Finder's keeper

The second Wolfowitz misquote, the one where he confirmed everyone's deepest fears about the US, ("we invaded Iraq .. for .. its oil .. and .. yes .. we .. sacrifice .. small children .. in the White House"), went all over the Norwegian media, which, being fundamentally ignorant about why the US went to war, didn't find it at all strange that Wolfowitz would say such a thing.

Friends of America, led by Fredrik Norman and others, then issued a press statement that was quoted in corrections by VG and DN.

Complete transcripts of Wolfowitz' statements are available for anyone at the website of the American defense department. From these quotes it is apparent that what the deputy secretary of defense really said was that it was impossible to force Saddam Hussein's socialist regime on its knees through economic sanctions, simply because the dictator had access to so such an enormous oil wealth. He didn't say anything that could be interpreted as that the US went to war to secure control over Iraq's oil, as VG's and NTB's article insinuates, quite the opposite.

All very well - but then there's this:

Friends of American believes that the US and Great Britain would have been within their full rights if they had invaded Iraq to take control over the oil. American and British oil companies were responsible for 75% of the oil production in Iraq before the nationalization in 1972, and after the nationalization Iraq turned to French and Russian companies for means and expertise. As nationalization of private property is theft, the US and Great Britain are within their full rights to intervene to secure their oil companies' rights in the area. Oil belongs to those who find it and take it up, not the state. But this was not the purpose of Wolfowitz and the US with the war.

There are actually two press statements on the website, and this section is gone in one of them. But: Wtf? This is one of the most stupid things I've read in a while, and doubly so since it contradicts the purpose of the statement. What kind of a right are we talking about here? Can't be a legal right, as that's just a matter of who's in power. So it must be a moral right. The US has a moral right to take Iraq's oil. How do you reply to that? What is Fredrik, or whoever wrote that, thinking?


Maybe he's just referring to 'theft of investment' and perhaps machinery.

In other words: "These dumb, backward ragheads would never have developed their oil industry without American and British help and it was theft for them to nationalize it all (i.e. steal all the American and British work, know-how, and investment for themselves) once it was all developed.

Though by that reasoning some western nation would 'legally' own Aeroflot right now. Maybe not an exact analogy, but I'm sure America and Britain got their investment back and more before Iraq nationalize all their work...

ps- I will now await a post by somebody who knows what they're talking about who will make me look very dumb...

No, he's referring to the natural law and the moral law. Nationalization is simple theft, and the rightful owners have a right to re-possess, if they can.

And, while natural resources have to be administered by governments, it does not follow that they are owned by them.

Much less is there the least reason to suppose that people who live nearby, but never had a clue they were there, and never had the least use for them, anyway, own them.

Exactly my thought when I read the report, and what I wrote in my comments. That statement just took away attention from the main point of the press release, namely that Wolfowitz was misquoted, and made the "Friends of America" look like crazy fanatics.

A natural resource, be it fish or oil, belongs to the nation-state, and is administered by its legal government in accordance with national and international law. It's not up for grabs by international businesses or other states. Norway's oil resources was found and originally developed by international oil companies like Philips Petroleum. Norway was wise enough to give these companies a deal leaving them a healthy profit, but surely kept most of the revenue on Norwegian hands. As it should be.

No, not by moral right, but by commercial right to recover their investment (CT says it better).
Of course mining companies do have an obligation to the owners of the land, be that privately owned, "crown" land, whatever. When these companies fail in their obligations then compensation is due to the people so affected. Witness the devestation brought about by the actions of BHP in Papua New Guinea and the resultant compensation demanded by the local inhabitants to cover their loss of livelihood.
The point is, it is ludicrous to think that a mining company has more "right" (that is rights without obligations) than the people of the country they are working in.

"Marcus Tullius Cicero" gets it pretty much right, but here's some more background information on this:

Blood for Oil by Robert Tracinski:

--- Begin quote ---

Those who oppose strong action against the Saudis — or against anyone else in the Middle East, for that matter — will no doubt take up their Gulf War protest cry: "No blood for oil." But if they really meant those words, they would be the ones agitating for an invasion of Saudi Arabia, because blood for oil is the gruesome equation that has ruled the Middle East for the past five decades — our oil, stolen by the Saudis and used to spill our blood.

The Saudis did not create their oil fields. The oil was discovered and drilled for by American, British and French oil companies. These firms were the rightful owners of the oil, and until the 1950s, their rights were mostly respected.

