Reagan’s Legacy of Deregulation Goes Haywire in the Gulf

BILL BERKOWITZ FOR BUZZFLASH

The oil spill in the Gulf is the product of decades of conservatives pounding for deregulation, Cheney-era manipulation of federal regulatory agencies, and corporate insatiability.

These days, when watching television news reports – often the extraordinary reporting of MSNBC’s Rachel Maddow – about the environmental/economic catastrophic oil spill in the Gulf which took the lives of 11 workers, I can’t help but think of two seemingly disparate things; the administration of Ronald Reagan, and the 1953 coup in Iran.

I’m thinking about our 40^th president because the genesis of corporations drilling for oil where-ever and how-ever without being distracted or deterred by common sense rules and regulations, although part of the economic landscape for decades, picked up steam during the Reagan era.

The 1953 coup in Iran, which overthrew the democratically-elected government of Mohammad Mossadegh, came about because the British government, which owned the Anglo-Iranian Oil Company -- more Anglo than Iranian in both ownership and control – helped engineer the coup. And, one year later, the British government renamed the company, the British Petroleum Company.  

During the 1980 presidential campaign, the Heritage Foundation burst onto the national scene with the publication of “Mandate for Leadership,” a comprehensive set of policy recommendations which became the intellectual underpinning for the "Reagan Revolution." Heritage’s blueprint included trickle-down economics, a major emphasis on deregulation, and massive cutbacks in social programs.  

Although economists – both those supportive of Reagan’s economic initiatives and those opposed – have for years debated how committed the Reagan Administration was to actually advancing deregulation, one thing is clear; under-funded or de-funded government regulatory agencies, government agencies larded with corporate-friendly officials receiving corporate perks and kickbacks, and such mantras as “unleash the creativity of corporations and all will be well” and “drown the government in a bathtub” have dominated conservative policy initiatives over the past three decades.    

In a recent interview, Lawrence Wilkerson, a retired United States Army soldier and former chief of staff to U.S. Secretary of State Colin Powell and currently an adjunct professor at the College of William & Mary, told the Real News Network that George W. Bush’s Administration, through the offices of vice president Dick Cheney, did all it could “to destroy about a half-century or more's regulatory work with regard to oversight of fisheries, forestry, oil, gas, minerals in general. You name it,” said Wilkerson. “If it was supervised, if it was overseen, if it was regulated by the federal government, Cheney with his marvelous bureaucratic talent moved in and essentially replaced the people who were in the positions that were central to this regulation, this oversight, with people who were either lobbyists for the industry being regulated or executives from that industry.”  

Wilkerson went on to point out that one of the key ways Cheney was able to leave his mark was by consciously converting some “1,600-plus people in the administration” from “being political” appointees to “civil service” status. Civil service positions are not subject to immediate change when a new administration takes over.

Colin Powell’s former chief of staff added that Republicans “have been spouting this deregulation, spouting this ‘the market is the best guide,’ spouting this business about let private industry do everything and all things will be wonderful, and don't have any government interference at all. And what we've done is stripped government regulation and oversight from so many things across this country, we're going to be paying for it for years to come. We're going to be paying dearly for it.

“There are going to be more oil spills, there are going to be more bridges collapsing, there are going to be more hurricanes that surprise us in their devastation and so forth, because we Republicans have stripped government of its ability, of its capacity to do the kinds of things that it should do that no one else can do, certainly not someone with a profit motive can do,” Wilkerson pointed out.

The history of British Petroleum is marked by amazing ingenuity and resourcefulness, outrageous oppression of workers, grossly unfair contractual agreements, a series of destructive incidents, an abysmal environmental record, and the extraordinary hubris of its lead officials. The results of BP’s ingenuity and hubris are currently fouling the waters of the Gulf of Mexico, and washing up on its wetlands.

The company was founded in 1901 as the Anglo-Persian Oil Company, and it was the first company to use oil reserves of the Middle East. It changed its name to the Anglo-Iranian Oil Company in 1936, and after the 1953 coup it changed its name to the British Petroleum Company. In “Overthrow: America’s Century of Regime Change from Hawaii to Iraq,” journalist Stephen Kinzer writes that the Anglo-Iranian Oil Company, “principally owned by the British government, had held a monopoly on the extraction, refining, and sale of Iranian oil. Anglo-Iranian’s grossly unequal contract, negotiated with a corrupt monarch, required it to pay Iran just 16 percent of the money it earned from selling the country’s oil. It probably paid even less than that, but the truth was never known, since no outsider was permitted to audit its books.”

