Posted by
Keith Lehman on Wednesday, February 21, 2007 8:49:38 AM
Ken Renner, honored guest writer and frequent commentator
who is a 30-year veteran of journalism wrote in a
recent comment, that I transcribe here:
Last summer, the New York Times perceptive and
thought-provoking columnist, Thomas L.
Friedman,[*]
wrote an article in the journal Foreign Policy that didn’t receive the
attention it deserved – entitled - The
First Law of Petropolitics.[†]
Friedman’s piece laid out a law that relates to both this piece on failed and
failing states and even more directly to the previous one on the Red Storm
Rising in Russia.
The First Law of Petropolitics, as Friedman explains,
is that as oil prices rise, the pace of freedom and democratization in oil-rich
nations’ declines. Conversely, as oil prices fall, these same
regimes are forced to find new ways of economic survival other than sticking a
straw into the earth and sucking it dry, resulting in more freedom for their
people.
As the price of oil has plateaued at historically high
levels, we are seeing this scenario play out in country after
country. Rich with oil wealth, countries like Russia, Venezuela, Iran and others
have become increasingly bold and bellicose. Since they don’t have
to tax their citizens to spend growing amounts on the latest military hardware,
WMD programs and other ways of suppressing their own citizens and threatening
those of other countries, they become increasingly disconnected from their own
populations and world economic realities. Spending their oil wealth
like a party-prone frat boy with a hefty trust fund, these countries don’t have
to connect with the rest of the world to make ends meet. Their
leaders, like Putin, Chavez and Ahmadinejad in recent weeks and months, are
flush with cash to carry out whatever grandiose visions they might have.
Now look at the other side of the coin. As Friedman
notes, the first Arab state to run out of oil was Bahrain. Is
it a coincidence that as the oil spigot trickled to a halt, Bahrain became the
most democratic state in the Persian Gulf, the first
Gulf state to sign a free trade agreement with the US and the most
egalitarian for women’s rights? In order to survive, Bahrain’s leaders
recognized that they had to tap a new source of wealth, their
people. And the standard of living in Bahrain today is
among the highest in the Arab world, including those countries sitting on vast
oil reserves.
You don’t have to search very hard to find a common
denominator for the wealthiest nations in the world, the ones with the highest
standards of living and the highest incomes. The common denominator
is freedom. Simply put, those states without artificial wealth
created by oil or other natural resource riches have to make money the old
fashioned way. Their people must be free to become creative,
productive and innovative. To unleash their human economic
potential, you have to unleash their spirit to provide opportunities for people
to succeed.
But when you are sitting on a pot of gold, especially
black gold in today’s world, those realities go out the window. And
as oil prices remain high, those countries sitting on vast oil wealth are not
only disconnected from the realities of world politics but also from the need
to broaden their economies to spread wealth more evenly throughout their
societies.
Iran is a
fascinating case study. With somewhere between 7% and 10% of the world’s
oil reserves, depending on which study you believe, the country should be awash
in cash as crude prices hover near $60 a barrel. Yet recent studies,
including one here (http://www.cfr.org/publication/12661/irans_dire_oil_straits.html?breadcrumb=%2F
) done by the Council on Foreign Relations, show the country is actually
spending itself into the poor house. The combined effect of a
dilapidated energy infrastructure, combined with U.S. and
international sanctions related to its nuclear program, is actually putting a
bad pinch on the Iranian economy. It’s as hard to imagine as Greenland importing
ice cubes from Mexico, but Iran has actually
become a net importer of energy. With price subsidies on everything
from gasoline to food in order to keep its own people happy, the country may
literally be spending its oil wealth faster than it can produce it, even at today’s
prices. Some analysts even speculate that some of Ahmadinejad’s more
belligerent policies, like his insistence on pursuing nuclear technology, may
be designed to promote regional instability for no other reason than to keep
oil prices high. If Iran could be headed for an internal economic
implosion, like the Soviet Union when confronted with its own economic failings
in the 1980s, you have to wonder why we don’t just sit back and watch it happen
rather than play into their hands by providing Iran’s leaders with a convenient
scapegoat for their own failings with saber-rattling policies of our own.
There are really two major implications for American
policy implicit in the First Law of Petropolitics.
First, to the extent that we can help lower world oil
prices by lowering American demand, we are actually advancing the cause of
freedom and democratization. By reducing our own dependence on
foreign oil supplies, we can actually make the world a safer place.
