Even relatively sophisticated observers will attribute American interest in the Persian Gulf to Uncle Sam’s insatiable thirst for crude, combined with an effort to gain lucrative contracts for American oil firms. The U.S. on this view is something like a global Count Dracula, roaming the earth in search of fresh bodies, hoping to suck them dry.
Senior CFR fellow Walter Russell Mead does a nice job of explaining U.S. policy. And a better job than I, explaining why this popular leftist propaganda is precisely upside down. Why is U.S. public information so inept?
True, the security of America’s oil supply has been an element in national strategic thinking at least since Franklin Roosevelt met with King Abdul Aziz in the waning days of World War II. And true, the U.S. government has never been indifferent to the concerns of the major oil concerns. But the security of our domestic energy supplies plays a relatively small role in America’s Persian Gulf policy, and the purely commercial interests of American companies do not drive American grand strategy.
The U.S. today depends on the Middle East for only a small portion of its energy supplies. Still the world’s third largest oil producer and holding large coal reserves, America is significantly less dependent on foreign energy sources than the other great economies. Imports account for 35% of U.S. energy consumption versus 56% for the European Union and 80% for Japan. Nearly half the oil and all the natural gas imported by the U.S. comes from the Western Hemisphere; sub-Saharan Africa supplies most of the balance. Only 17% of U.S. oil imports and less than 0.5% of our natural gas come from the Persian Gulf; 80% of Japan’s imports come from the Gulf, and by 2015 70% of China’s oil will come from the same source.
While U.S. import needs are projected to grow significantly, U.S. dependence on Persian Gulf energy is not, thanks largely to expected production increases in the Western Hemisphere and sub-Saharan Africa. U.S. energy imports from the Persian Gulf are expected to remain below 20% of total consumption. The oil market, of course, is global, and if something were to happen to the Middle Eastern supplies, prices would rise world-wide, and the U.S. economy would be seriously disrupted. But domestic supply is not the key to American interest in the Gulf.
For the past few centuries, a global economic and political system has been slowly taking shape under first British and then American leadership. As a vital element of that system, the leading global power — with help from allies and other parties — maintains the security of world trade over the seas and air while also ensuring that international economic transactions take place in an orderly way. Thanks to the American umbrella, Germany, Japan, China, Korea and India do not need to maintain the military strength to project forces into the Middle East to defend their access to energy. Nor must each country’s navy protect the supertankers carrying oil and liquefied national gas (LNG).
For this system to work, the Americans must prevent any power from dominating the Persian Gulf while retaining the ability to protect the safe passage of ships through its waters. The Soviets had to be kept out during the Cold War, and the security and independence of the oil sheikdoms had to be protected from ambitious Arab leaders like Egypt’s Gamal Abdel Nasser and Iraq’s Saddam Hussein. During the Cold War Americans forged alliances with Turkey, Israel and (until 1979) Iran, three non-Arab states that had their own reasons for opposing both the Soviets and any pan-Arab state.
When the fall of the shah of Iran turned a key regional ally into an implacable foe, the U.S. responded by tightening its relations with both Israel and Turkey — while developing a deeper relationship with Egypt, which had given up on Nasser’s goal of unifying all the Arabs under its flag.
Today the U.S. is building a coalition against Iran’s drive for power in the Gulf. Israel, a country which has its own reasons for opposing Iran, remains an important component in the American strategy, but the U.S. must also manage the political costs of this relationship as it works with the Sunni Arab states. American opposition to Iran’s nuclear program not only reflects concerns about Israeli security and the possibility that Iran might supply terrorist groups with nuclear materials. It also reflects the U.S. interest in protecting its ability to project conventional forces into the Gulf.
The end of America’s ability to safeguard the Gulf and the trade routes around it would be enormously damaging — and not just to us. Defense budgets would grow dramatically in every major power center, and Middle Eastern politics would be further destabilized, as every country sought political influence in Middle Eastern countries to ensure access to oil in the resulting free for all.
