TheMillerCircle.org

As the world attempts to diminish the global conditions that breed conflict and warfare, the Middle East remains as the seemingly insoluble obstacle, one for which no one has a solution–certainly not those who are currently in charge of trying to find one. Nations are flocking to the region, as the whole energy-hungry world knows that the Persian Gulf  has the largest reserves of oil in the world, accounting for more than 60% of the known global supply, coupled to about 40% of the known supply of natural gas. No other region comes close to the huge reserves that lie below the sand scape of the region. One would hope that a region sitting on such critical energy reserves would be strongly encouraged into forming harmonious relationships with neighboring states, if for no other reason than to create a safe environment for oil extraction and transportation. But, the region has been so dominated by Western interventions and exploitation, that peace at the moment seems well out of reach. Perhaps in no other region of the world do the forces of colonialism, exploitation, nationalism, authoritarianism and greed still have their visible stamps, all on display at the same time. The presence of American troops to stabilize the region, at least from our point of view,  seems to be more like the heal of a hard boot on the neck of the countries we occupy, providing a sense of resentment and hostility that evokes acts of terrorism against trespassing. Consistent with the theme of exploitation, the region has not uniformly shared the oil wealth with its own citizens and fights against nationalistic movements that emerge in the form of sabatoge against oil wells and pipelines, particularly in Iraq, are far more common place than reported in the U.S.  media. Then, as if the conflicts over oil weren’t sufficient to create a full dose of volatility in the area, we have the flip side of the  coin of conflict insolubility in the struggle between Israel and many of its neighbors.  Peace talks between Israel and the Palestinians seems as remote as ever, as the two sides exchange hostilities, rockets and intermittent warfare, all of which speaks to the insoluble nature of the conflict. There is no evidence that any of the major players in the region, including the United States, are serious about making the kinds of concessions or forcing a position that stimulates the beginning of a serious peace dialog. Yet its hard not to imagine that the right kind of peace, in a region that can expect increased prosperity from oil revenues, could prove anything other than beneficial to the entire region, if done in the right way. There is after all, hope.

In  Stephen Kinzer’s recent book “Reset: Iran, Turkey and America’s Future,” the author, writing as a regional expert in Middle East  history and politics, has attempted to formulate a new pathway for reconciliation in the Middle East, one that advocates a lasting peace and insures prosperity for the region, by reducing the tensions through recruiting two new players in the peace process that heretofore have not been inserted as major partners for a settlement. This new vision for peace, includes the participation of  Turkey and Iran as major players, two countries that would probably not be on the top of the list drawn up by most Americans. We are still locked in a mode in which we think negotiations between the Palestinians and Israel can lead to a magical formula for peace, but only if thousands of clauses and sub-agreements get adopted as conditions for talks or preconditions for peace. But Kinzer argues that until all the major players in the region are included, such negotiations are all destined to fail. He argues that a negotiation strategy between two partners only is completely naive and that the United States needs to more maturely step up to the plate and insist on a peaceful solution involving all those in the region, because the stakes are too high for the economies of the world to continue taking oil in exchange for arming every country to the teeth, in order to protect the national interests of each new nation that comes to the area looking for black gold. Furthermore, Kinzer argues that bringing in Iran and Turkey will make the peace process easier, though the United States will have to deal with Iran more effectively than what we have done to date, and a big step forward for that objective could be achieved if the U.S. stopped behaving like an emotional child towards Iran and finally recognized the fact that Iran is a major player, not a minor leaguer, and that our invasion of Iraq helped to make it that way. Are you listening Dick Cheney?

Continued conflict in the Middle East increasingly risks the danger of evoking a wider conflict between any number of countries that are increasingly competitive with one another in hopes of establishing oil contracts in the new cutthroat game of searching for scarce new oil and gas leases, as China, India, Japan, South Korea and many other countries have become and will continue to insist on being players in the region. The history of the United States in viewing Persian Gulf oil as something that it owns, sparked in part by the “Carter policy,” and preceded by FDR’s secret agreement with Saudi Arabia, forged in 1945, to provide their protection in exchange for rights to the Saudi oil fields–all that history seems to be the policy mantra that we are moving forward with, which cannot help but evoke serious conflicts in the future: not that the region needs any new ones. It wasn’t just 9/11 that changed things for us, it was the emergence of a new world-wide panic that we are headed for “global peak oil.”

