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COMMENTARY
January 8, 2003
Oil crisis
It is becoming clearer by the day that the ideal time to invade Iraq and change the regime of Saddam Hussein would be -- any month in the year 2002. We have a massive build-up of force and readiness around that country -- chiefly American British Turkish and Israeli. It appears to be building towards a climax around the end of this month. The New Moons are on Feb. 1 and March 1. The latter date is getting towards the last moment when ground troops heavily encumbered with suiting against the chemical and biological weapons Saddam is expected to unleash still have the benefit of fairly cool weather. Even without an invasion of Iraq the coincidence of four or more aircraft carrier groups in the vicinity of the Gulf changes the power equation in the region. It means the United States is now overwhelmingly the leading regional military power no matter who is its adversary. But an optimal state of readiness and preparation cannot be maintained indefinitely. Even the logistics planners must have some idea of the "window" in which the attack will be ordered and if nothing happens in this window the morale of troops is compromised. That is just one of the realities: "use it or lose it" where "it" means your edge. Moreover contrary to media reports the various regional potentates including the Turks and the princes of the different Gulf sheikdoms are nagging the U.S. to get it over with. Each has a difficult domestic constituency to pacify and the longer this takes the harder to keep them down. I know that at least three regional leaders including the Crown Prince of Saudi Arabia have sent envoys to Washington to privately plead for speed. Each has also warned that if the U.S. doesn't follow through on this one promptly they really will not have the stomach to go through the build-up again. (Publicly they say quite contrary things -- chiefly to assuage their "Islamist" and anti-American constituencies who must be told they are at least trying to keep Saddam in power.) Finally each and every month that goes by gives Saddam and the international terror machine with which he is in communication (note the phrase in communication with ; he doesn't actually run most of it only Hamas) -- the time to prepare retaliation for when the U.S. strikes. The advantage was previously with the Americans who could build up forces and make preparations (including domestic ones against possible terror strikes in the U.S. itself) faster than the adversary. But with that having got nearly as good as it will get the advantage is transferred. From now on time is on Saddam's side. Which is a pity because the U.S. is currently stepping into a quadruple quagmire. The first is the North Korean crisis. On the face of things that crisis appears more urgent -- for Pyongyang already has nuclear weapons and much besides. What this means in reality is that it's too late to attack them. An Iraq in North Korea's position in the heart of the Middle East would be a far worse problem. That's why Iraq must be attacked -- because it is not too late yet. But try to explain this to a public now accustomed to soundbites less than a twentieth the length of the paragraph you have just read. Second by giving the United Nations a role as is now indisputable the Bush administration has conceded the power of delay to its enemies. The U.N. 's Secretary-General Kofi Annan has made it abundantly clear he will do everything in his power to resist American action. He sets the pace for the weapons inspectors. Behind the scenes the U.S. has discovered that even when those inspectors are given U.S. leads in live time nothing happens. The inspectors on the ground in Iraq simply refuse to act in a timely manner on U.S. information. They have however stopped complaining that the U.S. isn't telling them anything. Third the U.S. has succeeded in stalling until the Israeli election of Jan. 28 European and international pressure to compel Israel to make (dangerous and potentially suicidal) concessions to achieve (an unworkable) peace in its neighbourhood including the creation on a strict timetable for a Palestinian state. The "quartet" of U.S. European Community United Nations and Russia will swing back into action immediately after the election. This will expose a series of fault lines between the U.S. and its allies including an especially dangerous one between the U.S. and Britain. But the fourth is the real killer. The world supply of oil has just nosedived and so the price of oil must necessarily skyrocket however temporarily just when the U.S. is about to do something that can only aggravate this -- namely take Iraq's 2 million barrels a day temporarily out of production with the possibility of worse if production or shipment is interrupted for whatever reason elsewhere in the Gulf. Throughout 2002 supply and demand kept roughly at pace and it appeared supplementary reserves were available. Indeed OPEC was begging the Russians to slow production against a potential global oil glut. This turns out to have been partly illusory for the speed at which new Russian oil was getting to market turns out to have been more an artefact of imaginative Russian accounting systems than of efficient Russian engineering. In the last several weeks Venezuela one of the world's leading oil exporters has descended into complete chaos taking a crucial 2 million barrels a day off the market. Whatever excess capacity was elsewhere is thus now fully engaged. Venezuela may stay down for months and in the meantime oil inventories are shrinking dangerously in the U.S. and Europe -- it is winter after all. Even if Venezuela comes back up it will take time for the restored supply to work its way through to consumers. An Iraq campaign in the next several months will thus almost certainly trigger an international oil crisis. (There is a lesser but similar problem in natural gas.) The scale of it is not predictable but a shortfall aggregating to at least 4 million barrels a day is a very plausible nightmare. The longer term position is by no means grim -- Iraq once on its feet again could be within a year at much higher levels of production and so could Venezuela after Hugo Chavez disappears. But the oil market on which so much of our economies depend works from day to day not from year to year. Whereas the damage that can be done in a day tends to last rather longer. Can the U.S. afford to wait until the oil market returns to equilibrium before it settles the issue of Iraq? No. David Warren
© Ottawa Citizen
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