The potential for conflict and chaos is real. A world of insecure and suspicious great powers engaged in military competition over vital interests would not be a safe or happy place. Every ship that China builds to protect the increasing numbers of supertankers needed to bring oil from the Middle East to China in years ahead would also be a threat to Japan’s oil security — as well as to the oil security of India and Taiwan. European cooperation would likely be undermined as well, as countries sought to make their best deals with Russia, the Gulf states and other oil rich neighbors like Algeria.
America’s Persian Gulf policy is one of the chief ways through which the U.S. is trying to build a peaceful world and where the exercise of American power, while driven ultimately by domestic concerns and by the American national interest, provides vital public goods to the global community. The next American president, regardless of party and regardless of his or her views about the wisdom of George W. Bush’s invasion of Iraq, will necessarily make the security of the Persian Gulf states one of America’s very highest international priorities.
Via DrumBeat there’s a not very informative bulletin in Rig Zone
Iraq’s Vice President Tariq Al Hashimi said Sunday he opposes a draft oil law that is crucial to Iraq’s future because it gives too many concessions to international oil companies and the country’s regions. “We disagree with the production sharing agreement,” Al Hashimi told Dow Jones. “We want foreign oil companies but not with big privileges.”
Iraq’s government is locked in debate over the draft oil law that must be approved by the country’s parliament. Parliament in Baghdad could take two months before to approve the legislation, Al Hashimi said.
International oil companies such as Royal Dutch Shell Plc, BP Plc and ConocoPhillips are awaiting the legislation that will set a framework for licensing access to Iraq’s vast oil reserves, estimated to be the world’s third biggest.
Disagreements between the Kurds in northern Iraq and the central government in Baghdad revolve around who controls rights to oil exploration and how revenues from the oil rich areas of the North will be divided.
Kurds want their share of the earnings from the export of oil to be given to them directly, bypassing the central government’s finance ministry.
“We are against giving regions extensive powers,” Al Hashimi said. “We need to review these extensive powers given by the Iraqi constitution to the regions at the expense of the center.”
…
Helge Eide, DNO’s chief executive, said: “We are ready to pump. We never thought that we would be in a position to start producing oil from Kurdistan only two years after we commenced exploration.”
An example of foreign investment will do for Iraq — the first exploration and production-sharing contract was done in Kurdistan.
The first crude oil pumped by a foreign company in Iraq in decades will flow into the global market next month.
DNO, a Norwegian oil company, will announce on Wednesday that it will begin producing a small amount of oil from the northern Iraqi region of Kurdistan, marking a symbolic return of foreign companies to Iraq after 35 years of state control.
…DNO, which is quoted on the Oslo stock exchange, discovered the Tawke oil field in late 2005, after signing a production sharing agreement in June 2004 with the Kurdish regional government, a semi-autonomous area of northern Iraq.
Ashti Hawrani, the Kurdish oil minister, said Kurdistan’s regional government would share revenue with the rest of the country.
I’m on the same page as Glenn
I’ve been pushing that idea since 2003, of course, and it’s also been supported by the likes of Milton Friedman and Vernon Smith. I don’t understand why the Bush Administration hasn’t been more supportive.
who points out that Hillary Clinton has co-authored a WSJ op-ed supporting the Iraq Oil Trust. It is good to see Clinton come down on the right side of this issue - she explains the case for the Oil Trust fairly well. But she doesn’t make clear one of the most important benefits: that is empowering Iraqis to take control of their government. Making the government dependent upon taxes [rather than on controlling the oil revenues], places the levers of power in the hands of the citizens. Here’s Clinton’s benefits summary:
• The future of Iraq’s oil reserves remains at the heart of the political crisis in Iraq, as the regional and sectarian divides in Iraq play out over the division of resources and revenues. As the Iraq Study Group writes, “The politics of oil has the potential to further damage the country’s already fragile efforts to create a unified central government.” An Iraq Oil Trust would chart an equitable path forward for dividing oil revenues in a way that transcends the divide among Shiites, Kurds and Sunnis.
