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Archive for June, 2011

Crude Oil: What Gives with the Squabbling at OPEC

Posted in Middle East, United States on June 23, 2011|

[Originally published in the Herald of Randolph]

In the most recent OPEC session, the Saudis pushed very hard for approval to raise the output of crude oil.  They were rejected by a majority of the membership.

Such a rise would likely have pushed the price of oil down to the $75 dollar per barrel range, which would have been a boon to all of the countries now trying to deal with the ongoing recession, most emphatically including the United States.

At the same time, you may have noticed that the Saudis are anything but pleased with what they consider to be America’s ill-advised new policy of supporting the Arab Spring.  They are particularly displeased with our support of the Egyptian rebellion.

Why then, would the Saudis want to do something that would be pleasing to the United States, like trying to put some sort of cap on the ever-rising price of crude? Don’t be confused about this, their decision had very little to do with the Unites States or with international politics.  It had to do primarily with their own internal economic situation.

Saudi Arabia has one of the world’s largest oil reserves.  It has very little else going for it economically. As long as its reserves last, which is estimated to be around 75 years, Saudi Arabia will stay economically healthy. But it must keep the rest of the world comfortable and happy with the price of crude oil.

If that price goes too high, the consumer countries, which include the most technically advanced and innovative countries in the world, will start looking for alternative sources of energy. If they can’t easily find them, they will look to create or invent them.  In the end, one or more of those countries will find energy sources that are close enough in price to crude and politically far more stable than the crude oil energy offered by what are, arguably, among the most unstable countries in the world.  That would be bad news for Saudi Arabia.

This internal economic reality runs headlong into political reality in OPEC where Saudi interests are in keeping customers by maintaining reasonable prices. Unfortunately for the Saudis (and the world’s leading consumer – the United States), this view is not shared by that majority of OPEC members who do not have the oil reserves required for them to have a truly long-term policy on crude.

In fact, such producers, most of whom simply cannot significantly raise the output of their product because they have neither the reserves nor the facilities, want to avoid a drop in the price of crude at all costs.  A drop from today’s price of $100 per barrel to the Saudi’s hope for $75 per barrel would mean a cut of 25% in the income of those countries from oil.

A perfect example of this dilemma is in Algeria, where a cut of 20% in income from crude oil sales would result in a 10-15% drop in their overall GDP!  That is a massive economic blow to a country like Algeria. Because so many of these low-volume OPEC oil producers are countries that do not enjoy the benefits of either affluence or real self-determination, GDP cuts in that range are highly destabilizing and thus to be avoided at all costs.

Iran, Iraq, Kuwait, the UAE, Libya, Nigeria, Ecuador, Qatar, Venezuela and Angola, for example, are 10 of today’s 12 OPEC member states.  Most of those states are far more interested in the income produced by crude today than they are in crude produced in 100 years.  Thus, they represent a bloc opposed to any Saudi plans to lower the price of crude today.

However, the reality is that the Saudis are going ahead and raising production on their own by up to 13%, with the sale of the surplus going largely to China and other expanding Asian economies.  The net result of this overall rise in world production will be a drop in the worldwide price of crude oil.

The lesson for Americans who consume such an outrageously large proportion of the world’s production is that we are going to run out of oil.  No matter what you hear from the Oil and Gas industry in their constant barrages on television, we will be without oil far sooner than anyone realizes. If our past behavior is predictive, we will ignore this reality because we can drive, heat and cool, etc. today. We will rather stupidly wait for the inevitable Armageddon.

Imagine the misery we could avoid and the money we could make if we addressed and solved the problem of alternate forms of energy before the crude runs out!

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How we helped al-Qaida

Posted in foreign policy, Middle East, terrorism, United States on June 19, 2011|

[Originally published in the Barre Times-Argus and the Rutland Herald]

Terrorism is not designed to overwhelm. It is designed to undermine. In that context, whatever it does to cause or initiate anxiety in populations, it relies on the reaction of those populations equally as much to achieve its final goal.

The reaction of the Bush administration to the slaughter of 9/11, largely continued under Obama, was precisely what bin Laden and al-Qaida would have prayed for as it created an environment which made life for Americans difficult, induced levels of paranoia and ultimately resulted in the loss of many of its citizens’ basic human rights in the name of the fight against terrorism. Terrorism has now been fully planted in our collective psyche. To wit:

We have lived for almost a decade with an insane, multicolored “terrorist warning system” designed primarily to cover the posterior of the administration that designed and implemented it.

Transportation has become a nightmare. The simple preparation for air travel takes infinitely longer now than it did 10 years ago. Controls in airports have become so repressive and intrusive that air travel now proceeds at a crawl.

We have become paranoid and morbidly suspicious and distrustful of anyone we think might be a Muslim.

Our government has been able to get whatever it wanted in terms of surveillance rights. We have been subject to warrantless surveillance of all kinds.

We have watched our government torment, torture and incarcerate people without any regard for human rights or international law and convention.

The sad thing is that we have acquiesced to all of this because of our concerns about our own personal safety. But will we ever get our human rights back or will we lose more? In the dark days of 1775, Benjamin Franklin wrote perceptively, “They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety.”

The key here is that without the active, witless involvement and effective acquiescence of our government, al-Qaida terrorism would have caused us far less pain than it ultimately has.

When it came to planning the attack on 9/11, most of the al-Qaida operational management was dead set against it. The plan prevailed solely because Osama bin Laden, their oracle, was its champion.

Ultimately, those in al-Qaida who opposed the 9/11 plan were proven correct. The 9/11 attack was the beginning of the decline of al-Qaida, who did just about everything wrong. They provoked a nasty, powerful and retributive America which turned on them full force. We invaded Afghanistan, denying them their operational base and stability. We methodically began to eliminate their senior and mid-level operational management. We pursued bin Laden so relentlessly that it completely changed al-Qaida’s modus operandi.

