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Oil and Islam. Will America Shift Away from Its Past Unilateralist Policies? Obama’s Cairo Speech

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by Prof. Peter Dale Scott
June 10, 2009

In his remarkable speech at Cairo University on June 4, President Obama promised
“a new beginning.” In the words of the Israeli commentator Uri Avnery,
the speech offered “the map of a new world, a different world, whose values
and laws he spelled out in simple and clear language — a mixture of idealism
and practical politics, vision and pragmatism.”1

Much of what Obama had to say was new, and warmed the hearts of observers like
myself, who had become increasingly concerned about the new president’s
fidelity to the financial and military policies of the previous Bush-Cheney
administration. But while Obama broke new ground on Israel-Palestine issues,
he glossed over troubling issues pertaining to the US presence in Iraq and Afghanistan.
He also glossed over one of the fundamental issues alienating the Muslim world:
America’s relentless efforts to preserve its threatened financial status
by moves to dominate the region’s oil resources. Here his careful ambiguity
was ominously reminiscent of the Bush era.

The speech reaffirmed a complete withdrawal of US forces from Iraq by 2012,
as the U.S. committed itself to do in a signed agreement last December. In addition
Obama asserted that “we do not want to keep our troops in Afghanistan…
We would gladly bring every single one of our troops home if we could be confident
that there were not violent extremists in Afghanistan and now Pakistan.”

But Obama’s remarks did not address the statement on May 26, 2009, by
Gen. George Casey, Army chief of staff, that, despite the agreement with Iraq,
the United States would continue to have fighting forces in Iraq and Afghanistan
beyond 2012. The reality, Casey said, is that “we’re going
to have 10 Army and Marine units deployed for a decade in Iraq and Afghanistan.”2

Nor is it clear that Obama’s promise to withdraw “troops”
from Iraq would also cover private military contractors (PMCs) . Jeremy Scahill,
author of a book on the notorious firm Blackwater, said on the Bill Moyers show
that what we’re seeing in the Cairo speech “is sort of old wine in a new
bottle. Obama is sending one message to the world,” he told Moyers, “but
the reality on the ground, particularly when it comes to private military contractors,
is that the status quo remains from the Bush era.”3

Even more ominous is the president’s oblique reference to America’s
controversial oil policies. It was significant that he apologized for the CIA’s
ouster in 1953 of Iran’s democratically elected government — the
first of America’s many operations against Islam on behalf of the oil
companies. With respect to Iraq, he said he had made it clear to the Iraqi people
that America pursues “no claim on their territory or resources.”
His solitary reference to America’s hated oil policies was oblique and
evasive: “While America in the past has focused on oil and gas when it
comes to this part of the world, we now seek a broader engagement.”

In stating that the American presence in Iraq has nothing to do with oil, Obama
is following in the footsteps of the Republicans before him, such as Donald
Rumsfeld, who on November 14, 2002 told CBS News that the U.S. plans for Iraq
had “nothing to do with oil, literally nothing to do with oil.” As
it became increasingly clear in 2003 that America would invade Iraq, neither
Bush’s State of the Union Message nor Colin Powell’s address to the United Nations
Security Council mentioned, even once, the word “oil.”

But we now know that in March 2001 Cheney’s Energy Task Force developed a map
of Iraq’s oil fields, with the southwest divided into nine “Exploration
Blocks.” One month earlier a Bush National Security Council document had
noted that Cheney’s Task force would consider “actions regarding
the capture of new and existing oil and gas fields.”4

What Obama means by “no claim” on Iraq’s resources is ambiguous.
For eight years the Bush-Cheney administration, in a number of ways, pushed
for the Iraq Ministry of Oil to eliminate state control of oil and negotiate
contracts giving Chevron and other multinationals access to Iraqi oilfields.5
These negotiations have continued under Obama, and Bloomberg reported in April
that the Iraqi government might give foreign companies 75 percent stakes in
new oil developments.6 Observers are concerned that oil companies, when their
contracts are secured, may continue to employ PMCs like Erinys, which has employed
14,000 guards in the Iraqi oil fields.7 Jeremy Scahill talked on Bill Moyers’
Journal of “a scenario where you have corporations with their own private
armies…a devastating development.”8

“No claim on resources” is ambiguous in another respect. At no
point has America been an important market for Iraqi oil. But since World War
Two Washington has fought, in two cases literally, to main U.S. control over
the disposition of Middle Eastern oil. A little background is necessary to explain
the importance of this distinction.

