Some 80% Libya’s developed petroleum fields are in rebel-held territory,
and the
Benghazi leadership is making plans to pump the oil and receive the
proceeds. If the standoff with Qaddafi goes on very long, the oil politics
could prove decisive. With Qaddafi’s own foreign funds increasingly frozen,
and 3/4s of the country’s oil facilities idled (it ordinarily exports 1.7
million barrels a day), his cash on hand to pay mercenaries and bribe clients
will rapidly decline, whereas the Benghazi rebels may reap a windfall. Reports
about the situation at the oil fields are chaotic and contradictory,
but it seems clear that some oil
workers are pumping the oil themselves as expatriate companies flee, and
it is possible that the Benghazi leadership could export by tanker truck
despite the closing of the Italian pipeline.
The oil politics could also provoke NATO or other intervention. Although
Saudi Arabia is pumping extra petroleum (500,000 barrels a day), it is
probably not actually replacing what has been lost from Libyan production.
Brent crude
hit $114 a barrel on Sunday. The world is skating on the edge of petroleum
prices so high that they could push the global economy back into recession.
Will NATO governments really risk taking a bath in their next elections
because they declined to implement a no-fly zone over Libya and bring a quick
end to what is for them not only a humanitarian crisis abroad but also a
potential oil crisis at home?
More production may be lost, as unrest spreads in the Middle East.
Iraq’s
massive protests this weekend were followed by an
attack on the
refinery at Baiji, which closed it. The plant has a capacity of between
150,000 and 300,000 barrels a day (you see varying estimates). The spread of
the protests to Oman, moreover, raised ominous questions about how much
production may be lost. Not only have petroleum workers in the port of Sohar
demonstrated, with 2 protesters killed, but
they targeted the road used by tanker trucks. (They so far haven’t had an
impact on pipeline exports, the bulk of them.) Workers in the Gulf unhappy
with their lives,
unlike Wisconsin school teachers, can fairly easily disrupt the economy if
they choose.
Oman
Oman pumped some 860,000 barrels a day in 2010 and exported about 750,000
of it. If most Libyan production goes off line and Oman is similarly crippled,
that would be a loss of about 2.5 million barrels a day– nearly 3% of the 85
million a day the world typically consumes, which is probably all the Saudis
could cover even if they were willing and able to ramp up production that much
for an unknown period of time. (Some critics question whether the Saudis can
really pump that much extra petroleum for very long without putting strains on
their equipment and infrastructure). Although a loss of 3% of export capacity
may not seem very much, actually in a market where supply was just barely
meeting demand, the loss could cause prices to skyrocket (especially because
of the atmosphere of uncertainty the losses could provoke). The big kahuna
would be disruptive protests in Saudi Arabia itself, which would certainly
cause a global economic crisis.
Quite apart from production, a lot of petroleum refining is done in the
Middle East, and were the world’s refining capacity to be reduced that might
be more significant for supplies and prices than merely taking crude off the
market temporarily. Oman, for instance, refines 200,000 barrels a day.
Refineries take years to build and billions in investments. Raw petroleum is
useless– it has to be turned into gasoline/ petrol, kerosene, etc., to drive
vehicles– its main use. Increasing refining capacity is not nearly as easy to
do in the short term as just pumping more crude.
So back to Libya. In newly liberated Zawiyah, half an hour drive west of
the capital of Tripoli,
rebels
displayed their heavy weaponry– including tanks and artillery– to Western
reporters and underscored their intent to take on Qaddafi’s forces. The
Zawiyah liberation movement appears to be coordinating with Benghazi, now the
epicenter of revolutionary politics. The city is significant because it is the
site of Libya’s largest refinery.