• As report after report indicates, one of the challenges to building Iraq’s oil revenues has been insurgent attacks against oil infrastructure. A distribution of revenues to all Iraqis would mean they would have a greater incentive to keep the oil flowing, help the economy grow, reject the insurgency, and commit to the future of their nation.
• While demonstrating that the U.S. is not in Iraq for oil, an Iraq Oil Trust would also inhibit corruption and the concentration of oil wealth in the hands of a privileged few.
• Finally, an Iraq Oil Trust would demonstrate the values at the heart of democratic governance: Individuals would have the rights and responsibilities of citizenship. Indeed, the study group reports, “Iraqis have not been convinced that they must take responsibility for their own future.” By trusting ordinary Iraqis, ordinary Iraqis would in turn gain greater trust in the national government while seeing something positive about the future at a time when positive signs have been few and far between.
We live in a sea of information, an Information Age: and yet, it has been almost half a millennia since mankind has been so unwilling or unable to use critical thinking to separate the intellectual wheat from so…much…chaff! Critical Thinking — the ability to analyze data, determine it’s usefulness and fidelity, to learn how to asses reliability, question methodology, weigh expertise and all the rest – is in shockingly short supply these days. It’s not just a shame; it’s an epidemic, it is a fatal metastasizing disease in a democracy where information is used by the public to make the decisions that steer the ship of state.
This is for the critical thinkers. Bill Whittle has just finished another must-not-miss essay, 8800 words this time. I’m confident you’ll find the exercise fruitful. First example — on the meme of No Blood for Oil!:
Sometimes, the best way to examine a radical assertion is to assume that it is correct and examine the likely consequences. For example, proponents of the Loch Ness Monster assert that there is a surviving plesiosaur lurking in the murky depths of a Scottish lake. We are then drawn into endless discussion of distant wakes and grainy photos and claims of hoaxes, etc. But if you cut to the chase, so to speak, and grant the premise, where does that leave you? Plesiosaurs are air-breathing reptiles that have to daily consume massive amounts of fish to survive. There are essentially no fish in Loch Ness. Does it order out for pizza? Also, as an air breather, we would not have a surface sighting once or twice a decade, but hundreds of times a day. If you grant the premise of an air-breathing dinosaur the entire proposition becomes ridiculous, not on the basis of the evidence, but on the monumental lack of evidence supporting the idea.
Likewise with a “war for oil.” What would a real “war for oil” look like? Well, US troops would have sped to the oilfields with everything we had. Everything we had. Then, secure convoy routes would have been established to the nearest port – probably Basra – and the US Navy would essentially line the entire gulf with wall-to-wall warships in order to ensure the safe passage of US-flagged tankers into and out of the region.
There would have been no overland campaign – what for? – and no fight for Baghdad. Fallujah and Mosul and all those other trouble spots would never even see an American boot. Why? No oil there. The US Military would do what it is extraordinarily well-trained to do: take and hold a very limited area, and supply secure convoys to and from this limited area on an ongoing basis. Saddam could have stayed if he wanted: probably would have saved us a lot of trouble, and the whole thing would have become a sort of super no-fly zone over the oil fields, ports and convoy routes, and the devil take the rest of it. Sadr City IED deaths? Please. What the f**k does Sadr City have that we need?
That’s what a war for oil would look like. It’s entirely possible that such an operation could have been accomplished and maintained without a single American fatality.
We have lost thousands killed and wounded because they are being blown up as they continue to provide security, electrical and water services, schools and hospitals to a land ravaged by three decades of fear, torture and barbarism. It is the American presence in the cities, providing security and some semblance of order for Iraqi citizens, that has cost us so many lives. If we are going to be tarred and slandered and pay the public relations price for “stealing Iraqi oil,” then the least we can do is go in and actually steal some of it, instead of dying to protect that resource for the use of the Iraqi people. Which is what is happening, because, as usual, there is not a shred of evidence to the contrary, no matter how many imbeciles hold up signs and dance around in giant papier–mache heads.
Second example — on the meme of End U.S. Imperialism Now!
Can I just take another quick second of your precious time to put this one to bed once and for all?
