Oil and 9-11: The Connection

News Abroad

Mr. Shughart is F.A.P. Barnard Distinguished Professor of Economics and holder of the Robert M. Hearin Chair at The University of Mississippi.

Victory over the evil empire assured as a bloodied Soviet army withdrew in 1989, American policymakers lost interest in Central Asia. What they left behind in Afghanistan was a country Ahmed Rashid describes as "divided into warlord fiefdoms" over which tribal factions "fought, switched sides and fought again in a bewildering array of alliances, betrayals and bloodshed." Into this power vacuum stepped the Taliban. A series of military successes over rival warlords contending for local or regional supremacy, crowned by the Taliban's capture of Kabul in September 1996, triggered hopes that peace and political stability finally would be restored, at least to Afghanistan's southern provinces.

Political stability historically has been the principal goal both of foreign powers contending for spheres of influence and of the region's neighbors. In the twentieth century, that goal was pursued by redrawing the map of Central Asia in the now manifestly false hope that, by splitting major tribes and ethnic groups across new national boundaries, age-old loyalties would be weakened and grounds for conflict narrowed. (Click here for a brief history of the intrigue that led to the redrawing of the map of Afghanistan.)

The promise of political stability explains Washington's initial backing of the Taliban. The Clinton administration saw a peaceful, Taliban-controlled Afghanistan as a key factor in America's foreign policy strategy of isolating Iran. That strategy, which originated in the Ayatollah Khomeini's humiliation of Jimmy Carter, took advantage of the irreconcilable differences between Sunni and Shia Muslims, grounded in a centuries-old doctrinal dispute over the proper line of succession (hereditary versus elective) to the Prophet Muhammad. Seeing a threat to its own security in the disintegration of the Afghan state, Iran, the only Islamic nation where Shias are in the majority, backed the United Front coalition opposing the intensely Sunni Taliban.

The Clinton administration also courted the Taliban's favor for a more parochial reason: to promote the interests of U.S. oil companies in exploiting the region's immense oil and gas deposits. The Taliban's success in quelling ethnic violence and tribal warfare seemed to offer an opportunity at long last to begin construction of a natural gas pipeline running North-South across Afghani territory, connecting up the Central Asian oil fields with Pakistani terminals located on the Arabian Sea. The completion of such a project would both enable the oil companies to comply with the American government's embargo on trade with Iran, whose pipelines run from ports on the Caspian Sea, and help undercut Russian influence in the region.

During the heyday of Soviet power, the Kremlin's central planners had neglected the petroleum riches of Central Asia in favor of exploiting Siberian oil and gas deposits. Indeed, the Central Asian Republics had been converted by Moscow into a cotton-based agricultural economy. Ecological damage of catastrophic proportions was produced in the process as the region's water resources were diverted to large-scale irrigation projects. Following the USSR's breakup, Central Asia's oil and gas deposits became a major source of foreign exchange, which Russia maintains an insular interest in exporting through its own pipeline network.

Although oil companies from Saudi Arabia, Pakistan, Japan and South Korea pledged to provide some of the financing, the chief investor in the proposed trans-Afghanistan pipeline was the American company Unocal. To the members of the investing consortium, the Taliban seemed to be a godsend for a project long delayed by civil war. Neither the Unocal executives nor the U.S. government representatives who conducted negotiations with Afghanistan's new regime to secure pipeline rights of way seemed to be much put off by the Taliban's virulent anti-modernity and subjugation of women, implemented under its strict interpretation of Islamic law (sharia). Not until feminist pressure was brought to bear on the Clinton administration in late 1997 did U.S. policy begin turning around, a reversal ultimately finalized by the bombing of Al Qaeda camps in August 1998. Unocal pulled out of the consortium in December of that year.

Washington's retraction of support for the Taliban, whose single most important channel of operating funds ran through the Al Qaeda network, added to Osama bin Laden's list of real and imagined grievances against the "Great Satan," a list that includes the defeat of Iraq in the Gulf War, the continued presence of U.S. troops in Saudi Arabia after Kuwait's liberation, rapprochement with post-Khomeini Iran and, not least, historical support of Israeli statehood. While 9-11 has many fathers, America's diplomatic neglect of Central Asia for much of the 1990s (Warren Christopher never once mentioned Afghanistan publicly during his entire term as Secretary of State), along with its reckless romancing of the Taliban to secure pipeline rights, surely played a role.

