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The New Middle East

Richard N. Haass, Foreign Affairs
Summary: The age of U.S. dominance in the Middle East has ended and a new era in the modern history of the region has begun. It will be shaped by new actors and new forces competing for influence, and to master it, Washington will have to rely more on diplomacy than on military might.

…The June 1967 war forever changed the balance of power in the Middle East. The use of oil as an economic and political weapon in 1973 highlighted U.S. and international vulnerability to supply shortages and price hikes.

…the price of oil will stay high, the result of strong demand from China and India, limited success at curbing consumption in the United States, and the continued possibility of supply shortages. The price of a barrel of oil is far more likely to exceed $100 than it is to fall below $40. Iran, Saudi Arabia, and other large producers will benefit disproportionately.

…Military action against Iran would also drive the price of oil to new heights, increasing the chances of an international economic crisis and a global recession. For all these reasons, military force should be considered only as a last resort.

…The second opportunity involves the United States’ insulating itself as much as possible from the region’s instability. This would mean curbing U.S. oil consumption and U.S. dependence on the Middle East’s energy resources, goals that could best be achieved by reducing demand (by, say, increasing taxes at the pump — offset by tax reductions elsewhere — and promoting policies that would accelerate the introduction of alternative sources of energy).
(Nov-Dec 2006 issue)
Long discussion by a senior policy maker. I’ve picked out passages relating to oil. Bio of author Haas:

Richard Haass is president of the Council on Foreign Relations, a position he has held since July 2003. … Haass is the author or editor of ten books on American foreign policy. …Until June 2003, Richard Haass was director of policy planning for the U.S. Department of State, where he was a principal adviser to Secretary of State Colin Powell on a broad range of foreign policy concerns.


Bush’s Petro-Cartel Almost Has Iraq’s Oil (Part Two)

Joshua Holland, AlterNet
The Bush administration has co-opted the compassionate language of debt relief to ensure that Big Oil gets its way in Iraq.
With 140,000 U.S. troops on the ground, the largest U.S. embassy in the world sequestered in Baghdad’s fortified “Green Zone” and an economy designed by a consulting firm in McLean, Va., post-invasion Iraq was well on its way to becoming a bonanza for foreign investors.

But Big Oil had its sights set on a specific arrangement — the lucrative production sharing agreements that lock in multinationals’ control for long terms and are virtually unheard of in countries as rich in easily accessible oil as Iraq.

The occupation authorities would have to steer an ostensibly sovereign government to the outcome they desired, and they’d have to overcome any resistance that they encountered from the fiercely independent and understandably wary Iraqis along the way. Finally, they’d have to make sure that the Anglo-American firms were well-positioned to win the lion’s share of the choicest contracts.
(17 Oct 2006)

Putin Gets Mugged in Finland

Mike Whitney,
Most people won’t pay any attention to this week’s energy summit in Lahti, Finland, but they should. It is particularly instructive for anyone who is interested in the latest developments in the global resource war.

The purpose of the meeting was to work out the nettlesome issues of energy policy, but the hidden agenda was to pressure Russian President Putin into signing away the control of his country’s critical assets to the big-players in the world energy cartel. The proposed “Energy Charter Treaty” is designed to tie up Russia’s resources through legal obligations which serve the overall interests of the energy giants. The treaty is no different than the EU Constitution which was voted down last year when the “informed” European public realized that it was just another boondoggle set up by big business to override national sovereignty, environmental safety, and civil liberties. The Energy Charter Treaty and the EU Constitution focus on the very same objectives, that is, establishing the legal framework for placing the world and its dwindling resources in the hands of a small cadre of obscenely-wealthy western plutocrats.

Western elites have been waging an intensive public relations campaign against Putin since he nationalized Yukos Oil and put it under control of Gazprom. Gazprom is quickly growing into the world’s largest oil corporation and will probably achieve that goal within the decade.

Putin’s move to nationalize the industry has been popular at home (his personal approval rating is consistently over 70%) and has had a profound effect on stabilizing the ruble and raising the standard of living. Most Russians still remember the country’s bleak experiment with “free market” capitalism during the 1990s when the ruble fell through the floor and Russia’s national assets were raffled off by the chronically-inebriated Yeltsin (under the supervision of western advisors). “The Oligarchs”, as they were known, contributed significantly to Russia’s economic decline as well as its loss of prestige in the world. Putin has restored national pride, fueled the new prosperity, and is quickly rebuilding Russia into a world power. If energy prices continue to soar, as they undoubtedly will, Russia will be a force to reckon with throughout the 21st century.
(22 Oct 2006)
A rare pro-Putin piece, worth reading for the perspective. -AF

Further to your comments on Gazprom

Heading Out, The Oil Drum
In following up on my post the other day about Russia I have been struck, again, by how much value I (and presuming the rest of the readers) get from the contributions that come as comments. Consider that when I wrote the piece, I was talking about how much grip Russia was taking over European fuel supplies. It was therefore a nagging concern to read David Tomlinson’s comment with reference to a Newsnight piece that for some reason I could not access. However his notes and the figures that he quoted, were sufficient to drive me to a piece by Vladimir Milov at the Institute of Energy Policy in Russia. I am going to steal a couple of graphs from the top presentation listed, which was given to the World Bank last week. The news about long-term Russian investments in new gas production that was presented is quite worrisome, coming as it does at a time that the reliance on future supply is becoming more critical. There are also Russian domestic concerns about supply, that I will come to later.

UPDATE: The situation may be a little more critical than I had thought according to the new article from Radio Free Europe .
(22 Oct 2006)
The original article by Heading Out, to which this is a follow-up appeared Oct 20 in The Oil Drum: More Thoughts on Gazprom.

War Climates (water wars)

Jeffrey Sachs,
Our political systems and global politics are largely unequipped for the real challenges of today’s world. Global economic growth and rising populations are putting unprecedented stresses on the physical environment, and these stresses in turn are causing unprecedented challenges for our societies. Yet politicians are largely ignorant of these trends. Governments are not organized to meet them. And crises that are fundamentally ecological in nature are managed by outdated strategies of war and diplomacy.

Consider, for example, the situation in Darfur, Sudan. This horrible conflict is being addressed through threats of military force, sanctions and generally the language of war and peacekeeping. Yet the undoubted origin of the conflict is the region’s extreme poverty, which was made disastrously worse in the 1980s by a drought that has essentially lasted until today. It appears that long-term climate change is leading to lower rainfall not only in Sudan, but also in much of Africa just south of the Sahara Desert-an area where life depends on the rains, and where drought means death.

Darfur has been caught in a drought-induced death trap, but nobody has seen fit to approach the Darfur crisis from the perspective of long-term development rather than the perspective of war. Darfur needs a water strategy more than a military strategy. Its 7 million people cannot survive without a new approach that gives them a chance to grow crops and water their animals. Yet all of the talk at the United Nations is about sanctions and armies, with no path to peace in sight.

Jeffrey Sachs is professor of Economics and director of the Earth Institute at Columbia University .
(23 Oct 2006)