Bush's World War III 'Solution'

By Scott Ritter, Truthdig
Posted on October 23, 2007, Printed on October 23, 2007
http://www.alternet.org/story/65846/

Don't worry, the White House is telling us. The world's most powerful leader was simply making a rhetorical point. At a White House press conference last week, just in case you haven't heard, President Bush informed the American people that he had told world leaders "if you're interested in avoiding World War III, it seems like you ought to be interested in preventing [Iran] from having the knowledge necessary to make a nuclear weapon." World War III. That is certainly some rhetorical point, especially coming from the man singularly most capable of making such an event reality.

Pundits have raised their eyebrows and comics are busy writing jokes, but the president's reference to Armageddon, no matter how cavalierly uttered and subsequently brushed away, suggests an alarming context. Some might note that the comment was simply an offhand response to a reporter's question, the kind of free-thinking scenario that baffles Bush so. In a way, this makes what the president said even more disturbing, since we now have an insight into the vision, and related terminology, which hovers just below the horizon in the brain of George W. Bush.

When I was a weapons inspector with the United Nations, there was a jostling that took place at the end of each day, when decisions needed to be made and authorization documents needed to be signed. In an environment of competing agendas, each of us who championed a position sought to be the "last man in," namely the person who got to imprint the executive chairman (our decision maker) with the final point of view for the day. Failure to do so could find an inspection or point of investigation sidetracked for days or weeks after the executive chairman became distracted by a competing vision. I understand the concept of "imprinting," and have seen it in action. What is clear from the president's remarks is that, far from an innocent rhetorical fumble, his words, and the context in which he employed them, are a clear indication of the imprinting which is taking place behind the scenes at the White House. If the president mentions World War III in the context of Iran's nuclear program, one can be certain that this is the very sort of discussion that is taking place in the Oval Office.

A critical question, therefore, is who was the last person to "imprint" the president prior to his public allusion to World War III? During his press conference, Bush noted that he awaited the opportunity to confer with his defense secretary, Robert Gates, and Secretary of State Condoleezza Rice following their recent meeting with Russian President Vladimir Putin. So clearly the president hadn't been imprinted recently by either of the principle players in the formulation of defense and foreign policy. The suspects, then, are quickly whittled down to three: National Security Adviser Stephen Hadley, Vice President Dick Cheney, and God.

Hadley is a long-established neoconservative thinker who has for the most part operated "in the shadows" when it comes to the formulation of Iran policy in the Bush administration. In 2001, following the 9/11 terrorist attacks on the United States, Hadley (then the deputy national security adviser) instituted what has been referred to as the "Hadley Rules," a corollary of which is that no move will be made which alters the ideological positioning of Iran as a mortal enemy of the United States. These "rules" shut down every effort undertaken by Iran to seek a moderation of relations between it and the United States, and prohibited American policymakers from responding favorably to Iranian offers to assist with the fight against al-Qaida; they also blocked the grand offer of May 2003 in which Iran outlined a dramatic diplomatic initiative, including a normalization of relations with Israel. The Hadley Rules are at play today, in an even more nefarious manner, with the National Security Council becoming involved in the muzzling of former Bush administration officials who are speaking out on the issue of Iran. Hadley is blocking Flynt Leverett, formerly of the National Security Council, from publishing an Op-Ed piece critical of the Bush administration on the grounds that any insight into the machinations of policymaking (or lack thereof) somehow strengthens Iran's hand. Leverett's article would simply underscore the fact that the Bush administration has spurned every opportunity to improve relations with Iran while deliberately exaggerating the threat to U.S. interests posed by the Iranian theocracy.

The silencing of informed critics is in keeping with Hadley's deliberate policy obfuscation. There is still no official policy in place within the administration concerning Iran. While a more sober-minded national security bureaucracy works to marginalize the hawkish posturing of the neocons, the administration has decided that the best policy is in fact no policy, which is a policy decision in its own right. Hadley has forgone the normal procedures of governance, in which decisions impacting the nation are written down, using official channels, and made subject to review and oversight by those legally and constitutionally mandated and obligated to do so. A policy of no policy results in secret policy, which means, according to Hadley himself, the Bush administration simply does whatever it wants to, regardless. In the case of Iran, this means pushing for regime change in Tehran at any cost, even if it means World War III.

But Hadley is simply a facilitator, bureaucratic "grease" to ease policy formulated elsewhere down the gullet of a national security infrastructure increasingly kept in the dark about the true intent of the Bush administration when it comes to Iran. With the Department of State and the Pentagon now considered unfriendly ground by the remaining hard-core neoconservative thinkers still in power, policy formulation is more and more concentrated in the person of Vice President Cheney and the constitutionally nebulous "Office of the Vice President."

Cheney and his cohorts have constructed a never-never land of oversight deniability, claiming immunity from both executive and legislative checks and balances. With an unchallenged ability to classify anything and everything as secret, and then claim that there is no authority inherent in government to oversee that which has been thus classified, the Office of the Vice President has transformed itself into a free republic's worst nightmare, assuming Caesar-like dictatorial authority over almost every aspect of American national security policy at home and abroad. From torture to illegal wiretapping, to arms control (or lack of it) to Iran, Dick Cheney is the undisputed center of policy power in America today. While there are some who will claim that in this time of post-9/11 crisis such a process of bureaucratic streamlining is essential for the common good, the reality is far different.

It is said that absolute power corrupts absolutely, and this has never been truer than in the case of Cheney. What Cheney is doing behind his shield of secrecy can be simply defined: planning and implementing a preemptive war of aggression. During the Nuremberg tribunal in the aftermath of World War II, the chief American prosecutor, Supreme Court Justice Robert H. Jackson, stated, "To initiate a war of aggression, therefore, is not only an international crime; it is the supreme international crime differing only from other war crimes in that it contains within itself the accumulated evil of the whole." Today, we have a vice president who articulates publicly about global conflict, and who speaks in not-so-veiled language about a looming Armageddon. If there is such a future for America and the world, let one thing be certain; World War III, as postulated by Dick Cheney, would be an elective war, and not a conflict of tragic necessity. This makes the crime even greater.

Sadly, Judge Jackson's words are but an empty shell. The global community lacks a legally binding definition of what constitutes a war of aggression, or even an act of aggression. But that isn't the point. America should never find itself in a position where it is being judged by the global community regarding the legality of its actions. Judge Jackson established a precedent of jurisprudence concerning aggression based upon American principles and values, something the international community endorsed. The fact that current American indifference to the rule of law prevents the international community from certifying a definition of criminality when it comes to aggression, whether it be parsed as "war" or simply an "act," does not change the fact that the Bush administration, in the person of Dick Cheney, is actively engaged in the committing of the "supreme [war] crime," which makes Cheney the supreme war criminal. If the world is not empowered to judge him as such, then let the mantle of judgment fall to the American people. Through their elected representatives in Congress, they should not only bring this reign of unrestrained abuse of power to an end, but ensure that such abuse never again is attempted by an American official by holding to account, to the full extent of the law, those who have trampled on the Constitution of the United States and the ideals and principles it enshrines.

But what use is the rule of law, even if fairly and properly implemented, if in the end he who is entrusted with executive power takes his instructions from an even higher authority? President Bush's relationship with "God" (or that which he refers to as God) is a matter of public record. The president himself has stated that "God speaks through me" (he acknowledged this before a group of Amish in Pennsylvania in the summer of 2004). Exactly how God speaks through him, and what precisely God says, is not a matter of speculation. According to Palestinian President Mahmoud Abbas, President Bush told him and others that "God told me to strike at al-Qaida and I struck them, and then he instructed me to strike at Saddam, which I did." As such, at least in the president's mind, God has ordered Bush to transform himself into a modern incarnation of St. Michael, smiting all that is evil before him. "We are in a conflict between good and evil. And America will call evil by its name," the president told West Point cadets in a speech in 2002.

