The Quest: Energy, Security, and the Remaking of the Modern World Read online

  But this time, “the Boys” did not cooperate. The January 2006 attacks were the beginning of a wave of bloody intimidation, kidnappings, and murder. Violence in Nigeria became a key factor in the world oil market. “The balance of world oil supply and demand has become so precarious,” U.S. Federal Reserve chairman Alan Greenspan warned in June 2006, “that even small acts of sabotage or local insurrections have a significant impact on prices.” The dense swamps and intricate network of creeks and waterways made it easy for MEND and such similar organizations as the Martyrs Brigade to attack and then fade back into the jungle—and they did so with impunity. One night shortly after the presidential election in 2007 of Nigeria, the family home in the Delta of Goodluck Jonathan, the new vice president (and now Nigeria’s president), was burned to the ground by one of the gangs. It was meant as a demonstration of power—and as a warning.11

  In the face of constant violence in the Delta and the killing and kidnapping of their workers, the international oil companies repeatedly evacuated their employees, closed down facilities, and declared force majeure on shipments. Plans for substantial expansion of capacity were shelved. As it was, without physical security, the oil could not flow. At some points, upward of one million barrels per day—40 percent of Nigeria’s total output—was shut in and lost to the world market. That deficit was one of the key factors in the rise of prices. And it was certainly a loss for the United States, for which Nigeria had just moved up in the rankings to become its third-largest source of imported oil.

  NATURAL DISASTER

  Somewhere above the west coast of Africa, unseen and unnoticed on a cloudless day, solar radiation penetrated the earth’s atmosphere and struck an expanse of surface of the southern Atlantic. The sun’s rays transferred their energy to an enormous number of water molecules, transforming liquid into gas and sending these molecules back into the sky as a gaseous vapor. Winds off the dry Sahara and the power of the earth’s rotation pushed these clouds of water, now coalescing into large bands of tropical moisture, westward, toward the American continent.

  No one took notice until August 13, 2005, when a forecaster at the National Hurricane Center in Miami identified a mass of clouds over the tropical Atlantic, 1,800 miles east of Barbados. Ten days later, those same clouds once again caught the attention of the National Hurricane Center as they merged with another tropical storm and began to slowly churn. On Thursday morning, August 25, what had now been christened Hurricane Katrina made landfall near Miami Beach but without heavy devastation. The storm gained scope as it passed into the Gulf of Mexico.

  By August 28, it had been transformed into a huge storm, a frighteningly ominous black mass, sprawling across the map—from the Yucatán Peninsula in Mexico to the southern United States. With winds as powerful as an EF4 tornado, Katrina was already one of the most powerful storms ever recorded by the National Oceanic and Aeronautics Administration.

  America’s largest energy complex is in and around the Gulf of Mexico, and it was right in the bull’s-eye. Over more than six decades, thousands of oil and gas production platforms had been built offshore, in both shallow waters, within sight of shore, and deepwater far out at sea. At the time, almost 30 percent of U.S. domestic oil production and 20 percent of natural gas production came from the Outer Continental Shelf in the Gulf of Mexico. Almost a third of the country’s entire refining capacity—which turns the crude into gasoline, jet fuel, diesel, and other products—stretches along the shores of the Gulf.

  Now, with Katrina approaching, the entire offshore industry went into emergency mode. Workers rushed to shut in the wells, secure the platforms, and activate automatic systems; they then hurriedly climbed into helicopters and raced the increasingly powerful winds back to shore.

  As winds reached a peak strength near 175 miles per hour, Katrina hit the offshore energy complex and then slammed with devastating force and surging seas along the Louisiana, Mississippi, and Alabama coasts, blowing down buildings, washing away homes, overturning cars, ripping out power lines, flooding the entire region, and forcing 1.3 million to flee as temporary refugees.12

  What ensued was a human tragedy of far-reaching proportions. The worst violence was reserved for New Orleans, where the levies were breached, opening the way for the waters to flood into streets and homes built below sea level, submerging large parts of the city under water, forcing up to 20,000 people to seek refuge in the Superdome and leaving more than 1,800 dead.