This won’t be as easy today as it was back in the
Carter administration, when tougher CAF?standards and
other conservation measures actually reduced American oil consumption by 16%
over a three-year period with a minimum of pain and
suffering. First, we’ve already picked the low-hanging
fruit. Although we can still make dramatic reductions in our own
energy demand, there will be costs and trade-offs in other sectors of our
economy. But to the extent that we can make the world safer and
reduce our need for a far-flung military that currently has more than 2.5
million men and women under arms throughout the world, the costs may well be worth
it.
Second, we aren’t the only energy hogs on the block
anymore. As China and other
nations industrialize, they are demanding an increasing amount of
oil. China has been
especially aggressive about forging economic ties to oil-producing countries in
Africa, South
America and, of course, the Middle East to quench
its growing demand for fuel. Friedman has elsewhere advocated the
equivalent of a new Manhattan Project to harness the best brains throughout the
industrial world in a crash program to develop new, alternative energy sources
that will help us reduce the world demand for oil while cutting pollution.
The second major implication of Friedman’s law is that
we need to engage more with the rest of the world, not less. And
that includes engaging our enemies and potential adversaries, not just our
friends. You and I part company here a little Keith. You
are absolutely right that allowing China into the WTO
without corresponding concessions on their part for political freedom and human
rights was a setback for those causes. But I would argue that while
we temporarily lost that battle, we are actually winning the war. I
think the evidence shows that the rapid modernization of the Middle Kingdom,
especially evidenced by the entrepreneurial spirit that is rampant throughout
the Chinese economy, is creating irresistible internal pressures for
change. What politics and diplomacy failed to accomplish, capitalism
is doing very nicely. As the Chinese people see the benefits of
economic growth and engagement with the rest of the world, the pressures for
more internal freedom and democracy are growing. I predict that we
will see capitalism eating out the rotten core of the decrepit Chinese
communist political system within our lifetimes. And I think similar
outcomes are possible throughout the world as nations slowly realize that
economic progress depends on freedom.
As far as Bahrain and what Friedman wrote[‡] - Bahrain[§] is expected
to run out of oil. It is a constitutional monarchy, not a
democracy, but of course better than the theocracy that surrounds it. “morality issues” are still on the
platform of politics, Wikipedia states:
The
opening up of politics has seen big gains for both Shia and Sunni Islamists in
elections, which has given them a parliamentary platform to pursue their
policies. This has meant that what are termed “morality issues” have moved
further up the political agenda with parties launching campaigns to impose bans
on female mannequins displaying lingerie in shop windows, sorcery and the
hanging of underwear on washing lines. Analysts of democratization in the Middle East cite the
Islamists’ references to respect for human rights in their justification for
these programmes as evidence that these groups can serve as a progressive force
in the region.
But, as Ken points out, women’s
rights have moved forward there, and for the first time in 2002, women voted. Thus
far, however, women do not hold public office.
Ken also describes the
economic situation, via Friedman, excerpts from Wikipedia give a background on
the country of Bahrain:
In a region currently experiencing an unprecedented
oil boom, Bahrain has the fastest
growing economy in the Arab world, the United
Nations Economic and Social Commission for Western Asia found in January
2006. Bahrain also has the
freest economy in the Middle East according to
the 2006 Index of Economic Freedom
published by the Heritage Foundation
/Wall Street Journal, and is twenty-fifth freest overall in the world. In Bahrain, petroleum
production and processing account for about 60% of export receipts, 60% of
government revenues, and 30% of GDP. Economic conditions have fluctuated with
the changing fortunes of oil since 1985, for example, during and following the Persian Gulf crisis of
1990-1991. … A large share of exports consists of petroleum products made from
imported crude. … Unemployment, especially among the young, and the depletion
of both oil and underground water resources are major long-term economic
problems.[**]
Unlike other nations of the Middle East, there is a well-defined middle-class because of the political and
economic reforms. The middle class and upper class are cosmopolitan, not always
dressing according to the custom of the region, and presently Bahrain’s youth favor the mainstream hip hop music of the West. The most detailed and updated facts
concerning Bahrain can be found at The World Factbook published by the CIA and what I used while serving in
the U.S. Army.
