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The new oil order: built on sand?

Put quite simply, what the american people learned from the Gulf War is that it's a helluva lot easier and a helluva lot more fun to "kick ass" in the Middle East (to quote those at the highest levels of government) than it is to make any sacrifices to limit America's dependency on imported crude. (James Schlesinger, former U.S. Secretary of Energy in Petroleum Intelligence Weekly, 28 September 1992).

The second gulf war has unmistakably contributed to the establishment of a "new oil order", with the American-Saudi connection as its linchpin. The shape of that new order has been visible for quite a while, but the outcome of the war, so successful for the West, has given a fresh impetus to the realization of radically different relations in the oil market. After "Operation Desert Storm", politicians and spokespersons for oil companies, with increasing frequency, can be caught speaking unashamedly of the "internationalization" of Arab oil wells. It looks as if we are living a rerun of the "golden" Fifties and Sixties, way back when the Western oil companies dictated the oil market. Hard-pressed for money, many oil-exporting countries today find themselves compelled to appeal to the very same oil companies for financial and technical aid. True to the motto "We pay, we control", they have regained access to the oil resources they had not been allowed to touch for twenty years. "This is just about as close to denationalization as you can get", one of them noted.(1) It is highly doubtful, however, that this "recolonization" of Arab oil will last very long. There are just too many uncertain (f)actors at play.

OIL AND OIL REVENUES

It is not only its opponents who claimed that the war was mainly about "oil". But is it really all that clear-cut? Just as in any other war, several motives played a part on both sides in the Second Gulf War. Simplistic sloganeering such as "no blood for oil" only touch on part of the truth, however important that part. The war's multicausal character can hardly be cast into doubt: Political, economical, strategic and moral dimensions each contributed their bit. That is not to say that each factor carried the same weight. At different points in time and place, different sets of interests took the upper hand. Sometimes it was not quite possible to disentangle politico-economic and politico-strategic dimensions. Still, the "oil factor" arguably played a singular part for both Iraq, Kuwait and the United States, and therefore merits a singular analysis.(2) This is not to imply that, say, from an American perspective the Second Gulf War can simply be portrayed as a "war for resources". On the other hand, this should not lead us astray - as Cyrus Bina did in a recent contribution to Arab Studies Quarterly, where he asked us to believe that "the need for oil is a sideshow. . . . Why should the U.S. government be worried about the lack of access to 'cheap' Middle Eastern oil, knowing well that the globalization of oil has already diminished the regional boundaries and, regardless of who owns or controls the oil fields, the omnipotent rules of the transnational market will have the final say?", he misleadingly argued.(3)

Strictly speaking the American government had little reason to worry about short-run oil supplies. Before the Iraqi invasion and the subsequent economic boycott, Kuwait and Iraq supplied less than 7% of world oil demand. Their exports covered under 4% of American oil consumption. As it turned out, other OPEC countries managed to make up for lost Iraqi and Kuwaiti output very rapidly. In that respect, everything seemed to go quite well. In other words: There was hardly any need to transfer some 500,000 soldiers to the Saudi desert. All the more true since Washington was aware that the oil market obeys different laws, which govern Saddam Hussein as well. Should the Iraqi leader have succeeded in annexing Kuwait, which would have put him in control of 20% of the world's oil reserves, oil supplies would still not really have been imperiled. Iraq was deeply indebted after the Iran-Iraq war, and what would have been more obvious than increasing oil production?

Even if the Iraqis had considered producing less with a view to forcing up the oil price, that would have only given them short-term relief. In that case, reactions to earlier price hikes would most likely have been repeated: energy conservation and increased oil production in (more expensive) non-OPEC quarters.(4) Moreover, a higher oil price is not necessarily unfavorable to the United States. It does mean a higher import bill, but on the other hand, domestic oil production would receive a shot in the arm. The low oil prices of the past few years have compelled one American oil field after another to close down, so a price rise of a couple of dollars would find great acclaim by the American oil industry.(5)

