Congress Must Take a Hard Look at Iraq’s Charges Against Kuwait : Geopolitics: Before the U.S. exercises the ‘war option,’ we must assess the regional belief that Hussein was responding to provocative Kuwaiti policies.

As Congress considers the wisdom of going to war with Iraq, it must try to assess a number of psychological or attitudinal factors that will dominate the costs and risks: Saddam Hussein’s intentions; the convictions of potential rivals; the morale of Iraqi soldiers and civilians; the willingness of peoples in the American-led alliance to sacrifice for restoration of Kuwait’s Sabah dynasty, and the prospects for postwar radicalization and alienation of the Arab masses from their own governments and the United States.

Those assessments will not be easy, but they will certainly be wrong if they assume that the rest of the world, especially the Middle East, shares the Bush Admnistration’s hasty and simplistic conclusion that there is no reason to investigate the circumstances surrounding Iraq’s invasion because Hussein is “Hitler Revisited.”

Let it be clear at the outset of this analysis that I consider Hussein a brutal tyrant whose annexation of Kuwait must be undone. Moreover, there can be no second guessing of the President’s decision to deploy adequate air and naval forces--with the necessary ground protection--to defend Saudi Arabia, or of its superb organization of unprecedented economic sanctions to force Iraqi withdrawal. Nonetheless, Congress should, before endorsing the so-called “war option,” establish the relevant facts to assess the breadth and depth of regional belief that Hussein was responding--albeit with inexcusable brutality--to provocative Kuwaiti oil and financial policies that he had expressly labelled “economic warfare” in a May 30, 1990, address to the Arab summit conference.

Financial assistance. Although the Iraq-Iran War represented a tremendous drain on Iraq’s financial resources, it provided huge incremental oil revenues to Kuwait, Saudi Arabia, Abu Dahbi and Qatar during the early years when Iraq’s prewar exports of 3 million barrels per day dropped to a mere trickle with Iranian destruction of its port and Syrian closure of its pipelines. In order to meet the requirements of its oil-short customers, Iraq arranged for those other gulf exporters to increase their production and thereby reap a huge windfall.

Recognizing that the Iraqi army was the only barrier to Iranian hegemony and Shiite fundamentalism, Kuwait and the others states were more than willing to expend a portion of their unexpected windfall on financing Hussein’s war effort. Lest OPEC complain that they were exceeding their quotas, Iraq’s financiers called their additional production “war relief” and argued that it should be counted against Baghdad’s unfulfilled quota.

When the war ended in 1988, Kuwaiti government accounts showed that about $22 billion had been booked as its share of the collective Arab war effort. Although such bookkeeping incurred no interest or principal payments, it nonetheless added uncertainty to Iraq’s credit worthiness at a time when new international credits were required for rebuilding. Therefore, Iraq sought formal removal of all such amounts from the books of the assisting states. Saudi Arabia agreed, but Kuwait refused, its foreign minister, Sheik Sabah al Ahmed al Sabah, later suggesting that “we thought it would be a help to them in rescheduling their debts with Western banks.”

American taxpayers had better hope that the Kuwaitis and Saudis do not extend similar “help” to Washington when the current crisis is over. The circumstances are, after all, precisely the same: The Arab exporters have used a portion of their windfall oil revenues to finance a common defense effort, although this time the defending soldiers are American, rather than Iraqi.

The Rumaila Field. While there is little support outside Iraq and its Arab allies for Baghdad’s so-called historic claim to Kuwait, there is widespread uncertainty as to the precise location of the common border. In fact, the United States has never recognized a legally binding border because no officially ratified delineation agreement has been deposited with the United Nations.

Acknowledging the failure of Iraq and Kuwait to agree on a precise land boundary, the Arab League established in 1962 a so-called “Military Patrol Line” straddled by a sort of buffer zone, which was to be free of provocative activities and permanent presences. There was little reason to encroach on that area until Iraqi delineation of its enormous Rumaila Field indicated that it almost certainly extended for a short distance across the Military Patrol Line.

When Kuwaiti drilling rigs moved into the area in the 1970s, Iraqi troops crossed the Military Patrol Line and forced Kuwaiti withdrawal. That standoff prevailed until the early 1980s, when Kuwait moved back in to drill about a dozen wells while Iraq was locked in battle with Iran.

Oil could not have been the reason for risking retaliation. The 12,000 barrels per day that the Kuwaitis eventually produced represented about one-half of 1% of the country’s total capacity and could have been easily replaced by a minuscule twist of the valves in other Kuwaiti fields where OPEC quotas left almost 1 million barrels per day of surplus capacity. It is far more likely that Kuwait was motivated by a desire to establish “facts on the ground” in connection with its border claim, or to set up negotiating room.