It is a staple of the left to accuse the US of “Imperialism.” That so many people can level such a charge with a straight face is a testament to the efficacy of forty years of standards-free education reform here and around the world.
An “Empire” is defined as a nation state that has political control over other nation states, and uses that political control to extract the wealth and resources from the subjugated country.
The United States of America does not have any political control over any other sovereign nation on the face of the Earth. We have influence, but influence is to control as a rich uncle is to a prison warden. That’s all you need to know. The entire idea of American Empire and U.S. Imperialism is dead on its face after that. No control means no empire. Period.
But we do have a large footprint in the rest of the world, and have military bases all across the globe. Is that a form of empire?
Look, the whole point of having an empire is to take the wealth out of the colonies and return them to enrich the home country. The US not only does not pull in the resources of other nations…it does exactly the reverse. We pump billions and billions of dollars annually into those nations that host our facilities, and the minute any one of those nations decides we are no longer welcome, we pack our bags, leave and turn those billion-dollar institutions over to the host country. (Look up Bay and Clark AFB in the Philippines for some recent examples)
This is not “imperial behavior.” It is, in fact, the precise opposite of imperial behavior. I guess somehow STOP U.S. ANTI-IMPERIALISM just doesn’t have the same snap somehow for the North Korean-backed International A.N.S.W.E.R. crowd. Color me shocked.
There are millions of people – actually, probably billions now – who genuinely believe that the wealth of the US was stolen from third world countries. This is one of the great perks of living a life free of the ability to think critically and do a little research. I have heard this slander repeated so many times I decided to look into some actual numbers to see if there is anything to this charge. This is a perfect example of how critical thinking allows you to see the unseen. That attitude, Google and ten minutes is all you need to shoot lies like this down in flames.
Okay. The US Per capita income is $41,300. That of a poor, third world country –Djibouti, say — is $2,070.
Now it gets interesting. The US gross domestic product – the value of everything we produce in a year — was last measured as $12 trillion, 277 billion dollars (hundreds of millions of dollars being too insignificant to count in this economy).
The GDP of Djibouti is 1 billion, 641 million US dollars.
A little basic arithmetic shows me that US has a GDP 7,481 times greater than Djibouti. A 365 day year, composed of 24 hours in a day, yields 8760 hours per year. Hang on to that for a sec.
Now, let’s suppose the U.S. went into Djibouti with the Marines, and stole every single thing that’s produced there in a year…just grant the premise and say we stole every goddam thing they make. If we hauled away all of Djibouti’s annual wealth, how long would it run the U.S. Economy, which is 7,481 times greater?
Well, 8,760 hours divided by 7,481 gives you an answer of 1.17 hours. In other words, it takes the U.S. 1.17 hours to produce what Djibouti produces in a year.
If the US really did go in and steal everything that the bottom thirty countries in the world produce, it might power the US economy for two or three days.
Conversely, the billions and billions of dollars the US spends annually in aid, rent, etc. – plus uncounted billions more from private American charities – would supply the entire GDP of Djibouti for hundreds of years.
Where’s your Imperialism argument now?
If you’ve not been a Bill Whittle reader you may also wish to look at Tribes, certainly one of his best. Ranking Bill’s writing is a challenge — it is all good. E.g., Sanctuary [Part 1, Part 2] might be the “best of the best”. What do you think?
Michael Barone interviewed President Bush yesterday. US News released a podcast which I’ve downloaded but won’t listen to until bicycling later. Barone’s recap indicates it is an interview well worth listening to. In one segment Barone asks about the Iraqi oil trust — the good news is that Bush has “raised the issue” with al-Maliki:
…He said he has raised the issue with Iraq’s Prime Minister Nouri al-Maliki and said it could be one of two institutions that could unify the country, the other being the Army. But he added that the Iraqis have to come up with their own solutions.
Regular readers know that I’ve long backed the oil trust scheme. See, e.g., Can Iraq avoid the “Resource Curse”?:
Back on 8 May 2003 I wrote:
Oil wealth has been a curse for most countries who have it - particularly the Arab Gulf states. Where the revenues flow directly into the ruling government’s coffers, corruption and missapplication are the norm. Since meaningful general taxation isn’t required to fund the government, you loose one of the pilars of democracy: vigilant taxpayers.
