by Prof. James Petras
October 26, 2014
There is no question that, in the immediate aftermath and for
several years following U.S. military conquests, wars, occupations
and sanctions, U.S. multi-national corporations lost out on
profitable sites for investments.
The biggest losses were in the
exploitation of natural resources - in particular, gas and oil - in
the Middle East, the Persian Gulf and South Asia.
As a result some observers speculated that there were deep fissures
and contradictory interests within the U.S. ruling class. They
argued that, on the one hand, political elites linked to pro-Israel
the military industrial power
configuration, promoted a highly militarized foreign policy agenda
and, on the other hand, some of the biggest and wealthiest
multi-national corporations sought diplomatic solutions.
Yet this seeming 'elite division' did not materialize.
There is no evidence for example that
the multi-national oil companies sought to oppose the
Iraq, Libyan, Afghan, Syrian wars.
Nor did the powerful 10 largest oil companies with a net value of
over $1.1 trillion dollars mobilize their lobbyists and influentials
in the mass media to the cause of peaceful capital penetration and
domination of the oil fields via neo-liberal political clients.
In the run-up to the Iraq war, the three major U.S. oil companies,
...eager to exploit the third largest
oil reserves in the world, did not engage in Congressional lobbying
or exert pressure on the
Bush or later
Administration for a peaceful resolution of the conflict.
At no point did the Big Ten challenge
the pro-war Israel lobby and its phony arguments that Iraq possessed
weapons of mass destruction with an alternative policy.
Similar "political passivity" was evidenced in the run-up to
the Libyan war. Big Oil was
actually signing off on lucrative oil deals, when the militarists in
Washington struck again - destroying the Libyan state and tearing
asunder the entire fabric of the Libyan economy.
Big oil may have bemoaned the loss
of oil and profits but there was no concerted effort, at before or
after the Libyan debacle, to critically examine or evaluate the loss
of a major oil producing region. In the case of economic sanctions
against Iran, possessing the second largest oil reserves,
the MNC again were notable by their
absence from the halls of Congress and the Treasury Department where
the sanctions policy was decided.
Zionist policymakers, Stuart
Levey and David Cohen designed and implemented sanctions
which prevented U.S. (and EU) oil companies from investing or
trading with Teheran.
In fact, despite the seeming divergence of interest between a highly
militarized foreign policy and the drive of MNC to pursue the global
accumulation of capital, no political conflicts erupted.
The basic question that this paper seeks
to address is:
Why did the major MNC submit to an
imperial foreign policy which resulted in lost economic
Why the MNC
Fail to Oppose Imperial Militarism
There are several possible hypotheses accounting for the MNC
accommodation to a highly militarized version of imperial expansion.
In the first instance, the CEO's
of the MNC may have believed that the wars, especially the
Iraq war, would be short-term, and would lead to a period of
stability under a client regime willing and able to
privatize and de-nationalize the oil and gas sector.
In other words, the petrol
elites bought into the arguments of,
...that the invasion and
conquest would "pay for itself".
Secondly, even after the
prolonged-decade long destructive war and the deepening
sectarian conflict, many CEO's believed that a lost decade
would be compensated by "long term" gain.
They believed that future
profits would flow, once the country was stabilized. The oil
majors entry after 2010; however, was immediately threatened
by the ISIS offensive. The 'time frame' of the MNC strategic
planners was understated if not totally wrong headed.
Thirdly, most CEO's believed
that the U.S.-NATO invasion of Libya would lead to monopoly
ownership and greater profits than what they received from a
public-private partnership with the Kaddafi regime.
The oil majors believed that
they would secure total or majority control.
In other words the war would
allow the oil MNC to secure monopoly profits for an extended
period. Instead the end of a stable partnership led to a
Hobbesian world in which anarchy and chaos inhibited any
large scale, long-term entry of MNC.
Fourthly, the MNC, including the
big oil corporations, have invested in hundreds of sites in
dozens of countries.
They are not tied to a single
location. They depend on the militarized imperial state to
defend their global interests. Hence they probably are not
willing to contest or challenge the militarists in, say
Iraq, for fear that it might endanger U.S. imperial
intervention in other sites.
Fifthly, many MNC interlock
across economic sectors: they invest in oil fields and
refineries, banking, financing and insurance as well as
To the degree that MNC capital
is diversified they are less dependent on a single region,
sector, or source for profit. Hence destructive wars, in one
or several countries, may not have as great a prejudicial
effect as in the past when "Big Oil" was just 'oil'.
Six, the agencies of the U.S.
imperial state are heavily weighted to military rather than
The international bureaucracy of
the U.S. is overwhelmingly made up of military, intelligence
and counter-insurgency officials. In contrast, China, Japan,
Germany and other emerging states (Brazil,
Russia and India) have a large economic component
in their overseas bureaucracy.
The difference is significant.
U.S. MNC do not have access to
economic officials and resources in the same way as China's
MNC. The Chinese overseas expansion and its MNC, is built
around powerful economic support systems and agencies. U.S.
MNC have to deal with Special Forces, spooks and highly
militarized 'aid officials'.
In other words the CEO's who
look for "state support" perforce have mostly 'military'
counterparts who view the MNC as instruments of policy
rather than as subjects of policy.
Seventh, the recent decade has
witnessed the rise of the financial sector as the dominant
recipient of State support.
As a result, big banks exercise
major influence on public policy. To the extent that is
true, much of what is 'oil money' has gone over to finance
and profits accrue by pillaging the Treasury.
As a result, oil interests merge
with the financial sector and their 'profits' are as much
dependent on the state as on exploiting overseas sites.
Eighth, while Big Oil has vast
sums of capital, its diverse locations, multiple activities
and dependence on state protection (military), weaken its
opposition to U.S. wars in lucrative oil countries.
As a result other powerful
pro-war lobbies which have no such constraints have a free
For example the pro-Israel power
configuration has far less 'capital' than any of the top ten
oil companies. But it has a far greater number of lobbyists
with much more influence over Congress people.
Moreover, it has far more
effective propaganda -
media leverage - than Big
Oil. Many more critics of U.S. foreign policy, including its
military and sanctions policies, are willing to criticize
"Big Oil" than Zionist lobbies.
Finally the rise of domestic oil
production resulting from fracking opens new sites for Big
Oil to profit outside of the Middle East - even though the
costs may be higher and the duration shorter.
The oil industry has replaced
losses in Middle East sites (due to wars) with domestic
Nevertheless, there is tension and
conflict between oil capital and militarism.
The most recent case is between
Exxon-Mobil's plans to invest $38 billion in a joint venture in the
Russian Arctic with the Russian oil grant Rosneft.
Obama's sanctions against Russia is
scheduled to shut down the deal much to the dismay of the senior
executives of Exxon Mobil, who have already invested $3.2 billion in
an area the size of Texas.
The latent conflicts and overt difference between military and
economic expansion may eventually find greater articulation in
However, up to now, because of the
global structures and orientation of the oil industry, because of
their dependence on the military for 'security', the oil industry in
particular, and the MNC in general, have sacrificed short and middle
term profits for "future gains" in the hopes that the wars
will end and lucrative profits will return...