Oil crisis: Call it the Curse of Saddam
By ERIC MARGOLIS
Contributing Foreign Editor
As oil climbs toward US$40 per barrel, motorists and truckers across Europe are in open insurrection, demanding fuel taxes be
slashed. If petroleum prices keep rising and shortages develop, Americans, and even usually passive Canadians, may also stage a
modern version of a medieval peasants' revolt.
No wonder politicians on both sides of the Atlantic are running scared. The Curse of Saddam has struck.
Western consumers take for granted that cheap oil is theirs by divine right. For them, "normal oil prices" means a return to the
good old days before 1970 when tame Mideast puppet rulers gave away oil at $2 per barrel in return for protection, and blondes.
"How dare those Arabs raise the price of our oil!" is what many people angrily mutter - unaware, of course, that most of North
America's imported oil comes from West Africa and Venezuela, not the Mideast.
Angry western demands that oil producers lower prices are pure, unabashed economic imperialism. The Mideast, for example, imports over 50% of
its food and 95% of its medicines from western nations - commodities even more precious and imperative than oil. Do we see our farmers lowering
prices of grains or meats sold to the Mideast? Or Detroit, Silicon Valley or drug firms slashing export prices of goods they sell to oil producers? Of
course not.
We are simply demanding by right of might that exporting nations, many of whom rely on oil as their sole source of income, cut their prices so it
costs us less to tank up our road hogs. The U.S. produces over six million barrels daily: why are there no calls for American producers to slash their
wellhead prices?
Amidst all the finger-pointing over who is to blame for high oil prices, and inevitable pre-electoral threats by the Clinton administration to bomb the
usual Iraqis, it is simply amazing that no one has asked the most obvious question: does the 10-year embargo of Iraqi oil play a role in this mess?
The answer is: of course. Before Saddam Hussein's invasion of Kuwait, Iraq, which has the Mideast's second largest proven oil reserves after Saudi
Arabia - 120 billion barrels - exported over three million barrels per day and was expanding its petro-infrastructure to export up to five million
barrels a day by 2000.
Today, under the decade-old UN sanctions, Iraq is allowed to export 2.3 million barrels daily. Iraq is supposed to get half the proceeds from that oil
for food and medicine; the rest goes to the UN's bureaucracy and to Kuwait.
Industry crumbling
But Iraq's actual exports are considerably lower because the U.S. has steadily blocked or delayed Iraq's purchase of equipment and spare parts for
its crumbling oil industry.
Now, ironically, western governments fear Saddam may throw world oil markets into a new crisis by halting Iraq's modest oil exports. World
petroleum consumption has hit 76 million barrels daily. Oil is so scarce right now that even a minor reduction could trigger an international panic
that could spill over into financial markets. In short, the West's punishment of Iraq has come home to haunt us.
Another nice irony: during the made-for-TV Gulf war, Americans thrilled as they watched armadas of macho armoured vehicles sweep across the
desert. This ignited consumer lust for tough-looking, road-warrior vehicles. A friend, psychiatrist Dr. Clotaire Rapaille, conducted in-depth studies
of post-war American auto consumer psyches for Chrysler and discovered that both men and women wanted "aggressive" looking vehicles.
Booming economy
The result: the enormous upsurge in huge, menacing RV's and now, paramilitary Humvees - both major gas guzzlers. With nearly half the vehicles
on the road getting 12-13 mpg, and with booming economic times, is it any wonder gas prices are sky high?
If Iraq's oil industry was quickly refurbished and allowed to export at full capacity, there would be no shortage, and prices would fall sharply. This
column predicted way back in 1991 that oil shortages would ensure if Iraq was kept out of the market. And so they have.
But Iraq's Arab oil "brothers," Iran and Russia, don't want Iraq to resume exporting because prices would drop. Kuwait knows Saddam thirsts for
revenge. Israel exerts intense pressure on the Clinton administration through its American lobby to keep Iraq bottled up. Britain wants Iraq shackled
to protect its lucrative Gulf markets. No American politician wants to risk being called "soft on Saddam" or letting him out of his cage.
None of the above care much that 5,000 Iraqi children die each month from disease and malnutrition mainly caused by the cruel western embargo.
U.S. Secretary of State Madeleine Albright says that's "a price worth paying."
This column heartily disagrees. It would be far cheaper and more humane to lift the embargo, let Iraq export oil and bribe Saddam to be good, as
Washington has done with nuclear-armed North Korea.
Instead, consumers in Europe and North America are paying the cost, via high gas prices, of sustaining Iraq's long imprisonment and prolonging
the suffering of its people.
Eric can be reached by e-mail at margolis@foreigncorrespondent.com.
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