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Reichstag Fire - 12/26/2003

for more on oil and 9/11


READER - 4/29/2003


Chris Messner - 10/1/2002

"misses the point that the whole struggle in the west bank is occurring because of the unjust treastment of the Palestinians"

I could not agree more; if their fellow arabs had taken them in, as the Irsaelis took in all the Jews expelled from Arab countries after 1949. Or if their fellow Arabs had cared for them, instead of letting them rot in UN "under"sighted refugee camps, to be armed and trotted forward as cannon fodder every generation. Or if the UN (with, god forgive, US acceptance) hadn't pulled Arafat out of exile and allowed him and his 'Tunisians' to once again loot and exploit 'his' people for no peaceful purpose, at a time when no Arab leader in the middle east would touch him with a 10 foot pole. Yes, treatment of the Palestinians has been unjust, by their fellow Arabs, by the UN, and by their own making.


Leo Beilin - 9/29/2002

Iran,is NOT "..the only Islamic nation where Shias are in the majority". Interestingly,Iraq is another although the government is made up of Sunni.

Rafael Gomez - 9/26/2002

Well, I could have just have said that The New York Times ran that article about Unocal. I remember very well reading the article (pointed to me by a colleague with whom I had been discussing this). But since my memory could fail me in the details, and I didn't want to be the blamed of lying in case the newspaper was The Washington Post and/or the company was Exxon-Mobil (for example), I was a bit vague on purpose.
But the point is that the signing of that agreement while heavy fighting was still going on, and no truly stable government existed, looks a lot like "rushing" to me.

If you have not seen any evidence of this "rushing" it may be because you haven't read all the back pages on the newspapers (I don't do either, but sometimes by chance you run into these news). Many of these news are very far form the front page, and probably never make it to the TV.
You can probably find the reports if you search for Unocal on the news websites.

Along a different line, many of the people that now loudly denounce the Taliban for its ties to terrorism and/or its brutality didn't say a word when US oil companies invited Taliban representatives to Texas (probably treating them to the best and most expensive hospitality) to negotiate the pipeline construction. The same can be said about the now high-principled Rumsfeld, Chenney and Co. and their recent talk about Iraq. All principles go out the window when big profits can be made, especially from oil and weapons.