Kinzer has written several books about the Middle East. One of my favorites is “All the Shah’s Men: an American Coup and the Roots of Middle East Terror,” published in 2003 that explains how the CIA, at the request of the British Government, overthrew the democratically-elected Prime Minister, Mossadegh, in 1953 because he had nationalized what was then known as the Anglo-Iranian Oil company (today’s BP); the United States replaced him with the Shah (Mohammad Reza, the son of Reza Pahlavi), who in turn, was overthrown in the 1979 coup that led to the Islamic cleric Khomeini as Iran’s new leader.   The success the CIA had in overthrowing Mossadegh, served as the U.S. template for eliminating other democratic governments in favor of installing autocratic despots, especially in South American countries, beginning with Guatemala in 1954. The point of all this CIA intrigue was supposedly based on an assault against communism, but every American should know by now that it was really all about securing a favorable climate for American corporate interests. The Truman administration refused to act on the British outrage (Truman apparently admired Mossadegh), of the nationalized oil company, as they demanded return and control of Iranian oil. In fact, they had an embargo against Iran.   But, a few years later, during the Eisenhower years, when the CIA and the Secretary of State positions were occupied by  Allen Dulles and his brother John Foster Dulles (each of whom favored American corporate interests over the sanctity of internal nationalist movements), they agreed to help the British re-establish their control of Iranian oil. According to Kinzer, we are still paying the price for what we did in overthrowing Moassadegh in 1953. When the Iranians revolted against the Shah, the Mossadegh story was the first one they mentioned to their American captives. Americans didn’t find out about the CIA overthrow until 2000, when the New York Times got hold of a secret CIA document and published the details of the story.

In his book “Reset,” Kinzer takes us through the early 20th century history of Turkey, the first democratic Muslim state and Iran, a more troubled country, but one with deep democratic instincts, as we all witnessed by the turmoil that took place following last year’s presidential election. In the 1920s, both Turkey and Iran generated leadership who were committed to advancing their countries through a pathway of secular modernity. In the case of Turkey, it was Mustafa Kemal Ataturk, made famous by his military success at Galipoli,  who led Turkey from its planned destruction and occupation by the victors of WW I, through a decisive military victory over the Greek army,  followed by the consolidation of modern Turkey into a secular state. For Iran, the new leader to emerge was Reza Pahlavi who wanted to help modernize Iran through the formation of a secular state, using the Turkish model he admired. However, Reza had to settle for a new monarchy in which he was crowned king, as the 132 year old Qajar dynasty was abolished. The difference between the two countries was that Mustafa Kemal was successful in unseating the power of the clerics in Turkey, whereas Reza had to accommodate the religious leaders, which remains today as one of the fundamental differences between the two countries. But, as Kinzer points out, we need to form relationships with large countries that are committed to peace and democratic reforms. Turkey is already there and could be the first Muslim c0untry admitted to the European Union. They also have good relationships with Israel and they have gained experience in their diplomatic dealings with neighboring countries. Iran right now is a conflicted state, but one that cannot be ignored as a major player in any peace settlement for the region. Kinzer suggests that it may not be possible to deal with Iran right now, but our hardline attitude towards the country only insures that hardliners within Iran will have the advantage of leadership, much like how our attitude towards the Soviets during the Cold War extended the lifespan of their dictatorship; we surely prolonged the life of the Soviet Communist state through our obsessive confrontational policies.

