Crude Vision New!
The Secret History of the Aqaba Pipeline
the early 1980's Iraq and America's newest enemy Iran were locked in a
vicious conflict. The use of chemical weapons by Saddam Hussein was
well-known. In fact, in November 1983, U.S. Secretary of State George
Shultz received an intelligence report describing how SaddamHussein's
troopswere resorting to "almost daily use of CW [chemical weapons]" in their war against the Iranians.
Undeterred by the reports, one month later, President Reagan dispatched a special envoy to Baghdad on a secret mission.
On December 20, the envoy meets with Saddam Hussein. He is not there to lecture the dictator about his use of weapons of mass destruction or the fine print of the Geneva Conventions. He is there to talk business.
The envoy informs the Iraqi
leader that Washington is ready for a resumption of full diplomatic
relations, according to a recently declassified State Dept. report of
the conversation, and that Washington would regard "any major reversal
of Iraq's fortunes as a strategic defeat for the West." Iraqi leaders
later describe themselves as "extremely pleased" with the visit.
The envoy was Donald H. Rumsfeld, then the CEO of pharmaceutical giant Searle.
The meeting is widely considered to be the trigger that ushered in a
new era of U.S.-Iraq relations, one that opened the door to shipments
of dual-use munitions, chemical, biological agents and other dubious
technology transfers. But for years what exactly was discussed in that now infamous meeting has been shrouded in secrecy.
In arecently released investigative report from the Institute for Policy Studies entitled Crude Vision: How Oil Interests Obscured U.S. Government Focus On Chemical Weapons Use by Saddam Hussein,
researchers Jim Vallette, Steve Kretzmann, and Daphne Wysham detail the
real reason Donald Rumsfeld was sent to Baghdad: Rumsfeld, under direct
instructions from the White House, was there to convinceSaddam Hussein
to approve a highly lucrative, and highly secret,oil pipeline project from Iraq to Jordan.
Examining recently released
government and corporate sources, the researchers document how a
close-knit group of high-ranking U.S. officials worked in secrecy for
two years attempting to securethe billion dollar pipeline scheme for
the Bechtel corporation. The Bush/Cheney
administration now eyes Bechtel as a primary contractor for the
rebuilding of Iraq's infrastructure.
Bechtel's pipeline would have carried a million barrels of Iraqi crude oil a day through Jordan to the Red Sea port of Aqaba.
What happened to thepipeline
deal? What trade-offs were made? Who were the players? How did Israel
fit into the scheme? What impact didit haveon current U.S. policy?
For answers to these questions, and links to the original memos and declassified cables, read GNN's Cointel interview with the report's lead author Jim Vallette here:
"While Iraq is not unique in
possessing these weapons, it is the only country which has used them -
not just against its enemies, but its own people as well. We must
assume that Saddam is prepared to use them again. This poses a danger
to our friends, our allies, and to our nation. Saddam is more wily,
brutal and conspiratorial than any likely conspiracy the U.S. might
mobilize against him. Saddam must be overpowered." - Donald Rumsfeld,
Robert McFarland, Judge William Clark, "Open Letter to the President," Feb. 19, 1998
GNN: What are the origins of western involvement in Iraq's oil?
Jim Vallette: The U.S.
and the British have a history of intervention in Iraq for oil. It
really goes back over seventy years to 1911 when the British, German
and Turkish formed a pipeline consortium interest. After WWI, the U.K.
took over Iraq and installed a king and took over this oil consortium.
Herbert Hoover, the former U.S. president, forced the British to allow
what is now Exxon Mobil into the consortium. So by the 1920's you had a
king installed by the British and you had oil exploration and
production controlled by the origins of British Petroleum (BP), Exxon, Mobil, TotalFinaElf of France and Shell.
From the 20's through the 60's, starting with the British and then with
the U.S., there was a considerable backlash among the Iraqi people
against the control of their resources.
