has significant potential for oil production, and that this
factor trumps the legal ambiguities and risks associated with the
company’s PSC with the KRG. The oil potential of northern Iraq
continues to attract significant investor interest. Several other
international energy companies are expected to announce oil deals
with the KRG during coming weeks. Despite the KRG’s aggressive
pursuit of foreign direct investment to develop the Kurdistan
Region’s hydrocarbons production potential, KRG Prime Minister
Nechirvan reiterated the KRG’s commitment to the federal hydrocarbon
revenue sharing agreement that allocates Iraq’s oil wealth to all
Iraqis on a per capita basis. Meanwhile, senior central government
officials expressed their dismay that the KRG enacted a regional
hydrocarbons law, and that the KRG continues to pursue oil
investment from foreign companies in advance of enactment of
comprehensive national hydrocarbons legislation. [NOTE: The ability
of regional governments to sign contracts has been among the key
issues of contention during negotiation of the national hydrocarbon
law. The KRG has reluctantly agreed, at times. to refrain from
finalizing agreements in advance of a national law, but have
maintained that they would not wait indefinitely for national
legislation to be approved by the Council of Representatives. END
NOTE.]

KRG Contract with Hunt in Disputed Territory
——————————————–

¶2. (SBU) On September 8, 2007, the KRG, Hunt Oil Company, and
Impulse Energy Corporation (IEC) jointly announced they had signed a
PSC covering petroleum exploration activities “in the Dohuk area of
the Kurdistan Region.” Hunt Oil’s General Manager for Europe,
Africa and the Middle East, David McDonald, told RRT Erbil’s Team
Leader on September 5 that the envisioned “Dohuk area” of operations
under the PSC consists of the administrative districts of northern
Ninewa province. McDonald did not disclose the exact areas in
northern Ninewa to be initially targeted for exploration by Hunt Oil
but he mentioned Shekkan and Akra as areas they had visited. While
the land to be explored by Hunt Oil has been behind the Green Line
of KRG control for many years and is occupied by a majority Kurdish
population who considers itself part of Dohuk Governorate, the area
falls within the legal boundaries of Ninewa province. Northern
Ninewa is “disputed territory,” according to the Iraqi federal
constitution, and the legal boundaries of the area are eventually to
be decided by a public referendum pursuant to Article 140 of the
federal constitution.

¶3. (SBU) During discussions with RRT Erbil’s Team Leader, McDonald
seemed less than fully informed about the potential ramifications of
Article 140 on Hunt Oil’s negotiations with the KRG. He did not
express concern about the potential controversy surrounding
signature of a PSC with the KRG that covers areas of operation
currently outside the KRG’s legal control. He said, “This is a
significant opportunity that outweighs the legal ambiguity.” Hunt
Oil CEO Ray Hunt also discounted the fact that the northern Ninewa
districts targeted under the PSC are not yet within the KRG’s
legally defined borders. He expressed satisfaction on September 8
that his company was “actively participating in the establishment of
the petroleum industry in the Kurdistan Region of Iraq.”

¶4. (U) Enactment of the KRG’s new oil law may have spurred
completion of the PSC with Hunt Oil. The PSC was announced shortly
after publication of the English translation of the new oil and gas
law on the KRG’s website. Before the law was enacted, only one PSC
had been signed for the Dohuk area – with DNO of Norway. That PSC
covered operations only within the legal boundaries of Dohuk
Governorate. Enactment of the KRG oil law and the subsequent
announcement of the deal with Hunt Oil may accelerate the signing of
PSCs with other international oil companies. Several are
reportedly on the verge of signing PSCs with the KRG during coming
weeks. Article 19 of the KRG law states that “the Federal
Government must not practice any new Petroleum Operations in the
disputed territories without the approval of [the KRG] until such
time as the referendum required by Article 140 of the Federal
Constitution is conducted.” Article 20, however, allows the KRG to

BAGHDAD 00003071 002 OF 003

sign PSCs with foreign oil companies in disputed territories, based
on articles 112, 115 and 121(3) of the Federal Constitution.

Potential Bonanza Trumps Legal Ambiguity
—————————————-

¶5. (SBU) While McDonald said Hunt Oil must conduct further
assessments about the speed and scope of their operational
activities in northern Ninewa, with decisions regarding the focus of
initial seismic tests to begin “by the end of October,” he was
optimistic about the oil potential of the region. McDonald said
portions of the topography in all three districts of northern Ninewa
bode well for oil exploration. He said, “It’s like shooting fish in
a barrel.” A Hunt Oil company spokesman in Dallas said the company
will begin geological survey and seismic work by the end of 2007,
with plans to be in a position to drill an exploration well in
¶2008.

KRG Boldly Enacts Regional Hydrocarbons Law…
———————————————

¶6. (U) The KRG deal with Hunt Oil marks the first PSC signed with a
foreign oil company following KRG enactment of the Oil and Gas Law
of the Kurdistan Region on August 6, 2007. Speaking of the KRG’s
rationale in passing a controversial regional hydrocarbons law while
a draft national oil and gas law remains intensely debated, KRG
Prime Minister Nechirvan Barzani told reporters on August 7,
“Successive governments in Iraq have deliberately left our oil in
the ground as an effort to keep our people [ethnic Kurds] poor and
to deny our aspirations for a better way of life. Today, with the
passage of this new Kurdistan Law in a federal Iraq, we know that
those days are gone.”
¶7. (U) While espousing the benefits of foreign direct investment in
the Kurdistan Region’s oil producing areas, Nechirvan acknowledged
federal constitution provisions that require any oil revenues
generated under the KRG’s hydrocarbons law to be shared equally with
all Iraqis. He confirmed the KRG intends to limit itself to its
constitutionally mandated share of national oil revenues, regardless
of whether the oil is sourced inside or outside the Kurdistan
Region. He said, “We will receive 17 percent of all revenues from
all oil production in all of Iraq.”
¶8. (U) KRG Minister of Natural Resources Ashti Hawrami echoed those
comments. Hawrami said on September 9, “We believe that the [KRG’s]
production-sharing agreements are the best way to move swiftly
forward and help not just the Kurds but all Iraqis.” He envisions
that the Kurdistan Region will produce one million barrels of oil
per day within five years. To achieve this goal, the KRG intends to
sign PSCs with other large international oil companies. On
September 9, Hawrami told Dow Jones, “I think we’ll be having an
announcement with a blue-chip company soon.”

While Criticizing Central Government Paralysis
——————————————— –

¶9. (SBU) Following passage of the KRG hydrocarbons law, KRG
officials recommitted themselves to the February 2007 national
hydrocarbons framework agreement. Nechirvan told RRT Erbil’s Team
Leader on August 28 that he hoped the new KRG law “would spur
movment in Baghdad” to enact a national hydrocarbons law. During
that meeting, however, Nechirvan expressed disappointment with
political developments in Baghdad and pessimism about “whether the
Sunnis and the Shi’a want to live together.” He said the KRG does
not want Iraq’s central government to “hold up development of
regional resources for another ten years.”

Arab Leaders Critical of KRG Oil Law
————————————
¶10. (U) Senior central government officials in Baghdad condemned the
oil deals signed by the KRG in advance of enactment of national
hydrocarbons legislation. Abdul Hadi al Hasani, Deputy Chairman of
the national parliament’s Energy Committee, said recently that such
contracts may be overturned by the federal government, though he
conceded that such a move could discourage potential foreign
investments in Iraq’s oil sector. Sami al Askari, a parliamentarian
and senior advisor to Prime Minister al Maliki, told reporters on
September 7 that a federal oil and gas council to be formed under
the national hydrocarbons law could decide whether to rescind the
KRG’s handful of oil contracts with foreign investors. In a
concession to the reality that foreign direct investment in Iraq’s
oil infrastructure remains both valuable and scarce, the
parliamentarians said the private firms that signed deals with the
KRG should not be blocked from winning future oil contracts in
Iraq.

