Sunday, September 30, 2007

It's the Oil, Stupid.

by ScoTt O'Reilly Page 1 of 2 page(s)

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The United States' strength and strategic position will continue to weaken the longer it remains in Iraq.

The Bush administration believed toppling Saddam would be relatively easy and that doing so would enhance America's ability to shape the Middle East. Instead, Iraq has become a black hole that is devouring America's military, resources, prestige, and moral authority. Not only is America's influence at its nadir in the Persian Gulf because of the invasion, but the preoccupation with Iraq precludes attention to other vital issues, such as the rise of China.

Former Federal Reserve Chairman, Alan Greenspan, is now admitting what most sensible people already knew: the United States went to war in Iraq because of oil. Put simply, in the wake of 9/11 sophisticated policy experts recognized that the West's oil lifeline was highly vulnerable.

For example, any hostile force -- Saddam, Iran, or non-state Islamic fundamentalists – that could close the Strait of Hormuz would be in a position to devastate the economies of the West. Greenspan may not have put it in so many words, but a sudden rise in oil prices, say to $120 a barrel, would hit the Western economies like a weapon of mass destruction.

The Bush administration could not wait for Saddam's "smoking gun to become an empty gas tank," to vary Condoleezza Rice's mixed and misleading metaphor.

Dick Cheney and Donald Rumsfeld, Ford administration retreads who had witnessed the political fallout from long gas lines in the seventies, would have been acutely cognizant of America's precarious petroleum predicament in a post-9/11 environment. They recognized (given the fact that fourteen out of the nineteen highjackers were Saudi nationals) that America's energy security was tied up with the fate of the Saudi Royal family. In other words, America's economic well-being rested on a pillar of sand.

There were other Realpolitick reasons to oust Saddam and install or cultivate a pro-American regime.

First, Saddam had recently decided that Iraqi oil would be priced in Euros; a precedent that if widely imitated would hurt U.S. financial institutions.

Second, exercising control over Iraq's proven reserves, the second largest in the world, would reduce OPEC's clout, bring down the price of oil, and diminish the amount of petro-profits flowing to anti-American jihadists.

Third, with American firms managing Iraq's oil facilities the United States would both profit and gain leverage over strategic rivals like China.

Fourth, by ensuring Iraq's oil was priced in dollars the United States could ensure that the dollar remained the world's reserve currency, which is a tremendous advantage for American financial firms.

And finally, lower oil prices would bolster the fortunes of America's automakers because cheap petrol would mean consumers could continue to afford the energy inefficient SUVs Detroit was churning out.

Iraq's oil revenue was supposed to pay for Iraq's reconstruction, but things have not quite worked out as planned. Instead, the United States finds itself in a vicious cycle, pouring more blood and treasure into an effort that increasingly promises only diminishing returns.

Perversely, the invasion of Iraq has had precisely the opposite effect intended: oil prices have risen to $80 (a new high), which has worked to the advantage of America's adversaries (especially Iran and al-Qaeda).

Iraq is like a Gordian knot; the more effort America expends in Iraq the harder it becomes to unravel the problems the invasion has engendered.

The United States is now involved in a proxy war against Iran. To withdraw from Iraq, hardliners argue, would essentially hand Iran and Islamic extremists a victory.

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About the Author -- Scott D. O'Reilly is an independent writer with degrees in philosophy and psychology. His work has been published in The Humanist, Philosophy Now, Intervention Magazine, Think, and The Philosopher's Magazine. He is a contributor to the book The Great Thinkers A-Z (Continuum, 2004). You can find his regular political humor and analysis at his blog:

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