  Rita, a new storm, also one of the most violent hurricanes ever recorded, similarly spawned in the South Atlantic, headed straight down the center of the Gulf. Once again, the industry sprang into emergency mode. Rita hit the platforms that had been spared on Katrina’s course and then tore through onshore oil refining centers, leaving some of them severely damaged and flooded.

  Altogether, more than 3,000 platforms and 22,000 miles of undersea pipeline were in the direct path of the two storms. A total of 115 platforms were completely destroyed (most of them older ones, not built to 1988 standards); 52 were damaged, as were 535 pipeline segments of pipeline. Yet so effective were the environmental containment measures that the offshore production facilities did not leak. At the peak, the hurricanes knocked out 29 percent of total U.S. oil production and almost 30 percent of U.S. refining capacity. Months later, a significant part of the production and refining operations was still not back on line.13

  Onshore, some 2.7 million people were left without electricity. With electric power down, the long-distance pipelines that carry gasoline and other refined products to the East Coast could not operate, and supplies became very tight in the Southeast and the Mid-Atlantic states. The gasoline may have been sitting there in the underground tanks at the stations. But without electric power there was no way to pump it out and into the tanks of the ambulances and police cars and fire engines and repair trucks so that they could carry out their rescue and repair missions amid the chaos and devastation.

  Oil prices surged upward, both because of the disruption itself and as word of shortages sent tremors of panic and fears of gas lines through the public. The two storms sparked the largest disruption of oil supply in the history of the United States—a loss, at its peak, of 1.5 million barrels per day. Other countries took the unprecedented step of shipping emergency stocks of oil to the United States to help make up for the shortfall.

  By 2006 production was recovering in the Gulf of Mexico, and supplies from offshore were once again making their way to consumers. But the market continued to feel the impact of the various losses of supply from the aggregate disruption. Moreover—in addition to Venezuela, Nigeria, and Katrina and Rita—another disruption was having a big impact on the world market. This one was in the very heart of the Middle East.

  7

  WAR IN IRAQ

  In late 2002, Philip Carroll received a phone call from an official in the Pentagon. The Department of Defense was putting together an advisory group on oil, and Carroll was a sensible stop. Twice retired—first as CEO of Shell Oil USA and then the engineering company Fluor—Carroll came equipped with considerable international experience in the logistics and infrastructure of energy supply, as well as a reputation for diplomatic skill.

  The questions were about how and what to plan for, in terms of oil, in the event of war. Two things were known: Iraq was highly prospective but had not really been explored since the 1970s and indeed was one of the least explored of all the major oil-exporting countries. And its industry was in poor condition, although no one really knew how poor. Carroll recommended that the DOD do an in-depth study and think through how the industry could be managed during postwar transition. A few months later, in early 2003, Carroll was formally asked if he would go out to Iraq as oil adviser following U.S. military action. He would become one of about twenty other senior advisers, each to advise and help direct an Iraqi ministry. By that time it was more than clear that the United States, along with Britain, Australia, Japan, and a score of other nations, in what was called “the
coalition of the willing,” would shortly be going to war.

  WHY THE WAR?

  Iraq was an oil country. Its only export was oil. It was a nation defined by oil, and as such was a country of great significance to the global energy markets. But the ensuing war was not about oil. It resulted from a convergence of factors: the primary ones were the September 11, 2001, attack and its consequences, the threat of weapons of mass destruction, the way the 1991 war ended, the persistence of Saddam’s intransigent and ruthless rule, and the way in which analysis was, and was not, carried out.

