Showing posts with label oil. Show all posts
Showing posts with label oil. Show all posts

Tuesday, February 23, 2010

The Great Anglo-Saxon Conspiracy Defeated Again

It's tough to be a native English speaker nowadays. It was bad enough a while back as one French intellectual after another lambasted the great Anglophone conspiracy--only to be followed to the cameras and microphones by a parade of Parisian politicos doing the same.

The Spanish (Socialist) government took up the bash-the-Anglos cudgel late last week. Madrid has blamed their homegrown fiscal crisis on the Anglo-Saxon gang, alleging assorted sinister but unspecified actions undertaken by this secret cabal which have intentionally undermined the solvency of Spain (along with, presumably, the rest of the "PIGS" group.)

Now, the one time colonies of Spain have entered the lists. The thirty-three countries south of the Rio Grande have resolved to form their own Latin America/Caribbean group of nations. Pointedly excluded were the more or less anglophone states of Canada and the US. (It appears that the Spanish and Portuguese speakers of the region were willing to allow Jamaica and other residue of the old British Empire hang around in the new and so far unnamed group.)

The US State Department viewed the move which was spearheaded by Brazil and Mexico with apparent equanimity. Probably the folks at Foggy Bottom were privately pleased that the assorted hotheads of the Lands Down South including Hugo Chavez, Ewo Morales, Raul Castro, and the deathless Ortega brothers didn't try a coup in the now rather stodgy Organization of American States which is a monument to the Good Neighbor policy of FDR and, like many other ideas of that long-ago period has outlived its utility.

Feeling robust as all get out following this slap at the Anglophones, the representatives of Latin America and the Caribbean countries lined up in full-throated support of Argentina in its current dust-up with the UK. Invoking assorted elderly UN resolutions the delegates found the oil exploration underway in the territorial waters of the Falkland Island dependency to be all kinds of icky-poo, a threat to world peace, a slap in the face of the international community, and a gross offense against history.

After working themselves into an appropriately high dudgeon over economic exploitation, the glories of nationalism, and the evils of capitalism, the delegates condemned the UK, applauded Argentina, and called upon the "international community" to stop the theft of Argentinian patrimony. Argentina claimed a great diplomatic victory.

Fer sure, dudes.

Behind the rhetoric is the reality. Argentina is an economic basket case with no immediate end in sight. The government is feeling pressure. And, the pressure is both real and growing, the inevitable legacy of decades of poorly conceived and worse executed experiments in central state socialism under both civilian and military dictatorships.

Buenos Aires wants to be bought off. A goodly percentage of the potential oil revenues would do quite nicely, thank you. Particularly if all the risks of exploration and development are borne by UK and other countries' companies and investors. Just slip Buenos Aires a percentage, say, forty percent, as hush money, and the ancient and quite unsuccessfully prosecuted claim to the Falklands will be extinguished with equal silence.

Brazil, which has large potential oil and natural gas reserves in its exclusive economic zone waters would be happy if Argentina had control (or at least a portion of "the say") over the Falklands' oil. This eventuality would make competition easier to manage. The UK is likely to be more hard headed in its development and marketing of the oil reserves, which would limit Brazil's competitive advantage globally. The relatively less efficient Argentinian approach would be to Brazil's longer term advantage.

The same argument applies to Mexico and Venezuela. Both countries have significant reserves which are less and less efficiently extracted and brought to the international market. Neither country sees any percentage (other than negative) in the Falkland product being sold by the aggressive and efficient companies of the UK (and quite probably) the US. Socialism of either the Mexican or (to a greater extent) the Venezuelan sort cannot hang with the front porch dogs of Anglo-Saxon capitalism. And, both governments know it very well. Better see the Falklands oil fields under Hispanophone control.

While the Obama administration and many in the "Progressive Caucus"of the Democratic Party may think they are ordained to preside over the "graceful decline" of the US, there are few in the American public let alone the American business community who would agree that our best days are long in our past. The US, the West, and the world need oil if for no other reason than it takes time--a lot of time--to bring the nuclear reactors and alternative energy prime movers on line in significant quantity. The oil of the Falklands as well as other already known deposits are necessary to keep the world running as the alternatives are developed.

This means the US has little realistic choice other than supporting the UK in its contretemps with Argentina. It probably does not mean war is looming, but the potential for that undesired option is lowered if the US quickly and firmly plants its flag alongside that of the UK.

Given that it is both welcome and fortuitous that the assorted LatAm and Caribbean states have decided to form an English-free zone, it is better for all parties that the new outfit serve as the forum for the Falkland dispute. Lord knows, nothing will happen outside the realm of talk and posturing.

Meanwhile, the adults of the Anglo-Saxon conspiracy can get on with the job of providing necessary basic resources for the world.