There were interventions to get folks out
of power who wanted to nationalize the oil company. In 1958, [Col.]
Kassem took over in a coup and started nationalizing parts of the Iraq
Petroleum Company. In 1963, the CIA assisted in a coup that wound up with an important deal and their oil interests somewhat protected.
Then the Baath Party took over in 1968 and a few years later in 1972 they nationalized the oil interests of Exxon Mobil and BP.
That was the end of sixty-one years of a
British and U.S. stranglehold over Iraq's oil. It severed the
relationship between the U.S., U.K. and Iraq on a business and
political level. They turned their support to the north where the Shah Reza Pahlavi was
a very tight friend of the British and Americans. But then, the Iranian
revolution in 1979 swept him from power and made Iran a mortal enemy of
immediately Reagan put out an olive branch to Saddam. He took Iraq off
the list of states that support terrorism, despite evidence that they
still did - including harboring master terrorist Abu Nidal.
A year later the Iran-Iraq war started and
the Reagan Administration took over. Almost immediately they put out an
olive branch to Saddam, saying they were interested in reestablishing
business connections. They took Iraq off the list of states that
support terrorism, despite evidence that they still did [including
harboring master terrorist Abu Nidal]. But that allowed the sale of
dual-use munitions to Iraq.
In 1983, these business interests ratcheted up quite a bit after Bechtel
officials met with State Department officials to discuss a plan to build
an oil pipeline from Iraq to Jordan. George Shultz, the Secretary of
State, had gone from being president and CEO of the Bechtel
Groupdirectly into the Reagan Administration.
GNN: Tell me about Bechtel.
Bechtel is a privately held company, one of the largest construction
companies in the world. They and Halliburton are dominating the
contracting for post-war Iraq. They have deep ties with the Bush-Cheney Administration.
Shultz went straight from Bechtel to the White House, where he promoted this pipeline idea. They hired Donald Rumsfeld, who was then the CEO of Searle pharmaceutical company, for a couple of months as a special envoy to the Middle East, where he made several trips.
was never clear what Rumsfeld was doing in Baghdad in December 1983.
Newly released documents reveal he had marching orders from George
Shultz to promote a pipeline deal on behalf of Bechtel, Shultz's former
In the public realm, these trips have
always been described as peace missions, but it was never clear what
Donald Rumsfeld was doing in Baghdad in December 1983 in his meeting
with Saddam Hussein. But from papers that were released by the National Security Archive,
and by papers I found in the government's National Archives, it is very
clear in their own words that George Shultz gave Donald Rumsfeld
marching orders to go to Baghdad and promote this Bechtel pipeline to
In that meeting, Saddam told
Rumsfeld that he thought this was a good idea since we needed to avoid
the Persian Gulf where the Iranians were attacking Iraqi ships. This
would be a pipeline that would go west through Jordan to the Gulf of
Aqaba, and into the Red Sea, circumventing the Persian Gulf.
But Saddam told Rumsfeld that
he was worried about the possibility of the Israelis attacking the
pipeline. In his note back to Shultz, Rumsfeld said this is something
we need to talk to the Israelis about. So for the next few years, while
Saddam Hussein was unleashing thousands of chemical bombs on the
Iranians, the Reagan Administration and many of the architects of this
war were spending their time shuttling back and forth between Baghdad,
Amman, Israel and Washington, trying to get the Israelis to guarantee
that there wouldn't be an attack on the pipeline and to assuage
Saddam's fears that there wouldn't be an attack.
GNN: The Israelis had attacked their nuclear plant at Osirak in 1982.
Exactly. It was fresh in their minds. There were all sorts of
mechanisms that were put into place. Shultz's State Deptartment
pressured another U.S. agency, the U.S. Export Import Bank
that loans and credits exports to overseas projects, to extend hundreds
of millions of dollars to their project. Then the National Security
Agency put similar pressure on another agency, the Overseas Private Investment Corp., to give insurance to the project, all designed to allay Saddam's concerns.
