Wolfowitz Back in Government?

The Bush administration has offered the former World Bank president a new public service position.

At Newsweek, Mike Isikoff reports:

Don't ever say the Bush administration doesn't take care of its own. Nearly three years after Paul Wolfowitz resigned as deputy Defense secretary and six months after his stormy departure as president of the World Bank—amid allegations that he improperly awarded a raise to his girlfriend—he's in line to return to public service. Secretary of State Condoleezza Rice has offered Wolfowitz, a prime architect of the Iraq War, a position as chairman of the International Security Advisory Board, a prestigious State Department panel, according to two department sources who declined to be identified discussing personnel matters. The 18-member panel, which has access to highly classified intelligence, advises Rice on disarmament, nuclear proliferation, WMD issues and other matters. "We think he is well suited and will do an excellent job," said one senior official.

Wolfowitz, now a visiting scholar at the conservative American Enterprise Institute, will replace former senator Fred Thompson, who quit over the summer to run for president. Although officials declined to say how Rice came to choose him, Wolfowitz began his government career in the 1970s in the State Department as an arms-control expert; he forged a relationship with Rice during the 2000 presidential campaign, when they both served as top foreign-policy advisers to the then candidate Bush. But his selection has raised more than a few eyebrows within State because he'll be providing advice on some of the same issues that critics say the administration got spectacularly wrong when Wolfowitz was pushing the case for the Iraq War at the Pentagon. (One of the department sources called the appointment "amazing.") At least Wolfowitz, who did not return calls seeking comment, will have like-minded company: other panel members include Robert Joseph, the former National Security Council official in charge of Iraq WMD intelligence, and ex-CIA director James Woolsey, both strong allies during the Iraq debate.

The sources said Wolfowitz has already accepted Rice's offer to fill the part-time position, though it won't be announced until the completion of a standard check for conflicts of interest. But he won't have to worry about any complaints from pesky Democrats. The position doesn't require Senate confirmation.

Pinpointing Crucial Moments in The History That Got Us Into The Iraq War

Congressional Quarterly reports:

Hearing horror stories about the manipulation of Iraq intelligence is like watching “The Exorcist” again and again: Each time you see something new and laugh at the parts that used to make your hair go up straight.

Patrick Lang told a hilarious story the other night, for example, about a job interview he had with Douglas Feith, a key architect of the invasion of Iraq.

It was at the beginning of the first Bush term. Lang had been in charge of the Middle East, South Asia and terrorism for the Defense Intelligence Agency in the 1990s. Later he ran the Pentagon’s worldwide spying operations.

In early 2001, his name was put forward as somebody who would be good at running the Pentagon’s office of special operations and low-intensity warfare, i.e., counterinsurgency. Lang had also been a Green Beret, with three tours in South Vietnam.

One of the people he had to impress was Feith, the Defense Department’s number three official and a leading player in the clique of neoconservatives who had taken over the government’s national security apparatus.

Lang went to see him, he recalled during a May 7 panel discussion at the University of the District of Columbia.

“He was sitting there munching a sandwich while he was talking to me,” Lang recalled, “ which I thought was remarkable in itself, but he also had these briefing papers — they always had briefing papers, you know — about me.

“He’s looking at this stuff, and he says, ‘I’ve heard of you. I heard of you.’

“He says, ‘Is it really true that you really know the Arabs this well, and that you speak Arabic this well? Is that really true? Is that really true?’

“And I said, ‘Yeah, that’s really true.’

‘That’s too bad,” Feith said.

The audience howled.

“That was the end of the interview,” Lang said. “I’m not quite sure what he meant, but you can work it out.”

Feith, of course, like the administration’s other Israel-connected hawks, didn’t want “Arabists” like Lang muddying the road to Baghdad, from where — according to the Bush administration theory — overthrowing Saddam Hussein would ignite mass demands for Western-style, pro-U.S. democracies across the entire Middle East.

Lang’s story is merely an illumination of what the Senate Intelligence Committee said in drier language May 25, that the White House was warned before invading Iraq that creating a stable democracy there “would be a long, difficult and probably turbulent process.”

Suddenly the Cassandras are everywhere. These days you can’t drop a Blackberry between Capitol Hill and Dupont Circle without it being stepped on by a former intelligence official with prepared testimony or a book proposal.

For those of us who have been around Washington for more than awhile, it’s unprecedented.

There were defections from the Johnson administration over Vietnam, more with the Nixon administration’s invasion of Cambodia — and of course there were Daniel Ellsberg and the Pentagon Papers, which exposed a historical record of official deceit on Indochina.

But back then intelligence officials didn’t quit one day and the next day write real-time books exposing the machinations of current, or near-current, defense and intelligence leaders.

When one did in 1974 — dissident CIA executive Victor Marchetti, who wrote “The CIA and the Cult of Intelligence,” an expose of how the agency overthrew governments, etc. (with John Marks, a former State Department intelligence analyst), there was an uproar.

Shrugs
Today, there are fewer uproars than shrugs, weekend news blips. Even George Tenet’s memoir has already started falling down the rungs of The New York Times nonfiction best-seller list.

One reason might be that readers don’t think he’s telling the truth — and too late, at that.

But another may be that the public has already concluded that, at least when it comes to the Middle East, the president and his men are — not to put too fine a point on it — dopes. Or worse.

As Colin Powell’s former chief of staff Lawrence Wilkerson, appearing on the same panel with Lang, put it, “This is the most colossally inept and incompetent administration in American history.”

And Wilkerson spent more than three decades in the Army. Even coming from the right hand man to the Bush administration’s former secretary of State, however, who was at the center of every intelligence controversy related to Iraq, that’s hardly news anymore.

Still, with the added value of hindsight, their anecdotes still have a fresh punch.

Here’s Another From Lang
“I remember talking to [Paul] Wolfowitz, in his office, in the Pentagon, and telling him — this was after the propaganda build up had started, before the war. I said, ‘You know, these guys are not going to welcome you.’

“He said, ‘Why?’ I said, ‘For one thing, these guys detest foreigners, and the few who really like you are the least representative of the various breeds of people there. They’re going to fight you, then, if you occupy the place there’s going to be a massive insurgency.’”

“He said, ‘No, no, they’ll be glad to see us,’” Lang continued. “This will start the process of revolution around the Middle East that will transform everything.’

No, Lang told Wolfowitz, “that’s not gonna happen. It’s just an impossibility. They’re not like that. They don’t want to be us.”

Not everyone agrees with all of Lang’s views about the Arab world, but on this issue he was prescient, of course, as were almost all experts on the region outside of the neocon faithful.

