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Tuesday, Nov 10, 2009
Though LUKoil might retain its contracts, the prospect of a post-Saddam government freely pumping oil and driving down the price also terrifies the Russians. Oil constitutes a bigger portion of Russia's gross domestic product than it does for Saudi Arabia. Russia derives some 90 percent of its foreign earnings from oil. The Russians are already pumping all they can and won't be able to take full advantage of any short-term war-induced price hike. Once the Iraqi oilfields are repaired and the Iraqi pumps open, prices are predicted to fall to as low as $13, tanking the Russian economy. Any benefit the United States enjoys from low oil prices will be tempered by sharing the globe with a Russia in financial extremis.
A suddenly rejuvenated Iraq could turn Russia's oil industry into a poor stepsister. "Russia's oil industry [much of which sprawls across the frozen reaches of Siberia] needs ships, terminals, refineries, pipelines, ports -- everything," said Russia expert Tobi Gati, who served as a special assistant to President Clinton and is now a senior advisor with the Washington law firm Akin, Gump, Strauss, Hauer & Feld. "Who's going to invest in high-priced, low-quality Russian oil if Iraqi oil can be invested in for half the price?"
Beyond concern for their wobbly oil economy, Russians nurture a healthy fear of war and the chaos it brings. "[The American] policy is, 'We'll take the risk that the reward of change is worth the risk of instability,' but Russians fear instability more than they want change," said Gati. "We take 9/11 as an affront -- 'How dare you disturb the natural order?' But the Russians take 9/11 as an affirmation of the natural order. World War I started and the Romanovs fell. Instability terrifies them."
Our oil-dependent "partners in peace" in the Middle East -- Qatar, Kuwait, Bahrain and the Emirates -- likewise stand to lose when Iraq returns in a major way to the world oil market. In a burst of off-the-record candor, one White House official put it this way to the Financial Review in September: "Oh, and by the way, after you've helped us invade Iraq, we're going to destroy your economies."
Bush may believe the United States urgently needs another secure source of Middle Eastern oil because, though public rhetoric doesn't yet reflect it, our longstanding friendship of convenience with Saudi Arabia is over. The House of Saud is shaping up as a major enemy in the so-called war on terrorism. Charities owned by royal family members support al-Qaida, 15 of the 19 Sept. 11 hijackers were Saudi, and the Saudis refused to participate in the investigation of the bombing of their Khobar Towers, where 19 U.S. Marines died in 1996, or in the 80-nation agreement to block funding to terrorist groups. Departing from its acquiescence of 1991, Saudi Arabia will neither allow the U.S. to base troops on its soil for an attack on Iraq, nor contribute to the cost of a war.
All that keeps the lid on U.S. hostility toward the Saudis is its reliance on their oil. That could change if Iraqi oilfields pass to friendly hands. "Having launched a war on Iraq from Saudi soil a decade ago," says Snider, the Claremont professor, "we may well end up some day launching a war on Saudi Arabia from Iraqi soil."
Many critics of the Bush administration argue that the coming war on Iraq will be a war of empire, that Bush wants to unseat the hostile governments in Baghdad, Damascus, Tehran and Riyadh the way Britain and France ousted the Ottoman Empire from the region in World War I. London and Paris carved up the Turkish-held region in the Sykes-Picot agreement of 1916, which led to the creation of the modern states of Iraq, Syria, Lebanon and Saudi Arabia, as well as British-controlled Palestine. The world, arguably, has paid the price in bloodshed and chaos ever since. In October, unnamed Bush administration officials leaked to the New York Times and the Associated Press plans to occupy Iraq indefinitely, using the American occupation of Japan after World War II as a model -- a plan the Bush administration has not specifically disavowed.
Just talking about such plans is already ratcheting up boundless ill will in the Middle East, says Ibrahim at the Council on Foreign Relations. "If I'm Saudi Arabia and you're telling me Iraq is just the first step in regime changes, it would be dumb for me not to ask the question, 'If Saddam is first, who's second?'" he says. "Clearly Iran is next. Then clearly Saudi Arabia, and then Egypt. So how much welcome do you expect for the Americans who are explicitly saying they're coming to institute democracy in a region that can't even spell the word?"
Perhaps the protesters are right, and in the hidden chambers of the Bush administration there is agreement that oil will be the just spoils of this war. War, however, is notoriously unpredictable, and nobody can say how long and bloody an American occupation of Iraq -- in the region most hostile to the United States -- would be. It may be, then, that Bush ends up with much blood on his hands, and very little oil.