Tuesday, November 18, 2008

What Happened To The "Global War On Terror?"

The Geek rarely agrees with any statement by an official of the Feudal Government of Saudi Arabia. Indeed, this may be a first. The first time the Geek has unreservedly agreed with a perspective offered by a Saudi official.

Following the seizure of the Saudi VLCC Sirius Star, the Feudal Monarchy's ForMin characterised the action as one of "terrorism" and demanded urgent action against the Jolly Pirates of Puntland.

For once the duplicity laden ruling family of the Kingdom of Mosques, Oil, and Sand has spoken truly. The favorite aquatic sport of the Somalis is no longer a mere nuisance. It no longer can be argued that the upsurge of maritime banditry is the result of either the absence of an effective government in the geographic expression known as Somalia or the lack of suitable employment and market opportunities for the simple fisherfolk of that region.

The linkage between the seaborne thugs and the land-based terrorists of the al-Qaeda variety is well established. The flow of money from the ransoms extorted by the pirates to the Islamist and jihadist groups both in Somalia and elsewhere including Yemen, Sudan, and points both east and west is likewise well known to the relevant western governments--including our own.

The newly but convincingly demonstrated capacity of the Allah and money driven raiders to operate at great distances from their homeports and employ weapons of greater lethality than previously points to an increase in the support (and thereby implicit command and control) from longer established, more experienced terror groups such as al-Qaeda.

Why this development "stunned" the Chairman of the Joint Chiefs of Staff as has been reported astonishes the Geek. Even a cursory examination of the trajectory of improvement followed by the pirates of Puntland over the past eighteen months shows the increasingly tight coupling between their activities and the agenda of the al-Qaeda type Islamist/jihadist entities. Since Islamism and jihadism do not live on faith alone, the cash generating capacity of piracy must have been noticed quickly.

Given that the so-far quite successful insurgents in Somalia are Islamist to the max, it should not shock anyone to see the speedy development of mutually beneficial relations between the Islamist movement generally and the pirates. While some money obviously sticks in Puntland and environs, much goes to the Islamist/jihadist groups. In return, the outside entities can provide weapons, instruction, intelligence, and other necessary support functions.

Now that the pirates have shown a direct and material capacity to impair the economic interests of the US and other oil importing countries, the use of piratical terror becomes all the more attractive to the Islamists and their ilk. The goal as with other categories of attack remains the same--to directly, substantially, and materially affect the policy of the US and allied nations.

That is the purpose of terror. Cow the opponent into abandoning or altering policies that the terrorist finds obnoxious. That was the goal on 9/11. That was the goal of the 7/7 attacks in London. It was the goal of the Madrid subway bombers.

It is the goal of the entities that have jacked up the pirates of Puntland from the status of mere nuisance affecting only coastal shipping to that of global threat, putting the price and availability of oil in hazard.

Get a grip on that reality.

There is no excuse for the navies of the US and its NATO/EU more-or-less allies not to take robust action against the pirates. There is no excuse not to take action which will risk the loss of Somali lives or even the lives of crew members of hijacked ships.

The US and other navies have the requisite assets (typified by the Navy SEALS and the British Royal Marine Commandos) to board seized ships and subdue the criminals. True some--or even all--the pirates may head off to Allah in the operation. Such is the risk of piracy.

The US and other navies have the resources necessary to monitor small craft--particularly small vessels operating far from the normal fishing waters--and execute "stop and frisk" operations. In the event pirates fight back as they did last week against a combined UK-Russian force, fine. They will end up dead, as at least two or three pirates did that day. This will make trial unnecessary.

An objection that has been raised to robust action beyond a measure of convoy activity in the Gulf of Aden and along the Somali coast has been the absence of courts able to try suspected pirates. This objection is one which strikes the Geek as being particularly ill-founded, not to say flatly out-to-lunch. The US Code already provides statutory authority for the trial of pirates no matter where apprehended or under what specific circumstances. Other countries have similar laws.

If all else fails, the UN can create another one of its much loved special tribunals. If apprehending war criminals and bringing them to trial in the Netherlands is important, so also is the ending of a clear and present danger to open maritime commerce. The UN apparently abhors piracy and has called upon countries with navies to do something. It can add on to this inspirational message by creating a Piracy Tribunal so none can cavil at the lack of due process in the protection of pirates' human rights.

The Geek would love to know what brings about the silence in Washington? Where is the belligerent rhetoric of Dick Cheney? Where are the loudmouthed, testicle grabbing neocons? What's wrong, boys? There's no regime to change? No democracy to plant in hostile soil?

Is that why you all are so quiet? Is that why the opening of a new front in your Great Global War on Terror gives you so little cause for alarm? So little desire to "shock and awe?"

