Oil: “Part of the Backstory”

by Charles Walker

President George W. Bush’s bipartisan war against Osama bin Laden and the Afghanistan Taliban is not a war on behalf of oil companies, wrote New York Times economics columnist Paul Krugman on September 26. Still, Krugman holds that it is the “continuing presence of American soldiers in Saudi Arabia” that was the greatest single factor motivating the suicide-skyjackers. “That presence is a legacy of the Gulf war…[W]e probably wouldn’t have waged that war, or maintained a permanent military presence in the region, if it were not for the oil.”

(Krugman’s statement brings to mind what many observers and antiwar protesters said in 1991 when Bush’s father, then President George H. Bush, waged war on Iraq. They said that the war wouldn’t have happened if Kuwait had a superabundance of broccoli, rather than oil.)

Krugman makes the point that American capitalists and their counterparts in Europe and Japan are greatly concerned over just who controls the Persian Gulf oil reserves. He makes that obvious point in order to emphasize an equally obvious point. That is, that the imperialist industrialized states are hopelessly dependent on foreign oil. The U.S., for example, produces less than half the oil it refines and guzzles.

As Krugman puts it, “Strong efforts at conservation, which could reduce U.S. per capita oil use to European levels, would make us roughly self-sufficient. But even so, the strategic importance of the Persian Gulf would only be minimally reduced. The reason is that even if the U.S. became self-sufficient, our allies in Europe, Japan and elsewhere would still be highly dependent on imported oil—this despite the fact that they use much less oil per person than we do…[W] e need to protect not just our interests but those of our allies.

 “So the bottom line is that as long as oil is important to modern economies [read `capitalist economies’], the Persian Gulf will remain strategically crucial. This presumably [!] means that the West will have to maintain a military presence in the region, with all the tensions that that creates.” Please note that Krugman is saying (with no irony intended) that the U.S. and some of its allies maintain an armed force in the Middle East in order to protect its oil interests from the very “tensions” which that same armed force spawns.

Those “tensions” are mostly attempts by the Middle Eastern masses to free their homelands from the foreign oil barons and their domestic accomplices. Krugman writes that the oil revenues, which allow “the Saudi monarchy to buy off potential opposition, are pretty much the only thing that keeps Saudi Arabia from turning into another Afghanistan.” Krugman neglects to mention what happens to those oppositionists who can’t be bought off or who are judged not to be worthy of a payoff.

Krugman asks: “So what is the answer?” to the “awkward reality that the oil reserves of the Middle East are crucial to the world’s economy…We’ll have to find a way, through some combination of technological innovation and radical policies, to wean not just the United States but the world economy as a whole from its dependence on oil.”

In other words, Krugman sees no end in sight to the cold-blooded barbarism that flows from the century-old domination of the Middle East’s oil and peoples by the European and American capitalist powers.

Krugman says that Bush’s war is not a war on behalf of the oil companies. Isn’t it more precise to say that Bush’s war is not a war entirely on behalf of oil companies? Sure, the horrific suicide skyjackings of September 11 precipitated Bush’s declaration of war. But Krugman is right to remind those who don’t know that  “oil is part of the backstory.”

[There is further confirmation that, lurking in the background behind the present crisis, considerations about oil are crucial in the thinking of the military and financial planners of the U.S. and European ruling classes. We reprint below, for the information of our readers, an article to this effect from the September 26 San Francisco Chronicle by their staff writer Frank Viviano .—The Editors]

“Hidden Stakes in the War Against Terrorism” 

Energy future rides on U.S. war
Conflict centered in world’s oil patch

Paris–Beyond American determination to hit back against the perpetrators of the Sept. 11 attacks, beyond the likelihood of longer, drawn-out battles producing more civilian casualties in the months and years ahead, the hidden stakes in the war against terrorism can be summed up in a single word: oil.

The map of terrorist sanctuaries and targets in the Middle East and Central Asia is also, to an extraordinary degree, a map of the world’s principal energy sources in the 21st century. The defense of these energy resources—rather than a simple confrontation between Islam and the West—will be the primary flash point of global conflict for decades to come, say observers in the region.

“You cannot discuss the violence of this region outside the context of oil,” says Vakhtang Kolbaya, deputy chairman of the parliament in the republic of Georgia. “It’s at the heart of the problem.”

World’s Energy Center

The terrain of the globe’s energy future ranges along a swath of mountain and desert with resource-poor Afghanistan and Pakistan at its volatile eastern end.

Outside of this core, where suspected terrorist leader Osama bin Laden and many of his supporters are located, terrorist groups are active in Saudi Arabia, Libya, Bahrain, the Gulf Emirates, Iran, Iraq, Egypt, Sudan, and Algeria. Their operations also threaten to destabilize regimes in Turkmenistan, Kazakhstan and Azerbaijan. They also are active in areas—such as Chechnya, Georgia, and eastern Turkey—where major pipelines carry energy resources to markets worldwide.

Altogether this region accounts for more than 65 percent of the world’s oil and natural gas production, according to the Statistical Review of World Energy. By 2050, it will account for more than 80 percent, according to forecasts.

The combined total of proven and estimated reserves in the region stands at more than 800 billion barrels of crude petroleum and its equivalent in natural gas. By contrast, the combined total of oil reserves in the Americas and Europe is less than 160 billion barrels, most of which, energy experts say, will have been exhausted in the next 25 years.

It is inevitable that the war against terrorism will be seen by many as a war on behalf of America’s Chevron, ExxonMobil and Arco; France’s TotalFinaElf; British Petroleum; Royal Dutch Shell and other multinational giants, which have hundreds of billions of dollars of investment in the region. There is no avoiding such a linkage or the rising tide of anger it will produce in developing nations already convinced they are victims of a conspiratorial collaboration between global capital and U.S. military might.

Nowhere is that alleged collaboration more reviled than on the Arabian Peninsula, where U.S. armed forces have been present at six military bases since the Gulf War and where more than 30,000 Americans work for multinational oil giants. They are seen as the main conduits for the inflow of secular, Western values in a profoundly conservative society—and for the huge outflow of its resources.

Fueling this resentment in other oil-producing states is the yawning gap between the living standards of expatriate Western oil workers and a small local elite on one hand, and the vast majority of ordinary citizens on the other.

Oil’s Failed Promise

Azerbaijan, the ex-Soviet Muslim nation on the Caspian Sea, sandwiched between fundamentalist Iran and violent Islamic insurgencies in Russian Dagestan and Chechnya, is a case in point. In Baku, the booming capital city, the streets hum with Mercedes limousines. Former state-subsidized housing units have been gutted and refurbished as luxury apartments that rent for up to $5,000 per month.

A scant 20 miles away from Baku in the rural town of Qaza, just adjacent to an oil field, there is no electricity, no drinkable water and, most astonishingly, no heating oil on sale. “All of our hopes rested on the discovery of oil,” says a 42-year-old father of three children. “But we have seen nothing to justify that hope.”

Such despair is growing daily, its anger fed by the awareness that the region’s own political leaders are often the chief beneficiaries of oil wealth, and that corruption is rampant. “It’s everywhere, including my own country,” says a senior, Cabinet-level official in one oil state, speaking off the record.

The official recounted a ministerial conference he had attended in Kuwait to discuss the suppression of corruption. His Kuwaiti host’s bathroom was equipped with solid gold toilet fixtures.

“Even in a corrupt world, there should be limits,” says the official, shaking his head.