CIAO DATE: 9/5/2007

Ariel Cohen on Iraq, Oil, and US Foreign Policy

Nermeen Shaikh

June 2007

Asia Society

Ariel Cohen is Senior Research Fellow in Russian and Eurasian Studies and International Energy Security at the Sarah and Douglas Allison Center of the Davis Institute for International Studies at the Heritage Foundation.

He is a member of the Council of Foreign Relations, the International Institute of Strategic Studies in London, and the Association for the Study of Nationalities.

Dr Cohen spoke to Nermeen Shaikh on April 22nd in Almaty, Kazakhstan, at the Eurasian Media Forum. In the interview, Dr Cohen speaks about the war in Iraq, the privatization of oil and gas development, Eurasian regional politics, and the role of the US in the area.

Could you begin by telling me what you think the main insights were on the Iraq panel that took place here in Almaty?

The panel was close to consensus that the war is badly mismanaged, and none of the goals have been attained: (a) finding WMD; (b) creating any kind of democracy, western-style, in Iraq; and (c) creating more security for the region. Nobody found WMD, although everybody believed - the Clinton Administration, the Bush Administration, the British, the French, the Germans, the Israelis - that Saddam had a WMD program. So this was a major intelligence failure on the part of Western allies.

In terms of simple solutions of building Western-style democracy in Iraq, Western decision-makers totally underestimated the fissures within the Iraqi body politic, the hatreds between the Sunnis, the Shi'ites, the Kurds, and the influences from outside actors, be it Iran or Saudi Arabia. Now we're facing a situation in which Iraq threatens to become a huge black hole in the Middle East, destabilize the Gulf, threaten oil production in the Gulf, suck in Iran and create a line of confrontation between the rest of the Sunni Arab world and Iran from Lebanon (via Hezbollah), all the way to Basra and Shi'a populated areas of the Gulf. So we are overall much worse today, security-wise, in that part of the world than we were before the war.

I don't know if you saw the most recent issue of Foreign Policy magazine (March/April 2007), which argues that Iran, Moqtada al-Sadr and Al Qaeda are the biggest winners of the war in Iraq.

That's one way to look at it. I didn't see the article. Now extremists on both sides - Sunni extremists such as Al Qaeda and the broader Sunni global jihadi movement, on the one hand, and the so-called hardliners in Iran, President Mahmoud Ahmadinejad, the Revolutionary Guards, the most hardline and activist faction of the clerical regime in Iran - are in ascendancy. They hate each other. They're willing to tactically cooperate to push America out of the region. Sooner or later, especially if the US weakens, it might be pushed out of the region, at least partially. So that will create a vacuum in which the conflict between Sunnis and Shi'as will be exacerbated. And we may see outside actors moving in - Russia, in particular, after Putin's visit to the Middle East, where he offered more weapons and nuclear reactors to Saudi Arabia, and also the Chinese who have very significant oil interests in the Middle East.

I asked this question during the panel of Ambassador Holbrooke, and I'd like to ask you as well: To what extent do you think the US military presence in Iraq is contributing to the violence? In other words, there are people who argue that the American presence is part of the problem and that if the US military withdraws, the situation is likely to improve. Then there are others who think that the violence is a result of different groups -- Sunnis, Shi'as and so on - fighting for control of the state.

As long as the US is there, there will be factions that will attack the US. Right now it's primarily the Sunni insurgents. But in the future I don't exclude at all the possibility that Shi'a militants will also be attacking the US. But if and when the US pulls out, they will be killing each other at an even greater rate; we see it with Sunnis consistently attacking Shi'as and trying to provoke a civil war. Now, a lot of people don't understand the way the Sunni radicals are looking at this: namely, as the Sunni world at large versus the Shi'a world at large. And the Sunni world is bigger and more powerful. The extremists don't think in terms of nation states, they don't think in terms of national borders. They're thinking in terms of the Sunni umma versus the Shi'as and they have very disparaging views of the Shi'as; they call them all kinds of names. They deny their Islamic legitimacy. And if that's what they want to have, if they want to have essentially a civil war within the umma, well, you always have to beware what you wish for. The US should have been aware of what it wished for in Iraq.

Namely?

Namely, the US wanted to get rid of Saddam Hussein. Well, they got rid of Saddam Hussein. They got rid of this bulwark against the Iranians. People warned about that, by the way. So Sunni extremists who don't care how many casualties they take in fighting whatever conflict du jour they're fighting - be it against the Shi'as or against the Israelis or against somebody else - should be aware of what they wish for. Because it's impossible to predict, and then things escalate in conditions where they cannot predict the outcome.

Were you an advocate of the war prior to the invasion?

I wouldn't call myself an active advocate of the war. But I didn't oppose it. I wasn't writing anything saying that we shouldn't do it, again, because there was a vast consensus - Republican and Democrat - in Washington and also because I did believe that Saddam is a destabilizing factor in the Middle East. I did not expect the war to go as badly - the post-war situation, that is. The war itself, the military operations, the US obviously won hands down. It's the post-war environment that has been a mess.

