The Middle East and Oil

August 15th 2008 -- Oil is for the moment what drives development in the world economy. Not only is it one of the main reference points for planning a country's political economy, but also the main component for any diagnosis of  the health of the capitalist economic system as we know it.

Since 1908 when the first important oil deposits were found in Iran, developed countries, especially the United States, thought it strategically important to create States in that part of the world simultaneously loyal to it and  indebted.  So in 1922, it supported the creation of Saudi Arabia and in 1961 it recognized Kuwait - which had been a province of Iraq up until then. But the most important part happened later.

The Iraqi Ba'ath party had overthrown the monarchy in a military coup in 1963. Its radicalization after Saddam Hussein came to power and its alliance with the Soviet Union alarmed the Western powers. In less than four months, between August 15th and December 2nd 1971, three new States in the region were  recognized : Bahrain, Qatar and United Arab Emirates. In other words, an Emir or King was placed wherever there was oil and recognized as a country.

But the new States, aware of their power, sparked the first oil crisis in 1973. It is then that a series of studies was begun on known oil reserves, where there could be new deposits and how much time that finite fossil fuel might last. As a result of those studies, it is today considered that sufficient reserves exist to guarantee production at the same levels as now, or even greater levels, for approximately fifty years. So one can say that oil is a strategic resource in the medium and long term.

It happens that two-thirds of known reserves are in the Middle East. According to data of the 2006 Statistical Review of World Energy, the latest for now, of total reserves totaling 1.2 trillion barrels of oil, the Middle East has 61.9%. Two countries, Saudi Arabia and Iran, lead the ranking with 22% and 11.5% of those reserves respectively. That is to say,just two countries have one third of the world's oil reserves. A fact that helps us understand not only the importance of conflicts like the one in Iraq but the threats that are being made against Iran.

On the other hand, proven reserves in the whole American continent - North and South - are reckoned at just 13.6% of the planet's total and of that 13.6% three-quarters are in Venezuela. As for Europe, including Russia and its Asian region, the percentage is around 11.7%. With those figures, it should surprise nobody that the Middle East has been a region subject to imperialist intervention since the 1980s.

The person who designed that strategy is a man who appears today as a champion of world peace, ex US President James Carter, curiously a Nobel Peace prize winner. The excuse was the victory of the Islamic Revolution in Iran in 1979 that overthrew the brutal and corrupt regime of the Shah, a man described as "a little local imperialist" approved of by the West. Cyrus Vance, Carter's Secretary of State, says as much in his memoirs, "Within the  new military strategy of the United States, based on the experience of defeat in Vietnam, the Nixon and Ford governments with Kissinger's support, insisted that the Shah guarantee stability and governability in the region". (1)

The Carter Doctrine and the invasion of Iraq

In synthesis, the Carter Doctrine as it is known in the ambit of international relations, establishes that Persian Gulf oil reserves are a vital US interest. From the moment that doctrine was put into practice in 1981, military intervention was justified. The text of that doctrine is as follows, "Any attempt by a force other than the United States to obtain control of the Persian Gulf will be considered as an attack on the vital interests of the United States and will be rejected by all necessary means, including military means." (2).

A foreign policy decision of that calibre had to be backed up by military deployment and that us how the Rapid Reaction Force currently named the United States Central Command serving the Pentagon and the UK Ministry of Defence to carry out military operations in the Middle East from air bases in Bahrain, Diego Garcia (leased from Britain in the Indian ocean), Oman and Saudi Arabia. So, it is nothing new that the various US administrations since then (Reagan, Bush Sr., Clinton and Bush Jr.) made the Middle East a priority of their foreign policy and specifically the Persian Gulf for its strategic importance to the leading power of world capital.

It s well know that the US produces only 40% of the oil it consumes and has to import the rest. At the same time, its gas reserves are declining progressively and it barely has the capacity now to produce new reserves. This was why it invaded Iraq in 2003 along with its neocolonial Middle East plan to turn Israel into the main regional power and secure recognition for it from the States regarded as moderate in the region, namely, US allies.

As a result of the embargo suffered by Iraq, imposed by the UN after Iraq's invasion of Kuwait in 1990, Iraq had its oil industry reduced to a minimum. However, it managed to get around some of those sanctions and had established agreements and signed contracts for future oil exploration and extraction with rivals of US oil companies, for example Total-Fina-Elf of France, Russia's Lukoil and China's National Oil Corporation. That is to say there were "other forces" trying to get control of one of most oil rich countries in the Persian Gulf.  And the Carter Doctrine meant that was regarded as an attack on the vital interests of the United States, for which reason it was decided to invade Iraq.

Via that action, outside all international law, the US guaranteed control of Iraq's oil. A little known fact is that during the bombardment that began the invasion, the only Ministry not affected by the bombing was, exactly, the Oil Ministry. Something better known is that one of the first measures of proconsul Paul Bremer was to cancel contracts signed by Saddam Hussein's government with the companies mentioned earlier.

US strategy was twofold. In part it sought to normalize oil production and facilitate Iraq's exit from OPEC which would lead in the medium term to cheaper, more secure oil supplies, by lowering the oil price to around US$20. But also, were it not possible to normalize oil supplies, as was the case, the strategy sought to keep Iraq inside OPEC to reinforce the "moderate" position of States like Saudi Arabia while simultaneously threatening to increase production  when possible.

Iraq's current Oil Minister, the collaborationist Hussein al-Sharistani, has said that the medium term objective is to market 4 million barrels a day, reaching 6 million a day by 2012. That would lower the price to around US$30 a barrel and hand control of the main Iraqi oil fields mainly to British and United States multinationals. (3) In either case, the US would be seen not as an imperial power breaking international law but as a still hegemonic but benign power for having lowered oil prices and prevented a worldwide economic recession.