Now is the time to recognize that the primary result of our invasion of Iraq was to strengthen the hand of Iran, who has become a far more important player in the region in the post-Iraq invasion world; our actions served to push Shiites in Iraq into leadership positions, and they have established friendly relationships with Iran. That’s as it should be and there’s no getting around it.  That train left the station the moment we entered Iraq and declared war on the Bathists. Today, we continually tell ourselves that our main fear is that Iran may be enriching Uranium on its way to building nuclear weapons. But there is very little evidence supporting that view and Iran is a signatory of the nuclear non-proliferation treaty, which,  neither Israel nor India has signed.  In reality, what we are worried about with Iran is having a hostile country that is too close to our prized partner in oil production–Saudi Arabia. We had relied on the Shah of Iran, whom we armed to the teeth with American weapons, to serve as our surrogate army in the Middle East. But with the overthrow of the Shah in 1979, something that dumbfounded our State Department,  together with the humiliation we endured when our embassy workers were kept hostage for more than a year, Iran quickly converted from friend to foe and ever since we have reacted like an emotional child to Iran, insuring that they in turn react emotionally towards us. Bush calling Iran a member of the “axis of evil” was hardly realistic or knowledgeable about our mutual history. But any realist can see that no peace settlement in the Middle East is possible without the inclusion of Iran as a major player and we have to recognize that our best partner for approaching the peace process is  Turkey. So we should be doing everything we can to facilitate Iran’s conversion to a more cooperative partner, and engaging Turkey as a full partner, not a messenger boy.

Few Americans are aware that Iran has been very cooperative with America in the post-9/11 era. Iran is a bitter enemy of the Taliban and al-Qaeda. In the months following 9/11,  Iran and American officials met constantly. At the request of the U.S., Iran expelled hundreds of foreigners within its borders that the U.S. believed were connected to the Taliban or al-Qaeda.  Iran connected the U.S. to the Northern Alliance in Afghanistan,  which we engaged to fight a proxy war in that country. In early 2003, after Bush’s silly “axis of evil” speech,  Iran tried to approach the United States in a cooperative mode. They proposed comprehensive talks and laid out an agenda in which the United States would end its “hostile behavior” towards Iran, lift the economic sanctions, guarantee Iran access to peaceful nuclear technology and recognize its legitimate security interests. In exchange, Iran offered to do the two things demanded of them by the U.S.: full transparency in its nuclear program and the elimination of any material support for militant groups in the Middle East, specifically referring to Hezbollah, Hamas and Islamic Jihad. This was the most forward-looking proposal that the U.S. had received from Iran in a quarter century and quite astonishingly (maybe not so surprising when you think about the American actors on the stage at the time), Bush turned the offer down because he and his cohorts wanted to destroy Iran not compromise with it. It is is simply mind-boggling to think that GWB would  turn down the Iranian offer for negotiations on the very issues we claimed were important to us, and all of this took place after he had given his axis of evil speech. It is sometimes hard to know whether the destructive hard line attitudes that prevent reproach between the two countries belong to the U.S. or Iran. Perhaps a little of both. But if our objective is that of establishing peace rather than dominance, we must recognize that Iran cannot be left out of the equation. I haven’t done justice to Kinzer’s book “Reset,” but it’s a fascinating read and brings a whole new perspective to the  equation table that we will need before we have a legitimate and just fix for the Middle East. One of the problems we face in confronting issues of the Middle East is that of basic competency and judgment on the part of our State Department. Kinzer talks about the acute need for sage officials among our diplomatic corps, and stresses a time when we did have a better, more informed State, which had a more longitudinal view of the world. As he talks about the need for more cultural knowledge of Iran, he quotes Nassir Ghaemi who is knowledgeable about both countries. Ghaemi points out that i) Americans are willing to compromise principle for results; Iranians are willing to sacrifice results to principle; ii) Americans worship the future, Iranians the past; iii) Americans value forthrightness and simplicity while Iranians prefer complexity and iv) Americans have imbibed science while Iranians have done the same with literature. Yet, despite these cultural differences, Americans and Iranians have far more in common and it is this larger, common set of values that should bring Iran and America into a much closer alignment, particularly when thinking about the gravity of the issues that must be solved if more serious conflict is to be avoided.

