> The Petroleum Finance Company
> Washington, DC (1 202) 872-1199 - Paris, France (33 1) 47 70 29 00
> Email: info at pfcenergy.com - Web: www.pfcenergy.com
> Markets & Risk
> US FOREIGN POLICY: THE RULES OF THE GAME HAVE CHANGED
> September 12, 2001
>
> Yesterday's terrorist attacks have dramatically redrawn the parameters of
> US foreign
> policy. Fighting terrorism in a broad sense has become Washington's main
> priority, and
> it will expect absolute support from its allies. This latter issue will
> define who are the
> United States' friends worldwide. The impact of this new policy moving
> forward will
> depend to a large extent on how US efforts to identify and respond to the
> culprits of the
> attacks pans out.
>
> Irrespective of this fact, however, the moderate Arab states find
> themselves facing a
> nightmare scenario: an already tense situation due to Israeli-Palestinian
> violence is
> about to get worse as the Bush Administration demands absolute cooperation
> in its anti-
> terrorism policy, which may include military strikes against states in the
> region.
>
> Adding to their woes, the picture for oil prices is bearish. OPEC's
> Gulf-led market
> management strategy to keep prices high is no longer politically feasible
> in light of the
> attacks and an imminent global recession. Indeed, the OPEC cohesion that
has
> characterized the organization since 1999 looks set to be tested, and may
> not survive
> much into 2002.
>
> Washington Redraws Its Global Strategy
> In the aftermath of yesterday's terrorist attacks, there has been a
> striking and immediate change in US
> strategic priorities, the impact of which will be felt globally. In
> response to what President George Bush
> and others have described as an "act of war", combating terrorism broadly
> defined has quickly emerged
> as the new guiding principle of US foreign policy. In the medium term, at
> least, this will have a number of
> implications for US policy:
>
> Policy will be guided by a determination to respond both against the
> perpetrators of yesterday's
> terrorist attacks and to target more proactively any terrorism networks
> that are perceived as
> threatening US national security, including state sponsors of terrorism.
>
> Washington has already made clear that it expects its allies, including
> moderate Arab states, to
> give it unconditional support in this international venture. It is also
> looking for support from
> Russia and China, two states that have heretofore been considered
> competitors. Going forward,
> the Bush Administration is likely to present support for its fight against
> terrorism as a black and
> white choice, defining who is considered a US friend and who is an enemy.
>
> The issues that formally dominated the US foreign and defense policy
> debates will now either be
> reassessed in light of this new determination to strike at terrorism (as
is
> likely to be the case with
> China and to a lesser extent Russia) or will be subsumed within the
broader
> rubric of security
> (missile defense).
> Executive Memo
> MARKET INTELLIGENCE SERVICE
>
>