"It got dirtier and dirtier."Bechtel hired a Swiss billionaire to bribe Israeli Prime Minister Shimon Peres.
A lot of this was being hatched out of the Bechtel offices, in cahoots with their buddies in the State Department and the National Security Council, and this went on for two years. It got dirtier and dirtier. Bechtel met with a Swiss billionaire Bruce Rappaport, who was close personal friends with the Israeli Prime Minister Shimon Peres. Rappaport and another agent E. Robert Wallace
tried to make certain arrangements with the Israeli government, which
included funneling off oil pipeline profits into Peres' Labor Party.
GNN: Pipeline protection
money. [Peres was reportedly offered $700 million over ten years.
Rappaport was later investigated by the FBI for illegal oil dealing.
Wallace and his former client Attorney General Edwin Meese were
investigated by a special prosecutor for their role in the bribing
scandal. See the National Security Archive for an extensive list of documents relating to the scandal, including a photo of Iraqi Foreign Minister Tariq Aziz and Reagan.]
Exactly. They also looked at ways of dedicating Defense Department
funds as a way of insuring against attack, and were looking at all
sorts of mechanisms off the books that would set up this deal. This is
what really preoccupied U.S. policy with Iraq at the same time Saddam
Hussein was unleashing weapons of mass destruction.
GNN: At one
point, at the same time the State Department was urging the
Export-Import Bank to push through this loan for the pipeline, the
State Department itself was issuing statements criticizing Iraq for
using chemical weapons. It's taken so long for this major operation to
come out, it must have been very top secret. How aware where they in
keeping it under wraps?
Jim Vallette: There was definitely an assumption that these documents were never going to come out.
GNN: How were they just sitting in the National Archives?
There was an independent investigation into Edwin Meese, who was made
the Attorney General under Reagan in 1985, and his relationship with E.
Robert Wallach, who was one of the pipeline agents. He owed money to
Wallach, who was an attorney, from a past defense. Wallach, once hired,
went straight to Meese and said can you get your boys and get the ball
rolling on this pipeline? And Meese did get the ball rolling in the
National Security Council.
The timing of the official proclamations was interesting.
GNN: Yes, were those same people issuing statements condemning Iraq aware of these back channel deals going on?
Sure, in these memoranda you can see that in behind the scenes
communications, they were saying, 'of course we had to say something
about this, but just don't source your chemical weapons from the U.S. -
don't embarrass us because we don't want this issue to dominate our
Later, in March 1984 the United
Nations had a team of experts go to Iran who came back and reported on
March 28th that indeed Iraq had used chemical weapons on Iranians that
same day Rumsfeld was back in Baghdad trying to push the pipeline deal.
Then things kind of cooled off,
first with the Israeli elections. The Labor Party took over from the
Likud Party as the dominant party in Israel and they had been relying
on contacts with the existing government in Israel. It took about six
months for Bechtel to work out this deal to find this other way, which
they did in January 1985, when Bechtel worked out a deal with this
Swiss billionaire Bruce Rappaport,
who was close friends with Peres. Throughout 1985, Peres provided
certain levels of guarantees, which got stronger and stronger as the
pot sweetened. In the summer of '85, Bechtel and the pipeline and
others hired two very high level officials; one was James Schlesinger, who was a Defense Secretary in the 1970s [and a CIA Director]. They also hired Judge William Clark,
who was known as the Second Reagan or his right hand man. He was
National Security Advisor for Reagan, left office and took a $500/hour
job to promote the plan. He flew to the Middle East to discuss the
pipeline, representing himself not as a pipeline agent but as being on
[official] White House business.
I'm not making this up. Folks
can read all of this themselves. It was really amazing to see all this
stuff unfold and piece it together, and these are the same guys who are
using this justification for the invasion of Iraq that Saddam must be
disarmed of weapons of mass destruction. They say it doesn't have
anything to do with oil.