RFM

• Leave a comment... (0)

June 22, 2005 was a day that shook the American Oil industry as if a cannon had exploded on the scene without warning.  On that day,  the Chinese state-controlled oil company CNOOC Ltd (China National Offshore Oil Corporation)  shot a volley across the bow of the American oil industry, by announcing an offer to buy the 115 year-old American energy company UNOCAL (Union Oil Company of California). At a time when many Americans were becoming fearful of China’s rising economic power and its spreading sphere of influence, to imagine that the Chinese would dare to come into America’s back yard and attempt to control part of its energy supply, was shocking and unthinkable. Of equal concern was the growing awareness that Americans felt about the global supply of energy and whether gasoline supplies in the future could reliably feed the glutinous, energy-consuming demands of the American economy. At the time the offer was made by CNOOC, UNOCAL was no longer a major player in the domestic U.S. oil market, having sold their “Union 76″ chain of service stations to ConocoPhillips. But they still had substantial untapped oil and gas deposits in Asia and North America, making the company an appealing target for any country trying to expand its energy future and enhance its reserves. In the 1970s,  the United States had hit its “peak oil” condition, after which domestic oil production was in decline (see accompanying graph); it was natural to ask whether something similar might happen to the world’s oil supply some day, so knowledge of projected reserves has become a topic of keen interest.  The UNOCAL offer suddenly brought home the intense competitive nature of establishing oil reserves and whether the world might be running out of oil, something that could happen like one magical day and then poof–there goes to global economy. Now, with the BP oil spill in the Gulf and the freeze on new deep water oil permits (if the new regulatory change can pass through judicial review), the United States, indeed the world, shares a far greater sense of panic created by the growing awareness of oil projections that point to a shortage of oil and possibly natural gas by the year 2030. Serious doubts now exist about whether the future oil supplies can be expanded to meet the expected growth of India and China, both of whom have rapidly developing economies. Can the future world’s need for energy be suitably matched by expansion of oil and gas supplies? After briefly enjoying a victory in the Cold War in favor of the United States, it looked as if the world was rapidly shifting to a new strategic yardstick–one that depended more on a country’s level of oil reserves and less on the presence of a robust military, though the two conditions are not exactly easy to separate. Thus, an increased awareness and doubts about the global capacity to continue providing relatively cheap sources of energy, prompted many to ask when would our planet reach the ominous year of “global peak oil”–the year in which global oil production reaches a maximum and then begins to decline, as it has in the United States.

Peak Oil Production and Imports in U.S.

In response to CNOOC’s offer for UNOCAL, the Republicans, ever anxious to demonstrate why the free market system doesn’t apply to essential commodities, moved to prevent the sale by attaching an amendment to the Energy Policy Act on July 26, 2005, calling for a four-month review of China’s energy policies. This effectively killed CNOOC’s chances for acquiring UNOCAL, as another bid for the company from Chevron was coming up. The Chinese saw the writing on the wall and withdrew their offer, but remained in hot pursuit of oil contracts throughout the far reaches of the globe.

The unsolicited offer from the Chinese to purchase UNOCAL brought chills to the American spine about energy policies and raised new questions about whether the United States had the right policies in place to secure its own energy future. If China was looking for oil in America’s backyard, maybe that’s because there isn’t any more oil in all the other backyards? That was a question for which Americans wanted an answer. Or maybe not.  One of the problems that traditional oil companies face is the rising tide of nationalism in oil company ownership.  Thirteen of the top fifteen oil producing and reserve holding companies are nationally owned, including Saudi Aramco, National Iranian Oil, Iraq National Oil, Kuwat Petroleum, Abu Dhabi National Oil, Pertoleos de Venezuela S.A., National Oil Corp of Libya and the  Nigerian National Petroleum. The top eight companies in terms of oil reserves are all nationally owned.  The only international oil companies in the top fifteen include Lukoil (Russia) and Chevron (USA).  Many have argued that with nationalization of such an essential economic commodity as oil, those companies that remain private will increasingly operate at a disadvantage, as nationalized companies form relationships between governments that enhance shared oil reserves but also go deeper to promote trade and solve other issues to enhance the arrangement. International oil companies, like Shell, Chevron and BP can’t negotiate such holistic deals. Thus, Saudi Arabia is increasingly selling oil to China.