Or are you neocons simply sitting by with calmly folded hands hoping that your ideological counterparts in the next administration will screw the pooch as well and truly as you have the past seven plus years?

Thursday, November 13, 2008

Tests For A New President--West Africa

The big noise from the Continent of Collapsing States of late has focused on the East of Africa. The Jolly Pirates of Somalia, and their landlocked kinsmen, the woman killers of the Shabab, have gotten more than a little MSM coverage. Recently, the recrudescence of active war between the Looting, Pillaging, Raping and Killing National Force of the Democratic Republic of Congo and the Tutsi "Freedom Fighters"of General Nkunda have occasioned much spilling of ink, wringing of UN and EU hands, and generation of photogenic refugee streams on the ground.

Meanwhile, on the other side of Africa, trajectories of both long standing and relatively recent origin are pointing to the emergence of another set of interlocking problems. For a single reason which will shortly become apparent, the United States will not be able to sit back, twiddle its thumbs, and hope somebody does something so that we don't have to.

At the center of the vortex sits Nigeria, flush with some 37 billion barrels of proven oil reserves and over five trillion cubic meters of natural gas. Nigeria also has a population of more than a 146 million who enjoy(?) a life expectancy of only forty-five or so years, a low per capita income, massive maldistribution of wealth, and sectarian violence pitting the majority Muslims (fifty percent of the folks) against the slightly less numerous Christians.

The sectarian killing comes on top of the long festering tribal hatreds. (For those of you who have reached a "certain age" think back to Biafra. It was all the rage forty or so years ago.) Endemic violence has joined with endemic disease and a precarious balance on the knife edge between enough to eat and starvation. In short, all four horsemen of the apocalypse are riding high and hard.

The schwerpunkt of the coming crisis in Nigeria is the delta of the Niger river. That delta is home to much of the Nigerian oil industry, particularly the tanker loading terminals. Thus, it is the primary point of departure of the oil, which provides 20 percent of the country's GDP, 95 percent of its foreign exchange earnings, and roughly 80 percent of the government's budget.

The delta is also home turf for MEND, the Movement for the Emancipation of the Niger Delta. This insurgent group gives armed expression to very legitimate, completely organic political, economic, and social grievances. MEND has shown itself to be competent, well armed, and possessed of a keen eye for the media spectacular. The seizure of off-shore platforms, loading facilities and associated supply boats replete with kidnappings and "non-negotiable" demands.

The impact of MEND has been to significantly slow and even stop the shipment of oil from the Niger delta. It has also served to discourage further foreign investment or even the repair of aging facilities. It follows that MEND has hurt the already less than well emplaced government, which is struggling so far without great success to overcome the long wretched years of grossly corrupt and utterly incompetent military rule which ended not quite a decade ago.

"So what?" You ask.

The so what is this. The US is the largest export partner of Nigeria. We receive over fifty percent of Nigeria's exports. And, buddy, we ain't buying that much cocoa and rubber. We are buying that much oil. While the exports have fallen from their previous average level of 2.1 million barrels per day, the Nigerians still provide nearly a fifth of US oil imports.

The current downward trend of oil prices will hurt Nigeria. Without an increase in production, the country will not have the foreign exchange necessary to support its massive requirement for imported food. Heck, the Nigerian government might even have to postpone its ambitions to enter the space race in order to feed the people. To say nothing of meeting other basic needs such as infrastructure improvements.

As if the flaky situation in Nigeria were not sufficient to rate a high place in the contingency plans of the incoming US administration, the affairs of two other neighboring countries must be factored in.

The worse off of the two is Chad. You might remember Chad from a couple of decades ago when it fought a semi-comic, semi-tragic war with Libya. Back then, Chad, which is about three times the size of California, was best known as a place with nothing but miles and miles of nothing but miles and miles.

Enter oil. Chad has oil. Not a lot compared with Nigeria, but a still respectable 1.5 to 2 billion barrels. A consortium headed by ExxonMobil has sunk nearly four gigabucks into developing the oilfields in the south. These went on line in 2003.

Since the completion of a 650 mile pipeline to the Limboh terminal in Cameroon, approximately 225,000 barrels per day have been exported. This amount can be increased perhaps enough to make up some of the shortfall from Nigeria. The US is the destination for some 85 percent of the flow.

The government of Chad is controlled by a minority group. In addition, it is a government which, shall we say, lacks transparency. It is also a government which is excessively economical with the truth.

A prime example of this economy of truthfulness is found in the record of Chad's president, Idress Deby. President Deby swore to the World Bank and IMF that his government would institute a "share the wealth" program. Some of the oil revenues were to go to assorted social programs benefiting the people of southern Chad.

Instead the money went to security needs such as new weapons for the army. When first called to account for this, Deby responded by demanding a new agreement with the World Bank leaving out the pesky requirement to spend the money on trivia such as the people of Chad who have a low median income, a short life expectancy, an absence of medical care and educational facilities, and a surplus of frustration.