In brief, it is improbable that President Bush only drew his "line in the sand" for fear of a direct threat to American oil supplies. Too little was at stake to justify that assumption. Matters were naturally different for Western Europe and Japan, who were much more dependent on oil imports from the Middle East compared to the U.S.(6)

If we look into the more distant future, the cards are stacked quite differently. Not only Western Europe and Japan, but the U.S.A. in particular is expected to become increasingly dependent on Middle East oil. If the current trend persists - and all the signs confirm this - the United States' dependence on oil imports will reach 65% of its needs by 1995 (in 1990 that figure was already close to 50%). An ever increasing share of that rate will originate from the Cuff region, since two-thirds of the world reserves are located there. The United States itself only contains 3.4% of world oil deposits.(7) Reliable suppliers are obviously vital in that situation. If we go by the adage "foresight is the essence of government", American intervention can be explained (in part) from that perspective.

There is much to be said against this reasoning, though, and so it cannot explain the American intervention in the Gulf by itself. For, viewed from a strictly economic, rational-actor vantage point, it does not matter all that much who is in control of 20% (or more) of world oil reserves. "Whoever owns the oil must sell it at the world-market price," Robert Brenner argues.(8) It should be clear, however, that not everyone, and not a great number of American politicians at any rate, has a rock-solid faith in this "logic of the market". They would rather be on the safe side and give America-friendly regimes the advantage.(9)

However important, the guaranteed access to cheap Arab crude is not the be-all and end-all of American foreign policy. Although oil as an energy resource is the mainstay of growth and prosperity in the industrialized world, there is more to the story. For, oil revenue in turn represents economic value to Western firms, especially American and British banking institutions. Secrecy is the rule in this world of financial wheeling and dealing and the scarce figures available are widely divergent. Highest estimates (before the Gulf crisis) put investment by Gulf states in the United States at some $1 trillion(!)(10) Although this figure may be overstated, it is clear enough that ascertaining the "political welfare" of the ruling oil monarchs in the Gulf States is a top priority in London and Washington.(11)

A NEW PARADIGM

Let us now focus on recent developments in the oil industry itself. In addition to what has been described above, a set of structural trends which lay the groundwork for a radically changed power configuration on the oil market stand out. A key concept here is the process of "vertical integration", that is, integration of five distinctive stages: exploration, production, transport, processing and distribution, in short "from pit to pump". The wave of nationalizations in the Seventies broke up this vertical integration of Western oil companies, and the oil exporting countries took control of oil fields (the "pit"). Over the past few years we have seen a process of vertical reintegration, in which the needs of OPEC state oil companies and Western oil firms appear to mesh. On the one hand, the OPEC states own the reserves of crude oil that the Western oil firms badly need, on the other hand OPEC state oil companies crave outlets for their oil products (such as petrol stations) which are almost all owned by Western companies.

Although at first the initiative seemed to remain with the oil-exporting states, particularly Saudi Arabia, Kuwait, Venezuela and Libya,(12) the Western firms have retaken center stage of late. More and more frequently the oil states must call on foreign funds and know-how to keep up or expand their production level. This is rooted in the dire financial straits most oil exporters entered after the "oil crisis" of 1985-86. Since then, their revenues have dropped so dramatically that in many cases they are now unable to exploit their oil deposits independently.(13)

It is not all that surprising, then, that in the last few years increasingly passionate pleas have been made in OPEC quarters for a "dialogue" of producers and consumers. In order to meet projected demand, OPEC members will have to expand their capacity by a further 10 million b/d to around 38 million b/d by the year 2000. According to then OPEC Secretary General, Dr. Subroto, this will cost as much as $160 billion.(14) Looming in the background is a sense of apprehension about the possible introduction of some form of energy tax in the oil consuming countries, which might have deleterious consequences for oil exports from OPEC member states.(15) Venezuela's Oil Minister Alirio Parra is one of the most outspoken representatives of this new mood: "We must build bridges, not walls. Our global industry is now working under a new paradigm, what I visualize as the seamless fabric where the connecting and is obsolete, and the new rubric should be written as ProducerConsumer, without a hyphen, and written as one word."(16) Note that some twenty years ago, after the first oil shock, it was the industrial countries (bar the United States) who asked for such a dialogue. Now the tables seem to have turned and the oil states are the asking party, and again it is the United States which, wary of any institutionalized consultation of producers and consumers, prefers the sidelines.

