Worried About the Price of Gas? End the Wars
Oil Wars
By ISMAEL HOSSEIN-ZADEH
CounterPunch
May 14, 2008
http://www.counterpunch.org/
Despite all the recent talk of soaring prices at the pump, political and
economic pundits rarely mention the impact of war and political
instability in the Middle East on the skyrocketing price of oil. There is
strong evidence, however, that the heightened price of energy is a direct
consequence of the destabilizing wars and geopolitical insecurity in the
region.
These include not only the raging wars in Iraq and Afghanistan, but also
the threat of a looming war against Iran. The record of soaring oil
prices shows that anytime there is a renewed U.S. military threat against
Iran, fuel prices move up several notches.
Not long ago the price of oil was about a quarter of what it is today.
But soon after the invasions of Afghanistan and Iraq the price of oil
began to escalate in tandem with the escalation of war and political
turbulence in the Middle East. The fact that the rise in the price of oil
has followed the heightened insecurity in oil markets is neither
accidental nor a simple correlation; it represents a causality that runs
from the heightened insecurity in oil markets to the inflated price of
energy.
The war also contributes to the escalation of fuel cost in indirect ways;
for example, by plunging the U.S. ever deeper into debt and depreciating
the dollar. As oil is priced largely in U.S. dollars, oil ex****ting
countries ask for more dollars per barrel of oil as the dollar loses
value.
Not only are the raging wars in the Middle East responsible for energy
price inflation, they are also responsible for price inflation of many
other commodities, especially grains and other foodstuff, whose
production and trans****tation depend on fuel. According to the World
Bank, food prices have more than doubled over the past three years. The
price of rice, the staple for billions of Asians, is up 147% over the
past year alone. The mounting food prices have caused hunger and deadly
violence in many countries, including Haiti, Egypt, Thailand, Indonesia,
Senegal, and Malaysia.
This shows that the disastrous consequences of U.S. wars of choice go
beyond Iraq, Afghanistan, and the United States. The skyrocketing costs
of fuel and food tend to plunge many of the world economies into a 1970s-
style stagflation (a combination of stagnation and inflation) that
threatens many lives and/or livelihoods around the globe.
Neoconservative forces in and around the Bush administration and
beneficiaries of war dividends — wi****ng to deflect attention away from
war as the main culprit for the skyrocketing energy prices — tend to
blame secondary or marginally relevant factors: OPEC, China and India for
their increased demand for energy, or supply-demand imbalances in global
markets.
Whatever the contributory role of these factors, the fact remains that
the current oil price hikes started with the beginning of the Bush
administration’s wars against Iraq and Afghanistan. Furthermore, a
closer
examination of these factors reveals that their roles in the current
price inflation of oil have been negligible.
The claim that there is a supply-demand imbalance in global energy
markets cannot be backed by facts. The alleged disparity between supply
and demand is said to be due to the rapidly growing demand coming from
China and India. But that rapid growth in demand is largely offset by a
number of counterbalancing factors. These include slower growth in U.S.
demand due to its slower economic growth, efficient energy utilization in
industrially advanced countries, and increases in oil production by OPEC,
Russia, and other oil producing countries.
Nor can OPEC be blamed for the current energy crisis. OPEC’s desire to
sometimes limit the supply of oil in order to shore up its price is
limited by a number of factors. For one thing, OPEC members are not
unmindful of the fact that inordinately high oil prices can hurt their
own long-term interests as this is bound to prompt oil im****ters to
economize on fuel consumption and search for alternative sources of
energy.
For another, OPEC members also know that inordinately high oil prices
could precipitate economic recessions in oil im****ting countries that
would, in turn, lower demand for their oil. In addition, high oil prices
tend to raise the cost of oil producers’ im****ts of manufactured
products
as high energy costs are bound to be reflected in higher costs of those
products.
For these reasons leading OPEC members such as Saudi Arabia and Iran have
repeatedly stated that they prefer stable, predictable, and moderate oil
prices to short-term oil price hikes that result from war, political
turbulence and unstable markets.
The political implications of this discussion are clear: to bring down
the prices of fuel and food requires bringing home the troops. By
lowering the energy costs of production and trans****tation this will help
save our own and many other economies from the plagues of inflation and
stagnation. It will bring relief to hundreds of millions worldwide who
are burdened by crippling energy bills and the cru****ng costs of feeding
their families.
Not many people would doubt the devastating socio-economic consequences
of the U.S. wars of choice, both at home and abroad. The question is: why
can’t they be stopped?
The answer is that while the war has been ruinous to many, it has been a
boon for a few, the powerful special interests who not only benefit from
war (both economically and geopolitically), but who have also positioned
themselves within the U.S. power structure in ways that allows them to
constantly invent new enemies and make new wars in order to further their
nefarious interests.