COMMENT
¶11. (SBU) USG policy has discouraged companies from signing oil
deals with the KRG until Iraq enacts its national hydrocarbon
framework law, as such regional contracts could act as an impediment
to negotiations toward a comprehensive national settlement that
equitably distributes Iraq’s oil wealth. Such contracts also remain
subject to significant legal ambiguity. This has not deterred Hunt
Oil and the other handful of companies that have signed PSCs with

BAGHDAD 00003071 003 OF 003

the KRG. Their concerns about the nebulous political environment
and possible eventual dissolution of their PSCs have been overridden
by the prospect of huge profits – from getting first access to the
choicest oil exploration fields in northern Iraq, and from
establishing productive relationships with key KRG and central
government officials. The potential pitfalls are especially acute
in cases (e.g. Hunt Oil and its junior partner IEC) where investors
will commence operations in disputed territories. It remains
doubtful that the KRG was legally entitled to enter into a binding
contract with Hunt Oil that covers oil exploration and eventual
hydrocarbons production in an area (i.e. northern Ninewa province)
that the KRG does not legally control. Legal considerations aside,
the KRG’s actions complicates enactment of a national hydrocarbons
law.
BUTENIS

 


WWIII Starts Sept. 25th Says Former State Dept. Veteran

 

Posted by Dominique de Kevelioc de Bailleul on Sep 18, 2012

 

Speaking with Infowars’ Alex Jones, former Assistant Deputy Secretary of State Dr. Steve Pieczenik says Israel plans to attack Iran before the U.S. elections of Nov. 6., and, that an attack on Iran will assuredly kickoff WWIII, according to him.

Moreover, Pieczenik, a man whose career inspired the character Jack Ryan of the Tom Clancy book series, says the ‘October Surprise’ will not take place in October. Instead, the big surprise will come earlier, in late September.

Dr. Pieczenik says the specific date of the strike on Iran is Sept. 25th or 26th, Yom Kippur—the Jewish holiday, which commences in the year 2012 at sundown on the 25th, and ends at nightfall, the following day.

 

“It [an Israeli attack on Iran] could be earlier than October, because we have Yom Kippur. And I predicted on your radio show, and I predicted to our national security people, privately, that Benjamin Bibi Netanyahu would start something on Rosh Hashanah,” says Pieczenick.

“This [prediction] was over a year ago, and I said it on your radio show. He was as predictable as a clock, and the Israelis will be very predictable, on Yom Kippur,” he adds.

Pieczenik says it’s clear to him that Israeli prime minister Bibi Netanyahu has already planned to attack Iran and has been desperately trying to enlist the U.S. to back him up. But, with or without U.S. direct help, Pieczenik is certain that Israel will attack Iran.

Moreover, he says Netanyahu is an extremest, who will “lie” for his personal and selfish cause, a conclusion also drawn by many Israelis who protest his regime.

“Everything Bibi is saying to the Americans and the American Jews is an absolute, unmitigated lie,” Pieczenik, a Jew, himself, says forcefully,

“What we have here is a collusion between Saudi Arabia, neocon Jews of America and Israel, against a president, who, whether I like or dislike, and may have lied about Osama Bin Laden,” he adds, “he [President Obama] is the son . . . a son of a CIA operative, the grandson of a CIA operative, who understands very well what the issues of intelligence are.”

With help from his neocon friends, Netanyahu threatens the entire world with the suicidal notion that Iran must be attacked, and the Israeli prime minister must be stopped, even if it means assassination, according to Pieczenik

“In a couple of weeks, they [Israel, Saudi and neocons] will try to initiate another war, unless their ex-Mossad operatives and their ex-Shin Bet will take out Netanyahu, and do to Netanyahu what happened to Rabin,” exclaims Pieczenik. “They know what I’m talking about. Otherwise he will bring down Israel, the world, and there will be a third world war.”

He also says, “What we are, is [sic] at the brink of war, that is being precipitated by two major countries. That is, Israel, particularly Bibi Netanyahu, who knows his country is failing economically, socially, politically.” And the other country is “Saudi Arabia.”

Pieczenik says the Israelis, Saudis and neocons were behind the 9-11 attacks, an accusation also made some years ago by many researchers of the incident. Once considered a crazy idea forwarded by some ‘conspiracy theorists’, who seek to see a conspiracy in every major world event, the conspiracy theorists have been mostly vilified, though no reinvestigation of the 9-11 incident has been seriously proposed by any member of Congress.

Today, the ‘conspiracy theory’, or ‘inside job’ theory, appears to be much, much closer to ‘fact’ than the account of that day was published through the official Congressional report of 9-11, giving rise to a strong possibility of a Mossad, Saudi and neocon conspiracy to carryout a false-flag attack on the United States and blame the crime on Osama bin Laden, Iraq and Afghanistan.

Given evidence of Mossad’s checkered past and involvement with the attack of the USS Liberty on Jun. 8, 1967, killing 34 American soldiers, Pieczenik comments won’t be received as a big surprise to many Americans.

I want Netanyahu to “begin telling the truth, that the involvement of Israel was, in 9-11” says Pieczenik. “Over 134 Mossad operatives were picked up on 9-11. The FBI picked them up [and] debriefed them. They were clearly involved with the Pakistani ISI and Saudi Arabian intelligence” on 9-11.

MORE HERE

 


Secret documents reveal further Swedish arms cooperation

The shell company set up to carry out Sweden’s secret plans to build a weapons factory in Saudi Arabia was financed with cash borrowed from the country’s military intelligence agency, according to a new report.

The company, Swedish Security Technology and Innovation (SSTI), was reportedly set up by the Swedish Defence Research Agency (Totalförsvarets forskningsinstitut – FOI) in order to oversee the construction of a factory for the maintenance and upgrade of anti-tank missile systems.

In order to keep the company secret, FOI needed cash in order to set it up, according to Svergies Radio (SR), which first reported on the secret plans for the Saudi weapons plant earlier this month.

However, FOI was unable to procure the necessary cash on its own, but instead had to rely on help from the Swedish Military Intelligence and Security Service (Militära underrättelse- och säkerhetstjänsten – MUST).

MUST provided the cash to FOI in the form of a loan, according to SR.
Sweden was in talks with Saudi Arabia about providing a state of the art public security system, according to information in a secret letter sent from the Swedish minister for trade and revealed by daily Expressen.

 

The letter, which was sent from Swedish minister for trade Ewa Björling to Prince Mohammed Nayef, dated September 17th 2009, was revealed and published on Tuesday by the newspaper.

The Saudi dictator, according to the paper, wanted to buy “several million kronor” worth of cameras, digital equipment, and an underground control centre system to watch over his own people.

In the letter, Björling notes the advanced technology of Swedish security systems, and how the two countries can continue to work on their “strategic partnership” in the future.

Swedish government ministers have been keen to pass the buck when confronted by Expressen regarding the claims, with all signs seemingly pointed towards the Ministry for Foreign Affairs and The Swedish Fortifications Agency (Fortifikationsverket).

However, spokespeople for both groups have not confirmed or denied the possible collaborations with Saudi Arabia.

According to the letter, published in full today, Björling wrote:

“The responsible Swedish government agencies are prepared to provide an initial study regarding civil public security utilizing the full knowledge gained from Sweden’s experience along with its advanced and proven technologies”.

