Recent weeks have seen unprecedented events in the oil rich region called Saudi Arabia. The shootings and kidnappings in Khobar this May, were ground breaking due to the size of the disturbance and the audacity of the perpetrators. But it was one in a series of astounding events in this traditionally closed and closely scrutinised society.
Soon after September 11th, the United States was keen to point out that 15 of those 19 alleged to have carried out the attacks, were nationals of Saudi Arabia. They often point out that Osama bin Laden was born and brought up in Saudi, where religious intolerance is rife and the government permits the Islamic clergy to encourage anti-Western sentiments.
Indeed, from the very beginning of the “War on Terror”, the Bush administration have repeatedly highlighted the need for reform, democracy and freedom in the Middle East often citing Saudi Arabia as one of those countries desperately in need of change.
US attacks on Afghanistan and Iraq, along with continuous rhetoric concerning the need for true democracy and freedom in Middle Eastern countries sent alarm bells ringing throughout government offices, particularly in Egypt, Syria, Iran and Saudi Arabia, the key states in the region. Twelve months ago, they were the most enthusiastic to declare their support for the war on terror and their commitment to reform within their own countries, although this did not manifest as actual liberal reforms on the ground.
In recent months however, this enthusiasm has changed.
The Arab rulers have begun to find their voices and their feet once more, particularly the Saud family.
There is one main reason for this newfound confidence, high oil prices with US presidential elections only a few months away.
The US imports over 14% of its oil from the Persian gulf, much of that from Saudi Arabia. That accounts for about 21% of all its oil imports. It should be noted that it gains a further 20% from Venezuela, part of OPEC, the organisation of petroleum exporting countries, who coordinate their production in order to stabilise international oil prices.
The price of oil is dependent on a variety of factors, one of which is the potential excess production capacity as when this capacity is large, confidence grows and the price falls and stabilises. Persian gulf countries, especially Saudi Arabia, are responsible for the majority of the excess production capacity within OPEC as only they are able to significantly increase their production by millions of barrels a day in the short term. Saudi Arabia holds between 20% and 25% of exportable crude oil supplies worldwide and this puts Saudi Arabia in a unique position. Saudi Arabia is uniquely responsible for the stability in oil prices and is uniquely capable of reducing oil prices by increasing production if prices become unacceptably high. This affects the price of all oil, particularly that from OPEC countries, not just the price of Persian Gulf oil.
Oil prices hit a 13-year high in April, reaching $41.54 at its peak. These prices have been due to a variety of factors, including OPEC production cuts last summer and early this year, in preparation for the arrival of large amounts of Iraqi oil under US control to the market. However, this oil did not arrive, demand from India and China continued to rise and threats of oil blockades from Venezuela along with attacks on Western targets in Saudi Arabia and continued instability in Iraq has kept prices high.
The strain that this has put on the US economy has already impacted heavily fuel reliant industries. AMR’s American Airlines, UAL Corp.’s United Airlines and their three biggest U.S. competitors had $1.36 billion in first-quarter losses, in part because of surging jet fuel prices. Although the American consumer has thus far remained relatively unharmed by the recent increases, over time, unemployment, prices and inflation will undoubtedly increase and become noticeable to the ordinary man.
Jan Hatzius, a senior economist at Goldman, Sachs & Co. in New York, said “Our analysis suggests that the current level of oil prices, if sustained for a few more months, could be a significant drag on the U.S. consumer.” (24/05/04, Bloomberg.)
This drag would arrive just in time for US presidential elections in October and so the Bush administration has looked towards the one country with the ability to cool oil prices and save the US economy for elections, Saudi Arabia. The Saudi royal family is aware of this, hence their new found air of confidence. In recent interviews, they have made it very clear that there will be some reforms in Saudi Arabia, but the Saud family will remain the real rulers and they will not be forced into reforms by external pressures.
In this June’s G8 summit, Bush and Blair once again pointed out the need for reform in the Middle East, but unlike 12 months ago they were practically rebuffed by the Egyptian president Hosni Mubarak and the defacto ruler of Saudi, Prince Abd el Aziz with a statement that they will reform as they see fit.
Saudi Arabia has every intention to help Bush get re-elected. In an interview with CBS’s “60 Minutes” about his new book “Plan of Attack” on the Bush administration’s preparations for the Iraq war, Bob Woodward, a senior editor at the Washington Post, said Prince Bandar pledged the Saudi’s would try to fine-tune oil prices to prime the U.S. economy for the election — a move they understood would favour Bush’s re-election.
Questioned about recent price rises, he said “They’re high. And they could go down very quickly. That’s the Saudi pledge. Certainly over the summer or as we get closer to the election they could increase production several million barrels a day and the price would drop significantly.” (20/04/04, Reuters.)
In the last OPEC summit, Saudi has already acted upon this pledge by increasing production by 2 million barrels per day.
However much the attacks on Western targets in Saudi Arabia have actually affected oil prices, the high prices have given the Saudi government a long forgotten confidence. That finally, the Bush administration would realise what all previous American governments knew, which was that the Saud family was and is the only option for stability in Saudi Arabia and stability in oil prices and that they must be supported no matter what they did or said. The truth in Saudi Arabia, as in so many other autocratic Muslim countries these days, is that the Western backed and pro-Western dictators are becoming the only pro-Western power brokers in their countries. Indeed, with the Islamic revival and support for hukm Shari’i in most Muslim countries, the only popular alternative would be an ideologically Islamic government, probably hostile to Washington and therefore unacceptable to them.
Recent oil price rises have reminded the US of its own vulnerability and the Arab rulers, particularly the Saudi’s, know this and will in coming weeks and months ensure they make it very clear to Bush that Americas future stability and security, at least for the time being, rests on it cooperating and supporting the Saud family as the attacks increase day by day in their oil rich kingdom.
What can also be seen from these events is the potential economic power that exists within the Muslim lands. There is no doubt that Persian Gulf oil is still vital for the stability of the American and ultimately the internationally economy. This power could be used to serve the interests of Islam and the Muslims.
The Shariah has placed natural resources such as oil under the remit of public property and under the guardianship of the Islamic State to ensure the wealth of such properties is enjoyed by all people. Ibn Abbas narrated that the Prophet (salAllahu alaihi wasallam) said, “Muslims are partners in three things, in water, green pastures and fire,” reported by Abu Dawud. Anas reported from Ibn Abbas adding “and its price is forbidden”. The word ‘fire’ is considered to be any source of energy be it oil, gas, coal etc. From these Ahadith it is clear that those properties that are the community’s needs are not the private property of any ruler with which they can do as they like.
Unfortunately, the resources of the Muslims are not managed on their behalf but are managed on behalf of the colonialist overlords of the Muslims rulers. With strong Islamic political leadership and vision, these resources could be used to prevent the repeated attacks against Muslim lands, the support for Israel and the war against ideological Islam as well as culturing education and prosperity within the lands of the Muslims, especially in the poorest places most in need of it.
This potential power is being used by unscrupulous and corrupt rulers for one thing and only one thing, the maintenance of their position of power. This is the politics of self-preservation. This is the politics of the defeated. The Muslims must shake off these shackles for shackles they truly are and when liberated from these, with Islam held firmly in their hearts and minds, these resources could be used for the good of mankind rather than the maintenance of colonialism, oppression and poverty as they are today.