Oil on the skids

01.03.16-oil-on-skids-590.jpg

Getting high on their own supply – Saudi youths engages in a popular stunt of 'sidewall skiing'. Oil exports are down while domestic consumption keeps rising. © Mohamed Alhwaity

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Within a year of being crowned king in 1932, Abdul Aziz ibn Saud, founder of modern Saudi Arabia, had signed an exclusive concession with Standard Oil, run by the US oil giant Chevron.

In return, the US would enter a formal military alliance with the kingdom, to protect it from rivals. Thus was established a pattern of relationships that continues today: the West props up Saudi repression to maintain ‘stability’ – meaning access to regional oil and gas – while the Saudis use their oil wealth to buy protection wherever needed.

By 1944, Chevron brought in fellow oil majors Exxon, Mobil and Texaco to consolidate Standard into the Arabian American Oil Company, ARAMCO, which effectively functioned as a proxy for the US government in Saudi Arabia.1

‘The best regime’

By 1971, British ambassador to Saudi Arabia William Morris described Saudi Arabia’s specific role as guarantor of regional ‘stability’ with candour: ‘Our narrow commercial interests are of lesser importance than the politico-strategic-economic interest to us of Saudi Arabia as a major supplier of oil to the West… however unsatisfactory, this is the best regime in Saudi Arabia we have, or can count on getting. There is little or nothing we can do to improve it, so we must make the best of what it is.’

The decision to accept Saudi Arabia as ‘the best regime’ to guarantee Western fossil-fuel interests in the Gulf lives on today. Its ISIS-like ideology and financing of terrorism continues to be largely ignored by Western governments.

According to a 2009 secret cable from then US Secretary of State Hillary Clinton, ‘donors in Saudi Arabia constitute the most significant source of funding to Sunni terrorist groups worldwide’. The cable described Saudi Arabia as ‘a critical financial support base for al-Qaeda, the Taliban, LeT [Laskhar-e-Toiba], and other terrorist groups’ and said that Riyadh had only taken limited action to disrupt terror financing.2

This is nothing new. After 9/11, a joint Congressional inquiry into the attacks discovered a CIA memo confirming ‘incontrovertible evidence that there is support for these terrorists [9/11 hijackers Khalid Almidhar and Nawaf Alhamzi] within the Saudi government’. The memo was published as part of a report that had been unilaterally classified by the White House. The Obama administration has continued to rebuff repeated demands from the 9/11 families to declassify those pages.3

When British historian Mark Curtis, author of Secret Affairs: Britain’s Collusion with Radical Islam, submitted a Freedom of Information Act request to the UK Foreign Office for its assessment of terrorist funding from Saudi Arabia, he was told: ‘Disclosure of information is likely to prejudice relations between the UK and Saudi Arabia.’

Funding Islamist militancy is only one part of this equation. The other involves mobilizing oil wealth to buy silence, support and influence. In the US, much Saudi investment goes towards energy research to prolong the kingdom’s declining fossil-fuel resources. Tens of billions of dollars have gone to Stanford, Cornell, Texas A&M, UC Berkeley, CalTech, among others to develop technologies that can extract more oil per well, discover new reserves, and advance carbon capture methods that might permit continued fossil-fuel exploitation.4

But none of this has prevented Saudi Arabia’s oil empire from crumbling.

Oil collapse

The plummeting price of oil, down from $115 in 2014 to under $30 earlier this year, has hit oil-producing nations hard. Saudi Arabia could have chosen to reduce supply in a bid to push up the price, but instead kept the taps open to try to increase its global market share.

The world – and in particular the US – has been shifting away from Middle Eastern oil to sources from the Americas, including shale and tar sands. A spate of recent studies and forecasts shows that by mid-century, Saudi Arabia is destined to lose its dominance over global oil markets to other producers such as Canada and Venezuela. The prospect of parts of ARAMCO, Saudi’s highly secretive national oil company, being sold off to the private sector, was raised earlier this year by Deputy Crown Prince Mohammed bin Salman.

The kingdom is cagey about disclosing the scale of its reserves, but there are reports that it is running out of cheap oil. A study in the Journal of Petroleum Science and Engineering predicts that Saudi Arabia’s oil production will peak then inexorably decline in 2028.5 And according to the Export Land Model created by Texas petroleum geologists, Saudi net oil exports have been in decline over the last decade.6 The geologists show that a major factor is rising domestic consumption.7

In 2012, Citigroup observed that Saudi electricity production is growing at about eight per cent a year.8 A quarter of the country’s total fuel production is used domestically. At this rate Saudi Arabia’s net oil exports could decline to zero by 2030.

At this rate Saudi Arabia’s net oil exports could decline to zero by 2030

During Paris COP21, Nour O Shihabuddin of ARAMCO confirmed that investing in renewables for domestic energy consumption would free up more oil for export.9

Meanwhile, the money too is dwindling. In September last year, I reported that if Saudi Arabia’s considerable cash reserves continued to deplete at the rate of about $12 billion a month, by late 2018 the kingdom’s reserves could hit just $200 billion (compared with $650 billion at the end of 2015). This would trigger capital flight, and could lead to bankruptcy.10

A month later, the IMF provided a more radical forecast, saying that on its current course, Saudi Arabia would deplete its cash reserves and go bankrupt in just five years. Adjustment plans ‘are currently insufficient to address the large fiscal challenge,’ warned the agency.11

Imperial overstretch

As Saudi Arabia’s economic and energy security has declined, its resort to military expansionism has intensified, resulting in hundreds of millions of dollars of support to extremist rebels in Syria, a prolonged war in Yemen, support for Bahrain’s ongoing sectarian crackdown on Shi’a democracy activists, and the formation of a regional ‘anti-terror’ coalition of Muslim states ready to commit military forces.

All this is consistent with Saudi Arabia’s traditional role, codified under the Nixon Doctrine derogating the regime as a regional policeman. As a ‘pillar’ of the Gulf, Saudi Arabia’s role, among other regional US client-regimes, was to oversee regional security with extensive Western military support.

