Keith,
While I agree with much of what you and Steltzer have written, there are
a few issues.
I believe that the Bushies feel that
"the continuing deaths of American and British troops almost
every day"
are a tolerable price to pay for their control of Iraqi oil. I don't
believe that they had a short run view and that they will only be
concerned if they feel that the election is at stake next year which
gives them some 15 months. I feel that their goals of having a large
number of American and British troops near Saudi Arabia have been met and
that their position gives them the ability to move quickly to protect the
Kingdom. I also feel that their financial attacks on Hamas and other
groups attacking Israel will be accepted by Americans as 'doing something
against terrorism'. I also feel that they see the situation in
Afghanistan as acceptable since they are able to nullify threats to the
continental US.
The point is that this administration does not have a lot of compassion
for anyone who does not come from the fiscal elite in the US. My guess is
that you will see a liberalization of the Bush domestic policy as the
election nears to pick up votes from groups to offset votes lost
elsewhere with Bush feeling that the Christian right has nowhere else to
go.
Bill
On Sun, 24 Aug 2003 18:51:25 +0100 Keith Hudson <[EMAIL PROTECTED]>
writes:
> Within hours of the destruction of the Trade Center on 11 September
> 2001,
> the Bush administration knew that the terrorists were predominantly
> Saudi
> Arabian Al Quada terrorists led by Osama bin Laden and that this was
> a Wake
> Up Call. America could no longer rely on the stability of the Saudi
> Arabian
> regime and, furthermore, could no longer rely on the smooth
> continuation of
> oil supplies from Saudi Arabia.
> However, America imported 20% of its supplies from Saudi Arabia and
> its
> economy depended on these. Without SA oil, America would immediately
> sink
> into an economic recession with unknown social and political
> consequences.
>
> So what could America do? Both Nigeria and Venezuela are large
> suppliers of
> oil, though nowhere as cheap as SA's, nor could production be ramped
> up
> quickly enough if supplies from SA ceased, nor did they have the
> vast
> reserves of oil that SA has which will continue at high levels for
> at least
> the next two or three decades (so long as China and Japan didn't
> import too
> much).
>
> So what about invading Saudi Arabia and establishing a provisional
> government that would take over the thoroughly nasty and corrupt
> royal
> regime of the Saud family? This must have been considered, and the
> Americans must have discounted it because they couldn't have relied
> upon
> popular support. Since Gulf War I, the Saudi Arabian Constitution
> had
> become an Islamic one under Sharia law, and all important government
>
> decisions -- as well as its budget -- were controlled by the higher
>
> echelons of the Wahhabis, the majority sect of the Muslim faith in
> the
> country, which was further able to control every aspect of ordinary
> life
> and education through its 150,000 mullahs in the country and their
> attendant religious police. Any American invasion would have met with
>
> powerful resistance unless, somehow, the Americans could enlist the
> large
> numbers of the unemployed which make up the majority of their young,
>
> totally unskilled, generation and somehow give them useful well-paid
> jobs
> instantly. That would be the only way the Americans could have got
> away
> with it, sorely though they must have been tempted.
>
> So that was ruled out, though, as a precaution, the American army
> and
> airforce base at Qatar was vastly extended, and extra Special
> Service
> troops were placed all around Saudi Arabia, ready at a moment's
> notice to
> be dropped into SA if the need arose to protect, or try to protect,
> the
> oilfields. This strengthening of Special Service units continues, as
> also
> the building up of ordinary troops in Kuwait.
>
> The one remaining strategy was to invade Iraq, a country with the
> second
> largest reservoirs of oil, hitherto largely undeveloped. Iraq was a
> country
> which, although progressing towards a western way of life with a
> secular
> education system and a growing pro-western professional class, were
> only
> able to do so because Saddam Hussein was ruthless in murdering all
> opposition which emerged -- principally extreme Shia clerics and
> many tens
> of thousands of ordinary Shias who demonstrated from time to time.
>
> So, the Americans thought, if they invaded Iraq, they could not only
>
> overthrow a cruel dictator, could also count on the enthusiastic
> support of
> the majority of the population, the Shias, but could also ensure
> that the
> existing Iraqi oil production would be available on the free market
> and
> that its reserve oilfields would then be available for development
> by the
> western oil companies. Within a few years, Iraqi oil could take over
> the
> burden of being the main exporter to America. Therefore, if and when
> an
> internal revolution reduces Saudi exports for a while, or perhaps
> permanently, the Americans could count on sizeable imports from
> Iraq.
>
> That was the theory, anyway. So,as we all know, the Americans
> invaded, even
> though they were not able to get the consent of the United Nations
> Security
> Council. What has turned out so far has been a disaster, as Irwin
> Stelzer,
> one of America's most informed expert, relates below.
