Tuesday, May 20, 2008

A WAR ABOUT OIL. . .AND WE LOST



GIDEON RACHMAN, FINANCIAL TIMES The importance of oil to American foreign policy is both obvious and curiously difficult to acknowledge in public. In the run-up to the Iraq war it was left to the left to make the argument that this was a 'war for oil'. Establishment people - those in the know - rolled their eyes at this 'conspiracy theory'.

Yet in recent months, both Alan Greenspan, former chairman of the Federal Reserve, and Senator John McCain have come close to saying that Iraq was indeed about oil. In his memoirs Mr Greenspan said he regretted that it was 'politically inconvenient' to acknowledge that 'the Iraq war is largely about oil'.

Earlier this month Mr McCain, who will carry the Republican banner in this year's presidential election, promised an energy policy 'that will eliminate our dependence on oil from the Middle East' and so 'prevent us from having ever to send our young men and women into conflict again in the Middle East'.

Both Mr Greenspan and Mr McCain subsequently issued 'clarifications'. Mr McCain now says that the conflict that he was thinking about was the first Gulf war of 1991. As for the Iraq war of 2003, that was about . . . whatever he said it was about at the time: weapons of mass destruction, probably. . .

However, if the invasion of Iraq was partly motivated by oil, it was a failure - in this respect, as in many others. In 2003, just before the invasion, the oil price was $26 a barrel. Today it is $126 a barrel, with reputable analysts discussing the prospect of $200 oil by the end of 2008.

Mr McCain's promise to eliminate American dependence on Middle Eastern oil is hardly original. Barack Obama and Hillary Clinton have made similar pledges. President Bush himself swore to end America's 'addiction to oil' a couple of years ago. President Richard Nixon made similar promises after the first oil shock of the 1970s. The reality is that things are moving in the opposite direction. In 1973 the US imported 33 per cent of its oil; today it imports about 60 per cent and this figure could rise to 70 per cent by 2020. America's transport system is still completely dependent on oil.

American politicians have, so far, responded to this problem with a mixture of wishful thinking and anger. The calls for 'energy independence' are all but universal. Money has been poured into the production of biofuels, which has helped push up food prices. But no leading politician is yet prepared to say that Americans may have to adjust their lifestyles to a world of permanently higher fuel prices. . .

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