2 - 8 May 2002
Issue No.584
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Al-Ahram Weekly Online 2 - 8 May 2002 Issue No.584 |
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Battlefield oil
On the streets, the Arab masses demand bold action against Israel; their governments cringe at the thought of war. But there are other options, writes Salah El-Amrousi*
The Arab masses and their governments seem to have taken opposing views regarding the current conflict with Israel. Hundreds of thousands of demonstrators have taken to the streets, loudly venting the deep sense of frustration felt by the Arab public. The governments, however, continue to insist on their so-called "strategic" option of peace. Government gurus keep telling us: The time is not right for war. It should be us who choose the time for battle, not our enemy. Furthermore, we are told, wars are old-fashioned. Conflicts in this day and age should be resolved at the negotiating table and not on the battlefield.
The angry youths are not convinced. No other time, they argue, would be more appropriate for war than now -- when defenceless Palestinians are being massacred by a brutal Israeli army wielding sophisticated US weapons. As far as the Arab public is concerned, there is ample evidence that the long and winding path of negotiations has brought us to nothing but a dead-end. Besides, the Israelis themselves seem to be wholly missing the point about the nature of these more genteel times in which we are supposedly living, and in which negotiations, not war, are used to sort out all conflicts.
Arab nationalist and leftist leaders find themselves in an obvious dilemma. Most of them have, in fact, refused to buy into the "diplomatic struggle" notion. Still, they cannot prescribe war, at least for the time being.
It is tempting to engage in fiery rhetoric and verbal skirmishes, but that is besides the point. There are sensible arguments against run-of-the-mill Arab armies engaging Israel's sophisticated and US-backed army. Arab nationalist and leftist leaders undoubtedly trust the concepts of nations and armies in the long run, but they are aware of the risks of an immediate war. If, in a worst case scenario, we went to war and Israel were to seize Sinai yet again, it would be hard to dislodge it. Furthermore, a long, drawn-out military conflict could wreak havoc on our fledgling economies.
It was into this bleak landscape that the notion of the "oil weapon" came up. But the brief flicker of hope was soon extinguished. At the height of Israel's barbaric incursion into Palestinian self-rule areas, the Organisation of the Islamic Conference rejected a proposal by Iran and Iraq to place an oil embargo against Israel's sponsors. The oil weapon, the OIC maintained, is no longer a valid option.
Is this true? Has the oil weapon lost its effectiveness? Or have the Arabs simply lost their will to challenge the United States? The main argument offered up so far has been that OPEC countries no longer held sway over the oil market. This is presumably because considerable oil production now takes place outside OPEC. Furthermore, the argument runs, there are large strategic reserves of oil in industrial countries, particularly the United States. These reserves, we are told, would cover about six months of consumption.
So let's look at the figures.
The proportion of world oil production that comes from Arab countries and Iran has, admittedly, dropped from about 42 per cent of the total in 1973 (OPEC's total share at the time was 53 per cent) to about 37 per cent at present (OPEC's total share has, meanwhile, dropped to 42 per cent). But this is not a huge drop. There is still enough production to control the market if there is a collective will to do so.
The weight of Arab states in the world market is even higher than their production share suggests, because they export a particularly high percentage of their production. The Middle East countries together account for more than 44 per cent of world oil exports. This figure does not include North African Arab countries, which control six per cent of world oil exports. So the combined share of the Arab countries and Iran is actually more than half of world oil exports.
The potential influence of Arab countries becomes even more impressive if we look at world oil reserves. Middle Eastern countries possess nearly two-thirds of all oil reserves worldwide. If we add the share of North African countries, including Egypt, the share of oil reserves held by the Arab countries and Iran amounts to about 70 per cent of world reserves -- and these are recent figures. In other words, the argument that the Arabs, together with Iran, cannot use oil as a weapon is false. In actual fact, the strategic importance of Arab oil has increased.
Efforts to discover oil outside the Arab world have not been especially successful, and many countries are about to run out of oil. Within the next two decades, Arab countries will have more, not less, control over oil production, exports, and reserves. This may explain why the United States is trying so strenuously to control the sources of Arab oil -- something which the Gulf War made particularly easy for them to do.
