The Konformist

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April 2000

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THE GREAT AMERICAN GAS PRICE CONSPIRACY

Jim Redden

Are skyrocketing gasoline prices the result of a devious plot between the rulers of Kuwait and former President George Bush to help his son defeat Al Gore at the November general election?

There's no doubt that the gas crisis has given the younger Bush a good issue against Gore, who cannot explain why the Clinton Administration didn't see the crisis coming. And these's little doubt the Kuwaiti's worked hard behind the scenes to convince the other 11 members of the Organization of Petroleum Exporting Countries (OPEC) to cut oil production and drive the price of gasoline up before the November 2000 general election. But is there really any reason to believe that the former President and the Kuwaiti's engaged in a genuine conspiracy to raise prices? The answer is yes.

For starters, the Kuwaiti's owe Bush Sr. big time. He saved their asses from Suddam Hussein after Iraq invaded Kuwait in late 1989. Bush put together the coalition which drove Hussein's troops out of Kuwait during Operation Desert Storm. Although the "liberation campaign" was approved by the United Nations, it was largely funded and manned by the good old U.S. of A. Bush committed $70 billion and 500,000 troops to the offensive, which was launched on January 16, 1990.

Is there any evidence that Bush Sr. has been talking to the Middle East leaders? As a matter of fact, yes. He was honored by the Kuwaiti sheiks after the war, and his picture hangs in their palaces. He visited there in 1993 and again in 1996, shortly after his son had been re-elected Governor of Texas and was considering a bid for the Presidency. And he visited Kuwait twice in the past two years. The first visit happened in November 1998, when he was greeted at the airport by Crown Prince and Prime Minister Sheik Saad al-Abdullah al Sabah. The most recent visit took place on January 15 of this year, according to Xinhua, a Chinese newspaper.

But would former President Bush really conspire with Middle East leaders to sabotage a sitting White House administration for political gain? The answer is, he did it once before - and the conspiracy was proven in a Portland court.

GEORGE BUSH SR. AND THE OCTOBER SURPRISE

In 1980, George Bush Sr. was Ronald Reagan's running mate against incumbent President Jimmy Carter and Vice President Walter Mondale. At that time, the revolutionary government of Iran was holding 52 American hostages it had seized at the U.S. Embassy. As proven by a remarkable federal trial right here in Portland, Bush helped convince the Iranians to keep holding the hostages through the 1980 general election, undermining Carter's credibility and assuring Reagan's election.

This was the so-called October Surprise, a conspiracy involving numerous officials with the 1980 Reagan-Bush campaign, including Bush (the former head of the CIA), campaign manager William Casey, and Donald Gregg, a high-ranking CIA officer who had turned against Carter. According to numerous source, Bush, Casey, Gregg and other campaign officials held several meetings with top Iranian officials in the closing months of the Presidential election. They convinced the Iranians to continuing holding the hostages until after the November 1980 vote - in exchange for $40 million in laundered funds to purchase weapons for its war against Iraq.

Carter lost the election and Iran released the hostages the very day that Reagan was sworn into office. Casey was appointed head of the CIA and Gregg became Vice President Bush's National Security Advisory. Rumors about the October Surprise conspiracy circulated within political circles and the alternative media for years following Reagan's victory. They were largely ignored by the mainstream media until May 12, 1989, when Lake Oswego resident Richard Brenneke was charged with perjury for swearing in a federal court that they were true. Brenneke was a part-time arms dealer who helped the Reagan White House supply weapons to the contra rebels fighting the Sandanista government in Nicaragua.

In September 1988, Brenneke testified on behalf of a longtime friend who was appealing a fraud conviction in a federal court in Denver. The friend, Heinrich Rupp, claimed he was acting under what he thought were orders from the Central Intelligence Agency when he committed the fraud. Brenneke testified that the CIA employed both he and Rupp on numerous occasions. To back up his claim, Brenneke claimed that Rupp, a pilot, flew Casey to Paris for one of the October Surprise meetings. Brenneke said he was also at the meeting, which took place on October 20, 1980. And he said he was told Bush was there, too, although he didn't actually see him. "The purpose of the meeting was to negotiate, not only for the release of the hostages, but also to discuss...how we would go about satisfying everyone else involved," he told the court.

The government charged Brenneke with five counts of lying to the Denver court. The indictment prompted a small flurry of articles on the October Surprise conspiracy in the mainstream press, including an October 20, 1988 opinion piece in the Wall Street Journal by investigative journalist Alexander Cockburn, who said, "Let's start with some facts not in serious contention. Three officials of the 1980 Reagan-Bush campaign concede that they listened to the overtures of an Iranian emissary in the fall of that year, though they (Robert McFarlane, then an aide to Sen. John Tower; Richard Allen, Mr. Reagan's campaign foreign-policy adviser; and Laurence Silberman, a longtime CIA lawyer subsequently elevated to the federal bench) deny that any deal was struck. Mr. Allen has also told the New York Daily News that some "self-starters" in the Reagan-Bush campaign 'might have met some Iranians in Paris' subsequently."

