It's the oil, stupid
William R Thomson Chairman of Momentum Asia Ltd 24 September 2002
As official Washington grinds inexorably forward towards war - and 'regime change' - with Iraq, UN resolutions or not, it seems increasingly clear that the so-called war on terrorism has become a convenient cover for a much wider agenda on the part of certain influential thinkers and policy makers. Top of that agenda is oil, and the sure access to it at a reasonable price. But the agenda spreads well beyond Iraq into the arena of nation building and recasting the old orders and even boundaries of the Middle East.
Washington's attitude towards Middle East oil reminds us of the quote of an eccentric Japanese-Canadian member of the US Senate Senator Hayakawa who, when asked his view on the Panama Canal and the prospect of returning it to the locals, quipped 'Why, it's ours, we stole it fair and square.' The Arabs are allowed to enjoy the fruits of their oil sales, just so long as they make it available on demand and be nice Israel. Otherwise, they can look out.
Oil is presently selling for around $30 a barrel, a price that is believed to contain a war premium of $5-10 a barrel. If there were a short war with a quick result then a combination of Iraqi oil becoming available and a collapse of the war premium could drive oil below $20 a barrel. This would act as a tax reduction and stimulation to the beleaguered Western economies. But if the war is messy and protracted, or President Hussein decides to pollute his oil fields, and possibly those of his neighbours, with nuclear or other materials, then oil could conceivably spike in the $50 to $100 range. This would well and truly seal the fate of the Western economies to a renewed recession.
The assumption amongst the think tanks advising Bush is that regime change can be effected reasonably easily using disgruntled elements in the military and society to turn on Saddam. At least, they are selling it to the American public that way. There are echoes of the Spanish American War of 1898 and America's 'manifest destiny' here. The Murdoch media empire is playing the role of the Hearst yellow press of that earlier time as cheerleader in chief for war. The overwhelming military power enjoyed by the US at this time is allowing these policy wonks to dream wider dreams of restructuring the Middle East to make it safe for all time for Israel and US oil interests.
Whilst Iraq may be the first 'beneficiary' of this new American destiny, Iran and Saudi Arabia are close behind. Saudi Arabia is presently unsettled by the internal fights to succeed the ailing King Fahd. The chief protagonists are the Crown Prince Abdullah (the King's half brother) and the King's seven full brothers (known as the Sudheiri seven). Abdullah and Washington are not close; he is seen as being unhelpful to the US and helpful to Al-Qaeda. Washington would prefer a more malleable puppet. But the think tanks, taking a longer view, dream of a democratised Saudi Arabia and propagate plans to redraw its boundaries and carve out pliable oil emirates on the eastern boundaries, leaving the religious and oil-poor areas in a separate state.
These ideas have been given greater credibility this last week with the announcement of a new Bush doctrine of pre-emptive intervention when US interests are threatened. Conspiracy theorists will also look to the influence of the large US oil interests, who are large supporters of the Republicans. They see a unique opportunity to gain at the expense of Russian and French oil interests in Iraq, later Iran and possibly Saudi Arabia.
So to rephrase the Clinton campaign slogan, we can forget the useful fool, Al Qaeda, - it's the oil, stupid! It's ours, we stole it fair and square. The world must be made safe for gas guzzling SUVs (sport utility vehicles).
History however, is rarely that simple. Only simpletons believe it is.
William R. Thomson 24 September 2002 Wt at momentum-asia.com.hk
---------------------------------------------------------------------------- ---- Bill Thomson is Chairman of Momentum Asia, a distributor of Momentum's conservative (non-leveraged) alternative investment funds. He is also Chairman of the Siam Recovery Fund and advises governments and institutions in Asia. He was formerly Vice President of a major international bank in Asia and is a former US Treasury official. He writes widely and we appreciate his words of wisdom at 321gold.