Billions of dollars of US and British arms sales to the Saudi kingdom have directly supported these adventures. The militarization of Saudi policy is, in other words, a direct function of its relationship with the West. To sustain ‘stability’ the kingdom’s US and British backers are resorting to what they know best: empowering Saudi Arabia’s domestic police-state and expanding its regional influence.

Last November the regime proposed measures for economic reform, including pervasive privatization of state enterprises and deep budget cuts, especially in relation to energy subsidies.

Saudi planners appear to have forgotten that subsidy reductions on essential food and fuel items played a major role in triggering the Arab Spring in countries like Egypt and Syria. Neoliberal reforms in those countries did little but widen inequalities and entrench corruption, as political repression to stave off crisis increased, often with Western complicity.

Judging by this recent history, the kingdom’s days are numbered. The West’s key pillar of regional ‘stability’ is beginning to crumble.

Nafeez Ahmed is an investigative journalist and international security scholar. He is a frequent contributor to Middle East Eye.

  1. FPRI nin.tl/US-Saudi-history
  2. Mark Curtis nin.tl/Saudi-Bahrain
  3. Middle East Eye nin.tl/Nafeez-Ahmed
  4. The National Interest nin.tl/saudi-shapes-us-research
  5. Science Direct nin.tl/crude-oil-forecast
  6. Resilience nin.tl/future-net-oil-exports
  7. BMO Research nin.tl/domestic-oil-demand
  8. Bloomberg nin.tl/saudi-import-oil-2030
  9. Newsweek nin.tl/saudi-kill-cop21
  10. Middle East Eye nin.tl/KSA-collapse-inevitable
  11. The Independent nin.tl/KSA-bankrupt-5yrs

Our terrorists

A longer version of this article, with footnotes, is available on-line. Please follow this link.

US and Pakistani intelligence bigwigs get chummy at a mujahidin training camp in 1987. Note then-Director of the ISI (Inter-Service Intelligence) Major Gen. Hamid Gul (front left) and then-Director of the CIA William Webster (second left).

Photo: www.rawa.org

Once upon a time, the CIA trained, financed and supported Osama bin Laden and his mujahidin networks in Afghanistan to repel the Soviet invasion of Afghanistan. After the end of the Cold War, bin Laden turned against the West and we no longer had any use for him. His persistent terrorist attacks against us for more than a decade, culminating in 9/11, provoked our own response, in the form of the ‘war on terror.’ This is the official narrative. And it’s false. Not only did Western intelligence services continue to foster Islamist extremist and terrorist groups connected to al-Qaeda after the Cold War; they continued to do so even after 9/11.

Graham Fuller, the former Deputy Director of the CIA’s National Council on Intelligence, alluded to the strategy in 1999. ‘The policy of guiding the evolution of Islam and of helping them against our adversaries worked marvellously well in Afghanistan against the Red Army. The same doctrines can still be used to destabilize what remains of Russian power, and especially to counter the Chinese influence in Central Asia.’

Throughout the 1990s, US intelligence sponsorship of Islamist extremist networks was linked to destabilizing Russian and Chinese influence in Eastern Europe, the Balkans, Central Asia, the Caucasus and North Africa – which contain the world’s largest energy reserves after the Middle East.

Afghanistan – Big Oil and the Taliban

In 1997 a US diplomat commented: ‘The Taliban will probably develop like the Saudis… There will be Aramco [consortium of oil companies controlling Saudi oil], pipelines, an emir, no parliament and lots of sharia law. We can live with that.’

Continued US sponsorship of the al-Qaeda-Taliban nexus in Afghanistan was confirmed as late as 2000. Testifying before the Senate Foreign Relations Sub-committee on South Asia, Dana Rohrabacher – former White House Special Assistant to President Reagan and now Senior Member of the House International Relations Committee – declared: ‘This administration has a covert policy that has empowered the Taliban and enabled this brutal movement to hold on to power.’ The assumption was that ‘the Taliban would bring stability to Afghanistan and permit the building of oil pipelines from Central Asia through Afghanistan to Pakistan’. US companies involved in the project included Unocal and Enron. As early as May 1996, Unocal had officially announced plans to build a pipeline to transport natural gas from Turkmenistan to Pakistan through western Afghanistan. US officials held several meetings with the Taliban from 2000 to the summer of 2001, in an effort to get the Taliban to agree to a joint federal government with their local enemies, the Northern Alliance. In exchange, they promised the Taliban financial aid and international legitimacy. But eventually US policymakers concluded that the Taliban would never bring the stability needed for the pipeline project. According to Pakistani Foreign Minister Niaz Naik, who was present at the meetings, US officials threatened the Taliban with military action if they failed to comply with the federalization plan. Even a date for threatened military action – October 2001 – was proposed. The Taliban rejected the plan. So months before the 9/11 terrorist attacks, a war on Afghanistan was already on the table. Jean-Charles Brisard, a former French intelligence officer, thus speculates that 9/11 may have been a pre-emptive attack by al-Qaeda to head off the declared US military invasion of Afghanistan.

There is still keen interest in the pipeline. ‘Since the US-led offensive that ousted the Taliban from power,’ reported Forbes in 2005, ‘the project has been revived and drawn strong US support’ as it would allow the Central Asian republics to export energy to Western markets ‘without relying on Russian routes’. Then-US Ambassador to Turkmenistan Ann Jacobsen noted that: ‘We are seriously looking at the project, and it is quite possible that American companies will join it.’ The problem remains that the southern section of the proposed pipeline runs through territory still de facto controlled by Taliban forces.

Chechnya – Jihad in the Caucasus

The US flirtation with the al-Qaeda-Taliban nexus in Afghanistan was only part of wider US plan to secure key energy resources.

Chechnya is one victim of this strategy. The encroachment of US-sponsored mujahidin operatives linked to Osama bin Laden transformed the character of the Chechen resistance movement by the late 1990s. Al-Qaeda’s hardline Islamist ideology was empowered, at the expense of Chechnya’s populist Sufi culture and traditions.

