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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. --By Donald L. Barlett and James B. Steele