Reinforcing Saudi Arabia

Five years after invading Iraq, one can say US plans have failed. The oil price reached as high as US$145 a barrel and there is a swelling current within OPEC on whether or not it is necessary to introduce other currencies like the Euro for oil's financial transactions. While friendly countries like Qatar, the United Arab Emirates or even Kuwait  are reducing their dollar currency reserves and increasing the percentage of their reserves in Euros (4), only the Saudis and the Iraqis stay loyal to the US currency.

The fragile situation in the Middle East worries the main US ideologists. The fragility was accentuated in the summer of 2006 when the Lebanese political-military movement Hizbollah defeated the until then all powerful Israeli war machine. Thinkers like Patrick Clauwson or Michael Klave argue that if the US wants to maintain its dominance in the Middle East it needs to keep Saudi Arabia from becoming unstable since that country has 22% of the world's oil reserves.

Others are more radical, like Zbigniew Brezinski, ex national Security adviser and Richard Haas an adviser to George Bush. They think US dominance in the Middle East is over and that a new era has begun. These last two individuals, via different routes, agree in noting that "a new era has begun in the region's modern history... in which one has to take into account the preponderance of local forces (ie countries) faced with external actors (traditionally influential powers like the US)" (5).

Neither Brezinski nor Haas say it straight out, but one can assert that a new regional security structure is forming including various countries : Saudi Arabia, Turkey, Syria and Iran. Of these the first and the last - the two countries with the region's largest oil reserves - are the most active in moving their pieces on the regional board. Saudis and Iranians The Saudis and the Iranians are entangled in a muffled struggle for control not any longer of the Middle East but of the Maghreb and the Far East.

In the Iranian case it has no godfather and acts as it does as a result of the failure of US strategy in Iraq. But in the Saudi case it is obvious they would not have dared to take that step towards acting as a regional power without the support and complaisance of the United States, since Israel is sunk in a deep crisis following its failures in Lebanon in 2006 and in Gaza in 2008.

The role Saudi Arabia has played and continues to play in Lebanon is symptomatic. It was the country that created most difficulties for a political agreement. It maintained a hard critical line against Hizbollah and has stayed on the edges of the agreement negotiated between the pro-Western forces and the Lebanese nationalists in Qatar last May, by virtue of which the pro-Western forces and the Saudis lost power.

..and ensuring water

However, while oil is the current nub of the conflict in the Middle East with its repercussions in the world economy, one should not lose sight of the fact that the next looming crisis in the region might be over water. Oil deposits remain and even grow as new deposits are discovered. In fact today, production is at the same level it was two years ago, about 85 million barrels a day. But that is not the case with water resources, at the moment about 1% of the world's total.

Countries like Bahrain, Jordan, Kuwait, Qatar, Saudi Arabia, Yemen, the United Arab Emirates, Israel and the Palestinian Occupied Territories (these as a result of theft of aquifers by Israel) have clear problems of supply for their populations. Israel's occupation of the Golan Heights, belonging to Syria, was due to Israel's need for water and this is the reason why Israel still refuses even to talk to Syria about returning that territory.

And the exploitation of the waters of Lebanese rivers Wazzani and Hasbani by the Israelis was one of the reasons for prolonging the occupation of Southern Lebanon for 20 years, until they were forced to abandon the country after a long and heroic resistance by Hizbollah. However the Israelis still today prevent the Lebanese from fully enjoying the waters of those rivers (tributaries of the River Jordan flowing into Lake Tiberias) despite the water shortages in Southern Lebanon under the threat of Israeli military attack. The same reason serves to prolong the occupation of the Sheba'a farms, land in Southern Lebanon occupied by Israel since 1967. It happens that the Sheba'a Farms are located near Mount Hermon, an important reserve of subterranean water, and are very close to the rivers Hasbani and Wazzani.

Exactly that is one of the main reasons for the conflict in Lebanon and for US interest in that little country. There are no chance events in geopolitics and it is worth mentioning that the Israeli bombardment of Lebanon in 2006 coincided with the inauguration of the Baku-Tblisi-Ceyhan oil pipeline joining the Caspian Sea to the  eastern Mediterranean(6). A project that will serve among other things to provide Israel with oil and which has been designed by the United States. The same as the pipeline project to bring water to Israel pumping from the higher sources of the river system of the Tigris and Euphrates, which rise in Turkey but run mostly through Iraq.

(1) Cyrus Vance, “Hard Choices: Critical Years in America’s Foreign Policy”, Simon & Schuster Books 1983.

(2) Alberto Cruz., “Breve manual de la política exterior de los EEUU” http://www.avizora.com/publicaciones/politica_y_economia_americanas/politica_y_economia%20americanas_18.htm

(3) Alberto Cruz, “Irak, la baza de EEUU para evitar el derrumbe del dólar” http://www.nodo50.org/ceprid/spip.php?article73

(4) Ibid.

(5) Foreign Affairs, noviembre-diciembre 2006.

(6) Michel Chossudovsky, “The Lebanese war and the battle for oil” http://www.globalresearch.ca/index.php?context=va&aid=5841

This article was published in Number 32 of the review Pueblos for June 2008 coinciding  with the celebration of the Alternative Oil Summit  to the official one that took place in Madrid. Here, oil price data have been revised and a mention added of the Doha accord on Lebanon.

Alberto Cruz is a journalist, political analyst and writer specializing in international relations - albercruz@eresmas.com