The matter of how and when an individual chooses to practice his faith, or lack thereof, is a deeply personal matter, one which should be kept from public discourse. For a president to so openly impose his personal religious beliefs, as Bush has done, on American policy formulation and implementation represents a fundamental departure from not only constitutional intent concerning the separation of church and state but also constitutional mandate concerning the imposition of checks and balances required by the American system of governance. The increasing embrace by this president of the notion of a unitary executive takes on an even more sinister aspect when one realizes that not only does the Bush administration seek to nullify the will of the people through the shackling of the people's representatives in Congress, but that the president has forgone even the appearance of constitutional constraint by evoking the word of his personal deity, as expressed through his person, as the highest form of consultation on a matter as serious as war. As such, the president has made his faith, and how he practices it, a subject not only of public curiosity but of national survival.

That George W. Bush is a born-again Christian is not a national secret. Neither is the fact that his brand of Christianity, evangelicalism, embraces the notion of the "end of days," the coming of the Apocalypse as foretold (so they say) in the Book of Revelations and elsewhere in the Bible. President Bush's frequent reference to "the evil one" suggests that he not only believes in the Antichrist but actively proselytizes on the Antichrist's physical presence on Earth at this time. If one takes in the writing and speeches of those in the evangelical community today concerning the "rapture," the numerous references to the current situation in the Middle East, especially on the events unfolding around Iran and its nuclear program, make it very clear that, at least in the minds of these evangelicals, there is a clear link between the "end of days" prophesy and U.S.-Iran policy. That James Dobson, one of the most powerful and influential evangelical voices in America today, would be invited to the White House with like-minded clergy to discuss President Bush's Iran policy is absurd unless one makes the link between Bush's personal faith, the extreme religious beliefs of Dobson and the potential of Armageddon-like conflict (World War III). At this point, the absurd becomes unthinkable, except it is all too real.

Thomas Jefferson, one of our nation's greatest founders, made the separation of church and state an underlying principle upon which the United States was built. This separation was all-inclusive, meaning that not only should government stay out of religion, but likewise religion should be excluded from government. "I never submitted the whole system of my opinions to the creed of any party of men whatever in religion, in philosophy, in politics, or in anything else where I was capable of thinking for myself," Jefferson wrote in a letter to Francis Hopkinson in 1789. "Such an addiction is the last degradation of a free and moral agent." If only President Bush would abide by such wisdom, avoiding the addictive narcotic of religious fervor when carrying out the people's business. Instead, he chooses as his drug one which threatens to destroy us all in a conflagration derived not from celestial intervention but individual ignorance and arrogance. Again Jefferson, in a letter written in 1825: "It is between fifty and sixty years since I read it [the Apocalypse], and I then considered it merely the ravings of a maniac, no more worthy nor capable of explanation than the incoherences of our own nightly dreams."

Nightmares, more aptly, unless something can be done to change the direction Bush and Dobson are taking us. The problem is that far too many Americans openly espouse not only the faith of George W. Bush but also the underlying philosophy which permits this faith to be intertwined with the governance of the land. "God bless America" has become a rallying cry for this crowd, and those too ignorant and/or afraid to speak out in opposition. If this statement has merit, what does it say for the 6.8 billion others in the world today who are not Americans? That God condemns them? The American embrace of divine destiny is not unique in history (one only has to recall that the belt buckles of the German army during World War II read "God is with us"). But for a nation born of the age of reason to collectively fall victim to the most base of fear-induced theology is a clear indication that America currently fails to live up to its founding principles. Rather than turning to Dobson and his ilk for guidance in these troubled times, Americans would be well served to reflect on President Abraham Lincoln's second inaugural address, delivered in the middle of a horrific civil war which makes all of the conflict America finds itself in today pale in comparison:

"Both [North and South] read the same Bible and pray to the same God, and each invokes His aid against the other.... The prayers of both could not be answered. That of neither has been answered fully. The Almighty has His own purposes.... [T]hat He gives to both North and South this terrible war as the woe due to those by whom the offense came, shall we discern therein any departure from those divine attributes which the believers in a living God always ascribe to Him?"

God is not on our side, or the side of any single nation or people. To believe such is the ultimate expression of national hubris. To invoke such, if one is a true believer, is to embrace sacrilege and heresy. This, of course, is an individual right, granted as an extension of religious freedom. But it is not a collective right, nor is it a right born of governance, especially in a land protected by the separation of church and state.

The issue of Iran is a national problem which requires a collective debate, discussion and dialogue inclusive of all the facts, and stripped of all ideology and theocracy which would seek to deny reasoned thought conducted within a framework of accepted laws and ideals. It is grossly irresponsible of an American president to invoke the imagery of World War III without first sharing with the American people the framework of thought that produced such a comparison. Such openness will not be forthcoming from this administration or president. Not in the form of Stephen Hadley's policy of no policy, designed with intent to avoid and subvert both bureaucratic and legislative process and oversight, or Dick Cheney's secret government within a government, operating above and beyond the law and in a manner which violates both legal and moral norms and values, and certainly not in the president's own private conversations with "God," either directly or through the medium of lunatic evangelicals who embrace the termination of all we stand for, and especially the future of our next generation, in a fiery holocaust born from the fraudulent writings of centuries past.

The processes which compelled George W. Bush to speak of a World War III are intentionally not transparent to the American people. The president has much to explain, and it would be incumbent upon every venue of civic and public pressure to demand that such an explanation be forthcoming in the near future. The stakes regarding Iran have always been high, but never more so than when a nation's leader invokes the end of days as a solution.

A former Marine Corps intelligence officer, Scott Ritter was a chief inspector for the United Nations Special Commission in Iraq from 1991 until 1998. He is the author of several books; "Target Iran," with a new afterword by the author, was recently released in paperback by Nation Books.

© 2007 Independent Media Institute. All rights reserved.
View this story online at: http://www.alternet.org/story/65846/

From Afghanistan to Iraq: Connecting the Dots with Oil

By Richard W. Behan, AlterNet
Posted on February 5, 2007, Printed on February 5, 2007
http://www.alternet.org/story/47489/

In the Caspian Basin and beneath the deserts of Iraq, as many as 783 billion barrels of oil are waiting to be pumped. Anyone controlling that much oil stands a good chance of breaking OPEC's stranglehold overnight, and any nation seeking to dominate the world would have to go after it.

The long-held suspicions about George Bush's wars are well-placed. The wars in Afghanistan and Iraq were not prompted by the terrorist attacks in New York and Washington. They were not waged to spread democracy in the Middle East or enhance security at home. They were conceived and planned in secret long before September 11, 2001 and they were undertaken to control petroleum resources.

The "global war on terror" began as a fraud and a smokescreen and remains so today, a product of the Bush Administration's deliberate and successful distortion of public perception. The fragmented accounts in the mainstream media reflect this warping of reality, but another more accurate version of recent history is available in contemporary books and the vast information pool of the Internet. When told start to finish, the story becomes clear, the dots easier to connect.

Both appalling and masterful, the lies that led us into war and keep us there today show the people of the Bush Administration to be devious, dangerous and far from stupid.

The following is an in-depth look at the oil wars, the events leading up to them, and the players who made them possible.

Iraq

The Project for a New American Century, a D.C.-based political think tank funded by archconservative philanthropies and founded in 1997, is the source of the Bush Administration's imperialistic urge for the U.S. to dominate the world. Our nation should seek to achieve a "...benevolent global hegemony," according to William Kristol, PNAC's chairman. The group advocates the novel and startling concept of "pre-emptive war" as a means of doing so.

On January 26, 1998, the PNAC, sent a letter to President William Clinton urging the military overthrow of Saddam Hussein in Iraq. The dictator, the letter alleged, was a destabilizing force in the Middle East, and posed a mortal threat to "...the safety of American troops in the region, of our friends and allies like Israel and the moderate Arab states, and a significant portion of the world's oil supply..." The subjugation of Iraq would be the first application of "pre-emptive war."

The unprovoked, full-scale invasion and occupation of another country, however, would be an unequivocal example of "the use of armed force by a state against the sovereignty, territorial integrity, or political independence of another state." That is the formal United Nations definition of military aggression, and a nation can choose to launch it only in self-defense. Otherwise it is an international crime.

