Ghosts of Empire

by Kwasi Kwarteng

  Saddam constantly boasted of his achievement in snatching Iraq’s oil wealth from the greedy hands of the imperialists and giving it back to the Iraqi people. In a meeting of oil department bureaucrats on 1 June 1983, the eleventh anniversary of the nationalization of the IPC, he recalled that the real national independence of Iraq had not begun in 1921, nor even with the Ba’athist coup of July 1968; Iraq’s real independence, he claimed, dated from 1 June 1972.24 Always keen to burnish his credentials as an Arab nationalist, he would talk about how his relatives had been killed by the British, how his forefathers had fought bravely against the Turks. He would claim that he had considered himself a nationalist from the time his mother told him of his uncle, Tulfah, who had fought against the British in 1941.25 Against this background of fierce anti-imperialist struggle, the nationalization of Iraq’s oil took on a heroic quality. On the eighth anniversary of the nationalisation, on 1 June 1980, Saddam invited a group of young children to the Presidential Palace. He went on to tell them a sort of bedtime story about the nationalization. He explained to his captive audience that children in the dark days when the colonial powers controlled Iraqi oil could not afford the ‘nice clothes you have on now’ and could only look at Western children, the children of the British and Dutch oil executives, with envy. Now all the shares were for the Iraqis. There were ‘no shares for foreigners’.26

  At the time of the nationalization itself, Saddam proclaimed that this act had ‘crowned a dauntless unremitting struggle that lasted for over half a century against foreign domination and alien exploitation’. These sentiments chimed harmoniously with his much vaunted nationalism, as well as with his socialism. ‘The presence of the oil companies did not only arrest the economic progress of the country. It also menaced the country’s independence and . . . conflicted with the Revolution’s ultimate aim of: unity, freedom and socialism.’27 The British reaction to Saddam’s move was not as robust as might have been expected. Within a year of the nationalization, the Foreign Office was discussing whether to help British companies to get back into Iraq. In August 1973, Tom Boardman, a minister in the Trade Department, was writing to Sir Alec Douglas-Home, the Foreign Secretary, about a move that Shell and CFP, the French oil company, were making in Iraq. These companies had proposed a ‘European Consortium involving themselves, Italian, German and possibly other oil companies’ to go to Iraq and ‘undertake large-scale oil exploration and development’. Shell, it seemed, was convinced of the richness of Iraq’s oilfields. It believed, according to the British minister, that there was ‘no virgin territory in the Middle East or outside it of equal promise’.

  Boardman urged the Foreign Secretary to become more actively involved in this potential development. British involvement would ‘improve our economic and political relations with Iraq’. Against the background of the Cold War, it was also important to provide ‘an extra link with the West’ in Iraq which since 1972 had been in ‘alliance with the Soviet Union’. Boardman felt that Shell’s proposal needed a ‘good deal more study’. He would later tell Shell that the British government ‘saw no objection to the group making initial soundings in Iraq, provided no mention is made of possible government involvement’.28

  Edward Heath, the Prime Minister, cautiously expressed the view that it was a ‘very dubious proposition’.29 The scheme involved the Western governments giving aid to the Iraqis in exchange for access to their oil. Anthony Parsons, a senior Foreign Office official, and an expert on Iranian affairs, felt the scheme was ‘imaginative’ but would make things difficult for the Saudis and the Shah of Iran. How ‘could we begin to explain to the Shah, the Saudis and the Kuwaitis that we were prepared to be far more generous to Iraq (of all countries) than toward any of our friends in the region?’ he asked.30 The potential of Iraq as a rich source of oil was a factor which loomed large in the minds of British civil servants. One Foreign Office memorandum from July 1973 referred to Iraq as perhaps ‘the only Middle East country with real hope of discovering very substantial new oil reserves’. The reserves there would be ‘maybe greater than those of Iran and perhaps remotely approaching Saudi Arabia’.31