The dispute between Abdel Jalil and the Benghazi liberation council may
signal more trouble ahead. Given that the former Tunisian prime minister,
Mohamed Ghannouchi, has just been forced to resign because he served in the
old, overthrown government, Abdel Jalil’s move was probably inadvisable. Even
though Abdel Jalil was the first cabinet minister to resign in disgust at
Qaddafi’s brutal use of force, and even though he offers some continuity at a
time of upheaval, having a Qaddafi cabinet minister, especially one who had
oversee Libya’s corrupt and oppressive ‘justice’ system, try to run the
country now would be a recipe for further protests and upheavals. The rebels
are talking about parliamentary elections within three months, which is,
frankly, probably unrealistic. The pledge underlines the need for the United
Nations to get officials into Benghazi to consult with the revolutionary
notables about how to go forward, since the UNO has a lot of experience in
these matters, which, to say the least, the leading lights of Benghazi do not.
Jeffrey Rudolph writes in a guest column for
Informed Comment
Saudi Arabia, an Islamic absolute monarchy, has enjoyed extremely close
relations with the United States, a constitutional republic. This relationship
highlights the gross hypocrisy of US foreign policy: fundamentalism and
dictatorship in the Arab world is only condemned when it comes garbed in
anti-Americanism. In fact, Saudi Arabia makes Iran—the target of sanctions and
regime change by the US for over 30 years—look relatively progressive.
The US and Saudi governments have had a clear long-term agreement. The Saudis
agree to supply oil in accordance with US needs and to reinvest the resulting
revenue in US assets and arms. In return, the US provides protection to the
Royal family regardless of its internal repression and extremist ideology.
While mutually beneficial, this compact is also the source of one of Saudi
Arabia’s great contradictions: The Saudi kings depend for their security on a
country widely reviled in the Arab world as Israel’s protector.
Contradictions run deep in Saudi Arabia. Attempts at domestic reform have been
confronted with state-sponsored extremist preachers—in fact, Saudi kings have,
on occasion used their power to protect “progressives” from harsh Saudi
judges. While in the foreign policy realm, uneven state support of
confrontational policies concerning Iran have been coupled with attempts to
moderate US belligerence in Iraq and Palestine.
The following quiz is an attempt to supplement the rather shallow coverage of
Saudi Arabia provided in the mainstream media.
The Saudi Arabia Quiz
1. Which Middle-East country has been the US’s oldest ally in the region?
-Saudi Arabia. In 2008, Saudi Arabia celebrated “the seventy-fifth
anniversary of U.S.-Saudi diplomatic relations, which had started with the
signing of the oil contract in 1933.” President Bush attended the
celebration—flying to the Kingdom after attending celebrations in Jerusalem
to mark Israel’s sixty years of existence since 1948. “Abdullah took some
delight in the comparative longevity of the two anniversaries, cupping his
palms open in front of him, as if weighing the relative poundage of sixty or
seventy-five years of friendship in the scales.” (Robert Lacey; Inside The
Kingdom: Kings, Clerics, Modernists, Terrorists, and the Struggle for Saudi
Arabia; Viking; Toronto: 2009; p. 301.)
-“In May 1933, Ibn Saud granted Standard Oil of California an enormous
petroleum concession for less than $200,000 [a great bargain]… Later, in the
early 1940s, the California-Arabian Standard Oil Company (a consortium that
became known in 1944 as the Arabian American Oil Company, or Aramco)
convinced President Roosevelt to help the king by including the kingdom in
the lend-lease aid program.” (Juan Cole; Engaging The Muslim World; Palgrave
Macmillan; New York: 2009; p. 86.)
-“[O]il is not the whole story [of US interest in Saudi Arabia]: Saudi
Arabia is also important because of its strategic location. Lend-Lease was
extended to the nation in 1943 in exchange for permission to build and
utilize an air force base in Dhahran. The location of this base later made
it a useful tool for the Americans during the cold war. … The official
relationship was launched at the highest level in the most dramatic of
circumstances: at President’s Franklin Roosevelt’s post-Yalta meeting with
Ibn Saud. … [W]ildly different notions of how the world worked…[did not] get
in the way of the main bilateral issue: Saudi oil supply and American
security guarantees for the kingdom.” (Stephen P. Cohen; Beyond America’s
Grasp: A Century of Failed Diplomacy in the Middle East; Farrar, Straus and
Giroux; New York: 2009; pp. 94-95.)