Who are these powerful special interests, the highly influential
beneficiaries of war dividends who camouflage their evil objectives
behind national interests in order to perpetuate war and militarism and
fill out their deep pockets, or further their geopolitical interests in
the Middle East?
A most widely-cited factor behind the Bush administration’s drive to war
and the soaring energy cost is said to be Big Oil. Despite its
popularity, however, this claim cannot be sup****ted by facts; it tends to
rest more on perception and precedent than reality.
It is true that for a long time, from the beginning of Middle Eastern oil
exploration and discovery in the early twentieth century until the
mid-1970s, colonial and/or imperial powers controlled oil either
directly, or through control of oil producing countries—at times, even
by
military force. But that pattern of exploitation of global markets and
resources has now changed.
It is also true that, once the Bush administration commenced with the
invasion of Iraq, American oil companies set up shop in Baghdad in order
to partake in the spoils of war. But this was not limited to oil
companies; many non-oil transnational cor****ations likewise rushed to
Baghdad to make an economic killing.
The larger part of the perception, however, stems from the fact that oil
companies handsomely benefit from oil price hikes that result from war
and political turbulence in the Middle East. Such benefits are, however,
largely incidental. Surely, American oil companies would welcome the
spoils of war. From the largely incidental oil price hikes that follow
war and political convulsion, most observers automatically conclude that
Big Oil must have been behind the war.
There is no hard evidence, however, that oil companies pushed for or
sup****ted the Bush administration’s plans of invading Iraq—just as
they
are now leery of the administration’s threat of a military strike
against
Iran. “The big oil companies were not enthusiastic about the Iraqi
war,”
says Fareed Mohamedi of PFC Energy, an energy consultancy firm based in
Wa****ngton, D.C. “Cor****ations like Exxon-Mobil and Chevron-Texaco want
stability, and this is not what Bush is providing in Iraq and the Gulf
region,” adds Mohamedi [1].
During the past few decades, major oil companies have consistently
opposed U.S. policies and military threats against countries like Iran,
Iraq, and Libya. They have, indeed, time and again, lobbied U.S. foreign
policy makers for the establishment of peaceful relations and diplomatic
rapprochement with those countries. The Iran-Libya Sanction Act of 1996
(ILSA) is a strong testament to the fact that oil companies nowadays view
wars, economic sanctions, and international political tensions as harmful
to their long-term business interests and, accordingly, strive for peace,
not war, in international relations.
The 1996 Iran-Libya Sanction Act, which amounted to a total trade and
investment embargo against these two countries, penalized not only Iran
and Libya, but also major American oil companies, especially the Conoco
oil company that had just signed a $1 billion contract to develop fields
in Iran.
It is no secret that the major force behind the Iran-Libya Sanction Act
was the America Israel Public Affairs Committee (AIPAC). The success of
AIPAC in passing ILSA through both the Congress and the White House over
the opposition of the major U.S. oil companies is testament to the fact
that, in the context of U.S. policy in the Middle East, even the
influence of Big Oil pales vis-à-vis the influence of the pro-Israel
lobby [2].
So, if Big Oil no longer favors war and political turbulence in oil
markets, what, then, are the driving forces behind the Bush
administration’s war and military adventures in the Middle East?
Many would immediately point to the power and influence of
neoconservative forces in and around the Bush administration. While
obviously this would not be false, it would not be the whole truth
either; it hides more than it reveals. Specifically, it tends to lose
sight of the bigger, but largely submerged, picture: the powerful special
interests that lie behind the façade of neoconservative figures.
There is clear evidence that the leading neoconservative figures have
been long-time political activists who have worked through think tanks
set up to serve either as the armaments lobby, or the pro-Israel lobby,
or both—going back to the 1990s, 1980s and, in some cases, 1970s. These
cor****ate-backed militaristic think tanks include the American Enterprise
Institute, Project for the New American Century, Center for Security
Policy, Middle East Media Research Institute, Wa****ngton Institute for
Near East Policy, Middle East Forum, National Institute for Public
Policy, and Jewish Institute for National Security Affairs.
There is also evidence that the major components of the Bush
administration’s foreign policy, including the war on Iraq, were
designed
long before George W. Bush arrived in the White House — largely at the
drawing boards of these think thanks, often in collaboration directly, or
indirectly, with the Pentagon, the arms lobby, and pro-Israel lobby. Even
a cursory look at the records of these militaristic think tanks — their
member****p, their financial sources, their institutional structures, and
the like—shows that they are set up to essentially serve as
institutional
fronts to camouflage the dubious business and political relation****p
between the Pentagon, its major contractors, and the pro-Israel lobby on
the one hand, and militaristic neoconservative politicians, on the other
[3].