President Clinton did not honor the PNAC's request.

But sixteen members of the Project for a New American Century would soon assume prominent positions in the Administration of George W. Bush, including Dick Cheney, Lewis "Scooter" Libby, Donald Rumsfeld, Paul Wolfowitz, Richard Armitage and John Bolton.

The "significant portion of the world's oil supply" was of immediate concern, because of the commanding influence of the oil industry in the Bush Administration. Beside the president and vice president, eight cabinet secretaries and the national security advisor had direct ties to the industry, and so did 32 others in the departments of Defense, State, Energy, Agriculture, Interior, and the Office of Management and Budget.

Within days of taking office, President Bush appointed Vice President Cheney to chair a National Energy Policy Development Group. Cheney's "Energy Task Force" was composed of the relevant federal officials and dozens of energy industry executives and lobbyists, and it operated in tight secrecy. (The full membership has never been revealed, but Enron's Kenneth Lay is known to have participated, and the Washington Post reported that Exxon-Mobil, Conoco, Shell, and BP America did, too.)

During his second week in office, President Bush convened the first meeting of his National Security Council. It was a triumph for the PNAC. In just one hour-long meeting, the new Bush Administration turned upside down the long-standing focus of U.S. foreign policy in the Middle East. Over Secretary of State Colin Powell's objections, the goal of reconciling the Israel-Palestine conflict was abandoned, and the overthrow of Saddam Hussein was set as the new priority. Ron Suskind's book, The Price of Loyalty, describes the meeting in detail.

The Energy Task Force wasted no time, either. Within three weeks of its creation, the group was poring over maps of the Iraqi oilfields, pipelines, tanker terminals, and oil exploration blocks. It studied an inventory of "Foreign Suitors for Iraqi Oilfield Contracts" -- dozens of oil companies from 30 different countries, in various stages of negotiations for exploring and developing Iraqi crude.

Not a single U.S. oil company was among the "suitors," and that was intolerable, given a foreign policy bent on global hegemony. The National Energy Policy document, released May 17, 2001 concluded this: "By any estimation, Middle East oil producers will remain central to world security. The Gulf will be a primary focus of U.S. international energy policy."

That rather innocuous statement can be clarified by a top-secret memo dated February 3, 2001 to the staff of the National Security Council. Cheney's group, the memo said, was "melding" two apparently unrelated areas of policy: "the review of operational policies toward rogue states," such as Iraq, and "actions regarding the capture of new and existing oil and gas fields." The memo directed the National Security Council staff to cooperate fully with the Energy Task Force as the "melding" continued. National security policy and international energy policy would be developed as a coordinated whole. This would prove convenient on September 11, 2001, still seven months in the future.

The Bush Administration was drawing a bead on Iraqi oil long before the "global war on terror" was invented. But how could the "capture of new and existing oil fields" be made to seem less aggressive, less arbitrary, less overt?

During April of 2002, almost a full year before the invasion, the State Department launched a policy-development initiative called "The Future of Iraq Project" to accomplish this. The "Oil and Energy Working Group" provided the disguise for "capturing" Iraqi oil. Iraq, it said in its final report, "should be opened to international oil companies as quickly as possible after the war ... the country should establish a conducive business environment to attract investment in oil and gas resources."

Capture would take the form of investment, and the vehicle for doing so would be the "production sharing agreement."

Under production sharing agreements, or PSAs, oil companies are granted ownership of a "share" of the oil produced, in exchange for investing in development costs, and the contracts are binding for up to 30 years. What would happen, though, if the companies' investments were only minimal, but their shares of the production were obscenely, disproportionately large?

This is hardwired. According to a UK Platform article titled "Crude Designs," production sharing agreements have now been drafted in Baghdad covering 75 percent of the undeveloped Iraqi fields, and the oil companies, waiting to sign the contracts, will earn as much 162 percent on their investments. And the "foreign suitors" are not quite so foreign now: The players on the inside tracks are Exxon-Mobil, Chevron, Conoco-Phillips, BP-Amoco and Royal Dutch-Shell.

The use of PSAs will cost the Iraqi people hundreds of billions of dollars in just the first few years of the "investment" program. They would be far better off keeping in place the structure Iraq has relied upon since 1972: a nationalized oil industry leasing pumping rights to the oil companies, who then pay royalties to the central government. That is how it is done today in Saudi Arabia and the other OPEC countries.

Production sharing agreements, heavily favored by the oil companies, were specified by George Bush's State Department. Paul Bremer's Coalition Provisional Authority drafted an oil law privatizing the oil sector, and American oil interests have lobbied in Baghdad ever since then for the PSAs. Apparently successfully: The Oil Committee headed by Deputy Prime Minister Barham Salih is said currently to be "leaning" toward them.

With the capture of Iraqi oil resources prospectively disguised, the Halliburton company was then hired, secretly, to design a fire suppression strategy for the Iraqi oil fields. If oil wells were to be torched during the upcoming war (as Saddam did in Kuwait in 1991), the Bush Administration would be prepared to extinguish them rapidly. The contract with Halliburton was signed in the fall of 2002. Congress had yet to authorize the use of force in Iraq.

So a line of dots begins to point at Iraq, though nothing illegal or unconstitutional has yet taken place. We are still in the policy-formulation stage, but two "seemingly unrelated areas of policy" -- national security policy and international energy policy -- have become indistinguishable.

Afghanistan

The strategic location of Afghanistan can scarcely be overstated. The Caspian Basin contains up to $16 trillion worth of oil and gas resources, and the most direct pipeline route to the richest markets is through Afghanistan.

After the fall of the Soviet Union, the first western oil company to take action in the Basin was the Bridas Corporation of Argentina. It acquired production leases and exploration contracts in the region, and by November of 1996 had signed an agreement with General Dostum of the Northern Alliance and with the Taliban to build a pipeline across Afghanistan.

Not to be outdone, the American company Unocal (aided by an Arabian company, Delta Oil) fought Bridas at every turn. Unocal wanted exclusive control of the trans-Afghan pipeline and hired a number of consultants in its conflict with Bridas: Henry Kissinger, Richard Armitage (now Deputy Secretary of State in the Bush Administration), Zalmay Khalilzad (a signer of the PNAC letter to President Clinton) and Hamid Karzai.

Unocal wooed Taliban leaders at its headquarters in Texas, and hosted them in meetings with federal officials in Washington, D.C.

Unocal and the Clinton Administration hoped to have the Taliban cancel the Bridas contract, but were getting nowhere. Finally, Mr. John J. Maresca, a Unocal Vice President, testified to a House Committee of International Relations on February 12, 1998, asking politely to have the Taliban removed and a stable government inserted. His discomfort was well placed.

Six months later terrorists linked to Osama bin Laden bombed the U.S. embassies in Kenya and Tanzania, and two weeks after that President Clinton launched a cruise missile attack into Afghanistan. Clinton issued an executive order on July 4, 1999, freezing the Taliban's U.S.-held assets and prohibiting further trade transactions with the Taliban.

Mr. Maresca could count that as progress. More would follow.

Immediately upon taking office, the new Bush Administration actively took up negotiating with the Taliban once more, seeking still to have the Bridas contract vacated, in exchange for a tidy package of foreign aid. The parties met three times, in Washington, Berlin, and Islamablad, but the Taliban wouldn't budge.

Behind the negotiations, however, planning was underway to take military action if necessary. In the spring of 2001 the State Department sought and gained concurrence from both India and Pakistan to do so, and in July of 2001, American officials met with Pakistani and Russian intelligence agents to inform them of planned military strikes against Afghanistan the following October. A British newspaper told of the U.S. threatening both the Taliban and Osama bin Laden -- two months before 9/11 -- with military strikes.

According to an article in the UK Guardian, State Department official Christina Rocca told the Taliban at their last pipeline negotiation in August of 2001, just five weeks before 9/11, "Accept our offer of a carpet of gold, or we bury you under a carpet of bombs."