Back in 1991, CIA veteran Richard Secord, a former Deputy Assistant Secretary of Defense for International Security Affairs, landed in Baku to set up a front company that would fly hundreds of al-Qaeda mujahidin from Afghanistan into Azerbaijan. By 1993, 2,000 mujahidin were recruited, converting Baku into a base for regional jihadi operations, which quickly extended into Dagestan and Chechnya.

US intelligence remained deeply involved until the end of the 1990s. According to Yossef Bodanksy, then Director of the US Congressional Task Force on Terrorism and Unconventional Warfare, US Government officials participated in a formal meeting in Azerbaijan in December 1999 ‘in which specific programmes for the training and equipping of mujahidin from the Caucasus, Central/South Asia and the Arab world were discussed and agreed upon’. This, he said, culminated in ‘Washington’s tacit encouragement of both Muslim allies (mainly Turkey, Jordan and Saudi Arabia) and US “private security companies”... to assist the Chechens and their Islamist allies to surge in the spring of 2000 and sustain the ensuing jihad for a long time.’

The US saw the sponsorship of ‘Islamist jihad in the Caucasus’ as a way to ‘deprive Russia of a viable pipeline route through spiralling violence and terrorism’.

Algeria – state terrorism in disguise

Covert operations were deployed in the same period in Algeria, where the army cancelled national democratic elections in 1992 that would have brought the Islamic Salvation Front (FIS) to power in a landslide victory. Not long after the coup, hundreds of civilians were being mysteriously massacred by an unknown terrorist group, identified by the Algerian junta as a radical offshoot of the FIS – calling itself the Armed Islamic Group (GIA). The GIA was formed largely of Algerian veterans of bin Laden’s mujahidin forces in Afghanistan, who had returned in the late 1980s. To date, the total death toll from the massacres by the GIA is an estimated 150,000 civilians.

Yet in the late 1990s, evidence emerged from dissident Algerian Government and intelligence sources that the GIA atrocities were in fact perpetrated by the state. ‘Yussuf-Joseph’, a career secret agent in Algeria’s securité militaire for 14 years, defected to Britain in 1997. He told the Guardian newspaper: ‘The GIA is a pure product of [the Algerian] secret service. I used to read all the secret telexes. I know that the GIA has been infiltrated and manipulated by the Government. The FIS aren’t doing the massacres.’ Joseph’s testimony has been corroborated by numerous defectors from the Algerian secret services. Secret British Foreign Office documents – revealed for the first time during the 2000 London trial of an alleged Algerian terrorist – referred to the ‘manipulation of the GIA’ by the Algerian Government as a ‘cover to carry out their own operations’.

Currently, the militant Algerian splinter group, the al-Qaeda Organization in the Islamic Maghreb, plays a predominant role in regional terrorist violence. Yet in a series of extensive analyses for the Review of African Political Economy, social anthropologist Jeremy Keenan of Britain’s University of East Anglia has unearthed the role played by Western intelligence agencies. He documents ‘an increasing amount of evidence to suggest that the alleged spread of terrorist activities across much of the Sahelian Sahara, has indeed been an elaborate deception on the part of US and Algerian military intelligence services’. Keenan argues that an al-Qaeda hostage-taking of European tourists in early 2003 ‘was initiated and orchestrated by elements within the Algerian military establishment’ – an operation ‘condoned by the US’ – and that al-Qaeda leader Ammar Saifi (also known as ‘the Maghreb’s bin Laden’) ‘was “turned” by the Algerian security forces in January 2003’.

Corroborating Keenan’s findings, a Pentagon adviser told US investigative journalist Seymour Hersh that the Algerian operation was part of a new Pentagon covert operations programme, originally proposed in August 2002 by the Defense Science Board as the ‘Proactive, Pre-emptive Operations Group’. The covert programme would aim to ‘stimulate reactions’ among al-Qaeda terrorists by duping them into undertaking operations through US military penetration of terrorist groups and recruitment of locals to conduct ‘combat operations, or even terrorist activities’. The capture of Ammar Saifi was a pilot for the new programme.

Western interest is easily explained. Algeria has the fifth-largest reserves of natural gas in the world, and is the second-largest gas exporter. It ranks fourteenth for oil reserves, with official estimates at 9.2 billion barrels. Approximately 90 per cent of Algeria’s crude oil exports go to Western Europe and Algeria’s major trading partners are Italy, France, Germany, Spain and the US.

Energy hegemony is a key priority. On the pretext of fighting al-Qaeda in North Africa, the US has pushed through a regional counter-terrorism architecture that has evolved into the $500 million Trans-Sahara Counterterrorism Initiative, in which Algeria plays a pivotal role. The initiative coincides with the inauguration of a $6 billion World Bank project, the Chad-Cameroon oil pipeline.

Israel and Hamas – an ambiguous affair

Israel has played a very similar game to the US and Britain in its ambiguous relationship to the Palestinian organization, Hamas. US Government and intelligence sources confirm that Israel provided direct and indirect financial aid to Hamas in the late 1970s as a counterbalance to the Palestinian Liberation Organization (PLO). According to Israeli military affairs experts Ze’ev Schiff and Ehud Ya’ari, at the time of the first intifadah the Palestinian Fatah organization ‘suspected the Israelis of a plot first to let Hamas gather strength and then to unleash it against the PLO, turning the uprising into a civil war... many Israeli staff officers believed that the rise of fundamentalism in Gaza could be exploited to weaken the power of the PLO.’

Israeli support for Hamas reportedly continued even after the signing of the Oslo Peace Accords in 1993 – during the period of some of the worst suicide bombings. Even the late Palestinian Authority President Yasser Arafat said in 2001 that Hamas ‘continued to benefit from permits and authorizations, while we have been limited, even [for permits] to build a tomato factory... Some collaborationists of Israel are involved in these [terrorist] attacks.’

