Israel's pipe dream: getting oil from Iraq
By SUSAN TAYLOR MARTIN, Times Senior Correspondent
Published August 15, 2004

There's an old joke Israelis like to tell on themselves: Their ancestors
followed Moses around for 40 years and he led them to the only place in the
Middle East without any oil.
More than three millennia later, Israel's energy outlook has barely
improved. Although it is in a region awash with oil, the Jewish state must
import most of its supplies from Russia because Arab oil producers refuse to
deal with it.
Assuring Israel of an adequate oil supply has long been a goal not just of
Israel itself, but also of pro-Israel factions in the United States. Thus
emerged a controversial plan that is still kicking around even though its
chief booster, Ahmad Chalabi, could soon be behind bars.
Once the Pentagon's choice to lead the "new" Iraq, Chalabi promised to
reopen an old British-built pipeline from Kirkuk in northern Iraq to the
Israeli port of Haifa. The plan impressed Richard Perle, Douglas Feith and
other conservatives influencing Bush administration policy toward Iraq in
the lead-up to last year's war.
The idea also drew enthusiastic response from Israel.
"The pipeline would be a dream," Yosef Paritzky, Israel's minister of
infrastructures, said as reported by Salon.com. "We'd have an additional
source of supply, and could even export some of the crude through Haifa. But
we'd need a treaty with Iraq . . . to build the pipeline."
Once Chalabi assumed a position of influence in the new Iraqi government,
Israel would get its treaty, the neoconservatives were assured. The pipeline
was by no means the only reason for going to war, but it could well have
been one reason.
After the invasion, though, Chalabi began to slide from U.S. favor when it
became apparent his Iraqi National Congress provided faulty intelligence on
Iraq's alleged weapons of mass destruction. A rival, Iyad Allawi, became
Iraq's new interim prime minister, and an arrest warrant issued last week
accuses Chalabi of counterfeiting Iraqi currency.
As Chalabi's bubble deflates, so has the idea of the Kirkuk-Haifa pipeline.
But does a pipeline even make sense? Yes and no, experts say.
A direct pipeline from Iraq might reduce Israel's energy costs, now inflated
by the cost of shipping oil from Russia. Because the pipeline might cross
Jordan, that struggling country could reap lucrative transit fees. And the
United States, a close ally of both Israel and Jordan, would benefit from
better access to the rich Iraqi oil fields, thereby reducing U.S. dependence
on Saudi Arabia.
All reasons why the pipeline is such a political hot potato.
"Even the suggestion is going to create trouble because it fuels all Iraqis'
suspicion that their country was invaded for Israel's benefit," says Jeremy
Binnie, Middle East editor of Jane's Sentinel.
He and other experts note Iraq already has several outlets for its oil,
including terminals on the Persian Gulf and a major pipeline through Turkey.
The big problem is not a shortage of outlets but protecting the ones it has.
The pipeline through Turkey is frequently sabotaged, and Iraq temporarily
stopped pumping oil from its southern fields because of violence in the
region.
"Until you can secure an existing pipeline it may not make sense to build
another one," says Jim Burkhard, director of oil market analysis for
Cambridge Energy Research Associates in Massachusetts.
Another expert questions Israel's claim it could save 20 percent on energy
costs by getting oil from Iraq instead of Russia.
"Given the near-perfect price arbitrage in oil markets, this is quite
implausible," economist Thomas R. Stauffer writes in the Washington Report
on Middle East Affairs. "Only two interpretations suggest themselves.
"First, the Russian oil mafia has succeeded in bilking the Israelis - a
formidable task. Or, second, the Israelis and their allies in the Bush
administration presume that they can force Iraq to sell oil into the line at
a steep discount."
Even if the pipeline never materializes, Israel has an ace in the hole.
Under a 1975 memorandum of understanding, the United States guarantees
virtually all Israel's oil needs in the event of a crisis - even if it means
reducing the amount of oil available to Americans.
Susan Taylor Martin can be contacted at