The Historical Importance to America of Dollar-Denominated Oil

For over three decades, as I have argued elsewhere, America has propped up
the dollar by ensuring that all OPEC oil payments would be dollar-denominated,
thus creating an artificial need for dollars in oil-deprived nations around
the world.9 But this system may become less relevant, as more and more oil deals,
such as China’s $10 billion oil deal with Brazil, are made outside of
the American and OPEC orbits.10

Iran has been selling its oil for euros for quite some time. A lot of its international
deals are denominated in euros. As are Russia’s, China’s and Brazil’s. Adding
Brazil to the mix strengthens the movement away from the dollar in our own hemisphere.
Brazil has been moving in this direction since 2005, Venezuela has been pushing
this since 2007.11

Most Americans are unaware that in 2003 Saddam Hussein had begun to sell Iraqi
oil for euros as well as dollars, and that Bush, two months after invading Iraq,
enacted an emergency order which, with the misleading title of “Protecting
the Development Fund for Iraq,” secretly ended Iraq’s euro sales of oil. The
U.S. press, unlike the Irish Times and the UK Financial Times,
took no notice of this.

As I wrote in The Road to 9/11,

The United States acted swiftly to ensure that oil would remain dominantly
a dollar commodity, by an executive order empowering Iraqi oil sales to be
returned from euros to dollars. Bush’s order of May 22, 2003, declaring a
“national emergency,” did not directly mention the dollar as such; but it
directed all oil earnings into a central fund, controlled by the United States,
for reconstruction projects in Iraq.12 The Financial Times, on
June 6, 2003, confirmed that Iraqi oil sales were now switched back from euros
to dollars.13

Most Americans are also unaware that on May 20, 2009 Obama explicitly renewed,
rather than canceled, Bush’s emergency order 13303 for the use of the
dollar in Iraq’s oil dealings. Once again, the language of Obama’s
emergency order concealed its implications.14

Obama’s reluctance to abandon America’s traditional Middle Eastern
oil policies has to be understood in the light of the dollar’s increasing
precariousness at this time. In recent weeks the U.S. Treasury has had to pay
more to attract foreign purchasers of its securities. The basic US Treasury
rate has risen to 5.29 percent, with indications that it will go higher.15 China,
a major purchaser of U.S. Treasury instruments, has recently switched from long-term
to short-dated U.S. Treasuries. Meanwhile it has become increasingly focused
on currency swaps with its neighbors in Southeast Asia, a development only to
be expected.16

An increase in interest rates will of course threaten the Obama program for
relief to distressed homeowners, which, as he told Congress in his February
speech, was a program to help Americans take advantage of the lower interest
rates then prevailing. It will also threaten the timeline he projected for American
economic recovery.

The Choice Between Unilateralism and Multilateralism in Central Asia

No doubt in Washington this weakness of the oil-dependent dollar is seen by
hawks as reinforcing the case for persistence in both Iraq and in Afghanistan
(where a decade ago the US firm Unocal hoped to build an oil pipeline from Turkmenistan
to Pakistan).17 But increasingly multilateralists in Washington are arguing
that America, instead of proceeding unilaterally to sustain Bush-era policies
for dominating the oil of Central Asia, could do better by reaching out to cooperation
with Russia and China.

