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The United States of Oil 

No administration has ever been more in bed with the energy industry -- but does that mean Big Oil is calling Bush's shots? 

by  Damien Caveli  

 

Salon.com, 19 November 2001 

Centre for Research on Globalisation (CRG), Montréal, 21 November 2001

 

 The Bush administration's ties to oil and gas are as deep as an offshore well. President George W. Bush's family has been running oil companies since 1950. Vice President Dick Cheney spent the late '90s as CEO of Halliburton, the world's largest oil services company. National Security Advisor Condoleezza Rice sat on the board of Chevron, which graced a tanker with her name. Commerce Secretary Donald Evans was the CEO of Tom Brown Inc. -- a natural gas company with fields in Texas, Colorado and Wyoming -- for more than a decade.

The links don't end with personnel. The bin Laden family and other members of Saudi Arabia's oil-wealthy elite have contributed mightily to several Bush family ventures, even as the American energy industry helped put Bush in office. Of the top 10 lifetime contributors to George W.'s war chests, six either come from the oil business or have ties to it, according the Center for Public Integrity.

"There's no denying that this is an oil administration," says Peter Eisner, managing director of the nonprofit, nonpartisan watchdog group that conducted the study of Bush's campaign finances. "You can't talk about the career of any George Bush -- father or son -- without talking about oil."

But talking is one thing; determining exactly how the ties to the oil industry affect domestic and foreign policy is another. How much influence does the oil industry have? Is the U.S. bombing Afghanistan in part because -- as antiwar critics have claimed -- the industry wants to clear a path for oil and gas pipelines? Will the Bush administration steadfastly avoid confrontation with Saudi Arabia -- home of 15 of the 19 suspected hijackers -- because it doesn't want to upset ExxonMobil and the other oil companies with a deep Saudi stake? Or, even more intriguingly, could the close ties between Bush and the Saudis lead to increased U.S. pressure on Israel to create a peace settlement?

Or is this too simplistic? Since at least World War II, the oil industry has often been forced by the U.S. government to serve foreign policy objectives, rather than the other way around. Presidents have generally accepted oil's economic significance, its role as the grease that makes capitalism go. But even the most conservative administrations have regularly emphasized geopolitical objectives -- Soviet containment, for example -- at the expense of oil industry interests. Aspects of Bush's energy plan suggest that even this administration will not break the give-and-take pattern.

The problem, however, is that this pattern, the so-called "cheap oil strategy" looks more and more like a failure. Foreign oil dependence has risen over the past decade while now -- with anti-American sentiment growing in the Arab world -- foreign oil supplies are looking increasingly insecure. More than ever, some kind of national policy pushing both conservation and the development of renewable energy resources seems eminently prudent, if not necessary.

And that's where the current makeup of the Bush administration becomes crucial -- not because Bush-Cheney and company plan to invade Iraq to make it safe for ExxonMobil, (although that's not totally beyond the bounds of possibility) but because these are the last men and women in the world to expect radical change from on questions related to energy. Their friends, finances, and worldviews are all oil-drenched.

George W.'s ties to oil don't prove that the industry decides our every foreign policy move. But they do just about guarantee, for all practical purposes, that nothing significant will change in American energy policy. With Bush-Cheney in power, oil addiction is here to stay.

It's a Bush family affair 

The fusion of oil and politics is a Bush family tradition. For generations, the Bushes and their friends have been shuttling back and forth between energy industry boardrooms and Washington's hallowed halls.

Bush's grandfather, Prescott Bush, initiated the pattern. Shortly before winning a Connecticut Senate seat in 1952 he helped his son George raise $350,000 to start what would become Zapata Petroleum.

Sen. Bush also regularly looked out for the oil industry and his son's interests while in Washington. His biggest single favor, according to Herbert Parmet's book "George Bush: The Life of a Lone Star Yankee," came a year into his first Senate term, when he opposed legislation that would have federalized offshore resources -- including oil -- to raise money for education. In the name of states' rights and free enterprise, the bill's defeat helped both the oil companies and gave Zapata just what it needed to expand. In fact, soon after the legislation failed, Zapata moved into offshore drilling -- eventually one of Zapata's most lucrative ventures

George Bush made millions during the '50s and '60s Texas oil boom, and he also made many friends, most notably James Baker, who became Bush's company lawyer in 1963 after Zapata merged with Penn to become Pennzoil.

