Chomsky on Everything

Sameer Dossani: Let’s talk about the recently passed Iraqi oil law. It’s well known that the law was drafted in the U.S. and then consulted on by very few Iraqis all loyal to Prime Minister Noori al-Maliki, then finally pushed through the Iraqi parliament. This law paves the way for regionalization and privatization of Iraqi oil. What’s the U.S. economic agenda in Iraq and will it be able to carry that agenda out, given the disastrous nature of the occupation so far?

Noam Chomsky: It’s not very clear. What you said is correct. The law was not even seen by the Iraqi Parliament until it was finished, so it’s an inside job. Exactly what this entails is still kind of open. It allows for Production Sharing Agreements (PSAs) which have traditionally been a way of gouging the producer and ensuring that foreign corporations have control and make huge profits. It’s quite different from other contractual arrangements in the region–it’s what they used to have but they’ve since nationalized their oil production and countries set terms more in their own interest with the corporations that are moving in. This law is vague on that so it leaves it open.

As far as the U.S. economic interests I think we have to make a distinction. The primary interest, and that’s true throughout the Middle East, even in Saudi Arabia, the major energy producer, has always been control, not access, and not profit. Profit is a secondary interest and access is a tertiary interest.

So in the years when the U.S. was not using Middle East oil at all, [the U.S.] was the largest producer and the largest exporter, it still had the same policies. It wanted to control the sources of oil and the reasons are understood. In the mid-1940s, the State Department made it clear that the oil resources of the region, primarily then Saudi Arabia, were a stupendous source of strategic power which made the Middle East the most strategically important area of the world. They also added that its one of the greatest material prizes in world history. But the basic point is that it’s a source of strategic power, meaning that if you control the energy resources, then you can control the world, because the world needs the energy resources.

This was made explicit by George Kennan when he was one of the Middle East planners [in the U.S. State Department]. [He said that] control over Middle East oil will give us veto power over our rivals. He was specifically talking about Japan, in case Japan industrialized, it was devastated by the war still, we’ll have veto power as long we control the oil. And that’s been understood through the years. So in the early stages of the Iraq war [former U.S. National Security Advisor] Zbigniew Brzezinski, who’s one of the more astute of the planners–he was not terribly enthusiastic about the war–said that if the U.S. wins the war, which means that it succeeds in imposing a client regime in Iraq, then the U.S. will have critical leverage over its industrial rivals in Europe and Asia because it will have its hand on the spigot.

And that is also understood very well at the highest level of the administration. So a few months ago, Dick Cheney said that control over [oil] pipelines can be “tools for intimidation and [blackmail]”. He was talking about control over pipelines in the hands of others, so if our enemies have it, it’s a tool of intimidation and coercion. But of course the same is true if it is in our hands. We’re not supposed to think that because we’re supposed to be noble, but the rest of the world certainly understands it. Yes, it’s a tool of intimidation and coercion, whether it’s the direction of pipelines or whether its control over the production or over the regimes in question, and control can take many forms.

So that’s the primary concern–control. A secondary concern is undoubtedly profit for U.S.-based corporations and British based corporations and several others of course. And yes [in the case of the Iraqi oil law] that’s a possibility. The Production Sharing Agreements and the other arrangements for long-term contracts at ridiculous rates, those are expected to be sources of immense profit as they have been in the past, so for example a couple of weeks ago Exxon-Mobil posted its profits for 2006 which are the highest for any corporation in U.S. history. That broke the record of the preceding year, which also happened to be Exxon-Mobil and the other energy corporations are doing just great–they have money pouring out of their ears. And the same with the corporations that link to them, like Haliburton, Bechtel and so on.

The material prize of oil production is not just from energy. It’s also from many other things. Take Saudi Arabia or the [United Arab] Emirates. They have huge constriction projects paid for by petro-dollars which recycle back to Bechtel and other major construction companies. A lot of it goes right back to U.S. military industry. So these are huge markets for U.S. military exports and the military industry in the United States is very closely linked to the high-tech economy generally. So it’s a sort of a cycle–high prices for oil, the petro-dollars pour back to the U.S. for major construction projects for high-tech industry, for development, for purchasing treasury securities which helps bolster the economy–it’s a major part of the economy and of course it’s not just the United States. Britain, France and others are trying very hard to sell them the same things and sometimes succeeding. There was a big bribery scandal in Britain recently because of efforts to bribe Saudi officials into buying jet aircraft and so on. So the basic idea of the energy system is that it should be under the control of loyal clients of the United States, and they’re allowed to enrich themselves, become super rich in fact, but the petro-dollars are basically to cycle back to the West, primarily the United States in various forms. So that’s a secondary concern.