Al-Qaida became a franchise operation, the McDonald’s of terrorism. All a wannabee jihadi had to do was get a group of like-minded folks together and find a building from which to operate. At that point, visits to training facilities in Pakistan or Yemen or wherever, would teach them how to make bombs and how to run a business. Just like McDonald’s.

This progression was largely the result of the environment in which al-Qaida lived. As they ramped up their operations, first in Afghanistan, then in Iraq and later in Yemen and in North Africa, they created another entire category of enemy — those Muslims who objected to their killing of other Muslims. Since they were killing Muslims in droves, that meant that they could no longer be sure that their living environment was benign.

Worst of all from the Muslim point of view, they began to justify those killings by indiscriminately and in Muslim eyes, inappropriately employing takfir, the practice of branding other Muslims as unbelievers and making them thereby “legally” executable by al-Qaida.

Add to that the fact of lethal Western pursuit of their members, and we see al-Qaida going underground and paranoid. Bin Laden hid in the open in suburban Pakistan. But he was so paranoid that he had no phone, no Internet connection. Under those circumstances, there ceased to be an “al-Qaida Central.” All that was left were the franchises around the world. Given his personal circumstances, bin Laden could not conceivably have exercised classic command and control over them.

Which is precisely where we are now. We see disparate groups freelancing on their own in whatever operations appeal to them and doing so in operational environments that are increasingly hostile to them. Osama’s death hasn’t changed much.

If we could only bring ourselves to mitigate those of our activities, like our Middle East military operations, that provoke moderate Muslims and therefore strengthen al-Qaida, we might find ourselves in a far stronger counterterrorist position than that in which we find ourselves today.

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In Egypt, a perilous journey to democracy

Posted in Egypt, foreign policy, Middle East on June 5, 2011|

[Originally published in the Barre Times-Argus and the Rutland Herald]

 By Haviland Smith


What is happening in Egypt may be unique to that country, but it is certainly a portent of what may come to pass in the Middle East and North Africa. Time will tell as the “Arab Spring,” President Obama’s “new” policy toward the region and American congressional attitudes unfold.

Our president has just said we will support the legitimate wishes of the Arab people for self-determination. But what if that turns into an Islamist government or a military dictatorship in Egypt?

Egyptians will have their first presidential election this fall. There is only one political party that is in any way “established” in Egypt. That is the Muslim Brotherhood, which was founded in 1928 as an Islamist movement.

Egypt doesn’t have a lot of options. With a broad array of political candidates and virtually no established democratic institutions, the Egyptian military is the only other organization with any real power.

Mohamed El-Sayed Habib, first deputy of the chairman of the Muslim Brotherhood, recently made a bold statement in which he outlined his party’s positions. Whether you believe him or not, and many Egyptians do not, he has come out along the following lines.

He said the brotherhood believes in political reform, democracy, pluralism and the peaceful rotation of political power. He sees the nation as the primary source of national power.

Further, the brotherhood is in favor of the termination of the state of emergency, restoring public freedoms, including the right to establish political parties, whatever their tendencies may be. It also supports freedom of the press, freedom of criticism and thought, freedom of peaceful demonstrations and freedom of assembly.

He concluded that the brotherhood also supports the end of Hosni Mubarak’s exceptional courts and exceptional laws. It wishes to establish the independence of the judiciary and fully supervised general elections, and remove all obstacles that restrict the functioning of civil organizations.

Whatever you may have heard about the brotherhood, this statement certainly contains just about all the elements we Americans, as purveyors of liberal democracy, would like to see embedded in constitutions around the world.

And remember, this statement was made for internal Egyptian consumption prior to the fall 2011 presidential election, in which roughly 20 percent of the population is estimated to support the brotherhood; it is unclear if it will even be allowed to run its own presidential candidate.

With the presidential election coming up this fall, the U.S. Congress has already weighed in. The Republican chairman and the Democratic ranking member of the House Subcommittee on State, Foreign Operations and Related Programs vowed in May at the American Israel Public Affairs Committee policy conference to deny aid to Egypt if the Muslim Brotherhood should happen to gain strength in the upcoming elections.

Over the last 50 years, the Egyptian military has invested in and now “owns” somewhere between 5 percent and 40 percent of the entire Egyptian economy. That makes it the only cohesive force in Egypt that has a real, ongoing stake in the status quo, and it is the only ones with guns.

What might happen if the Muslim Brotherhood gets favorable results in a new, free election? It got 20 percent in the rigged 2005 election when it was not even allowed to label its own candidates as belonging to the brotherhood. Will a favorable result trigger the withdrawal of U.S. aid from Egypt? Will that withdrawal include our generous provision of military aid?

If that plays out as our congressmen vow it will, what is the Egyptian military likely to do? For it, everything is at stake. It relies heavily on U.S. aid. What happens immediately after the election is critical for Egypt’s hopes for future liberalization. The military has already begun to threaten some of the civil rights gained after the Tahrir Square revolution.

It has the power and is not about to give it up. Any election result will have to be at least tacitly approved by the military. It may or may not object to the Muslim Brotherhood; however, it can probably re-establish a military dictatorship whenever it wishes.

The military would certainly react badly to a loss of billions in U.S. aid. If ultimately there is a military coup, will it be because Congress is miffed at what it considers to be positive brotherhood election results and halts all aid to Egypt? Do we support real self-determination in the Middle East or not?

America must not kill the Egyptian Spring, ultimately returning Egypt to military dictatorship, simply because of our fear of and suspicions about Islam.

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