Democratisation in the Middle East - the debate

That sure was a surprising headline to see on The Independent's (Fisk's newspaper) front page this morning, splashed across above the fold!

McG
Well if it wasn't oil and Israel, what other possible reason is there for America to be interested in a backward middle east country full of Muslims?

Whatever Iraqi government emerges from the bloody process of democratisation, they will make sure the oil resources are 'free' for western oil companies to exploit. They will pay the govt. royalties in the normal way. By free I meant its liberated from the hands of the former regime, not that you will get free crude oil.

Obviously only for a few here, regarding the reaction :wink:

But the previous Iraqi regime was all too willing to sell its oil at the prevailing market price. Indeed we and other nations, yours included, had taken aggressive action to PREVENT them from selling their oil.

The need of the producers of oil to sell their commodity is at least as great as that of the consumers to buy it. Indeed it is probablky greater in that Sudi Arabia (for example) has no economic alternative to the revenues that its oil provides, while we do have alternative sources of energy - the transition to them would be difficult and costly, but it is possible. Saudi Arabia cannot sustain its population without oil revenue by any means at all. Your analysis, while it represents a widely held and popular opinion, simply does not pass the common sense test..

Bush has just delivered a significant speech to a military university.

"Syria must get out of Lebanon"
"Iran must halt its nuucuular program"

(Note use of the imperative)

What if Syrian forces are welcome in Lebanon? Just seen 100,000+ Lebanese listening and supporting Hezbollah. OK I support the basic concept, freedom and democracy for all. Like I support being nice to people. But what if peoples around the middle east don't want American interference in being made free? What happens if they would rather do it themselves in their own way without American help? Just what concern is it of the US that Syria has some people in the Beeka valley?

And supposing the Iranian people rise up (As Bush wants) and become free. And then start enriching uranium for nuclear power? The Americans bomb the newly free Iranian nuclear program?

I'm sure some people will find the speech inspiring. Others frightening. I just fear a whole new bunch of people are going to die.

"Your analysis, while it represents a widely held and popular opinion, simply does not pass the common sense test.."

You don't know what my analysis is

Of course Saddam wanted to sell his oil. And he did. And you know what...the biggest buyer of illegally smuggled Iraqi oil was...well you can guess.

The fact that Saddam wanted to sell oil and the west wanted to buy it makes the origin of the conflict even less understandable. There was absolutely no military or trade reason why Iraq posed a threat to the USA.

What Iraq did do however was CONTROL a significant proportion of the world's oil. When we are entering a phase of peak oil it means whoever has control of the production capacity margin controls the price. That was one reason the US invaded, to get control over the oil.

The situation in the middle east was made worse by loss of another big oil producer Iran formerly with US friendly installed Shah until the mad mullahs took over, and political instability in Saudi. What happens if a popular islamic revolution deposed the house of Sa'aud, and the new govt. under sheik usama bin Laden nationalises the oil industry?

Believe me the whole program is not about democracy or freedom. Its about control of vital energy supplies..(and protecting Israel).

We, USUK, supported Saddam against Iran. We didn't give a damn about the Iraqi Kurds in the 80's. Its only after we tried to get rid of Saddam first time after the first gulf war and Saddam became public enemy number one that his evil deeds against his own people were trumpeted from the highest mountain.

You're an intelligent man. You know this as well as anyone.

Perhaps this is because the basic assumptions you are making in interpreting these events are wrong. Change your assumptions and the conflict becomes understandable. We never claimed that the threat from Iraq arose from purely military or trade matters. Instead we emphasized our concern was for the nexus of Islamist terrorism, autocratic rogue governments in the Moslem world, and the potential for the use of more dangerous weapons by these forces. Our remedy from the start was to alter the direction of political development in the Moslem world and find a democratic alternative to the poles of tyrants and zealots who would otherwise control this large disaffected pool of humanity.

This statement is manifestly false. Iraq did not even control its own oil - it was (mostly) excluded from the international market by the action of other countries. Moreover OPEC has repeatedly demonstrated its inability to really control the price of its oil. The dependence of the oil producing states on the current revenues from oil sales is far greater now than it was 30 years ago. Their market power is declining, not growing.

Certainly protecting the supply of vital commodities is a valid consideration in these affairs. Protecting Israel is also a valid consideration (unless you would wish to restore the European habit of persecution). However the correction of the growing instability in the Moslem world is a very serious matter, which threatens the security of all of us - we in America and you in Europe as well. Given that the historical source of these problems is the greed and ambition of Britain and France after their dismembering of the Ottoman Empire in WWI, I find it odd that you neglect this aspect of the problem.

The world is full of problems, and we can't solve them all. We supported Iraq during the war with Iran because we didn't want to see either side gain a decisive victory in their bloody and senseless conflict. This was a perfectly valid strategic approach to a real problem, not of our own creation.

So are you, but I find your evident inclination to blame us for events we did not cause or create highly unrealistic and quite unsupportable in view of the established facts of history.

I would say that it is manifestly false to state that Saddam did not have control over Iraq's oil. [If not him, who?]

In november 2000 he swapped from charging for oil in dollars to the euro. The US was and still is terrified that OPEC might switch to the euro. It would make economic sense from their point of view. But it would threaten the dollar's status as the international reserve currency, and the US would have to start earning its keep in the world, instead of printing more dollars.