Given the opportunity to design from scratch how the Iraqi oil assets are managed, we hope that the Iraqis can devise a scheme that avoids the “resource curse”. The core concept that appeals to me is to transfer ownership of all (or most) of the oil assets directly to the people - a variation of the State of Alaska structure. Then the new Iraqi government must tax the people for the funds to run the government, thereby inverting the usual wealth relationship in such states.
It is possible that today’s sectarian confict might have been avoided had the oil trust fund been implemented back in 2003 when Ahmed Chalabi first proposed it. Even now, I cannot think of another policy that has more power to move Iraq towards a stable society.
I don’t think anybody can predict where Iraq is going — and it is possible that the present government is part of the problem. Certainly we are seeing new negative developments, such as the Shia-Shia conflict between the Badr Brigades and the Madhi Army.
Richard Fernandez has a long, thoughtful, resource-rich analysis — recommended:
A few posts ago I remarked that the closest historical analogue to Iraq was the breakup of the former Yugoslavia, also a former ethnically mixed Ottoman state. That experience provides a benchmark against which to measure the length and duration of the challenge that Iraq represents as well as to understand the incentives of ethnic politics. The debate over how to handle the Yugoslav wars revolved around those who wanted to let the “ethnic cleansing” happen on the way to a more stable set of boundaries and those who wanted to keep the old Yugoslavia a multiethnic place. To some extent those are also the issues in Iraq now. The current Iraqi constitution, with its provision for federal states, reveals a preference for devolution among at least some Iraqis. But it is important to remember there were always a large percentage who believed in Iraq as a country; who thought of themselves as fundamentally Iraqi. Even surveys recently taken show a surprising support for a united Iraq. But the hope of achieving such a unitary, multicultural society is slipping away. And the terrible possibility emerges that the new Iraqi government is part of the problem and not part of the solution. While on the subject of comparisons with Yugoslavia it may be useful to remember that the architects of its civil war purposely stirred up trouble with the idea of grabbing pieces of the disintegrating state. It’s certainly plausible to imagine Iran and perhaps Syria licking their lips at the thought of picking up the pieces of Saddam’s old domain. For them unrest is not a bug; it’s a feature; disturbance not an aberration but an opportunity.
One solution to an Iraq divided by tribal and religious loyalties is to let it divide in a semi-orderly way yet manage the separation so that one doesn’t finish up with a dozen Somalias but a number of stable areas. The problem, as the fighting between the Badr Brigades and the Madhi Army shows, is that some way of dividing up the oil resource still must be found. Without some kind of central government to ensure that revenues are shared the seeds for future regional war will be planted. One simply remembers why Saddam went to war against Kuwait. It was for oil.
The task of managing peaceful devolution — if that goal is not changed by unforseen events — requires resources. It may require the half million men that the intel sergeant mentions or it may require less. One officer writing from Iraq to whose reference I’ve forgotten believes that only “unconventional solutions” will work. No massive armies of occupation, but more Lawrences. I hope he’s right. Lawrence’s greatest talent was his ability stir up ethnic unrest. He achieved no Arab state. But whatever the mission, it will require something. And that something will not be provided without a bipartisan commitment to midwifing the successor Iraqi state or states. More importantly, it will require an agile national leadership which can act opportunistically within the framework of a strategy rather than simply to implement a fixed vision. Perhaps the real flaw in Iraq was not a lack of force but a lack of imagination. From one perspective Iraq provides an opportunity perhaps of historic proportions; certainly Iran and neighboring countries with far fewer resources have treated it as such. The last three years have shown how ill equipped, politically and operationally, America has been to make use of that opportunity. That needs to change, a change should begin with the way Washington’s bureaucries do business under any administration. Washington is not the seat of empire. It’s the seat of local politics with the reach of empire.
Thomas P.M. Barnett’s proposed reconfiguration of US and Western “system administration” remains the best overall roadmap. Perhaps in 25 years or so the skills and capabilities will be there when next needed.