How come we learned so much of this dispute only after the war?

Face Time
Wilkerson provides a damning clue.

In February 2003, Powell’s top aide relates, he “spent five of the most intimate days of my life, and five nights, without sleeping, as did my team, staring into . . . the face” of George Tenet, Tenet’s deputy John McLaughlin, and other top CIA officials working on Iraq, at the agency’s headquarters at Langley.

It was the eve of Powell’s now infamous speech at the United Nations detailing Iraq’s alleged biological, chemical and nuclear programs.

“One of the things Secretary Powell and I told Mr. Tenet and Mr. McLaughlin at the outset of our frenetic five or six days, trying to get ready for the U.N., was ‘multiple sources.’ We will not take anything and put it in this presentation, unless there are multiple, independently corroborated sources for the items we’re putting in the testimony,” Wilkerson said.

“That was the going-in position.”

Subsequently, he learned that there was but “a single source for the mobile biological laboratories; that his code name was Curveball; and that there were several very key dissents as to this individual’s testimony, during or before the preparation of the secretary of State.”

Curveball, an Iraqi refugee, turned out to be a liar.

“None of that, ladies and gentlemen, none of that was revealed to the secretary of State, or to me, or to any member of my team, by either John McLaughlin or George Tenet,” Wilkerson said.

Tenet says in his memoir that he never heard of any serious questions about Curveball.

As readers of this column know , however, Tenet’s chief of European operations, Tyler Drumheller, insists he sent a flurry of warnings about Curveball to Tenet’s deputies.

Both can’t be right.

“Either George Tenet is lying through his teeth, or Tyler Drumheller is lying through his teeth,” Wilkerson says, “with regard to one of the most important pillars of Secretary Powell’s presentation at the United Nations: the mobile biological laboratories.”

We’re waiting now for a third CIA official to come forth with an answer.

Duped
The other “pillar” for the invasion, of course, was Saddam Hussein’s alleged connection to al Qaeda.

Now everybody knows that, too, was bogus.

But in Wilkerson’s hands this “old news” seems fresh — like watching Tony Perkins creep up on Janet Leigh in “Psycho” again.

Wilkerson relates how he and Powell were dubious about the Saddam-al Qaeda link the White House was pushing, and were trimming back that section of Powell’s draft on the eve of the speech.

“All of a sudden, we were told that a high-level al Qaeda operative . . . had been interrogated and . . . revealed that there was major training going on by . . . Saddam Hussein’s people — of al Qaeda operatives in how to use chemical and biological weapons,” Wilkerson said.

“This was quite a revelation, and, as you can imagine, changed the secretary’s mind about how much he was going to include about contacts between al Qaeda and Iraq in his presentation.”

But that, too, it turned out, was phony.

“One definition of news,” a mentor told me long ago, “is what people have forgotten.”

If that’s so, then the horror stories of Iraq can be told again and again.

And here’s one reason why they should be: CIA veterans are leaving in droves.

The other night I was talking with a recently retired top CIA operations officer, a man who had been a station chief in several foreign capitals.

“This government — what have they done to themselves?” he vented.

“They took a fine intelligence service,” he said, “and managed to destroy it in two administrations.”

I’m probably way out of step, but to me that’s still news.

The Prize of Iraqi Oil

Michael Schwartz follows the oil slicks deep into the Gulf of Catastrophe in Iraq. He offers a sweeping view of the role oil, the prize of prizes in Iraq, has played in Bush administration considerations and what role the new oil law is likely to play in that country's future.

TomDispatch.com and 'The Struggle over Iraqi Oil':

In the run-up to the invasion of Iraq in 2002-2003, oil was seldom mentioned. Yes, Deputy Secretary of Defense Paul Wolfowitz did describe the country as afloat "on a sea of oil" (which might fund any American war and reconstruction program there); and, yes, on rare occasions, the President did speak reverentially of preserving "the patrimony of the people of Iraq" -- by which he meant not cuneiform tablets or ancient statues in the National Museum in Baghdad, but the country's vast oil reserves, known and suspected. And yes, oil did make it prominently onto the signs of war protestors at home and abroad.

Everybody who was anybody in Washington and the media, not to speak of the punditocracy and think-tank-ocracy of our nation knew, however, that those bobbing signs among the millions of antiwar demonstrators that said "No Blood for Oil" were just so simplistic, if not utterly simpleminded. Oil news, as was only proper, was generally relegated to the business pages of our papers, or even more properly -- since it was at best but one modest factor among so very many in Bush administration calculations -- roundly ignored. Admittedly, the first "reconstruction" contract the administration issued was to Halliburton to rescue that country's "patrimony," its oil fields, from potential self-destruction during the invasion, and the key instructions -- possibly just about the only instructions -- issued to U.S. troops after taking Baghdad were to guard the Oil Ministry. Then again, everyone knew this crew had their idiosyncrasies.

Ever since, oil has played a remarkably small part in the consideration of, coverage of, or retrospective assessments of the invasion, occupation, and war in Iraq (unless you lived on the Internet). To give but a single example, the index to Thomas E. Ricks' almost 500-page bestseller, Fiasco: The American Military Adventure in Iraq, has but a single relevant entry: "oil exports and postwar reconstruction, Wolfowitz on, 98." Yet today, every leading politician of either party is strangely convinced that the key "benchmark" the government of Prime Minister Nouri al-Maliki must pass to prove its mettle is the onerous oil law, now stalled in Parliament, that has been forced upon it by the Bush administration.

Michael Schwartz writes, 'Eyes Eternally on the Prize:
The struggle over Iraqi oil has been going on for a long, long time. One could date it back to 1980 when President Jimmy Carter -- before his Habitat for Humanity days -- declared that Persian Gulf oil was "vital" to American national interests. So vital was it, he announced, that the U.S. would use "any means necessary, including military force" to sustain access to it. Soon afterwards, he announced the creation of a Rapid Deployment Joint Task Force, a new military command structure that would eventually develop into United States Central Command (Centcom) and give future presidents the ability to intervene relatively quickly and massively in the region.

Or we could date it all the way back to World War II, when British officials declared Middle Eastern oil "a vital prize for any power interested in world influence or domination," and U.S. officials seconded the thought, calling it "a stupendous source of strategic power and one of the greatest material prizes in world history."