In an earlier book, “All the Shah’s Men: An American Coup and the Roots of Terror in the Middle East” -- which completely detailed how U.S. and British intelligence developed and executed Operation Ajax, which overthrew the Mossadegh government -- Kinzer quotes the director of Iran's Petroleum Institute, who described the conditions oil workers and their families were subjected to:

“Wages were 50 cents a day. There was no vacation pay, no sick leave, no disability compensation. The workers lived in a shanty town called Kaghazabad, or Paper City, without running water or electricity, ... In winter the earth flooded and became a flat, perspiring lake. The mud in town was knee-deep, and ... when the rains subsided, clouds of nipping, small-winged flies rose from the stagnant water to fill the nostrils .... Summer was worse. ... The heat was torrid ... sticky and unrelenting - while the wind and sandstorms shipped off the desert hot as a blower. The dwellings of Kaghazabad, cobbled from rusted oil drums hammered flat, turned into sweltering ovens. ... In every crevice hung the foul, sulfurous stench of burning oil .... in Kaghazad there was nothing - not a tea shop, not a bath, not a single tree. The tiled reflecting pool and shaded central square that were part of every Iranian town, ... were missing here. The unpaved alleyways were emporiums for rats.”

Ironically, as Kinzer writes in “Overthrow,” under a new post-coup arrangement, “British Petroleum ended up with 40 percent of the shares in the new National Iranian Oil Company, American companies received 40 percent, and the remainder was divided among European companies. This consortium agreed to share its profits with Iran on a fifty-fifty basis. In the end, then, the British wound up with considerably less than they would have had if they accepted Iran’s demand for an equal share of oil profits in the late 1940’s.”

Kinzer points out that “The main results of the 1953 coup were the end of democracy in Iran and the emergence, in its place, of a royal dictatorship that, a quarter of a century later, set off a bitterly anti-American revolution.” 

Things changed for dramatically during the Thatcher era in Britain. According to an essay titled “Privatization,” written by Robert W. Poole, Jr., and published in The Concise Encyclopedia of Economics, “the largest and best-known effort [at privatization] was that of Margaret Thatcher’s government in the United Kingdom during the 1980s. Thatcher succeeded in making privatization politically popular while selling off the commanding heights of the British economy: British Airways, British Airports Authority, British Petroleum, British Telecom, and several million units of public housing, to name only a few examples.”

After a series of buyouts and mergers, including deals with Amoco (formerly Standard Oil of Indiana) and Arco (Atlantic Richfield Co.), in 2001 the company formally renamed itself as BP plc, and adopted the tagline "Beyond Petroleum," which remains in use today.   

BP is the third largest energy company, and the fourth largest company in the world. Being one of the industry’s top dogs isn’t easy. It means that BP has to “drill baby drill” in as many places as possible. And it must “drill baby drill” in deeper and deeper waters. Its scientists/technicians have been brilliant at designing equipment capable of doing so. While BP was becoming a pioneer at deep water drilling, it was assuring government agencies (those that were still paying attention), that what it was doing was safe.

It is more likely than not BP knew all along that what it was doing was extremely risky. The company appears to operate under the assumptions that: a) it doesn’t make mistakes – although its safety and environmental record belies that notion; b) if it does have an accident, it is confident it can bury it, spin it, reframe it, or in some other way deal with it effectively; and, c) even if things go mega-badly, it believes that it can successfully limit its legal liability.

As investigative reporters have pointed out, and re-affirmed by scientists and environmentalists, an event like the one we’re seeing in the Gulf was bound to happen. And, BP has proved beyond a shadow of a doubt that it is not possible to clean up a twenty-first century meltdown with twentieth-century equipment and procedures.  

In 1953, a few years after failing to convince the Truman Administration to get rid of Mohammad Mossadegh, the British government found a willing partner in the Eisenhower Administration. The coup in Iran was an example of a desperate imperial Britain attempting to flex its international muscle. It also was a major cause of the unhinging of the Middle East.

The oil spill in the Gulf is corporate imperialism, British Petroleum style. Unfortunately, the sun will not be setting on this imperial venture anytime in the near future.