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 11^th, 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 oil proposal. It was the Democratic Party, backed by the environmental whacko crowd who cares nothing for the truth, but only their agenda – who has prevented the building of another refinery (needed in the past 30 years) and/or increasing the opportunity of increased production with the refineries in place. It is the Democrats who have stopped further oil exploration and recovery off the shores of America – and meanwhile, Great Britain (without polluting the seas) has increased their oil production offshore. These same political prostitutes sided with Saddam Hussein, the one who created the worst environmental disaster in the history of the industrial age by setting fire to oil fields in Kuwait and opened up valves to allow oil to flow out into the beautiful and clean Persian Gulf Sea.[‡‡] And the same people who cry that we use too much crude (and causing “Global Warming” are the ones who are transporting about in big limos and private Leer jets; as well as, wanting to increase the population in the United States with porous borders (specifically the southern one) and give amnesty to people who have come here illegally. Increased population equals more fuel consumption across the spectrum.

There is no doubt that we should strive to find an affordable alternative energy; but in the meantime, we need to be obtaining our own crude oil and provide the means to process it.

We will always have “far-flung” military around the world – different strengths for the need. It is part of “peace through strength” and the means to afford people of other nations other than ourselves to experience and work at achieving democracy with the freedoms and liberties that too many Americans take for granted. And it is debatable as to whether the concept of globalization, especially politically, would decrease or make war obsolete as the utopians of the liberal-progressives believe.[§§]

And, Ken, we are "engaging" with our adversaries and potential adversaries - not just militarily; as we have done in the past. It took 12 years of Saddam's refusal to comply with UN resolutions and, indeed, the very treaty that made up the cease fire in 1991 - but it was clearly evident of his intentions and lack of interest in reform. Why is it that the anti-war crowd always ignores those facts. I am truly sick of reading/hearing the anti-American Americans who would side with our enemies rather than confront them. Diplomacy should always be in the forefront, but it cannot be the only option - not if we, as a nation, wish to survive; and that goes for any other free nation. We must negotiate, but at the same time we must keep our military strong, well-trained, properly equipped, provide good military leadership and remain vigil, but at the same time be reluctant, as in most cases in American history, to use force. I might remind everyone that it wasn't America who initiated the war on terrorism - it was forced upon us, as well as other nations. Just as Pearl Harbor, September 11th, 2001 was the "straw that broke the camel's back".

And despite some interesting discourse Thomas Friedman is not Milton Friedman.  

I would like to thank Ken “from Tennessee” for his interesting topic and insight concerning the subject of this article, and also thank him for livening up the commentary here at LP Journal. It has been stimulating and thought provoking, to say the least. In the near future, I would like to spotlight Thomas Friedman in a separate article and compare his stance on foreign policy with that of Bill Gertz and the legendary economist Milton Friedman; as well as the concept of the term globilization.