The Arab chieftains who ruled the region had no idea the oil was there and no idea what to use it for; they were still riding camels. But once the West discovered the oil and put it to use — running our factories and automobiles — the chieftains began to tax the oil. When that wasn't enough, they simply stole the oil fields, beginning with the de facto nationalization of the Saudi oil fields in 1950. The House of Saud did not seize the oil in the name of the "the people"; they seized it to enrich a small gang of princes and hangers-on.

If someone were to propose, today, that such a vast amount of wealth be seized for the sole benefit of a single family of feudal aristocracy, the Western world would rise up to oppose the idea. So why accept such a situation after the fact?

Worse, consider what the Saudis did with their ill-gotten gains. The Saudi common man is still poor; not much of the oil loot trickles down to him. But plenty of money goes to indolent Saudi princes — and, through them, to the religious fanatics who attack America.


I agree with the rallying cry of "no blood for oil" — but I think we should really mean it: no oil for corrupt Saudi princes, and no more blood spilled by the terrorists they support.

--- End quote ---

I strongly disagree with Jan's idea that "A natural resource, be it fish or oil, belongs to the nation-state". To quote

--- Begin quote ---

Wealth is not a "collective resource" to be distributed by some totalitarian or his cronies, but is produced by individuals. Wealth belongs to the individual who produced it.

--- End quote ---

Fredrik Norman,

You seem to vaccilate between advocating the supreme rights of the strong and some sort of laissez faire capitalism.

"Wealth belongs to the individual who produced it."

You can disagree all you want that natural resources are not ultimately owned by the nation state, but it is both national and international law.

Capitalism requires a nation state that can enforce laws, including business contracts. Otherwise, wealth belongs to whoever has enough physical force to take it and defend it. I think most people are happy that we live in civilisations that have moved beyond that.

A capitalist state requires a strong (if not large) state and consistent, predictable, enforced laws. When you sign a contract with a business partner, you can rely on the state to enforce the contract through the court system and the police (and, ultimately, its armed forces). So, in a capitalist economy every contract has a third implied party, the state.

To maintain a state requires taxation, which is redistribution of wealth. I am not very impressed by right-wing rants against taxation as "theft", as rightists almost always support a strong military and judiciary, all of which requires taxation. The debate between left and right on tax is simply one of what the state should be responsible for, and how much tax people should pay.

As we can currently see in Afghanistan, one of the prerequisites for a civilised state is that the central government gets control of taxes.

What the text you quote criticise the Saudis for is lack of a civilised state. They are a primitive feudal community. If they had a modern state when the oil fields were originally developed, they would tax the oil and redistribute wealth reasonably fairly to the citizens of the country.

You seem to be contradicting yourself, on one side wanting a civilised state with its institutions, on the other you appeal to the "right" of force.

The press release from "Friends of America" betrayed a naive and bizarre political view, which is not at all consistent with US policy. With such friends...?

I understand the ideological argument about nationalization, but as a practical matter oil companies that suffered losses when their assets were nationalized decades ago have long since written them off. Moreover, anyone producing the oil will generally want to sell it, so as a rule it really doesn't matter who exercises political control over its production. The exception, operative in this case, is when the revenues from oil production are used for purposes radically at variance with American interests.

I don't mean to denigrate anyone who insists on ideological points of this kind, but suggest their attention would be better focused on spotlighting the malignant effect of left wing ideology on the organization of the Baathist regime in Iraq and on the importance of establishing a government with limited power to control economic life in that country.

I tend to agree with Zathras's point, and I would add to that as follows: above all, the capitalist is interested in business. Property ownership is not some divine or natural right. It is, rather, an expedient way to organize production for all of society. The people who dream up, build up, and engage in production should be supported by property laws because those laws can facilitate how the spoils from that production are apportioned, and give encouragement to others to engage in further production.

The fact is (and I'm not a friend of the Saudis by any means) that US and Western property law had really no jurisdiction in, - or was imposed through colonialism on, - the Arab world at the time oil was discovered. Westerners took the risk in territories where they were really not the rulers. And for awhile, they profited.

But the lesson to be learned is that they are still profiting from all the oil pumped in Arab lands. Because control of the oil fields is still not as necessary as access to markets. It is the marketplace that places the value on oil. And Arabs certainly want access to that marketplace.

