TCS Daily


Corrosive Wealth

By Pete Geddes - April 3, 2003 12:00 AM

Many of those opposed to our military action in Iraq shout, "No blood for oil!" They believe our desire for Iraqi oil, not security, motivates our actions. Do these people think in terms of slogans, or causal relationships? If they don't understand the driving force of allied military policy, they may be correct, but not for the reasons they think. The proper explanation is more subtle. Here goes.

Our war is driven by oil, but only indirectly. We fight to keep Saddam Hussein from exploiting Iraq's oil wealth for evil ends. Why? Because he uses Iraq's oil revenues to enrich himself and his cronies, to fund terrorists, to buy tools of mass murder, and to brutalize his people and his neighbors. We fight to keep a madman from acquiring ever more weapons of terror. Energy conservation arguments ignore this problem.

Over the last century, we've been steadily de-carbonizing our economy. It takes about half as many barrels of oil to produce each $1 of economic output today as it did 30 years ago. We're slowly moving toward a hydrogen economy.

But oil remains important, and will for quite some time. The world's industrial societies are utterly dependent on an energy infrastructure built around oil and coal. The developing world is following this trajectory. As much as we may wish otherwise, here's the undeniable reality: Aside from remote locations far from the grid where solar and wind make sense, for the next few decades most new energy demand will be met by fossil fuels or nuclear power.

Iraq has the world's second largest known oil reserves. Are we fighting to get access to this oil? I don't think so. If our foreign policy were driven by access to oil we would attack and conquer far easier targets-Nigeria, for example. In 2000, Nigeria accounted for 9.7 percent of our imported oil. In that year it was the fifth largest exporter to the U.S., behind Saudi Arabia, Mexico, Canada, and Venezuela.

The U.N. imposes, and the U.S. enforces, sanctions that restrict Iraq's oil production. If this war were really about access to Iraq's oil, we could simply ask the U.N. to eliminate those sanctions. Iraqi oil would flow into the market. As supplies increased, prices would fall.

What if we occupy Iraq's oilfields, and then sell the oil cheap, for say $12 to $15 a barrel? The lower price would do two things: first, close down a majority of America's domestic producers and second, increase, in the short term, our dependence on imported oil. This undermines arguments that we fight on behalf of American oil companies.

As a general rule, unearned wealth is corrosive, both to individuals and to social institutions. For the tribal cultures of the Middle East, the discovery and development of the region's oil by western companies was like winning the lottery. Its pernicious impact on Saudi Arabia is revealing.

Saudi Arabia is an absolute monarchy. Power is held in the hands of senior royalty and wealth is spread amongst some 7000 princes, most of whom lead grotesquely luxurious lifestyles. In 1981, per capita income was $28,600, matching the United States. By 2000, per capita incomes had fallen to $6800. The monarchy's brutal enforcement of puritanical Islamic laws exacerbates tensions. Public beheadings are carried out in a plaza known as Chop-Chop Square. The laws, of course, do not apply to the super-wealthy elite.

Daniel Chirot wrote in The Crisis of Leninism and the Decline of the Left: The Revolutions of 1989, "In the 21st century... the causes of revolutionary instability will be moral." The moral decay and social injustice evident in Saudi society are not sustainable. As the new Atlantic Monthly cover story reports, "the royal family is obsessed with gambling, alcohol, prostitution, and parties." The article goes on to describe the kingdom's rich as parasitic, not productive.

By implicitly defending a tyrant who launched a war for oil in Kuwait, those who cry "No blood for oil" hold an ironic, morally suspect position. A more complete understanding reveals it's Saddam's weapons of terror and the ambitions of terrorist regimes that drive our war.

Pete Geddes is program director of the Foundation for Research on Economics and the Environment (FREE) and Gallatin Writers. Both are based in Bozeman, Montana.
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