Sources close to Expressen have indicated that this co-operation was to involve intense civilian monitoring by the regime, allowing them to be able to “deploy heavily armed domestic troops” if deemed necessary from security monitoring.

An initial workshop has already taken place in June of 2009 relating to the security collaboration, according to Björling’s letter.

The plans were met with heavy criticism from the opposition, including Left Party spokesperson on foreign policy, Hans Linde.

“I think it is unacceptable to be engaged in this type of cooperation with a country like Saudi Arabia. This would be actively providing one of the worst dictatorships with tools to monitor and thereby repress its own people,” he told the paper.

Swedish Armed Forces (Försvarsmakten) spokesperson Erik Lagersten confirmed for the radio station that money was transferred to FOI, but claims that MUST didn’t know that the funds were to be used to set up the shell company.

“That’s something for the preliminary investigation to reveal,” he told SR, referring to the preliminary criminal investigation launched by prosecutors last week in order to determine whether the secret Saudi weapons deal may have violated the law.

FOI’s own investigation has revealed information leading the agency to believe “there are suspicions that a crime may have been committed”, it said in a statement, prompting FOI head Jan-Olof Lind to report the incident to prosecutors.

As FOI is a state agency, it isn’t allowed to start any companies without the approval of the government – something which, according to SR, did not occur in the case of SSTI, which was started in 2009.

The company was launched as part of what is referred to in confidential documents reviewed by SR as Project Simoom, a project started by FOI in 2007 with the aim of helping build an advanced weapons plant in Saudi Arabia.

At the time of SR’s revelations, SSTI CEO Dick Sträng, who is also a high ranking official at FOI, refused to divulge how the company was funded.

“I refuse to answer that question,” he told SR.

“I can’t answer it without lying.”

SR has subsequently learned, however, that SSTI was financed by FOI and that the start-up capital came in the form of a cash loan from MUST.

On Tuesday, FOI head Lind is scheduled to appear before a parliamentary committee to answer questions about his agency’s connections to SSTI and its involvements in the Saudi arms plant construction project. Source


BAE army systems: The Corporate Crimes

BAE SYSTEMS has committed an impressive amount of corporate crimes. What follows is merely a selection of some of the more recent ones and is by no means a comprehensive account of the company’s wrong-doings. CAAT have a wealth of information on BAE, and further details of the company’s deplorable record can be obtained from them (see Further Information/Resources).

Indonesia

BAE SYSTEMS’ arms sales to Indonesia are notorious. It has a long history of exporting Hawk Jets to the country, which was ruled by the vicious Suharto regime (and is still governed by a corrupt and undemocratic system, in which the military retains a large portion of power). Arms exports began as early as 1978, but the biggest controversy began in November 1996, when the Conservative government granted an export licence for 16 Hawk-209 aircraft. The purpose of the Hawk aircraft is not ambiguous – BAE themselves describe it as a ‘single-seat, radar equipped, lightweight, multi-role combat aircraft, providing comprehensive air defence and ground attack capability’.[44] Given that in 1996 Indonesia was also trying to purchase US F-16 aircraft (which are air defence fighters), it is likely that the Hawks were intended mainly for ‘ground attack’.

It is clear that these ground attack fighters were being purchased for use in internal repression, especially in East Timor. Despite Conservative denials, East Timorese leaders have frequently asserted that Hawk jets have been used in repressive attacks since 1978,[45] and whilst in opposition Robin Cook believed the same thing. As he stated in 1994, ‘Hawk aircraft have been observed on bombing runs in East Timor in most years since 1984’.[46] Unfortunately, this belief did not carry over into his stint as Foreign Secretary for the Labour Government, which renewed the export licence despite vehement protests. Needless to say, this change of heart had absolutely nothing to do with Lord Hollick (then a member of the BAE SYSTEMS Board of Directors) being a DTI advisor at the time of the decision[47], or BAE SYSTEMS’ massive influence over the Labour Government (see section on Influence/Lobbying). Despite continuing concerns over the use of Hawk jets in East Timor, the only action taken by the UK Government was a brief ban from September 1999 to January 2000. It eventually took UN intervention to stop the occupation of East Timor, and needless to say, BAE have never apologised for accepting contracts from a corrupt and murderous dictatorship.

Saudi Arabia

Before the protests over its exports to Indonesia, BAE (then British Aerospace) had already become involved in one of the biggest trade scandals of the 1980s; the Al-Yamamah deals with Saudia Arabia. In the words of the Financial Times, the arms deal known as Al Yamamah II was ‘the biggest [UK] sale ever of anything to anyone.”[48] The deals were condemned by Amnesty International as a clear endorsement of a country ruled by a repressive regime who displayed a ‘persistent pattern of gross human rights abuses.’[49] BAe was the prime contractor for the entire deal, which included the sale of 48 Tornado bombers, 24 Tornado fighters, 30 Hawk trainer-fighters, and a large number of Rapier missiles. It also involved millions of pounds worth of corrupt commissions paid to Arabian businessmen, which the Conservative government of the time denied, and which eventually led to the downfall of Jonathan Aitken. Bringing in the service side of BAe, the company provided training and advice for the Saudi military. Indeed, this was pursued to such an extent that The Economist suggested that ‘the company not only supplies Saudi Arabia with fighter aircraft, but virtually runs its entire airforce.’[50] The scandal was further added to by a Channel 3 TV documentary. This showed two BAe representatives offering electro-shock batons for sale and claimed that the company had supplied 8,000 of them as part of the Al Yamamah contract. In spite of the compelling nature of the evidence, the Director of Public Prosecutions decided not to charge BAe on public interest grounds.[51]

Turkey

The UK sold £84 million worth of arms to Turkey in 1998, most of which came directly from the BAE SYSTEMS empire. The orders for that year, which was largely typical, included tank turrets, military components and torpedoes. More worrying was the deal struck between Turkey and Matra Marconi Space, worth $110 million, for military satellite terminals, and the deal between a Turkish company and Matra BAE Dynamics for the manufacture of BAE’s Rapier anti-aircraft missiles. 850 of those missiles are to be supplied to Turkey.[52] The problem with all this, of course, is that Turkey is, an oppressive regime with an appalling human rights record. It routinely uses its military equipment to oppress and kill Kurds and other ethnic minorities. It has been accused by the Council of Europe, among other bodies, of having a history of ‘repeated and serious human rights violations’. The same body reported in July 1999 that it could see ‘no significant progress in limiting torture, disappearances, and extra-judicial killings’ in Turkey.[53]

Deliberate inflation of military spending

Selling military equipment to dictatorial and oppressive regimes is not the only corporate crime that BAE SYSTEMS commits (although they do seem to like doing it). Just as serious is its complete lack of scruples when selling weaponry to poverty-stricken and corrupt countries. The old argument ‘if we didn’t do it, someone else would’ is soon deployed when the examples (amongst others) of South Africa, Greece, Tanzania, Zimbabwe and India are raised. According to CAAT, ‘Arms purchases do not merely waste scarce resources, but also aggravate international tensions, generating mutual suspicion and hostility. The essence of this traffic is the alliance between Western arms companies and local military interests, which repeatedly show that they can manipulate even democratic politicians into needless extravagances.’[54]

South Africa
At the time of writing, the government of South Africa has just decided to go ahead with the second phase of a deal with BAE worth £1.5 billion, involving the purchase of 24 Hawk aircraft as well as Gripen aircraft from SAAB (which BAE owns shares in). The deal has been roundly condemned by churches and NGOs across South Africa, as it will inevitably divert much needed resources from health, education and welfare policies. Raenette Taljaard, finance spokesman for the South African Democratic Alliance estimated that the money being spent on the Hawk jets could provide 4.5 million destitute South Africans with a basic living grant of R100 a month for a year, or offer housing subsidies for 337,500 homeless families.[55] Even if South Africa desperately needed new fighter aircraft, questions have been raised over the suitability of the ageing Hawk jets. Despite costing more than the aircraft which came first in the evaluation, BAE manufactured aircraft were chosen. This has lead to accusations of corruption and bribery.