>
> Considering the continuing deaths of American and British troops
> almost
> every day, and that most other large nations are refusing to help in
>
> keeping the peace in Iraq unless their troops are under UN control,
> and
> also that the existing oil production facilities are being
> sabotaged, as
> Irwin Stelzer also relates, it is a matter of judgement as to
> whether the
> situation can be ameliorated in the coming months or whether it will
> become
> considerably worse. In the latter case, public opinion in America
> and
> England will demand that troops are withdrawn.
>
> If Iraqi oil is not going to be the short-term saviour of America's
>
> economy, then America will seriously have to start considering the
> strategy
> of invading Saudi Arabia because the country is going to explode of
> its own
> volition anyway. The Wahhabis will either displace the Saudi royal
> family
> and take over the reins of government directly (and keep oil prices
> high,
> to America's discomfort), or the masses of the young unemployed
> young
> people will revolt against the Wahhabi clerics and their religious
> police,
> as they are already doing in Iran.
>
> In my opinion, the first possibility is unlikely because the
> Wahhabis
> already have everything they want. They control oil prices, they
> control
> the armed forces via the defence minister, they decide on the
> contracts
> with western oil companies for further oil development and have
> total
> control of schools and thus what children are taught -- which is
> very
> little, apart from being to read and recite the Qu'ran.
>
> The second is more likely -- indeed, in my opinion, it is a
> certainly. But
> it's a matter of when. However, Saudi Arabia is a pressure vessel
> made of
> much stronger steel than Iran, namely Wahhibism. Whereas young
> Iranians --
> relatively well-educated young people in the large cities -- are
> probably
> close to revolting successfully against the religious authorities
> because
> they are fully aware of what the young have in the west, the young
> in Saudi
> Arabia are more deeply indoctrinated and have little knowlege of the
>
> outside world. Nor would they have the skills that would enable a
> revolutionary take-over to be successfully consolidated. One
> occasionally
> hears of small-scale demonstrations by unemployed young in cities
> outside
> the Riyadh but they're easily put down.
>
> If -- and I think when -- America invades Saudi Arabia, it is likely
> that
> they would meet far more intensive opposition that they received in
> Iraq.
> American troops would have to be considerably more aggressive. But
> there
> can be no doubt that they would win. But if they were to put in
> enough
> troops, then the prospect of establishing some sort of provisional
> government would be a great deal easier than in Iraq because SA is
> not so
> fractured as Iraq is, as between the Kurds, Sunnis and Shias. SA is
>
> predominantly Wahhabi with a minority of Shias. If America were to
> establish a secular educational system and establish enough
> employment
> opportunities in Saudi Arabia and thus cut-off grass-roots support
> for the
> Al Qaeda then, paradoxically, I believe that America could succeed
> in SA
> even though it has failed in Iraq. This would be an enormously
> expensive
> strategy but, considering what the present occupation of Iraq is
> costing,
> and what could be afforded as oil prices are increased to the rest
> of the
> world (sans America, of course) in the course of the next two or
> three
> decades, then this would be possible.
>
> Let me summarise the whole situation in simple terms:
>
> 1. Saudi Arabia is a religiously oppressed country with no sign that
> it is
> going to become free in teh next twenty or thirty years; and, at the
> same
> time, it contains the lkagest and cheapest oil and gas reserves in
> the world;
>
> 2. America has an enormous appetite for imported oil and, for
> another
> twenty or thirty years until another energy technology comes along,
> it will
> have an increasingly desperate need for foreign gas and oil.
>
> Saudi Arabia has a relatively small population and is militarily
> weak;
> America has a relatively large population and is the strongest
> military
> power in the world.
>
> I see an invasion of Saudi Arabia as inevitable. The only question
> in mind
> is when.
>
> <<<<
> THE PRICE WE PAY FOR RELYING ON SAUDI OIL
>
> Irwin Stelzer
>
> We now know four things about the oil market: prices are staying
> high, the
> Saudis are ignoring their promise to cap prices at $28, Iraq will
> not
> become a big exporter soon, and when Iraq does become a big exporter
> it
> will return to the embrace of the Opec cartel.
>
> Hopes that a successful conclusion of the war to depose Saddam
> Hussein
> would bring oil prices down have been dashed, even though oil
> facilities
> were largely undamaged during the hostilities. Prices have stayed at
> or
> above $30, some 15% higher than this time last year, and show no
> sign of
> coming down, not even to the higher end of the $22-$28 range that
> Opec says
> it finds acceptable.