The Great Game and Its Players

The geostrategic imperative of reliable oil supplies has a long history, arguably beginning with the British Navy in World War I. First Lord of the Admiralty Winston Churchill repowered the British fleet -- from coal (abundant in the UK) to oil (absent in the UK), and thus began the Great Game: jockeying by the world powers for the strategic control of petroleum. (Churchill did this to replace with oil pumps the men needed to shovel coal -- a large share of the crew -- so they could man topside battle stations instead.) Iraq today is a British creation, formed almost a century ago to supply the British fleet with fuel, and it is still a focal point of the Game.

The players have changed as national supremacy has changed, as oil companies have morphed over time, and as powerful men have lived out their destinies.

Among the major players today are the Royal family of Saudi Arabia and the Bush family of the state of Maine (more recently of Texas). And they are closely and intimately related. The relationship goes back several generations, but it was particularly poignant in the first Gulf War in 1990-91, when the U.S. and British armed forces stopped Saddam Hussein in Kuwait, before his drive reached the Arabian oil fields. Prime Minister John Major of the UK, and President George H.W. Bush became the much esteemed champions of the Arabian monarchy, and James Baker, Bush's Secretary of State, was well regarded, too. (Years earlier, Mr. Baker and a friend of the royal family's had been business partners, in building a skyscraper bank building in Houston.)

The Carlyle Group: Where the Players Meet to Profit

After President Bush, Secretary Baker, and Prime Minister Major left office, they all became active participants and investors in the Carlyle Group, a global private equity investment firm comprised of dozens of former world leaders, international business executives (including the family of Osama bin Laden); former diplomats, and high-profile political operatives from four U.S. Administrations. For years, Carlyle would serve as the icon of the Bush/Saudi relationship.

Carlyle, with its headquarters just six blocks from the White House, invests heavily in all the industries involved in the Great Game: the defense, security, and energy industries, and it profits enormously from the Afghan and Iraqi wars.

In the late 1980s, Carlyle's personal networking brought together George W. Bush, the future 43rd U.S. president, and $50,000 of financial backing for his Texas oil company, Arbusto Energy. The investor was Salem bin Laden (half-brother of Osama bin Laden) who managed the Carlyle investments of the Saudi bin Laden Group. (After the tragedy of 9/11, by mutual consent, the bin Laden family and Carlyle terminated their business dealings.) George Bush left Carlyle in 1992 to run for governor of Texas.

Ex-President Bush, Ex-Prime Minister Major, and Ex Secretary Baker, in the 1990's, were Carlyle's advance team, scouring the world for profitable investments and investors. In Saudi Arabia they met with the royal family, and with the two wealthiest, non-royal families -- the bin Ladens and the bin Mahfouzes.

Khalid bin Mahfouz was prominent in Delta Oil, Unocal's associate in the Afghan pipeline conflict. He was later accused of financing al Qaeda, and named in a trillion dollar lawsuit brought by the families of 9/11 victims. (It was Mr. bin Mahfouz who had been Mr. Baker's business associate in Houston.)

Carlyle retained James Baker's Houston law firm, Baker-Botts, and Baker himself served as Carlyle Senior Counselor from 1993 until 2005. (Other clients of Baker-Botts: Exxon-Mobil, Chevron, Texaco, Shell, Amoco, Conoco-Phillips, Halliburton, and Enron.)

Mr. Baker has long been willing to put foremost the financial advantage of himself, his firm, and his friends, often at the expense of patriotism and public service. As President Reagan's Secretary of the Treasury, he presided over the savings-and-loan scandal, in which S&L executives like Charles Keating and the current President's brother Neil Bush handed the American taxpayers a bill to pay, over a 40-year period, of $1.2 trillion. His law firm willingly took on the defense of Prince Sultan bin Abdul Azis, the Saudi Defense Minister sued by the families of 9/11 victims for complicity in the attacks.

We will encounter Mr. Baker again soon.

September 11, 2001

In September of 2000, the Project for a New American Century published a report, "Rebuilding America's Defenses." It advocated pre-emptive war once again, but noted its acceptance would be difficult in the absence of "some catastrophic and catalyzing event, like a new Pearl Harbor."

President Bush formally established the PNAC's prescription for pre-emptive, premeditated war as U.S. policy when he signed a document entitled "The National Security Strategy of the United States of America" early in his first term.

Still nothing illegal or unconstitutional had been done.

But the rationale and the planning for attacking both Afghanistan and Iraq were in place. The preparations had all been done secretly, wholly within the executive branch. The Congress was not informed until the endgame, when President Bush, making his dishonest case for the "war on terror" asked for and was granted the discretion to use military force. The American people were equally uninformed and misled. Probably never before in our history was such a drastic and momentous action undertaken with so little public knowledge or Congressional oversight: the dispatch of America's armed forces into four years of violence, at horrendous costs in life and treasure.

Then a catastrophic event took place. A hijacked airliner probably en route to the White House crashes in Pennsylvania, the Pentagon was afire, and the Twin Towers of the World Trade Center were rubble.

In the first hours of frenetic response, fully aware of al Qaeda's culpability, both President Bush and Secretary Rumsfeld sought frantically to link Saddam Hussein to the attacks, as we know from Richard Clarke's book, Against All Enemies. They anxiously waited to proceed with their planned invasion of Iraq.

If the Bush Administration needed a reason to proceed with their invasions, they could not have been handed a more fortuitous and spectacular excuse, and they played their hand brilliantly.

9/11 was a shocking event of unprecedented scale, but it was simply not an invasion of national security. It was a localized criminal act of terrorism, and to compare it, as the Bush Administration immediately did, to Pearl Harbor was ludicrous: The hijacked airliners were not the vanguard of a formidable naval armada, an air force, and a standing army ready to engage in all out war, as the Japanese were prepared to do and did in 1941.

By equating a criminal act of terrorism with a military threat of invasion, the Bush Administration consciously adopted fear mongering as a mode of governance. It was an extreme violation of the public trust, but it served perfectly their need to justify warfare.

As not a few disinterested observers noted at the time, international criminal terrorism is best countered by international police action, which Israel and other nations have proven many times over to be effective. Military mobilization is irrelevant. It has proven to be counterproductive.

Why, then, was a "war" declared on "terrorists and states that harbor terrorists?"

The pre-planned attack on Afghanistan, as we have seen, was meant to nullify the contract between the Taliban and the Bridas Corporation. It was a matter of international energy policy. It had nothing to do, as designed, with apprehending Osama bin Laden -- a matter of security policy.

But the two "seemingly unrelated areas of policy" had been "melded," so here was an epic opportunity to bait-and-switch. Conjoining the terrorists and the states that harbored them made "war" plausible, and the Global War on Terror was born: It would be necessary to overthrow the Taliban as well as to bring Osama bin Laden to justice.

(In retrospect, the monumental fraud of the "war on terror" is crystal clear. In Afghanistan the Taliban was overthrown instead of bringing the terrorist Osama bin Laden to justice, and in Iraq there were no terrorists at all. But Afghanistan and Iraq are dotted today with permanent military bases guarding the seized petroleum assets.)

On October 7, 2001 the carpet of bombs is unleashed over Afghanistan. Hamid Karzai, the former Unocal consultant, is installed as head of an interim government. Subsequently he is elected President of Afghanistan, and welcomes the first U.S. envoy -- Mr. John J. Maresca, the Vice President of the Unocal Corporation who had implored Congress to have the Taliban overthrown. Mr. Maresca was succeeded by Mr. Zalmay Khalilzad -- also a former Unocal consultant. (Mr. Khalilzad has since become Ambassador to Iraq, and has now been nominated to replace John Bolton, his PNAC colleague, as the ambassador to the UN.)

With the Taliban banished and the Bridas contract moot, Presidents Karzai of Afghanistan and Musharraf of Pakistan meet on February 8, 2002, sign an agreement for a new pipeline, and the way forward is open for Unocal/Delta once more.