‘Pipelines and lots of sharia law – we can live with that’

Indeed, there are indications that the Israeli assassination of Hamas leader Abu Hanoud in November 2001 was a ploy to provoke more terror bombings. Three months earlier, the Israeli Insider reported Ariel Sharon’s plan for an all-out attack on the Palestinian Authority (PA) to destroy permanently its infrastructure, noting that the plan would only ‘be launched immediately following the next high-casualty suicide bombing’ – which was later provoked by Israel’s extrajudicial killing of Hanoud. As Israeli military security analyst Alex Fishman noted in Ha’aretz:

‘Whoever gave a green light to this act of liquidation knew full well that he was thereby shattering in one blow the “gentleman’s agreement” between Hamas and the Palestinian Authority [under which] Hamas was to avoid in the near future suicide bombings inside the Green Line... This understanding was, however, shattered by the assassination the day before yesterday – and whoever decided upon the liquidation of Abu knew in advance that that would be the price.’

Elements of the Israeli far-right, including senior cabinet officials, recognized that the plan to destroy the PA would facilitate the rise of Hamas. In an Israeli Cabinet meeting in December 2001, one minister declared: ‘Between Hamas and Arafat, I prefer Hamas.’ He added that Arafat is a ‘terrorist in a diplomat’s suit, while Hamas can be hit unmercifully… there won’t be any international protests’.

Ties with terror

Islamist terrorism cannot be understood without acknowledging the extent to which its networks are being used by Western military intelligence services, both to control strategic energy resources and to counter their geopolitical rivals. Even now, nearly a decade after 9/11, covert sponsorship of al-Qaeda networks continues. In recent dispatches for the New Yorker, investigative journalist Seymour Hersh cites US Government and intelligence officials’ confirmation that the CIA and the Pentagon have funnelled millions of dollars via Saudi Arabia to al-Qaeda affiliated Sunni-extremist groups, across the Middle East and Central Asia. The policy, which Hersh says began in 2003, has spilled over into regions like Iraq and Lebanon, fuelling Sunni-Shi’a sectarian conflict.

The programme is part of a drive to counter Iranian Shi’a influence in the region. In early 2008, a US Presidential Finding to Congress corroborated Hersh’s reporting, affirming CIA funding worth $400 million to diverse anti-Shi’a extremist and terrorist groups. This was not contested by any Democratic members of the House. Now, President Obama has retained Bush’s Defense Secretary, Robert Gates, as his own. Yet Gates was the architect of the covert strategy against Iran. To date, Obama has given no indication that this strategy will change.

The history outlined here throws into doubt our entire understanding of the ‘war on terror’. How can we fight a war against an enemy that our own governments are covertly financing for short-sighted geopolitical interests?

If the ‘war on terror’ is to end, it won’t be won by fighting the next futile oil war. It will be won at home by holding the secretive structures of government to account and prosecuting officials for aiding and abetting terrorism – whether knowingly or by criminal negligence. Ultimately, only this will rein in the ‘security’ agencies that foster the ‘enemy’ we are supposed to be fighting.

Nafeez Mosaddeq Ahmed is Executive Director of the Institute for Policy Research and Development. His latest book is The London Bombings: An Independent Inquiry (Duckworth, 2006).

A longer version of this article, with footnotes, is available on-line. Please follow this link.

Our terrorists

Once upon a time, the CIA trained, financed and supported Osama bin Laden and his mujahidin networks in Afghanistan to repel the Soviet invasion of Afghanistan. After the end of the Cold War, bin Laden turned against the West and we no longer had any use for him. His persistent terrorist attacks against us for more than a decade, culminating in 9/11, provoked our own response, in the form of the ‘War on Terror’. This is the official narrative. And it’s false. Not only did Western intelligence services continue to foster Islamist extremist and terrorist groups connected to al-Qaeda after the Cold War; they continued to do so even after 9/11.

The CIA’s jihad

The story begins in the summer of 1979, six months before the Soviet invasion, when the CIA had already begun financing elements of an emerging Islamist mujahidin force inside Afghanistan. The idea, according to former US National Security Adviser Zbigniew Brzezinski and former CIA Director Robert Gates, was to increase the probability of a Soviet invasion, and entrap ‘the Soviets into a Vietnamese quagmire’.1

Osama bin Laden arrived in the country later that year, sent by then-Saudi intelligence chief Prince Turki bin Faisal, where he set up the Maktab al-Khidamat (MAK) which helped finance, recruit and train mujahidin fighters.2 Bin Laden, the MAK, and the Afghan mujahidin in total received about half a billion dollars a year from the CIA, and roughly the same from the Saudis, funnelled through Pakistan’s Inter Services Intelligence (ISI).3

By around 1988, as Jane’s Defence Weekly reports, ‘with US knowledge, Bin Laden created al-Qaeda (The Base): a conglomerate of quasi-independent Islamic terrorist cells spread across at least 26 countries’.4 US and Western intelligence agencies facilitated this process, seeing rightwing Islamist movements as a counterweight to Communist, leftwing and nationalist political trends. They supported the Saudis and other Gulf states, as well as Pakistan, Turkey and Azerbaijan among others, in proliferating Islamist extremist institutions in far-flung countries such as Algeria, Yemen, Indonesia, and the Philippines. Funding for these activities was intertwined with the establishment of organized criminal financial centres in Malaysia, Madagascar, South Africa, Nigeria, Latin America, Switzerland, the United Kingdom, Turkestan, and elsewhere.5

Islamism and the CIA’s destabilization doctrine

After the collapse of the Soviet Union, and in particular in 1991 when the Saudis accepted the stationing of 300,000 US troops in the country due to the Iraqi invasion of Kuwait, Osama bin Laden reportedly turned against his former masters in Riyadh and Washington. Since then, bin Laden and his al-Qaeda terrorist network became our enemy, targeting Western citizens and interests throughout the 1990s, culminating in the most devastating strike of all in the form of the 9/11 atrocities in the US.