A tertiary concern is access. That’s much less of a concern. One of the reasons is that the distribution systems are pretty much in the hands of big energy corporations anyway and once oil is on the high seas, it can go anywhere. So access is not considered a major problem. Political scientists, when they make fun of the idea that the U.S. invaded Iraq to gain its oil, they point out is that the U.S. can get Middle East oil in other ways so therefore that can’t be the reason. That’s true, but it’s irrelevant because the true issues are and always have been control and secondarily profit and in fact U.S. intelligence projections for the coming years have emphasized that while the U.S. should control Middle East energy for the traditional reasons, it should rely primarily on more stable Atlantic basin resources, namely West Africa and the Western hemisphere. They’re more secure, presumably and therefore we can use those, but we should control the Middle East oil because it is a stupendous source of strategic power.

SD: The difficulties surround the occupation Iraq has deflected the U.S.’s attention away from other parts of the world, including Latin America. Recently, Venezuelan President Hugo Chavez and others such as Rafael Correa of Ecuador, Evo Morales of Bolivia, have been talking about regional trade agreements such as ALBA and, in the case of Venezuela, aid packages that are supposedly designed to actually benefit local populations as opposed to transnational companies. Critics claim that these policies are a) unsustainable, because they depend on revenues from Venezuela’s oil wealth, and b) self serving for the government of Hugo Chavez. What is your response to these criticisms?

NC: It’s very odd criticism in the first place. Are U.S. aid programs sustainable? No, not if there’s a depression or even a recession. Furthermore, U.S. aid happens to be about the lowest relative to the economy of any advanced society so there isn’t much of it in the first place and it also can be withdrawn at any time and often is.

As for doing it for self interest, what do you think other countries provide aid for? They’re perfectly open about it. Sometimes, there’s something done for altruistic reasons maybe by Norway, but overwhelmingly, aid is openly presented as “in our interest”, not just by the U.S. but by Britain and France and others. It is part of general strategic policies of controlling whatever part of the world you can. So, if in fact Venezuela’s doing it for that reason, that just says, “yeah, they’re just like us”. So whatever that is, it’s not a criticism.

What are the reasons? Well, they’re complicated. First of all, there’s a background. For the first time in 500 years since the Spanish conquest Latin America–especially South America–is beginning to move towards some sort of integration. Actually it’s a dual type of integration. Part of it is international integration meaning the countries are becoming more integrated with one another. The traditional structure in LA has been that each of the countries is primarily oriented towards Western imperial powers. So [economies are oriented toward trade with] Spain, and in recent years mostly the United States, not with one another. That’s even true of the transportation systems. They’re designed for export of resources abroad and import of luxury goods for the rich within.

There’s a very clear contrast with East Asia. East Asia is resource poor, Latin America is resource rich. You would have expected Latin America to have rapid growth, not East Asia, but it didn’t. One of the reasons is that Latin America adhered very rigorously to the neo-liberal policies of the last 25 years, the IMF World Bank policies, and those are basically offshoots of the U.S. Treasury department. They adhered to the rules and they suffered severely–most of the population that is. The rich sectors did ok. East Asia just disregarded the rules and followed the same kinds of programs that the rich countries themselves, including the U.S., had followed to gain their wealth and power. So East Asia grew, but in addition to that, if you look at say imports and exports, Latin America exported raw materials, which is low income basically, and imported luxury goods for the wealthy. East Asia imported capital goods and moved up the ladder of industrial progress and ended up exporting high technology goods.

SD: What do you mean by “capital goods”?