The Bridas contract was breached by U.S. military force, but behind the combat was Unocal. Bridas sued Unocal in the U.S. courts for contract interference and won, overcoming Richard Ben Veniste's law firm in 2004. That firm had multibillion-dollar interests in the Caspian Basin and shared an office in Uzbekistan with the Enron Corporation. In 2004, Mr. Ben Veniste was serving as a 9/11 Commissioner.

About a year after the Karzai/Musharraf agreement was signed, an article in the trade journal "Alexander's Gas and Oil Connections" described the readiness of three US federal agencies to finance the prospective pipeline: the U.S. Export/Import Bank, the Trade and Development Agency, and the Overseas Private Insurance Corporation. The article continued, "...some recent reports ... indicated ... the United States was willing to police the pipeline infrastructure through permanent stationing of its troops in the region." The article appeared on February 23, 2003.

The objective of the first premeditated war was now achieved. The Bush Administration stood ready with financing to build the pipeline across Afghanistan, and with a permanent military presence to protect it.

Within two months President Bush sent the armed might of America sweeping into Iraq.

Then came the smokescreen of carefully crafted deceptions. The staging of the Jessica Lynch rescue. The toppling of the statue in Baghdad. Mission accomplished. The orchestrated capture, kangaroo court trial, and hurried execution of Saddam Hussein. Nascent "democracy" in Iraq. All were scripted to burnish the image of George Bush's fraudulent war.

The smokescreen includes the cover-up of 9/11. Initially and fiercely resisting any inquiry at all, President Bush finally appoints a 10-person "9/11 Commission."

The breathtaking exemptions accorded President Bush and Vice President Cheney in the inquiry rendered the entire enterprise a farce: They were "interviewed" together, no transcription of the conversation was allowed, and they were not under oath. The Commission report finally places the blame on "faulty intelligence."

Many of the 10 commissioners, moreover, were burdened with stunning conflicts of interest -- Mr. Ben Veniste, for example -- mostly by their connections to the oil and defense industries. The Carlyle Group contributed to Commissioner Tim Roemer's political campaigns. Commission Chairman Thomas Kean was a Director of Amerada Hess, which had formed a partnership with Delta Oil, the Arabian company of Khalid bin Mahfouz, and that company was teamed with Unocal in the Afghan pipeline project. Vice-Chairman Lee Hamilton serves on the board of Stonebridge International consulting group, which is advising Gulfsands Petroleum and Devon Energy Corporation about Iraqi oil opportunities.

The apparent manipulation of pre-war intelligence is not addressed by the 9/11 Commission, the veracity of the Administration's lies and distortions is assumed without question, and the troubling incongruities of 9/11 are ignored: The theories of controlled demolition, the prior short-selling of airline stock, the whole cottage industry of skepticism.

The doubters and critics of 9/11 are often dismissed as conspiracy crazies, but you needn't claim conspiracy to be skeptical. Why did both President Bush and Vice President Cheney pressure Senate Majority Leader Tom Daschle to forego any investigation at all? Failing in that, why did the President then use "Executive Privilege" so often to withhold and censor documents? Why did the White House refuse to testify under oath? Why the insistence on the loopy and unrecorded Oval Office interview of Mr. Bush and Mr. Cheney simultaneously?

There is much we don't know about 9/11.

The Iraq Study Group

Viewing the carnage in Iraq, and seeking desperately to find a way out of it, the U.S. Congress appointed on March 15, 2006 the Iraq Study Group. It was also called the Baker-Hamilton Commission after its co-chairmen, the peripatetic problem-solvers James Baker and Lee Hamilton. It was charged with assessing the situation in Iraq and making policy recommendations.

The Commission assessed the situation as "grave and deteriorating" and recommended substantive changes in handling it: draw down the troop levels and negotiate with Syria and Iran. These recommendations were rejected out of hand by the Bush Administration, but those about the oil sector could hardly have been more pleasing.

The Commission's report urged Iraqi leaders to "... reorganize the national industry as a commercial enterprise." That sounds like code for privatizing the industry (which had been nationalized in 1972.) In case that wasn't clear enough, the Commission encouraged "...investment in Iraq's oil sector by the international energy companies." That sounds like code for Exxon/Mobil, Chevron/Texaco, Conoco/Phillips, BP/Amoco and Royal Dutch Shell. The Commission urged support for the World Bank's efforts to "ensure that best practices are used in contracting." And that sounds like code for Production Sharing Agreements.

Mr. Baker is a clever and relentless man. He will endorse pages and pages of changes in strategy and tactics -- but leave firmly in place the one inviolable purpose of the conflict in Iraq: capturing the oil.

A Colossus of Failure

The objectives of the oil wars may be non-negotiable, but that doesn't guarantee their successful achievement.

The evidence suggests the contrary.

As recently as January of 2005, the Associated Press expected construction of the Trans Afghan Pipeline to begin in 2006. So did News Central Asia. But by October of 2006, NCA was talking about construction "... as soon as there is stability in Afghanistan."

As the Taliban, the warlords, and the poppy growers reclaim control of the country, clearly there is no stability in Afghanistan, and none can be expected soon.

Unocal has been bought up by the Chevron Corporation. The Bridas Corporation is now part of BP/Amoco. Searching the companies' websites for "Afghanistan pipeline" yields, in both cases, zero results. Nothing is to be found on the sites of the prospective funding agencies. The pipeline project appears to be dead.

The Production Sharing Agreements for Iraq's oil fields cannot be signed until the country's oil policies are codified in statute. That was supposed to be done by December of 2006, but Iraq is in a state of chaotic violence. The "hydrocarbon law" is struggling along -- one report suggests it may be in place by March -- so the signing of the PSA's will be delayed at least that long.

The U.S. and British companies that stand to gain so much -- Exxon/Mobil, Chevron/Texaco, Concoco/Phillips, BP/Amoco and Royal Dutch Shell -- will stand a while longer. They may well have to stand down.

On October 31, 2006 the newspaper China Daily reported on the visit to China by Iraqi Oil Minister Hussein Shahristani. Mr. Shahristani, the story said, "welcomed Chinese oil companies to participate in the reconstruction of the Iraqi oil industry." That was alarming, but understated.

Stratfor, the American investment research service, was more directly to the point, in a report dated September 27, 2006 (a month before Minister Shahristani's visit, so it used the future tense). The Minister "... will talk to the Chinese about honoring contracts from the Saddam Hussein era. ... This announcement could change the face of energy development in the country and leave U.S. firms completely out in the cold."

The oil wars are abject failures. The Project for a New American Century wanted, in a fantasy of retrograde imperialism, to remove Saddam Hussein from power. President George Bush launched an overt act of military aggression to do so, at a cost of more than 3,000 American lives, hundreds of thousands of Iraqi lives, and half a trillion dollars. In the process he has exacerbated the threats from international terrorism, ravaged the Iraqi culture, ruined their economy and their public services, sent thousands of Iraqis fleeing their country as refugees, created a maelstrom of sectarian violence, dangerously destabilized the Middle East, demolished the global prestige of the United States, and defamed the American people.

Richard W. Behan lives and writes on Lopez Island, off the northwest coast of Washington state. He is working on a new book, To Provide Against Invasions: Corporate Dominion and America's Derelict Democracy. He can be reached at rwbehan@rockisland.com. (This essay is deliberately not copyrighted: It may be reproduced without restriction.)

© 2007 Independent Media Institute. All rights reserved.
View this story online at: http://www.alternet.org/story/47489/

Future of Iraq: The spoils of war

How the West will make a killing on Iraqi oil riches

By Danny Fortson, Andrew Murray-Watson and Tim Webb

Published: 07 January 2007

Beating Around the Bush By the Bourse

bourse / /n. (also Bourse) a stock exchange, esp. in Europe. ~Canadian Oxford Dictionary

Only bimbos believed Bush when he said it was WMD's that made him attack, invade, occupy and massacre Iraq. Most of us thought it was to steal Iraq's oil, but we were only partly right. What totally terrorized the tyrannical Texan tycoon was when Saddam played the oil bourse card in November, 2000. When Saddam started selling Iraqi oil in euro's, he jeopardized greenback hegemony as the world's supreme foreign exchange transaction currency. If this brilliant idea catches on, it will trigger the total collapse of the USA economy. The oil grab is a sideshow. The main feature is the oil bourse.