Representatives of the oil-producing states are bowing to Western bankers and oil companies, and each contract is more appetizing than the previous one. More often than not the early oil concessions come to mind.(17) Departing from the historical conflict between capital and landed property, this new power structure could be summarized as the end of a process that went from "deterritorialisation of capital and re-territorialisation of rent" (in the 1970s) to "deterritorialisation of rent and re-territorialisation of capital" (in the 1980s and early 1990s).(18) In some cases even granting (partial) ownership to foreign companies of oil or gas fields is no longer taboo.(19) Under the adage, "We pay, we control", Western oil companies dictate the terms of negotiation.(20) The Gulf oil producers cannot ignore this trend, either, and it is at least ironic that Saddam Hussein's Iraq shows the least reservation of all in its attempt to woo Western oil companies.(21) Both Iraq and the other (Arab) Gulf states will naturally find it hard to deny that the Gulf War has given a vivid impetus to this "new pragmatism."

More important, of course, is Saudi Arabia's deep indebtedness to the United States. In addition to a direct contribution to the war effort ($17 billion), the Saudis will have to "pay" in a different sense: by giving up part of their sovereignty in the field of price and production policies. Even more than before, there exists the question of a "special relationship" between the world's biggest oil consumer and producer.(22)

TETE-A-TETE

Both the Gulf crisis and Gulf War have influenced the oil market configuration in several ways.(23) Two developments stand out in this context: the changed relations within OPEC and the hegemonic position occupied by the United States. Although the shape of a "mini-OPEC" was detectable before the war, it was the Gulf crisis which made it manifest that only a very limited number of member states possess sufficient unused production capacity to play a role of any significance in the oil market. Some jokingly refer to "GOPEC" (Gulf Organization of Petroleum Exporting Countries) with Riyadh as its new center of power.(24) The successful outcome of "Desert Storm" even reinforced this development at the political level. Before the war, states like Algeria and Libya could still pressure the Gulf states to reduce their production levels. Since the war, this has become rather more difficult. Thanks to the American/British Blitzkrieg, with the support of Egypt and Syria, the Gulf states have mustered enough political courage to resist any pressure by other oil producers for at least some time to come.

A second outcome of the Gulf War which can hardly be overrated is the (as yet) unchallenged and multidimensional hegemony of the United States in the Gulf region. Even though the situation differs from country to country, the "political tribalism"(25) of kings, sheikhs and emirs owes its survival to the success of "Operation Desert Storm", and these rulers rely on Washington's political and military support for their continued existence. As a result, the Gulf states' (particularly Saudi Arabia's) policies regarding oil price and production more than ever have to acknowledge American oil interests, both at the national level and in OPEC. As a result, American-Saudi relations seem to have reached a new peak, the last stage of a process which began in the Thirties. Consecutive American Presidents, from Roosevelt on, never let Saudi oil slip from their attention.(26) American involvement reached its temporary apex under President Carter when the "Carter Doctrine" was announced in January 1980: The United States' "vital interests" in the Persian Gulf must be defended, if necessary by military means.(27) The "Rapid Deployment Force" was expressly created for that purpose, and was to serve as the organizational matrix for the gigantic "Desert Shield" operation ten years later.

Under President Reagan the Saudis showed their readiness to support anti-communist movements in the Middle East and elsewhere in the Third World, in exchange for the delivery of sophisticated arms systems. On that basis, over $1 billion was channeled to the contras in Nicaragua. Other beneficiaries included Jonas Savimbi's UNITA in Angola and the mujahidin in Afghanistan.(28)

Of equal if not greater importance is the regular consultation between Riyadh and Washington on Saudi off policy. Up until mid-1992 allegations to this effect could still be dismissed as "conspiracy theories", but when the Washington Post started to quote from Foreign Office and other government files in July that year, the allegations proved quite correct. In past years the Americans went to great lengths to explain the negative consequences of an oil price that exceeded certain margins. For its part, Saudi Arabia repeatedly informed Washington on proposals it was going to make within OPEC.(29) During the Gulf crisis President Bush had successfully appealed to Saudi Arabia and other oil producers to make up for lost Iraqi and Kuwaiti production. The Saudis shored up their production from 5.2 million b/d to over 8 million b/d. This level has not, or only marginally, been adjusted since then.