Bush later brought his friends to Washington, first as a representative in the House, then as head of the Republican National Committee and finally as vice president and president. He didn't stock his administration as full of oilmen and women as his son has, but like Prescott Bush, he didn't mind doing the industry's bidding either. His most public act for oil came in 1981. While serving as Ronald Reagan's vice president, he departed from the White House's official stance and visited Saudi Arabia to plead for an end to sliding prices. Bush argued that he was simply trying to protect American security interests by protecting domestic producers, who have higher costs than their Persian Gulf counterparts. But higher prices had another benefit: by protecting domestic oil jobs, they helped shore up support in Texas for what would eventually become his successful 1988 presidential campaign.

Higher prices also directly helped Bush's son, George W. Bush. George W.'s oil career started in 1978 -- 12 years after his father first entered Congress -- when several of his father's friends invested in his firm, Arbusto ("Bush" in Spanish). Unlike his father, George W. spent much of his oil career in the red. As Joe Conason pointed out in Harper's last year before the election, the company's original investors and others bailed out his firm at least three times. But after a final act of corporate CPR -- a merger with Harken Energy in 1986 -- Bush's connections to power really paid off. Two years after the merger, Abdullah Taha Bakhsh, a former director of Saudi Arabia's income tax department, purchased an 11 percent stake in Harken through his company Traco International. That same year, Harken won a contract for oil-drilling in Bahrain.

"Harken had no international experience at the time," says Eisner at the Center for Public Integrity, which published a detailed account of Bush's rise to power titled "The Buying of the President: 2000." "It was their first out of country contract."

Press reports at the time questioned Bahrain's motivations. Even the normally reserved Wall Street Journal reported in 1991 that the contract "raises the question of ... an effort to cozy up to a presidential son."

The Bush family countered that the contract was well deserved. Regardless, the deal in the Persian Gulf gave Bush a direct tie to the Saudi elite and set Bush on a suddenly successful path.

"It's not just the matter of a single contract," Eisner says. "It also has to do with converting Harken into a player that was then converted into a stake in the Texas Rangers and a run for governor. It's not incidental. The Bahrain deal is central to Bush's life."

Some experts suggest that it's not necessarily a bad thing to have a presidential family so steeped in oil knowledge, given the importance of oil to both national security and the domestic economy. But Bush has shown a pervasive willingness to let oil interests define energy and environmental policy. After accepting millions from the industry during his run for governor, he signed into law tax breaks for state energy producers, and in 1997, he gave them a hand in writing their own rules. Upon hearing that Texas' state environmental agency planned to end an exemption that allowed power plants built before 1971 to avoid complying with state pollution laws, Bush tapped two people to come up with an alternative plan: Vic Beghini, an executive with Marathon Oil Inc. and Ansel Condray, an executive with Mobil.

The plan they came up with initiated a voluntary pollution reduction program that didn't punish companies for noncompliance and thus essentially failed. A study by the Environmental Defense Fund published six months after Bush announced the program revealed that only three of the 26 companies had actually cut their emissions. Two years later, under increasing public pressure, Bush signed a bill forcing power plants to cut their emissions in half by 2003 -- but the essential exemption, as the industry wanted, still stands.

The Condoleezza Rice-Chevron-Central Asia connection

The politicos surrounding Bush also have enjoyed warm government/oil-industry connections. While Bush used his elected position to help friends in his former industry, Cheney employed past government connections to improve his own bottom line.

Iraq provides the most dramatic example. Cheney, intentionally or inadvertently, went against his own edicts in order to pad his company's profits. He told Sam Donaldson in August 2000 that, as the head of Halliburton, "I had a firm policy that I wouldn't do anything in Iraq, even arrangements that were supposedly legal." And yet, as the Financial Times eventually proved, Cheney oversaw $23.8 million in sales to Iraq in 1998 and 1999. Cheney, who collected a $36 million salary before becoming vice president, essentially profited from the destruction of Iraq that he oversaw as secretary of defense during the Gulf War. And while the oil-rig and equipment sales were legal -- a 1998 U.N. resolution gave Iraq the right to rebuild its oil industry -- Cheney's firm sold through European subsidiaries "to avoid straining relations with Washington and jeopardizing their ties with President Saddam Hussein's government," according to a November 2000 Financial Times report.