The date when the struggle for Iraqi oil began is less critical than our ability to trace the ever growing willingness to use "any means necessary" to control such a "vital prize" into the present. We know, for example, that, before and after he ascended to the Vice-Presidency, Dick Cheney has had his eye squarely on the prize. In 1999, for example, he told the Institute of Petroleum Engineers that, when it came to satisfying the exploding demand for oil, "the Middle East, with two thirds of the world's oil and the lowest cost, is still where the prize ultimately lies." The mysterious Energy Task Force he headed on taking office in 2001 eschewed conservation or developing alternative sources as the main response to any impending energy crisis, preferring instead to make the Middle East "a primary focus of U.S. international energy policy." As part of this focus, the Task Force recommended that the administration put its energy, so to speak, into convincing Middle Eastern countries "to open up areas of their energy sectors to foreign investment" -- in other words, into a policy of reversing 25 years of state control over the petroleum industry in the region.

The Energy Task Force set about planning how to accomplish this historic reversal. We know, for instance, that it scrutinized a detailed map of Iraq's oil fields, together with the (non-American) oil companies scheduled to develop them (once the UN sanctions still in place on Saddam Hussein's regime were lifted). It then worked jointly with the administration's national security team to find a compatible combination of military and economic policies that might inject American power into this equation. According to Jane Mayer of The New Yorker, the National Security Council directed its staff "to cooperate fully with the Energy Task Force as it considered the 'melding' of two seemingly unrelated areas of policy: 'the review of operational policies towards rogue states,' such as Iraq, and 'actions regarding the capture of new and existing oil and gas fields.'"

While we cannot be sure that this planning itself was instrumental in setting the U.S. on a course toward invading Iraq, we can be sure that plenty of energy was being expended in Washington, planning for the disposition of Iraq's massive oil reserves once that invasion was successfully executed. In 2002, just a year after Cheney's Task Force completed its work, and before the U.S. had officially decided to invade Iraq, the State Department "established a working group on oil and energy," as part of its "Future of Iraq" project. It brought together influential Iraqi exiles, U.S. government officials, and international consultants. Later, several Iraqi members of the group became part of the Iraqi government. The result of the project's work was a "draft framework for Iraq's oil policy" that would form the foundation for the energy policy now being considered by the Iraqi Parliament.

The Prize

The specific prize in Iraq is certainly worthy of almost any kind of preoccupation. Indeed, Iraq could someday become the most important source of petrochemical energy on the planet.

According to the U.S. Energy Information Administration, Iraq possesses 115 billion barrels of proven oil reserves, third largest in the world (after Saudi Arabia and Iran). About two-thirds of its known oil reserves are located in Shia southern Iraq, and the final third in Kurdish northern Iraq. However, in energy terms, only about 10% of the country has actually been explored and there is good reason to believe that modern methods -- which have not been applied since the beginning of the Iraq-Iran War in 1980 -- might well uncover magnitudes more oil. Estimates of the possible new finds offered by officials of various interested governments range from 45 billion to 214 billion additional barrels, depending on the source; but some non-governmental experts see the final treasure exceeding 400 billion barrels. If the latter figure is correct, then Iraq would likely become the world's largest source of oil.

For the most part, Iraq's petroleum has "attractive chemical properties;" that is, its oil is considered to be of very high quality. Moreover, both its current fields and many of the potential new discoveries would be extremely cheap to access, if security weren't such a problem today in Iraq. James Paul of the international policy monitoring group, the Global Policy Forum, offers this positive view:


"According to Oil and Gas Journal, Western oil companies estimate that they can produce a barrel of Iraqi oil for less than $1.50 and possibly as little as $1…. This is similar to production costs in Saudi Arabia and lower than virtually any other country."
With the price of a barrel of crude oil today above $64 a barrel, the potential for profits is stupendous and the only question is: Who will pocket them -- the oil companies or the Iraqi government -- and, if the former, which oil companies those will be? It is not inconceivable that any major oil companies able to claim a large portion of the Iraqi oil spoils could double, triple, or even quintuple their already gigantic global profits.

Under Saddam Hussein, Iraqi oil never fulfilled the potential of even its proven oil fields. A modest goal for the country's oil industry would have been producing 3.5 million barrels per day, but the temporary disruptions caused by the Iraq-Iran War and the more permanent ones caused by UN sanctions imposed after the Gulf War in 1991 severely limited production. From the late 1990s until the American invasion in 2003, Iraq averaged around 2.5 million barrels per day.

Knowledge of this level of underproduction was certainly one factor in Deputy Secretary of Defense Paul Wolfowitz's pre-war prediction that the administration's invasion and occupation of Iraq would pay for itself; he hoped for a quick postwar increase in production to 3.5 million barrels per day or, at the $30 per barrel price of oil at that time, close to $40 billion per year in revenues. An expected expansion in production levels (once the oil giants were brought into the mix) to perhaps 6.5 million barrels, through the development of new oil fields or more efficient exploitation of existing fields, had the potential to more than cover the expected American short-term military costs and leave the new Iraqi government flush as well.

This, then, was the allure of melding energy policy and military policy, as Cheney's energy group and allied administration officials envisioned it.

The Initial Campaign to Capture Iraqi Oil

With all this history, the particular way the U.S. sprang into action as soon as its forces arrived in Baghdad was hardly surprising. While American troops simply stood by as unrestrained looting severely damaged the dawn-of-civilization treasures in the National Museum, compromised the ability of hospitals to deliver health care, and destroyed many government offices, large numbers of American soldiers were deployed to protect the Oil Ministry and its associated holdings. This effort was certainly emblematic of the newly established occupation's priorities.

Not long after President Bush declared "major combat operations in Iraq have ended" under a "Mission Accomplished" banner on the deck of the aircraft carrier, the USS Abraham Lincoln, Paul Bremer, the new head of the American occupation, promulgated a series of laws designed, among other things, to kick-start the development of Iraqi oil. In addition to attempting to transfer management of existing oil facilities (well heads, refineries, pipelines, and shipping) to multinational corporations, he also set about creating an oil-policy framework, unique in the region, that would allow the major companies to develop the country's proven reserves and even to begin drilling new wells.

All these plans were, however, quickly frustrated, both by the growing Sunni insurgency and by civil resistance. Iraq's oil workers quickly unionized -- even though Bremer extended Saddam's prohibition on unions in state-owned companies -- and effectively resisted the transfer of management duties to foreign companies. In one noteworthy moment, the oil workers actually refused to take orders from Bechtel officials in the oil hub of Basra, thus preserving their own jobs as well as the right of the Iraqi state-owned Southern Oil Company to continue to control the operation in that region. Bechtel's management contract was subsequently voided.