-The following link has a picture of the
February 14, 1945
“landmark
meeting between King Abdulaziz of Saudi Arabia and U.S. President Franklin
D. Roosevelt onboard the U.S. Navy cruiser Quincy in the Great Bitter Lake
segment of the Suez Canal. The…meeting was the first face-to-face contact
between top American and Saudi leaders and served as the foundation for the
longstanding relationship between Washington and Riyadh.”:
“King Abdulaziz and President Roosevelt Meeting
2. Who stated the following in 1945?: “I’m sorry, gentlemen, but I have to
answer to hundreds of thousands who are anxious for the success of Zionism. I
do not have hundreds of thousands of Arabs among my constituents.”
-Harry Truman: President of the United States, 1945-1953.
-The above quote was stated by Truman at a “meeting in Washington with
William Eddy, the U.S. chief of mission in Saudi Arabia, and with other U.S.
diplomats to the major Arab countries. There had been widespread anger in
the Arab world at the favor that America was showing toward the Zionist
effort to create a Jewish state in Palestine, and the diplomats had been
assembled to explain the reasons for Arab opposition. But nothing he heard
appeared to change Truman’s mind. … Truman was not quite correct. The U.S.
Census of 1940 showed 107,420 individuals classified ‘white’ who gave their
‘mother tongue’ as Arabic, and census analysts reckon the real count of
Arab-Americans at three times that. But the president’s political point
remained. By the 1940s the Jews were organized politically in America in a
way that the Arabs never were… Today [2009]
there are some 3.5 million Arab-Americans (a good number of them
Christians), and their political clout does not begin to match that of the
6.4 million U.S. Jews. Following the hard-fought creation of Israel in 1948,
every successive crisis in the Middle East would increase pro-Israeli
feeling inside America—and then came the emergence of so-called Christian
Zionism in the 1980s. Popular evangelists like Jerry Falwell and Pat
Robertson preached that the return of the Jews to the Holy Land had happened
in accordance with biblical prophecy—‘to stand against Israel is to stand
against God,’ proclaimed Falwell in 1981.” “America was the ‘far Satan,’ in
Osama’s eyes, because it was the patron and supporter of the Al-Saud, the
‘near Satan’ that was the ultimate target. … [F]ew Americans could see that
it was through the selection of contradictory friends [i.e. Islamic
extremists in Afghanistan and allying with the House of Saud while also
supporting Israel at the expense of Arabs] that their successive governments
had picked themselves this lethal foe.” (Robert Lacey; Inside The Kingdom:
Kings, Clerics, Modernists, Terrorists, and the Struggle for Saudi Arabia;
Viking; Toronto: 2009; pp. 216-7 and 228.)
-The culmination of one-sided U.S. support for Israel was the Bush Jr.
administration. One of its earliest and most warmly welcomed guests was
Ariel Sharon, the hardline enforcer of Greater Israel.
3. What
was Saudi Arabia’s military expenditures for 2009 (in US dollars)? What was
Israel’s?
-Saudi Arabia’s military expenditures: $39 billion. (Source
here.)
-Israel’s military expenditures: $14 billion. (Source
here. )
4. Why, despite spending billions on military equipment, is the Saudi state
unable to defend itself?
-“Even after Saudi oil was fully nationalized in 1980, Washington’s
politico-military elite maintained their pledge to defend the existing Saudi
regime and its state whatever the cost. Why…could the Saudi state not defend
itself? The answer was because the Saud clan, living in permanent fear, was
haunted by the spectre of the radical nationalists who had seized power in
Egypt in 1952 and in Iraq six years later. The Sauds kept the size of the
national army and air force to the barest minimum to minimize the risk of a
coup d’état. Many of the armaments they have purchased to please the West
lie rusting peacefully in desert warehouses. For a decade and a half in the
late 1970s and ‘80s, the Pakistan army, paid for by the Saudi treasury, sent
in large contingents to protect the Saudi royal family in case of internal
upheavals. Then, after the first Gulf War, the American military arrived.” (Tariq
Ali; The Duel: Pakistan on the Flight Path of American Power; Scribner; New
York: 2008; p. 265.)