Greece
Arms sales to Greece would seem to be unobjectionable on first examination. After all, the country is a NATO ally of the UK and a European democracy. It is also, however, the poorest country in the European Union. At the same time, it spends a higher proportion of its national income on ‘defence’ than any other European power, except Turkey (Greece’s defence budget was 4.9% of its total budget in 1999). In the year 2000 Greece purchased 60 Typhoon aircraft from BAE SYSTEMS at a cost of £5 billion.[56] It is also looking to purchase additional submarines and attack fighters. This is disgraceful considering that the country cannot afford decent healthcare or housing for its citizens. This, however, is not a consideration for BAE, which will sell to any customer which has the money.

Tanzania
Another case of BAE selling an expensive product to a country unable even to feed its own citizens came to light at the end of 2001, as the Labour Government approved the £28 million sale of a military air traffic control system to Tanzania. The country has an average per capita income of only £200, and the government of Tanzania has had to take out a hefty loan from Barclays to finance the deal. In an indication of the utter unsuitability of the deal, even the World Bank and the IMF refused to fund it, stating that they saw the system as a white elephant which would do nothing to benefit the country, and the Department for International Development rejected the deal on similar grounds before they were over-ruled by the Cabinet and Prime Minister. As Julian Forsyth, Oxfam’s head of policy, pointed out, the deal also makes a mockery of the Government’s supposed commitment to African debt relief. As he put it, ‘It is outrageous that Tanzania’s debt relief will go towards bolstering the profits of BAE and Barclays bank, rather than helping the poor people of Tanzania.’[57]

India

In 2001, BAE SYSTEMS found itself involved in the ‘Hinduja scandal’ that prompted the resignation of Peter Mandelson. A former advisoer to the Indian government claimed that the company had paid a large “commission” to the Indian tycoons to fix a £1bn arms deal with the Indian Air Force for 66 Hawk jets. The ensuing controversy resulted in the resignation of India’s defence minister, George Fernandes, who also stood accused of manipulating procurement of the Hawks. Despite this embarassing setback, BAE continued to aggressively pursue the £1bn deal. This was at a time when India’s dispute with Pakistan over Kasmir threatened to turn into a (potentially nuclear) war, which would futher destabalise the entire region. Furthermore, whilst Tony Blair was expressing hope that the UK “could a calming influence” in the region, Geoff Hoon, the defence secretary, was pressing the Indian Government to make a quick decision on the Hawks. The proposed deal has faced harsh criticism from within India itself, with the UK being accused of “fleecing India over Hawks.” [58]

According to The Guardian, the British government has recently admitted that British jets sold to India could be adapted to carry nuclear weapons or used to train pilots to fly nuclear-capable aircraft. The admission prompted angry reactions by MPs who said the sales flew in the face of the government’s commitment to sustainable development, its guidelines covering arms exports, and its pledge not to encourage nuclear proliferation.[59]

BAE SYSTEMS has already sold Jaguar combat aircraft to India in licensing deals which the Ministry of Defence (MoD) refuses to disclose.[60] Besides breach of contract, ‘client confidentiality’ is the explanation that’s always trotted out to justify the obscurity within which the British Government is allowed to sponsor and subsidise gun-running, a BBC correspondent investigating the world of arms exports explains.[61] With regard to the Jaguar jet deal with India, junior defence minister Lewis Moonie told Tory MP Baldry that information about the end use in the Jaguar licensing deal, and the number of Jaguars involved in the deal, was confidential. Baldry said the deals were not consistent with the government’s publicly stated concern about the impact of arms sales on sustainable development. “What the Indian government would spend on Hawk jets amounts to a decade of UK bilateral development aid,” he said.[62]

Zimbabwe

BAE SYSTEMS was happy to provide spare parts to keep Robert Mugabe’s ageing Hawk jets in operation in Zimbabwe, which were obviously being used to sustain Mugabe’s operations in the Democratic Republic of Congo. Significantly, the Foreign Office had wanted to stop the export of the spare parts but are said to have been over-ruled by the Prime Minister, with whom Sir Richard Evans (Chairman of BAE) has a very close relationship (see section on Influence/Lobbying). BAE only stopped supplying spare-parts to Mugabe in mid-2000, when Mugabe’s behaviour became too outrageous to ignore.

Qatar/Algeria

In 2000, the Sunday Times reported that BAE had made an application to export £5 million worth of military equipment to Qatar, which Qatar intended to gift in full to Algeria. The information was leaked to the Sunday Times by a Qatari officer, and the DTI confirmed that ‘it had received the purchase order and it was being considered.’ Algeria has an ongoing conflict with Islamic groups and an infamous human rights record.[63]

Pressure on the Government and MPs

As the world’s largest arms manufacturer, and owner of a large majority of the UK’s ship-building industry, BAE is able to exert a massive amount of pressure on the Ministry of Defence. It has a history of threatening the Government with relocation and withholding of investment if it does not get the contracts that it desires. For example, in 2001 the company put pressure on the MoD to assign all 12 of the new Type 45 Destroyers to BAE, despite the original plan being to split their manufacture between Vosper Thornycroft and BAE SYSTEMS. It threatened that if it didn’t get the contract in its entirety it would scrap its planned investment of £150 million at Scotstoun on the Clyde, and effectively pull out of shipbuilding altogether, crippling the British manufacturing sector.[64]

BAE also boast close links to Tony Blair and the Government (see section on Influence/Lobbying).

Moving into the educational sector

BAE SYSTEMS has developed its PR machine far in advance of the traditional careers fair stall and occasional brochure. It has formed partnerships with a number of universities in the UK. It also sends many of its young engineers back into secondary schools to extol the benefits of a career with BAE. In addition, the company have sponsored various events and ‘educational’ displays, such as the Mind Zone in the Millennium Dome, further linking its name with scientific and engineering excellence, and avoiding its real business of manufacturing weapons to kill people. Having capital far in excess of any other UK engineering firm (partly because of its size, and partly because of its massive reserves from the Al-Yamamah deal) it offers extremely rewarding packages to the best UK engineering students, ensuring that the arms industry continues to leech off the most promising talents in the sector Source


OpEd: Germany’s Shallow Remorse of Selling Big Guns

Report of major Leopard 2A7+ deal with Saudi Arabia splits German politicians

10:00 GMT, July 5, 2011 defpro.com | If you are a reader from any country outside of Germany, honestly, what was the last news you heard or read about regarding German defence policy? Whatever it was, I will willingly bet that it included at least one aspect that caused you to incredulously shake your head. Be it the German government’s decision to abstain from US Security Council Resolution 1973 on Libya (together with Russia and China), the never-ending reports about inadequate equipment for soldiers deployed to Afghanistan, the head-over-heels decision to end compulsory military service … the list is long and continues to grow day-by-day.