Unfortunately, this is where the official story begins to break down. Because after 1991, Islamists affiliated to bin Laden and al-Qaeda continued to receive selective support from Western intelligence services. The policy was alluded to by Graham Fuller, former Deputy Director of the CIA’s National Council on Intelligence, when he stated: ‘The policy of guiding the evolution of Islam and of helping them against our adversaries worked marvellously well in Afghanistan against the Red Army. The same doctrines can still be used to destabilize what remains of Russian power, and especially to counter the Chinese influence in Central Asia.’6

Afghanistan, Big Oil and the Taliban

Throughout the 1990s, the selective US intelligence sponsorship of Islamist extremist networks was linked not simply to destabilizing potential Russian and Chinese influence, but further to securing US-led Western control over strategic energy reserves. When bin Laden moved from Sudan to Afghanistan in June 1996, the State Department warned that the move ‘could prove more dangerous to US interests’, granting him ‘the capability to support individuals and groups who have the motive and wherewithal to attack US interests almost worldwide’.7 He had been offered protection by Pakistan in May on condition that he align his mujahidin forces with the Taliban. The new al-Qaeda-Taliban alliance was reportedly blessed by the Saudis.8

Yet as the respected Pakistani correspondent Ahmed Rashid reported, US intelligence supported the Taliban as a vehicle of regional influence at least between 1994 and 1998. This policy continued up to the year 2000, despite growing cautions. Thus, when the Taliban conquered Kabul in 1996, a State Department spokesperson explained that the US found ‘nothing objectionable’ in the event. One year later, a US diplomat commented: ‘The Taliban will probably develop like the Saudis… There will be Aramco (consortium of oil companies controlling Saudi oil), pipelines, an emir, no parliament and lots of Sharia law. We can live with that.’9

Continued US sponsorship of the al-Qaeda-Taliban nexus in Afghanistan was confirmed as late as 2000 in Congressional hearings. Testifying before the Senate Foreign Relations Subcommittee on South Asia, Congressman Dana Rohrabacher – former White House Special Assistant to President Reagan and now Senior Member of the House International Relations Committee – declared that ‘this administration has a covert policy that has empowered the Taliban and enabled this brutal movement to hold on to power’. The assumption is that ‘the Taliban would bring stability to Afghanistan and permit the building of oil pipelines from Central Asia through Afghanistan to Pakistan’.10 US companies involved in the project included UNOCAL and ENRON. As early as May 1996, UNOCAL had officially announced plans to build a pipeline to transport natural gas from Turkmenistan to Pakistan through western Afghanistan.

US officials held several meetings with the Taliban from 2000 to summer 2001, in an effort to get the Taliban to agree to a joint federal government with their local enemies, the Northern Alliance, promising financial aid and international legitimacy if the deal was struck. By then, US policymakers had belatedly concluded that the Taliban would never bring the stability needed for the pipeline project. According to Pakistani Foreign Minister Niaz Naik, who was present at the meetings, US officials threatened the Taliban with military action if they failed to comply with the federalization plan. Even the date of threatened military action, October 2001, was proposed. Needless to say, the Taliban rejected the plan.11 So months before the 9/11 terrorist attacks, a war on Afghanistan was already on the table. Jean-Charles Brisard, a former French intelligence officer, thus speculates that 9/11 may have been a pre-emptive attack by al-Qaeda to head off the declared US military invasion of Afghanistan.12

There is still keen interest in the pipeline. ‘Since the US-led offensive that ousted the Taliban from power,’ reported Forbes in 2005, ‘the project has been revived and drawn strong US support’ as it would allow the Central Asian republics to export energy to Western markets ‘without relying on Russian routes’. Then-US Ambassador to Turkmenistan Ann Jacobsen noted that: ‘We are seriously looking at the project, and it is quite possible that American companies will join it.’13 The problem remains that the southern section of the proposed pipeline runs through territory still de facto controlled by Taliban forces.

Mega Oil and mujahidin from the Balkans to the Caucasus

Unfortunately, we now know that US flirtations with the al-Qaeda-Taliban nexus in Afghanistan throughout the 1990s were only one moment in a much wider covert US geostrategy to secure control over strategic energy resources across the Eurasian continent, by co-opting Islamist networks affiliated with bin Laden.

In 1991, the first Bush Administration wanted an oil pipeline from Azerbaijan, across the Caucasus, to Turkey. That year, three US Air Force officers, Richard Secord (a former Deputy Assistant Secretary of Defense for International Security Affairs), Heinie Aderholt and Ed Dearborn, landed in Baku, and set up a front company, ‘MEGA Oil’. They were veterans of previous CIA covert operations in Laos and later with Lt. Col. Oliver North’s Contra scandal. In Azerbaijan, they setup an airline to secretly fly hundreds of al-Qaeda mujahidin from Afghanistan into Azerbaijan. By 1993, MEGA Oil had recruited and armed 2,000 mujahidin, converting Baku into a base for regional jihadi operations.14

The covert operation contributed to the military coup that toppled elected president Abulfaz Elchibey that year, and installed US puppet Heidar Aliyev. A secret Turkish intelligence report leaked to the Sunday Times confirmed that ‘two petrol giants, BP and Amoco, British and American respectively, which together form the AIOC (Azerbaijan International Oil Consortium), are behind the coup d’état.15

From 1992 to 1995, the Pentagon flew thousands of al-Qaeda mujahidin from Central Asia into Europe, to fight alongside Bosnian Muslims against the Serbs. The mujahidin were ‘accompanied by US Special Forces equipped with high-tech communications equipment,’ according to intelligence sources. Bin Laden’s mercenaries were used as shock troops by the Pentagon ‘to coordinate and support Bosnian Muslim offensives’.16

The pattern continued in Kosovo, where ethnic violence broke out between Albanians and Serbs. In 1998, the Kosovo Liberation Army (KLA) was listed by the State Department as a terrorist organization financed by bin Laden and the heroin trade. Bin Laden had sent a senior lieutenant, Muhammed al-Zawahiri (brother of al-Qaeda deputy leader Ayman al-Zawahiri), to lead an élite KLA unit during the Kosovo conflict. He had direct radio contact with NATO leadership. Indeed, British SAS and American Delta Force instructors were training KLA fighters as early as 1996. The CIA supplied military assistance up to and during the 1999 bombing campaign, including military training manuals and field advice, under the cover of OSCE (Organization for Security and Co-operation in Europe) ceasefire monitors.17

