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The Fortunate Fifth

Chris Sanders, Sanders Research
US politics turns on the fortune of some 20-25% of its population; the other 75% are window dressing. It is important to understand this if one is to understand why a wider war is likely.

Whenever there are many powers united against another power, even though all together are much more powerful, nonetheless one ought always to put more hope in that one alone, who is less mighty, than the many, even though very mighty…by using a little industry, he will be able to disunite the very many and weaken the body that was mighty. Nicolò Machiavelli, Discourses on Livy, p. 245.

When there is freedom, there will be no state. V.I. Lenin, The State and Revolution.

Watching the antics of the oil market this year has brought to mind, and not for the first time, Oscar Wilde’s quip about those who know the price of everything but the value of nothing. Oil has fallen heavily since making an all time high last summer, with about half the fall from summer top to winter low occurring in January. The culprit is said to be everything from unseasonably warm weather and machiavellis from Saudi Arabia dumping shiploads of crude on the US Gulf coast to hurt Iran, to collapsing US SUV sales. For all we know, there may be something to all this, but as the news on the energy front accumulates, we are most impressed with how serious it is, and how little it will take to launch oil prices to new all-time highs.

The oil world seems to have learned how to get along with the prospect of war with Iran, which is to say that it is choosing to ignore it. The Bush surge in Iraq with the prospect of fresh and heavy fighting is old news. The news that Mexican production fell half a million barrels a day last year caused not a ripple. The shutdown of most of Nigeria’s refining capacity has evoked the equivalent of a mighty yawn. The fact that OPEC production fell last year, even before the production cuts announced in September began to take effect, evokes derision rather than worry. “OPEC just can’t get its act together.”
(31 Jan 2007)

Alternative finances

Susan George, Le Monde diplomatique
Now is the time to rediscover John Maynard Keynes’s revolutionary ideas for an international trade organisation and adapt them to rebalance the world’s economies in the 21st century.
THE Doha agenda, launched at the World Trade Organisation (WTO) ministerial meeting in the Qatari capital in 2001, has collapsed, and a good thing too. Although the WTO director general, Pascal Lamy, is trying desperately to resuscitate the agenda, the opponents of Doha maintained throughout the negotiations that no deal was better than a bad deal. The round, from the beginning until the final fruitless exchanges in 2006, was destined to benefit the largest farmers, to destroy nascent or fragile industries throughout the South and to open public services everywhere to corporate takeover through the General Agreement on Trade in Services (GATS).

As we know, Keynes did not prevail and the postwar vision was never realised. The World Bank and the IMF have wreaked havoc through their structural adjustment policies, third world debts can never be repaid, and Wall Street now decides the policies of democratically elected governments (as can be attested by Brazil’s president, Luiz “Lula” Inácio da Silva, along with many other leaders of indebted countries). World trade rules do not benefit the poorer members of the WTO and the rich ones have grown more selfish as they have become richer.

In these circumstances, how could the global justice movement help to make fair trade a reality, since the WTO and its disastrous rules already exist? The writer George Monbiot believes that the South could use its $26,000bn of debt as a “nuclear threat” against the world financial system unless it consents to establish an ICU. The South could begin by creating its own, smaller clearing union: perhaps Latin America could launch such a plan. Perhaps a new government in France could put it on the agenda; stranger things have happened. But it is important to realise that we need not reinvent the trade wheel: Keynes did all the work 60 years ago. ..
(Jan 2007)

Greek Cyprus and Turkey oil conflict grows

Staff, Turkish Weekly
ANKARA – A dispute between Turkey and Greek Cyprus over Greek Cypriot attempts to open tenders for offshore oil and gas exploration in the eastern Mediterranean took on new dimensions yesterday when news reports said the Turkish military had sent warships to the international waters off Cyprus.

Chief of General Staff Gen. Yaşar Büyükanıt denied the reports soon after they were first broadcast on Turkish television, saying there were no additional ships in the Mediterranean other than those that were already on duty in the area. ..

But tension was high in Greek Cyprus, where officials said national forces were ready to respond to Turkish military moves. “We are monitoring the situation in consultation with the National Guard and other security and intelligence forces, and we will act accordingly in the event that our territorial waters are violated,” said Greek Cypriot Foreign Ministry official Alexandros Zenon. “We have to confirm all this and formulate our response,” he added.
Zenon also criticized Turkey’s stance over the oil issue as a “provocation” and “unbefitting” a country aiming for membership in the European Union.

Tension has been brewing since Ankara became aware of an agreement between Greek Cyprus and Lebanon, signed on Jan. 17, to delineate their undersea border to facilitate future oil and gas exploration. Similar accords were struck with Egypt last year. ..
(2 Feb 2007)

Blood of the Earth: Dilip Hiro on the Battle for the World’s Vanishing Oil Resources
(audio and transcript)
Amy Goodman, Democracy Now
In his new book, veteran Middle East Journalist Dilip Hiro offers a detailed account of how and why the planet’s limited supply of oil has come to revolutionize human behavior, politics and warfare across the globe. He joins us for a wide-ranging interview. [includes rush transcript]

As scientists in Paris finalize their report on the adverse effects of human-caused emissions on climate change, a new book offers a detailed account of how and why the planet’s limited supply of oil has come to revolutionize human behavior, politics and warfare across the globe. “Blood of the Earth: The Battle for the World’s Vanishing Oil Resources” is a detailed account of the history of oil. It reveals that when states replaced coal with oil, they scrambled to meet an unprecedented global energy demand.