After the Gulf War, Saudi Arabia and the United States had a "once-in-a-generation opportunity to put in place the elements of a new oil regime governing oil trade", as Edward Morse exulted.(30) What reason was there for the Americans to warm to the producer-consumer dialogue that some embraced so enthusiastically, if a simple tete-a-tete between the biggest oil exporter and the leading world power could easily be arranged? As a result of this joint American-Saudi condominium, the price of oil remains low, that is, far below OPEC's target price of $21 a barrel; and, in real terms, less than half the revenue achieved immediately after the "oil crisis" of 1973-74.(31)

As a growing oil importer, the United States is quite happy with that, even though there is an inherent risk of even greater dependence on foreign supplies as oil consumption continues to grow. A permanent military presence in the Gulf region almost becomes a necessity: "US military predominance makes it more likely that the US government will favour a 'fix-it' approach over one designed to limit US vulnerability. . . . In the wake of Desert Storm, the dangers of import dependence appear to have been forgotten - if something goes wrong in the Middle East, US military might can fix it."(32) The convene is that a low oil price does not suit the purpose of the United States as a producer. In sum, the "optimum" oil price is neither too high, which would hurt the American economy, nor too low, which would bring about the demise of the domestic oil industry. It would be a reasonable assumption to put these upper and lower ceilings at $25 and $12 a barrel respectively.(33) The Saudis should bear this in mind. James Akins, the oil guru and former U.S. ambassador to Saudi Arabia, even takes matters one step further, hinting at the (extorted) option of allowing the United States "special treatment". Even if the Saudis should decide on a price rise - because of (persisting) cash constraints - the Americans could get away scot-free and evade higher import bills. As Akins soberly observes, "Here is one of history's opportunities to have it both ways. The American balance of payments problem could be handled by a special deal whereby the United States would either pay much less than the OPEC price or the Saudis could make off-setting payments to the United States. It would be difficult for the Saudis to refuse."(34)

CORNERSTONE OR SAND CASTLE?

How long will this "special relationship" last? The fatal termination of that other "special relationship" with the shah. of Iran should give sufficient food for thought. History is apparently not there to draw lessons from, however, and Washington clearly expects the "sweet arrangement" outlined above to last for some time. Another historical given that will not have the American administration tossing and turning is the fact that the Saudis have not always proved the reliable partners for which they were taken.(35)

Critics of the American-Saudi condominium tend to point out the long-run political consequences of the Gulf War. They draw analogies to earlier occasions of mass humiliation in the Arab World, such as the Anglo-Egyptian treaty of 1936, the Arab-Israeli wars of 1948 and 1967 and Israel's invasion of Lebanon in 1982. Then, too, the consequences only made themselves felt years after. Sooner or later anti-American feelings will prevail, so the argument reads. "Most Americans will be unwilling to accept the proposition that past U.S. policies had something to do with those adverse developments - that an Iraqi child who lost his parents under the rubble of a Baghdad apartment destroyed by American bombers might one day hijack an American airliner."(36)

It has also been noted that ever since the breakdown of the Ottoman empire no external power has managed to establish sustainable hegemony in the Middle East. There is no reason to assume that the United States will be the exception to that role, notwithstanding its Cold War victory. The harder the Americans try to impose a Pax Americana, the more they will be mired in all kinds of entanglements that have nothing to do with their original interest. "The Middle Eastern game is never ending, and the United States is bound to encounter new entanglements and higher costs. As it cuts one head of the hydra of instability, Washington will see several new ones spring forth," says Hadar.(37)

Naturally the simplicity of such criticisms determines their appeal. Very likely there is an element of truth in them, but only the (distant) future will tell if they really hit the mark. At this moment, however, there is more solid ground to cover concerning the near future. The main emphasis will be on the dilemmas facing King Fahd's regime, which has been the help and stay to the American government.