The currency issue was another factor influencing the decision to invade imo. And what was the first action of the newly "liberated" Iraqi oil ministry in American control? Charging for Iraq oil reverted to dollars.

As for blaming the US for everything....well the US have their fingers in all the pies these days. Great powers behave like great powers do. And America is a powerful country. You are just as guilty of blaming everything on the old imperial powers, and very naive if you think the US is just going around correcting our mistakes. You are interested in the middle east for exactly the same reasons as we were. (and still are)

Regarding aside comments on the persecution of Jews, thats for another thread.

Steve, If anyone bothers to do the math, the US is still the economic powerhouse on this planet - followed by Japan and China. Converting oil based on the Euro will have more problems than the US dollar; Germany, the biggest economy of the Euro countries is having it's own economic problems with over ten percent unemployment. I doubt very much that OPEC will consider Euro as their currency any time soon. There isn't enough economic production backing the Euro to float it world-wide.

That's not to say the US's aggresive attack against Iraq wasn't based on your premise.

Cicerone

I don't pretend any knowledge of international finance save from a lay perspective.

But its surely a fact that the dollar is the world currency...if there is such a thing. And is it not being challenged byt he euro?

I know the euro zone economies are struggling somewhat at the moment (especially germany but thats got its own special problems to do with the hang over from re unification) but in the long term the euro will rival the dollar no?

I read an interesting article about the currency rivalry sparking the Iraq war... I'll try and find it.

there ya go amazing what you can do with a search engine


http://www.ratical.org/ratville/CAH/RRiraqWar.html#p1

Summary

Although completely unreported by the U.S. media and government, the answer to the Iraq enigma is simple yet shocking -- it is in large part an oil currency war. One of the core reasons for this upcoming war is this administration's goal of preventing further Organization of the Petroleum Exporting Countries (OPEC) momentum towards the euro as an oil transaction currency standard. However, in order to pre-empt OPEC, they need to gain geo-strategic control of Iraq along with its 2nd largest proven oil reserves. The second coalescing factor that is driving the Iraq war is the quiet acknowledgement by respected oil geologists and possibly this administration is the impending phenomenon known as

Global "Peak Oil." This is projected to occur around 2010, with Iraq and Saudi Arabia being the final two nations to reach peak oil production. The issue of Peak Oil has been added to the scope of this essay, along with the macroeconomics of `petrodollar recycling' and the unpublicized but genuine challenge to U.S. dollar hegemony from the euro as an alternative oil transaction currency. The author advocates graduated reform of the global monetary system including a dollar/euro currency `trading band' with reserve status parity, a dual OPEC oil transaction standard, and multilateral treaties via the UN regarding energy reform. Such reforms could potentially reduce future oil currency and oil warfare. The essay ends with a reflection and critique of current US economic and foreign policies. What happens in the 2004 US elections will have a large impact on the 21st century.

Steve,

I believe your assumption that there is a real danger that the Euro will displace the dollar as the international reserve currency is widely inconsistent with the facts. According to the 2004 World Economic Summary of the World Bank, the US economy constituted 21% of the world's GDP while the Euro area constituted only 15%. Moreover the gap is widening, not shrinking. The 1995-2005 ten year average annual growth rates in total economic output were 3.5% for the US and only 2.0% for the Euro Area. In all of Europe only Ireland has matched our economic growth rates. Ten year average unemployment rates tell a similar story. In the United States the rate was 5.0% and in the Euro area it was 9.3% - and rising. The UK generally has done better than the Euro area of Europe for most of the last 10 years - perhaps a strong argument that you should think twice about getting on the hell-bound train.

The fact is that the economic sclerosis and attendant political paralysis that infects the Euro area countries paints a rather bleak picture for the ambitions of those who see the Euro as a replacement for the dollar or even Europe as a serious economic challenger to the united States.

As for the matter of reserve currencies - they are no longer what they once were. The international standard of value is still substantially measured in dollars. However increasingly vital commodities such as petroleum and other products, and the Euro as well play a role in all this. The focus on a single currency is no longer what it once was and it is likely that this will not change. This does us no harm, and I don't think there is much concern here about it.

Then only oil exports Saddam had in 2000 were those he got under the notorious UN oil for food program That he would do what he could to spite his tormentors is no surprise. Besides the Euros probably helped him in bribing French and UN officials. No big deal.

As an addendum to georgeob's above post, there is also the problem of the Euro's gain against the US dollar which makes US products and services more competitive in the world markets, and the balance of trade favors the US. Me worry? What for?

Well Cicerone, it probably makes your international travels a bit more costly, but it has boosted our exports and contributed to reducing our balance of payments deficit as you said.

The basic point however is that the U.S. economy is far more vibrant, adaptable and is growing much faster than that of continental Europe.

Yes, especially travel to the UK and Europe. I'm not sure whether you missed another thread where I said that a coffee and donut now costs US visitors to London $6.25 vs <$2.00 at home.

Exchange rates are all screwed up! The GDP per capita income in the UK and the US doesn't reconcile to the current exchange rates.

I think that is because the exchange rate has more to do with the trade-weighted relative demand for the currencies than it has with the relative wealth of the countries themselves. A good year to vacation in the USA.

Unfortunately, we're (includes dys and Diane) already booked for holiday in London, Amsterdam, and Lippstadt in May.

Well then enjoy it. Life is more important than money anyway. Hope you have a great time.