>
> The Saudis promised to produce enough oil to keep prices from
> piercing the
> $28 ceiling, and now say they are trying to bring prices down. But
> Bijan
> Mossavar-Rahmani, president of Mondoil and a shrewd observer of
> producer-country practices, says it is nonsense to believe that the
> Saudis
> are unhappy that prices are topping $30. The kingdom's princes need
> the
> money to support their lavish lifestyles, to dole out to the largely
>
> unemployable generation their Wahhabi-dominated school system has
> produced,
> and to continue funding a variety of terrorist organisations.
>
> Although Venezuela is having difficulty getting its output to levels
>
> prevailing before a strike crippled its industry, Nigerian
> production is
> increasingly threatened by domestic turmoil, and Iraq's output is
> curtailed
> by sabotage, the Saudis have reportedly cut production by about 1m
> barrels
> a day. With an economic recovery taking hold in America, China in
> need of
> increasing amounts of oil to fuel its 16% annual increase in
> industrial
> production, Japan desperate to replace its shutdown nuclear plants
> with
> oil-fired generation, and inventories in consuming countries at low
> levels,
> it comes as no surprise that the Saudis' decision to curtail output
> has
> kept prices well above the ceiling they pretend to want to
> maintain.
>
> Any hopes that exports from Iraq would dampen prices have been
> dashed by
> the inability of coalition forces to stop looting and prevent
> sabotage of
> production facilities and pipelines. Hard numbers are difficult to
> come by,
> but it seems unlikely that Iraq will reach its prewar output of
> between
> 2.5m and 3m barrels a day any time soon, despite optimistic reports
> from
> the Coalition Provisional Authority and its ironically named Restore
> Iraqi
> Oil group.
>
> Reports from Iraq suggest that repairs in the fields cannot be
> postponed
> much longer, and that production from many wells will have to be
> halted
> while those repairs are made. Worse still, nobody knows where the
> $10
> billion estimated to be needed to pay for the near-term fixes of
> Iraq's
> fields will come from. Iraq's State Oil Marketing Organisation has
> announced that it has no interest in surrendering its monopoly grip
> on the
> nation's oil industry, and will welcome foreign investment only when
> new
> areas are to be explored and developed. No matter: most oil
> companies have
> no interest in exposing their capital and personnel to the risks of
>
> operating in present-day Iraq.
>
> But even if we assume that the money can be found to restore output
> to
> about pre-war levels, there will not be enough oil available for
> export to
> affect world prices. Of the 2m barrels a day that Iraq might be able
> to
> produce by year-end, about 200,000 must be reinjected to maintain
> oil
> pressure in the fields, and some 500,000 barrels (estimates range
> from
> 350,000 to 750,000) will be needed to satisfy domestic needs for
> petrol
> and, in the heating season, kerosene. Both are in short supply.
> Riots are
> breaking out in petrol queues, and more will break out when kerosene
> is
> rationed during the winter. Odd that, since Saudi Arabia could meet
> much of
> Iraq's needs if its princes were truly interested in helping to
> establish a
> stable, democratic government on its border.
>
> In addition, I am reliably informed (but cannot independently
> confirm)that
> export potential is further reduced because the Kurds in the north
> are
> skimming off thousands of barrels of oil headed for export.
>
> So much for the near term. Prices are high (a surprise to those who
> thought
> they would fall at war's end), the Saudis were economical with the
> truth
> when they said they would keep prices from piercing Opec's $28
> target
> ceiling (a surprise only to the US State Department and members of
> the Bush
> family), and Iraq will not be a major exporter for the foreseeable
> future
> (a surprise to the Pentagon).
>
> This brings us to the fourth fact now apparent. In the long run Iraq
> will
> return to the Opec fold. At the moment, the cartel's Arab members
> don't
> want to deal with Iraq's oil administration because -- get this --
> the
> government has not been democratically elected. But when an
> internationally
> recognised government is in place, the welcome mat will be out. It
> will
> cause the Saudis little pain to maintain prices "by cutting back
> their
> production to make room for the dribble of oil that Iraq will be
> able to
> bring to world markets.
>
> If the world's consumers think that restoration of calm to Iraq will
> mean
> relief from Opec exactions, they had better think again. Only
> sensible use
> of strategic reserves, and the development of tax and other policies
> to
> curtail dependence on Saudi oil hold any promise of limiting the
> cartel's
> power. If you think America is capable of adopting such policies,
> just
> consider what its politicians have left undone since the great
> blackout of
> 40 years ago.
>
> Irwin Stelzer is a business adviser and director of economic policy
> studies
> at the Hudson Institute
>
> Sunday Times, 24 August 2003
> >>>>
>
> Keith Hudson, 6 Upper Camden Place, Bath, England,
> <www.evolutionary-economics.org>
>
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