The Neocon global domination agenda is engendered by the denomination of global oil transactions in greenbacks. America prints out the bucks that are required for the purchase of oil, and the world has to produce stuff they can sell to get the bucks they need to buy oil. Printing Monopoly 'fiat' money only costs America the paper and green ink, so the USA dollar has been fattened on oil-enriched chicken feed since Tricky Dick delinked the buck from the bullion. The oil bourse scheme could so seriously setback US suzerainty that Saddam got stomped to smithereens. Krassimir Petrov, who teaches international finance in Bulgaria's American University, warns "should the Iranian Oil Bourse gain momentum, it will be eagerly embraced by major economic powers and will precipitate the demise of the dollar." Saddam was just the first wavelet in the coming tsunami. On March 20, 2006, Iran will start selling oil in euros.

Here's what the Bush cabal's Neocon Global Hegemony Manifesto, written in September 2000, has to say:

"At present the United States faces no global rival. America's grand strategy should be to preserve and extend this advantageous position as far into the future as possible. There are, however, potentially powerful states [read Europe, China, India] who are dissatisfied with the current situation and who wish to change it, if they can, in directions that would endanger the relatively peaceful, prosperous and free condition the world [read USA] enjoys today. Up to now, they have been deterred from doing so by the capability and global presence of American military power [read terrorist menace]. But as that power declines, [read currently being defeated in Iraq] relatively and absolutely, the happy conditions that follow from it will be inevitably undermined."

The latest Neocon ramp-up rhetoric for attacking Iran is a dreary fearmongering rerun of the same old lies that launched Bush's disastrous Iraq-attack. The same old WMD drumbeat is now rattling to attack and destroy Ahmadinejad's nascent civilian nuclear program. Bush will fail to get IAEA support to forward his Iran-sanctions feint to the UN Security Council, so there won't be any UN 'coalition of the willing.' Russia and China aren't interested, and Bush's Ambassador to India, David Mulford, has just ruined the nuclear carrot that Bush so carefully waved at India to get them to toe the US line. India has its nukes already, and hooking up the pipeline with Iran is more to their interest. This all makes a preemptive American or Israeli attack all the more likely, and the Neocon's insane desperation is such, that such an attack might just go nuclear.

Bush has stated that "All options are on the table.The use of force is the last option for any president. You know we have used force in the recent past to secure our country." Freaky Dick's office has tasked STRATCOM to draw up a plan which includes a large-scale air assault on Iran using conventional and tactical nuclear weapons. Condoleeza Rice says that "time had run out for talking to Tehran." John Bolton says that Bush "has made clear that a nuclear Iran is not acceptable." Newt Gingrich, who won't rule out a run for the presidency in '08, said, "If we don't have a very serious systematic program to replace the government of Iran, we're going to live in an unbelievably dangerous world. This is 1935 and Mahmoud Ahmadinejad is as close to Adolf Hitler as we've seen." Israel's Defense Minister Shaul Mofaz said that Israel was preparing to protect itself if international diplomatic efforts failed to convince Iran to give up its nuclear program.

When the Neocons conquered the White House in 2000, the U.S. surplus was approximately $5 trillion. That's all gone and the domestic deficit now stands at somewhere around $500 billion. The world's largest debtor nation owes $8,193,150,090,487.56 as of this morning, and the American debt is mushrooming by over a billion a day. Foreigners hold 48 percent of the U.S. Treasury bond market, 24 percent of the U.S. corporate bond market and 20 percent of all U.S. corporations. With "W" walloping US whack like that, why in the world would anyone want dollars?

Here's how the Neocons hoodwinked and swindled the world:

From the Third World Traveler website, Sohan Sharma, Sue Tracy and Surinder Kumar wrote,

"Oil can be bought from OPEC only if you have dollars. Non-oil producing countries, such as most underdeveloped countries and Japan, first have to sell their goods to earn dollars with which they can purchase oil. If they cannot earn enough dollars, then they have to borrow dollars from the WB/IMF, which have to be paid back, with interest, in dollars. This creates a great demand for dollars outside the U.S. In contrast, the U.S. only has to print dollar bills in exchange for goods. Even for its own oil imports, the U.S. can print dollar bills without exporting or selling its goods. For instance, in 2003 the current U.S. account deficit and external debt has been running at more than $500 billion. Put in simple terms, the U.S. will receive $500 billion more in goods and services from other countries than it will provide them. The imported goods are paid by printing dollar bills, i.e., "fiat" dollars."

Here's the Neocons worst nightmare:

China has more than $800 billion reserved in a giant stack of basically green, ink-smeared paper. When Iran starts selling its oil in euros, why wouldn't China just go ahead and convert that stack of paper to euros and use real money to buy oil instead? In January 2002, Canada unloaded nearly 20% of its gold stocks in exchange for euros, thereby bringing its euro holdings to the equivalent of about US$14 billion. That's about 42 percent of the total US$33 billion in foreign deposits and securities held by the government. Just 2 years previous, euros accounted for the equivalent of about US$7 billion of Canada's reserves, only 23 percent of the total. The gold sale reduced Canada's U.S. dollar share to 55 percent from 75 percent. Under Hugo Chavez, Venezuela is brokering barter deals for trading oil with 12 Latin American countries thereby cutting out the USA cut. At the OPEC summit in September 2000, Chavez delivered the report of the "International Seminar on the Future of Energy." One of its key recommendations was that "OPEC take advantage of high-tech electronic barter and bi-lateral exchanges of its oil with its developing country customers." That would be the end of dollar hegemony over OPEC oil transactions.

The War Resisters League calculates that the cost of the US military runs about $643 billion annually. This obscene military expenditure, which supercedes the total of all other combined global military expenditures, is responsible for 80% of the American debt. When the world stops propping up the debt-ridden USA dollar, that will end the Neocon global domination project and the world's worst terrorist menace. This much, "W" clearly understands, and so too, apparently, do his quisling war-mongering Democrat counterparts. The Neocon oil-mens cabal has an even clearer understanding of Peak Oil, and its equally ominous implications for the American economy. This quote from Investment Banker Matthew Simmons—a key advisor to the Bush Administration and Cheney's 2001 Energy Task Force and the Council on Foreign Relations: "What peaking does mean, in energy terms, is that once you've peaked, further growth in supply, is over. Peaking is generally, also, a relatively quick transition to a relatively serious decline at least on a basin by basin basis. And the issue then, is the world's biggest serious question."

In this horrific context, it's not too difficult to understand why the Bush Neocon cabal is preparing to risk all to go on a global oil-stealing spree, and to attack Iran, perhaps even with nukes. It's also easy to understand the cringing wimp-ass non-response of the Democrats. There's no way America can win, and America's got everything to lose. As Gavin R. Putland puts it, "If this oil-currency-war theory is a delusion, the U.S. administration can easily discredit it—by declaring that the USA has no objection if oil exports to the Euro Zone are denominated in euros." The crash of the USA economy will wreak global economic catastrophe. Paradoxically, that crash is this world's only hope for evading global ecological catastrophe. We should support Iran's oil bourse. Bring it on!

******

2006: The Year of Oil Collapse?

By James Howard Kunstler, Kunstler.com
Posted on January 11, 2006, Printed on January 11, 2006

Editor's note: This is one of three perspectives AlterNet has assembled on the prospect of peak oil and its implications for modern society and the global economy. The other two are from World Watch: Christopher Flavin writes that while we can't know exactly when oil production will start declining, we must focus on alternatives to petroleum now; and Robert K. Kaufman describes the role the market and government should play in helping to make the transition from a petroleum-dependent society.

