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I Miss Journalism
I miss journalism. I used to enjoy the news. People said things, events happened, and the “news” told me about that. Some were better at shrinking away human bias than others, but by sticking to a solid handful of outlets you could get a decent sense of what was happening.
Now, columnist Max Boot in the Washington Post has finally put into writing what we have all known for some time: that sort of journalism is dead. The job has shifted to aspirational writing, using selected facts alongside made-up stuff to cause something to happen.
What Boot made black and white is he does not commit journalism anymore to create Jefferson’s informed public. He writes to drive Trump from office and overturn the 2016 election, regime change, my bitches. Max: “Much of my journalism for the past four years has been devoted to critiquing President Trump and opposing the spread of Trumpism. But no matter how many columns or sound bites I produce, he remains in office… I am left to ask if all my work has made any difference.” While reasoned editorials and Op-Eds supporting and opposing policies have always been a part of journalism, what Boot spent the last few years doing was creating and supporting others who created narratives designed to drive Trump himself from office. They manufactured reasons for him to resign, to drive actual impeachment, or at last resort, influence voters too dumb to know what’s good for them.
We more or less knew this was true even before senior staff at the New York Times had to remind reporters they were “not part of the f*cking resistance,” or before CNN advised the House “go for the jugular vein” and impeach Trump, but it is helpful to see it in daylight. After all, democracy dies in the darkness.
The uber-created narrative was Russiagate. None of the core substance was true. Trump wasn’t the Manchurian Candidate set in place by Putin in a long con, nor was there a quid pro quo for Russian election help. Yet the media literally accused the president of treason by melding together otherwise unrelated droplets of truth — Trump wanted a hotel in Moscow, some ads were run on Facebook — that could be spun into a narrative which would bring Trump down, if not send him to SuperMax. What was true was of little consequence; what mattered was whether the media could create a narrative the rubes might believe.
The critical flaw in Russiagate (other than it did not actually happen)) was the media creating an end-point they could not control, Robert Mueller. Mueller, an old school, Deep State man to his core, was made into an Avenger, the Last Honest Man, the Savior of Democracy as the narrative first unfolded and then fell apart like cardboard box in the rain. After
Michael Cohen’sMueller’s dismal testimony, promoted to a crescendo for three full years across the media, there was nowhere to go.A much better example which follows the same Bootian construct but which will play out without end is the mash-up story Trump is manipulating both the inner workings of government in the specific and American foreign policy on a global scale for personal gain via… hotel fees.
At first glance it seems like a non-starter. Trump’s hotels are as much a part of him as the extra pounds he carries. He campaigned as a CEO and announced early on he was not going to leave any of that behind and divest.
But even as the first cold slap of Trump’s election victory filtered past nascent attempts at unseating him, claiming he lost the popular vote (in baseball and the Electoral College, you win with the most runs, not the most hits, kids), or that votes were miscounted (they were not) or that the sleepy EC would rise from Hamilton’s grave and smite Trump (it did not), a narrative was being shaped: Trump could not become president because of his business conflicts of interest. Some went as far as to claim swearing him in would itself be an unconstitutional act.
An early proponent was Harvard professor Lawrence Tribe, who dug around in the Constitution’s closet and found the Emoluments Clause, a handful of lines intended to bar office holders from accepting gifts from foreign sovereigns, kings and princes to prevent influence buying. Pre-Trump, the last time the issue was in actual contention was with President Martin Van Buren (no relation) over gifts from the Imam of Muscat.
The media ran with it. They imagined out of whole cloth any foreign government official getting a room at any Trump hotel was such an emolument. Then they imagined whatever tiny percentage of that room profit actually went to Trump himself represented a bribe. Then they imagined despite the vast complexity of U.S. relations, Trump would alter course against America’s own interests because some guy rented a room. It was Joker-like in its diabolicalness, the presidency itself merely a prank to hide an international crime spree!
Then they made it happen. The now-defunct leftist site Think Progress ran what might be Story Zero. It was based on an anonymous source claiming before Trump even took office, under political pressure, the Kuwaiti Ambassador canceled a major event at one hotel to switch to Trump’s own DC hotel. It all turned out to be untrue. “Do you think a reception of two hours in the Trump hotel is going to curry favors with the administration when we host thousands of U.S. troops in Kuwait? When we have in the past and still do support American operations in Afghanistan and Iraq?” the Kuwait ambassador asked when some other outlet got around to his side of the story. But no matter.