The then president of the World Bank, Paul Wolfowitz, agreed so that Deby would not carry out his threat to close the taps feeding the pipeline. The justification offered by Deby and accepted by Wolfowitz among others was the spreading conflict in Darfur and the threat of armed attack from Sudan

Deby proved himself another champion of democracy when he engineered the removal of limits upon his term in office. He has also proven himself a master of counterinsurgency by seeing the renewal of guerrilla attacks last year and a near overrunning of the capital earlier this year.

The guerrillas have popular support and have been shaking hands with al-Qaeda, which group has become increasingly active in both North Africa and the Sahel. Given that over half of Chad's ten million people are Muslim, this development has potential ramifications of importance.

Security at the oil fields is light. The pipeline cannot be secured against attack. As events in Sudan have shown in recent weeks, kidnapping of foreign technicians is a very viable option for even quite small groups of anti-government orientation.

Despite Deby's threat to close the Big Valve on the pipeline which caused Wolfie to quake in his upmarket boots, any hiccup in the flow of oil (and dollars) would cause seismic shaking in the Chadian government. A shaky Chad could become a collapsing Chad quickly.

Picture a failed state perched between Libya and Sudan, Niger and the Central African Republic. Ain't a pretty picture, is it?

The third country in the mix is Cameroon. While Cameroon itself has been quite stable by African standards, it is vulnerable to spill over from either or both Nigeria and Chad. Cameroon has made a few, hesitant, even microscopic steps in the general direction of democracy but remains under an authoritarian regime headed by Paul Biya. Biya has been running the show for twenty-six years now and shows no sign of being eager to retire.

Cameroon has a decent agricultural base and a modest oil patch. These have provided much of the reason for the country's stability. But, there are some very real problems there. Unemployment is running at or above thirty percent. Altogether forty-eight percent of the population lives below the local poverty line. Wealth is quite unevenly distributed with the top decile disposing of over thirty percent and the lowest decile less than three.

With the transfer of the Bakassi peninsula from Nigeria to Cameroon, the possibility of developing more oil reserves exists. This possibility is of lesser importance than the development of the oil terminal at the end of the Chad pipeline. Overall, much of the recent appearance of stability in Cameroon has been dependent upon the high price for coffee, cocoa and oil. The government's share of the revenue stream has underwritten social and economic development programs catering to the aspirations and needs of selected portions of the population.

With prices headed down for some time to come, the Cameroon government will find it difficult to either placate disaffected portions of the public or provide for security forces. President Biya has expressed concern (alarm would be more accurate) over recent "pirate" raids on Cameroonian targets both afloat and on shore. Cameroon along with Nigeria has asked the UN for the establishment of an anti-piracy patrol in the Niger delta and adjacent international waters.

All three countries are inherently less than stable. All, Nigeria in particular, have past histories of internal conflict. All three have significant social and economic problems which could be capitalised upon easily by anti-government movements. Two of the three have majority Muslim populations which have experienced significant penetration by Islamist ideology.

The mix of factors now including a decline in world market prices for basic commodities is one of real explosive potential. Golly, what a great time to be the brand new, quite inexperienced POTUS.

Better start thinking about problems like the one outlined here, POTUS to be, before they become above the fold stories in the WaPo and NYT.

Monday, August 18, 2008

Israel Is Not Part Of The United States

Is there something hard to grasp about that fact? Is it impossible to understand that the national interests of Israel as defined by that country's citizens and government might not be in the national interests of the United States?

Up until 1961 the USG and We the People seemed to have no difficulty understanding that Israel was a sovereign state and not part of our Union. Before Kennedy came to the White House no American president appeared to have the slightest problem differentiating between the national interests of the US and those of Israel.

The US was first to recognise the new State of Israel but accompanied recognition with a total embargo on arms sales even though the country was in a desperate struggle for survival. The embargo on arms instituted by Truman continued under Eisenhower. It was a policy both for the present and the future. It allowed the US to act as and, more importantly, be seen as an honest broker by some if not all the Arab states.

The US concern for stability in the region, particularly during the Eisenhower Administration, was driven by a need for oil. Not a need for oil to turn into gasoline powering the monsters of chrome and cast iron on American highways. Not even a need to protect the profit margins of major oil companies.

No. Ike and company were worried about getting enough oil to Europe quickly enough to meet NATO's warfighting needs in the event the Crimson Tide rolled over the Trace. It was all a matter of escort vessels and convoys but the bottom line was clear: oil from the Arabian Peninsula and Persia was key to a successful conventional defense of Europe. The Europeans agreed since the idea of being nuked by "friendly fire" didn't appeal to a single German or Frenchman or Briton.

