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War In Iraq
With Michael Renner
Senior Researcher, Worldwatch Institute

Friday, April 18, 2003; Noon ET

Many people question the Bush admnistration's motives for the war in Iraq. Many more wonder about the future of Iraq's oil industry. How much does the U.S. depend on imported oil? What fuel efficient resources are being researched? How will oil affect American foreign policy in the Middle East?

Michael Renner, senior researcher for the Worldwatch Institute, will be online Friday, April 18 at Noon ET, to discuss how inefficient use of energy reinforces dependence on imported oil, and oil in regards to U.S.-Iraq relations, including the Gulf War and sanctions.

The transcript follows.

Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.

College Park, Md.: Granted, a decreasing percentage of US oil has been imported from the mideast. However, US MNCs stand to profit greatly from controlling exports to Europe and Asia even IF (and it's a big if) the import patterns of the US don't change given the invasion.
However, who is going to provide security now for these US oil companies in Iraq and elsewhere? It seems inevitable that as representatives/symbols of the US government they will be the targets of attacks. Will the US military now be indefinitely deployed in the oil fields, ports, and along the pipelines of these new franchises?

Michael Renner: This is a very good question indeed. It is quite likely that US military forces will be stationed for an extended period of time to guard oil fields and installations. Presumably, the administration will seek, in the longer run, to hand this task over to Iraqi security forces, trained and "advised" by the United States. This wouldn't be a new development. Multinational oil companies have made arrangements with government security forces in a number of places, including Colombia, Nigeria, and Indonesia, to protect their installations from the wrath of local communities (who are often incensed by the fact that they have to shoulder the social, political and environmental burdens of oil extraction, while seeing little in the way of benefits).

Washington, D.C.: I have read conflicting reports about who will run Iraqi's oil industry. Initial reports suggested that a former Shell Oil executive was in line for the job. More recently the British press has reported that the administration is looking for a Muslim oil executive. What can you tell us about these reports?

Michael Renner: There are indeed conflicting reports, as you say. Part of the confusion, I believe, has to do with dissent within the administration. Pentagon officials have been reported to favor a privatization of the Iraqi oil industry, whereas the State Department is in favor of keeping the industry nationalized. There is also considerable rivalry among oil companies to get a slice of the action, and this will have an impact as well. Apart from that larger question, though, I would think that the choice of individuals in an immediate time period has enormous implications -- a signal effect -- in terms of what we can expect.

Vienna, Va.: Mr. Renner, what are the CURRENT sanctions on Iraqi oil?

Michael Renner: After the first Gulf war, essentially all Iraqi trade, including oil, was made the subject of sanctions. As the suffering of civilians became clearer and clearer in consequence, efforts were made to establish an oil-for-food program, which allows limited Iraqi oil exports. The proceeds from these exports go into a UN-controlled bank account, and Iraq has to get permission from the Security council' sanctions committee for its imports. The US government has repeatedly placed so-called "holds" on a broad variety of items, meaning that many imports have been held up for months or been denied altogether. (Iraq apparently managed to smuggle oil out as well, although it's mot entirely clear how much money the regime earned in this way).

Wheaton, Md.: I remember hearing during the first Gulf War the charges of the U.S. trying to steal oil. It never happened then and its not happening now. This accusation is fabricated on baseless lies.

Michael Renner: It all depends on how you formulate the argument. Perhaps some anti-war demonstrators have indeed used the word "steal." I don't think that's an apt description. But there is an underlying point here: foreign governments-principally the British, French, and US governments-have long worked hard to ensure that their own oil companies would get preferential access to Middle East oil. This concerned in the first place a rivalry among those Western nations, but in the second place the question of how oil profits would be shared between host governments and companies. It was precisely the sense among producer governments that they were getting a bad deal that led them to confront the companies and nationalize their oil in the early 1970s. Many companies have since been itching to get their hands on Middle East concessions again, and with an occupation regime, it's quite likely that US companies in particular will have bright prospects. We'll have to see what the specific terms and conditions will be. Based on that, you can decide what you'd call all this. Again, it may not be stealing, but I'm also not prepared to assume at this point that the Iraqi people will indeed get a good deal.

Arlington, Va.: When the war in Iraq started, many were expecting for the oil fields to be burned, causing devastation to the world's oil market. Many oil producing countries ramped up production/supplies to prepare for the worse. But the devastation never happened. Now there's a glut in the world oil supply. What does this mean for the oil market? How will this affect future gas pump prices?