Cheney also helped Halliburton obtain a windfall of U.S. government loans. He secured $1.5 billion in taxpayer-backed financing for Halliburton -- a massive increase over the $100 million loan it received during the five-year period before Cheney took over. And while Cheney has claimed that Halliburton's rise to power had nothing to do with his political stature, State Department documents obtained by the Los Angeles Times suggest that U.S. officials assisted Halliburton both in Asia and Africa. Even the domestic defense-contracting arm of Halliburton -- Brown & Root -- saw its fortune change drastically once Cheney took over. The company booked $1.2 billion in contracts between 1990 and 1995; with Cheney at the helm, contract awards spiked to $2.3 billion between 1995 and 2000.

Other Bush administration officials have also profited from past government experience and influence. Bush's father and his then Secretary of State James Baker -- the lawyer who fought for Bush during the Florida election fiasco -- work for the Carlyle Group, an investment firm that until recently collected investments from the bin Laden family and other members of the Saudi elite. Reagan's Secretary of State George Schultz sat on the board of Chevron before the arrival of Condoleezza Rice.

Rice joined the Chevron board in 1991, after serving for a year on Bush Sr.'s National Security Council. There, she earned a $35,000 annual retainer, $1,500 for every meeting she attended and stock options worth hundreds of thousands of dollars, according to SEC documents. She was reportedly hired for expertise in the former Soviet states, and long before U.S. planes started dropping bombs in nearby Afghanistan, she spent much of her time at Chevron working on prospective deals in the Caspian region. Chevron (with Mobil) already produces 70 percent of the oil coming out of the Tengiz oil field in Kazakhstan, according to Ahmed Rashid's book, "Taliban," and the company has been working hard to secure a pipeline that would allow more oil to be produced. In 1993, with Rice on the board, the company pulled together a pipeline project to carry oil to a Russian port on the Black Sea. Russian opposition eventually postponed the plan indefinitely but Chevron still holds a 45 percent stake in the project -- and given the present state of improved Russian-American relations, many suspect that project will eventually get off the ground.

The slowly improving relations between the U.S. and Iran could also help Chevron. When negotiations over pipelines from Tengiz broke down a few years ago, Chevron turned its focus toward the Islamic theocracy, asking the Clinton State Department for a "swapping" license. Approval would have allowed oil from Tengiz to be shipped across the Caspian to Iran while, in exchange, Chevron would be able to sell an equal amount of Iranian oil that would be shipped from the Persian Gulf. The proposal was never approved, but given Rice's ties, many have suspected that Chevron will soon play a larger role in American foreign policy, whether in Iran or the Caspian.

Critics of the Bush administration point out that a stabilized Caspian region could benefit Rice's friends at Chevron, and if she returns to the board, Rice herself. They also argue that maintaining dependence on Saudi oil could benefit Cheney's old firm and Bush's father, and ultimately, the president himself when an inheritance comes his way.

But there is no clear evidence, right now, of oil company desires affecting current U.S. foreign policy. If anything, the terrorist attacks have reduced the energy industry's influence. Before Sept. 11 Saudi Arabia was reportedly pushing the U.S. to pressure Israel into Palestine peace concessions and, according to a Newsweek story, Bush was beginning to comply. But after Sept. 11, the chance that the U.S. would accede to Saudi requests evaporated, given the numerous Saudi connections to the attacks.

In that sense, the trajectory of oil influence over foreign policy has continued upon its historical path. A review of the evidence suggests that over time, the oil industry has progressively lost power. But that still doesn't mean that the current administration is likely to do anything radical to alter U.S. dependence on foreign oil -- barring the unlikely event of Bush pulling a Nixon-visit-to-China shock, and using his oil ties to force a real commitment to renewable energy and conservation.


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http://globalresearch.ca/articles/CAV111A.html