Behind the scenes, an oil imbroglio brews

CAPITOL IDEAS

Is America's confrontation with Iraq really about oil?

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BY DAVID E. SANGER

Many times in recent months, Saddam Hussein has sought to rally support

by asserting that President Bush's condemnation conceals a desire to seize Iraq's oil fields. Such declarations play smoothly into Arab suspicions that America is a nation of rapacious capitalists attempting to free themselves of reliance on OPEC. It's a convenient oversimplification that ignores the threat Hussein poses to his neighbors, his willful defiance of the disarmament agreement he signed at the end of the Gulf War and his continued efforts to build nuclear weapons.

But the Bush Administration does its case harm by downplaying the oil factor. Few allies are convinced that Bush would care so much about Hussein if Iraq had no oil. The Bush Administration might win more support if it described its true fears: that Hussein will use oil as a weapon, and that oil revenues are funding his quest for nuclear weapons.

Such official silence complicates the politics of invasion. Those who believe the Iraq issue will be resolved by a swift "regime change" ignore the likelihood that an American victory over Iraq, whose much-coveted reserves are exceeded only by Saudi Arabia's, will embroil the United States in new disputes with friends and enemies alike, especially allies who are also economic competitors.

It's almost impossible to get the Bush Administration to discuss its oil objectives publicly. But every once in a while, the topic slips out, as it did in late August when Vice President Dick Cheney briefly mentioned it in a speech laying out the case for confrontation:

"Armed with an arsenal of these weapons of terror, and seated atop 10 percent of the world's oil reserves, Hussein could then be expected to seek domination of the entire Middle East, take control of a great portion of the world's energy supplies, directly threaten America's friends throughout the region and subject the United States or any other nation to nuclear blackmail."

Cheney's warning explains why White House plans for Iraq rely on two assumptions: That the United States will occupy the country for a number of years, and that reconstruction will be paid for with oil.

But who will get access to that oil? Always a politically savvy operator, Hussein spent much of the past few years signing agreements with oil companies around the world that take effect, at least in theory, when United Nations sanctions are lifted. He carefully favored companies from three of the five permanent members of the U.N. Security Council: China, Russia and France. Each has argued privately that its contract should be honored by whatever government replaces Hussein's.

With Iraq's oil rights hanging in the balance, negotiations over the country's fate resemble a grand bazaar. France's commercial interests, along with its traditional suspicions of U.S. power, could explain why it has so far resisted Bush's policy of confrontation. Turkey has long claimed rights to the Kirkuk oil fields on its border with Iraq, and if the United States wants to give Turkey an incentive to deal with Iraqi Kurds, oil could be the diplomatic tool. China is of two minds: Its economy relies on a stable supply of Middie Eastern oil, but also on U.S. foreign capital.

Russia is also nervous. It wants guarantees that the $7.6 billion it says it is owed by Iraq will be honored by an occupation government. Then there are the 300 Russian companies doing business with Iraq under the United Nation's food-for-oil program. "If there is military action, the prospects for us in Iraq will be zero," fretted Nikolai P. Tokarev, an oil executive and member of a Russian government commission on Iraq, in The New York Times recently. "Do Americans need us in Iraq? Of course not. Russian companies will lose the oil forever if the Americans come."

This has caused a looming problem for the United States. Competing interests between the U.S. government and its allies, enemies and oil lobbies have the makings of an ugly post-Hussein struggle.

In public, President Bush will no doubt continue to talk about Hussein as a dictator who gassed his people and is a threat to his neighbors and world peace. But sooner or later, if Hussein is successfully removed, Bush will have to begin talking about the politics of allocating Iraq'a huge reserves--and come up with a strategy the world considers fair. Otherwise, he will only justify suspicious that his true goal is a bald oil grab.

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David E. Sanger covers the White House for The New York Times.