So, in the end, the West does control the oil business, because it controls the access to markets, - and with a lot less effort than before. The capitalist, above all, wants the stability to do business. And if it means that stability is to be gained from nationalization, then so be it.

Unfortunately, as the experience of Venezuela and Mexico has shown, nationalization has proven not to be the cure-all the Latin Americans expected, as their respective nationalized oil corporations are not only inefficient, but they fail to apportion wealth to all of society as efficiently as it is done in the West (yes, Western corporations are much better at that, believe it or not). But that is because Western businesses operate in an environment with a respect for property law, and competition, and the free market. That state monopolies fail in Latin America is due to the lack of an ancillary business environment surrounding the wealth-producing oil corporations. Nationalized industries rely on government planning, "special" relationships, and cronyism. It is very unlike the business environment in Texas, for example, where a multitude of competing subcontractors vie for business from the oil corps, to the aggregate benefit of the Texan economy.

It is infinitely better that foreign oil corporations are owned by their own countries, though. They must learn for themselves what it takes to make resources benefit all of their respective societies. And, eventually, they will all come back to the free-market model. Because, in the end, it will prevail.

Well, actually, property is a natural right. Without it, what we think of as liberty is impossible. It is eminently desirable to impress this on Iraqi society; I just don't think the place to start is with claims of Western corporations that they themselves gave up on long ago.

The only other thing I would add is that, in this situation, control of Iraqi oil production should be returned to the Iraqis only after absolute transparency as to revenues and what they are used for is established. It would also be useful for the Iraqi oil authority to have considerable autonomy in its daily operations from whatever government is eventually established in Baghdad. It really would be a tremendous disaster if we wound up with Pemex on the Euphrates -- the experience of nearly every country that has relied on extractive industries for most of its wealth has been that the income from said industries is a potent source of corruption, discontent and eventual political instability.

Jan wrote:

"To maintain a state requires taxation, which is redistribution of wealth"

That statement is unclear at best and incorrect at worst. Except for perhaps libertarians, conservatives (in the U.S.) agree that taxes are a necessity in order to maintain order within a nation. Hence, taxation for that purpose is not seen by us as "redistribution of wealth." Redistribution of wealth is taxation for the express purpose of giving the money away to some group (as opposed to using it for the mutual benefit of all).

I suppose it's a question of semantics, but to insinuate that "taxation=redistribution of wealth=something that all conservatives are against" is flawed reasoning. "Rightists," as you say, are against the purpose of taxation as a means of directly giving money away to non-producers.

To keep the comment on-topic . . . while I understand the technical point about the original theft by nationalization, I think that if you want to ascertain actual rights to oil revenue, you have to go back further. Was the original granting of rights to the oil companies legitimate? Did whoever sold them land/rights to minerals have the authority to do that? Or was it a case of a tyrant selling land he had stolen first?

My point is that it's stupid to look into the past to make points like that, because no one really knows all of the variables involved.

Sorry, didn't mean to say that the second bit in quotes is an actual quotation of you.


Conservatives can argue all they want that taxation is not necessarily redistribution of wealth. It's just rhetoric. No government benefits go equally to all people. Even defense, police and the court system benefits some groups more than others, in that case those who are the richest (they have the most to lose).

Even the most right-wing agenda that has any chance of getting in power doesn't argue the complete cessation of industry and agricultural subsidies, educational grants, health benefits, roads and other infrastructure, etc, etc. These services benefit people unevenly. Thus taxation does redistribute wealth, even in the most conservative system.

It matters rather a lot whether redistribution is an incidental effect of taxation or its intended purpose, does it not?

For one thing, tax systems that begin with the view that the state has a duty to take from those it regards as too rich tend to have very high tax rates. The reason is plain enough -- the point of the system is not merely to gather enough revenue to fund programs the legislature thinks are needed but to achieve "justice" and fight "inequality." The higher revenues produced by redistributionist systems can then be used to fund ever-larger government; the more money available, the more programs, workers and so forth any legislature will decide it needs. Eventually tax evasion of various kinds sets in, diminishing the revenue stream and prompting new efforts to collect more money in taxes.

As for right wing agendas, which I hearily endorse for the most part, it is important to distinguish them from academic models. An pure free market model might bar any subsidies to agriculture, for example, while a free market politician would enthusiatically support government funded research and food safety inspections while calling for an end to subsidies for cotton production and quotas on sugar imports.


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