GNN: Why did Saddamultimately decide not to go through with the deal at the end of 1985?
A couple of things happened. Around this time he was also negotiating
to do deals to do pipelines through Turkey and Saudi Arabia, and those
were completed. He also thought Bechtel was overpricing the project.
Bechtel said it was a billion dollar project to build it. Saddam
apparently thought it would be half of that.
GNN: It fell through on the numbers.
were steaming mad. Reagan's boys had expended a lot of political
capital on this. They turned a blind eye to chemical attacks for
Jim Vallette: There may
have been an element of Saddam using the U.S. as leverage against these
other contracts. They were steaming mad. Bechtel was steaming. The
Reagan Administration had expended a lot of political capital on this.
They turned a blind eye to chemical attacks for naught.
GNN: How did U.S.-Iraqi relations progress from there?
That was really the last big effort to expand business ties between
Washington and Baghdad. But Iran was still... there was still some
relations between the first Bush Administration and Saddam allowing
some dodgy technologies to get in there. Then it became 1990, and
Saddam Hussein accused Kuwait of being in cahoots with the United
States in influencing oil prices, which Saddam claimed was a threat to
Iraq's national security, and with that pretext he invaded Kuwait.
Since then, the U.S. has seen
oil contracts go to other countries like France, Russia and China.
These are multi-billion dollar contacts. Beyond that the landscape
hasn't really changed, in terms of what weapons and what tactics he has
used to stay in power. But what has changed in the intervening 12 or 15
years, has been this lucre being parceled out to other interests.
GNN: And these
guys got back into power. Do you think there's a personal feeling of
resentment that these guys spent the good part of the early 80's trying
to do a deal that never happened?
They keep calling him a wily dictator that can concoct these wild
schemes greater than anything the U.S. could concoct against him, so
maybe that reflects some sort of psychological state remnant of their
dealings in the 80's.
In the 90's, a lot of these
guys were in think tanks and in business concocting the current
strategy against Iraq. In a lot of their papers, and in their
testimonies before Congress up until last year, they were justifying
their attack on Iraq in terms of oil. As recently as last August when
Dick Cheney spoke to the Veterans of Foreign Wars
and kind of launched this whole initiative, they raised the specter of
Saddam holding weapons of mass destruction and holding oil hostage from
the global community. Since August of last year, the Bush/Cheney
Administration has completely eliminated the word oil from their
GNN: What has been the response to your report? Any contact with the Times or the Post?
There is always hope. The alternative media is the best hope for the
truth, especially in times of war. We'll see what happens. There is
already talk in mainstream media about who will get the spoils of war,
so maybe this will filter into that.
In some ways I wish I had found these documents earlier. It's kind of late.
this information is extremely important to understand the secret
history of how the U.S. and Iraq have been dealing with each other and
to see through the hypocrisy of the weapons of mass destruction
rhetoric. And I applaud you for digging this out.
Read the entire "Crude Vision" report here(PDF).
07/20/84: Memo from Bechtel to energy ministries of Iraq and Jordan
07/26/84: Internal memo, Bechtel
10/15/84: Correspondence between Bechtel and Placke (State Dept.)
10/15/84: Notes from the first Rappaport/Bechtel meeting
01/07/85: Internal memo, Bechtel
01/23/85: Internal memo, Bechtel
02/08/85: Internal memo, Bechtel
05/03/85: Internal memo, Bechtel
05/03/85: Letter from law firm to Bechtel
06/14/85: Letter from law firm to Bechtel
07/11/85: Letter from William Clark to E. Robert Wallach
08/01/85: Internal memo, Bechtel
09/25/85: Letter from Shimon Peres to Edwin Meese
01/30/86: Internal memo, Bechtel
02/07/86: Internal memo, Bechtel
National Archives documents can be found on the National Security Archive web site. You can also find video of Donald Rumsfeld's December 1983 meeting with Saddam Hussein.