I don't think the Iraqis did a very good job fighting a conventional war. But Saddam was a lifelong admirer of General Giap, the head of the Northern Vietnamese Army, who practiced a lot of these guerilla warfare tactics. And he laid down the doctrine pretty much. That was what the Iraqis were doing in terms of preparing for the post-military operation phase.

You were also, from what I understand, an advocate for the privatization of Iraq's oil fields. What's your view now on Iraqi oil, given the increasing violence and constraints to production, distribution, and so on? What do you think the US should be doing?

First of all, in terms of private development of oil and gas versus state-owned development, I still hold strong views that in a peaceful environment the private sector does a better job developing the resources. I also think that in today's security environment in Iraq, significant development is practically impossible; there has to be security before there can be investment. You have to have a semblance of a legal system. You have to have oil and gas laws. And obviously you have to have a political consensus between the three major groups in Iraq. That is what's being negotiated. Unfortunately, they're going back to the central oil ministry model that existed under Saddam. There are some very good people in the state oil sector of Iraq, professional people - but it still remains an open question if the security situation can be brought under control to the point where the oil ministry, the Iraqi National Oil Company and Westerners can move in with significant investment. Saddam was running that industry into the ground. On the technical side, it was grossly mismanaged. Iraq today is pumping just about as much oil as Saddam was pumping.

As I'm sure you're aware, there was a lot of speculation, both prior to and following the US invasion of Iraq, that one of the principal reasons for intervention - and this seems to have become a fairly mainstream view - was access to Iraqi oil. A recent opinion piece in the International Herald Tribune said that the law that was being pushed through the Iraqi Parliament, ostensibly about sharing oil revenues, could also be seen as a cover for privatization, since it would leave the Iraqi National Oil Company with just seventeen of Iraq's eighty known oil fields. The Bush Administration has been quite aggressive, this editorial goes on to say, in trying to have this law passed. What do you think the implications of such a law would be for Iraqi sovereignty?

First of all, I reject in the strongest terms the notion that the war was about oil or about control of oil resources. Iraq was selling oil, oil was available in the market. If the US just wanted oil, it would have propped up Saddam as a strong man to have more oil from Iraq. I think that the drivers for war were exclusively security and not energy.

As to the Iraqi oil bill, it is strengthening the central control of oil. So it's not true that it's a push towards privatization. The State Department actively is pushing for more state involvement in the economy, for job creation by the state. I think that's the wrong direction to go. I think the private sector is a better path to create jobs. And the purpose of the state is to create the environment in which jobs can be created. Unfortunately, the Iraqi state is now so weak it's not doing so.

But the law is an interesting hybrid. It increases the authority of the three regional or local governments in the distribution of licenses. Everything the local governments decide would need to be approved by Baghdad, by the oil ministry and possibly by parliament. The Iraqi system is very corrupt. I hear a lot of complaints from the industry about how corrupt it is. And that, too, will slow down the development.

Now, in the case of any country having large oil and gas revenues, the issue is not just development. The issue is how the income is distributed, corruption levels, modern accountability and accounting controls, transparency. I am not very optimistic about what will happen in Iraq on all these counts.

There seems to be virtually universal consensus on two points: one, that Iraq has become a training zone for terrorists, and two, that as a result of this, there's a much greater risk of terrorist attacks now than there was prior to the Iraq invasion. Could you comment on that?

Of course, Iraq is a training zone for terrorists. I think that these terrorists will be used just like the Afghan mujahideen were used, to spread that kind of militancy. The thousands or tens of thousands of foreigners who go through Iraq and fight there will then return to their countries and will engage in terrorism. In terms of higher levels of terrorism, at this point, it's primarily focused on Iraq itself. We are not at the stage where this metastasizes the way Afghanistan metastasized in 1990s. But whether it's going to happen? Quite possible that it's going to happen.

Likely?

Yes, likely. And by the way, it applies both to Iraq and Afghanistan. Because, again, you cannot look at the theatres of operation, both in Iraq and Afghanistan, in isolation from the rest of the world. These are threats of a global conflict, this is a global phenomenon and it has repercussions all over the world.

What do you think the problem was? Why did Afghanistan go so badly wrong?

I think not enough resources were deployed, both in terms of the military operations, and in terms of reconstruction. The counter-insurgency strategy is still deeply lacking, both in Iraq and Afghanistan. The US is the leading military power and the US still didn't get its counter-insurgency strategy down. The counter-insurgency strategy is still "one size fits all." It's not culturally specific, or geographically specific. And it won't work. I'm deeply convinced that the counter-insurgency strategy will not work if it remains a sterile, generic strategy.

Moving away from Iraq, could you comment on the challenges the US is facing in this region, broadly Eurasia?