The autocrats in Riyadh are scared to death of any form of political unrest, first and foremost inside their own borders, but they fear upheaval abroad as well. On that latter note it is crystal clear that a permanently low level of oil prices (conforming to the United States' wishes) will only serve to increase social and, as a consequence, political dissatisfaction. The various Islamist movements' influence should not be overestimated, but it is certainly not unthinkable that they will carry a lot more weight in the coming years. This could bring about political shifts in Egypt, Algeria, Iraq or Syria, which in turn will no doubt make great waves in Riyadh, Kuwait and the other Arab Gulf states. Not even America's military umbrella can insulate the Gulf states from the rest of the Arab World, and neither can it protect oil exports from each and every political threat.(38)

The threat of political unrest in Saudi Arabia itself is at least as important, though. Saudi rulers face an enormous dilemma: They are forced to intensify oil exports to buy off growing public discontent, but this can only be realized by driving up prices through a sharp production squeeze. It goes without saying that such a course of action is not quite compatible with the cherished "special relationship" with the United States. King Fahd's greatest nightmare is for economic problems to coincide with swelling protests from the "neo-fundamentalists". The latter have gained clout during the Gulf War, protesting the presence of "infidel" Western troops on Wahhabi soil. From time to time therefore the regime finds itself compelled to crack down on overly obstreperous ulema.(39)

Neither King Fahd nor the rigid political structures in Saudi Arabia are ever-lasting. Even apart from the highly unlikely event of a future revolution a la Iran, it is now clear that the Saudis cannot be the cornerstone of a more than short-lived American hegemony in the Middle East. The Clinton Administration would be well-advised not to dismiss James Schlesinger's cri-de-coeur out of hand.

NOTES

1. Petroleum Economist, "Oil Up For Grabs" March 1992, p. 8; also Jahangir Amuzegar, "OPEC and a New Oil Order". Finance and Development, September 1992, p. 312.

2. Cf. earlier publications such as Paul Aarts, "Democracy, Oil and the Gulf War", in Third World Quarterly, 13(1992)3, pp. 525-538.

3. Cyrus Bina, "The Rhetoric of Oil and the Dilemma of War and Hegemony", Arab Studies Quarterly, vol. 15, no. 3, Summer 1993, p. 12-13 (emphasis added, PA). For different viewpoints also see Ken Matthews, The Gulf Conflict and International Relations (London, New York: Routledge, 1993), pp. 191-192; Mary Ann Tetreault, "Independence, sovereignty, and vested glory: oil and politics in the second Gulf War", Orient, 34(1993)1, pp. 87-103; James O'Connor, "Red green politics. Murder on the Orient Express: The Political Economy of the Gulf War", Capital, Nature and Socialism, June 1991, no. 7, pp. 1-17; Eric Davis, "The Persian Gulf War: Myths and Realities" in Hooshang Amirahmadi (ed.), The United States and the Middle East. A Search for New Perspectives (Albany, N.Y.: State University of New York Press, 1993), pp. 251-285; Robert Springborg, "Origins of the Gulf Crisis", Australian Journal of International Affairs, 44(1990)3, pp. 221-235; Simon Bromley, American Hegemony and World Oil: The Industry, the State System and the World Economy (Cambridge: Polity Press, 1991), in particular the Postscript.

4. In the Eighties this brought about a considerable reduction in OPEC's share of world oil production: from 54% in 1973 down to 30% in 1985. See Paul Aarts and Michael Renner, "Oil and the Gulf War": Defining the Terms of Dominion". Middle East Report, July-August 1991, pp. 25-29, 47.

5. American oil production dropped from 9.6 million barrels a day in 1970 to 7.3 million b/d in early 1992, at a time of drastically increased oil consumption since the late Eighties. See Arab Oil & Gas, "Developing Strategies for energy policies in the 1990s. Oil trends cause concern", 1 October 1990, pp. 40-44; The Economist, 19 April 1992, p. 77; Tetreault, 1993, op. cit., p. 100 and an interview with Pierre Terzian in Journal of Palestine Studies, XX (1991)2, "The Gulf Crisis: The Oil Factor", p. 103.