The sheer weight and inertia of American life kept our systems on their feet through 2005, despite a worsening economic climate and some harsh body blows, like the hurricanes that pounded oil and gas production in the Gulf of Mexico. In a way, some perverse law of sociopolitical physics seemed to concentrate all the year's destructive potential in the devastation of New Orleans, Biloxi and other Gulf Coast towns -- while the mighty din of motoring and cheeseburger sales roared on elsewhere without pause from Cape Cod to Catalina.

First, a little background briefing on where we are at -- to use some of the bad grammar now normative in American life -- before I make predictions (i.e., guesses) about the year ahead.

You can only introduce so much perversity into an economic system before distortions cripple it. From 2001 through 2005, consumer spending and residential construction had together accounted for 90 percent of the total growth in GDP, while over two-fifths of all private sector jobs created since 2001 were in housing-related sectors, such as construction, real estate and mortgage brokering. Much of the money spent did not really exist except as credit -- incomes as yet unearned, hallucinated liquidity, wished-for wealth, all based on the expectation that house values would continue to rise at 10 percent to 20 percent a year, forever. It became a reckless racket, all predicated on sustaining an economy that had lost its other means for generating wealth -- foremost its infrastructure for making things besides suburban houses.

This housing bubble economy represented, holistically speaking, the wish to maintain a sense of normality in American life under conditions of disintegrating normality, and it is no symbolic accident that it centered on the images of hearth and home, because fundamental comforts were what many Americans actually stand to lose in a reality-based future. The decay of standards and norms in banking behavior applied to housing started, as in the case of the proverbial rotting dead fish, at the head, the Federal Reserve, and infected every lowly loan officer through the body until, in effect, lending standards ceased to exist.

The suburban housing bubble and its related activities were predicated on the idea that we could continue building out a living arrangement dependent on cheap oil and methane gas, and that all the subdivisions and strip malls would retain value for decades to come. Of course, this was the central delusion of the suburban sprawl economy, because it was obvious to anyone who gave the situation more than a cursory glance that cheap oil and gas were the things we were least likely to have in the decades to come.

This reality had begun to penetrate the American collective consciousness and will be represented in 2006 by millions of individual choices to not buy a new suburban house, either because the individuals fear the expense of long commutes, or they fear the cost of heating a 4,000-square-foot house occupied by only a few people (or both). As the inventory of unsold new houses mounts up, the prices of all houses, new and old, will start to go down. There will be enormous psychological resistance to this reality, expressed in a lag of correct pricing, as the owners of these value-shedding "investments" wait for the bubble behavior (anticipated 10 percent to 20 percent asset appreciation) to return. Eventually they will get the picture.

The velocity of change in the housing bubble (and the psychology involved) will be greatly affected by oil and gas prices. It seemed to many of us watching the energy markets that the world may indeed have passed through its all-time oil production peak in 2005. Production in 2005 was nearly flat over 2004. The world was producing and also using roughly 82 million barrels of oil a day. Oil coming into new production was not making up for signs of depletion showing among virtually all the world's major producers. Iran, Russia, Mexico, Venezuela, the North Sea and, of course, the United States, were all past peak.

The big mystery was Saudi Arabia, but its inability to boost production from the 50-year-old fields that comprised its main reserves suggested that it was topping out, too. Which left an energy-hungry world with the need to either (a) make other arrangements for powering industrial economies or (b) contest for control of the remaining oil reserves, which were substantially concentrated in the Middle East and Central Asia.

Here, I hasten to remind the reader that peak is peak, meaning right now we are all operating on the basis of a lot of oil flowing around the world. The comfort level is still high. The factories are still humming in China, and the six-lane commuting corridors are still full of big cars around Atlanta, Dallas, Denver and Minneapolis. The problem is that the oil supply will soon steadily diminish at a rate of at least 3 percent a year, and that necking down of supply is likely to be expressed in greater geopolitical friction and turmoil between the great nations who crave oil.

The United States entered into the military phase of this turbulence before any other nation. We used our superpower status to set up a centrally located Middle East garrison in Iraq, under the idealistic cover story that we were removing a dangerous head-of-state and helping to set up a model democracy that would invite us to stick around the vicinity indefinitely and thus retain some control over the deportment of other oil-rich states in the region.

The foregoing is the background of my predictions for 2006, which will be the year that the hardships and difficulties I lump together as "The Long Emergency" get some serious traction.

The world’s oil-allocation system is now so fragile that any disturbance in one producing region can send damaging shock waves around the planet. There is no more "swing producer." The United States squeaked through the huge loss of oil production capacity this fall by taking oil from our own strategic petroleum reserves and from Europe's. These actions kept oil prices in the high $50 range through the holidays, giving Americans a false sense of festive security. Those withdrawals are now over. Global demand for oil is still increasing. The strategic reserves will now have to be refilled (they're called strategic reserves for a reason). This will start oil prices moving upward again -- they already have moved above $61 as of Jan. 2.

I can't predict whether some maniac will drive a Zodiac boat into a tanker in the straits of Hormuz or fire a shoulder-launched missile at an Arabian refinery. If nothing like that happens, the first year of post-peak will express itself in turbulent oil markets. Fear of not getting enough will rule. Futures will be overbought and then dumped or shorted, and then overbought again. This will at least increase the violence of the ratcheting effect in the markets. Overall, I expect to see $100-a-barrel oil at some point this year. Last year I made a bet with a friend that oil would end 2005 at $75. I lost the bet. But it is a fact that the price of oil altogether ended the year 40 percent higher than 2004, so it is not as if the markets did not show extraordinary stress.

New laws regulating gasoline mixtures will also contribute substantially to higher gasoline prices (perhaps as much as 40 cents a gallon). So I will predict gasoline breaking through the $4-a-gallon mark sometime this year.

Our natural gas situation is pretty dire. Prices shot up for a while above $17 (per one million BTUs), but that was the energy equivalent of $100-a-barrel oil and was based at the time on the enormous damage in the Gulf of Mexico prior to the start of the heating season. The heating season so far as been abnormally mild in the northern United States, and prices have slumped back to the $11 range -- which is still a lot higher than the $7 range in 2004. Unlike oil, we will get no quick relief from international gas sources if the rest of winter turns sharply colder. We're short of terminals to receive significant quantities of imported liquefied natural gas, and they cannot be built quickly (or cheaply). The natural gas markets in the United States respond very sharply to current conditions. A warm week and the prices sink. A cold one and the price shoots up. Our gas storage for the year is slightly below 2004 levels. Even if we have a mild winter overall, there will be spikes of cold. Our production is still crippled in the Gulf. Therefore, I'll predict that methane gas prices will spike above $20 sometime before May.

High gasoline, heating oil and methane gas prices will absolutely kill the housing bubble for reasons I've already outlined. The production home builders will be idle, stuck with huge inventories in places that never should have been suburbanized in the first place. A lot of Americans holding "creative" mortgages -- no money down, interest only, adjustable rate, what-have-you -- will be crushed by the expense of their obligations. Many of them will go bankrupt under new bankruptcy laws that leave no wiggle room for escaping partial repayment. Their houses will flood the real estate markets in an orgy of distress selling. "Greater fools" will snap up these "bargains," failing to realize that many of the logistical liabilities will remain -- namely remote locations and huge heating costs of enormous McHouses -- even if the ownership terms are less hazardous than the previous owner's. At some point in the future, after several flippings perhaps, all those 4,000-square-foot houses 44 miles outside Denver (or Cleveland, or Seattle) will be seen as the mistakes that they are, and their cash value will reflect that.

With the cratering of the housing bubble, the U.S. economy has to fall on its ass. The global economy is likely to fall on its ass, too, since so much of it depends on the decisions of Americans to take out exotic loans for buying houses they can't afford. Large numbers of jobs will vanish in construction, remodeling, real estate sales, and the various mortgage rackets -- those things precisely related to the recent gains in GDP.