The obvious venue for such a multilateral approach would be the Shanghai Cooperation
Organization (SCO), which will meet in Yekaterinburg on June 15-16. As U.S.
diplomat Lynn Roche has written,

The SCO grew out of the Shanghai Five founded in 1996 to coordinate border
security between five nations of Central Asia — Russia, China, Kazakhstan,
Kyrgyzstan and Tajikistan — and added Uzbekistan in 2001. It has usually
been viewed as an attempt to counterbalance NATO and therefore, suspect. That
outlook is short-sighted. Focusing on mutual security issues such as counter-terrorism
and drug trafficking in this thorny part of the world, the SCO provides a
valuable function that the West hasn’t taken advantage of so far…. It’s
the right time to enlist the SCO’s input and assistance on Afghanistan. It’s
an opportunity to work with Russia and China in a multilateral forum, hopefully
leaving some of our bilateral baggage at the door.18

SCO’s initial opposition to NATO has shifted with the deteriorating situation
in Afghanistan and Pakistan. This led a SCO meeting in May 2009 to express the
view that “the NATO coalition forces in Afghanistan must pay more attention
to the problems of Pakistan.”19 And although SCO in 2005 opposed a U.S.
military presence on the territory of its member states, Kyrgyzstan’s
expulsion of the U.S. from its base at Bishkek, scheduled for August of this
year, will be reconsidered by Kyrgyz President Bakiyev and Afghan President
Karzai at the June SCO meeting. These developments are symptomatic of the interest
the SCO countries share with America in reducing violence and narcotics in the

Even though the United States was denied SCO observer status in 2005, the United
States was invited by SCO to participate in a Moscow meeting on Afghanistan
on March 27 of this year. (It was on the sidelines of this meeting that Patrick
Moon, U.S. envoy for South and Central Asia, held talks with Mehdi Akhundzadeh,
Iran’s Deputy Foreign Minister.) Later on March 27, in Washington, Obama
announced that his new Afghanistan policy “will include a new contact
group for Afghanistan involving the United Nations, NATO allies and other partners
from the Central Asian states, the Gulf nations, Iran, Russia, India and China.”20

This outreach to SCO was more noticed abroad than in the U.S. press. But a
Council on Foreign Relations podcast commented that SCO’s

first invitation to the United States to attend its March 27 meeting in Moscow
has aroused interest about a potential partnership for stabilizing Afghanistan.
President Barack Obama announced a shift in U.S. policy emphasis on the same
day as the SCO summit, and greater consultation with Afghanistan’s neighbors
is a part of the new template.21

The new template could possibly lead to multilateral consultations on oil as
well. In 2007 SCO member states agreed to establish a “unified energy market”
for oil and gas exports, while also promoting regional development through preferential
energy agreements.22 With India, Iran, Mongolia and Pakistan attending SCO’s
next meeting as observers, SCO attendees will represent more than half of the
human race.

The so-called BRIC countries, Brazil, Russia, China, and India, will also meet
separately in Yekaterinburg in June, and Brazil will attend the SCO meetings
as well. A Goldman Sachs research paper has predicted that the four BRIC countries,
by their synergy, may become among the four most dominant economies by the year
2050.23 And as has been pointed out, BRIC also represents “the world’s
fastest and most consistently growing economies with the largest foreign currency
and gold reserves.”24

Clearly SCO has emerged as a venue for the resolution of issues in Central
Asia — including oil — with or without the United States. Thus one
can expect continuing debate in Washington as to whether America’s interests
in the region will be better served by unilateral or multilateral approaches.

In the waning days of the British 19th Century, two memorable, archetypical
novels appeared whose mythic plots could be used to express the moral dichotomy
of the British Empire. I am referring to Stevenson’s Strange Case of Dr
Jekyll and Mr Hyde
(1886) and Wilde’s The Picture of Dorian Gray (1990).
A century later they express the moral dichotomy of America as well —
evil and ugly as the wager of a preemptive war in Iraq, but still attractive
and beneficent as one of the most successful multicultural civil societies in
the world.