The latest national commotion, especially among politicians, was stirred by media reports about a possible export of 200 Krauss-Maffei Wegmann-built Leopard 2A7+ main battle tanks to the Kingdom of Saudi Arabia, after Germany has, reportedly, blocked the sale of weapon systems to the authoritarian desert kingdom for decades. According to the weekly news magazine “Der Spiegel”, the federal security council approved the sale last week. The report continued to explain that Saudi Arabia was negotiating to buy a version of the tank that was developed by the Spanish subsidiary of General Dynamics, yet, that the major portion of the order will land with Krauss-Maffei Wegmann and its partner Rheinmetall Defence. “Der Spiegel” also claims that 44 Leopard 2 tanks have already been sold to Saudi Arabia within the framework of the current agreement.

This report caused a familiar knee-jerk reaction by politicians from almost all political camps, but first and foremost by the socialist, green and left-wing opposition parties. Most critics of the possible multi-billion euro deal pointed to the volatile situation in North Africa and the Middle East and emphasised that Saudi Arabia recently deployed troops and heavy equipment to support its neighbour Bahrain in crushing demonstrations against the small Kingdom’s leadership. According to tagesschau.de, Jürgen Trittin of the Green party said that, as yet, German governments agreed not to sell weapons to countries in crises areas. He explained: “Saudi Arabia was recently involved in crushing the democratic movement in Bahrain. To deliver weapons to such a regime, and in such a manner, is unprecedented in recent years.”

Further, politicians who oppose the possible contract mentioned Saudi Arabia’s questionable human rights record, as well as the possible threat that such a large fleet of tanks could represent to Israel and the general balance of power in the region.

Interestingly, the ranks of those opposing or questioning the sale of tanks to Saudi Arabia have most recently been joined by members of the ruling parties, including Norbert Lammert, the President of the Bundestag and member of the conservative CDU, as well as Liberal-party member Elke Hoff of the Bundestag’s defence committee.

But what are the true motives of German politicians when suddenly crying out loud about such a contract? I will not question that some may have true pangs of conscience. But it is not the first time that German-built weapon systems are being sold to Saudi Arabia. In fact, the country is among the most important customers of German defence goods. According to tagesschau.de, the government approved defence contracts worth €168 million with the Saudi Kingdom in 2009; the same year also saw the export of 147 Leopard MBTs to Chile, Finland, Greece, Singapore, Turkey and Brazil. Furthermore, Saudi Arabia has been the first Eurofighter Typhoon export customer, having ordered 72 aircraft for an estimated €.6.5 billion (the first batch was also delivered in 2009).

But the protests among politicians were far more restrained when these contracts were publicly discussed. And Saudi Arabia’s human rights record is not only being questioned since the start of the spring uprisings in the Arab world.

There are a number of different factors that blend into the outraged statements that could be heard during past days.

First, there is a historical reluctance when it comes to selling ‘big guns’. The large 120mm smoothbore gun and massive impression made by its 60+ tons has often brought the Leopard main battle tanks to the centre of attention of politicians opposing German weapon exports in general, or to a particular country. Its heavy armour recalls difficult memories of those days when Germany was notorious for solid Krupp steel products. But this comprehensible remorse by many Germans can also be exploited to win over certain groups of voters; in particular, at times when the ‘popular parties’ are having difficulties in sustaining their popularity.

Secondly, the so-called “Arab spring movement” makes it a currently most opportune moment for politicians to jump onto the train of shining pro-democratic self-manifestations. But no German politician’s indignation could be heard as loud as today when, for instance, Eurofighter Typhoons were sold to Saudi Arabia or when the United States negotiated and signed multi-billion dollar arms deals last month. In mid-June, the US Defense Security Cooperation Agency (DSCA) announced possible foreign military sales (FMS) of a number of weapon systems, including 404 CBU-105D/B sensor-fuzed weapons or a variety of light armoured vehicles, for an estimated $263 million. In addition to a large number of different weapon systems, more than 370 US-built M1 Abrams main battle tanks have also been ploughing Saudi desert sands for years and provided the US defence industry with manufacturing, service and upgrade contracts worth several billion dollars.

If German politicians did not vividly criticise US defence exports to Saudi Arabia, it is also due to the fact that Germany has had its share of the cake in helping Saudi Arabia to build one of the region’s largest and most state-of-the-art armed forces – often legitimised by Western allies as a significant strategic counter-balance to Iran.

Thus, when a member of the opposition party directly accuses Chancellor Angela Merkel and Foreign Secretary Guido Westerwelle of having only paid a lip service to the democratic movement in the Arab world during the last few months, when so light-heartedly selling tanks to Saudi Arabia, it’s not all that strange when a bad feeling crops up in the gut.

The result of this hypocrisy for the German defence industry, providing work to some 80,000 people, is a very uncomfortable and damaging business environment (one that many foreign country’s industry representatives are observing with amused curiosity), as the same politicians who are eagerly shaking hands and excitedly watching during weapon system displays are far too willing to demonise this same industry, when the tide turns.

Oh, and by the way: According to the German business newspaper “Handelsblatt”, the German federal security council recently gave the green light for the export of German defence equipment worth an estimated €10 billion over the next 10 years to the autocratic military government of Algeria, including Fuchs armoured transport vehicles, trucks and off-road vehicles, as well as frigates. Has anybody heard a word about this from German politicians?
Source


Three Little Words: WikiLeaks, Libya, Oil

‘Libya has some of the biggest and most proven oil reserves — 43.6 billion barrels — outside Saudi Arabia, and some of the best drilling prospects.’

So reported the Washington Post on June 11, in a rare mainstream article which, as we will see, revealed how WikiLeaks exposed the real motives behind the war on Libya.

So what happens when you search UK newspaper archives for the words ‘WikiLeaks’, ‘Libya’ and ‘oil’? We decided to take a look.

From the time prior to the start of Libya’s civil war on February 17, and of Nato’s war on Libya on March 19, we found a couple of comments of this kind in the Sunday Times:

‘Gadaffi’s children plunder the country’s oil revenues, run a kleptocracy and operate a reign of terror that has created simmering hatred and resentment among the people, according to the cables released by WikiLeaks.’ (Michael Sheridan, ‘Libya froths at plundering by junior Gadaffis,’ February 6, 2011, Sunday Times)

The Telegraph described political wrangling over the alleged Lockerbie bomber, Abdelbaset al-Megrahi:

‘The documents, obtained by the WikiLeaks website and passed to this newspaper, provide the first comprehensive picture of the often desperate steps taken by Western governments to court the Libyan regime in the competition for valuable trade and oil contracts.’ (Christopher Hope and Robert Winnett, ‘Ministers gave Libya legal advice on how to free Lockerbie bomber,’ The Daily Telegraph, February 1, 2011)

From the time since Nato launched its war, we found this warning from Jackie Ashley in the Guardian:

‘…cast aside international law, and there is nothing but might is right, arms, oil and profits.

‘Well, you might say, but isn’t that where we are already? Not quite. Many of us may feel great cynicism about some of the west’s war-making and the strange coincidence of military intervention and oil and gas reserves. I do.’ (Ashley, ‘Few would weep for Gaddafi, but targeting him is wrong: In war, international law is all we have. If we cast it aside there’ll be nothing left but might is right, arms, oil and profits,’ The Guardian May 2, 2011)

This hinted in the right direction, but no facts were cited in support of the argument, certainly none from the WikiLeaks diplomatic cables.

The Guardian’s Alexander Chancellor managed to discover a leaked cable revealing that Libya ‘sometimes demands billion-dollar “signing bonuses” for contracts with western oil companies’. (Chancellor, ‘The bonanza of kickbacks and corrupt deals between Libya and the west have helped Gaddafi cling on to power,’ The Guardian, March 25, 2011)

Other cables offer more significant insights, but Chancellor made no mention of them.