6. In 1990 Western Europe's and Japan's oil consumption depended for 30.6% and 61.8% respectively on oil imports from the Middle East. The U.S. stood at a modest 12.5%. Computed on the basis of data in BP Statistical Series of World Energy (London, 1991).

7. In 1990 almost 25% of American oil imports originated from the Gulf states. That figure is expected to rise to 37% by the year 2000. See Arab Oil & Gas, 1 June 1990, pp. 26 and 1 February 1993, pp. 31-32.

8. Robert Brenner, "Why the United States Is At War With Iraq", New Left Review, January-February 1991, pp, 129. Also see Bina, 1993, op. cit.

9. Brenner's view is shared by Leon Hadar, Quagmire, American in the Middle East (Washington, 1992), pp. 14 and 48; Hooshang Amirahmadi, "Global restructuring, the Persian Gulf War, and the U.S.", in H. Amirahmadi, 1993, op. cit., pp. 369-370; Richard Leaver, "The Gulf War and the New World Order: Economic dimensions of a problematic relationship", Australian Journal of Political Science, 27 (1992), p. 250. For a dissenting view cf. Robert J. Lieber, "Oil and Power After the Gulf War", International Security 17(1992)1, pp. 156-176 and Steven R. David, "Why the Third World Still Matters", International Security, 17(1992/93)3, pp. 127-159.

10. Craig Hulet, "The Secret U.S. Agenda in the Gulf War", Open Magazine Pamphlet Series (Westfield, New Jersey), 14 February 1991, p. 10.

11. See Peter Gowan, "The Gulf War, Iraq and Western Liberalism", New Left Review, May-June 1991, pp. 47-49; Simon Bromley, "Crisis in the Gulf", Capital & Class, Summer 1991, pp. 7-14.

12. See Aarts and Renner, 1991, op. cit., pp. 28-29; Edward Morse, "The Coming Oil Revolution", Foreign Affairs, Winter 1990-91, pp. 36-56; Pierre Terzian, "Integrating the Producer Countries into the Foreign Downstream Sector", OPEC Bulletin, September 1991, pp. 8-12.

For a recent survey see Middle East Economic Survey (MEES), 17 May 1993, pp. A11-A12.

13. For a rough idea of the decline in revenue, consider that OPEC states received $275 billion in oil revenues in 1980. In 1986 that figure was $77 billion.

14. Dr. Subroto, "Increased Production Capacity and its Financing in OPEC Member Countries", OPEC Bulletin, April 1993, p. 6. Note that the amount of $160 billion is a quesstimate. Subroto himself for instance is not always referring to the same figure. Also see his "OPEC's Perspective on the International Oil Market - Medium and Longterm Outlook", OPEC Bulletin, September 1993, pp. 5-8. It goes without saying, however, that huge amounts of money are needed which the OPEC countries themselves simply do not have.

15. Meanwhile the indignant outcries have become well nigh uncountable. For a survey see Paul Aarts, "De lange tenen van de OPEC" ("OPEC Quick to Take Offence"), Nieuw Europe (NL), 18(1992)3, pp. 26-30. Also see The Impact of Environmental Measures on OPEC (Vienna: OPEC, October 1993).

16. MEES, 6 July 1992, PP. D1-D3.

17. The Economist, "Oil's New World Order", 13 July 1991, pp. 67-68; Georges Corm, "Les habits neufs de la domination neocoloniale", Le Monde Diplomatique, April 1992, pp. 16-17, and, for a dissenting view, Giacomo Luciani, "Le nouvel ordre petrolier arabe", Maghreb-Machrek April-June 1992, no. 136, pp. 50-62.