Michael Renner: You have to distinguish between short-term and longer-term impacts. In the short run, including the run-up to the war, prices rose considerably (though not nearly as high as in 1990/91 around the time of the first Gulf war) and showed plenty of instability. The longer run situation will be governed by how strong the world economy is, and whether there will be any serious movement toward energy alternatives. The Bush administration has staked out an energy future that commits us to growing oil consumption, while naysaying the role of alternatives like wind and solar, or greater energy efficiency. So growing world consumption may put pressure on prices to rise. But we also know that Iraq has huge oil reserves to be developed. This will take some years, no doubt, but it is possible that opening the Iraqi spigot could actually put downward pressure on prices in a decade or so.

Cumberland, Md.: I have read the Kofi Annan allowed just about anything to be imported under oil for food ( ie. Russian TV's) and that there has been no serious accounting of the UN stewardship of this whole program which would prove to be a real embarrassment to the UN. Would you care to comment on this?

Michael Renner: I suppose you read the New York Times op-ed page this morning, where these points have been made. While it's true that the oil-for-food program has not been as transparent as one might wish, I think Annan's being slandered. Moreover, the real scandal is that the Clinton and Bush 1 and 2 administrations prevented the import of many crucial items into Iraq, all under the excuse that these were potential "dual use" items that could be used for Iraqi military purposes. These tactics worsened the humanitarian crisis after 1990 (the suffering of Iraqis is now exclusively blamed on the regime, but that's not the whole story). I highly recommend an article that appeared in Harper's Magazine (November 2002) for more info.: Joy Gordon, "Cool War: Economic Sanctions as a Weapon of Mass Destruction").

Washington, D.C.: Michael,
It's been obvious for more than thirty years, since at least the first oil embargo, that all industrial countries were placing themselves in a dangerous political position by becoming increasingly dependent on imported oil. Yet after all these years, we're even more dependent on imported oil in the U.S., and we have never made a meaningful national commitment to develop renewable energy sources.
Don't you think it's time for a national crash program, like the Apollo moon project, to develop renewable energy sources and end our dependent on foreign oil?

Michael Renner: I agree that it's time to get serious about supporting renewables. Many Americans assume that talking about wind and solar, and other alternatives, is a pipedream. But lots has happened in recent years that gives considerable hope. The wind power industry is growing dramatically, at something like 25-30 percent per year. Costs have come down (it is now cost-competitive with many traditional energy sources like coal-fired power plants), the technology is in many ways cutting edge, and wind power generates far more jobs per dollar invested than oil, coal, natural gas, and nuclear power do. Most of these advances have been made in Europe, but there's progress in this country, too (even in George Bush's home state of Texas). Much more could be done with proper government support, but the administration hasn't gotten the message or purposely plays deaf. Some people may object by saying that alternatives couldn't work without subsidies, but what energy source has not been subsidized? Oil, coal, and nuclear -- "mature" industries -- still attract massive subsidies today. It's time for a change.

Long Beach, Calif.: I find it ironic that the US is taking the position that Iraqi debts should be declared null and void, especially as it applies to Russia, Germany and France. If one were to objectively study our history, one would find numerous incidents where the Marines enforced the payments of the same type of debts, at gunpoint. Why the switch now?

Michael Renner: I suspect that debt nullification may be motivated more in terms of political payback for Russian, French, and German opposition to the war than by any other reason. Compared to these debts, the ongoing compensation payments for the Iraqi invasion of Kuwait probably weigh in more heavily, but I haven't heard any proposal to do away with those. More broadly, US demands would be more credible if there was more general support for debt relief for other countries that have emerged from dictatorships.

Washington, D.C.: Why is the U.S. so interested in having U.N. sanctions/the oil-for-food program lifted if it has already said that the money from oil exports will go to the Iraqi people? Could any of that money be used in to cut down the costs for the U.S. in its reconstruction efforts?

Michael Renner: Lifting the sanctions would give the administration a much freer hand, legally-speaking, in restructuring the oil industry to its own liking. Surreptitiously lifting the sanctions now is a mistake (remember that and end to sanctions was predicated on clarifying the weapons of mass destruction situation, something that's still in the works). What ought to happen is for the UN Security Council to come up with an interim solution that ensures that Iraqi rebuilding efforts will not be obstructed by sanctions.

Fairfax, Va.: Mr. Renner,
What alternative fuel resources do you suggest? Also, what countries and agencies are involved in Iraq's oil industry or distribution?

Michael Renner: As I mentioned in response to an earlier question, wind power is a strong and growing contender. Solar electricity and solar heating/cooling systems are not nearly as far in terms of technological development, cost reduction, but with proper support, they will come along. More "established" alternatives like geothermal and hydropower probably don't have all that much growth potential (dam-building, as it is, is often very destructive of ecosystems and has led to numerous struggles with local communities, particularly in developing countries, because of the terrible population displacements they exact). It makes sense to support the development of a hydrogen economy and fuel cell technology as well, but these are clearly developments that will take some years to bring to fruition.