George Monbiot’s March 15 Guardian article contained all three search terms – his sole mention of Libya in the past 12 months – but he was writing about Saudi Arabia: ‘We won’t trouble Saudi’s tyrants with calls to reform while we crave their oil.’ The article had nothing to say about the looming assault on Libya, just four days away. Monbiot has had nothing to say since.

Johann Hari wrote about the Libyan war in his sole article on the subject in the Independent on April 8, commenting:

‘Bill Richardson, the former US energy secretary who served as US ambassador to the UN, is probably right when he says: “There’s another interest, and that’s energy… Libya is among the 10 top oil producers in the world. You can almost say that the gas prices in the US going up have probably happened because of a stoppage of Libyan oil production… So this is not an insignificant country, and I think our involvement is justified”.’

This was a rare affirmation of the role of oil as a motive, albeit one that emphasised the specious claim that the US concern is simply to keep the oil flowing (Hari did mention, vaguely, that results were intended to be ‘in our favour’). And again, Hari appeared to be innocent of any relevant information released by WikiLeaks. A lack of awareness which perhaps explains why he had ‘wrestled with’ the alleged moral case for intervention before rejecting it.
Soured Relations – Gaddafi And Big Oil

Remarkably, then, we found nothing in any article in any national UK newspaper reporting the freely-available facts revealed by WikiLeaks on Western oil interests in Libya. And nothing linking these facts to the current war.

By contrast, in his June 11 article for the Washington Post, Steven Mufson focused intensely on WikiLeaks exposés in regard to Libyan oil. In November 2007, a leaked State Department cable reported ‘growing evidence of Libyan resource nationalism’. In his 2006 speech marking the founding of his regime, Gaddafi had said:

‘Oil companies are controlled by foreigners who have made millions from them. Now, Libyans must take their place to profit from this money.’

Gaddafi’s son made similar comments in 2007. As (honest) students of history will know, these are exactly the kind of words that make US generals sit up and listen. The stakes for the West were, and are, high: companies such as ConocoPhillips and Marathon have each invested about $700 million over the past six years.

Even more seriously, in late February 2008, a US State Department cable described how Gaddafi had ‘threatened to dramatically reduce Libya’s oil production and/or expel… U.S. oil and gas companies’. The Post explained how, in early 2008, US Senator Frank R. Lautenberg had enraged the Libyan leader by adding an amendment to a bill that made it easier for families of the victims of the Lockerbie bombing to ‘go after Libya’s commercial assets’.

The Libyan equivalent of the deputy foreign minister told US officials that the Lautenberg amendment was ‘destroying everything the two sides have built since 2003,’ according to a State Department cable. In 2008, Libyan oil minister Shokri Ghanem warned an Exxon Mobil executive that Libya might ‘significantly curtail’ its oil production to ‘penalize the US,’ according to another cable.

The Post concluded: ‘even before armed conflict drove the U.S. companies out of Libya this year, their relations with Gaddafi had soured. The Libyan leader demanded tough contract terms. He sought big bonus payments up front. Moreover, upset that he was not getting more U.S. government respect and recognition for his earlier concessions, he pressured the oil companies to influence U.S. policies’.

Similarly, compare the chasm in rational analysis separating the mainstream UK media and the dissident Real News Network, hosted by Paul Jay. Last month, Jay interviewed Kevin G. Hall, the national economics correspondent for McClatchy Newspapers. Jay concluded with a summary of their conversation discussing oil shenanigans in Libya:

‘So you’ve got the Italian oil companies already at odds with the US over Iran. The Italian oil company is going to, through its deals with Gazprom, allow the Russians to take a big stake in Libyan oil. And then you have the French. As we head towards the Libyan war, the French Total have a small piece of the Libyan oil game, but I suppose they would like a bigger piece of it. And then you wind up having a French-American push to overthrow Gaddafi and essentially shove Gazprom out. I mean, I guess we’re not saying one and one necessarily equals two, but it sure – it makes one think about it.’

Hall responded:

‘Yeah, it’s not necessarily causation, but there’s – you might suggest there’s correlation. And clearly this shows the degree to which oil is kind of the back story to so much that happens. As a matter of fact, we went through 251,000 [leaked] documents – or we have 250,000 documents that we’ve been pouring through. Of those, a full 10 percent of them, a full 10 percent of those documents, reference in some way, shape, or form oil. And I think that tells you how much part of, you know, the global security question, stability, prosperity – you know, take your choice, oil is fundamental.’ (Our emphasis)

Jay replied with a wry smile:

‘And we’ll do more of this. But those who had said it’s not all about oil, they ain’t reading WikiLeaks.’

Hall replied: ‘It is all about oil.’

In March, we drew attention to a cable released by WikiLeaks sent from the US embassy in Tripoli in November 2007. The cable communicated US concerns about the direction being taken by Libya’s leadership:

‘Libya needs to exploit its hydrocarbon resources to provide for its rapidly-growing, relatively young population. To do so, it requires extensive foreign investment and participation by credible IOCs [international oil companies]. Reformist elements in the Libyan government and the small but growing private sector recognize this reality. But those who dominate Libya’s political and economic leadership are pursuing increasingly nationalistic policies in the energy sector that could jeopardize efficient exploitation of Libya’s extensive oil and gas reserves. Effective U.S. engagement on this issue should take the form of demonstrating the clear downsides to the GOL [government of Libya] of pursuing this approach, particularly with respect to attracting participation by credible international oil companies in the oil/gas sector and foreign direct investment.’ (our emphasis)

The US government has certainly been ‘demonstrating the clear downsides’ since March 19.

US analyst Glenn Greenwald, asks:

‘Is there anyone – anywhere – who actually believes that these aren’t the driving considerations in why we’re waging this war in Libya? After almost three months of fighting and bombing – when we’re so far from the original justifications and commitments that they’re barely a distant memory – is there anyone who still believes that humanitarian concerns are what brought us and other Western powers to the war in Libya? Is there anything more obvious – as the world’s oil supplies rapidly diminish – than the fact that our prime objective is to remove Gaddafi and install a regime that is a far more reliable servant to Western oil interests, and that protecting civilians was the justifying pretext for this war, not the purpose?’

‘The Urge To Help’

It does seem extraordinary that anyone could doubt that this is the case. But the fact is that the WikiLeaks cables cited above, the Washington Post’s facts, and Greenwald’s conclusions, have been almost completely blanked by the UK media system. Notice that they have been readily accessible to us, a tiny website supported by public donations.

As though reporting from a different planet, the BBC reported last week:

‘Nato is enforcing a UN resolution to protect civilians in Libya.’

Is this Absolute Truth? Holy writ? In fact, no. But it does reflect the mainstream political consensus and so the BBC feels content to offer it – by way of a service to democracy – as the only view in town. And yet, we need only reflect on three obvious facts: while UN Resolution 1973 did authorise a no-fly zone to protect Libyan civilians, Nato is now openly seeking regime change and rejecting all peace overtures out of hand. The UN did not authorise regime change.

An Observer leader entitled, ‘The west can’t let Gaddafi destroy his people,’ told the same tale in March:

‘the only response that matters now is a common position which brooks no more argument… to pledge, with the honest passion we affect to feel that, whether repulsed in time or not, this particular tyranny will not be allowed to stand’. (Leading article, ‘Libya: The west can’t let Gaddafi destroy his people,’ The Observer, March 13, 2011)

Like a cut and paste from Orwell, the paper insisted:

‘This is a regional uprising of young people seeking freedom, remember? Do you recall all the power of the tweet, as lauded only a fortnight ago?