  Saddam had an “addiction to weapons of mass destruction,” as the head of the U.N. weapons inspection program put it on the eve of the war. For decades the Iraqi dictator had devoted a significant part of the country’s resources to the development of chemical, biological, and nuclear weapons. Despite his agreements with the United Nations after the Gulf War, both Western and neighboring countries believed that Saddam was continuing to develop WMD and that, if not restrained, would indeed acquire them. For instance, a 1998 National Intelligence Estimate reported that while Iraq’s WMD capability had been damaged by the Gulf War, “enough production components and data remain hidden and enough expertise has been retained or developed to enable Iraq to resume development and production of WMD . . . Evidence strongly suggests that Baghdad has hidden remnants of its WMD programs and is making every effort to preserve them.”

  For the war planners, the likely use of such weapons by the Iraqi regime was a central factor in military planning, right up to and into the war itself, when, as a result of intercepted signals, some units carried bulky, cumbersome masks, impermeable gowns, and individual antidotes for chem-bio attacks. The postwar failure to find WMD capabilities, despite much effort, undermined the credibility of the decision making in the eyes of many. Some parts of the U.S. intelligence community—notably the State Department’s Bureau of Intelligence and Research and some in the CIA—had dissented, arguing the view that Saddam was probably still not pursuing the weapons but their arguments were discounted. The general view was that Saddam certainly was acting on his addiction. And there was within the U.S. intelligence community, the Middle East National Intelligence Officer Paul Pillar wrote, “a broad consensus that such programs existed.” There was, however, no agreement on their scale, timing, effectiveness, and utility.1

  France and Germany—along with Russia—opposed the decision to go to war at every step. French president Jacques Chirac emerged as a particular foe to supporters of war, stating that “nothing today justified a war,” and that there was, in his view, “no indisputable proof ” of weapons of mass destruction. But Chirac was reflecting the view of the French intelligence service. “We had no evidence that Iraq had weapons of mass destruction,” recalled a senior French policymaker. “And we had no evidence that it did not. It may be that sanctions had worked much better than we had thought.”2

  But Saddam made several miscalculations. He thought that the scale of the antiwar demonstrations in Europe would somehow ensure that the coalition would not actually invade. In what proved to be a massive miscalculation, he chose to convey ambiguity as to what he was doing about such weapons—and what he was covering up. To do otherwise, he apparently thought, would have weakened his regime vis-à-vis both Iran and domestic opponents. As he told his inner circle, “The better part of war was deceiving.” To an interrogator after the war, who asked him why the illusion, he had a one-word reply: Iran.

  There was also the matter of assuming that others saw the world the way he did. It has been suggested that Saddam could never have believed that the 1991 coalition would have stopped short of Baghdad for something so mushy as the “CNN effect” on television viewers around the world and because of the fear of splintering the coalition. He would not believe it because he would not have acted on such reasons. It had to be because they feared that he had equipped his forces with chemical and biological weapons for the final defense of Baghdad. This was a very compelling reason to maintain the illusion.3

  From the coalition side, there was good cause to proceed on a worst-case assumption: in the aftermath of the First Gulf War, it was discovered, with some shock, that the Iraqi regime was six to eighteen months away from a crude nuclear weapon. In retrospect, had Saddam not been so hasty but instead waited to invade Kuwait until 1993 or 1994 rather than 1990, he would have been in a much stronger position—equipped with some kind of nuclear weapon capability, and operating in a much tighter world oil market. All this would have reduced the flexibility of his opponents.

  With the United States’ having underestimated Saddam’s capabilities once, the Bush administration was not going to repeat that mistake. There was all the more reason for such a response given 9/11 and in light of Saddam’s evident appetite for WMD and his hunger for revenge after 1991. Laura Bush later wrote of her husband, “What if he gambled on containing Saddam and was wrong?” Bush himself said, “That was not a chance I was willing to take.” This gamble seemed all the more risky in the state of permanent anxiety and tension that followed 9/11: after the attacks, a daily litany of reports flowed into the U.S. government about plots and attacks prevented, which only added to the constant apprehension about those plots that might not be nipped in time. “ We lived with threat assessments more disturbing than any ever spoken on the air,” said Laura Bush.