As Amy Chua has written in her book Day of Empire,

If America can rediscover the path that has been the secret to its success
since its founding and avoid the temptations of empirebuilding, it could remain
the world’s hyperpower in the decades to come — not a hyperpower of coercion
and military force, but a hyperpower of opportunity, dynamism, and moral force.25

America’s real strength, and ultimately its best defense, is as a civil
society to which other societies are drawn. One of the tragedies of the last
decade has been the way the democratic core of that civil society has been grossly
weakened. In the name of security, a noisome fog of secrecy has obscured the
workings of government from public view, in a declared “state of emergency”
which has been continuously renewed since 9/11 — and which Congress is
required by law to review, yet refuses to.26 Democratic institutions are like
garden plants: to prosper they need sunlight.

America’s moral dichotomy was summarized some years ago by Michael Klare
as an ongoing struggle between its Prussians and its traders. That is too simple
a dichotomy to epitomize America’s choices in Central Asia: there the
oil companies, nominally traders, have helped drive the urge for unilateral
U.S. military dominance in remote countries like Georgia and Uzbekistan.

But it catches the choice America faces in Central Asia. Either America can
struggle militarily for “full-spectrum dominance” of the region
— an absurd but official Pentagon doctrine calling for the ability “to
control any situation across the range of military operations.”27 Or it
can cooperate with other major and local powers for multilateral negotiations
of shared problems.

Peter Dale Scott, a former Canadian diplomat and English Professor at the University
of California, Berkeley, is a poet, writer, and researcher. His new book of
poems (including political poems) is Mosaic Orpheus, from McGill-Queen’s University
Press. To order it, click
Scott’s website is


1 Uri Avnery, Media With Conscience News, June 7, 2009,

2 Tom Curley, AP, Army Times, May 28, 2009,

3 Michael Winship, “The Privatization of “Obama’s War, ” Bill Moyers
Journal, June 5, 2009,

4 Scott, Road to 9/11, 188-89; citing Linda McQuaig, “Crude Dudes,” Toronto
, September 20, 2004; Jane Mayer, “Contract Sport,” New Yorker,
February 16-23, 2004.

5 David R. Baker, “Chevron reportedly in talks to tap Iraq’s oil,”
San Francisco Chronicle, March 25, 2008,

6 Bloomberg, April 6, 2009,

7 David Isenberg, “A Fistful of Contractors,” BASIC Research Report, (Erinys).

8 Michael Winship, “The Privatization of “Obama’s War, ” Bill
Moyers Journal, June 5, 2009,

9 Peter Dale Scott, The Road to 9/11: Wealth, Empire, and the Future of America
(Berkeley and Los Angeles: University of California Press, 2007), 190-91; David
E. Spiro, The Hidden Hand of American Hegemony: Petrodollar Recycling and International
(Ithaca, N.Y.: Cornell, 1999), x, 103-12, 121.

10 Stephanie Ho, “China, Brazil Sign Oil Deal,” Voice of America,
May 20, 2009,

11 Henry Porter, “A new vocabulary word: De-dollarization,” Daily
Kos, June 02, 2009,

12 Federal Register, Vol. 68, No. 102, May 28, 2003, Presidential Documents,
31931, Order 13303 of May 22, 2003.

13 “Executive Order Protecting the Development Fund for Iraq and Certain
Other Property in Which Iraq Has an Interest,” Executive Order 13303 of
May 22, 2003, Federal Register, 31931,
. The order was issued ten days after Paul Bremer arrived
in Iraq to head the Coalition Provisional Authority that would enforce it. The
Irish Times had correctly predicted the outcome on April 17, noting Washington
was making dollars the short-term currency within Iraq and putting the Iraqi
oil industry under U.S. direction: “This makes it certain that the future
sale of Iraqi oil will be in dollars, the international currency for oil transactions,
once the UN lifts anti-Saddam sanctions that provide that only the UN can approve
Iraqi oil sales” (Conor O’Clery, “Dollar to Replace Dinar,
for Now,” Irish Times, April 17, 2003).