  The British government and Foreign Office were involved in these discussions about Iraqi oil through the whole of the second half of 1973, while Heath remained guarded. In August, he was wary of being ‘bounced’, as he put it, into the project by Shell. Displaying the same reticence as the Prime Minister, the Treasury was worried that the Iraqi government would just expropriate the assets when a suitable occasion arose.32 The Iraqis, for their part, conscious that their oilfields were highly desirable, began to drive a hard bargain. By the end of September 1973, they wanted a ‘major agricultural development programme’ in exchange for an agreement between Shell, CFP, VEBA of Germany and Eni of Italy, together with the Iraq National Oil Company (INOC), which would provide Europe with a ‘new major, stable supply of crude oil’.33

  The British government continued to worry about the reaction of the US and indeed of the Japanese governments when they found that their own companies had been excluded from the proposed deal. Britain was also concerned about the reaction of its allies in the region, particularly Kuwait, Iran and Saudi Arabia. It was clear that a deal with Iraq would be beneficial for the European Economic Community (forerunner of the European Union), and that it would help stabilize relations between Britain and Iraq. During October, it also became evident that the French government was interested in the project, although it would prefer ‘direct involvement’. Co-operation between a ‘major British oil company ... and European companies’ would benefit Britain, as it was in Britain’s interests ‘to help to secure the EEC’s long term oil supplies’. The Iraqis, it was recognized by British diplomats, wanted to develop their oil reserves to promote their general economic development.

  Unfortunately, the outbreak of the Yom Kippur War in October 1973 delayed Shell’s plans. At the end of that month, Patrick Wright, the head of the Middle East Department at the Foreign Office, had the ‘impression that Shell were not proceeding actively with this scheme’.34 But it was simply political circumstance, not any qualms about the nature of the Iraqi regime, which put the brakes on an oil deal with Iraq. Even after the Yom Kippur War, the Foreign Office official Stephen Egerton, an Old Etonian and Cambridge-educated Classics scholar in his late thirties, frankly admitted in December of that year that the ‘Iraqi regime is repressive and on occasion hostile; but it is apparently well in control’. Besides, Egerton argued, the Iraqis were ‘more anti-Soviet’ than they used to be.35 In the matter of oil politics, and in the context of the Cold War, the nature of the regime was secondary to stability. On 21 November, Wright, in full agreement with Egerton, summed up the situation with startling realism. Yes, there had been a ‘history of political unrest in Iraq since 1958’, but the present regime had ‘remained in power for five years’ and had used that power to ‘eliminate most potential sources of opposition’. According to Wright, there was ‘no strong evidence that the power of the regime [had] declined appreciably’. The Iraqi government was strong and stable. On that basis, Britain could do deals with it. ‘Although repressive and singularly unattractive, the present Government seems to be well in control,’ Wright contended in language which exactly echoed Egerton’s earlier assertions on this issue. Wright was also clear that Western capital and expertise would be needed to achieve Iraq’s goals. Even the Shah of Iran, it seemed, would welcome this. The Shah’s attitude was that the ‘need to counter Russian influence in the area in general and in Iraq in particular’ was the most important factor.36

  The willingness of the British government to deal with Iraq, even after the nationalization, illustrates the highly pragmatic attitude taken by the West towards the Middle East in the days of the Cold War. Money-making and the desire to act against encroaching Soviet influence were primary concerns of foreign policy, long before the days of the neo-conservatives and their more ideologically driven enterprises undertaken in the first decade of the twenty-
first century.

  The deal with Shell quickly faded into the background. Saddam Hussein, now the dominant personality in Iraq, grew in power and prestige. For those analysts who saw the end of his career in the US-led invasion of Iraq in 2003, it was easy to see him as a villain of the Middle East, a malign dictator who brutally repressed his own people. It is also easy to overlook the extent to which the West had praised and encouraged him. His relations with the French were particularly warm. A French Middle East expert, Charles Saint-Prot, as late as 1987 could describe Saddam as one of the defining figures of the twentieth century. He had undertaken to ‘give back life to his country, that is to restart the dialogue with history’. Saddam was a statesman to be compared to ‘Charles de Gaulle, Nasser, Nehru, Tito’ and even Churchill. The same writer quoted Jacques Chirac, who would later be president of France at the time of the second Gulf War in 2003, speaking in an interview in July 1985: Saddam was a ‘sincere and faithful man, animated by a grand ambition for his country . . . He plays an essential role on the Arab scene.’37