18. Philippe Beraud, La dialectique territoriale de l'industrie petroliere (Rennes: Cahiers d'Economie Mondiale, 6(1992)1, January-June). For a systematic attempt to relate an analysis of the oil industry to Marx' discussion of rent, see Mohsen Massarrat, Weltenergieproducktion und Neuordnung der Weltwirtschaft (Frankfurt/New York: Campus Verlag, 1980) and his "The energy crisis. The struggle for the redistribution of surplus profit from oil", in Petter Nore and Terise Turner (eds.), Oil and Class Struggle (London: Zed Books, 1980), pp. 26-68.

19. Hacene Mefti, Algeria's Minister of Energy, held forth that "We are prepared to go further and offer our partners an opportunity for equity investments, both upstream in ongoing projects and downstream in new projects." H. Mafti, "Energy Strategies for Tomorrow: Managing for Uncertainty", OPEC Bulletin, June 1993, p. 9. One pundit even suggested, "There is only one way out of this corner and that is to sell the oil fields." See Maria Kielmas, "OPEC's Difficult Choices". Middle East International, 22 October 1993, p. 20.

20. For recent data see J. F. Giannesini, "Where to Invest Today's Dollars for Tomorrow's Barrels?", Arab Oil & Gas, 16 August 1992, pp. 39-46; Graham K. Kellas, "Recent Trends in Petroleum Exploration & Production Agreements", Arab Oil & Gas, 1 January 1993, pp. 33-46; and Ahmad Zaki Yamani, "Whither Oil in the Next Decade?" MEES, 12 April 1993, pp. D1-D3 (Yamani speaks of a "strategic fit" of Western oil companies and oil-producing countries); Ian Seymour, "Political Constraints on Oil Producers' Policy Options", MEES, 3 May 1993, pp. D1-D3; Mohammed Al-Sahlawi, "OPEC Policy and the Oil Business - What Future for Petroleum Engineering?", OPEC Bulletin, June 1993, pp. 10-12.

21. Maria Kielmas, "Iraq: Oil Company Officials Fly a Kite", Petroleum Economist, January 1992, pp. 9-11.

22. In 1992 Saudi Arabia surpassed Russia as the world's top producer. This is very likely to be only a temporary situation. Saudi Arabia, though, remains the country which owns the largest reserves in the world. The kingdom had previously been the world's biggest exporter for a good length of time. BP Statistical Review of World Energy (London, 1993).

23. For a survey in diagram form see Fadhil J. al-Chalabi, "The Gulf War and the Emerging World Order", MEES, 20 May 1991, pp. D1-D6.

24. Mohammed Akacem, "A New World Order for Oil", Middle East Policy, I(1992) 3, p. 23.

25. For an application of the concept of "political tribalism", see Paul Aarts, "Les limites du 'tribalisme politique': le Koweit d'apres-guerre et le processus de democratisation", Monde arabe/Maghreb-Machrek, no. 142, October-December 1993, pp. 61-79. Also: Khaldoun Hasan al-Naqeeb, Society and State in the Gulf and Arab Peninsula (London/New York: Routledge and the Centre for Arab Unity Studies, 1990).

26. See Henry Laurens, "Les aleas de l'hegemonie americane au Proche Orient", Le Monde Diplomatique, July 1991, p. 15 and "Pourquoi Riyad prefere le parapluie americain", in Le Monde Diplomatique, August 1992, pp. 8-9; L. Carl Brown, "Built on sand? America's Middle Eastern policy, 1945-1991; A historical perspective", in Ibrahim Ibrahim (ed.), The Gulf crisis: Background and Consequences (Washington: Center for Contemporary Arab Studies, 1992), pp. 18-37. Needless to say, the Clinton Administration is no exception to the rule. The build-up of a military infrastructure for a possible second "Operation Desert Storm" is in full throttle. See David Isenberg, "Desert Storm Redux?", Middle East Journal, Vol.47(1993), 3, pp. 429-443.

27. Incidentally, the U.S. had threatened military intervention at the time of the first "oil crisis". In view of his quote at the top of this article, it is a striking detail that Secretary of Defense James Schlesinger was a strong proponent of such intervention at the time. Alain Gresh, "Modeler duns la guerre un ordre de paix au Proche-Orient?", Le Monde Diplomatique, February 1991, pp. 8-9.

