“Libya: The Gathering Storm: Turkey, Egypt and the Wrestling Match for Libyan Oil” Tuesday, July 28 2020. KGNU: Hemispheres, Middle East Dialogues – Segment 2

One of the results of the 2011 U.S. inspired NATO invasion of Libya: slave markets. Boubaker Nassou describes the prisons where he was held in Libya as “slave markets.” He was repeatedly bought and sold into and out of these prisons before being taken into bonded labour. Now he lives in a shelter run by the Tunisian Red Crescent. (photo credit: Ruth Sherlock/NPR)

KGNU Hemispheres – June 30, 2020 – Transcript…Part Two (continued from Part One, Part Three)

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I cite for example the article of Robert Fisk when he visited Baghdad in the initial period of the occupation of Iraq just after the March, 2003 U.S. led invasion. At the time the National Museum of Iraq was being looted. Fisk noted that he was, at the time, within a mile of Iraq’s oil ministry, center of the country’s oil industry. He hurried to the American troops in the process of securing the oil ministry and told them of what was happening at the museum. The officers in charge responded that “that’s not our concern.” They were ordered to guard the oil ministry.

• Ibrahim Kazerooni

And as it is very poor public relations to admit that these invasions were about securing oil, and so the different pretexts that play better with public opinion were contrived – humanitarian intervention, weapons of mass destruction and the like.

What amazes me is that so many analysts, intelligent and “good people’ can’t see through this nonsense because that is all it’s ever been; and it continues

• Rob Prince

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Rob Prince continues: In any case, another moment, besides 1973 when U.S. energy policy was called into question and was in crisis, was, interestingly enough 2001. “It” happened just prior to 9-11.

Just to remind the listeners, in the year 2000, George W. Bush was elected president. He was for all practical purposes a rather weak president with a very strong vice president, Dick Cheney. Cheney came out of the oil industry, Halliburton – a company that produces all kinds of products for oil manufacturing. Early in the Bush Administration, Cheney put together what became known as the national energy task force (formally the National Energy Policy Development Group) which in short order produced the National Energy Policy of 2001.

At the time, U.S. energy consumption was such, that the country found itself increasingly dependent upon Middle East oil, then as now, still the overwhelming source of that energy supply.

There are many aspects to it – but for the listeners – keep in mind that the world we are living in today in the United States in terms of energy policy was shaped by that document. It remains, in many ways, the heart and soul of U.S. energy policy. – a document whose main themes are very much still in force, now nearly twenty years on.

One quick example – the virtually unregulated development of “fracking.” Where did the fracking orgy come from? Off shore oil development? Of course there was off shore oil development prior to 2000 but nothing like what followed.

The objective in unleashing fracking and off shore oil drilling was for the United States to become energy independent in general, but also specifically, to the degree possible, energy independent from the Middle East, because the region was in turmoil – leaving out the fact that the United States was responsible for a good part of that turmoil.

We’ll leave that aside for a moment!

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This report was issued a couple of months prior to 9-11, in the years that followed, 9-11 would be used as a pretext to pry open the energy sectors of Iraq, Syria, Libya – with the dual goal of :

– modernizing the energy sector so more oil and gas could be produced – done by companies like Halliburton
– breaking up the strong centralized states – either de facto or de jure – so that foreign energy companies and governments could impose more favorable – and more profitable – conditions on oil and natural gas contracts.

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This report was issued a couple of months prior to 9-11, in the years that followed, 9-11 would be used as a pretext to pry open the energy sectors of Iraq, Syria, Libya – with the dual goal of :

– modernizing the energy sector so more oil and gas could be produced – done by companies like Halliburton
– breaking up the strong centralized states – either de facto or de jure – so that foreign energy companies and governments could impose more favorable – and more profitable – conditions on oil and natural gas contracts.

At the heart of the report were a number of suggestions of what needed to be done…To name only a few:

• Increase domestic oil and gas production which led to a dramatic increase in off shore oil production, North American pipeline politics and in no small measure the highly subsidized activity known as fracking – releasing oil and natural gas from shale
• To the degree possible, the U.S. should reduce its international oil imports from the Persian Gulf and develop other sources – W. Africa, Latin America in the lead.
• Calls for the opening up of oil producing countries to foreign investment – and greater control from those strong centralized states that protected their energy sector – among them Iraq, Iran, Libya, Algeria.

In a more general sense what was needed finding ways to increase oil production.

At the same time that the document is calling for reducing U.S. dependence on Middle East oil, it is, contradictorily, calling on the region’s oil producing countries to increase production! Over the next twenty years (from 2001) the report calls for a doubling of Middle East oil production to meet projected global energy needs.

How was such a dramatic increase in Middle East oil production going to take place? By “modernizing” the technological aspects of production there.

Put another way, if the goal of the report is realized, the United States would be flooding the world market with increasing amounts of Middle East oil both to meet global demand and to keep the price of energy as low as possible. But that is not the strategy of Middle East oil producing countries which want to preserve their precious resource as long as possible and to keep oil prices above an minimal level.

