Pipelines or Pipe Dreams? Ed Blanche Investigates the Prospects of New Oil Deals between Iraq and Israel. (Iraq)

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Israel stands to benefit greatly from the US conquest of Iraq, primarily by getting rid of an implacable foe in Saddam Hussein. But it seems the Israelis have other things in mind that give added weight to concerns in the Middle East that, with Saddam disposed of, the Americans are determined to reshape the region the way they want it.

An intriguing pointer to one potentially significant benefit for Israel emerged in March, even before the US-led invasion of Iraq. The Israeli daily Haaretz reported that National Infrastructure Minister Joseph Paritzky was seriously considering the possibility of reopening the long-defunct oil pipeline from Mosul to the Mediterranean port of Haifa in northern Israel. With Israel lacking energy resources of its own and currently totally dependent on highly expensive oil from Russia, reopening the pipeline would transform its economy at a stroke.

The pipeline has been inoperative since 1948, when the flow of oil from Iraq's northern oilfields was redirected from Haifa to Syria when the British mandate in Palestine expired. According to Walid Khadduri, editor-in-chief of the respected Middle East Economic Survey (MEES) based in Cyprus, the old pipeline no longer exists. "There's not a metre of it left," he told The Middle East. "It was cannibalised over the years and there are even built-up areas now where the pipeline used to run. So ally pipeline would have to be built from scratch."

To resume supplies from Mosul to the refinery at Haifa would require the approval of whatever Iraqi government emerges following the downfall of Saddam's regime and presumably also of the Jordanian government, through whose territory it would likely run as the old one did. Israeli officials say that talks have been held with Amman on this and they are "optimistic." The Jordanians say there have been no discussions, but given the anti-US hostility sweeping the Arab world that is something they would have difficulty admitting to.

However, Amman, which depended on Iraq for heavily discounted oil with UN agreement, had been negotiating with Baghdad before the war to build a pipeline from the Kirkuk oilfields to the kingdom rather than trucking the fuel, so presumably any deal involving the Israelis as well could simply mean extending that project to Haifa.

Paritzky said that he was certain the Americans would respond favourably to the idea of resurrecting the pipeline. Indeed, according to western diplomatic sources in the region, the Bush administration has discussed this with Iraqi groups who opposed Saddam, including the Iraqi National Congress (INC). Led by Ahmad Chalabi, the INC--the largest exile organisation--expects to play a major role in any new Iraqi government.

Chalabi, who ironically has been wanted in Jordan for bank fraud for the last three decades, has discussed Iraq's future relations with Israel with the Americans, including efforts to secure recognition of Israel by the new government in Baghdad. It is understood from diplomatic sources that the Bush administration has insisted it would not support the lifting of UN sanctions on Iraq unless Baghdad agrees to supply Israel with oil.


James Akins, a former US ambassador to Saudi Arabia and one of the leading US Arabists, has said: "There would be a fee for transit rights through Jordan, just as there would be fees for Israel from those using what would be the Haifa terminal. After all, this is a new world order now. It just goes to show that this is all about oil, for the United States and its ally."

Strategically, reopening the pipeline would free Israel from having to depend for its oil on distant suppliers and would give it a large measure of energy security. The Jewish state has not enjoyed that since the 1979 overthrow of the monarchy in Iran, a key regional ally which supplied all Israel's oil needs via a pipeline from Eilat on the Gulf of Aqaba to the Mediterranean port of Ashkelon in southern Israel. …