  Increasing oil revenue had raised Iraq’s prestige and influence across the Middle East. The country’s literacy programme, funded by the oil money, won plaudits across the world. To mark its September 1979 International Literacy Day, UNESCO (the United Nations Educational, Scientific and Cultural Organization) awarded a prize to the Iraqi campaign to eliminate illiteracy. Saddam, having sidelined the hapless Bakr in 1978, was now president and could bask indulgently in the sunlight of international approval. The UNESCO citation claimed that Iraq ‘has given the international community an example of determined political will in the field of education’.38

  With this level of success and adulation, Saddam could pose as the world-historical figure he had always dreamed of becoming. He was avuncular and condescending. Sometimes he engaged in highly personal and charismatic gestures, as in October 1979 when he saw a boy on the street in Baghdad and offered him a lift to school. He then went on an impromptu tour round the school. At other times, he would suddenly appear on the doorsteps of houses, selected at random in Baghdad, accompanied by a camera crew. Saddam was deliberately portraying himself as a modern Haroun al-Rashid, the eighth-century caliph who famously had wandered the streets of Baghdad in disguise in order to learn about his subjects’ concerns. Saddam too would go on fact-finding missions and undertake what he called his ‘early-morning surprises’. A favourite pastime was to appear at the door of a house and ask any boy who happened to open the door, ‘Where is your father?’ ‘He is asleep.’ ‘Wake him and tell him that President Saddam would like to share your breakfast.’39

  Saddam’s charismatic style was supported by huge oil revenues. The price of oil quadrupled in the latter half of the 1970s, while Iraq’s production of the fuel soared. The Iraqis now owned 100 per cent of the revenues. The Yom Kippur War had induced the Arab oil-producing states to test their economic strength by encouraging them to force up the price of oil, which had been a little over US$3 a barrel on 1 October 1973; oil cost over US$11 a barrel just three months later on New Year’s Day, 1974.40 There now flowed a torrent of wealth into the country: Iraq’s oil revenues increased from US$ 575 million in 1972 to over US$26 billion in 1980, an increase of nearly fifty times, in nominal terms, in just eight years.41

  These were heady days in Baghdad and in Iraq generally. Oil wealth generated a massive social transformation in the country, where there now existed greater social mobility. The women of Iraq enjoyed a more liberal attitude towards their rights and towards the fashions they were allowed to display in their clothes. The nouveaux riches of Baghdad, the contractors and entrepreneurs, enjoyed all the delights usually found in the more cosmopolitan cities in the West. The 1970s were a period of great expansion and progress. In Baghdad, roads of asphalt replaced dirt tracks; modern hospitals, the envy of the Arab world, and architecturally impressive schools were built.42 New housing projects and increased social security were also supported by the oil industry. Despite all this investment, nearly 40 per cent of the income derived from oil was being spent on military hardware.43 Iraq was becoming a significant regional power, envied and feared by its immediate neighbours.

  Saddam sat at the top of all this success, hailed by millions of his countrymen as an extraordinary man, a leader of great vision and stature. In his pomp and vanity, Saddam saw himself as a ‘new Saladdin’, a Nebuchadnezzar or a Sargon the Great.44 The cult of Saddam began in those years, and he would enter the Guinness Book of Records as the world’s most frequently painted head of state.45 The vast increase in oil revenues, the new possibilities which wealth offered the Iraqi people, stirred Saddam’s ambition. On 17 September 1980, fully resplendent in the uniform of the commander-in-chief of the armed forces, Saddam stood before the National Assembly of Iraq. He renounced the 6 March 1975 agreement which he had signed with the Shah relating to border and other disputes between the two countries. The Iranian revolution of 1979 had put into power a radical Shi’ite cleric, the Ayatollah Khomeini, a religious figure totally opposed to the secular Arab nationalism that Saddam and, before him, Nasser had espoused. Saddam denounced the Iranians as ‘racist’ and ‘Persian’ and launched a war against them.46 The Iran–Iraq conflict was a new manifestation of the age-old conflict between Ottomans and Safavids, between Arabs and Persians, which had shaped the region for many centuries. But in this act of aggression Saddam badly miscalculated.