The book details how states have attempted to meet a growing thirst for oil through economic expansion and all-out war. It also explores developments in alternative and renewable sources of energy. With us now is the author of the book, Dilip Hiro. He is a veteran journalist on the Middle East. His trilogy of books on Iraq and Iran are considered some of the most definitive histories of the wars in the Persian Gulf.
(31 Jan 2007)

Ahmadinejad held hostage to bazaar politics

M K Bhadrakumar, Asia Times
…The main thing about Ahmadinejad that irritates Washington is his immense popularity within Iran. It renders absolutely nonsensical any talk of “regime change” in Iran. Ahmadinejad sets a standard of personal integrity and simplicity of lifestyle that is rare among the political elite. Mammoth crowds throng to listen to him at public rallies wherever he goes. He identifies with their sorrows and dreams. He is easily accessible. He lives in their neighborhood. This has never happened before – not even during the time of Mohammed Mossadeq in the early 1950s.

Ahmadinejad is the first “populist” leader Iranians have known. He is restoring to an extent the “connectivity” of the Iranian regime with the voiceless millions in Iran.

…French philosopher Jean-Paul Sartre once said, “I have no religion, but if I were to choose one, it would be that of Shariati.” One of the two or three foremost Islamic thinkers of the last century, Shariati’s radical blend of Islam and Marxism electrified a whole generation of Iranian revolutionaries like Ahmadinejad.

It is a different matter whether radical Islamic egalitarianism, which is redistributionist and anti-imperialistic, is workable in today’s era of globalization. But that doesn’t stop Ahmadinejad from trying. (It doesn’t stop Venezuela’s Hugo Chavez, either.) The premise of his polemic is simple: the predatory West motivated by Machiavellian considerations of power and profit seeks to dominate the Muslim world and seeks to transfer its resources. This makes conflict inevitable.

…behind the rhetoric, Iran actually possesses a vibrant political life. The political spectrum is constantly mutating. The latest indication that the regime could get its act together came last weekend when Supreme Leader Ali al-Khamenei made the stunning proposal to the visiting secretary of Russia’s National Security Council, Igor Ivanov, that Iran is willing to form with Russia a grouping like the Organization of Petroleum Exporting Countries for gas-producing nations.

…The prospects of [Khamenei’s] re-election in 2009 will depend on how he wards off challenges on the economic front.

The point is, Iran has had a windfall in recent years. Income from oil and gas exports shot up from US$23 billion in 2002-03 to $55 billion in 2005. Foreign-exchange reserves reached $47 billion, which is more than twice the size of Iran’s foreign debt.

The New York Times noted recently, “Iran’s overall rate of growth is healthy and rising.” Iran predicated its budget last year on the estimation that the price of oil would be about $44.1 per barrel, while it is estimating that for the coming year oil prices will average $33.7 per barrel. Evidently, the Iranian economy has a lot of cushion to absorb any unforeseen resource crunch.

…Harnessing the windfall from oil income, however, Ahmadinejad has resorted to a policy of government spending to rachet up domestic production. He has pumped oil money into government-run projects for creating jobs. This has been a successful populist measure and it explains the popularity that Ahmadinejad enjoys in poorer communities. Unemployment fell last year to an eight-year low of 10.3%. But there has been a downside.

M K Bhadrakumar served as a career diplomat in the Indian Foreign Service for more than 29 years, with postings including ambassador to Uzbekistan (1995-98) and to Turkey (1998-2001).
(3 Feb 2007)
Fascinating look behind the scenes of Iranian politics – much more nuanced a picture than usually appears in the U.S. press. -BA.

GPM correspondent Richard Bell writes:

On the surface, this piece is quite wonderful. I do not know enough about the domestic politics of Iran to be able to judge whether all of Bhadrakumar’s claims are true, but the overall picture makes sense in the context of what I do know.

I notice that he mentions Chavez, another tilter at the windmills of capitalism and globalization. In the end, the economic powers that be, whether you’re in Iraq or Venezuela, descend quickly to the level of thugs, indistinguishable from organized crime, if they think that there might be a real structural challenge to their stranglehold on the distribution of income. In both of these examples, windfall oil profits have created an unexpected surplus, and populist politicians have seized on that surplus to build popular support by distributing the money to the poor. But as Bhadrakumar points out, pumping that much new money into an economy creates inflationary pressures, which the ruling class can then turn back on the populists. Remember what happened to Jimmy Carter when people thought he was responsible for too much inflation. (Or to go back further, Huey Long and his Share Our Wealth program, “Every Man a King.” Or even further back, the Populist Party in the early 1890s.)

Following this line of thought, is it possible to construct economic policies that would short-circuit the inflationary stimulus of pumping oil windfall profit money into redistributionist programs?

One of the things that I always come away with from this sort of story is how relatively uncomplicated U.S. politics are, in comparison to, say, Iran. Dealing with the mix of revolutionary and fundamentalist forces at work in Iran seems much more challenging to me, especially when the likelihood that you are going to be assassinated or killed by the government has such a higher probability.