At the same time, the growing insurgency, acting on a general Iraqi understanding that a major goal of the occupation was to "steal" Iraqi oil, systematically began to attack the oil pipelines that traveled through the Sunni areas of the country. Within a few months, all oil exports in the northern part of Iraq were interrupted -- and the northern export pipelines have remained generally unusable ever since.

To resistance of various sorts must be added the "contribution" of the major American corporations involved in "reconstructing" Iraq, notably Halliburton and Bechtel. These crony corporations, with close ties to the Bush administration, accepted huge fees to rehabilitate dilapidated or damaged oil facilities. Almost without fail, they chose not to repair existing plants locally or to employ the raft of skilled Iraqi technicians who had used remarkable ingenuity in maintaining these facilities during a dozen years of UN sanctions. Working under cost-plus agreements that guaranteed a fixed profit rate no matter how much an operation ultimately cost, they preferred instead to install expensive new proprietary equipment. Then, in the absence of any outside oversight, they ran up huge expenses and frequently failed to complete their contracts, leaving the oil facilities they were servicing in states of disrepair or partial repair -- and equipped with technology that local technicians could not service.

Meanwhile, the major oil companies refused Bremer's invitation to invest their own money in Iraqi projects, pointing out the obvious -- that the insurgency and the spreading chaos made such investments unwise. In addition, they were well aware that Bremer's regime in Baghdad lacked clear authority to sign contracts with them. This, in turn, meant that their investments might be in jeopardy once a legitimate government took power. When technical sovereignty was finally handed over to an appointed Iraqi government headed by the CIA's favorite Iraqi exile, Iyad Allawi, in June 2004, the new premier embraced Bremer's policy, but to no avail. The international oil companies were no more impressed with his future than they had been with Bremer's. Like Wolfowitz, they knew that Iraq "floats on a sea of oil"; unlike him, they were no dreamers. They weren't willing to risk their capital in the dangerous and legally ambiguous circumstances then prevailing.

As a result, the first two years of Bush administration efforts to "access" Iraqi oil failed -- and dismally so at that. Average production never exceeded the bottom-of-the-barrel 2.5 million barrels Saddam's regime managed to extract on its worst days. By 2006, production had slipped below 2 million barrels per day.

Dealing with the Iraqi Government

It is difficult to judge how much Bremer's inability to implement the pre-planned oil policy contributed to the Bush administration decision to reverse its plans for Iraqi "democracy" -- which, as Juan Cole has pointed out, involved council-based elections, an electorate restricted to a small elite, and Bremer as "a MacArthur in Baghdad for years" -- and push for an elected Iraqi government. It certainly is true, however, that this change triggered a campaign aimed at the "capture of new and existing oil and gas fields."

As soon as the first elections for a temporary Iraqi government were completed in January 2005 American officials in Iraq began lobbying forcefully for adoption of the very policy that the State Department's pre-invasion Future of Iraq project had drafted. The State Department planners had concluded that Production Sharing Agreements -- a method that granted multinational oil companies effective control of oil fields without transferring permanent ownership to them -- would be the basic instrument through which a future "independent" Iraq would develop new oil fields. Wary by now of being seen as the chief advocate of this policy, which it so desperately wanted in place, the Bush administration concocted a strategy that would enlist the international community in pressuring Iraq to adopt its program.

This was done by making the International Monetary Fund (IMF) a key player in Iraqi oil policy. Through loans in the 1980s and reparations imposed for his invasion of Kuwait in 1990, Saddam had accumulated $120 billion in external debt, the largest per capita debt in the world and a potentially insurmountable obstacle to economic recovery, even in oil-rich Iraq. One option available to the new government was to declare this debt "odious," a technical term in international law referring to debt accumulated by authoritarian rulers for their own personal or political aggrandizement.

Saddam's expansionist war against Iran, his use of public funds to build ostentatious monuments and palaces, his transfer of billions to his personal accounts, and his failure to maintain the infrastructure of the country all were excellent evidence that the debt was indeed odious; and the U.S. claimed as much for almost $40 billion of it, held by 19 industrialized countries known as the Paris Club. Instead of seeking to cancel this debt (and the remaining $80 billion) entirely, however, the Bush administration sent James Baker, former Secretary of State under George H. W. Bush, to the Paris Club to negotiate conditional forgiveness. The resulting agreement immediately forgave $12 billion, but left $28 billion on the books. A second $12 billion would be abrogated when the Iraqi government signed onto "a standard International Monetary Fund program," and a further $8 billion three years later, after the IMF confirmed Iraqi compliance. Even if "successful," almost $8 billion would still be outstanding to the Paris Club -- together with $80 billion not covered by the agreement.

The "standard International Monetary Fund program," not surprisingly, included the now familiar American policies regarding Iraqi oil, as well as the use of Profit Sharing Agreements and a host of other provisions that would open the Iraqi economy as a whole, and the oil sector in particular, to investment by multinational corporations. Among the most punitive of the provisions was a demand for an end to the economic breadbasket that guaranteed all Iraqi families low prices for fuel and food staples. In a country with, by 2005, somewhere between 30% and 70% unemployment, average wage levels under $100 per month, and escalating inflation, these Saddam-era subsidies meant the difference between basic subsistence and disaster for a large proportion of Iraqis.

Independent journalists Basav Sen and Hope Chu summarized the new agreement thusly:

"A move that appears on the surface to be beneficial for Iraq -- debt cancellation -- is being used as a tool of control by the World Bank, the IMF and the wealthy creditor countries. What is more, it is a tool of control that will last long after the withdrawal of U.S. combat forces."

Zaid Al-Ali, an international lawyer working on development issues in Iraq, described the agreement as a "perfect illustration of how the industrialized world has used debt as a tool to force developing nations to surrender sovereignty over their economies."

The newly elected Iraqi National Assembly promptly denounced this agreement as "a new crime committed by the creditors who financed Saddam's oppression." This forceful expression reflected the opinions of the Assembly's constituents. After all, 76% of Iraqis believed that the main reason for the Bush administration's invasion was "to control Iraqi oil."

As it happened, the protest did not prevent that government from endorsing the deal. Otherwise, it faced the prospect of the U.S. -- which still had operational control over Iraqi finances -- simply appropriating most of its revenues for debt service. When the agreement was announced, interim Oil Minister Thamir Ghadbhan, a British-trained technocrat, publicly protested the provisions eliminating fuel and food subsidies. He was subsequently pushed out.