14 White House, May 20, 2009,
“THE WHITE HOUSE, Office of the Press Secretary, For Immediate Release,

Section 202(d) of the National Emergencies Act (50 U.S.C. 1622(d)) provides
for the automatic termination of a national emergency unless, prior to the anniversary
date of its declaration, the President publishes in the Federal Register and
transmits to the Congress a notice stating that the emergency is to continue
in effect beyond the anniversary date. In accordance with this provision, I
have sent the enclosed notice to the Federal Register for publication. This
notice states that the national emergency with respect to the stabilization
of Iraq declared in Executive Order 13303 of May 22, 2003, as modified in scope
and relied upon for additional steps taken in Executive Order 13315 of August
28, 2003, Executive Order 13350 of July 29, 2004, Executive Order 13364 of November
29, 2004, and Executive Order 13438 of July 17, 2007, is to continue in effect
beyond May 22, 2009.” The VanderbiltOrbis website has called Order 13303
one of “Bush’s nine worst executive orders:”

15 Julie Haviv, “U.S. mortgage rates surge to highest level since December,”
Reuters, June 4, 2009,
“U.S. mortgage rates surged to their highest in almost six months in the
latest week, despite government efforts to keep rates at low levels that will
help the hard-hit housing market begin to recover. Interest rates on U.S. 30-year
fixed-rate mortgages soared to 5.29 percent for the week ending June 4, up from
4.91 percent in the previous week, according to a survey released on Thursday
by home funding company Freddie Mac. The higher rates reflected an increase
in yields on U.S. government bonds, which act as a benchmark for the mortgage

16 MarketWatch, June 1, 2009,
“According to U.S. Treasury data, from August 2008 to March 2009, China
shifted more of its purchases to short-dated U.S. Treasuries from long-term
agency debt. The general trend is for less buying of long-term U.S. Treasuries.
It’s as if China is giving Uncle Sam a vote of no confidence. So if China is
moving away from the dollar, what does it want to use instead? China has signed
$95 billion in swap agreements with Argentina, Indonesia, South Korea, Hong
Kong, Malaysia and Belarus in recent months. The more that countries trade in
their own currencies, the less they have to rely on the U.S. dollar. Other countries
besides China are making similar agreements.”

17 Scott, Road to 9/11, 166, 170.

18 Lynn Roche, “SCO Offers Neutral Venue for Engagement,” Atlantic
Council, March 19, 2009,

19 Vladimir Radyuhin, “Shanghai forum concerned over Pakistan’s
nuclear arms,” The Hindu, May 21, 2009,

20 “Obama Announces New Strategy for Afghanistan, Pakistan,”,
March 27, 2009,

21 Council on Foreign Relations Podcast, “The SCO Role in Afghanistan,”
March 26, 2009,

22 Andrew Scheineson, “The Shanghai Cooperation Organization ,”
Council on Foreign Relations, Backgrounder, March 24, 2009,

23 “Dreaming With BRICs: The Path to 2050,” Goldman Sachs, Global
Economics Paper No: 99,

24 Rick Rozoff, “Shanghai Cooperation Organization: Prospects For A
Multipolar World,” dandelionsalad, May 22, 2009,

25 Amy Chua, Day of Empire: How Hyperpowers Rise to Global Dominance —
and Why They Fall
(New York: Doubleday, 2007), 342.

26 Peter Dale Scott and Dan Hamburg, “To All Readers: Help Force Congress
To Observe the Law on National Emergencies!!!”, March 24,

27 Joint Vision 2020, the U.S. Department of Defense blueprint for the future,
endorsed on May 30, 2000, by General John M. Shalikashvili, chairman of the
Joint Chiefs of Staff.