The urgent state of Americans over oil reserves was a driving force for the new gas and oil drilling leases that the Obama administration announced earlier this year, many of which are now on hold because of the Gulf spill, though I doubt this action will last for very long–there’s too much American panic. A state of  urgency  has now reached every oil and gas producing organization around the globe, as countries and companies try to enter into new relationships to secure oil and gas reserves as far into the future as possible.  It appears that no stone will be too sacred in our global thirst for oil and gas. While we move sluggishly to think and talk about getting off the oil habit by becoming more self-sufficient in energy, and moving away from fossil fuels, the rest of the world is buying up as much of the reserve oil supply as new energies are unleashed to discover more. But, while drilling more, they are finding less. The United States could reach a permanent new oil crisis before any transition in energy dependency takes place. That fear will haunt every administration beginning with the current one. Suddenly, a new world order is taking shape out there, one based, not on the size and extent of one’s economy or military, but instead derived from the sense of national security that a country can bestow on its citizens by guaranteeing energy capacity well into the future. Right now that future seems to be measured in twenty year increments. So alarmed was the Bush administration over the future of oil in the American gunsights, that in January 2008, Bush met with the Saudi king Abudllah during a swing through the Middle East and and pleaded on behalf of the beleaguered American public for increased production to ease the price of gasoline. Normally that would be a role for an oil company executive, but those days are over. We are now talking about the future of our national economy.

The global need for energy promises to expand in a major way within the next twenty years, primarily because of the huge growth anticipated by the expansion of the Chinese and Indian economies. China’s energy demands were at 68.6 quadrillion BTUs in 2006, amounting to 15.6% of the world’s energy consumption. But in 2030, the Chinese energy projection is for 145.4 quadrillion BTUs and 20.1% of the world’s oil consumption.  In the next 20 years, China will have to add the equivalent of what Europeans currently consume if they are to meet this expectation. Projections for India are almost  equally  expansive, though less overall: in 2006 India energy consumption was at 17.1 quadrillion BTUs and in 2030, they are projected to need 31.9 quadrillion BTUs or about 4.5% of the world’s energy. Right now things look best for China. They have a lot of hard currency on hand and can afford to pay top $ for energy contracts. In the meantime, America is bogged down in wars that we cannot possibly win and we suddenly appear to be very disadvantaged in many cases when competing with nationalized oil companies.

The major unanswered question about our oil future is this: Obama recently used the BP Gulf oil spill to sound a clarion call for national action to get out from underneath the heal of oil companies, begin to diversify our energy sources and move away from fossil fuels. It seems simple enough: diversify our economy by expanding it into the production of renewable forms of energy and conservation and, as an added benefit, save the planet. But, if you were sitting in the White House and you had a choice to remove subsidies from oil companies, or better yet, begin to charge oil companies and gas consumers a tax to support this energy transition, would you do it,  given the new form of panic that seems to have set in by the CNOOC offer for UNOCAL and the ongoing BP Gulf oil spill? It will take a considerable and risky amount of political capital to make the sensible choice, because one oil shortage later and your ticket to Mount Rushmore, if you think that’s where you were headed, would be suddenly exchanged for a ticket to Palookaville.

Note added: the quantitative numbers on energy consumption and projections were taken from Michael T. Klare’s book “Rising Powers, Shrinking Planet: the New Geopolitics of Energy.”

RFM

• Leave a comment... (0)

Al Franken

If you watched any part of the Elena Kagan Senate judiciary hearings for her nomination to the Supreme Court, you might have recognized that someone stole the show. It was not Kagan herself, though she had some good moments and, as a future Supreme Court Judge, one can anticipate that she will make an excellent foil against ideologues on the court, who want to rule from their gut, such as Antonin Scalia.  Kagan knows the law and she’s firm enough in her convictions through scholarly experience that we hope she won’t back down to decisionary arguments that arise directly from the intestinal wall.  Nevertheless, her placement on the Supreme Court will still preserve the current  5 to 4 decision-making balance, as the court will still be able to march the country to the very edge of a corporatist state. But the star of last week’s judicial hearings was Minnesota’s junior Senator Al Franken, the newest member of the Senate Judiciary Committee. Although he was probing the opinions of Kagan herself on legal issues, his message was really directed to his fellow Republican members on the Judiciary, whose favorite theme was whether Kagan would be an “activist judge” and if so they would argue, she would be an undesirable new member of the court.

• Continue reading or Leave a comment... (0)