American even-handedness went so far as to throw down the flag on the play made by our NATO partners France and Great Britain along with their co-conspirator, Israel, during the 1956 Sinai War. For almost the last time in history to date, applause for an American president echoed from Cairo to Damascus to Baghdad and beyond.

The applause was less but still audible a year later when the US fired a warning shot across the bows of the Soviet Union and its local assets by landing Marines in Lebanon to impose and maintain the peace during elections. Arguably the operation was both ill-advised and unnecessary but it did have the redeeming feature of helping give Lebanon another fifteen years of relative peace and prosperity.

All good things come to an end. American even-handedness ended along with the embargo on arms sales to regional countries during the Kennedy years. While the weapons sold were defensive (HAWK surface to air missiles) the nose of the camel was well under the tent flap.

A couple of years later with LBJ in the Presidency the rest of the camel came in and squatted down. LBJ overruled the advice and analyses of the Joint Chiefs of Staff, the CIA and at least some elements of the State Department and ordered the sale of M-60 main battle tanks and F-4 Phantom fighter-bombers to Israel.

The JCS had warned that the capabilities of the F-4s and M-60s made them excellent offensive systems. The body recommended that the requested items be denied and replaced by refurbished and upgraded M-48 tanks and new production A-4 strike aircraft. In both cases the limitations of range would render the systems less effective in offensive than in defensive employments.

LBJ was warned the Israeli armed forces would need about two years to integrate the new systems and could be expected to initiate aggressive war at that point. The IDF and IAF beat the estimate by a few months as they opened the expected war in June 1967.

The Kennedy and Johnson decisions were not in the national interests of the US. Neither decision enhanced American national security. Indeed, the sum of the two was a decrease in our national security. Neither decision represented a policy for the future. Unless one wants to describe the tossing aside of a policy that had served our interests well in order to replace it with one which would increasingly harm US security and interests.

So why were the decisions made?

A one word answer fits perfectly: politics.

The processes of politics--raising money, getting elected, cutting deals, log rolling, getting money--are all activities of the now. They all require policy for today and today only. The potency and pervasiveness of both formal and informal lobbying actions of the Israelis and their domestic supporters is right up there with the American Medical Association and the National Rifle folks. In close national elections as well as in a myriad of Senatorial and Congressional races, the stance of the pro-Israel groups can be critical.

Master politicians understand that reality with a vengeance. Not surprisingly Kennedy, who had come to office by the whisker of disputable votes in Illinois and Texas, looked to the electoral future and not the national security needs of the US and abandoned the firewall of neutrality with the HAWK sale. Even less surprising was the decision by LBJ, a supreme politico, to open the American tent all the way and approve the offensive weapons systems sale in the face of universal professional opposition.

The use of US weapons in the Six Day War went a long way in destroying the reputation of the US as a White Hat in the Arab-Muslim countries. Further demonization of the US was facilitated by the spineless reaction of the Johnson Administration to the attempt by the Israelis to sink the ELINT ship Liberty.

It didn't help that American newspaper cartoons, TV comedians and others made fun of the defeated Arabs and made no secret of our admiration for the Israelis. It was as if we were cheering for the home team.

That sort of bubble in the stream wouldn't have mattered if Washington could have influenced Israel to hand back at least some of the occupied territories in the weeks following the Six Day War. The archives show that the Administration did try to jawbone Tel Aviv into making at least symbolic withdrawals. The effort such as it was had no success. No Israeli politician seemed at all willing to look at the downside of victory.

We didn't press them too hard either. After all 1968 would see the next election cycle and the Administration as well as the Democratic Party were in the deep doo-doo of Vietnam to say nothing of schisms developing within the American society.

Fast forward to the most critical year. The year that well and truly saw the Israeli tail start wagging the dog of American foreign policy.

The year was 1973. The pivotal event was the Yom Kippur War of October. The crucial decision was President Nixon's choice to go toe-to-toe with the Soviet Union while airlifting critical replacement supplies to Israel.

There were two results from Nixon's politically motivated decision. One was the oil embargo engineered in OPEC by Saudi Arabia. The second was the apparently permanent tying of Israel to the United States as if it were in fact as well as joke, the Fifty-first State.

Uncle Sam became Samson tied to two posts. One post was Muslim, more to the point, oil from under Muslim sand. The other was Jewish, more to the point nuclear weapon equipped Israel.

We are still tied to those two posts. Still unable, or, to err on the side of accuracy, unwilling to pull down the house.

Temporizing from day to day, lurching from one slight change of policy for today to another, politicians from Nixon on to the current Bush have invoked "Israel's right to exist" while making occasional mumbles concerning the desirability of "energy independence."

Let's look at those two buzz phrases.

