The Oily Americans

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DMITRI KESSEL/TIME LIFE PICTURES/GETTY

Iran's oil industry sank in the early 1950s after Iran nationalized it

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But all this was merely the overture to the next U.S. foreign-policy decision rooted in oil. This time the players were the Soviet Union and Afghanistan. In 1977 the CIA sounded an alarm on the Soviets' faltering energy prospects in a secret 14-page memo titled "The Impending Soviet Oil Crisis." The agency concluded that the Soviet Union, which had been self-sufficient in oil, was running out and would soon become a major importer. "During the next decade," the report said, "the U.S.S.R. may well find itself not only unable to supply oil to Eastern Europe and the West on the present scale, but also having to compete for OPEC oil for its own use." Two years later, the Soviets invaded Afghanistan. President Jimmy Carter, concluding that the Soviet army was passing through Afghanistan to seize the Middle East oil fields, sounded a warning: "An attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States of America, and such an assault will be repelled by any means necessary, including military force."

When Ronald Reagan replaced Carter in the White House a year later, he turned up the heat. Administration officials insisted that the Soviet Union's interest in Afghanistan was a prelude to a communist takeover of the Middle East oil fields. The CIA report on the Soviets' running out of oil gave the Reagan Administration the ammunition to secure more money from Congress to arm Afghan insurgents and establish a permanent military presence in the Persian Gulf. Soon after Reagan took office, Defense Secretary Caspar Weinberger announced that it was essential for the U.S. to establish bases in the Persian Gulf region "to act as a deterrent to any Soviet hopes of seizing the oil fields." The Reagan Administration began building those bases, sold sophisticated AWACS planes to Saudi Arabia, and conducted joint military exercises with Egypt and other countries. And the CIA began one of its longest and most expensive covert operations, supplying billions of dollars in arms to a collection of Afghan guerrillas fighting the Soviets. The arms shipments included Stinger missiles, the shoulder-fired, antiaircraft weapons that were used with deadly accuracy against Soviet helicopters and that are now in circulation among terrorists who have fired such weapons at commercial airliners. Among the rebel recipients of U.S. arms: Osama bin Laden.

At the same time the U.S. was moving into the Persian Gulf militarily and supplying Afghan rebels, all based on a faulty CIA oil assessment, it was also secretly supporting Saddam Hussein. The Reagan Administration remained neutral after Iraq's invasion of Iran in September 1980, but as the war progressed and it appeared that Iran might emerge victorious, the U.S. secretly backed Iraq, according to declassified government documents. That began in 1982, when the State Department removed Iraq from its list of countries supporting terrorism. According to a General Accounting Office report, this "made Iraq eligible to purchase aircraft, helicopters, and national security controlled items for military end use." Yet another declassified State Department document makes clear that the Reagan Administration intended to implement regulations that would lift restrictions on exports "to both Iran and Iraq of five chemicals that could be used in chemical weapons production." This made sense, as the U.S. was peddling arms to Iran as well via the Iran-contra conduit.

The root of all this folly was the U.S. government's officially sanctioned version of faltering Soviet oil production, which was at odds with reality. To be sure, Soviet oil production was trailing off. But the Soviets were not running out of oil. Nor would they become dependent on imports. Rather, they were using primitive technology and needed to make investments in their infrastructure. In fact, Russia today is the world's second largest producer, after Saudi Arabia. Instead of becoming a major buyer of Middle East oil, as the CIA had warned, Russia ships 3 million bbl. a day to other countries, including the U.S.

As all this makes clear, the former Soviet Union was not running out of oil. Neither is the world. The one exception: the U.S., which was the Saudi Arabia of the first half of the 20th century, is finally running out. As a result, thanks in part to American policy that put an emphasis on foreign intervention rather than domestic conservation, Americans are more dependent than ever on imported oil.

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