But what was biggest obstacle in the way of increasing Middle East oil production? It was the centralized states of the oil producing countries, which because of their political clout, could negotiate with the United States and the energy companies from a position of strength.

Ibrahim Kazerooni: And by the way as we explained a little bit later, states with such centralized political systems were immediately attacked shortly thereafter, in 2003 and 2011. The centralized governments were (in the case of both Iraq and Libya) dismantled so that the position of negotiating strength was no longer available.

I cite for example the article of Robert Fisk when he visited Baghdad in the initial period of the occupation of Iraq just after the March, 2003 U.S. led invasion. At the time the National Museum of Iraq was being looted. Fisk noted that he was, at the time, within a mile of Iraq’s oil ministry, center of the country’s oil industry. He hurried to the American troops in the process of securing the oil ministry and told them of what was happening at the museum. The officers in charge responded that “that’s not our concern.” They were ordered to guard the oil ministry.

The same thing happened with the mercenaries that took control of Libya. Once having defeated and overthrown the Khadaffi government, they immediately began focusing on two positions, one of which was the oil industry. We’ll talk about it later.

Rob Prince: Well put.

The main point – in order to put the oil companies – and the governments of the United States, British and French – in a stronger bargaining position visavis oil producing states, it was necessary to weaken their centralized governments. From the vantage point of political economy that is what the (2003) invasion of Iraq was about and essentially it’s the situation in Libya. The goal is to be able to squeeze out more oil and natural gas from these countries and to, in the long run, do it at lower costs.

That is the heart and soul of the National Energy Policy of 2001.

And as it was very poor public relations to admit that these invasions were about securing oil, and so the different pretexts that play better with public opinion were contrived – humanitarian intervention, weapons of mass destruction and the like. What amazes me is that so many analysts, intelligent and “good people’ can’t see through this nonsense because that is all it’s ever been; and it continues.

So here we are in 2020 on the edge of another regional war in which many countries are involved to one degree or another and on one side or another. The main ones are Egypt and Turkey fighting over control of Libya’s natural gas.

Ibrahim! What’s going on?

Ibrahim Kazerooni: If somebody would have said that the time will come when after nine or ten years of so-called “liberating Libya” using the pretext of humanitarian intervention that it would become the focus of regional powers moving in to settle their differences and to take control of the country’s resources… nobody would have believed it.

But we predicted it, Rob. If you remember we argued that this is not humanitarian intervention but quite something else, and ultimately the crisis would deepen.

Moving to Libya…

To understand the situation in Libya and its relationship to the points that Rob just made about the National Energy Policy of 2001 and the influence of oil in U.S. foreign policy, it is necessary to give some background so as to deepen our understanding something about Muammar Khadaffi.

Nobody doubts that Khadaffi was a tyrant or that he was a supporter of democracy but as a leader for Libya, by the year 2000 Libya had achieved a dramatic level of independence from Washington. But more worrisome for the United States and the West than his human rights record were two Khadaffi initiatives.

He was in the process of setting up an independent banking system, a state owned bank the currency of which was backed by over 150 tons of gold as reserves. I’ll explain why in a minute. Secondly, he planned to create a gold-backed African currency to compete with the dollar and euro so that oil and natural gas would be traded in gold other than with the dollar.

It is not difficult to understand where this would lead. Khadaffi would have succeeded in this – and he almost did – to convince African leaders to abandon trading in dollars and instead trade in gold. The consequences of such a development would have been weighty. Such a move would have weakened – and perhaps broken – the strength of petrodollars as a means of exchange and the support the dollar enjoyed as a result of the “Kissinger Deal” discussed just above.

In the few meetings he had with African leaders, Khadaffi was able to convince them that Libya had already established a central bank independent of the Bretton Woods banking system using the Libyan dinar (gold based) and and dirhan (silver based). He convinced the other African oil producers to use the Libyan dinar and dirhan in their business transactions with the understanding that any oil and gas bought or sold had to have the backing of gold.

The francophone African oil producers were told that they could drop the CFA franc (Franc of the French Colonies in Africa) and begin to use the Libyan dinars and dirhams instead based on gold and silver.

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It is not difficult to understand where this would lead. Khadaffi would have succeeded in this – and he almost did – to convince African leaders to abandon trading in dollars and instead trade in gold. The consequences of such a development would have been weighty. Such a move would have weakened – and perhaps broken – the strength of petrodollars as a means of exchange and the support the dollar enjoyed as a result of the “Kissinger Deal” discussed just above.

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Rob Prince: You’ve just explained one of the main reasons why one of the first countries to intervene militarily and bomb Khadaffi was the French.

Ibrahim Kazerooni: Khadaffi’s plan would have resulted in disastrous consequences for the U.S. economy and the dollar, particularly undermining the elite and oligarchy controlling the banking and finance system – and by default, the political establishment in the West. It also would have had dire effects for the French as well as (many) African currencies would decouple from the CFA franc which would have weakened the Euro (in which France is a major participant) and French influence in Africa.

Summing up, using the Libyan currency supported by gold and silver – rather than the dollar – would undermine the basis of U.S. power globally, not just in the Middle East.

Bear this in mind as we see what happened after Khadaffi was toppled.

(To be continued)