Oil for Iraq- an Israeli pipedream- Jane's Foreign Report

FOREIGN REPORT – APRIL 17, 2003

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Oil from Iraq
An Israeli pipedream?

ISRAEL stands to benefit greatly from the US led war on Iraq, primarily by getting rid of an implacable foe in President Saddam Hussein and the threat from the weapons of mass destruction he was alleged to possess. But it seems the Israelis have other things in mind, things that give some weight to mounting concern in the Middle East that now Saddam has been disposed of, the regimes in Iran and Syria are next on President George W Bush’s hit list.

An intriguing pointer to one potentially significant benefit was a report by the Israeli daily Haaretz on 31 March that minister for national infrastructures Joseph Paritzky was considering the possibility of reopening the long-defunct oil pipeline from Mosul to the Mediterranean port of Haifa in northern Israel. With Israel lacking energy resources of its own and depending on highly expensive oil from Russia, reopening the pipeline would transform its economy at a stroke.

The pipeline has been inoperative since 1948, when the flow of oil from Iraq’s northern oilfields, currently under coalition control, was redirected from Haifa to Syria when the British mandate in Palestine expired. According to Walid Khadduri, editor-in-chief of the Middle East Economic Survey, the old pipeline no longer exists. “There’s not a metre of it left, at least in Arab territory,” he told Foreign Report. “It was cannibalised over the years and there are even built-up areas now where the pipeline used to run. So any pipeline would have to be built from scratch.”

To resume supplies from Mosul to Haifa would require the approval of whatever Iraqi government emerges following the end of Saddam’s regime and presumably the Jordanian government, through whose territory it would be likely to run as did the old one. Paritzky’s ministry was reported to have said on 9 April that it would hold discussions with Jordanian authorities on resuming oil supplies from Mosul, with one source saying the Jordanians were “optimistic”. Jordan, aware of the deep political sensitivities involved, particularly at this time, immediately denied there were any such talks.

Paritzky said he was certain the USA would respond favourably to the idea of resurrecting the Mosul-Haifa pipeline. Indeed, according to Western diplomatic sources in the region, the USA has discussed this with Iraqi opposition groups, including the Iraqi National Congress, led by Ahmed Chalabi, which expects to play a major role in a new Iraqi government.

Chalabi, a controversial figure, has discussed Iraq’s future relations with Israel with the USA, including efforts to secure recognition of Israel by the new government in Baghdad. It is understood from diplomatic sources that the Bush administration has said it will not support lifting UN sanctions on Iraq unless Saddam’s successors agree to supply Israel with oil.

Bush’s masterplan

All of this lends weight to the theory that Bush’s war is part of a masterplan inspired by pro-Israeli hawks to reshape the Middle East to serve Israel’s interests. Haaretz quoted Paritzky as saying that the pipeline project is economically justifiable because it would dramatically reduce Israel’s energy bill — by at least 25 per cent according to some industry estimates.

Strategically, Israel would not have to depend for its oil on distant suppliers and would have a measure of energy security it has not enjoyed since the 1979 overthrow of the monarchy in Iran, a key regional ally that supplied all Israel’s oil needs via a pipeline from Eilat on the Gulf of Aqaba to the Mediterranean port of Ashkelon in southern Israel.

US efforts to get Iraqi oil to Israel are not surprising, since it would get the USA off a hook it would rather not be on. Under a 1975 Memorandum of Understanding (MOU), then-US secretary of state Henry Kissinger negotiated an agreement with Israel that guaranteed all Israel’s oil needs in the event of a crisis. The MOU, which has been quietly renewed every five years, also committed the USA to construct and stock a supplementary strategic reserve for Israel, equivalent to some US$3bn in 2002. Special legislation was enacted to exempt Israel from restrictions on oil exports from the USA.

Moreover, the USA agreed to divert oil from its home market, even if that entailed domestic shortages, and guaranteed delivery of the promised oil in its own tankers if commercial shippers were unwilling or not available to carry the crude to Israel. All of this adds up to a potentially massive financial commitment to Israel, over and above the nearly $900bn in identifiable budgeted aid that the USA has provided Israel since 1949 (not counting the billions more in grants and other financial support not classified as foreign aid).

The USA has another reason for supporting Paritzky’s project: a land route for Iraqi oil direct to the Mediterranean would lessen US dependence on Gulf oil supplies. With the post-11 September emphasis on energy security in Washington, direct access to the world’s second-largest oil reserves (with the possibility of expansion through so-far untapped deposits) is an important strategic objective.

Now that Paritzky’s project is out in the open, it is sure to intensify Arab fury against the invasion of Iraq. That, in turn, is likely to result in some adroit diplomatic shuffling by Washington. Earlier efforts by Israel to tap into Iraq’s oil have all foundered, including one in 1987 that involved pumping the oil to Haifa via the occupied Golan Heights.

However, it is worth noting that the USA and Israelis were involved in talks in the mid-1980s to develop a pipeline from Iraq (then locked in a war with Iran in which Tehran’s ally Syria had cut off the flow of Iraqi oil across its territory to the Mediterranean) across Jordan to the port of Aqaba, a stone’s throw from Eilat. Among the US participants was Donald Rumsfeld, then an adviser to President Ronald Reagan, and the American Bechtel Corporation, headed by a future secretary of state, James Baker.