-“Relatively
small in number, in order to minimize the domestic risk of a republican coup
d’état of the kind that brought down monarchies in Egypt, Iraq, and Libya,
it [the Saudi military] is impressively armed with equipment bought at
prohibitive prices in what has proved to be a bonanza for Western cannon
merchants. Thus, for a population four times the size of that of neighboring
Jordan, the Saudi kingdom has barely twice as many personnel in its armed
forces, but it spends thirty-three times what the Hashemite kingdom spends
on its own military budget. … Much of Riyadh’s most advanced weaponry is
‘pre-positioned’ so as to be available for eventual use by the U.S. troops…
It is an open secret that the huge airport at Jeddah is not designed merely
for the transit of pilgrims to Mecca.” (Gilbert Achcar; Eastern Cauldron:
Islam, Afghanistan, Palestine, and Iraq in a Marxist Mirror; Monthly Review
Press; New York: 2004; pp. 71-72.)
-“The original function of the [Saudi National] Guard was to enlist the
loyalty of the tribes to protect the royal family against any threat… The
Guard was founded at a time of suspected military coups, so its first bases
were sited close to Riyadh and the major cities. The idea was that the Guard
could block hostile forces coming from the more distant army and air force
bases on the borders. Its anti-aircraft weapons were designed to shoot down
Saudi fighter planes. Its antitank rockets had to be good enough to take on
the Saudi Army.” (Robert Lacey; Inside The Kingdom: Kings, Clerics,
Modernists, Terrorists, and the Struggle for Saudi Arabia; Viking; Toronto:
2009; p. 184.)
-Note that the respective populations of Israel and Saudi Arabia are 7.6
million (75% are Jewish) and 25.7 million (including 5.6 non-nationals).
Therefore, Saudi Arabia has the population to more than match Israel’s
military.
5. Which country is the largest provider of crude oil to the US?
-Canada.
“The
top five sources of US crude oil imports for November [2010] were Canada
(1,975 thousand barrels per day), Mexico (1,229 thousand bpd), Saudi Arabia
(1,119 thousand bpd), Venezuela (884 thousand bpd), and Nigeria (806
thousand bpd).”
Source here.
-While the US does not rely on Saudi oil, according to Noam Chomsky "What
has been central to [US] planning [concerning Middle East energy resources]
is control, not access, an important distinction. The United States followed
the same policies long before it relied on a drop of Middle East oil, and
would continue to do so if it relied on solar energy. Such control gives the
United States 'veto power' over its industrial rivals, as explained in the
early postwar period by influential planners, and reiterated recently with
regard to Iraq: a successful conquest of Iraq would give the United States
'critical leverage' over its industrial rivals, Europe and Asia, as pointed
out by Zbigniew Brzezinski, an important figure in the planning community.
Vice President Dick Cheney made the same point, describing control over
petroleum supplies as 'tools of intimidation and blackmail'—when used by
others. He went on to urge the dictatorships of Central Asia, Washington’s
models of democracy, to agree to pipeline construction that ensures that the
tools remain in Washington’s hands." (Source
here.)
-The issue of “control of oil” is fundamental. It is why the US accepts
Saudi Arabia being China’s principal supplier of crude oil and why it
accepts Russia-Saudi joint ventures connected to oil.
-Saudi Arabia has the world's largest oil reserves and is the world's
largest oil exporter. Oil accounts for more than 90% of exports and nearly
75% of government revenues, facilitating the creation of a welfare state. (Source
here.)
What is at stake for Americans in the Bahrain unrest?
1. Bahrain is a major center for the refining of crude petroleum, refining
some 270,000 barrels a day. This amount is not large, but given tight
petroleum supplies and a price of over $100 a barrel for Brent Crude, an
outage there would certainly put up world prices.