Though the Emoluments Clause is quite specific, the media then decided every time anyone stayed at a Trump property it was corruption. Even when Trump visited one of his own homes it was corruption because the Secret Service paid Trump for the privilege!
Now none of that should have mattered. The Secret Service has always paid for the facilities they use for their work because the government cannot commandeer private property or demand/accept free stuff (which of course, ironically, could be seen as a bribe), not from Marriott and not from the Trump Organization. Joe Biden still charges the Secret Service rent on a cottage he owns, so that they can protect him when he visits home in Delaware. Taxpayers shelled out for eight years of Secret Service protection so his spouse, Jill, could hold a paid teaching job at a Northern Virginia community college.
Never mind. When a business executive stayed at a Trump property, it was corruption. For example T-Mobile booked nine rooms at a Trump hotel, ostensibly to influence a $26 billion merger’s federal approval. Those rooms were worth about $2700. Of course the president, who can shift the stock market for millions with a tweet, prefers to make his illegal money off jacked up hotel bills. Think small has always been a Trump trademark.
Reuters headlined how foreigners were buying New York condos from third party owners (i.e., not Trump or his company), but it was in a Trump-managed building after all and maybe the monthly maintenance fees would qualify as mini-emoluments? Every apartment sold to a Russian-sounding surnamed individual was corruption fodder. Trump was accused of “hiding” foreign government income at his hotels when servers at the bar failed to ask cash customers if they were potentates or princes (the headline: “Trump Organization Says It’s ‘Not Practical’ to Comply With the Emoluments Clause.”)
And of course that Air Force crew staying at a Trump place in Scotland. That the hotel forged its relationship with a nearby airport long before Trump became president, and that the Air Force had been using the same airport and hotel hundreds of times long before Trump became president, didn’t stop the New York Times. Another piece speculated the $166 a night the Air Force pays for rooms was always part of Trump’s financial plan for the floundering multi-million golf course.
Along the way all sorts of other co-joined narratives were tried and dropped: Stormy and Avenatti, the SDNY as Savior, Sharpiegate, something about security clearances, Trump outing a CIA asset inside the Kremlin, imminent war with ChinaIranVenezuelaNorthKorea, a recession that never seems to catch on, the Battle of Greenland, shady loans from Deutsche Bank that never materialize, taxes! taxes! taxes! and more. Some appear and disappear before a rebuttal can even be written. Others die out for awhile with the embers blown to life as needed, such as the idea diplomacy is “earned” by bad guys; that falsehood has impeded progress with North Korea and now on ending the war in Afghanistan (but was OK with Obama and Iran.)
Places like CNN simultaneously claim Trump is a warmonger and incapable of diplomacy while mocking his efforts to practice it. They claim he has weakened the State Department and then are incredulous when he tries to use it. Forgotten is how around this point in the Bush admin we had started wars in Iraq and Afghanistan. There was the abandonment of a great American city to Katrina. The Patriot Act stripped us of our privacy. Torture, kidnapping, and indefinite prison without trial became US government policies. With Obama we had around this point attacked Libya triggering a massive refugee crisis which killed so many and is still disrupting Europe, ignored the Arab Spring, laid the groundwork for civil war in Syria, drone murdered several American citizens, and spent trillions to dig out of the financial crisis Bush let happen.
But to really see how weak the corruption narrative is, you have only to compare it to how the media chose to cover similar questions in the past.
Outside of anti-war outlets, the Bush family’s long involvement in the oil industry in general and closeness to the Saudis in particular was never really tied to two generations of Bush presidents making war across the mideast. Vice President Dick Cheney’s job running Haliburton and accepting delayed compensation from them even while in office had nothing to do in the MSM with his encouraging no-bid contracts for his old company to run the backstage parts of Iraq War II. There were certainly no talks of impeachment.
Imagine if the media treated every appearance by Obama as a book promotion? What if each speech was slandered across the channels as corruption, Obama just out there selling books? Should he have been impeached for commercializing the office of president? At the very least this issue should have been discussed by Max Boot on cable news shows.
The Trump Organization pays to the Treasury all profits from foreign governments. In the 2018, $191,000. The year before the amount was $151,470. So Trump’s in-pocket money is zero.
Meanwhile Obama’s profit was $15.6 million as an author during his time in office (he has made multiples more since leaving office, including a $65 million book advance.) In the two weeks before he was inaugurated as the 44th president, Obama reworked his book deals. He agreed not to publish another non-fiction book during his time in office to keep anticipation high, while signing a $500,000 advance for a young adult version of Dreams From My Father.