More SeekerBlog resources on the Iraqi Oil Trust Fund here.
Technorati Tags: Iraqi oil trust
I’m pleased to see the Wall Street Journal come out in favor of the oil trust. I believe the trust could contribute, possibly significantly, to reducing sectarian tensions in Iraq.
…the way to cut the Gordian Knot on federalism is to come up with an oil-sharing plan that guarantees the resource will be apportioned equally. Our favorite idea on this score is the one proposed by Ahmed Chalabi during the Constitutional debates last year, which is the establishment of an Alaska-style oil trust that would make direct payments to all Iraqi citizens.
We spoke last week with Deputy Prime Minister Barham Salih and he told us the trust, or “dividend” as he called it, remains very much on the table–and is an idea he supports. He said Iraq’s parties have already committed to having the oil wealth apportioned equally by the central government, but that a dispute remains over whether the central government will also have control over new exploration contracts.
This is a disagreement Prime Minister Maliki might want to spend some political capital to settle quickly. The federalism issue, and other challenges such as disarming the militias, will be easier to tackle once everyone understands they have a monetary stake in Iraq’s success. Oil can be “a unifying resource, as opposed to a resource people will fight over,” as Mr. Salih puts it.
Wall Street Journal, 22 August [$]:
Mohammed al-Jibouri belongs to Iraq’s premier business fraternity: the geologists, engineers and finance men who run the country’s vast oil industry.
Through decades of war and trade sanctions, these professionals kept Iraq pumping. By last year, Mr. Jibouri, an oil economist, was a top contender to head the State Oil Marketing Organization, a powerful agency that sells Iraq’s crude oil abroad.
But senior Iraqi oil men were getting caught up in bitter political feuds. Other senior oil men were being murdered by insurgents. One of Mr. Jibouri’s aides was gunned down. So instead of lobbying for the important oil post, the 57-year-old industry veteran packed up late last year and moved to Jordan, joining a legion of elite technocrats fleeing the chaos.
Iraq, sitting atop the biggest conventional oil reserves after Saudi Arabia and Iran, is facing what may be the direst threat yet in its eight decades as a petroleum powerhouse: a brain drain. When the Saddam Hussein regime fell in 2003, a large cadre of oil professionals who had stayed on through Mr. Hussein’s wars and purges were seen as the key to expanding Iraqi output. But the ranks of these technocrats are thinning rapidly.
Of the top 100 or so managers running the Iraqi oil ministry and its branches in 2003, about two-thirds are no longer at their jobs, according to current and former Iraqi officials and outside analysts. The ministry says it doesn’t track this but it says about 100 officials and lower-level engineers and technicians have been murdered since the U.S.-led invasion, along with about 150 oil-field security guards. Among recent victims: the head of Iraq’s domestic fuel-distribution company and a high-ranking colonel in the force that protects oil fields.
[…]
In the summer of 2004, he returned when a fresh U.S.-brokered government named him Iraq’s trade minister. But Mr. Jibouri says the graft he saw spreading through the bureaucracy around him gradually turned him off government work. “I was engulfed by corruption. The flood was stronger than me,” he says.
After Iraq’s first free elections last year, politicians sounded out Mr. Jibouri about staying on as trade minister or taking the top job again at Somo. But he says many of the top technicians he had worked with had left, and political appointees bloated the agency.
His other worry was violence. Last year, just before Mr. Jibouri stepped down as trade minister, gunmen killed one of his deputies, riddling the man’s car with bullets as he drove to work.
A few months later, Mr. Jibouri packed up and moved his wife and three children to Amman. “I wanted to stay in Baghdad,” Mr. Jibouri said on a recent afternoon over grilled fish at a new Amman restaurant serving Iraqi dishes and filled with exiles. “But it was impossible. If you are honest you will be killed.”
Tigerhawk notes a fragment hinting that Bush is considering the oil trust concept.
Fingers double-crossed on such a bold and badly needed initiative.
Let us also wish for an increase in troop levels until at least Baghdad and Basra are truly secure.
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