The sheer falloff in new mortgages will send a tsunami through financial markets addicted to continuous supplies of new "money" to preserve the illusion of expansion. I'd called for a Dow-4000 late in 2005. I think that was just an error in timing, and I still call for the Dow to sink into that range, or worse, in 2006. This will represent a moment of painful clarity for market professionals, as they realize that an industrial economy and the finance that serves it must be based on the expectation of generating real future wealth, not on zero-sum rackets, games of monetery musical chairs, or casino legerdemain. Hedge funds, which depend on predictable stability, will be especially vulnerable. They will certainly take some large banks down with them when they go. I'll call for the so-called government sponsored entities of Fannie Mae and Freddie Mac to groan under and then drown in a sea of nonperforming loans, probably with overtones of criminal irresponsibility.

If these things occur, ugly things would happen to the dollar. I would predict an episode something short of hyperinflation -- say a rapid 30 percent drop in dollar value -- with a later deflation in the price of things like houses, paintings by Childe Hassam and many consumer goods. Which means that standards of living will fall across the board as incomes vanish with jobs, and food and energy prices rise -- while Americans try to shed their houses at the same time that consumer products sit unsold on the shelves of WalMart, Target and Best Buy. This will spell the beginning of the end for the chain store universe.

The commercial airline industry is already whirling around the drain. 2006 will send it decisively down that drain. Since we cannot do without aviation in a nation as large as the United States (with train service on the level with Bolivia), the government may have to take over the crippled air routes. If that happens, then service will certainly be greatly diminished. Fewer people will be flying under the circumstances, anyway, but there is no reason to believe that this will all occur smoothly. Among other things, huge pension obligations would remain to be worked out.

By similar reasoning, I see an excellent chance for General Motors and Ford to go out of business in 2006. Sales of their stupid SUVs were already tailing off in the second half of last year, and they are not positioned to offer much of anything else. Anyway, a middle class groaning under insupportable debt and bankruptcy is not likely to be assuming new time payments for exactly the kinds of vehicles they would be insane to depend on.

As America roils in economic pain, factory workers in China will be thrown out of work. They will be extremely pissed off, and as their appeals go unappeased, they might start making political trouble in their country. That could easily stimulate Chinese leaders to divert their nation's attention with a compelling military project -- say some moves into the oil-rich former Soviet lands to China's west. Sooner or later, China eventually will go cuckoo from a shortage of fossil fuels. It only remains to be seen how this will express itself. So far it has only done so in terms of an aggressive outreach in oil contracts with producers like Venezuela and Canada. But those arrangements were based on a peaceful world and a peaceful China.

I have no idea what will happen with Iran. Their leader Mr. Mahmoud Ahmadinejad, is clearly a maniac -- calling for Israel to be removed to Alaska, for instance. But here I invoke my allergy to conspiracy theories by saying I do not necessarily expect any U.S. or Israeli strikes against that country. One could argue that Iran could comfortably kick back and watch America get tortured by the insurgency next door in Iraq, and I think it will do just that through 2006. The nuclear card is wild, however, and anything could happen if they keep slapping it on the table.

Which brings us to the extremely sore subject of Iraq. I maintain that our reasons for being there have not changed one bit, namely to make sure that we don't lose access to Middle East oil in any shape or form. Now my stating that does not mean I think we will necessarily succeed. The creation of a constitution in Iraq and holding elections based on it amounted to an admirable stunt, but I tend to think this experiment will dissolve into sectarian violence and civil war, probably in 2006, no matter what else we do. I predict that circumstances will impel us to withdraw from the Iraqi cities, but that we will not give up large bases near the oil production areas of the north and south, and that we will continue to control the air space over Baghdad. Our position in that country would then devolve to a sort of Fort Apache situation. I imagine the vast emptiness of the desert combined with air cover will afford us some protection. But our presence there will only inspire more turmoil, hatred and jihad elsewhere.

King Abdullah seems to be in pretty good health, but he is going on 82. I predict that there will be fissures in the kingdom and continued confusion about its oil production capacity. But by the end of the year, it ought to be clear that they have not increased their output. Peak for Saudi Arabia may be the beginning of the end of the Saud kingdom -- since peak itself is highly destabilizing.

In Europe, we are beginning to see some of the first tectonic heavings over energy as Russia jerks poor Ukraine around on its natural gas shipments. England has managed to piss away all the former advantage of its North Sea oil bonanza, and it now faces a future of dependence on Russian gas, plus the bankruptcy of its remaining industrial base. France enters 2006 somewhat more energy self-sufficient, at least as far electricity is concerned, since 70 percent of it comes from nuclear reactors. The other nations of Europe are apt to get restive this year and may more actively join the worldwide contest for access to fossil fuels. At the same time, they will be struggling to contain large Muslim immigrant populations, and I would be surprised if there were fewer problems in 2006 than last year, with the riots in France and the London subway bombings. We tend to write off Europe as a region of sclerotic cafe layabouts, but for the time being, many of these nations can still mobilize potent military forces if they have to defend vital interests. Generally, I predict 2006 will see a shift in power to the big energy bear, Russia. It's industrial infrastructure is otherwise decrepit. Its armed forces are bankrupt. But it has at least enough nuclear arms to blow up the world a few times over, so that, combined with its oil and gas assets, require us to take it very seriously.

Japan has nearly been forgotten. It now imports 95 percent of the fossil fuel it needs to run itself. God knows what they will do if geopolitical turmoil shuts down the shipping lanes that bring a steady stream of oil tankers to the islands. They are capable of mobilizing to defend their vital interests. We just haven't seen them do it since the 1940s. What role Japan will play in the Pacific remains a mystery, especially in relation to the growing power of China. Perhaps some of this oriental mystery will be revealed in 2006. Perhaps Japan will enter into some kind of Asian coprosperity sphere alliance. Japan's economy will otherwise be subject to the severe economic strains emanating out of America.

South America is going loco on us. It will probably never amount to a united front, but one by one, its nations will become more hostile to us, in the manner of Venezuela's Hugo Chavez and the newly elected Evo Morales of Bolivia, a former coca farmer who aims not to allow America any more say in what crops his people can grow. Chavez can jerk America around on oil imports if he wants to, but probably not without risking his health and position. Mexico's economy is dependent on ours, only Mexico will suffer by another order of magnitude if the U.S. economy turns down in a big way. In 2006 I think we'll see the first signs of overt hostility between our two nations as the United States desperately tries to come to grips with the flow of illegal immigrants, and Mexico attempts to divert its suffering peoples' attention by making threats of incursion and reviving claims to lands along the border. We could see the first shots of what could turn into a huge ongoing border nuisance, perhaps even a quasi-war. Meanwhile, Mexico's premier oil field, Canterall, has entered depletion. Mexico depends on imports of natural gas from us, and under the rather insane terms of NAFTA, we in the United States depend on gas imports from Canada to make up for the stuff we have to sell to Mexico. Those relationships may be subject to review.

Karl Rove will probably join Lewis "Scooter" Libby in the indictment pen for the Valerie Plame incident. Tom DeLay is going to have a very ugly trial in Texas, and Senate Majority Leader Bill Frist may end up being prosecuted for stock sale irregularities. These shows may so successfully entertain the public -- and the cable news impresarios -- that we will fail to notice the rising predicament of oil and gas prices and the cratering of the suburban sprawl economy (just as Watergate -- a very satisfying melodrama for those of us who were young reporters in 1973-4 -- diverted the United States from the first throes of the oil crisis). All this activity will tend to degrade the standing of the Republican Party to "junk" status. But there is no sign that the Democrats offer an alternative world-view to the "non-negotiable American way of life."

Political circuses will not completely divert the middle class from its own suffering, as mortgages devour what is left of Americans’ financial lives. But as they sink in fortune and hope, I predict we will see a turning of all the recent celebrity envy -- and the infotainment value spun off it -- into a vicious hatred of the rich and famous, and a new desire not to emulate them, but to punish them. Look out, Nicole Ritchie and the Donald Trump. The grandchildren of Ozzie and Harriet will be looking to eat you for dinner starting in 2006.

James Howard Kunstler is a regular contributor to Orion magazine, Mother Jones and the Atlantic Monthly, and is the author of "The Long Emergency" (Atlantic Monthly Press).

US retail gasoline price down after 3 record weeks