While persistent rumours surface about Israel soon fattening up on cheap Iraqi oil, the idea is as unthinkable to Arabs, politically and commercially, as it has been since 1948, writes Saadalla Al-Fathi* Nearly two years ago now, I wrote a long article entitled 'The Kirkuk-Haifa pipeline: myth or reality?' published in the Middle East Economic Survey 1 December 2003 and at the same time in Arabic in the Journal of Palestinian Studies. A summary also appeared in Gulf News on 19 February 2004 under the title 'Will Israel get Iraqi oil?' As recurring reports on the subject are appearing, I will repeat, summarise and update the views expressed in the above-mentioned articles for the benefit of readers. Iraqi oil production from the northern fields in Kirkuk started in 1927. In 1934, a 12-inch pipeline was completed from the Kirkuk fields to Al-Haditha on the Euphrates River, where it branched to one line going to Tripoli through Syria and the other to Haifa through Jordan and Palestine. Iraq's oil production increased from 2,000 barrels per day in 1927 to 100,000 in 1945, and a parallel 16-inch pipeline was added and almost became operational in 1948 when the Arab- Israeli war broke out. After the armistice, the Iraqi government refused to permit the use of that line, the section through Jordan and Palestine consequently remained inactive, in some places left to deteriorate while the Iraqi army to make sure the line was not operational removed some sections. By 1952, following several unsuccessful attempts to pressure the Iraqi government to permit the use of the pipeline, oil companies gave up and went on to build two new lines through Syria to substitute the Haifa lines and cater for the increase in Iraqi production from Kirkuk. It is clear that as far as the oil industry was concerned the lines to Haifa were disregarded as early as 1950 as being a viable option for exporting Iraqi crude, and were left to deteriorate in place. Many sections were later cannibalised and used elsewhere for secondary services such as water. It seems that despite this history, as well as realities on the ground, the State of Israel wants to cash in quickly on the Iraqi tragedy. As early as 31 March 2003, Israel's National Infrastructure Minister Joseph Paritzky said, as reported in Haaretz, that he had instructed staff to check on the pipeline running from Mosul to Haifa, as if the line were readily there, ignoring history and facts on the ground. Of course the line ran from Kirkuk not Mosul, an ignorance nonetheless repeated frequently in Israeli statements. Even Benjamin Netanyahu, Israel's Finance Minister, jumped on the bandwagon. He said, as reported in Haaretz 20 June 2003 that, "It won't be long until you will see Iraqi oil flowing to Haifa," and "it is just a matter of time until the pipeline is reconstituted and Iraqi oil will flow to the Mediterranean." "It's not a pipedream," he added. Although official US statements in this regard have not been explicit, Jane's Information Group website has pointed out that "US efforts to get Iraqi oil to Israel are not surprising. Under a 1975 Memorandum of Understanding (MOU) ... [the US guaranteed] ... all Israel's oil needs in the event of a crisis. The MOU, which has been quietly renewed every five years, also committed the US to construct and stock a supplementary strategic reserve for Israel, equivalent to some $3billion in 2002 dollars. Special legislation was enacted to exempt Israel from restrictions on oil exports from the US. Moreover, the Americans agreed to divert oil from their home market, even if that entailed domestic shortages, and guaranteed delivery of the promised oil in its own tankers if commercial shippers were unwilling or not available to carry the crude to Israel. All of this adds up to a potentially massive financial commitment." Similarly, The Observer of 20 April 2003 quoted James Akins, former US ambassador to Saudi Arabia, commenting on the Haifa pipeline: "After all, this is a new world order now. This is what things look like, particularly if we wipe out Syria. It just goes to show that it is all about oil, for the US and its ally." It is in this vein that Amiram Cohen reported in Haaretz on 25 August 2003 that, "The US has asked Israel to check the possibility of pumping oil from Iraq to the oil refineries in Haifa. The request came in a telegram last week from a senior Pentagon official to a top Foreign Ministry official in Jerusalem." He added that "The Prime Minister's Office, which views the pipeline to Haifa as a bonus the US could give to Israel in return for its unequivocal support for the American-led campaign in Iraq, had asked the Americans for the official telegram." Nonetheless, on 27 August Cohen reported: "A senior (US) State Department source said that not only is there no such plan, but also there is no intention or possibility of such a scenario. The US believes it is not possible that any new government formed in Iraq would immediately agree to divert oil to Israel." Two years later, the reality hasn't changed. The divergent positions by the Pentagon and the State Department reflect, perhaps, the continuous differences within the US administration over many subjects related to Iraq. It could also reflect attempts by Israel to influence the parties concerned in its favour. It is obvious that Amiram's articles are intended to be sensational and carry a large number of mistakes, which I will not mention here. I maintain that all these statements are politically driven and that Iraq does not need an export terminal in Israel. No matter what political change takes place in Baghdad, Iraq will be driven by its needs and not by Israeli wishes. Even if Iraq's plans to raise production capacity to six million barrels per day are realised, it has sufficient export capacity of over six million barrels through its terminals in the Gulf, the pipelines to Turkey, to Saudi Arabia and to Syria. For the future, it will be far easier and more economical to expand these systems rather than propagate a new and suspect route that will compete with its terminals in Turkey and Syria. If the political situation in the region improves and there is a more cooperative and integrative approach, Iraqi oil exports can also go through Iran and Kuwait where there is surplus terminal capacity. Israel's refining capacity of under 300 thousand barrels a day does not by itself justify such an expensive scheme, and if it were politically possible to have a pipeline from Iraq, why not get the crude oil cheaper from any Mediterranean terminal? The growth in world oil demand will be more pronounced in Asia than any other region in the world. Asia's dependence on Gulf oil will increase sharply in the years to come. Therefore, Iraq and other Gulf countries are likely to expand their Gulf terminals rather than the Mediterranean terminals that will receive additional Russian and Caspian crude in coming few years. Similarly, Iraqi crude to North America, Latin America and South Africa can be supplied more economically from the Gulf or Red Sea terminals. It is indeed possible that the promotion of the oil pipeline scheme between Iraq and Israel is intended to show total disregard, by the occupiers and Israel, to the political sensitivities in the Arab world in general and Iraq in particular. Even if it can be imagined that it is possible to immediately terminate more than 50 years of hostility between Iraq and Israel, Iraq has more urgent problems to cope with. Even Egypt, 25 years after signing its peace agreement with Israel, is still reluctant to take steps towards further cooperation, with the exception of the sale of a limited quantity of oil and the recent still-on- paper gas agreement which was written only after a separate gas delivery agreement to Jordan was effectively implemented. The Egyptian gas export pipeline to Jordan does not pass through Israel or connect to its network. Therefore, it will not be possible for Israel to claim so quickly its share of the Iraqi spoils of war -- contrary to recent statements. Over the last 13 years there was much talk about a Middle Eastern energy infrastructure involving Israel. For example, projects like a joint refinery with Egypt, gas exports from Qatar, the Mediterranean Gas Ring, etc were discussed endlessly without results. The refinery project went ahead but only after Israel bailed out of it. A comprehensive and just peace in the region and the restoration of the rights of the Palestinian people does not seem to be on Israel's agenda and therefore statements about grandiose schemes of energy systems, including the Haifa pipeline, will remain, as I wrote before, a pipedream. Even if politics were to drive such schemes towards realisation it must be remembered that they would remain vulnerable and that oil and gas can by their nature sometimes defend themselves. * The writer is former head of the Energy Studies Department at the OPEC Secretariat