So why do we see so many repeated references to the declining international importance of Arab oil? This is largely the effect of confusion surrounding two matters. One is the ability of Arab and OPEC countries to control oil prices. The other is the impact of an oil embargo (or even a substantial, progressive decrease in exports) on prices.
There is currently a considerable gap between supply and demand in the oil market. The gap is partially due to the slowdown in the international economy. It is also due to a lack of commitment on the part of oil-exporting countries, both OPEC countries and non-OPEC members, to OPEC's price regulating mechanism.
This mechanism calls for reducing or increasing production whenever the prices go under or over certain levels. The margin of increase (or decrease) in production ranges between half-a-million and one million barrels of oil a day (or, in other words, 1.2 per cent to 2.4 per cent of world exports).
This mechanism can be scuttled if any producer (OPEC or non-OPEC member) decides to pump more oil. The same happens if international reserves (which are being accumulated, for example, by the United States) are drawn upon to a matching extent. Still, an oil embargo involving half, or even less, of world exports (i.e. the combined share of Arab countries and Iran) would be hard to counter. Neither the strategic reserves of the United States and other countries, nor the increase of oil production by other states (both other OPEC countries and non-OPEC members) could foil such a plan.
A production cut of as little as 10 per cent could drive prices up by an estimated 50 per cent. This means that even a partial, progressive reduction, leading to total embargo, could have an awesome impact. Such a step may not necessarily affect the current income of oil-producing countries. Nevertheless, these countries should be willing to make temporary sacrifices.
It has been said that Western-based multinational companies control oil production and transport of oil to such an extent that the oil producing countries are incapable of using oil as a weapon. This, too, is incorrect. Oil producing countries can still adjust the size of their exports and, consequently, hike oil prices. Considering how closely integrated the world economy is, the United States would be greatly affected, regardless of what the companies do or do not do. In the case of total embargo, the companies would in any case be left with no room for manoeuvre.
What this means is that Arab reluctance to use oil as a weapon has only one explanation: politics. Still, the use of oil as a weapon is no substitute to armed struggle against Israel. So is there any other alternative to waging a full-scale war against Israel?
It must be abundantly clear to all by now that for the Palestinians themselves, recourse to armed conflict is a valid option. The Palestinian masses have chosen to fight against their occupiers. The least we could do is give them the support they need.
It was the Palestinians themselves who repelled the Israeli attack against the Jenin camp for eight days. Their resistance was effective, but they need guns. They do not need the same kind of armaments that regular armies do. They do, however, need enough weapons to be able to keep Israeli tanks and armed personnel carriers at bay. They need enough arms to wage a guerrilla war, to keep the Israelis out of their towns and to drive the settlers away. If the Palestinians were armed in this way, they would be in a position to stop the questionable suicide attacks that have made their sympathisers so uneasy. The task of providing the Palestinians with arms is the least Arab governments should do -- and it would be more effective than any salvos of fiery rhetoric they may direct at the Israelis.
Arab governments so far seem to have confined themselves to moral support of the Palestinians and, on occasion, to humanitarian assistance. There is an obvious contradiction in Arab policy. Arab governments agree that the Palestinians have the right to take up arms against their occupiers, but they have done nothing to arm the Palestinian resistance. Some may argue that such an endeavor is a military secret and, as such, cannot be publicised. Fine, but the policy can be publicised. There is nothing wrong, for example, with a political declaration committing Arab countries to provide the Palestinians with weapons. The methods and means of performing the task could remain secret.
Short of declaring an all-out war against Israel, the Arabs can still do much to support the Palestinians: They could use oil as a weapon, and they could give arms to the Palestinians. Both actions would, no doubt, involve a face-off with the United States. But Washington cannot confront the Arab countries if they stand united. Arab governments would prefer, of course, to avoid such a high-stakes confrontation. But, with public pressure mounting, they might find it more politic to have a change of heart.
* The writer is an economist with the Cairo-based Arab Research Centre.
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