What "right to exist?" No nation, no state (including our own) has a "right" to exist. If a nation-state has demarcated borders and if it has the capacity to effectively defend those borders and if it has the capacity to effectively repress or restrain internal centrifugal forces, then it can maintain its existence. If any of these three prerequisites does not exist then the state will go to the dung heap of history. (Ask the city fathers of Carthage after the Third Punic War if this is true or not.)

The United States fought a defensive insurgency lasting nearly a decade as well as a conventional inter-state war lasting three years to establish its capacity to exist independent of Great Britain. The US also fought an internal war lasting four years to maintain its corporate existence.

"Right" had nothing to do with it. Establishing and maintaining the United States took blood, sacrifice, time and resources. Not once but repeatedly.

Israel has no more "right" to exist then the US. So far it has shown the capacity to exist. The Geek hopes it continues to do so. But, he is unwilling to see the US endanger its national security in order to provide reinsurance to Israel.

Politicians and pundits are also fond of telling us that Israel is our "ally." The test for an alliance is simply what is in the relationship for both countries. In the context of the US-Israel dyad there may be a great deal of benefit for the Israel but the upside for the US is hard to see.

Israel has cost us a great deal of money (it is our number one foreign aid recipient.) The relationship has also assured that we have diminished influence in the Arab countries while giving powerful impetus to those amongst the Muslim population of the world who wish us ill.

It has been argued that we must support Israel because it is an island of democracy in an ocean of feudal, authoritarian regimes. Get a grip!

Democracy is a fine thing. We might get it right some day here at home.

The encouragement of democracy by our example is a good thing. We should continue doing it as we have by sheer existence for more than two centuries now.

But, we have no specific national security interest in protecting another democracy simply because it has regular elections and an independent judiciary.

Our relationship with Israel must be evaluated in the stark terms of self-interest. What benefits do we accrue? What risks and liabilities do we shoulder? Weigh the two. If the real, substantial benefits to our national security, our national interest are greater than the liabilities and risks, then the relationship should continue as it has. If not, scale the relationship so that the costs and benefits are in balance.

When our good friends and close (coffee only) drinking buddies the Saudis organised the 1973 oil embargo, a government, an administration with the capacity to make policy for the future rather than temporizing policy for today, would have grabbed the opportunity to mobilize the resources of the US and We the People for genuine energy independence.

There was sufficient oil yet to find and exploit outside of OPEC's sway to buy the time necessary for the development of other energy technologies. To put it bluntly--we blew it. We continued to blow it over the next ten years as the search for new technologies degenerated into a race for the Federal cash cow by businesses great and small.

New emotional attachments of dubious utility to the cause of national security and national interest such as environmentalism and global warming combined with marginal improvements allowing conservation and a generally improving economy so that no real search for independence from the Muslim governed oil fields was politically possible. We stumbled on with one policy for today superseding its predecessor.

Had the US been more independent from Mideast oil would there have been any justification for the Kuwait War of 1990-91? As it was, the genuine relation of that war with any definable American national security need is hazy at best. Without the fear of too much oil falling under the control of one objectionable dictator there would have been zero national security or national interest requirement for the war.

The Kuwait War would have been unnecessary, completely unnecessary, if the US had possessed even a modicum of genuine energy independence. There would have been no need to shuck, jive and lie to the House of Saud so that US troops could enter the Kingdom of the Two Mosques. Osama bin Ladin would have been denied his best card in declaring war on the US a few years later.

History would have been quite different. No doubt about that. Unfortunately the facts remain as they were. We blew it.

We the People and our governments under both parties embraced hazy shifting policies for today. We and our "leaders" didn't think of the future at all. We--and they--assumed that somehow the future would take care of itself as long as we watched out for today.

Worse, we have thrown aside the necessity of defining national security and national interest narrowly in terms of our survival and flourishment. Instead we have rushed off pursuing seductive mirages such as "human rights," "democracy," "pluralism," multi-culturalism.

Like all mirages these lead only to disaster.

Stay tuned.

Sunday, August 10, 2008

At Last! A War Over Oil (Really)

For a long while now it has been an article of faith among some on the Left that the current administration's Great Adventure In Regime Change was caused by a slavering need to assure that Iraq's oil would be safe for Exxon et al.

Before that there were dark suspicions that H.W. Bush took his Grand Coalition to war not to roll back the Iraqi tide from Kuwait but to protect American oil interests in the Gulf region. At the time some of the Geek's academic coworkers hinted that somehow he was involved in this great plot to save the shareholders at the expense of American lives.

In the years before Desert Storm, long before invading Iraq was even a small glint in the eyes of Messrs Bush and Cheney or others of the neocon ninnie persuasion, folks on the Left imagined that the American efforts in South Vietnam were on behalf of Big Oil, making the South China Sea safe for Mobil and Chevron.