Obama’s books were huge sellers in China, where publishing is largely government controlled, meaning Obama likely received laundered payments via his publisher of Chicom money (Emoluments Clause!) while in the Oval Office. Obama’s own State Department bought $79,000 worth of his books to distribute as gifts abroad.
As with Trump, nothing Obama did was illegal. There are no laws per se against a president making money while in the White House. Yet no one bothered to raise the Emoluments/corruption question for Obama, and the State Department purchasing $79,000 worth of his books was forgotten fodder for FOX. No one ran stories Obama sought the presidency as a bully ATM machine. No one claimed his frequent messaging about his father was designed to move books. No one demanded hearings on his profits or inquiries into how taxpayer funds were used to buy up his books.
Only Trump, and Max Boot has confessed why. The media has created a pitch-and-toss game with Democrats, running false, exaggerated or purposely shallowly-reported stories to generate calls for hearings, which in turn breath life into the corruption story for another round.
“Undeterred by lackluster public support for impeachment,” the New York Times reports, “Democrats have sketched out a robust four month itinerary of hearings and court arguments that they hope will provide the evidence they need to credibly portray Mr. Trump as corrupt and abusing his power.”
Like Russiagate, this is all an assemblage of droplets of truth which will not lead to criminal charges or impeachment. Unlike Russigate, however, there is no Robert Mueller buzz kill to come, only a vague narrative which can be refreshed as needed, with the only end in sight being Trump somehow driven from office before November 2020, or beaten in the election. Until then, Max Boot and his ilk still have journalism’s new job to do. Journalism is now all for resistance, for condemnation and arousal.
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
Sources Tell Me… Fake News, Kuwait and the Trump DC Hotel
It is fully normalized now in American mainstream journalism to build an entire story, often an explosive story, around a single, anonymous source, typically described no further than “a senior U.S. official,” or just “a source.”
For a writer, this makes life pretty easy. They can simply make up the entire story sitting in their bedroom, inflate a taxi driver’s gossip into a “source,” or just believe an intern they tried to pick up at happy hour who says she saw an email written by her supervisor saying their manager heard something something. The story goes viral, often with an alarming headline, and is irrefutable in an Internety way, demanding critics prove a negative: how can you say it didn’t happen?!?!?The issue for readers as critical thinkers is that we tend to feel we have only two options: wholly take the writer’s word for it all, or not. The result is a steady flow of amazing insider stories that get blasted through sympathetic repeat media, left like roadkill for us to Tweet about, labeling them as fake news or screaming at the people who label them as fake news.
Any follow-up, including a straight-up debunking, is rarely sent viral, as it isn’t as click-worthy. Many sites that do little more than reprint other people’s work see no obligation to assume any responsibility for what they print; that rests with the originator, moving on.
A Political AgendaAlmost all of these “source” stories follow a political agenda, these days mostly to support a negative narrative about Trump (the last of the “pro-Hillary” stories like this, the Hail Mary CIA leaks ahead of the Electoral College vote, seem to have run their course for now.) And the best thing about these anonymous source stories? They are basically impossible to refute. How can you challenge a source’s statement, except perhaps by using another secret, counter, source? You can’t prove a negative, and you can’t do much if the base argument is only It May Be True!.
How to Read Stuff BettererThat said, there are a couple of things a reader with a few firing synapses still left might do.
The first is to examine the underlying political goal of the writer. If they seem to spend more time “proving some evil” than reporting facts, be skeptical. Be particularly skeptical of a writer whose proved evil tracks very closely with an established narrative the writer has driven before. Show me a (generally conservative) DailyCaller piece exposing Trump corruption, or a (generally liberal) DailyBeast piece exposing Clinton corruption, and you will have my attention. Not necessarily my belief; remain skeptical no matter the source. Don’t stop thinking.
Next might be to ask if what is being reported as true fits with the “is the juice worth the squeeze” test? In other words, if what is being reported is true, is what’s gained worth what is being risked?
As an example, a writer claims Candidate X had a police officer beaten after she ticketed his car. Ok, of course It May Be True! but in reality would a candidate risk news that he ordered a beating of a cop just to retaliate for a minor traffic ticket? Seriously? Yes, yes, who can refute it 100% (you can’t) if it is reported by a “source,” and since you hate Candidate X anyway you want to believe it, but trust yourself and apply the old sniff test.
Trump and the Kuwaitis: Case Study in Bullsh*tBut one of the most useful tools of skepticism is to employ an old spy trick: is the source really in a position to know the information they say they know? How could they have come across it? How many in the organization would have likely known Fact X?