Washington, D.C.: Michael,
If we aren't going to use oil, what are we going to run a high-tech economy on? Can you talk about the potential of wind power, and how wind-generated electricity could produce hydrogen for vehicles?

Michael Renner: The potential for wind power is very substantial. The Public Interest Research Group (PIRG) just released a report that further underlines this, saying that wind and other renewables could generate far more electricity than the economy is using now. The only question here is will this happen relatively swiftly, with government support, or will it play out over a longer period of time, in which case we in effect miss an opportunity to switch over from our heavy reliance on oil.
The administration has said it is in favor of fuel cells, but wants coal and nuclear be the sources that power them. That would simply perpetuate our current energy system instead of going with alternatives like wind.

New York, NY: Michael,
In your answer about wind energy, you didn't say anything about jobs. The Bush administration keeps trying to sell drilling in Alaska as a job-creation bill. Isn't it true that the growth of the wind energy in Europe has been creating lots of jobs? Do you know if you get more jobs from building windmills than from drilling more oil wells in the Rockies?

Michael Renner: Drilling for oil in Alaska (or elsewhere) will not create a large number of jobs, despite the best efforts by the oil industry to suggest such potential. Wind creates more jobs than oil, many studies have shown that. To date, at least 100,000 jobs have been created in the wind industry. Considering that it is still a fairly small segment of the overall energy pie, it's clear that far greater employment opportunities await us. A respected recent study suggests that by the year 2020, it's possible that some 1.8 million jobs can be created. Meanwhile, traditional energy industries, oil and coal in particular, are shedding jobs fast.

Pickens, SC: How can the Bush administration simultaneously push for the "democratization" of Iraq and the "nationalization" of the Iraqi oil supply? Is not a "free and democratic" Iraq contingent on an open, free-market society?

Michael Renner: Democratization is a very broad term that can mean, and accommodate, a broad range of outcomes. I don't think that a nationalized industry has to be in contradiction of a democratic system. As a matter of fact, in European countries both went hand in hand for many years. The key point is to ensure that the benefits of Iraqi oil flow to the Iraqi population. For some time under Saddam Hussein, that was actually the case (i.e., in the 1970s, before the regime embarked on war with Iran); health, education, and living standards rose dramatically then. But since the 1980s, the regime was much more intent on bolstering its military prowess and building palaces for its ruling clique. Now, there's a possibility that if Iraqi oil is privatized, the benefits again will not flow to the civilian population, but rather to foreign investors. So the situation bears close watching.

Alexandria, VA: Michael, can you tell us really quickly how you learned about the Middle East and our policies regarding the region, and also how you came to work at Worldwatch? Do you have any advice for young people who'd like to get involved with these issues as part of their careers.

Michael Renner: The good news is that there are many good books and reports about the Middle East to consult. And access to the Internet means anyone wanting to inform themselves about the region and policies relating to it can do so. It takes time and effort, but the information is basically out there. But in a globalizing world, keeping ourselves critically informed is more and more important, almost no matter what our career and other choices are.

Washington, D.C.: Wind turbines stop making electricity when the wind stops and solar electric will only work during peak insolation (sunshine). You need to have electricity stored-up to fill the down-time, and there are no good storage technologies (compressed air, batteries). Hence renewables at the moment can't compete with fossil or nuclear as a form of dispatchable (continuous) power generation. If you're going to advocate renewables, there's the issue.

Michael Renner: Yes, you need some backup. It's always a good idea to have a mix of energy sources and not to put all eggs into one basket. But the point is that we can dramatically lessen our reliance on fossil fuels.

Long Beach, Calif.: What type of consortium will be created, most likely, to extract Iraq's oil?
What will the percentages be, if you were to guess?

Michael Renner: Hard to know at this point. The Russian, French, and Chinese companies had all signed contracts with the previous regime for oil development. But given the confrontation over war with the Bush administration, it's not clear whether these contracts will be honored or not. It seems safe to say, however, that US (and British) companies have a much brighter future in Iraq now than before regime change. It may be that the Bush administration will not totally exclude the Russians, French, and Chinese, in order to mollify their governments and make some sort of cooperation possible. But who knows at this point?

Washington, D.C.: With so many countries upset with the way the Bush administration has awarded oil contracts, allegedly biased toward U.S. companies, is there anything that they can do about it? Will the U.S. be pressured into sharing this contracts by hiring foreign companies as subcontractors purely for good relations reasons?