NC: Machine tools, things that you can use for producing commodities, electronics, bio-technology and so on. I mean those are the high-value exports, not rice. I mean for the U.S., rice is such a low value export that agribusiness has to get about 40% of its profit from U.S. government subsidies, provided primarily since the Reagan administration, as part of their efforts to undermine markets–they love rhetoric about markets, but they greatly dislike the concept applied to us. And the terms of trade tend to decline for commodities, you know there’s variation, but they tend to decline for primary commodities as compared with high value goods like industrial exports. So [economists like to talk about] this notion called “comparative advantage”, you should produce what you’re good at, but the way countries develop is by rejecting that principle and acting in order to shift their comparative advantage.

So let’s take the United States. 200 years ago the comparative advantage of the United States was exporting fish and fur, and maybe cotton, thanks to slavery. If the U.S. had followed the principles that are dictated to the poor countries, we’d be a sparsely populated, pretty poor country, exporting primary resources. Instead, the United States violated all of the rules–the rules of the economists and the neo-liberal principles. It imposed extremely high tariffs on imports from Britain, textiles at first, later steel and others, and it had the highest tariffs in the world, the highest protection in the world in the 19th century. As a result, it was able to shift its comparative advantage from primary resource exports to manufacturing, finally high-tech technology and so on, and that goes on right until today. Only the poor countries are supposed to follow the principles that economists dictate. In the United States there’s a state sector of the economy, which is the core of high-technology advanced production. That’s where computers come from, and the Internet, and lasers, and containers for trade; civilian aircraft are mostly an offshoot of the military industry, right now moving on to genetic engineering, bio-technology, pharmaceuticals, and so on. Research and development–which are the risky, costly parts of development–those costs are imposed on the public by funding through the state sector and development in the state sector. When there are profits to be made it’s handed over to private corporations and that’s the basic structure of the advanced economy.

That’s one reason why the U.S. simply can’t enter into the free trade agreement–it just doesn’t accept market systems internally. So going back to East Asia and Latin America, Latin America followed the rules and became impoverished; East Asia ignored the rules, and was able to grow and develop pretty much the way the rich countries had themselves. So one form of integration in Latin America is integration of the societies with one another, although the alternative is the more far-reaching version of this, but there are others. And the second form of integration is internal. Latin America at last is beginning to do something, not much, but something about the internal fracturing of the societies, which is extreme. Each of those societies is characterized by a very wealthy small elite, and a huge impoverished mass. There’s also a pretty close correlation to race. The wealthy elite tends to be the white, Europeanized part of the society; the huge impoverished mass tends to be the Mestizo, Indian, Black part of the society. Not a perfect correlation, but it’s very noticeable. And that’s beginning to be addressed, in large part as a result of the pressure of mass popular movements, which are very significant in Latin America now more than any other part of the world.

It’s in this context that the Venezuelan phenomenon surfaces. Venezuela is indeed now, under Chavez, using its oil wealth to accelerate these processes–both the international integration and the internal integration. It’s helped countries of the region free themselves from U.S. controls, exercised in part through the traditional threat of violence, which has been much weakened, and in part through economic controls. That’s why country after country is kicking out the IMF, restructuring their debts, or refusing to pay them, often with the specific help of Venezuela. In Argentina particularly, Venezuela bought about a third of the debt and enabled Argentina to “rid herself of the IMF” as the President [Nestor Kirchner] put it. The international integration is also proceeding, not just through Venezuela. It doesn’t get reported here because it’s sort of not the right story, but a lot of things are happening. So in early December for example, there was a meeting of all South American leaders in Cochabamba, Bolivia–which is right at the heart of Morales territory, Indian territory–and they proposed, they had constructive ideas and suggestions which could lead towards sort of a European Union type structure for South America.

The more extreme version of this, advanced version of it is ALBA, which you mentioned, the Venezuelan initiative, but there are others. MERCOSUR, which is a regional trade alliance is stumbling, but it exists. There are great barriers to integration, it’s not an easy matter to dismantle 500 years of history, either internally or regionally, but there are steps towards it, and Venezuela is playing a significant role in them. In the U.S. there’s kind of a new party line on this matter. The party line is that, OK, we admit the subcontinent is drifting to the Left, but there are good Leftists and bad Leftists, and we have to distinguish between them. The bad Leftists are Chavez, of course, Morales, and probably Correa, not certain yet, and Kirschner’s also one of the bad ones. The good Leftists are Lula in Brazil, García in Peru, they don’t know about Bachelet in Chile, and so on.