‘The millions who began this revolution won’t be much impressed by a democracy defined only by inertia. They won’t thank the west – or China, India, Russia, the African Union – for letting this Arab spring die in a field of flowery promises.’

The Guardian also focused on the ‘ethical’ motivation. In a February 24 leading article entitled, ‘Libya: The urge to help,’ the editors simultaneously mocked and reversed the truth:

‘It is hard to escape the conclusion that European leaders are advocating these moves in part because they want to be seen by their electorates at home to be doing something, and in part because they want to be seen by people in the Middle East as being on the right side in the Arab democratic revolution. They may hope that a dramatic line on Libya will go some way toward effacing the memory of the dithering and equivocation with which they greeted its earlier manifestations in Tunisia and Egypt, France being particularly guilty in this regard.’

Compared to the analysis discussed above this reads like a bed-time story for children. The deceptive words ‘dithering and equivocation’ refer to the West’s iron-willed resolve to protect tyrannical clients and to thwart democratic revolution in the region while appearing (the key word) to be ‘on the right side’.

The conclusion: ‘a no-fly zone should become an option. Lord Owen was therefore right to say that military preparations should be made and the necessary diplomatic approaches, above all to the Russians and the Chinese, set in train to secure UN authority for such action’.

The Guardian’s argument was shorn of the political, economic and historical facts that make a nonsense of the idea that Western military action ‘should become an option’. There may indeed have been a moral case for action by someone. But not by Western states with a bitter history of subjugating and killing people in Libya, and elsewhere in the region, for the sake of oil. But then it is a trademark of Guardian liberalism that Britain and its allies are forever Teflon-coated, forever untainted by the evident brutality of ‘our’ actions. This is the perennial, vital service the paper performs for the establishment.

We are asked to believe that the facts sampled in this alert are somehow unknown to the hard-headed corporate executives who write of ‘The urge to help’ and the ‘common position which brooks no more argument’. And yet, the Guardian was one of WikiLeaks’ major ‘media partners’ at the time the cables were published – it is well aware that ‘a full 10 percent of those documents, reference in some way, shape, or form oil’. Like the rest of the corporate media, Britain’s leading liberal newspaper knows but is not telling.Source


Falling Oil Prices Present a Great Opportunity-Interview

World markets appear to be hovering over a precipice as Europe’s sovereign debt crisis, slowdowns in India and China and further bank downgrades threaten to send stocks and commodities down even further. Falling oil and gas prices may offer some respite to consumers but are they enough to help the economy or are they a symptom of deeper problems?

To help us look at these issues and more we are joined by the well known investor, adventurer and author Jim Rogers. Jim is the creator of the Rogers International Commodity Index, he also recently completed a book called: A Gift to my Children – which helps people learn from their triumphs and mistakes in order to achieve a prosperous, well-lived life. Please click on the following link to find out more information on A Gift to my Children.

In the interview Jim talks about the following:

• Why recent oil price falls are a good buying opportunity
• Why oil prices could fall to $40 a barrel
• Investment opportunities with the renewable energy sector
• Why he is optimistic about Nuclear energy
• Why agriculture offers good opportunities to investors
• Why Myanmar is the best investment opportunity in the world right now
• Why there could be further unrest in the Middle East
• Why we should let Greece fail

Interview conducted by. James Stafford of Oilprice.com

Oilprice.com: Jim, thanks for taking the time to join us today.

Jim Rogers: I’m delighted to be here, James. My pleasure.

Oilprice.com: It’s been an interesting period in the energy world as we’ve seen oil prices steadily decline over the past few months and with the problems in Europe and slowdowns in India and China do you expect this trend to continue?

Jim Rogers: Well, there is certainly a correction going on for various reasons. I think Saudi Arabia’s trying to help re-elect Mr. Obama. There are also stories that JP Morgan has problems in its London office with a lot of unauthorized positions they’re having to liquidate. I don’t know what’s going on, but I do know that corrections are normal in the industrial world. There’s nothing unusual about it. If it continues, there’s an opportunity to buy more.

Oilprice.com: I read a report by the Economist Phil Verleger who thinks that the Saudi’s massive increase in oil production along with other economic problems could cause oil prices crash to $40 a barrel oil and $2 a gallon gasoline by November. Do you think this is a reasonable forecast and we could see oil at these levels?

Jim Rogers: We could see anything. We certainly saw lower prices than that back in 2008 when there was a collapse. When things are collapsing, all sorts of strange things happen. We found that out in 2008 and we will probably find out in the future, as well. If oil does go to $40, that means it’ll just be setting up an even more bullish scenario for the duration of the bull market.

Oilprice.com: How do you see the energy markets reacting to the Iranian sanctions, which are going to be coming into effect on the first of July?

Jim Rogers: Oh, I don’t see that having much effect at all. Everybody already knows about that – nothing new to the markets. They have long since adjusted to this news, whether it be stock markets, smuggling, etc. The Iranian sanctions are a non-event as far as I’m concerned.
Now, an attack on Iran would not be a non-event, but this is just more noise.

Oilprice.com: The Middle East Petocracy’s, along with Venezuela and Russia must be nervously watching the price of oil. Can you see potential problems developing in these countries and other oil producing nations if prices continue to fall?

Jim Rogers: That’s part of what I was saying before. The lower prices go for the fundamentals, the price of fundamentals improve, but for these countries the money they have available to buy peace is running out and there are going to be problems, because a lot of people have been lead to believe that the government can solve their problems and if the government runs out of money, it makes people upset.

Oilprice.com: Crude oil has dropped from $108 a barrel in February to $84 today. Do you think low oil prices could provide an economic stimulus?

Jim Rogers: Certainly, it’s an economic stimulus for everybody who buys oil. There’s no question about that. On the other hand, for people who produce oil, it’s a negative. Now obviously more of us buy oil than produce oil, but it’s important to remember it does cut both ways.

 

Oilprice.com: Less than 0.1% of U.S. cars and trucks run on natural gas and with falling natural gas prices and America’s dependence on oil and vulnerability to oil price shocks – I was hoping to get your thoughts on natural gas usage for transportation?

Jim Rogers: Well, If natural gas stays this low compared to oil prices, it does give an incentive to develop natural gas powered vehicles and I think we are going to see more and more developments here. Is it going to end the use of oil, combustion engines? Probably not any time soon. Someday it could, but someday is a long way away.

Oilprice.com: Do you believe natural gas prices are near to a bottom, or do you think they have further to fall?

Jim Rogers: U.S. natural gas is somewhere near its bottom, in my view. The problem is I expect to see serious economic problems in 2013 and 2014 in the U.S. If and when that happens, we’re going to see a final panic in the markets and the economy and everything will have a crescendo and a selling climax.

We’re certainly a lot closer than we were. Although, when you have a selling climax in markets, you go to levels much lower than most people believe possible and that may happen. Whatever that bottom is, it’s not too far from the recent lows in natural gas.
Natural gas in many other places such as the UK are much, much higher than they are in the U.S.

Oilprice.com: The Arab Spring shook energy markets in 2011 – are there any potential geopolitical events taking place apart from the Iranian situation that could cause oil prices to skyrocket?

Jim Rogers: There are always geo-political possibilities. If oil goes down, Saudi Arabia’s going to have more trouble buying peace. Any country’s going to have more problems buying peace.

Iraq is being driven into the arms of Iran. America has spent staggering amounts of money in this region, and what we’re getting for it is a possible alliance between Iran and Iraq.
All sorts of things could happen in the future, especially if Iran and Iraq get closer together. That’s going to put America in a terrible situation, the world in a terrible situation. The good news is the world is always changing dramatically. The bad news is, the world is always changing dramatically.