Michael Renner: This may well come down to a larger political judgment. How important is it for the administration not to have an ongoing confrontation with several of its allies, plus Russia and China? I imagine the opinions diverge within the administration, but given clear signs that hardline elements, particularly in the Pentagon, have the President's ear, it's possible that opinions and interests in Paris and Berlin won't count for much.

Cumberland, Md.: What will be the effect of the cut-off of Iraqi oil to Syria?

Michael Renner: Syria benefited from being able to import Iraqi oil at discounted prices (illegally under the sanctions), and then sell some of its own oil on the world market, at world market prices. It received, in effect, a subsidy. Now that that's gone, the economy will be in worse shape, so pressure on the government is rising.

Nome, Alaska: Michael,
What do you think of the idea of setting up an Alaska-style fund for every citizen of Iraq, like the one we've had in Alaska? I don't know if the big oil companies would like it (NOT!) but when those first checks started arriving, it would sure as hell get the attention of the Iraqi people!

Michael Renner: That may well be an option to consider seriously. What's crucial, though, is that at least a large portion of oil revenues be used to rebuild the Iraqi infrastructure (health, education, etc.) and that efforts be made to diversify the economy in order not to leave it too dependent on oil. This is a concern in many oil exporting countries, where resource wealth often turns out to be a curse leading to distorted, weak economies, and stunted, corrupt political systems.

Maryland: What about the Iraqi people benefitting from THEIR OWN oil resources? I see little talk of that.

Michael Renner: You are right. And we've only heard platitudes on this from the administration so far. The devil, as always, is in the detail.

Cumberland, Md.: Since sanctions were aimed specifically as the regime of Saddam Hussein, which no longer exists, what legal justification is there for continuing these sanctions against a non-existant regime except a ploy by the French and others to force a UN role in Iraq? Isn't that an inherently dishonest approach?

Michael Renner: Not at all. The UN Security Council resolutions say that the issue of weapons of mass destruction has to be resolved before sanctions can be lifted. The best way to go about this would be to bring the UN inspectors back in (Hans Blix has offered his services; they are the ones with the expertise needed, and findings by inspectors would carry far more international credibility than actions by an occupation force. But apparently, Secretary Rumsfeld is not interested in this option. But hey, once you started an illegitimate war, why not continue down this road?

Washington, D.C.: You are obviously very enthusiastic about wind and other 'alternative' energy sources. Would you care to comment on the degree to tax payer subsidy in the form of tax credits that is supporting the extent of wind farm development now underway. My understanding is that this technology, as are most of the other nice 'green' alternatives is at least twice the price of conventional energy sources such as natural gas. The paradoxical obstacle to finding alternatives to fossil fuels is that they are darn cheap.

Michael Renner: Depending on what country's experience you look at, there is a different mixture of policies in support of wind power, but tax credits are one of the tools. The problem in the US has been that these credits haven't been applied consistently over time, so that wind farm operators had to contend with moving goalposts. I recommend that you read a chapter written by my colleague Janet Sawin, "Charting a New Energy Future," in State of the World 2003 (WW. Norton). In the chapter, she discusses the pluses and minuses of different policies, based on the experience of countries like Germany and others.
You are right to say that fossil fuels are so cheap. That's largely a result of subsidies and the fact that many of their costs have been "externalized" as economists say. For instance, we don't pay at the pump for health expenses as a result of urban air pollution, but one way or the other, as a society we have to bear those costs. Externalities for wind power and other alternatives are far lower, and so their total costs to society are lower. But we need to make our prices and balance sheets better reflect that.

Norfolk, Va.: Michael,
Speaking of Apollo-level projects, I know that Congressman Jan Inslee from Washington has been pushing something he calls a "New Apollo Project" to develop renewable energy. Do you know anything about this effort? Does the Bush administration's energy bill move us in this direction?

Michael Renner: I'm not familiar enough with that proposal to really comment. But I do think we need to think far more ambitiously in shaping our energy future. The Bush administration's approach seems to re-commit us to our energy past, rather than our future.

Alexandria, Va.: I've read all kinds of reports about President Bush's relations to the Middle Eastern Oil companies and the governments that run them, about how he and his father are on the payroll of BCCI (Bank of Commerce and Credit International) which was used to funnel money by the American Govt. to the mujahideen, about how the Bushs' company, Harken Energy, has had to be bailed out by Saudi Sheiks when it went bankrupt, and about a "top secret" trade agreement made by the US promising to keep the investments of Middle Eastern governments in the US totally secret (even from congress) in exchange for their ending the oil embargo. And all of this is from fairly mainstream books and sources; I don't like to get my info. from extremist sources. But understandably, I'm shocked and confused when I hear about things like this, so I was wondering if you could tell us to what extent they are true and possibly elaborate on the alleged relationships between our govt. and the oil industry and oil producing governments of the Middle East. Thank you.

