The question of what should happen to Iraq's oil fields if Saddam Hussein is removed from power has become yet another source of fierce division between hawks and Republican "moderates" within the Bush administration. A sharp and very inside-the-Beltway struggle is taking place behind the scenes over planning for a post-Saddam Iraq with the future of Iraqi oil taking center-stage.

A proposal drafted by Elliott Abrams, a special assistant to President
George W. Bush on the National Security Council (NSC), arguing for the
United States to assert de facto control of Iraqi oil fields has stunned
State Department officials. It doesn't help that Abrams (right) was
convicted of withholding information from Congress during the Iran-Contra scandal, only to receive a presidential pardon from the current president's father.

Bush-administration "moderates" have raised legal and practical objections to the Abrams proposal, arguing that only a puppet Iraqi government would acquiesce to U.S. supervision of the oil fields and that one so slavish to U.S. interests risks becoming untenable with Iraqis. Furthermore, they argue, the move would trigger a wide political backlash in the Middle East and confirm overseas suspicions that U.S. actions against Saddam are driven by oil politics.

Abrams, who in early December was promoted within the NSC to senior
director for Near East and North African affairs, heads one of a dozen
administration working groups tasked with drafting post-invasion plans. But critics in the State Department say his group has been going beyond its authority -- officially, it is meant to focus on planning for a humanitarian crisis in the immediate wake of an invasion -- and is
involving itself in post-Saddam politics and broader issues of economic
reconstruction.

Pentagon sources say Abrams has the backing of Paul Wolfowitz, the
conservative deputy defense secretary, and the support of the office of
conservative Vice President Dick Cheney. "This is a case of stealthy
micromanagement by the Wolfowitz hawks -- they use what bureaucratic
vehicles are available to make their imprint on policy," says an ally of
Secretary of State Colin Powell.

The group has not been forthcoming in providing information, refusing to
brief not only top State Department officials but also aides of Gen. Tommy Franks, the commanding officer of the U.S. Central Command (CENTCOM), about what it is doing, claim rival Defense Department sources.

Powell allies fear that the Abrams group is part of a concerted and
stealthy effort by hawks to steal a march on reconstruction planning, in
the process keeping it away from the State Department and the United
Nations. CIA sources say there also is frustration at Langley about
post-invasion planning and that agency heads there believe they are being shut out as well. Conservatives who hear such complaints respond that they hope this is just what is happening.

The Abrams group includes Joe Collins, a deputy assistant secretary at the Pentagon and a one-time Wolfowitz speechwriter, and Robin Cleveland, a former aide to Republican Sen. Mitch McConnell of Kentucky and now an influential staffer in the president's Office of Management and Budget. All the members of the Abrams group are fiercely opposed to U.N. involvement in post-Saddam planning, are closely allied to Wolfowitz and are firmly pro-Israel.

In their efforts to derail the group, internal administration critics are
questioning why a convicted felon, pardoned or not, is being allowed to
help shape policy. Abrams, who served as an assistant secretary of State during the Reagan administration, was a key player in Iran-Contra and pleaded guilty to "withholding information from Congress." President George H.W. Bush pardoned him. Abrams' supporters say the conviction was part of a political vendetta by Democrats against Reagan.

Other Wolfowitz foes argue that focusing on Abrams' past is irrelevant.
They contend that his role should be placed in the broader context of the
split within the Bush administration pitching liberals and supporters of
Powell against hawks who cleave to Wolfowitz and his boss, Defense
Secretary Donald Rumsfeld.

Within that broader split, the philosophical and ideological disagreements are sharp. The Wolfowitz hawks argue that Iraqi oil -- the second-largest reserves in the World -- could be a godsend for the United States. Supervision of it could help Washington shape U.S. and global energy prices, act as a counterweight to Saudi Arabia's dominant influence in the oil markets and erode the power of the Arab-led Organization of the Petroleum Exporting Countries (OPEC).

In the event that Saddam doesn't set fire to the oil wells, the hawks
maintain that during a "transitional reconstruction period" the United
States should supervise Iraqi oil to prevent future sabotage and avoid
disruption of the oil market. Certainly a surge in production would do no
one -- except possibly Western consumers in the short term -- much good. As one British oil-industry source pointed out, increased Iraqi oil production would be harmful even to the major U.S. oil companies, which would see their profit margins cut with lower prices.

For oil-producing countries the results could be devastating. The Kremlin already has let it be known that it could not live with the price of
Russian crude falling below $18 a barrel. And the Saudis reportedly are
amassing a huge "war chest" to be ready to weather a period of low oil
prices.

Bush-administration sources say that Powell and Franks favor a continuation of the U.N.'s oil-for-food program following Saddam's removal. The program, which allows Iraq to use its oil revenues to buy humanitarian goods, could be used to hold production down and allow nondisruptive phased-in increases over years.

U.S. allies, who also are being shut out in terms of information, are
becoming increasingly anxious about the possible division of Iraqi oil
spoils following Saddam's removal. Downing Street privately has urged
British oil companies to press their case in Washington, say British
government and oil-industry sources.

Jamie Dettmer is a senior editor for Insight.