  As a senior State Department official wrote to Secretary of State Colin Powell prior to the war, “September 11 changed the debate on Iraq. It highlighted the possibility of an Iraqi version of September 11, and underscored concerns that containment and deterrence will be unable to prevent such an attack.” Some argued that Iraqi intelligence had direct links to, and had perhaps even coached, Al Qaeda. Others said that such a link was highly dubious, indeed unlikely, and certainly unsubstantiated. “The intelligence community never offered any analysis that supported the notion of an alliance between Saddam and al Qaeda,” said Paul Pillar, the national intelligence officer. But that did not mean that, under the premise of “the enemy of my enemy is my friend,” there could not be cooperation in the future given their common enmity toward the West.4

  Iraq was already at the top of the agenda of some of the senior policymakers prior to their taking office in the administration of George W. Bush. A policy review of options related to Iraqi sanctions had been launched in the summer of 2001. A few days after 9/11, at a meeting of President Bush with his senior advisers at Camp David, some sought to add Iraq as a target for counterattack, alongside Al Qaeda and Afghanistan. At that point Bush was firm in his rejection. In early October 2001, the U.S. ambassador to the United Nations was instructed to read “the toughest message I’d ever been asked to deliver” to Iraq’s ambassador, warning of the dire consequences for Iraq if it tried to take advantage of the 9/11 attacks. But it was not until 2002, fueled with the confidence from what seemed to be the very successful and very short campaign to evict the Taliban from Afghanistan that plans really began to congeal around a war with Iraq. And, in the aftermath of 9/11, it was going to be a preventative war—launched under what became known as the policy of preemption.5

  To the inner circle of decision makers, 9/11 demonstrated the risks of not acting in advance to prevent Saddam’s acquisition of such weapons. Vice President Dick Cheney, who had been secretary of defense during the Gulf crisis, was central to the Iraq decisions. “As one of those who worked to assemble the Gulf War coalition,” he said in 2002, “I can tell you that our job then would have been infinitely more difficult in the face of a nuclear-armed Saddam Hussein.”

  President Bush laid out the fundamentals of the new policy in a speech at West Point in June 2002. Traditional “deterrence” did not work against “shadowy terrorist networks.” And “containment” did not work “when unbalanced dictators with weapons of mass destruction can deliver these weapons on missiles or secretly provide them to terrorist allies.” The only answer was “preemptive action,” Bush added, “if we wait for threats to fully materia
lize, we will have waited too long.”

  There was also a conviction among some that the existing political systems and stagnation in the Middle East were the breeding grounds for the likes of Al Qaeda and terrorism. A “new” Iraq could be the beginning of the answer. The skillful and clever Iraqi émigré Ahmed Chalabi, claiming to speak both for the exile community and those within the country, convinced some policymakers that an Iraq without Saddam would welcome the coalition as liberators and would quickly embrace representative democracy. These decision makers were convinced that “a pluralistic and democratic Iraq” would have a transformative effect in the Middle East, and in something akin to the fall of communism, set off a process of “reform” and “moderation” throughout the region.6

  Contrary intelligence and analyses that did not fit this vision were pushed aside. Moreover, after thirty-five years of Baathist dictatorship, some could argue that, in any event, not much was really known about such “facts on the ground” as religious cleavages, sectarian rivalries, the importance of tribal loyalties, and the role of Iran. Those who did know something about these details, or who questioned the basic policy convictions, or who warned that these assumptions were too optimistic, were progressively squeezed out of the decisionmaking process.

  The shock of 9/11 created a determination to demonstrate the strength of the United States, reassert a balance of power, and seize the initiative. There was also the desire to finish the “unfinished business” of 1991. After the 1991 Gulf War, Saddam conducted a brutal war against the disenfranchised Shia, which might have been prevented had the armistice not permitted Saddam’s forces to use helicopters in the south.