Although Iraq valued its professed loss at $2.4 billion, it is more likely that Baghdad was incensed by tiny Kuwait’s “lack of respect.” In that case, the Sabahs certainly acted recklessly if, as reported, they responded to Hussein’s May 30 warning by ordering a drilling rig to move closer to the Military Patrol Line than ever before.

Claimed share of OPEC oil revenues. At the end of the Iraq-Iran War in August, 1988, Kuwait’s 1 million barrels per day production quota represented a 6% share of OPEC’s total production ceiling and presumed revenues--not bad for a country with only 750,000 citizens that already enjoyed the organization’s highest per-capita income and only budget surplus, thanks to huge income from investments made during the extortionate days of the 1970s. Nonetheless, in March, 1989, Kuwait demanded a 50% increase in its previously agreed quota.

When OPEC met in June, 1989, all 12 of the other member states voted to reject the Kuwaiti demand.

Following his colleagues’ rejection, Sheik Ali al Khalifa al Sabah, then oil minister, announced that Kuwait would no longer be bound by any quota and doubled production to 2 million barrels per day.

By June, 1990, such massive noncompliance by Kuwait, and the United Arab Emirates, had caused oil prices to collapse below $14 per barrel, so Saudi Arabia summoned the two mavericks to a June 10 meeting, where Kuwait again solemnly pledged to reduce its output even though similar pledges had previously proved hollow.

Price objectives. Despite the disapproval of the United States and other oil importers, OPEC generally seeks to act like a rational monopolist, manipulating its total output so as to maximize current revenues without triggering a price-induced contraction in oil’s future share of growing world energy demand. That is a difficult tightrope to walk, but Saudi Arabia and Kuwait persuaded their more bullish OPEC colleagues in March, 1986, that the appropriate price was $18 per barrel.

It is impossible to say that the $18 target set in March, 1986, produced optimum revenue, but the ensuing growth in oil demand certainly demonstrated that it was not too high. Having established a price that would not trigger the feared backlash, rational monopolists could be expected to defend its purchasing power against erosion from inflation and the devaluation of the dollar that is used to settle oil account.

Recognizing that the collapse of the dollar pointed to a 1990 price of about $25 as the equivalent of $18 in 1986, Hussein proposed some adjustment in a Feb. 17, 1990, letter to the Emir of Kuwait. He appeared to have the support of Saudi King Fahd, who noted in the spring of last year that oil prices would reach $26 per barrel by year end, if all countries honored their quotas.

Kuwait not only ignored Hussein’s reasoned proposal but let it be known that it intended to block any increase in the nominal $18 price through the early 1990s. Although the many proponents of higher oil prices eventually obtained Kuwaiti agreement to a $21 barrel compromise price at a July 25 OPEC meeting, target prices would mean nothing if Kuwait and the UAE continued to flood the market. We will never know whether Kuwait really intended to change its ways, because Iraq invaded a week later.

Motive. Before dismissing Hussein’s conclusion that such obviously provocative policies were motivated by a Sabah conspiracy to weaken Iraq and lure the United States into a gulf alliance, Congress should investigate several considerations.

* Kuwait’s formal assertion of a maverick oil policy at the end of March, 1989, coincided precisely with the signature by King Fahd and Saddam Hussein of a nonaggression pact between Saudi Arabia and Iraq. When Hussein turned down a Kuwaiti request for a similar nonaggression pact, the Sabahs needed no further reminder of Iraq’s so-called historic claim to Kuwait and had to wonder what Saudi Arabia would do if Iraq invaded. The Sabahs may have decided that “the best defense is a good offense.”

* On Oct. 31, Iraq released what it claimed was a captured Kuwaiti intelligence document reporting on a week of meetings held with American officials, including CIA Director William Webster, during mid-November last year. The document reads, “We agreed with the American side that it was important to take advantage of the deteriorating economic structure in Iraq in order to put pressure on that country’s government to delineate our common border.” The CIA acknowledged that Webster had received a “routine courtesy call” from senior Kuwaiti officials on the indicated date but insisted that nothing about Kuwait’s relations with Iraq had been discussed “at that meeting.” Assuming Webster’s careful denial to be true, was a proposal for economic pressure raised by Kuwaiti officials at meetings with other American officials? If so, was it not evidence of Kuwaiti intentions, regardless of whether Washington agreed?

These are admittedly sensitive issues, but Congress should not hesitate to ask the right questions--even though we might not like the answers. We are owed such an investigation, before we send Americans to die in the cause of resisting ‘unprovoked aggression’.