While the Bush administration’s unilateral wars and military adventures
have brought unnecessary death, destruction, and economic hard****p to
millions, including many in the United States, they have also brought
fortunes and prosperity to war profiteers. Pentagon contractors
constitute the overwhelming majority of these profiteers. They include
not only giant manufacturing contractors such as Lockheed Martin,
Northrop Grumman and Boeing, but also a complex maze of over 100,000
service contractors and sub-contractors such as private army or security
cor****ations and “reconstruction” firms.
The rise of the fortunes of the major Pentagon contractors can be
measured, in part, by the growth of the Pentagon budget since President
George W. Bush arrived in the White House: it has grown by more than 76%
percent, from $297 billion in 2001 to almost $520 billion in 2008. These
figures do not include the Homeland Security budget, which is close to
$40 billion for the 2008 fiscal year alone, and the costs of the wars in
Iraq and Afghanistan, which amount to nearly $200 billion per year.
The skyrocketing Pentagon’s share of public money has meant that, for
example, in the current (2008) fiscal year military spending represents
58 cents out of every dollar spent by the U.S. government on
discretionary programs [4]. (Discretionary programs include everything
except Social Security and Medicare, that is, education, health, housing
assistance, international affairs, natural resources and environment,
justice, veterans’ benefits, science and space, trans****tation,
training/
employment and social services, economic development, and several more
items.)
The soaring military spending has also meant that beneficiaries of war
dividends are essentially looting the national treasury in order to line
their pockets. These include not only the Pentagon and its military
contractors but also members of the key Congressional committees who have
grown increasingly addicted to generous contributions to their reelection
that come from the fortunes of the Pentagon and its business clients.
U.S. lawmakers have additional, more direct, financial interests in war
and military spending: “Members of Congress have invested nearly 196
million dollars of their own money in companies that receive hundreds of
millions of dollars a day from Pentagon contractors to provide goods and
services to U.S. armed forces.” This means “lawmakers charged with
overseeing Pentagon contractors hold stocks in those very firms” [5].
It also means that our esteemed lawmakers know how or where to invest
most profitably: “Shares of U.S. defense companies have nearly trebled
since the beginning of the occupation of Iraq. . . . The feeling that
makers of ****ps, planes and weapons are just getting into their stride
has driven shares of leading Pentagon contractors Lockheed Martin Corp.,
Northrop Grumman Corp., and General Dynamics Corp. to all-time highs”
[6].
It is not surprising, then, that many elected officials with input or
voting power in the process of the appropriation of the Pentagon budget
find themselves in the pocket of defense contractors. Neither is it
surprising that these dubious relation****ps should serve as breeding
grounds for the near legendary levels of waste, inefficiency, and
corruption that surround the military-industrial-congressional complex.
Two major conclusions follow from this discussion. The first is that, as
pointed out earlier, war and political instability in the Middle East are
the major driving forces behind the soaring price of oil; and that,
therefore, to contain or reverse the rising trend of energy prices
requires bringing U.S. troops home. The second conclusion is that
achievement of this goal, the goal of ending U.S. wars of aggression, is
possible only if (a) money or profits are taken out of war, and (b) money
is taken out of elections [7].
References
[1] See Roger Burbach, Bush Ideologues vs. Big Oil: The Iraq Game Gets
Even Stranger, CounterPunch.
[2] Melinda K. Ruby, “Is Oil the Driving Force to War?” unpublished
Senior thesis, Dept. of Economics and Finance, Drake University, Des
Moines, Iowa (spring 2004); see also Herman Franssen and Elaine Morton,
“A Review of U.S. Unilateral Sanctions Against Iran,” Middle East
Economic Survey 45, no. 34 (26 August 2002), pp. D1-D5 (D section
contains op eds. as opposed to staff-written articles).
[3] William D. Hartung & Michelle Ciarrocca, “The Military-Industrial-
Think Tank Complex,” Multinational Monitor (Jan./Feb. 2003); DiLip
Hiro,
Secrets and Lies: Operation Iraqi Freedom and After (Nation Books 2004).
[4] Hartung, W. D. 2007. “Bush Military Budget Highest since WW II”,
Common Dreams.
[5] Abid Aslam, “US Lawmakers Invested in Iraq, Afghanistan Wars,”
Common
Dreams (8 April 2008),
[6] Bill Rigby, “Defense stocks may jump higher with big profits”,
Reuters.
[7] “Taking money out of war” in order to end imperial wars of
aggression
was, perhaps most forcefully and convincingly, formulated by the late
General Smedley D. Butler, in his famous War Is a Racket (Los Angeles:
Feral House, 1935 and 2003).
[Ismael Hossein-zadeh, author of The Political Economy of U.S. Militarism
(Palgrave-Macmillan 2007), teaches economics at Drake University, Des
Moines, Iowa.]
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