After the Kosovo War, when the KLA switched operations to Macedonia under the banner of the National Liberation Army (NLA), its links with al-Qaeda were as strong as ever according to US, Macedonian, Albanian and Yugoslav intelligence sources. Yet by 2001, Canadian military correspondent Scott Taylor reported after a visit to Tetovo that ‘there is no denying the massive amount of material and expertise supplied by NATO to the guerrillas’.18

So why the Balkans? Gen. Sir Mike Jackson, then-commander of NATO troops in the region, summed it up in 1999: ‘We will certainly stay here for a long time in order to guarantee the safety of the energy corridors which cross Macedonia.’ The General was talking about the Trans-Balkan pipeline passing through Bulgaria, Macedonia and Albania, planned to be a primary route to the West for Central Asian oil and gas.19

Around the same time, US intelligence stepped up sponsorship of al-Qaeda mujahidin in Chechnya. Chechnya is traditionally a predominantly Sufi society, yet the increasing encroachment of US-sponsored mujahidin operatives linked to Osama bin Laden transformed the character of the Chechen resistance movement, empowering al-Qaeda’s hardline Islamist ideology. US intelligence ties had been established in the early 1990s in Baku under Dick Secord’s operation, where mujahidin activities had quickly extended into Dagestan and Chechnya, turning Baku into a shipping point for Afghan heroin to the Chechen mafia.20

From the mid-1990s, bin Laden funded Chechen guerrilla leaders Shamil Basayev and Omar ibn al-Khattab to the tune of several millions of dollars per month, sidelining the moderate Chechen majority.21 US intelligence remained deeply involved until the end of the decade. According to Yossef Bodanksy, then-Director of the US Congressional Task Force on Terrorism and Unconventional Warfare, Washington was actively involved in ‘yet another anti-Russian jihad, ‘seeking to support and empower the most virulent anti-Western Islamist forces’. US Government officials participated in ‘a formal meeting in Azerbaijan’ in December 1999 ‘in which specific programmes for the training and equipping of mujahidin from the Caucasus, Central/South Asia and the Arab world were discussed and agreed upon’, culminating in ‘Washington’s tacit encouragement of both Muslim allies (mainly Turkey, Jordan and Saudi Arabia) and US “private security companies”... to assist the Chechens and their Islamist allies to surge in the spring of 2000 and sustain the ensuing jihad for a long time.’ The US saw the sponsorship of ‘Islamist jihad in the Caucasus’ as a way to ‘deprive Russia of a viable pipeline route through spiralling violence and terrorism’.22

Algeria – state terrorism in disguise

Parallel covert operations were deployed in the same period in Algeria, where the army cancelled national democratic elections in 1992 that would have brought the Islamic Salvation Front (FIS) to power in a landslide victory. Tens of thousands of FIS voters were rounded up into detention camps in the Sahara, while the FIS and other Islamist political parties were banned. Not long after the coup, hundreds of civilians were being mysteriously massacred by an unknown terrorist group, identified by the Algerian junta as a radical offshoot of the FIS calling itself the Armed Islamic Group (GIA). The GIA was formed largely of Algerian veterans of bin Laden’s mujahidin forces in Afghanistan who had returned in the late 1980s.23 To date, the total death toll from the massacres by the GIA is an estimated 150,000 civilians.24

Yet in the late 1990s, evidence began to emerge from dissident Algerian Government and intelligence sources that the GIA atrocities were in fact perpetrated by the state. ‘Yussuf-Joseph’, a career secret agent in Algeria’s sécurité militaire for 14 years, defected to Britain in 1997 and told the Guardian that civilian massacres in Algeria, blamed on the GIA, were ‘the work of secret police and army death squads… not Islamic extremists’. GIA terrorism was ‘orchestrated’ by ‘Mohammed Mediane, head of the Algerian secret service’, and ‘General Smain Lamari’, head of ‘the counter intelligence agency’. According to Joseph: ‘The GIA is a pure product of Smain’s secret service. I used to read all the secret telexes. I know that the GIA has been infiltrated and manipulated by the Government. The GIA has been completely turned by the Government… In 1992 Smain created a special group, L’Escadron de la Mort (the Squadron of Death)... The death squads organize the massacres... The FIS aren’t doing the massacres.’

Joseph also confirmed that Algerian intelligence agents organized ‘at least’ two of the bombs in Paris in summer 1995. ‘The operation was run by Colonel Souames Mahmoud, alias Habib, head of the secret service at the Algerian embassy in Paris.’ Joseph’s testimony has been corroborated by numerous defectors from the Algerian secret services.25

Western intelligence agencies are implicated. Secret British Foreign Office documents revealed in a terrorist trial in 2000 showed that ‘British intelligence believed the Algerian Government was involved in atrocities, contradicting the view the Government was claiming in public’. The documents referred to the ‘manipulation of the GIA being used as a cover to carry out their own operations’, and that ‘there was no evidence to link 1995 Paris bombings to Algerian militants’.26

Algeria has the fifth largest reserves of natural gas in the world, and is the second largest gas exporter, with 130 trillion proven natural gas reserves. It ranks fourteenth for oil reserves, with official estimates at 9.2 billion barrels. Approximately 90 per cent of Algeria’s crude oil exports go to Western Europe, including Britain, France, Italy, Germany, the Netherlands, and Spain. Algeria’s major trading partners are Italy, France, the United States, Germany, and Spain.