The U.S. then began pressuring the Iraqi government to draft a definitive petrochemical law that would conform to the IMF guidelines. Given the levels of resistance to the very idea, this work was conducted in secret and took until the end of 2006 to complete. As independent journalist Joshua Holland described the process:

"Just months after the Iraqis elected their first constitutional government, USAID sent a BearingPoint adviser to provide the Iraqi Oil Ministry 'legal and regulatory advice in drafting the framework of petroleum and other energy-related legislation, including foreign investment'…. The Iraqi Parliament had not yet seen a draft of the oil law as of July [2006], but by that time… it had already been reviewed and commented on by U.S. Energy Secretary Sam Bodman, who also 'arranged for Dr. Al-Shahristani to meet with nine major oil companies -- including Shell, BP, ExxonMobil, ChevronTexaco and ConocoPhillips -- for them to comment on the draft.'"

Even the Iraqi Study Group, James Baker's Commission, got into the act at the end of 2006, devoting three pages of its proposal for a partial redeployment of American forces from Iraq to exhorting the Iraqis to enact a petrochemical bill that would place its oil reserves in the hands of the major oil companies.

The Proposed Petrochemical Bill

When the "Draft Hydrocarbon Law" was finally delivered to the Iraqi Parliament on February 18, 2007, key provisions had already been leaked and immediately denounced by the full spectrum of the Iraqi opposition. Taking turns registering dismay were the majority of the Parliament, a wide range of government officials, the leadership of major Sunni political parties, the union of oil workers, the Sadrists -- the most powerful Shia grouping -- and the visible leadership of the insurgency.

All this led to many changes in the law, including the removal of all mention of either privatization or Production Sharing Contracts, which would have given multinational oil companies 15-25 years of basically unregulated operational control over Iraqi oil facilities. The amended version in no way excluded the use of PSAs, but it removed the explosive designation from the actual wording of the law.

It is worth reviewing the logic of PSAs to understand why the U.S. was so determined to make them a part of the law, and why many Iraqis were so ferociously opposed.

Production sharing agreements are generally applied in circumstances where there is a strong possibility that oil exploration will be extremely costly or even fail, and/or where extraction is likely to prove prohibitively expensive. To offset huge and risky investments, the contracting company is guaranteed a proportion of the profits, if and when oil is extracted and sold. In the most common of these agreements, the proportion remains very high until all development costs are amortized, allowing the investing company to recoup its investment expenditures (if oil is found), and then to be rewarded with a larger-than-normal profit margin for the remainder of the contract which, in the Iraqi case, could extend for up to 25 years.

This is perhaps a reasonably fair, or at least necessary, bargain for a country which cannot generate sufficient investment capital on its own, where exploration is difficult (perhaps underwater or deep underground), where the actual reserves may prove small, and/or where ongoing costs of extraction are very high.

None of these conditions apply in Iraq: huge reservoirs of easily accessible oil are already proven to exist, with more equally accessible fields likely to be discovered with little expense. This is why none of Iraq's neighbors utilize PSAs. Saudi Arabia, Kuwait, Iran, and the United Arab Emirates all pay the multinationals a fixed rate to explore and develop their fields; and all of the profits become state revenues.

The advocates of PSAs in Iraq justify their use by arguing that $20 billion would be needed to develop the Iraqi fields fully and that favorable PSAs are the only way to attract such heavy doses of finance capital under the current highly dangerous circumstances. This assertion seems, however, to be little more than a smokescreen. No major oil companies are willing to invest in Iraq now, no matter how sweet the deal. If order is restored, on the other hand, Iraq would have no trouble attracting vast amounts of finance capital to develop reserves that could well be worth in excess of $10 trillion and hence would have no need whatsoever for PSAs.

Based on leaked information, journalists reported that the PSAs envisioned by the Iraqi petrochemical law contained extremely favorable provisions for the oil companies, in which they would be entitled to 70% of profits until development expenses were amortized and 20% afterwards. This would have guaranteed them at least twice the typical profit margin over the long run and many times that figure during the initial years.

There are other elements in the law (and the possible PSA contracts) that have also roused resistance inside Iraq. Among the most controversial:

*Insofar as PSAs or their legal equivalent were enacted, Iraq would lose control over what levels of oil the country produced with the potential to substantially weaken the grip of OPEC on the oil market.

*The law would allow the oil companies to fully repatriate all profits from oil sales, almost insuring that the proceeds would not be reinvested in the Iraqi economy.

*The Iraqi government would not have control over oil company operations inside Iraq. Any disputes would be referred instead to pro-industry international arbitration panels.

*No contracts would be public documents.

*Contacting companies would not be obliged to hire Iraqi workers, and could pursue the current policy of employing American technicians and South Asian manual laborers.

Several African countries with vast mineral riches have been subjected to these sorts of conditions, with large multinational companies extracting both minerals and profits while returning only a tiny fraction of the proceeds to the local population. As the resources are taken out of the ground and the country, the local population actually becomes poorer, while the potential for future prosperity is drained.

The draft petrochemical law, if enacted and implemented, could ensure that Iraq would remain in a state of neoliberal poverty in perpetuity, even if order did return to the country.

The Resistance

The petrochemical law is hardly assured of successful passage, and -- even if passed -- is in no way assured of successful implementation. Resistance to it, spread as it is throughout Iraqi society, has already shown itself to be a formidable opponent to the dwindling power of the American occupation.

The Parliament itself may be the first line of defense. It challenged the original IMF agreement and has refused to consider the bill for two months, already missing a March deadline for passage that American politicians of both parties had pronounced an important "benchmark" by which to judge the viability of Prime Minister Nouri al-Maliki's government.

In addition, the government officials responsible for administering the oil industry could prove formidable opponents. Rafiq Latta, a London-based oil analyst, told Nation reporter Christian Parenti, "The whole culture of the ministry opposes [the law].... Those guys ran the industry very well all through the years of sanctions. It was an impressive job, and they take pride in 'their' oil."

Perhaps most formidable of all is the Federation of Oil Unions, with 26,000 members and allies throughout organized labor. The oil workers overturned contracts in 2003 and 2004 that would have placed substantial oil facilities under multinational corporate control; and they initiated a vigorous campaign against the U.S. sponsored oil program as early as June 2005 -- calling a conference to oppose privatization attended by "workers, academics, and international civil-society groups." In January 2006, they convened a convention composed of all major Iraqi union groups in Amman, Jordan, which issued a manifesto opposing the entire neo-liberal U.S. program for Iraq, including any compromise on national control of oil production.