Andrew Todd - 9/26/2002

In the largest sense of the word William F. Shughart is surely
correct. One can dispute particular points-- for example, the
Soviet invasion of Afghanistan could be seen as an advance
towards the Persian Gulf-- but the most basic point is simply
that there is nothing in the middle east except oil which would
remotely justify the sheer scope of american intervention. Even
in the case of Israel, American policy is driven by a need for
their army. We collectively told the South African whites to
either make their peace with the blacks or leave Africa because
we did not need anything in southern africa that badly.
However, one point I would add is the linkage between oil
money and weapons. Weapons do not simply exist. They have to be
manufactured. Manufacturing costs money, so the supply of arms is
ultimately an economic question. The cold war notwithstanding,
the Russians have tended to a considerable realism about
providing weapons. As Andrew Cockburn remarked in _The Threat:
Inside the Soviet Military Machine_ (1983), by the 1980's even
"the most poverty-stricken clients were being required to pay up"
(p. 130, paperback edition). Iraq's soviet arsenal was paid for
with real money, the proceeds of oil sales.
By contrast with its oil revenue, Iraq has chronically low
literacy. The official figure is 58%, and this should naturally
be regarded with some skepticism, since the newspaper circulation
is only about 27 per thousand. One of the rules of thumb of early
modern period historians is to be very dubious of literacy
figures which are not matched by the production of reading
material. Literacy figures often work out in practice to quota
fulfillment by the educational authorities. We are in practice
talking about a substantially illiterate nation. This low
literacy persistently limits Iraq's industrial potential. Iraq
has the weapons it could buy for oil, not weapons growing out of
the skills of its own people. Like most of the oil states, it has
a large urban "bread and circuses class," who forty years ago
camped outside the gates of the ruler's palace to claim their
share of the oil revenue, and have been there ever since. This
class's most valuable asset is its capacity for creating
disorder, so it has few incentives to modernize. Oil has few uses
outside of the context of a modern industrial economy, so the oil
states are overwhelmingly dependent on selling oil to the west.
Most of the oil states have little or no water resources, and
even the use of oil to power the desalination of sea water
involves expensive plants which have to be imported for want of
local skills. Iraq at least has the Tigris and Euphrates rivers,
but these are in the process of being diverted by Turkey
upstream. Even the bare ability of the oil states to feed their
populations is thus dependent on the oil revenue.
If the United States could eliminate the demand for oil, it
would in practice gain most of the advantages of a successful
invasion, without the associated risks. From the standpoint of
the United States, synfuel development represents a return to the
values of Washington's Farewell Address, with its fear of foreign
entanglements. Energy infrastructure takes time to build. It
takes less time now than it did in 1976, because there are more
computers in the loop, more robotics, more CAD/CAM, etc. Once
energy infrastructure is built, it stays built. The operating
expenses are usually so low that the infrastructure goes on being
used. Jimmy Carter had only four years to promote energy
independence, and that was not enough. However, technology moves
faster now, and a fairly short time window might be sufficient.
Once we ramp up energy independence, the world price of oil
will crash. The oil states will be forced to cut their weapons
expenditures, and possibly even to sell back the weapons they
already have. They will be forced to make a little extra money by
filling up the emergency stockpiles of the developed countries.
On another related point, security from foreign terrorism, or
even from weapons of mass destruction, can be gained by
dispersing the population. American cold war civil defense
planning called for dispersing the population when an attack was
threatened. This was of course somewhat impractical because it
presumed that there would be warning, and it made no provision
for housing the refugees. But now, in the age of the internet,
permanent dispersal is feasible. People can live in small towns
rather than gigantic cities. Oliver Morton has covered this issue
in some detail in his "Divided We Stand" (Wired Magazine, Dec
2001). I live in such a town in the mountains, and one basic fact
of life up here is that September 11 really didn't change
anything, the way it did down in the cities of the plain. We have
no giant buildings in the small towns-- they are not economic in
a place which is not overcrowded.
Most large cities are in long-term economic decline anyway.
The only real exceptions have been New York and Washington.
These cities do not manufacture much of anything, nor do they
produce very much information in any real sense of the word, say
in the sense of software or scientific research-- rather, these
cities are devoted to dancing attendance upon power. People go to
New York in order to prostrate themselves in the hope of being
given investment money, and they go to Washington to prostrate
themselves in the hope of being given government money. New York
and Washington have very little connection with the life of the
country, which is primarily based on people doing things for
themselves. Most of the country is substantially dispersed, and
in the process of becoming more so. In the long run, I suspect we
the people cannot allow the government to meet in Washington,
simply because the fact of meeting in one centralized place
will make its interests too divergent from ours.

Alec Lloyd - 9/26/2002

Again, the mantra of “follow the money” only applies to the US. Nice to know only our hands are capable of being stained with filthy lucre.

Paul N. Hehn - 9/26/2002

This analysis of the Oil and 9/11 article is not very good to put it mildly and sounds like it came from some of the ideologically-motivated stories we are currently hearing from various and sundry q uarters. First of all, the connection b etween the oil rerserves from central Asia into which the U.S. and the West swiftly entered after the demise of the Soviet Union, the U.S.-Taliban connection and either lack of knowlege of or disinterest in the Taliban's repressive social has been well documented recently by books and articles. That certainly was one of the reasons for the cold war to begin with: we wantted the reseouces of the the USSRS, oil parrticularly, whtether im Cetnral Asia or Siberia. That having been said, this anaysis of the UN as somehow responsible is both misleading and a red-herring. The rest of it--the accusation that the UN passively watched while the refugee camps manufactured bombs to kill Israelis and whatnot and does not mentions the killiings in Shatilla and the other camps in Lebanon --misses the point that the whole struggle in the w est bank is occurring because of the unjust treastment of the Palestinians. Oil iswhat it's all about. Israel is a catspaw to keep the the Arabs in check and to protect Amercian oil interests in the first pllace.

Al Czervikjr - 9/26/2002

>>The New York Times or some other major newspaper reported that a US company (maybe Unocal, I don't remember exactly) had signed an agreement with the Afghans to finally build the pipeline.

So some US company may have signed some agreement regarding some plan to build some pipeline through Afghanistan? I think you would agree that this is a rather thin reed upon which to hang the various conspiracy theories that have been floating around.

