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Al-Ahram Weekly 6 - 12 April 2000 Issue No. 476 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 6 - 12 April 2000 Issue No. 476
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Summit Features Focus Travel Living Sports Profile People Time Out Chronicles Cartoons Letters Controlling oil
By Lamis AndoniIt seems that the US administration's heavy-handed tactics to pressure OPEC to increase oil production might have succeeded -- at least in the short run. However, the "oil crisis" has underscored the limitations of the world's only superpower in trying to control the global market -- a situation that has triggered calls in the United States for more aggressive "American leadership" and renewed efforts for fuel conservation.
Although there is a growing realisation here that rock-bottom gasoline prices will not return, reaction by decision-makers and those who influence public opinion suggests that the drive for greater "American control" will continue. Such a drive would entail maintaining and perhaps stepping up pressures on OPEC countries to secure commitments for levels of oil production that would ensure a relatively low price at gas stations across America.
It seems that the recent showdown with OPEC, which saw the organisation give in to American pressure, has re-enforced the superpower's self-image as the police of the global market.
Angry calls for punishing and even breaking up OPEC have drowned out suggestions that the US should curb its insatiable thirst for oil and that its arm-twisting tactics might damage its international standing. Many, especially in the American Congress, have accused US President Bill Clinton's administration of "weakness and timidity" in its dealings with oil-producing countries. Some congressmen initially suggested an economic and arms embargo while a few pundits demanded "the arrest of OPEC ministers for price fixing."
Much of the American anger surrounding this matter has been directed at the Arab oil-producing countries, in addition to Iran. Saudi Arabia and Kuwait have come under immense fire from commentators and politicians who argued that they should be forever indebted to the United States for its leadership in the 1991 war against Iraq. "We should tell Kuwait and Saudi Arabia that they should get the Nobel Prize for ingratitude and not to come crying to us the next time a local bully starts picking on them," Michael Kinsley wrote in the Washington Post in an extremely hostile column that reflected the tone of editorials in the leading American media.
Even the liberal commentator Dan Schorr lamented that it was humiliating for the US to be pleading with Kuwait and Saudi Arabia to open up their oil spigots. Meanwhile, the fact the US went to war against Iraq for the sake of oil is hardly mentioned at all, many analysts concede that another confrontation in the Persian Gulf would have been possible had the increase of oil prices continued.
In effect, the tactics used by Washington against OPEC were another form of war that provided a taste of how a superpower in a unipolar world can operate. To begin with US Energy Secretary Bill Richardson was twice dispatched on tours of oil-producing states to pressure them to increase production.
Then, a joint American-Saudi statement, issued on 26 February at the end of Richardson's visit to the gulf state, implied that Riyadh would be held accountable for repercussions in the international economy if it did not adopt what the US administration viewed as the correct position on oil production.
The joint press release said, "Minister [of Petroleum and Mineral Resources] Ali Naimi reiterated that the Kingdom of Saudi Arabia will continue to review the oil supply and demand levels to ensure market stability, prevent oil price volatility and avoid harming the world economy." Notably, the statement did not include any acknowledgment that increasing production might harm the economies of the oil-producing countries.
Outgoing OPEC general secretary, Rilwana Lukman, said that the organisation expects the worldwide demand for crude to fall by 2.8 million barrels per day (bpd), limiting the need for increased production. Lukman has estimated that the price slump of a year ago cost oil-producing nations $50-60 billion in lost revenue. At its 27 March meeting in Vienna, OPEC agreed to raise its oil production by 1.45 million bpd -- a move that was dismissed by many congressmen as inadequate.
While the increase in oil production is expected to stabilise gasoline prices in America, these are unlikely to return to the recent low of $1 a gallon. At the current average of $1.5 a gallon, gasoline prices in the US are among the lowest in the world.
Responding to US insensitivity to the impact of increasing production on OPEC countries, Venezuelan President Hugo Chavez reportedly told President Clinton in a telephone conversation that if high oil prices were of concern to Washington, in Venezuela "we're worried about high poverty and the foreign debt." Oil accounts for about half of government revenues in Venezuela which is the second largest producer in OPEC and third largest exporter in the world.
Such expressions of frustration did not prevent Richardson from making numerous telephone calls to OPEC ministers while the organisation's ministerial council was meeting in Vienna last month -- a move that represented an unprecedented form of external pressure in the 40-year history of the organisation.
"We were very upset and disappointed by the external pressure," remarked Iran's representative Mohsen Kazempour Ardebeli. Ironically, the US is believed to have tried to lure Iran, which reluctantly accepted the OPEC decision, into accepting American demands by declaring on the eve of the Vienna conference that it intended to lift a two decade-long ban on the import of Iranian pistachios, caviar and rugs.
Analysts also believe that the US had dropped its objections to the doubling of the funds that Iraq could use, under a UN programme, to purchase much needed spare parts for its oil industry, only after Baghdad agreed to release more oil.