Currently, the militant Algerian splinter group, the al-Qaeda Organization in the Islamic Maghreb – formerly known as the Salafist Group for Preaching and Combat (GSPC) – plays a predominant role in regional terrorist violence. Yet in a series of extensive analyses for the Review of African Political Economy, social anthropologist Dr Jeremy Keenan – Director of Sahara Studies at the University of East Anglia – documents ‘an increasing amount of evidence to suggest that the alleged spread of terrorist activities across much of the Sahelian Sahara, has indeed been an elaborate deception on the part of US and Algerian military intelligence services’. He discusses evidence that an al-Qaeda hostage-taking of European tourists in early 2003 ‘was initiated and orchestrated by elements within the Algerian military establishment’, an operation ‘condoned by the US’, and that al-Qaeda leader Ammar Saifi (also known as Abderazzak El Para, or ‘the Maghreb’s bin Laden’) ‘was “turned” by the Algerian security forces in January 2003’.27

Energy hegemony is a key priority. Reported al-Qaeda activity in North Africa has focused on oil-rich nations, particularly the Niger Delta, Nigeria, and Chad. Thus, in July 2003, Keenan reports, under US auspices Algeria, Chad, Niger and Nigeria ‘signed a co-operation agreement on counter-terrorism that effectively joined the two oil-rich sides of the Sahara together in a complex of security arrangements whose architecture is American’. This has now evolved into the $500 million Trans-Sahara Counterterrorism Initiative, in which Algeria plays a pivotal role in US plans for future regional military deployment. The region-wide security arrangement coincides with the inauguration of a $6 billion World Bank project, the Chad-Cameroon oil pipeline.28

Islamist extremism and the Israeli connection

Curiously, Israel has played a key role in some of these policies, starting with the involvement of Congressman Charlie Wilson, who used his position in the House Select Committee on Intelligence, gained with the support of then Senator Dick Cheney, to ramp up billions of dollars’ worth of support for both Israel and the Afghan mujahidin.29 Gust Avracotos, the CIA’s Station Chief in Islamabad, commented that Wilson brought ‘the Israelis into the CIA’s Muslim jihad’, opening opportunities for Mossad penetration of the ISI and al-Qaeda and securing Israeli arms contracts and intelligence ties with Pakistan.30

Closer to home, Israel played a very similar game in its ambiguous relationship to Hamas. US Government and intelligence sources confirm that Israel provided direct and indirect financial aid to Hamas in the late 1970s as a counterbalance to the Palestinian Liberation Organization (PLO).31 According to the Israeli military affairs experts Ze’ev Schiff and Ehud Ya’ari, at the time of the first Intifadah, Fatah ‘suspected the Israelis of a plot first to let Hamas gather strength and then to unleash it against the PLO, turning the uprising into a civil war... many Israeli staff officers believed that the rise of fundamentalism in Gaza could be exploited to weaken the power of the PLO’.32

Israeli support for Hamas reportedly continued even after the signing of the Oslo accords in 1993, during the period of some of the worst suicide bombings.33 Even the late Palestinian Authority (PA) President Yassir Arafat said in 2001 that Hamas ‘continued to benefit from permits and authorizations, while we have been limited, even [for permits] to build a tomato factory... Some collaborationists of Israel are involved in these [terrorist] attacks.’34

Indeed, there are indications that the Israeli assassination of Hamas leader Abu Hanoud in November 2001 was a ploy to provoke more terror bombings. Three months earlier, the Israeli Insider reported Ariel Sharon’s plan for an all-out attack on the PA to permanently destroy its infrastructure, noting that the plan would only ‘be launched immediately following the next high-casualty suicide bombing’ – which was later provoked by Israel’s extrajudicial killing of Hanoud. As Israeli military security analyst Alex Fishman noted: ‘Whoever gave a green light to this act of liquidation knew full well that he was thereby shattering in one blow the gentleman’s agreement between Hamas and the Palestinian Authority. Under that agreement, Hamas was to avoid in the near future suicide bombings inside the Green Line (pre-1967 border), having come to the understanding that it would be better not to play into Israel’s hands by mass attacks on its population centres. This understanding was, however, shattered by the assassination the day before yesterday – and whoever decided upon the liquidation of Abu knew in advance that that would be the price. The subject had been extensively discussed both by the military and the political echelon, before it was decided to carry out the liquidation.’35

Elements of the Israeli far-right, including senior cabinet officials, recognized that the plan to destroy the PA would facilitate the rise of Hamas. In an Israeli Cabinet meeting in December 2001, for instance, one minister declared: ‘Between Hamas and Arafat, I prefer Hamas.’ He added that Arafat is a ‘terrorist in a diplomat’s suit, while Hamas can be hit unmercifully… there won’t be any international protests’.36

Ties with terror

Islamist terrorism cannot be understood without acknowledging the extent to which its networks are being used by Western military intelligence services, both to control strategic energy resources and to counter their geopolitical rivals. Even now, nearly a decade after 9/11, covert sponsorship of al-Qaeda networks continues. In recent dispatches for the New Yorker, investigative journalist Seymour Hersh cites US Government and intelligence officials’ confirmation that the CIA and the Pentagon have funnelled millions of dollars via Saudi Arabia to al-Qaeda affiliated Sunni extremist groups, across the Middle East and Central Asia. The policy, which Hersh says began in 2003, has spilled over into regions like Iraq and Lebanon, fuelling Sunni-Shi’a sectarian conflict.37 The programme is part of a drive to counter Iranian Shi’a influence in the region. In early 2008, a US Presidential Finding to Congress corroborated Hersh’s reporting, affirming CIA funding worth $400 million to diverse anti-Shi’a extremist and terrorist groups. This was not contested by any Democratic members of the House.38 Now, President Obama has retained Bush’s Defense Secretary, Robert Gates, as his own. Yet Gates was the architect of the covert strategy against Iran. To date, Obama has given no indication that this strategy will change. The history outlined here throws into doubt our entire understanding of the ‘war on terror’. How can we fight a war against an enemy that our own governments are covertly financing for short-sighted geopolitical interests?

If the ‘war on terror’ is to end, it won’t be won by fighting the next futile oil war. It will be won at home by holding the secretive structures of government to account and prosecuting officials for aiding and abetting terrorism – whether knowingly or by criminal negligence. Ultimately only this will rein in the ‘security’ agencies that foster the ‘enemy’ we are supposed to be fighting.

Nafeez Mosaddeq Ahmed is Executive Director of the Institute for Policy Research and Development. His latest book is The London Bombings: An Independent Inquiry (Duckworth, 2006).

This is an extended version of the article which appeared in the October 2009 issue of NI, Islam in Power.