Michael Renner: You are right to be concerned about being able to tell apart fact from fiction. While the Internet is a good source of information, it also contains a good deal of utter misinformation. I'm not sure I can categorically confirm or deny most of the points you raised. But what I think is important is this: the top ranks of the Bush administration are filled with individuals who have long and intimate connections to the oil industry, and so the ins and outs of Middle Eastern oil are no secret to them. That's one reason why I find the administration's insistence that the thing farthest from its mind is oil so hard to believe. Now, to say that oil is an important element is not necessarily to imply that there is wrong-doing. But the administration has been less than forthcoming in its energy policy (VP Cheney working very hard to keep out of public view the individuals he consulted with in formulating policy). What we need is greater transparency and greater discussion, not less.

Washington, D.C.: Let's not confuse our oil dependence, which is used as a transportation fuel (in the United States) with our choices for electricity generation. Coal and nuclear and renewables, e.g., wind won't displace our oil consumption, domestic or imported.

Michael Renner: Fair point. But in the transportation field, too, there are alternatives that can and ought to be pursued. In the first place, promoting greater fuel economy. The administration has essentially been missing in action on that one, and if anything, has worsened the situation by proposing that owners of the most gas-guzzling vehicles receive tax benefits. Besides efficiency, we see the beginnings of alternative vehicles coming onto the market. Toyota and Honda are both marketing so-called hybrid vehicles, which combine a gasoline engine and an electrical motor. I just rode in one of these cars last week, and I can tell you that they work extremely well. Other than new types of vehicles, let's also not forget that we can work to create a better mix of transportation options. Given the right land-use policies, we'll have more options to choose from, including public transit, and hopefully also biking and walking (the latter would help us stay in better health, another benefit).

Atlanta, Ga.: Michael,
Let's say it's December 1, 2004, and the new Democratic president has just appointed you the next Secretary of Energy. What would your top priority be? (or 2 or 3 if you want)

Michael Renner: I'd say phase out subsidies for fossil fuels and nuclear, and phase in support for renewables and alternatives like fuel cells. Make a commitment to boost the fuel economy of new cars (to at least catch up with the Japanese and Europeans). Phase in a carbon tax (yes, yes, I know, it's political suicide, but if so, let's make good use of that one term in office).

Chicago, Ill.: Will US control over Iraqi oil production allow the US to force oil prices down, by dumping lots more oil on the world market, and breaking the back of OPEC? My understanding is that Iraqi oil is some of the cheapest in the world to produce, so the temptation to go after OPEC would have to be great for Bush. Really cheap oil prices could give the US economy a shot in the arm that would really mean something, unlike Bush's ill-conceived tax cuts.

Michael Renner: Yes, Iraqi oil can be produced very cheaply (but let's not forget that this is not an overnight option: the Iraq industry needs very substantial investments in repair and expansion before the spigots can really be opened wide). I agree the temptation to go after OPEC, as you say, is probably there. One consideration that would dampen the interest in driving prices too low: it would render lots of US oil producers uncompetitive and thus may not play too well in Texas. But even without driving prices into the basement, the pressure on OPEC countries would certainly rise tremendously, particularly those with large populations. In turn, who knows what (unintended?) political changes that may cause?

washingtonpost.com: Mr. Renner,
How do you see U.S. and Middle East relations changing in regards to how the U.S and the U.N. deals with rebuilding Iraq and its oil infrastructure? Is this one of the most important American foreign policies to take shape?

Michael Renner: How Iraq is rebuilt and reshaped is indeed a critical issue. If the region's worst fears come to pass and the US turns out more an occupier preoccupied with oil than a liberator, then it's entirely possible that we'll see continued political upheaval in the Middle East. In close tandem, I think we need to watch how the administration now addresses the Israeli-Palestinian conflict, perhaps the most explosive issue in the region.
As regards the UN's role: unfortunately, the administration is determined to sideline the organization, even though it has tremendous expertise in the many social, economic, and environmental matters that need to be addressed for the region to be stabilized. If that policy stands (despite the wishes of many of our allies), it's bound to be a major mistake.

Michael Renner: Thank you, everyone, for your excellent questions. I think it's clear that the answers to at least some of these (and other) questions still aren't known. It's important to watch further developments closely, and particularly to try and bring as much transparency into the situation as possible.
Thank you,
Michael Renner


That wraps up today's show. Thanks to everyone who joined the discussion.

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