Oilprice.com: The media has gotten behind shale gas and it’s being promoted as a worldwide energy saviour. What are your thoughts on shale gas? Do you think it’s been oversold or it really is the cheap and plentiful oil extender we have been hoping for?

Jim Rogers: I don’t know how cheap it is. The technology’s getting better, apparently. The cost too because the environmentalists and politicians are getting worried about it. But I don’t know enough about the technology to know for sure. I do have confidence in mankind and someday we will have the technology and expertise to fully exploit these resources.

Someday’s still a long way away though, and in my case, I don’t know how long life the fields are. If these are short-lived fields and short-lived wells this is nothing more than a flash in a pan, which may last for a few years.

 

Oilprice.com: Moving away from fossil fuels – I was hoping to get your opinion on renewable energy. Do you see this as a sector investors should be avoiding – or are there opportunities here in the future?

Jim Rogers: That is your premise, if oil stays high alternatives become more competitive. Most alternative energy is not competitive at this moment in time but that could change.
If oil prices go down and stay down the subsidies for alternatives are going to have to be pretty massive to make it even viable.
However, having said that, if you can find competent companies that can make money in the field, they’ll make a fortune. Find the right companies and you’ll do well.

Oilprice.com: Are there any alternative sectors you’re more bullish on than others? Say solar, wind, geothermal, hydro?

Jim Rogers: No, no. They all have pluses and minuses. I’d be most optimistic about the ones that are economically competitive. I guess atomic energy is most economically competitive.

Oilprice.com: What are your thoughts on nuclear energy? Is there a future for this power source or due to public safety perceptions is it something politicians will feel forced to abandon or sideline?

Jim Rogers: I don’t think people will abandon atomic energy. It is competitive, it is economic, it is very clean if controlled. If it’s not controlled it’s a disaster of course. I suspect you’re going to see another revival of atomic energy. The French, the Koreans, the Chinese, many countries are going forward with their nuclear power development plans.

Oilprice.com: I’ve seen in other interviews that you’ve predicted that 2013 and 2014 will be bad years for the economy. What is an investor to do? Are there any commodities, stock or instrument people can go to for safety and capital preservation?

Jim Rogers: No such thing as safe when you talk about it. Even if you put your money in cash, if you put your money in the wrong cash, you lose a lot of money. As the people in Iceland have found out, as the people in Europe on the Euro have found out. So, no such thing as safe.

What I have done is I own commodities on the theory that if the world economy gets better, I’ll make money because of shortages. If the world economy does not get better, people will print money. The best way to save yourself when money printing is going on is to own commodities.
It does not mean between here and there, they can’t go down in a panic. In the meantime, commodities will be the thing to rally once that happens, but they can go down. Therefore, I have also short stocks as a hedge against myself. If the world economy doesn’t get better, you’re going to be losing a lot of money in stocks.

Oilprice.com: Now are there any commodities you’re particularly bullish on at this moment in time?

Jim Rogers: I’m more optimistic about agriculture than anything else, just because of the price. Most agriculture, I feel very depressed on the risk side basis. Sugar is 75% below where it was 38 years ago. There’s not much in the world that’s as depressed as agricultural current prices. So, I would say agriculture.

Oilprice.com: You’ve owned gold for 11 years now and the price is currently correcting. Do you see this as a buying opportunity or would you wait a little longer?

Jim Rogers: I’ve actually owned gold for longer than 11 years. I’m not buying now. Gold went up 11 years in a row, which is extremely unusual for any asset. I don’t know of any asset in history that’s gone up 11 years in a row without a correction.

Corrections are normal and are the way things should work, the way things do work. Having said that, I don’t know when the correction will stop. It’s normal in my experience for corrections to go down 30 or 40%. It’s just the way markets work.
Gold has not gone down that much. It’s only gone down that much once in the past 11 years, and even then it ended the year up. I’m not buying gold at the moment. If it goes down a lot, I hope I’m smart enough to buy a lot more. I’m certainly not selling my gold, because I suspect gold will be much, much, much higher over the next decade.

To view more discussions with other experts visit our new interview section

Oilprice.com: You’ve mentioned in the past that you’re bullish on Asia. Where do you see the best opportunities for investors in this region at present?

Jim Rogers: Probably the best investment opportunity in the world right now is Myanmar. In 1962, Myanmar was the richest country in Asia. They closed off in 1962, and now it’s the poorest country in Asia. I see enormous opportunities there because they’re now opening up. It’s like when China opened up in 1978. There were unbelievable opportunities going forward. The same is true in Myanmar now in my view. North Korea, I expect to see the same sorts of developments.

Oilprice.com: You’ve mentioned previously that the 21st century belongs to China. But China has some serious internal problems as its political stability depends heavily on rapid economic growth. We are also seeing increasing tensions between the wealthy coastal regions and the poor interior. My question is do you think the internal forces building up in China can be managed as China is held together by money not ideology?

Jim Rogers: What you just said about China’s true of every country in the world, more so in places like America and Europe than in China. China does have internal problems. But their economy’s much stronger than the western economies. You had riots in the streets in the U.K., what, last summer. Terrible instability, and there’s going to be much more in the west. Greece, Spain, Portugal, these countries have staggering instability.

In America in the 1930s we certainly had all sorts of political problems and yet survived, partly because America was a very large credit nation and had the assets to see us through. America came out of that and became the most successful country in the 20th century. China’s going to have plenty of problems. Plenty. I’d still rather invest in China than in other places.

Oilprice.com: You mentioned that with Spain and Greece we should just let them go bankrupt – what do you really see the implications of this being. Will it be as bad as we have been led to believe?

Jim Rogers: Might be worse. The good news is we’ll get their problems behind us. The way the system is supposed to work is when people fail, they fail. Then you come in, you reorganize. Competent people come in, reorganize, and start over with a sound base. This has been going on for thousands of years.

It’s a little bit like a forest fire. When you have a forest fire, it’s terrible, terrible, but it cleans out the underbrush, cleans out the dead wood. The forest, when it’s all over, is much stronger and has much better growth. Same with financial problems and bankruptcies. You start over and things are better.

Oilprice.com: Now, moving away from the markets, I was hoping you could tell us a little bit about your book, “A Gift to my Children,” the inspiration behind writing it and what you hope it achieves.

Jim Rogers: Well, I came into parenthood late and I never wanted to have children. I thought children were a terrible waste of time and money and energy. I felt sorry for friends who had children. Then I had some.

I’ve had some failures in my life, I’ve had a few triumphs. I started writing down the things I learned. I wanted to make sure my children knew all of these things. That turned into a magazine article, and the next thing you know it turned into a little book.
Grownups get a lot more out of it than children do because it’s really a book for grownups.

Oilprice.com: What are lessons within the book? Why would I go out and buy the book? What am I going to learn?

Jim Rogers: I hope you’ll learn to be famous, happy, rich and successful. Being happy, that’s the main thing I’m trying to help with. If you’re happy, not much else matters in life, at least in my experience. There’s various ways to be happy, of course. I’m trying to tell people the things that I have learned. I’m trying to teach them to be curious, independent. It’s very hard to think independently, as you probably know. Extremely hard. Most people are not very curious, If they see it on TV, that’s what they accept instead of thinking, what’s really going on here? I’m teaching readers to be curious, skeptical, independent thinkers.

Oilprice.com: Fantastic. Jim, thank you ever so much for taking the time to speak with us. It’s been a pleasure speaking with you.

Jim Rogers: My pleasure Source


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