2. Bahrain hosts a naval base for the US Fifth Fleet, important to the US
security architecture for the Persian Gulf (the Arabs say Arabian Gulf).
Nearly 2/3s of the world’s proven petroleum reserves and 45% of the world’s
natural gas reserves are in the Gulf region.
3. Bahrain is an important finance center.
The Shiite majority is attempting to assert itself there. A
Shiite-dominated government in Bahrain might well demand a closure of the US
naval base. It would not be an Iranian puppet, insofar as Arab Shiites are
jealous of their independence and most Bahraini Shiites don’t follow
ayatollahs; but it would certainly have warm relations with Tehran. A Shiite
victory there would politically embolden other Gulf Arab Shiites, in Kuwait,
Saudi Arabia, and the United Arab Emirates (Shiites are a minority in all
three). Insofar as Iran enjoys soft power with the region’s Shiites, the net
result would certainly favor Iran and at least somewhat disadvantage the
United States, which already shot itself in the foot by helping install a
Shiite government in Baghdad that has excellent relations with Iran. For the
Bahrain government to become more democratic and more Shiite-influenced would
annoy the Wahhabi Saudi state, which now sees the Sunni Bahraini king as a
strategic asset.
Gulf
Thousands of
Shiite demonstrators came out yet again in Bahrain on Tuesday. They are
demanding that prime minister Sheikh Khalifa bin Salman Al Khalifa step down.
An uncle of the king, Sheikh Khalifa has been appointed PM for four decades.
The Shiite protesters want an elected prime minister who would reflect their
demographic dominance.
The killings of two demonstrators, one on Monday and another on Tuesday,
have helped to galvanize the crowds. In an unusual concession, the king, Hamad
Al Khalifa,
apologized Tuesday for the deaths and promised that the shooters would be
brought to justice.
The demonstrators thronged into the downtown Pearl Roundabout, and some are
insisting on spending the night there. The main Shiite political party, with
18 seats in the lower house of 40 seats, is Wifaq.
It suspended its participation in parliament on Tuesday in protest against
the killings of the two demonstrators.
Bahrain has a
little over 1.2 million people, of whom 54 percent are expatriate guest
workers, nearly half of them from India. I can remember, on the occasions
I was in Manama, the way signs in Malayalam festooned the market and the
money-changer stalls. The other 568,000 are Bahrainis. Of these, social
scientists think about two-thirds, or about 374,000, are Shiites. In turn,
about 100,000 of these are Ajamis, i.e. Shiites of Iranian heritage who are
now Arabs. The rest are Baharna or indigenous Bahraini Shiites, who mainly
adhere to the conservative Akhbari school that does not believe in following
ayatollahs. Many of them live in rural villages outside the capital.
The other 187,000 or so are Sunni Bahrainis, the community to which King
Hamad Al Khalifah belongs. He has reigned as king since 2002 (having come to
power as emir in 1999).
Bahrain
In the Gulf, typically guest workers cannot vote and don’t have permanent
residency or a path to citizenship, though it is rumored that the Sunni
monarch, King Hamad Al Khalifa, has bestowed Bahraini citizenship on some
expatriate Sunnis in a so far vain attempt offset the indigenous Shiite
majority.
The Bahrain constitution lets the Sunni king appoint the 40 members of the
upper house of parliament. The lower house also has 40 members, and in the
2010 election only 18 of them were captured by the Shiite religious party,
Wifaq, led by cleric Ali Salman. The other 22 went to Sunnis of various
stripes.
Ali Salman
So, in a country where citizens are probably two-thirds Shiite, Shiites
have little representation in the senate and are a minority even in the
elected lower house. Not only can the Sunni-dominated upper house veto
measures passed by the lower house, but the king himself can veto legislation
at will and can prorogue parliament whenever he likes.
Many Shiites in rural areas are poor, despite Bahrain’s riches, derived
from its small petroleum industry, its vital finance sector, and strategic
rent from the US for the US naval base for the Fifth Fleet. Wifaq not only
seeks more equitable representation for the Shiite majority but also a better
economic deal for the poor.