All these specters of dank conspiracies to sacrifice lives in order that Big Business might be provided with a few more significant digits in its bottom line must give a frisson or two of pure delight to those on the Left. Heck, the Geek even wishes they were true, documentable from the archives and not mere projections of fears or wishes, as he likes a good conspiracy hypothesis as well as the next guy.

Unfortunately they are not.

That is why it is so nice, so satisfying that we are finally looking at a real honest-to-gosh shooting war where the cause, the real deal, the shore enough is oil. Oil and the need to protect and enhance a monopoly in its distribution and sale.

It is even more delightful that the war is being waged on behalf of this supreme capitalist goal by the Kremlin. By Vladimir Putin. By Russia, onetime Vanguard of the Proletariat.

While Georgia might have swung the first punch in its ill-advised attempt to bring the secessionist province of South Ossetia back under its control, the Kremlin reaction showed all the hallmarks of long standing planning and preparation as well as a goal far more expansive then simply "protecting" Russian "peacekeepers and citizens" in the province.

In the closing years of Putin's presidency it became increasingly clear to all but the most addleheaded that Russia was feeling more than a little steroidal. The Kremlin was (and is) most unhelpful in the Iranian uranium enrichment problem. Putin (and his handpicked successor) have been both obdurate and seemingly blind to reality on the matter of basing American anti-ballistic missiles and radars in Poland and the Czech Republic. Russian strategic bombers are again flying in the finest Cold War fashion near the US and the UK.

The reason for this boisterous behavior after years of quiescence is simple. Russia has oil. Lots of oil. The old, badly dilapidated Soviet Siberian oil fields have been expanded and renovated in large measure by foreign investment. New pipelines have been built. Russian oil flows to Western Europe. The Euros flow back in a flood.

There is a speed bump in the highway of continued Russian oil based prosperity and the political advantages which can accrue from a monopoly on either or both production and distribution. There is oil in several of the Central Asian Republics. There are new pipelines which connect the producers in Asia with the consumers in Europe (and elsewhere.)

The most important of these big tubes runs across Georgia. Right through pro-West, pro-US Georgia. The Baku-Tbilisi-Ceyhan (BTC) line runs from Azerbaijan to Turkey. It is US-backed.

The Russians bombed it yesterday. Considering the immediate irrelevance of the BTC to the operations being conducted by the Russian Army against the Georgian forces in South Ossetia, it is legitimate to ask, "Why?"

The answer isn't hard to find. Putin's goal is not removing Georgian troops from the disputed secessionist provinces of South Ossetia and Abkhazia. No. Putin's goal is much more than that. He wants to eliminate the long standing annoyance of Georgia's pro-American president, Mikhail Saakashvili in a short, sharp and salutary war.

This goal loops into another goal long held by Putin and company. Pacify the Caucasus. Pacification through effective hegemony. The same goal which fascinated various Czars and later attracted the full attention of Lenin and Stalin.

Hegemony over the Caucasus region provides the necessary first condition for re-establishing operational dominance if not full hegemony over the Central Asian Republics. Ah! A thought that would warm any Russian heart.

Particularly when operational dominance over the oil bearing areas of the Caucasus and Central Asia assures a Russian monopoly of non-Mideast origin oil to Europe and elsewhere. Capitalists and Communists agree on one thing: Nothing beats a monopoly.

Putin has long understood the power of possessing a scarce critical commodity. Russia has one. Russia flaunts the wealth and power which its possession confers. It is not surprising that Russia, like a crack dealership, wants to inhibit competition and raise prices.

An uptick in global oil prices as a result of the current fracas in the Caucasus is good for Russia. Good for Putin. A short war with a victorious conclusion would be infinitely better.

This possibility is worth taking a few risks to turn into reality. From the Kremlin's perspective the risks are very small indeed.

Georgia doesn't have much of an army. It will have to seek a negotiated settlement rapidly in order to preserve independence. The settlement might well include features far removed from autonomy or independence for the two break away provinces such as the removal of Georgia's president.

Given the retreat of a US presence in Central Asia to say nothing of the current American preoccupations with Iraq, Afghanistan and spinning Iranian centrifuges in the closing days of a badly discredited Administration, Georgia lacks Great Power support beyond soothing words and mood music. The Georgians are on their own. That's tough for them.

True the war might go badly for the Russians. It has the potential, if the Kremlin is not careful, very careful, to turn into a never-ending guerrilla affair in the Chechnya mode. Putin will have to take great pains to assure that this eventuality does not come to pass.

Vladimir might have been smiling with anticipation as he flew back from Beijing but his gut might have tightened just a bit if he remembered an all-too-true maxim of Clausewitz: No plan survives first contact with the enemy.