If Bahrain is running out of oil or as stated, already has –
than how can the statistic of oil being 60%
of Bahrain’s export receipts?[††]
The Bahrain government has wisely diversified and privatized its
economy to reduce the country’s independence on oil – not just because
it is “running out of oil” but
because they are shrewd knowing that diversification is best, especially when
the oil market fluctuates so often. I
can see the view of Ken and Friedman on this respect, but one must realize the
tiny country has more limited real estate, unlike Saudi Arabia. This is a key factor in their diversification
program because they know that oil production may decrease, as well as the
market is expected to change in the future.
As far as Russia, the “rich with oil wealth” scenario doesn’t face up
to facts. If Russia is doing so well in oil production, why are they
selling – against international sanctions that they have agreed to – illegal weaponry
and associated products under the table? It is mainly because of Putin’s yearning for
the “good old days” in communist Russia, formerly known as the Soviet
Union. Putin, despite
his outward display, is working towards moving back to communism; and that
communism, of course, would be different than what was practiced during the
days of the Soviet Union.
Ken is right – free trade
will change things, even in China – but it doesn’t mean we should trust them any
farther than the present leadership in Russia. The point I was making in the “Red Rising”
article was
that China should have been forced to comply with the United Nations
professed
concerns of human rights before giving China carte de blanche in
respect to
world trade and the fact that the Chinese intend to "flood " the market
- they have not lost their desire to dominate the world. When I say
"they" I am referring to the leadership and political infrastructure of
China. Once we had the same concerns about Japan (except not in a
peace-threatening scenario). If China's goals are so noble, why are
they trying, with Russia at its side, to increase their military (even
in space) in a threatening manner - not as America that is preoccupied
with defense measures? Red China has been and still is militarily aggressive.
The wealth acquired from
crude oil in the Middle East has done little to help the common folk there. They
are acquiring the wealth, but it is limited to only the elite of the nation,
and despite the ability to change it, their social life is still medieval in
respects – because of the leaning towards theocracy.
If Iran is spending
itself into the poor house – it is because they are making the mistake the Soviet Union did – it is militaristic and spending it on means to
comply with their publicly announced intentions in the world of foreign
affairs. They are also, as Ken points out, being stifled because of sanctions
due to their behavior in world affairs, their insistence that Israel be
obliterated, and its theocratic stance concerning Western and free nations.
Ken states:
If Iran could be headed for an internal economic
implosion, like the Soviet Union when confronted with its own economic failings
in the 1980s, you have to wonder why we don’t sit back and watch it happen
rather than play into their hands by providing Iran’s leaders with a convenient
scapegoat for their own failings with saber-rattling policies of our own.
Saber rattling – Iran and North Korea are good at this, more so than even China. Americans do not realize how, back in the early
1990s how close we came to confrontation with North Korea. In a now unclassified subject, Operation Silver
Bullet was real, and messages came into our headquarters that were emphasized
as not being a “scenario training mission” – information that I knew then, but
could not discuss because of signing a military document that stated that
nothing from that operation or pertaining to it could be discussed by any means
seven years from the year of discharge from military service in 1994. At the
time I held a Top Secret/Atomal clearance. And while the situation was defused,
it is not wise to ignore “saber-rattling.” And, accusing the US of “saber rattling” is not correct – the policies of
Ronald Reagan have proven this. His stance of “peace through strength” is
appropriate – not the liberal-progressive way that has been set in recent times
that began during the Vietnam conflict period. Harry Truman was a Democrat, yet he
used common sense when it came to this topic. He saw that by participating in “police
actions” or small wars entitled “conflicts” – it prevented escalation into a
world war. Unfortunately, the Western nations failed to see the indications of
danger when it came to the era of terrorism, and when they did not nip the
problem while organized terrorism was a fledgling process, it resulted into
what it has become today. Terrorists were treated as a criminal entity, rather
for what they were – organized and yet without any specific nation. The main
problem with dealing with terrorism or fighting against it, as what is
happening in Iraq is because it is something America has not dealt with in such a large scale before. We
are fighting an enemy with no specific nation, non-uniformed armies, and people
who will willingly sacrifice themselves to kill as many as they can in the
process – whether military or civilian. Unfortunately, after all that has gone
on since September 11th, 2001, there are still too many of those who just do not
get it.
I have been an advocate for
American independence when it comes to crude oil, as Ken states … so why do the
people who agree keep voting for those who have put a monkey wrench in the goal
to become self sufficient? It was the Democrats who put a stop to the Alaska