Continued Cockburn, "Carter administration officials say that in mid-fall, 1980, Iran suddenly switched from a deal-making posture to a more hard-nosed approach; also that Menachem Begin, then prime minister of Israel, permitted an arms shipment to Iran (to Mr. Carter's great fury when he discovered it). The hostages were released about 20 minutes into Ronald Reagan's inaugural in January 1981 and U.S.-sanctioned arms shipments to Iran began shortly thereafter. These are in fact the essential prima facie points to a deal."

The perjury trial started in late April 1990. Remarkably, although government officials swore Bush, Casey and Gregg weren't even out of the country when the fateful Paris meeting allegedly took place, they couldn't prove where the three men were. Bush had no campaign appearance that day. Casey had no campaign or other meetings. Gregg claimed he was on vacation with his family, and produced a photograph of himself standing on a beach as proof. But the authenticity of the photo was challenged by a retired Portland meterologist who produced weather charts which indicated the picture could not have been taken on that day.

At the end of the trial, the jury acquitted Brenneke of all charges, essentially ratifying his story. "We were convinced, yes, there was a meeting, and he was there and the people listed in the indictment were there," jury foreman Mark Kristoff said after the verdict was read to an astonished courtroom full of reporters from around the world. According to Kristoff, every juror believed Brenneke. There was not a single "guilty" vote.

PRICES STAY HIGH

Even mainstream press reports prove that the Kuwaiti's were the driving force behind the gas price crisis. The Reuters news agency reported that Kuwaiti Oil Minister Sheik Saud Nasser al-Sabah was calling for oil production cuts as early as October 13, 1998. Six months later, OPEC held a one-day meeting and agreed to cut production by 4.3 million barrels. "I can describe the current situation as a step in the right direction," Saud said at the end of the March 10, 1999 meeting.

George W. Bush formed a Presidential exploratory committee and begun raising campaign money that same week.

The cuts caused oil prices to triple over the next year. American gasoline prices began skyrocketing in mid-January, increasing for 10 consecutive weeks before reaching a historic average high of $1.59 per gallon for unleaded regular by late March. That was an increase of nearly 60 cents since prices bottomed out at 99.8 cents per gallon in February 1999, according to a Lundberg Survey report. And, as spring turned to summer, industry analysts began warning of $2 a gallon prices and gas shortages during the summer holiday driving season.

The OPEC production cuts were only scheduled to last through March 2000. But before the year was out, the Kuwaiti's were already working behind the scenes to keep gas prices high. "The possibility of extending the cuts beyond their March 2000 term has now become a reality, and I emphasize ther word reality," the Hemscott Information Exchange quoted him as saying on December 2, 1999.

Sure enough, as March 2000 rolled around, Kuwait was already lobbying other OPEC members against restoring the full 4.3 million barrel a day cut enacted the previous year. Instead, Kuwait was pushing for a mere 1.7 million barrel a day increase. The International Energy Agency, a government-backed advisor to the world's largest consuming nations, said OPEC needed to boost production by at least 2.3 million barrels a day to meet rising demand and replenish reserved.

OPEC scheduled a March 27 meeting in Vienna to consider increasing production. Panicked by the high gas prices, President Clinton sent U.S. Energy Secretary Bill Richardson to visit eight OPEC countries before the meeting to lobby for a production increase of at least 2.5 million barrels a day. Raad Alkadiri, a Washington DC-based petroleum consultant, told the Associated Press that Richardson's trip was driven by the sense of "quasi-crisis and hysteria" that Americans felt about the gas price increases.

The meeting began on March 27 in Vienna. It ended with a consensus agreement to only increase production by a mere 1.45 million barrels a day. The Clinton Administration immediately claimed that gas prices would fall by 11 to 18 cents a gallon by mid-summer. Most industry insiders were not so optimistic, however. "[A]nalysts cautioned that prices would probably remain high into the driving season and that eventual price decreases could be small," the New York Times reported on March 30. "Because of complicating factors including record-low gas inventories and new environmental regulations, gasoline prices 'are more likely to stay at current levels or go higher,' said Michael Rothman, director of energy marketing at Merrill Lynch."

After the OPEC meeting, the White House began lobbying non-OPEC oil countries to increase production. The Administration thought it could bring gas prices down even more if countries such as Mexico and Norway began flooding the market with additional oil. But OPEC was one step ahead of them.

As it turned out, OPEC had approved an automatic triggering mechanism to keep gas prices high. According to Algeria's Mining and Energy Minister Chakib Khelil, OPEC nations will cut or raise production if crude oil prices stray from the $22 to $28 dollar a barrel range. "Prices will probably fall slightly within the next two months,'' Khelil said after returning from the Vienna meeting. "But we have set up a mechanism that will protect OPEC against substantial drops. If prices fall under $22 a barrel, we will automatically cut by 500,000 bpd. If prices go beyond $28 we will raise production by 500,000 barrels per day. These measures will be taken automatically without the need for an OPEC meeting."

This all but assures that gas prices will stay relatively high through the November Presidential election, hurting Al Gore and giving George W. Bush an ongoing campaign issue - just like his father planned.

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