At a second Amman labor meeting in December of 2006, the Federation of Oil Unions announced its opposition to the pending law even before it was released. Iraq's trade unions, speaking in a single voice, declared that:

"Iraqi public opinion strongly opposes the handing of authority and control over the oil to foreign companies, that aim to make big profits at the expense of the people. They aim to rob Iraq's national wealth by virtue of unfair, long term oil contracts that undermine the sovereignty of the State and the dignity of the Iraqi people."

When the bill was made public, oil union president Hassan Jumaa denounced it before yet another protest meeting, stating:

"History will not forgive those who play recklessly with our wealth…. We consider the new law unbalanced and incoherent with the hopes of those who work in the oil industry. It has been drafted in a great rush in harsh circumstances."

He then called on the government to consult Iraqi oil experts (who had not participated in drafting the law) and "ask their opinion before sinking Iraq into an ocean of dark injustice."

If the oil workers and their union allies decide to organize protests or strikes, they are likely to have the Iraqi public on their side. Fully three-quarters of Iraqis believe that the United States invaded in order to gain control of Iraqi oil, and most observers believe they will surely agree with the oil workers that this law is a vehicle for that control. Even Iyad Allawi has now publicly taken a stand opposing it, perhaps the best indication that opposition will be virtually unanimous.

Finally -- and no small matter -- the armed resistance is also against the oil law. The Sunni insurgency underscored its opposition by assassinating Vice President Adel Abdul Mahdi, a major advocate of the pending law, on the day the bill was made public. The significance of the opposition of the Sunni insurgency is amplified by the stance of the Sadrists, the most rebellious segment of the Shia majority. Sadr spokesman Sheikh Gahaith Al Temimi warned journalist Christian Parenti that while the Sadrists would "welcome" foreign investment in oil, they would do so only "under certain conditions. We want our oil to be developed, not stolen. If a bad law were to be passed, all people of Iraq would resist it."

It seems clear that what the oil law has the power to do is substantially escalate the already unmanageable conflict in Iraq. Active opposition by the Parliament alone, or by the unions alone, or by the Sunni insurgency alone, or by the Sadrists alone might be sufficient to defeat or disable the law. The possibility that such disparate groups might find unity around this issue, mobilizing both the government bureaucracy and overwhelming public opinion to their cause, holds a much greater threat: the possibility of creating a unified force that might push beyond the oil law to a more general opposition to the American occupation.

Like so many American initiatives in Iraq, the oil law, even if passed, might never be worth more than the paper it will be printed on. The likelihood that any future Iraqi government which takes on a nationalist mantel will consider such an agreement in any way binding is nil. One day in perhaps the not so distant future, that "law," even if briefly the law of the land, is likely to find itself in the dustbin of history, along with Saddam's various oil deals. As a result, the Bush administration's "capture of new and existing oil and gas fields" is likely to end as a predictable fiasco.

Michael Schwartz, Professor of Sociology and Faculty Director of the Undergraduate College of Global Studies at Stony Brook University, has written extensively on popular protest and insurgency, and on American business and government dynamics. His books include Radical Protest and Social Structure, and Social Policy and the Conservative Agenda (edited, with Clarence Lo). His work on Iraq has appeared on numerous Internet sites including Tomdispatch, Asia Times, Mother Jones, and ZNet, and in print in Contexts, Against the Current, and Z Magazine.

Richard Clarke's Take On Terror

What Bush's Ex-Adviser Says About Efforts To Stop War On Terror

Richard Clarke, former White House terrorism adviser, talks to Lesley Stahl about September 11
^{"I find it outrageous that the President is running for re-election on the grounds that he's done such great things about terrorism. He ignored it." ~Richard Clarke}

CBS reports:
In the aftermath of Sept. 11, President Bush ordered his then top anti-terrorism adviser to look for a link between Iraq and the attacks, despite being told there didn't seem to be one.

The charge comes from the adviser, Richard Clarke, in an exclusive interview on 60 Minutes.

The administration maintains that it cannot find any evidence that the conversation about an Iraq-9/11 tie-in ever took place.

Clarke also tells CBS News Correspondent Lesley Stahl that White House officials were tepid in their response when he urged them months before Sept. 11 to meet to discuss what he saw as a severe threat from al Qaeda.

"Frankly," he said, "I find it outrageous that the president is running for re-election on the grounds that he's done such great things about terrorism. He ignored it. He ignored terrorism for months, when maybe we could have done something to stop 9/11. Maybe. We'll never know."

Clarke went on to say, "I think he's done a terrible job on the war against terrorism."

The No. 2 man on the president's National Security Council, Stephen Hadley, vehemently disagrees. He says Mr. Bush has taken the fight to the terrorists, and is making the U.S. homeland safer.

Clarke says that as early as the day after the attacks, Secretary of Defense Donald Rumsfeld was pushing for retaliatory strikes on Iraq, even though al Qaeda was based in Afghanistan.

Clarke suggests the idea took him so aback, he initally thought Rumsfeld was joking.

Clarke is due to testify this week before the special panel probing whether the attacks were preventable.

His allegations are also made in a book, "Against All Enemies," by Free Press, a subsidiary of Simon & Schuster. Both CBSNews.com and Simon & Schuster are units of Viacom.

Clarke helped shape U.S. policy on terrorism under President Reagan and the first President Bush. He was held over by President Clinton to be his terrorism czar, then held over again by the current President Bush.

In the 60 Minutes interview and the book, Clarke tells what happened behind the scenes at the White House before, during and after Sept. 11.

When the terrorists struck, it was thought the White House would be the next target, so it was evacuated. Clarke was one of only a handful of people who stayed behind. He ran the government's response to the attacks from the Situation Room in the West Wing.

"I kept thinking of the words from 'Apocalypse Now,' the whispered words of Marlon Brando, when he thought about Vietnam. 'The horror. The horror.' Because we knew what was going on in New York. We knew about the bodies flying out of the windows. People falling through the air. We knew that Osama bin Laden had succeeded in bringing horror to the streets of America," he tells Stahl.

After the president returned to the White House on Sept. 11, he and his top advisers, including Clarke, began holding meetings about how to respond and retaliate. As Clarke writes in his book, he expected the administration to focus its military response on Osama bin Laden and al Qaeda. He says he was surprised that the talk quickly turned to Iraq.

"Rumsfeld was saying that we needed to bomb Iraq," Clarke said to Stahl. "And we all said ... no, no. Al-Qaeda is in Afghanistan. We need to bomb Afghanistan. And Rumsfeld said there aren't any good targets in Afghanistan. And there are lots of good targets in Iraq. I said, 'Well, there are lots of good targets in lots of places, but Iraq had nothing to do with it.