Jeremy Pressman writes in a guest column for Informed Comment
The Cyclical vs. the Fundamental in U.S. Policy: Suddenly both are in flux
If you run Washington, how best to maintain the flow of Persian Gulf energy
supplies at a reasonable price, protect Israel, and – choose your era – block
the Soviets or undermine al-Qaeda? While U.S. policy on the Gulf side of the
Mideast has long been fluid and ever-changing, the Egyptian protests have
suddenly challenged a different and seemingly fixed guideline: Washington can
rely on pro-U.S. dictators and not push hard for democratic regimes.
U.S. Gulf policy has been in constant flux, moving between self-reliance
and reliance on some combination of Iran, Iraq, and Saudi Arabia: The two
pillars in the 1970s (Iran and Saudi), the Rapid Deployment Force and U.S.
CENTCOM, the tilt to Iraq during the Iran-Iraq War, Operation Desert
Shield/Storm, dual containment, alliances with the Gulf Cooperation Council
states, and regime change in Iraq culminating in the 2003 invasion. Of course
such shifts were not random but rather often came about as a response to
events like the Iranian revolution or the Iraqi invasion of Kuwait.
What is the right analogy for this aspect of U.S. Gulf policy? Maybe it is
like a mountain climber on Mt. Everest. After each tough section, the climber
reaches the next camp and rests. Sometimes there are moments of stability. But
come morning, the climbing party will have to set out again. Nothing stays
calm for long and it could all fall apart whether due to one’s own
shortcomings or larger factors beyond one’s control (see
Into Thin Air.
Yet in contrast, the U.S. approach across the entire Mideast has been
straightforward and stable: being pro-American trumps being democratic. Insert
Mubarak’s Egypt, the al-Saud dynasty, the Hashemites in Jordan or the like.
Even George W. Bush,
despite protestations to the contrary now by his acolytes], never pressed
Saudi hard and
let things slide with Egypt by the second half of term two. Bet on the
stability of autocrats rather than the complexity of democracy. As time went
on and the U.S. face (and aid) was so intimately tied to these regimes, the
odds that democracy might unleash anti-American or, at a minimum, neutral
politics increased.
Thus, what we have witnessed in the last decade has largely been unsettling
and familiar until Tunisia and Egypt. The United States invaded Iraq with an
insurgency supplanting rose petals. Iran sought to fill the power vacuum as it
meddled in Iraq, pushed nuclear research, rhetorically attacked Israel, and
continued siding with Hamas, Hizbollah, and other U.S. rivals. In short, U.S.
Gulf policy was again in shambles with the U.S. ally (post-Saddam Iraq) in
turmoil and the U.S. adversary (Ahmadienjad’s Iran) seemingly ascendant. Back
to the drawing board – AGAIN! – on the Gulf.
But what Tunisia and Egypt have challenged is the enduring guideline of
U.S. foreign policy, that while theoretically risky, endless short-term
commitments to autocrats would never come unraveled. (A bet, by the way, that
the United States has made many times in many countries around the world.)
Suddenly, there is a hint of democracy, the possibility that Arab leaders and
parties who express popular preferences will not only emerge but also create
space between their foreign policies and U.S. foreign policy.
This hint of democracy is a double threat for Washington. It means
dictators will not last forever, and it means democrats, should they follow,
may not be reflexively pro-American (what should be an obvious point when they
replace a pro-American, anti-democrat). I would agree that the general concern
about the changing balance of power in the Gulf since 2003 and what that means
for the region is important to consider. But I would also suggest it is part
of the cyclical U.S. challenge of advancing its interests in the Persian Gulf.
It has been decades of ups and downs. In contrast, Tunis and Cairo shake up
the static part of U.S. policy in a fundamental fashion and challenge – or
possibly force – Washington to engage in a fundamental rethink.
Jeremy Pressman
Alan R. Bennett Honors Professor
Associate Professor
Department of Political Science
University of Connecticut