Let’s examine one recent example. The blog ThinkProgress reported this:
The Embassy of Kuwait allegedly cancelled a contract with a Washington, D.C. hotel days after the presidential election, citing political pressure to hold its National Day celebration at the Trump International Hotel instead.
A source tells ThinkProgress that the Kuwaiti embassy, which has regularly held the event at the Four Seasons in Georgetown, abruptly canceled its reservation after members of the Trump Organization pressured the ambassador to hold the event at the hotel owned by the president-elect. The source, who has direct knowledge of the arrangements between the hotels and the embassy, spoke to ThinkProgress on the condition of anonymity because the individual was not authorized to speak publicly. ThinkProgress was also able to review documentary evidence confirming the source’s account.
The story certainly tracks an ongoing narrative, Trump’s conflicts of interest in general and his ownership of a Washington DC hotel in particular. It is a story persons who already dislike Trump are very willing to believe.
But what about the risk versus gain necessary for this story to be true?
The Trump organization pressuring a foreign embassy to do anything would be explosive, likely falling very close to criminal. If caught, it would spark at minimum an investigation that Trump’s opponents would drag on for as long as possible. Someone wold suggest impeachment. This would be global front page news, the smoking gun of long-rumored corruption. The potential gain for Trump? Maybe a few thousand bucks of catering and ballroom rental money. It May Be True! but does it pass the sniff test? But to people who want to believe, the story also fits the belief that Trump will do anything for money, so It May Be True!.
But who would the source have to be, to be credible?
The story claims it was the Kuwaiti ambassador himself who was pressured. Was the source the ambassador himself? It Might Be True! but why would someone of his stature, or a close aide, risk anything to talk to a blog like ThinkProgress? Maybe a high level source inside the Trump establishment? It Might Be True!, but the same questions apply. How many people inside either institution, the embassy or Trump’s, would know about this “pressure” being applied? Who inside Trump’s organization would have the pull to get one-on-one with the Kuwaiti ambassador (Ivanka? Eric?) and why would they leak?
Bottom line is that very, very few people would be privy to any discussion at those levels, and none of them plausibly would leak to a blog.
Hearing from the Other Side
Another feature of fake news is limited inclusion, if any at all, of opposing views or information. Either the writer doesn’t bother to try and obtain any, or works to get a no comment or negative non-response “Is it true you are beating your wife?,” falls back on the “no response was received as we went to press” (i.e., four minutes after I made the call) or the grandaddy, “Trump denies it because of course he would, what’s he gonna do, admit a felony?”
That said, in the case of ThinkProgress and the Kuwaitis, another site, POLITICO, did trouble themselves to reach out to the embassy. Here’s what they got back:
We were not under any pressure. Nobody contacted us whatsoever, Ambassador Al-Sabah said [Note: an actual named source]. I just thought ‘It’s a new venue, it’s been in the news… The novelty of the venue would encourage people’ — that was first on my mind.
Al-Sabah called the ThinkProgress report ‘totally false and unfounded.’ Still, he said he had a tentative save-the-date understanding with the Four Seasons, where the event was frequently held in the past, although he’d never signed a formal contract. He also pointed out that his country held the same event at the Newseum in 2016.
‘Do you think a reception of two hours in the Trump hotel is going to curry favors with the administration when we host thousands of U.S. troops in Kuwait? When we have in the past and still do support American operations in Afghanistan and Iraq?’ the ambassador asked. ‘Our relationship is much deeper and much broader than me needing to be in a hotel for two hours.’
ThinkProgress has since updated its story to include parts of the Ambassador’s quote. Most sites that printed the original story do not appear to have updated their stories.
But… But.. It Might Be TrueAnother line in the story raises questions — “ThinkProgress was also able to review documentary evidence confirming the source’s account.” Now what documentary evidence might that be? Would someone at Trump create a written record of said pressure on the ambassador? Would a source have access to that record? Would they show it to ThinkProgress? Why wouldn’t ThinkProgress release a redacted version of this documentary evidence, evidence that would go global? ThinkProgress has not stated what the documentary evidence is, even in broad form, such as an email, or a contract, or a recorded phone call.
With fake news, as few verifiable facts as possible being used is a key indicator.
In the end, ThinkProgress tips its hand with the highly-couched (emphasis added) “what it means” paragraph:
The apparent move by the Kuwaiti Embassy appears to be an effort to gain favor with president-elect through his business entanglements, and it appears to show Trump’s company leveraging his position as president-elect to extract payments from a foreign government.
A lot of qualifiers in that for something supposedly based on documentary evidence, but whatever.