"Initially, I thought when he said, 'There aren't enough targets in-- in Afghanistan,' I thought he was joking.

"I think they wanted to believe that there was a connection, but the CIA was sitting there, the FBI was sitting there, I was sitting there saying we've looked at this issue for years. For years we've looked and there's just no connection."

Clarke says he and CIA Director George Tenet told that to Rumsfeld, Secretary of State Colin Powell, and Attorney General John Ashcroft.

Clarke then tells Stahl of being pressured by Mr. Bush.

"The president dragged me into a room with a couple of other people, shut the door, and said, 'I want you to find whether Iraq did this.' Now he never said, 'Make it up.' But the entire conversation left me in absolutely no doubt that George Bush wanted me to come back with a report that said Iraq did this.

"I said, 'Mr. President. We've done this before. We have been looking at this. We looked at it with an open mind. There's no connection.'

"He came back at me and said, "Iraq! Saddam! Find out if there's a connection.' And in a very intimidating way. I mean that we should come back with that answer. We wrote a report."

Clarke continued, "It was a serious look. We got together all the FBI experts, all the CIA experts. We wrote the report. We sent the report out to CIA and found FBI and said, 'Will you sign this report?' They all cleared the report. And we sent it up to the president and it got bounced by the National Security Advisor or Deputy. It got bounced and sent back saying, 'Wrong answer. ... Do it again.'

"I have no idea, to this day, if the president saw it, because after we did it again, it came to the same conclusion. And frankly, I don't think the people around the president show him memos like that. I don't think he sees memos that he doesn't-- wouldn't like the answer."

Clarke was the president's chief adviser on terrorism, yet it wasn't until Sept. 11 that he ever got to brief Mr. Bush on the subject. Clarke says that prior to Sept. 11, the administration didn't take the threat seriously.

"We had a terrorist organization that was going after us! Al Qaeda. That should have been the first item on the agenda. And it was pushed back and back and back for months.

"There's a lot of blame to go around, and I probably deserve some blame, too. But on January 24th, 2001, I wrote a memo to Condoleezza Rice asking for, urgently -- underlined urgently -- a Cabinet-level meeting to deal with the impending al Qaeda attack. And that urgent memo-- wasn't acted on.

"I blame the entire Bush leadership for continuing to work on Cold War issues when they back in power in 2001. It was as though they were preserved in amber from when they left office eight years earlier. They came back. They wanted to work on the same issues right away: Iraq, Star Wars. Not new issues, the new threats that had developed over the preceding eight years."

Clarke finally got his meeting about al Qaeda in April, three months after his urgent request. But it wasn't with the president or cabinet. It was with the second-in-command in each relevant department.

For the Pentagon, it was Paul Wolfowitz.

Clarke relates, "I began saying, 'We have to deal with bin Laden; we have to deal with al Qaeda.' Paul Wolfowitz, the Deputy Secretary of Defense, said, 'No, no, no. We don't have to deal with al Qaeda. Why are we talking about that little guy? We have to talk about Iraqi terrorism against the United States.'

"And I said, 'Paul, there hasn't been any Iraqi terrorism against the United States in eight years!' And I turned to the deputy director of the CIA and said, 'Isn't that right?' And he said, 'Yeah, that's right. There is no Iraqi terrorism against the United States."

Clarke went on to add, "There's absolutely no evidence that Iraq was supporting al Qaeda, ever."

When Stahl pointed out that some administration officials say it's still an open issue, Clarke responded, "Well, they'll say that until hell freezes over."

By June 2001, there still hadn't been a Cabinet-level meeting on terrorism, even though U.S. intelligence was picking up an unprecedented level of ominous chatter.

The CIA director warned the White House, Clarke points out. "George Tenet was saying to the White House, saying to the president - because he briefed him every morning - a major al Qaeda attack is going to happen against the United States somewhere in the world in the weeks and months ahead. He said that in June, July, August."

Clarke says the last time the CIA had picked up a similar level of chatter was in December, 1999, when Clarke was the terrorism czar in the Clinton White House.

Clarke says Mr. Clinton ordered his Cabinet to go to battle stations-- meaning, they went on high alert, holding meetings nearly every day.

That, Clarke says, helped thwart a major attack on Los Angeles International Airport, when an al Qaeda operative was stopped at the border with Canada, driving a car full of explosives.

Clarke harshly criticizes President Bush for not going to battle stations when the CIA warned him of a comparable threat in the months before Sept. 11: "He never thought it was important enough for him to hold a meeting on the subject, or for him to order his National Security Adviser to hold a Cabinet-level meeting on the subject."

Finally, says Clarke, "The cabinet meeting I asked for right after the inauguration took place-- one week prior to 9/11."

In that meeting, Clarke proposed a plan to bomb al Qaeda's sanctuary in Afghanistan, and to kill bin Laden.

The president's new campaign ads highlight his handling of Sept. 11 -- which has become the centerpiece of his bid for re-election.

"You are writing this book in the middle of this campaign," Stahl tells Clarke. "The timing, I'm sure, you will be questioned about and criticized for. Why are you doing it now?"

"Well, I'm sure I'll be criticized for lots of things," says Clarke. "And I'm sure they'll launch their dogs on me."

Does a person who works for the White House owe the president his loyalty?

"Yes ... Up to a point. When the president starts doing things that risk American lives, then loyalty to him has to be put aside," says Clarke. "I think the way he has responded to al Qaeda, both before 9/11 by doing nothing, and by what he's done after 9/11 has made us less safe. Absolutely."

Hadley staunchly defended the president to Stahl: "The president heard those warnings. The president met daily with ... George Tenet and his staff. They kept him fully informed and at one point the president became somewhat impatient with us and said, 'I'm tired of swatting flies. Where's my new strategy to eliminate al Qaeda?'"

Hadley says that, contrary to Clarke's assertion, Mr. Bush didn't ignore the ominous intelligence chatter in the summer of 2001.

"All the chatter was of an attack, a potential al Qaeda attack overseas. But interestingly enough, the president got concerned about whether there was the possibility of an attack on the homeland. He asked the intelligence community: 'Look hard. See if we're missing something about a threat to the homeland.'

"And at that point various alerts went out from the Federal Aviation Administration to the FBI saying the intelligence suggests a threat overseas. We don't want to be caught unprepared. We don't want to rule out the possibility of a threat to the homeland. And therefore preparatory steps need to be made. So the president put us on battle stations."

Hadley asserts Clarke is "just wrong" in saying the administration didn't go to battle stations.