  1. Le Nouvel Observateur (15-21 January 1998) p. 76; Robert Gates, From the Shadows – The Ultimate Insider’s Story of Five Presidents and How They Won the Cold War (New York: Simon & Schuster, 1997) pp. 143-149
  2. Craig Unger, House of Bush, House of Saud – The Secret Relationship between the World’s Two Most Powerful Dynasties (London: Scribner, 2004) p. 100.
  3. Ahmed Rashid, Taliban: Militant Islam, Oil, and Fundamentalism in Central Asia (Yale: Yale University Press, 2000) p. 91
  4. Rahul Bedi, ‘Why? An attempt to explain the unexplainable,’ Jane’s Defence Weekly (14 September 2001)
  5. Richard Labeviere, Dollars For Terror: The United States and Islam (New York: Algora, 2000)
  6. Cited in ibid.
  7. Judicial Watch Press Release, ‘Clinton State Department Documents Outlined bin Laden Threat to the United States in Summer 1996’ (17 August 2005) www.judicialwatch.org/5504.shtml
  8. Gerald Posner, Why America Slept: The Failure to Prevent 9/11 (New York: Ballantine, 2003) pp. 105-6
  9. Ahmed Rashid, Taliban: Militant Islam, Oil and Fundamentalism in Central Asia (New Haven, Conn.: Yale University Press, 2000) pp. 166, 179
  10. Dana Rohrabacher, ‘US Policy Toward Afghanistan,’ Statement before Senate Foreign Relations Subcommittee on South Asia (Washington DC: US Senate, 14 April 1999). Also see Rohrabacher, Statement before Hearing of the House International Relations Committee on ‘Global Terrorism And South Asia,’ (Washington DC: US House of Representatives, 12 July 2000).
  11. George Arney, ‘US ‘planned attack on Taleban’,’ BBC News (18 September 2001) news.bbc.co.uk/hi/english/world/south_asia/newsid_1550000/1550366.stm
  12. Jean-Charles Brisard and Guillaume Dasquie, Forbidden Truth: US-Taliban Secret Oil Diplomacy and the Failed Hunt for Bin Laden (New York: Nation, 2002); George Arney, ‘US ‘planned attack on Taleban’,’ BBC News (18 September 2001). news.bbc.co.uk/hi/english/world/south_asia/newsid_1550000/1550366.stm
  13. ‘US Companies Eye Trans-Afghan Pipeline’, Forbes (19 January 2005) www.forbes.com/markets/feeds/ap/2005/01/18/ap1764703.html
  14. Peter Dale Scott, The Road to 911 – Wealth Empire and the Future of America (Berkley: University of California Press, 2007) pp. 163-165
  15. ‘BP Linked to the Overthrow of Azerbaijan Government,’ Drillbits and Trailings (17 April 2000, vol. 5, no. 6)
  16. Cees Wiebes (2003) Intelligence and the War in Bosnia 1992-1995: The role of the intelligence and security services (New Jersey: Transaction Publishers, Rutgers State University, 2003); ‘US Commits Forces, Weapons to Bosnia,’ Defense and Foreign Affairs: Strategic Policy (31 October 1994)
  17. Sources in Nafeez Ahmed, The War on Truth: 9/11, Disinformation and the Anatomy of Terrorism (New York: Interlink, 2005)
  18. Scott Taylor, ‘Macedonia’s Civil War: ‘Made in the USA’’ (Randolph Bourne Institute, 20 August 2001) www.antiwar.com/orig/taylor1.html
  19. Michel Collon, Monopoly – L’Otan à la Conquête du monde (Brussels: EPO, 2000) p. 96
  20. Scott, op. cit., pp. 163-165.
  21. Mark Erikson, ‘Bin Laden’s terror wave 2’, Asia Times (29 October 2002) www.atimes.com/atimes/Central_Asia/DJ29Ag05.html
  22. Yossef Bodanksy, ‘The Great Game for Oil’, Defense & Foreign Affairs Strategic Policy(June/July 2000)
  23. Colin Robinson, ‘Armed Islamic Group a.k.a. Groupement Islamique Armé’ (Washington DC: Center for Defense Information, 5 February 2003) www.cdi.org/terrorism/gia_020503.cfm
  24. The Guardian (8 April 2004)
  25. Ahmed, 2005, pp. 65-77; Ahmed, 2001
  26. Richard Norton-Taylor, ‘Terrorist case collapses after three years’, The Guardian (21 March 2000)
  27. Jeremy Keenan, ‘Terror in the Sahara: the Implications of US Imperialism for North & West Africa,’ Review of African Political Economy (September 2004, 31 (101): 475–486); ‘Political Destablisation and ‘Blowback’ in the Sahel’, Review of African Political Economy (December 2004, 31(102): 691–703).
  28. Keenan (2005) ‘Chad-Cameroon oil pipeline: World Bank and ExxonMobil in Last Chance Saloon,’ Review of African Political Economy (2005, Vol. 32, No. 104/5) pp. 395-405; Keenan, (2006) ‘The making of terrorists: Anthropology and the alternative truth of America’s ‘War on Terror’ in the Sahara’, Focaal – European Journal of Anthropology (2006, No. 48) pp. 144-51.
  29. George Crile, Charlie Wilson’s War (London: Atlantic Books, 2003).
  30. Ibid. p. 391.
  31. Richard Sale, ‘Analysis: Hamas History Tied to Israel,’ United Press International (18 June 2002) www.upi.com/Security_Industry/2002/06/18/Analysis-Hamas-history-tied-to-Israel/UPI-82721024445587
  32. Ze'ev Schiff and Ehud Ya'ari, The Intifada: The Palestinian Uprising – Israel’s Third Front (New York: Simon & Schuster, 1990)
  33. George Szamuely, ‘Israel’s Hamas’, New York Press (April 2002, Vol. 15, No. 17)
  34. L’Espresso (19 December 2001) [Rome]
  35. Yediot Ahranot (25 November 2001)
  36. Ha’aretz (4 December 2001)
  37. Seymour M. Hersh, ‘The Redirection’, New Yorker (5 March 2007) www.newyorker.com/reporting/2007/03/05/070305fa_fact_hersh
  38. Alexander Cockburn, ‘Exclusive: Secret Bush ‘Finding’ Widens Covert War on Iran’, Counterpunch (2 May 2008) www.counterpunch.org/andrew05022008.html

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