I Believe in Santa Claus
Yes, yes, It Might Be True! and no one can prove it is not true. Believe what you want to believe, it is the Christmas season after all, but stay away from the word truth, willya?
BONUS: Since writing this piece, I have been contacted by a source on the condition of anonymity because the individual was not authorized to speak publicly. My source stated the ThinkProgress piece is false, and that Kuwait shifted its plans to have its event at the Trump hotel based on little more than a lower price quote, all handled at the lowest administrative levels. The ambassador did not even know of the exact location of his fete until routinely reviewing his schedule with an aide a few days ago. My source showed me documentary evidence of all this, which unfortunately is not available to reproduce. Trust me…
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
Winning Our Own Hearts and Minds, Again
We have seen this movie before, but let’s allow the US Army’s own “public diplomacy” writer describe it to us once again:Service members and U.S. embassy employees took part in a sports day event at the U.S. embassy in Kuwait, Feb. 16, as a part of the English Access Micro-scholarship Program. The program is a U.S. State Department-funded, two-year English-language program for Kuwaiti youth to not only learn the English language but to learn about American culture as well.
The story is that the US Embassy and the US military gather up a bunch of local kids as props, play at playing soccer, wrap it in the sweet coating that this is also some weird kind of English lesson, and make nice.
“This is a very important part of the program,” said Airman Travis Holmes, a cable and antenna maintenance technician with the 386th Communication Squadron, 386th Expeditionary Wing. “I like being around the kids. This gives them a chance to get away from the stereotypical thoughts about Americans and get to know us one-on-one.”
Missing from the article is why/how the US military is in Kuwait. Following 1991’s Desert Storm, the US never left Kuwait. Instead, the US appropriated as much land as it wanted to build vast military bases, adding jewels to the necklace of foreign military enclaves that stretches around the world. Much of the war with Iraq was run out of Kuwait. Imagine how welcome a Chinese Army base might be in say Kansas City.
“These sports days are important for a couple of reasons,” said Grace Choi, the public diplomacy officer for the embassy and event coordinator. “It encourages these young people to participate in some of the core values we have at the embassy, like being healthy and maintaining healthy habits. And, because they’re doing it in English, it helps reinforce some of the things that they have been learning in class.”
The United States holds these kinds of feel-good events all the time, everywhere. We want to be loved as occupiers, want to believe that we are welcomed as liberators instead of merely tolerated as conquerors. In that sense, these sorts of staged propaganda pieces are indeed a success– we’re not trying to convince the Kuwaitis to love us, we’re trying to convince ourselves that the Kuwaitis love us.
BONUS!
I took the photo, above, in Iraq, at a US-sponsored event to bring together our soldiers and some Iraqi orphans for a day of sports, food and fun.
Also, this same week, NATO apologized after it said its troops mistook two Afghan boys for insurgents and shot them dead. One wonders how many English lessons and soccer matches it will take to overcome that incident?
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
Mother Jones: Inside the World’s Largest Embassy (c)
Mother Jones excerpts one of the funnier chapters from my book, focusing on the efforts by the World’s Largest Embassy (c) to grow green grass in the middle of the Iraqi desert:The ambassador, who fancied himself a sportsman, ordered grass to grow on the large sandy area in front of the main embassy building, a spot at one time designated as a helicopter-landing zone, since relocated. Gardeners brought in tons of dirt and planted grass seed. A nearly endless amount of water was used, but despite clear orders to do so, the grass would not grow.
The ambassador would not admit defeat. He ordered sod be imported into Kuwait and then brought by armored convoy to the embassy. No one confessed to what it cost to import, but estimates varied between two and five million dollars. The sod was put down and hundreds of thousands of gallons of water were used to make it live, in what was practically a crime against nature. No matter what Iraq and nature wanted, the American Embassy spent whatever it took to have green grass in the desert.
We made things in Iraq look the way we wanted them to look, water shortages throughout the rest of the country be damned. The grass was the perfect allegory for the whole war.
Read the whole excerpt/article at Ma Jones.