>>So, if the pipeline is not something very important, why would US companies rush to sign agreements about it

I've seen no evidence that US companies have "rushed" in to sign any such agreements. More significantly, even if any agreements had been signed, I've not seen any evidence that US companies have put any real money into such a project. Until that happens, this is all much ado about nothing.

As for why any company (American, British, French, Russian, etc.) might consider or sign an agreement regarding a pipeline, they are likely trying to curry favor with the governments of Afghanistan and Turkmenistan in order to increase their chances of getting a piece of the action when it comes to developing the gas reserves in those countries.

Alec Lloyd - 9/26/2002

One of the things I find interesting in the war debates is that apparently only the US is motivated by national interest and/or greed. The French and Russians, for example, are simply moral powers who want to preserve the status quo, not arms merchants looking to cash in on $6 billion worth of Iraqi debt.

By the same token, the UN is above reproach, despite the fact that it’s peacekeepers have a miserable record of keeping the peace and are now involved in the sex slave trade in Bosnia and prostitution rings pretty much wherever they go.

Indeed, the only time peacekeepers seem to work is when the US (or the UK) runs the show. Even then, it’s a touch-and-go business.

In the West Bank, the UN-sponsored “refugee camps” are terrorist sanctuaries where bombs are made right under the noses of the supervisory personnel. The Israeli operating in Jenin (immediately dubbed a “massacre” without a shred of proof) revealed that the UN either had zero control over the area or was complicit in the arms factories located there.

Along the Lebanese frontier, UN forces passively videotaped the murder of Israeli soldiers, then refused to hand it over to Israel so that the responsible party could be punished.

Of course the most lucrative UN market is the oil market; to with the Iraqi oil for food program, with billions of dollars sitting in UN bank accounts. As long as Iraq refuses to comply with the sanctions regime, the money is held in escrow by the UN. Where is it? What is it doing? How much is there? No one seems to know.

Thus UN bureaucrats get to administer billions of dollars in (uncollectable and unverifiable) oil dollars up to and until Iraq’s regime is made to comply with the cease-fire terms. In essence they are growing rich on the starvation of the Iraqi people.

Now ask yourself, which is more moral: removing a brutal dictatorial regime run by a sociopath or passively creaming a portion off of his oil sales whilst he starves his people and builds weapons of mass murder?

William H. Leckie, Jr. - 9/26/2002

Oil is certainly one of the major factors in both Iraq and Afghanistan, but obviously not the only one. Iraq as a political entity owes its composition--three disparate Ottoman provinces--to British oil interests after the First World War. The Afghan case is a lot more complicated, but I'd be willing to argue that what we're seeing in both places is an unravelling of the kinds of regional settlements and the regimes to keep them in place that were created in the aftermath of that war, re-established after the Second, and were maintained during the Cold War; Afghanistan as an example of Cold War "blowback" is in that sense a tribal precursor of what happened in Europe in 1989, but more than that--the ultimate failure of the victors' effort to exploit and control the old Ottoman Empire's remains. Oil has been a major consideration, but not the only one, since imperialist diplomacy had a broader horizon. Unfortunately, working out a longer view has been impeded by post-9/11 rhetoric, the demonization of Saddam Hussein, and "war of cultures" notions, although we're hearing references to nations cobbled together like the former Yugoslavia.

Rafael Gomez - 9/25/2002

I'm not so sure the "pipeline connection" is pure conspiracy theory. Right after the final defeat of the Taliban and the appointment of Karzai as head of the Afghan Goverment, The New York Times or some other major newspaper reported that a US company (maybe Unocal, I don't remember exactly) had signed an agreement with the Afghans to finally build the pipeline.
So, if the pipeline is not something very important, why would US companies rush to sign agreements about it without the situation in Afghanistan being even close to stable???

Alec Lloyd - 9/25/2002

Yes, the alleged pipeline had little to recommend it, which is why it was dropped almost as soon as the issue was seriously examined.

More dark hints of conspiracy, more black helicopters. Oliver Stone, call your office.

Al Czervikjr - 9/24/2002

Well, which is it? Neglect of Central Asia or "reckless romancing" of the Taliban? Aren't these two allegations at least somewhat contradictory?

I believe that Mr. Shughart overestimates the importance of both the proposed pipeline and the Clinton administration's purported "retraction of support" for the Taliban. First, the gas pipeline proposal never even came close to getting off the ground. Second, by 1997/1998, Al-Queda had long since begun its campaign against the US.