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Cablegate: Iraq Pd: Dvc with James Placke, Oil Analyst

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS AMMAN 000940

SIPDIS

E.O. 12958: N/A
TAGS: PREL KPAO OIIP IZ JO
SUBJECT: IRAQ PD: DVC WITH JAMES PLACKE, OIL ANALYST

1. IN A FEBRUARY 4 DVC HOSTED BY PAS AMMAN, OIL ANALYST
(AND FORMER STATE DEPARTMENT DAS) JAMES PLACKE REFUTED
EFFECTIVELY ALLEGATIONS THAT "CONTROL" OF OIL RESERVES --
AND NOT DISARMAMENT -- IS AT THE CENTER OF U.S. POLICY
TOWARD IRAQ. ROUGHLY 20 JORDANIAN JOURNALISTS FILLED THE
ONE HOUR PROGRAM WITH QUESTIONS THAT FOCUSED MAINLY ON TWO
AREAS: CONCERNS THAT THE U.S. INTENDS TO SEIZE IRAQ'S OIL
FIELDS TO FINANCE A MILITARY OCCUPATION, CONTROL WORLD OIL
PRICES AND EVISCERATE OPEC; AND JORDAN-SPECIFIC CONCERNS
REGARDING A POSSIBLE LOSS OF HEAVILY-SUBSIDIZED OIL SUPPLIES
FROM IRAQ IN THE EVENT OF WAR. PLACKE HANDLED QUESTIONS
WITH GRACE AND AUTHORITY, PROVIDING FACTUAL ANALYSIS NOTABLY
ABSENT FROM MOST DISCUSSION OF THESE TOPICS IN JORDAN. HE
EMPHASIZED THAT, IN THE CASE OF WAR AND EXPECTED U.S.
MILITARY PRESENCE IN IRAQ, IRAQI OIL PRODUCTION WOULD LIKELY
FALL UNDER A TEMPORARY U.S. ADMINISTRATION, AND NOT BE
"TAKEN OVER" BY U.S. OIL COMPANIES. REVENUES FROM THE SALE
OF IRAQI OIL WOULD ACCRUE TO THE BENEFIT OF THE IRAQI
PEOPLE, AND NOT A REGIME ELITE. ALL OF THESE MAJOR POINTS
APPEARED IN SUBSEQUENT DAYS' PRINT MEDIA COVERAGE OF THE
EVENT. WE JUDGE THE PROGRAM SUCCESSFUL AND WOULD COMMEND
MR. PLACKE TO OTHER POSTS IN THE REGION CONTEMPLATING
SIMILAR PROGRAMS.

2. THE PROGRAM BEGAN WITH PLACKE NOTING SECRETARY POWELL'S
STATEMENT THAT IN THE EVENT OF WAR IN IRAQ, THE U.S. WOULD
BE GUIDED BY INTERNATIONAL LAW IN ADMINISTERING IRAQ'S OIL
FIELDS AND THAT REVENUES FROM THE SALE OF IRAQI OIL WOULD
BENEFIT THE PEOPLE OF IRAQ, NOT ITS REGIME. PLACKE ALSO
MADE THE POINT THAT IF OIL TRULY WAS AT THE HEART OF THE
CURRENT CRISIS, IT WOULD BE AN EASY CONFLICT TO RESOLVE FOR
ALL SIDES INVOLVED. IN RESPONSE TO A STATEMENT THAT THE
U.S. WOULD BE IN A POSITION TO CONTROL WORLD OIL PRICES IF
IT INVADED IRAQ, PLACKE POINTED OUT THAT, AS A PERCENTAGE OF
TOTAL WORLD PRODUCTION, IRAQ'S OUTPUT (AND THEREFORE ITS
IMPACT ON GLOBAL PRICES) WAS EXTREMELY MODEST. IN ANY CASE,
HE CONTINUED, OPEC HAD LONG SOUGHT SUCH A ROLE AND HAD
DEMONSTRATED A VERY LIMITED ABILITY, HISTORICALLY, TO
"CONTROL" THE PRICE AND SUPPLY OF OIL AROUND THE WORLD. IN
DISCUSSING THE IMPORTANCE OF MIDDLE EAST OIL TO U.S. OIL
NEEDS, PLACKE NOTED THAT SAUDI ARABIA IS THE ONLY MIDDLE
EASTERN COUNTRY WITHIN THE TOP FIVE SUPPLIERS OF OIL TO THE
U.S. AT PRESENT.

3. OF GREATEST INTEREST TO THE JOURNALISTS PRESENT WAS THE
FUTURE OF THE PRESENT JORDAN-IRAQ OIL SUPPLY ARRANGEMENT,
WHEREBY IRAQ PROVIDES HALF OF JORDAN'S OIL NEEDS FREE WITH A
REDUCED-PRICE/BARTER ARRANGEMENT GOVERNING THE SUPPLY OF THE
REMAINING HALF. JORDANIANS ARE UNDERSTANDABLY CONCERNED
ABOUT THE FATE OF THIS FAVORABLE ARRANGEMENT. ATTENDEES
ASKED HOW JORDAN COULD POSSIBLY SURVIVE AN ECONOMIC SHOCK
CAUSED BY A DISRUPTION OF OIL SUPPLIES FROM IRAQ AND WHETHER
THE U.S. WOULD HELP JORDAN TO COMPENSATE FOR ANY SUCH LOSS.
WHILE PLACKE EMPHASIZED HE WAS NOT IN A POSITION TO ADDRESS
THOSE CONCERNS, HE NOTED THE EXCELLENT RELATIONS BETWEEN THE
U.S. AND JORDAN AND THE HIGH REGARD IN WHICH KING ABDULLAH
IS HELD IN THE UNITED STATES, INDICATING TO HIM THAT THE
U.S. WOULD BE PREPARED TO ASSIST JORDAN IN WEATHERING ANY
SHORT-TERM DISRUPTIONS.

3. REPORTING ON THE PROGRAM WAS FEATURED IN JORDAN'S MAJOR
DAILY ARABIC NEWSPAPERS. REPORTS HIGHLIGHTED PLACKE'S
COMMENTS THAT: THE PRINCIPAL REASON FOR WAR WOULD BE WMD,
AND NOT OIL; THE IRAQI OIL INDUSTRY WOULD BE FALL UNDER
TEMPORARY U.S. ADMINISTRATION, LEAVING IN PLACE TECHNOCRATS
AND WORKERS BELOW THE SENIOR LEADERSHIP; JORDAN WOULD
DOUBTLESS BE HIT HARD BY A DISRUPTION IN ITS OIL SUPPLIES
FROM IRAQ, BUT IT SHOULD BE EXPECTED THAT A NEW OIL SUPPLY
RELATIONSHIP WILL BE FORMED OVER TIME AND THAT, IN THE
MEANTIME, JORDAN'S FRIENDS LIKE THE U.S. WOULD LIKELY HELP
IT THROUGH SHORT TERM DISRUPTIONS.

4. POST THANKS IIP/T, JAY RICHTER, AND IIP/G/NEA, TERENCE
SCOTT FOR THEIR HELP IN PUTTING THIS PROGRAM TOGETHER.

BERRY

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