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
Twelve Reasons Why Iraq Will Not Be a Major Oil Exporter, Part Two
See Part One if you missed it…
7. Export
Oil Guy said the pipeline to Syria was built “back in the day” and looks like Swiss Cheese, full of holes (and a Scooby snack for the allusion!) The pipeline into Turkey is a bit better but can only handle about twenty percent of the oil, and has not had a full pressure test since 1991. That means eighty percent has to be piped down to the one deep water port Iraq has and shipped out through the Gulf by tanker. Somebody (such as Oil Guy) needs to first build all the piping and terminals and shipping stuff which are not there right now. Of course, that builder needs to be careful, because most of the countries in the neighborhood get their fresh water via desalinization plants that draw from the Gulf. An oil spill in an Iraqi port hastily thrown together would create an ecological and political disaster across the entire region that would make the BP Louisiana Gulf fiasco seem like just more spilled milk no one should cry over…
8. Infrastructure
Umm Qasr is Iraq’s only deep water port. It represents the door in for the massive amount of heavy equipment needed to extract the oil and the door out for the oil on its way to the world. The place is in terrible condition, reported to be the worst port in the Middle East. Umm Qasr is now prioritized for grain imports, needed to feed the population. Grain unloading will need to stop before oil equipment can be moved through the limited terminal space. Iraq charges some of the world’s highest port fees as well, close to $8000 for services that cost no more than $1000 anywhere else on the planet. Bribery and corruption are rumored to be nasty business (the use of the word “rumored” here by Oil Guy means “absolutely taking place.”) The Ministry of Oil is supposedly trying to negotiate a deal to bring in the extraction gear overland through Kuwait, but given that Kuwait is an oil competitor and cranky about Iraq invading it in 1991 (and still not having paid its reparations), that may not work out well. Of course the future is always bright, as Iraq has big plans to build a new port at the town of Fao; construction has only just started.
9. Water
You’d think oil and water don’t mix, and they don’t. However, one good way to get oil out of the ground is to pump fresh water under it, forcing the oily goodness upward. Turns out, said Oil Guy, that you need fresh water to do this because salt water clogs up the sand and does not work as well. Iraq or Oil Guy will need to build whopper-sized desalinization plants, because the supply of fresh water is decreasing as Syria, Turkey and Iran build dams that choke off the Tigris, Euphrates and other rivers that supply Iraq with its fresh water. If the oil companies decide to go with salt water, then lengthy pipelines and pumping stations which use a lot of electricity are needed instead. These would take a few years to construct.
10. Electricity
Iraq has an acute shortage of electricity, and a shaky, inefficient grid to move the power around. Oil work, especially all the pumping needed to shoot the oil from the extraction site to the port, needs megawatts of power that currently do not exist in Iraq and will need to be found. Everybody argues over the numbers, but we’ll go with Iraq being able to generate 4500 megawatts on demand in 2002, 4000 megawatts after the invasion, down to 3600 megawatts at present as the infrastructure degrades. Whatever the exact numbers, the curve is downward, while demand increases require it to trend upward for any hope of success. Iraq’s Minister of Electricity resigned in June 2010, a move prompted by several days of violent demonstrations in the south spurred by electricity shortages. His acting replacement, The Minister of Oil, has so far failed to achieve any growth in domestic electrical output. He has, however, increased the import of electricity, seventy-eight percent of which is now coming from Iran.
11. Time
Most of Iraq’s oil is in so-called “green” virgin fields, untapped. No one has done the thorough geological work that is needed, plus test wells, delineation wells (Snack!) and the like. This will take two or three years. The rest of the infrastructure needs Bob the Builder time as well so it might be four or five years before the oil starts to flow. Even some of the smaller “brown” fields that have been tapped since the 1920’s will need several years’ of work to bring into flower.
12. OPEC
OPEC was founded in Baghdad in September 1960 and Iraq served in a leadership role for the group until the 1990 invasion of Kuwait. Sentimentality, however, counts for little in the oil world. As Iraq cranks up its oil production, it stands to rival Saudi Arabia as a supplier to the world (US and China). More oil typically means lower prices (capitalism again) and it is possible OPEC, to include Iran, is not going to be happy to see the market flooded and oil prices drop so Iraq can be a happier place. Iraq will argue it should be allowed to over produce to make up for lost time, and the US would welcome the extra production to negate loses on the world market caused by its Iranian sanctions, but it is unclear Iraq’s neighbors will be so generous, especially as mini-revolutions spark up around the region; not a good time to mess with the economy. In December 2009 Iran may have been testing out a preemptive warning shot when it sent troops across the border to briefly occupy an Iraqi well head in Fakka. Given the naughty role other OPEC neighbors such as Syria and Saudi Arabia even now play in the shadows of Iraqi politics and security, this might turn out badly (violence).One pundit argues that the war was all about oil, so much so that the original name was Operation Iraqi Liberation (OIL), only later changed to Operation Iraqi Freedom (OIF). Only his argument is that the goal was to seize and then sideline Iraq’s reserves to keep the market price high for a barrel of that sweet, sweet black gold.