  The Iran–Iraq War was a disaster for Saddam and marked the beginning of the end of his power. It was a prime example of hubris, of overreaching oneself and bringing about one’s ruin. Like Agamemnon, or many other heroes of Greek tragedy, worldly success had pushed Saddam too far. In taking on new projects and fulfilling new ambitions, he would lose everything. The Iran–Iraq War left him crushed by debt. When the ceasefire came into effect on 20 August 1988, he presided over an Iraq that ‘had seen most of its major oil exporting capacity destroyed, blocked or closed’. The war left him owing US$65 billion to Western creditors and to the Soviets. The Arab states, particularly Saudi Arabia and Kuwait, had lent Iraq US$80 billion.47 Kuwait was pressing for repayment and, by February 1990, Saddam faced another problem–the collapse of the oil price. In January 1990 the price of oil was US$21 a barrel. By the summer it was US$11. At such a low price, Iraq would be bankrupt. Saddam believed that some OPEC producers were flooding the market, not sticking to their assigned quotas, and that Kuwait, in its refusal to keep production down and thus raise the oil price, was the prime culprit. While refusing to decrease production, the Kuwaitis also declined to write off a US$40 billion loan they had granted Saddam during the Iran–Iraq War.

  Saddam needed a dramatic boost to the oil price by which he could obtain more money to pay off his enormous debts, but the Kuwaitis still refused to cut their production. The conquest of Kuwait was the most attractive solution to the Iraqi dictator. Saddam’s thinking was brutal but pragmatic: if he annexed Kuwait, he could cut back its production of oil and thereby increase the oil price, enabling him to obtain more revenue.48 It was the United States’ invasion of Iraq, accompanied by its allies, in 1991 that prevented Saddam’s dreams from being realized.

  In 2002, the year before the second Gulf War, Iraq was exporting nearly 2 million barrels a day under the UN’s ‘oil for food’ programme. This brought in US$12 billion of revenue, on an annual basis, but was still well short of the 1980 figure. No one knows how much oil there is in Iraq. Since Saddam Hussein’s forcible removal from power by the Americans in 2003, the country has not been stable enough for proper geological surveys to be carried out. Under Saddam, Iraq had never been open for such surveys, and no adequate one had been carried out there for more than forty years. Even though the exact amount of oil remains unknown, Iraq still has a huge potential source of wealth. The Iraqi government in 2008 announced that it could be sitting on the largest oil reserves in the world, with 350 billion barrels.49 This figure is much greater than Saudi Arabia’s 264 billion barrels. The official figure of 11
5 billion barrels still ensures that Iraq is sitting on the third largest oil reserves behind Saudi Arabia and Iran.

  The damage done by the second Gulf War has meant that any Iraqi government is desperate to develop its oil reserves. To do this effectively, foreign capital and expertise will be required. The old problems could re-emerge. In June 2008, Iraq threw its doors open to international investment in its oil sector. It announced two bidding rounds for oil- and gasfield development service contracts.50 Iraq is desperate to boost its production, after the ravages of both Gulf Wars, not to mention the terrible dislocation and suffering caused by the Iran–Iraq War. Interestingly, the Chinese National Petroleum Company has been the first foreign company to begin a project in an Iraqi oilfield.51 The unsettled state of Iraq, its lack of stability, was deterring foreign investors at the end of the first decade of the twenty-first century. Undoubtedly, the development of Iraq’s oil resources remains one of the great questions in the global economy in the coming decades.

  But what of the British Empire? To what extent was the settlement in Iraq after the First World War responsible for the wars, the chaos and the confusion that have bedevilled Iraq for many decades? The establishment of the Hashemite kings was a disaster; to set up a monarchy without any antecedent foundation in Iraq was irresponsible, and it may also have been a product of a besetting sin of the British Empire, its snobbery. The IPC, as an institution, was a purely commercial enterprise, and had no political legitimacy or expertise. Its sole aim was to extract crude oil from Iraq, without having any real regard to the welfare of the Iraqi people.