28. Jonathan Marshall, "Saudi Arabia and the Reagan Doctrine", Middle East Report, November-December 1988, pp. 13-17"; Bob Woodward, Veil: the Secret Wars of the CIA 1981-1987 (London: Simon & Schuster, 1987); Theodore Draper, A Very Thin Line. The Iran-Contra Affairs (New York/London: Simon & Schuster, 1991) and more recently in The New York Times, 23 August 1993.

That newspaper further pointed out that Clinton's network of old cronies extends into the Saudi royal family, too; when still at Georgetown University, Clinton was a fellow student of Prince Turki ibn Feisal, who went on to head the Saudi Secret Services.

29. NRC Handelsblad (NL), 21 July 1992 and James Schlesinger, "Geopolitical Transformation and the Energy Market", Arab Oil & Gas, 16 January 1993, pp. 45-46.

30. Edward L. Morse, "When it Comes to Dialogue, Small Is Better", Petroleum Intelligence Weekly, 27 May 1991, p. 7.

31. Nicolas Sarkis, "Washington renforce son emprise sur la politique petroliere", Le Monde Diplomatique, July 1992, p. 20.

32. Edward N. Krapels, "International Oil in a Changed World", International Affairs, 69(1993)1, p. 74.

33. Ibid., pp. 79-80. also see Beraud, 1992, op. cit., pp. 20-22.

34. James Akins, "The New Arabia", Foreign Affairs, Summer 1991, p. 48.

35. Cf. the debate between S. Javed Maswood, "Oil and American Hegemony" and Richard Leaver, "International Oil and International Regimes: Mirages in a Desert", Australian Journal of International Affairs, 44(1990)2, pp. 131-141 and 143-154 respectively.

36. Hadar, 1992, op. cit., p. 180; see also Eric Davies, 1993, op. cit., p. 280. Cf. the scathing, pro-American and frankly over-simplified criticism of this type of argument by Marvell B. DeAtkine, "The Middle East scholars and the Gulf War", Parameters, Summer 1993, pp. 53-63.

In his highly controversial Cruelty and Silence. War, Tyranny, Uprising, and the Arab World (London: Jonathan Cape, 1993), Kanan Makiya makes a more eloquent stand against what he considers to be narrow-minded Arab nationalist thinking.

For a lucid analysis of different perspectives see Rex Brynen and Paul Noble, "The Gulf Conflict and the Arab State System: A New Regional Order?", Arab Studies Quarterly, vol. 13, nos. 1 & 2, Winter/Spring 1991, pp. 117-140.

37. Ibid, p. 183. Hadar's analysis builds on L. Carl Brown's classic: International Politics and the Middle East. Old Rules, Dangerous Games (Princeton, N.J.: Princeton University Press, 1984).

38. Nicolas Sarkis, "Socio-Economic Tensions in Arab Countries Threaten the Stability of the Oil Market", Arab Oil & Gas, 1 May 1993, p. 3 and interview with Sarkis: "Les pays du Golfe vont vers un suicide collectif", Les Cahiers de l'Orient, 1993/1, no. 29, pp. 145-153.

39. See Mordechai Abir, "Saudi Oil Policy" Internal, Regional and Global Pressure", Middle East Executive Reports, April 1992, pp. 9, 12-14; Roger Matthews, "Rulers Under Pressure", Financial Times: Survey Saudi Arabia, 30 January 1992, p. V and "Royal Boundary to Free Speech", Financial Times: Survey Saudi Arabia, 22 December 1993, p. II; Helga Graham, "Saudis Break the Silence", London Review of Books, 22 april 1993, pp. 6-8; Alain Gresh, "Les nouveaux visages de la contestation islamique en Arabic saoudite", Le Monde Diplomatique, August 1992, pp. 8-9.

Paul Aarts teaches International Relations at the University of Amsterdam, and is affiliated with Middle East Research Associates (MERA), Amsterdam. The author wishes to thank Henk Overbeek for his critical comments.
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Date:Mar 22, 1994
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