Kuwait is already lining up for a fight. Kuwait will attempt to seize Iraqi oil assets abroad when international legal protections end on June 30 – a move that will create problems for the international oil companies that are paid by Iraq in crude in lieu of (unavailable) hard currency. Kuwait seeks to enforce a 2006 British Court ruling against Iraqi Airways, for stealing $1.2 billion worth of equipment during the first Gulf War. Good times ahead.
So given all these things to do before they get totally oil drunk rich, you’d think Iraq would be out there getting crazy on oil work, staying up late and working weekends. They are not.
In 2009 the Ministry of Oil spent only $391 million dollars out of an allocated budget of $1.4 billion. Capital spending on oil represented twenty-seven percent of the country’s budget, not bad until you see that even the “Other” category in the budget was twenty-one percent. The Ministry of Finance is having a hard time coordinating all this money, having been suicide bombed three times since August 2009. Oil Guy said he had been to their most recent temporary offices (a brave man, and another Scooby snack!) and they had plastic garbage bags filled with unpaid invoices piled up. They were months behind on accounting and have no idea what their revenues and expenses might be. The country is run literally on paper ledger-based accounting systems. To make things worse, oil output in June 2010 actually fell over the previous month’s total. Fast forward: In March 2011, Iraq’s oil exports dropped two percent compared to the previous month.
So who cares, right? Iraq has gotten along being poor for awhile now and while it has not been pretty, it has remaining stable. We in the West have all mumbled along without Iraqi oil for like, dude, forever, and drive rainbow-powered Prius’ and have solar powered iPads. Cool, we don’t need the oil. But Iraq does. It really needs the oil really badly because Iraqis continue to have babies.
Iraq has a population of about thirty million people, with a median age of twenty years old. The population growth rate is 2.5 percent (neighbor Iran by comparison has a population growth rate of less than one percent). Iraq is going to see a huge population bulge and needs to create some 250,000 jobs a year every year for awhile to accommodate all these people. The oil industry is not labor intensive; oil can produce enormous wealth but not so many jobs. Iraq’s financial future is based on becoming something of an oil welfare state, using the oil revenues to fund education (the last comprehensive budget allotted only four percent to education), infrastructure and jobs for its growing population. People without work tend to drift, and in a country where the oil deposits are not equally distributed and where folks seemingly join up with insurgent groups like we patronize drive-throughs for burgers, that is a bad recipe.
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
Twelve Reasons Why Iraq Will Not Be a Major Oil Exporter, Part One
It is all about oil. After a year in Iraq as a State Department Provincial Reconstruction Team (PRT) leader, I came to understand it’s all about oil in Iraq, but not in the way you think. Despite sitting on the world’s largest reserves, and despite billions of US government and corporate investment, Iraq pulls no more oil from the ground today than it did in 2003. There are 12 good reasons why this is.The big events in modern Iraqi history have always been linked to the nation’s vast oil reserves. In 1920 colonialist Britain in part brought together the Ottoman provinces of Basra, Baghdad and Mosul in order to better exploit the oil holdings of the Turkish Petroleum Company in what is now Iraq. Under Saddam, oil revenues were used to enrich the Sunni minority; so much oil wealth was amassed by Saddam’s home tribe Tikritis that Saddam passed a law in 1972 banning the use of surnames in order to mask this reality. The 1991 invasion of Kuwait was also tied to oil, whether it was Kuwait’s horizontal drilling into Iraqi fields or Iraq’s need for the well-developed refining and extraction sites and spacious ports there. During the 2003 invasion the US protected only two Ministries from looters – Intelligence and Oil. Today, ninety-five percent of Iraq’s revenues come from oil sales.
While most of the 365 days I spent in Iraq as a US State Department Provincial Reconstruction Team (PRT) leader were merely something to be endured, every once in a while I stumbled across a person who just knew stuff and I got to learn something important and new. This happened when I had a chance to talk with An Important Person in the Oil Business (“Oil Guy”). We were both stuck somewhere in an airport and bored. He liked to talk. I enjoyed listening.