Wednesday, June 18, 2008

The "Dutch Disease" Hits Gulf Oildoms

If you follow such sites as http://www.middle-east-online.com/english/, a pattern of developing economic crisis is seen in the oil producing states of the Persian Gulf. All these resource rich semi-feudal spots from Saudi Arabia to Iran are experiencing what economists have called for some years, "the Dutch Disease." The symptoms of the disease are simple and obvious: accelerating inflation, low real growth and the absence of an economic base other than the exploited natural resource.

Actually the name should be the "Spanish Disease" as the symptoms were first experienced by the Spanish Empire during the Fifteenth Century as Spain was flooded by increasing torrents of gold plundered from its colonies in South and Central America as well as the Philippines. Inflation not only undercut whatever may have existed in the way of an underlying Spanish economic infrastructure but eventually assured the financial collapse of the Empire and its citizens.

More recently the Dutch experienced the same disease with the discovery and exploitation of oil from its continental shelf. It took the Dutch years, much effort, some pain and the understanding support of other countries to overcome the illness which now bears its name.

For a long, long time the oil producing shiekdoms, kingdoms and mullahocracies have or should have been aware that each and every one of them was a prime candidate for the next round of Dutch Disease. With the exception of Iran (which has poured money into economically non-beneficial uses such as missiles and uranium enrichment plants) none have used the oil based income to provide a sound economic infrastructure that could absorb and mitigate the negative effects of more money pouring in as the oil flowed out.

Sure, the Saudis Royal Family--all seven thousand or so members--have invested its plunder in any number of offshore projects. The same may be said of the elites in other countries such as Kuwait and at least some of the UAE.

Of course, the Saudis have poured a great deal of money into the building and provisioning of Wahhabist mosques and madrassas around the world. The same source has also been a generous contributor to various Islamist "charities" including such noted humanitarian organisations as the Taliban and al-Qaeda.

Spain did much the same as Saudi Arabia and the rest of the Gulf Oil Crew. It funded wars. It funded the Inquisition. It funded religious extremism and proselytising. It's aristocracy and elite built big homes, drove fancy carriages and wore expensive clothing.

Whether in the case of the Spanish or that of today's oil based autocracies, the spending of money on foreign investments, religious expansion or the stuff of war and repression helped develop the basic economic structure about as well as a 9 mm in the prefrontal lobes helps thinking.

From Iran on south and east to the tip of the Arabian Peninsula, the symptoms of the Dutch Disease are too visible to be hidden behind cooked books, fabricated statistics or a burqa of denial. Inflation is at or above ten percent throughout the region--and that is a conservative estimate. In Iran it is above twenty-five percent. Unemployment and underemployment are a majority experience for all those natives too proud to hew wood, draw water or do any of the other necessary, mundane and not necessarily inspiring jobs left to foreign helots (or expat Western technicians.)

As was the case with Spain and (to a lesser extent) Holland four hundred years later, the disease has profound effect upon neighbors. Neither Egypt nor Jordan, for example, are noted producers and exporters of petroleum, but both are experiencing very high inflation (in Egypt's case the highest in nineteen years) coupled with low rates of real growth and high unemployment.

Not surprisingly the countries with the worst cases of the disease are taking wrong actions. Iran has turned on the printing presses 24/7. The UAE and others are controlling prices and providing subsidies for such essentials as diesel fuel. Egypt continues to go the subsidy route for food.

The Geek admits economic history is a fascinating subject--if you are Allan Greenspan. For the rest of us, it usually is a very dull trudge through the Valley of Grim Numbers.

If, however, the trudge is taken and the Grim Numbers overcome, the result is an appreciation of what is needed to defeat the Dutch Disease. It's a simple, painful and not particularly short course of treatment involving the abandoning of controls and subsidies, the forced direction of resource derived wealth into economic infrastructure development and even, horrors! limiting the ability of the elite to buy private jets, luxury yachts the size of aircraft carriers or disporting in the usual lifestyle of the ultra-rich and self-involved.

Not a pretty political picture for any of these regimes. All the way along the wide arc from Tehran to Cairo, the governments are precarious in their grip on power.

Better not to take the risk of doing the right thing and losing hold of the levers of power.

Right?

Perhaps its only appropriate that the latest sufferers of the disease first experienced by the Spanish respond in the same way to their condition. Recall that the Spanish Empire was run by a dark and grim combination of autocrats and clerics. The Spanish Empire was hag ridden by a backward looking religious dogma and quivered in fear of the future. The Spanish Empire sought to hold its place in the world with a combination of blood-happy killers, repressive torturers and pure bluster of following "God's Will."

Sound familiar?

We know how it all ended for the Spanish. How different will it be for the Kings, Sheiks and Mullahs of oil?

It took Spain a long time to fade to the obscure margins of the world. Things happen much, much faster today.