As for the alleged pressure from Mr. Bush to find an Iraq-9/11 link, Hadley says, "We cannot find evidence that this conversation between Mr. Clarke and the president ever occurred."

When told by Stahl that 60 Minutes has two sources who tell us independently of Clarke that the encounter happened, including "an actual witness," Hadley responded, "Look, I stand on what I said."

Hadley maintained, "Iraq, as the president has said, is at the center of the war on terror. We have narrowed the ground available to al Qaeda and to the terrorists. Their sanctuary in Afghanistan is gone; their sanctuary in Iraq is gone. Saudi Arabia and Pakistan are now allies on the war on terror. So Iraq has contributed in that way in narrowing the sanctuaries available to terrorists."

Does Clarke think that Iraq, the Middle East and the world is better off with Saddam Hussein out of power?

"I think the world would be better off if a number of leaders around the world were out of power. The question is what price should the United States pay," says Clarke. "The price we paid was very, very high, and we're still paying that price for doing it."

"Osama bin Laden had been saying for years, 'America wants to invade an Arab country and occupy it, an oil-rich Arab country. He had been saying this. This is part of his propaganda," adds Clarke.

"So what did we do after 9/11? We invade an oil-rich and occupy an oil-rich Arab country which was doing nothing to threaten us. In other words, we stepped right into bin Laden's propaganda. And the result of that is that al Qaeda and organizations like it, offshoots of it, second-generation al Qaeda have been greatly strengthened."

When Clarke worked for Mr. Clinton, he was known as the terrorism czar. When Mr. Bush came into office, though remaining at the White House, Clarke was stripped of his Cabinet-level rank.

Stahl said to Clarke, "They demoted you. Aren't you open to charges that this is all sour grapes, because they demoted you and reduced your leverage, your power in the White House?"

Clarke's answer: "Frankly, if I had been so upset that the National Coordinator for Counter-terrorism had been downgraded from a Cabinet level position to a staff level position, if that had bothered me enough, I would have quit. I didn't quit."

Until two years later, after 30 years in government service.

A senior White House official told 60 Minutes he thinks the Clarke book is an audition for a job in the Kerry campaign.

"I'm an independent. I'm not working for the Kerry campaign," says Clarke. "I have worked for Ronald Reagan. I have worked for George Bush the first, I have worked for George Bush the second. I'm not participating in this campaign, but I am putting facts out that I think people ought to know."

60 Minutes received a note from the Pentagon saying: "Any suggestion that the president did anything other than act aggressively, quickly and effectively to address the al Qaeda and Taliban threat in Afghanistan is absurd."

Building The Case Against Iraq

The Telegraph reports:

The Taliban regime may be the current target in America's war on terrorism but the Bush administration is already building a case against a much bigger foe - Iraq.

James Woolsey, a former director of the CIA, ambassador and Pentagon official who now describes himself as a "private citizen", is the man entrusted with investigating Iraqi involvement in the September 11 attacks and anthrax outbreaks.

The Iraqi National Congress, the exiled group that opposes Saddam Hussein, said it recently held meetings in London with Mr Woolsey. Administration sources have said his trip was funded and approved by Paul Wolfowitz, the deputy defence secretary.

Such is the sensitivity of the Iraq issue, Mr Woolsey will make no comment about the exact nature of his brief. He told The Telegraph: "I was in London and that's it."

But he made clear that he believed there were "substantial and growing indications" that a state was behind the attacks.

The milled, "weaponised" anthrax that virtually shut down Congress and killed two postal workers has increased his suspicions. So too have reports of meetings involving Mohammad Atta, a leading hijacker, in Prague.

Atta travelled to the Czech Republic at least twice and was refused entry to Prague airport on another occasion.

According to the Wall Street Journal, on one occasion Atta was observed meeting Ahmed Khalil Samir al-Ani, an Iraqi diplomat subsequently expelled for spying.

Mr Woolsey said: "I doubt very seriously if this was simply a social relationship or that they liked to drink Czech beer together."

It has also emerged this week that intelligence reports have stated that Osama bin Laden sent an al-Qa'eda delegation to Baghdad on April 25, 1998 to attend Saddam's birthday celebration.

Saddam's son Uday, it is claimed, agreed to train al-Qa'eda recruits and establish a joint force of bin Laden's elite fighters and the Iraqi intelligence unit 999.

All this, Mr Woolsey, said, made it imperative that America "should look under that rock" to establish whether Iraq helped al-Qa'eda to carry out the September 11 or anthrax attacks.

He said: "If a state is involved, obviously it seems to me to be important for us to know whom we're at war with."

Focusing solely on proof that would be admissible in a court of law would be a mistake.

He said: "Hearsay is not admissible as evidence and almost all intelligence is hearsay. Evidentiary standards are the wrong standards. I would talk about indications, information."

He added: "The United States has not yet decided it is at war with Saddam Hussein but Saddam Hussein may have decided he is at war with the United States."

The Clinton administration, he said, had had "a propensity sometimes to reason backwards from public relations to policy, to the facts one was looking at".

This had resulted in the question of Iraqi involvement in the World Trade Centre bombing of 1993 being pushed aside.

In Washington, the debate over global terrorism was continuing to develop as the effects of the anthrax attacks grow more serious.

Having suffered thousands of civilian casualties, most Americans would prefer a pre-emptive strike against a known enemy such as Saddam than risk a biological or chemical attack that could kill tens of thousands.

Mr Woolsey said: "We ought to seriously consider removing Saddam's regime, if he has been involved in any terror in recent years against us."

Saddam had attempted to assassinate President Bush Snr in 1993. He had also defied UN mandates by developing weapons of mass destruction.

He added: "In my judgment that's enough."

President Clinton's response to the assassination attempt was "to shoot some Cruise missiles back into empty buildings in the middle of the night" but this type of limited, ineffective action had been discredited by September 11.

Mr Woolsey said: "Some of the states, such as Iraq, and some of the people, such as bin Laden, saw our behaviour over the last decade or two and may have a false impression that they can bludgeon the United States into submission.

He added: "I think some day - hopefully soon - they will come to the same conclusion that Admiral Yamamoto did after Pearl Harbor, which was to remark that Japan had awakened a sleeping giant.

" If the government chooses, based on the information that it has, to take military action against any other state outside Afghanistan, I believe that the world will see our reaction in that case will be ruthless, relentless and devastating.

He concluded: "In the American vernacular - you ain't seen nothing yet."

Coming from the man entrusted with gathering that "information", Saddam would perhaps be well advised to mark Mr Woolsey's words.