Iraq’s only hope for the future is in oil. That is what they have that others want and so the current government of Iraq has signed agreements with a bunch of giant oil companies such as BP and Shell to help them extract the oil from the ground. Iraq will pay the companies to get the oil out (about $2 a barrel), at which point the oil belongs to the Government to sell. The oil companies also have to pay for all the equipment and drilling stuff. The oil companies are happy to pay for all this equipment and drilling stuff because Iraq is cold freaking floating on oil. Iraq has five “supergiant” oil fields, which comprise five of the twenty largest oil fields in the world. It also has smaller fields with “only” half a billion barrels or so each. Better yet, all this oil is easy to get at, not so deep or underwater, making the “lift cost” (I felt like giving Oil Guy a Scooby snack every time he used a cool insider term like that) very low. If things go well, Iraq has the potential to out produce Saudi Arabia, plus Iraq is currently America’s bestest friend on Facebook (actually, Iraq probably still uses MySpace.)
But Oil Guy stopped me (sans Scooby snack) to remind that it is not how much oil you’ve got, but how much oil you can get out of the ground and then to market.
Right now Iraq is producing about two and a half million barrels of oil a day, which sounds like an epic amount but is not so much as these things go. Oil Guy said that at its 1970’s peak Iraq put out about three million barrels a day. Iraq would like to raise output up to twelve million barrels a day, which is an epic amount. Iraq’s ambitious seven-year plan to grow its production capacity is the biggest oil expansion ever attempted in history. So, let’s get drillin’.
Well, said Oil Guy, there are a couple of things (in the sense that a couple of things might include relocating Jupiter and inventing time travel) that need to be worked out first.
1. Security
Iraq has to make it so that the oil wells, the drilling gear, the terminals and all the foreigners needed to run this stuff are safe. Iraq has to secure long pipelines and roads, with no car bombs or IEDs, and no one knows if this is possible. Sabotage remains in the news while US officials express concern that Iraq’s Oil Police, tasked with securing much of the country’s oil infrastructure and cracking down on crude and fuel smuggling, lack the equipment and staff to do so. Southern Iraq is also home to up to twenty-five million mines laid during the Iran-Iraq War that will somehow need to be located and defused (this task has been assigned to the Oil Ministry, which does not possess the proper equipment or trained personnel. Mines are not solely a southern Iraq problem; a US PRT sponsored a Soccer and Mine Awareness festival in Kirkuk, teaching young people how to play the game and to recognize mines they might find on the pitch).
In three separate incidents during 2010, oil pipelines within well-protected Pipeline Exclusion Zones (PEZ) were damaged by attacks. These were the first reported attacks on PEZ-protected pipelines since these zones started to become operational in 2007, and resulted in several days’ worth of stoppages and a $30 million repair bill. Other attacks in April 2010 interrupted flows in the export pipeline to Turkey. The Turkey pipeline has since been again attacked and tapped six times in summer 2010. The last attack stopped the flow of oil completely for four days.
As recently as March 8, 2011, the northern pipeline was bombed in Ninewa province, knocking it out for several days and disrupting the flow. Still, the good (?) news is that such attacks have proven to be short-term bothers at worst, at least so far. No recent attack has done more than mess things up for a few days or so, though the possibility remains of a major strike.
To ensure their safety, most of the foreign oil companies have their offices located within the confines of the US military base at Basra, along with the US PRT, the British Consulate and the Russian and Chinese oil exploration firms, which must make for some interesting cafeteria small talk. “US policy at this time is that the USG in Iraq should assist in facilitating the mobilization of these companies without regard to the nationality of the companies,” said Kenneth Thomas, head of the energy section of the Basra PRT, though he added “But we are not going to assist an Iranian company.”
2. Scale
For Iraq to meet its goals on time, it needs to crank up production by 1.5 million barrels a day for a year, then up another 1.5 million the next year and so forth every year for “awhile.” No one has ever done that before, and there may not even be enough oil equipment in the world to realize that kind of growth. Oil Guy wants to start cranking the Rumaila super giant field near Basra early; it produces maybe 900,000 barrels a day now, and he thinks it could go as high as three million barrels a day. The Economist magazine is equally awed by the scale hoped for by Iraq, reminding that such production would place Iraq thirty percent ahead of the best years of Saudi output. Being The Economist, this is drolly characterized as “essentially ambitious.” (The Economist on real paper, February 20, 2010)
3. Banking
Iraq has a horrible banking system, with few international connections, poor auditing (the entire country of Iraq has only thirty auditors and they get tired), no deposit insurance but plenty of corruption. In May 2010, for example, over $310 million went missing in $7.7 billion in off-the-books loans. The Ministry of Finance no longer accepts checks from private banks, only from state-run institutions. One US Government report notes that “legal and technological challenges deter foreign banks from establishing a presence in Iraq.” Large amounts of oil demand large amounts of money to, um, flow, and Iraq is not ready. They’ll have to grow the banking system faster than they grow the oil processes.
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
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