In terms of the region, the US today is facing a rapid escalation of competition; the competition between the major powers in the region has become much stiffer. China and Russia are driving this, and both are becoming stronger: Russia because of its huge oil and gas revenues, China because of its economic growth and need for natural resources. China also has a fifty-year horizon for involvement in, and development of, Central Asia. The Chinese see this region as eventually an economic sphere of influence. I was in Beijing last fall and the Chinese, with great surprise, told me that the Russians and Central Asians were not very excited about China's fifteen-year program for creation of a free trade zone or the fifty-year program for economic development, writ large.

Of course, the people in Central Asia and in Moscow are not enamored of anything that smacks of long-term Chinese strategy. They don't operate off a long-term plan by any stretch. The governments and the leaders in the region, their job is to survive. And in the case of Kazakhstan, they're doing a pretty impressive job of economic development, too. But a lot of it is about political survival. In Russia the key issue is what happens with the presidency: Putin stays, Putin goes, who is he preparing to replace himself with? I just saw something very interesting: statistics on television coverage of Putin, Sergei Ivanov, the First Vice Premier - one of the heir apparents - and Dimitri Medvedev, the other First Vice Premier. Ivanov gets more coverage now than either Putin or Dimitri Medvedev. So it's a very interesting signal; judging by what I see today, it's actually Sergei Ivanov who looks better than the other guy.

Do you think that the US should try to counter either Russian or Chinese influence in Central Asia? And if so, what should US policy be?

Well, US policy fluctuates. We put a lot of emphasis on democracy promotion in Central Asia around 2003, 2004, and as a result, the Uzbeks opted for a divorce. They kicked out the US from an air base in Karshi-Khanabad and stopped military cooperation. There were claims that the US refused to pay rent for the air base. In place of the US, the Russians moved in as the predominant regional power and increased their power projection capabilities. They got their own military bases.

They also increased their presence in Kyrgyzstan. They are very actively opposing pipeline projects in Kazakhstan and Turkmenistan. The Russians are actively opposing pipeline projects that would divert oil and gas flows away from Russian territory. They want to remain in the position of monopoly or at least heavy domination.

And what is the US perspective on that?

The US wants to have some military presence to support the mission in Afghanistan. It wants to have some military presence to monitor terrorism, drug trafficking, things like that. It makes Russia very nervous. It makes China maybe even more nervous.

What about with respect to the oil?

With respect to the oil, the US would like to have at least a level playing field in terms of competition. The US does not like national oil companies that are opaque, and which are taking upon themselves the bulk of oil and gas development and all oil and gas transport. And that's the case today. Gazprom dominates the gas sector entirely. There's some talk about building a gas pipeline from Kazakhstan, Uzbekistan and possibly Turkmenistan to China through Kazakh territory. In terms of oil the only non-Russian transit that exists is Baku-Tbilisi-Ceyan (a port on the Mediterranean in Turkey). So it goes from Baku (Azerbaijan) to Georgia to Turkey through the Mediterranean coast. That pipeline just reached its projected capacity. It's a big success story for the US but it took twelve years to implement. These are very capital-intensive, long term projects. There's another pipeline that goes from Kazakhstan to the Black Sea but it goes through Russian territory and the Russians are messing with it in terms of tariffs and so on. It's called the Caspian Pipeline Consortium and it goes from Tengiz to Novorossiisk. But there are other projects. There's a gas pipeline that is being built now from Azerbaijan to Turkey. The US would like to see that pipeline extending itself to Turkmenistan and Kazakhstan. There will be more gas fields coming on line in Kazakhstan and also to tap into the huge resources of Turkmenistan. Today, Gazprom is taking everything, tripling the price of Turkmen gas and selling it in Western Europe, or substituting its own domestic gas production with cheap Turkmen gas. Russia is also pushing pipeline projects in the Black Sea area, such as South Stream (gas) and Burgas-Alexandroupolis (oil).

So there's a serious pipeline game afoot in Eurasia. But overall I would say that US power in Eurasia has declined. Not surprisingly, there was no consistency between State Department policy and Defense Department policy.

What were the differences?

Primarily democratization and the human rights agenda.

So do you see the US as ultimately losing out to Russia or to China in the region?

Well, first of all, Russia and China have potentially a clash of interests in Eurasia, especially on issues of energy. I heard Russian analysts saying publicly that the construction of an oil pipeline from Kazakhstan to China is a quote, "failure of Russian policy." But this is not very polite if you consider China your big ally in the Shanghai Cooperation Organization, the SCO. China is pushing the SCO as an economic cooperation umbrella. Russia is pushing the SCO primarily as a security umbrella to keep the US out. The Shanghai Cooperation Organization has issued a statement in the past demanding the departure of US troops and military forces from Central Asia. That was accomplished in Uzbekistan. It hasn't been fully accomplished in Kyrgyzstan. But the US presence in Kyrgyzstan was limited through sets of agreements. In general Kyrgyzstan is quite a problematic little country and is weak internally. So what Russia would like to see is pushing the US out and having itself as the dominant military and security power in Central Asia. Russian leaders also stated on different occasions that there are no justifications for a continuous US presence in Central Asia because of Afghanistan. They said that the "active military phase" of the Afghanistan operation is over and that the US can and should depart from Central Asia. Of course, the US will not do that.