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Oil and war

September 2nd, 2008
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It’s pretty widely assumed that several recent wars (most obviously those in Iraq and Georgia) have been motivated, in part at least, by the desire to control oil and other valuable resources including natural gas and (one that is close to my heart) water. The other side of the same coin is the idea (again evident in both these cases) that countries with control over valuable resources can use that control to further their own geopolitical ends.

But examples where either of these strategic ideas has been applied with success are thin on the ground to say the least. While I don’t subscribe to simple ideas of “war for oil” in relation to Iraq, it’s pretty clear that one of the many motives for going to war was the desire to put Iraq’s oil under the control of a government friendly to the US (and preferably not so friendly to rivals like France and Russia). The war has been as spectactular a failure in this respect as in many others. With the best part of a trillion dollars already spent and trillions more to come, the US is worse off in the oil market than it has ever been.

On the other side, the oil embargo of 1973 signalled the change from a market dominated by a buyer cartel to one dominated by a seller cartel. But in geopolitical terms it was a disaster. The Israeli occupation arising from the 1967 war, then only six years old, is still almost intact 35 years later (the Egyptians got the Sinai back, but not because they had any oil).

More generally, I suspect that countries wanting oil can’t do better than to buy it at the going price, and that those wanting to maximise the benefits from owning oil would be best off selling it for the same price and using the money to promote their strategic goals (or, more sensibly, investing it in projects like education).

Of course, showing that it’s stupid to go to war over oil doesn’t prove that people won’t do it. Empirical observation gives us plenty of evidence of the fact that people are more than usually stupid when war is concerned. In the early 20th century, Norman Angell’s Great Illusion demolished the idea that modern nations could secure economic benefits by fighting over war and resources. He was proved right in the most appalling way possible: the Great War that began in 1914 led to the ruin of all the parties.

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  1. smiths
    September 2nd, 2008 at 17:10 | #1

    whats interesting to me john is that you seem to view the forces as one and the same,

    the desire to put Iraq’s oil under the control of a government friendly to the US

    With the best part of a trillion dollars already spent and trillions more to come, the US is worse off in the oil market than it has ever been

    but theres something missing there,
    money spent is taxpayers,
    but profits are made privately from that taxpayer money and…
    potential oil profits are private

    at the beginning of the war greg palast said that the aim was to control the oil fields in iraq to not let the oil out,
    therefore decreasing supply and pushing up profits for multinationals

    how are exxon, bp and shell doing in the last few years,

    ummm

  2. Fmark
    September 2nd, 2008 at 17:36 | #2

    I have a lot of trouble with the idea that the recent war in Georgia is an oil war. While the Baku-Tbilisi-Ceyhan is indeed important to Azerbaijan, Georgia, and to a lesser extent Turkey, it is a relatively unimportant pipeline. The BTC pumps less than 1% of global oil supplies. As the Financial Times noted, the war in Georgia hardly has hardly boosted the falling oil price.

    The pipeline is of little importance to US energy security, as the USA sources less than 0.5% of its oil from Azerbaijan. Similarly, if the EU were concerned about energy security, they would do better to avoid antagonizing Russia, on whom they are largely dependent for natural gas supplies.

    So regardless of whether it makes economic sense to go to war for oil supplies, I doubt that what we are seeing in Georgia at the moment is a useful data point in that debate.

  3. Alan
    September 2nd, 2008 at 18:55 | #3

    Yes, smiths.

    The vast majority of the citizens and residents of the USA are no better off as a result of the war in Iraq, but Halliburton, the Carlisle group and companies associated with the Bushevik regime are, which makes the war a resounding success in the sense that it achieved its aims.

  4. September 2nd, 2008 at 19:12 | #4

    “While I don’t subscribe to simple ideas of “war for oilâ€? in relation to Iraq, it’s pretty clear that one of the many motives for going to war was the desire to put Iraq’s oil under the control of a government friendly to the US..”

    I’m disappointed you would subscribe to such a silly view. Why not just accept that BushCo genuinely believed Iraq had WMDs? BushCo no doubt thought that if Iraq had WMDs it could destabilise the Mid East and disrupt oil flows, but I doubt oil had anything else to do with it.

    Moreover, America has no trouble buying oil on the market, so I can’t see why having a “friendly” government in Iraq be of interest. It sounds like a red herring.

    Sure BushCo are stupid, but surely not as stupid as you’re implying.

  5. September 2nd, 2008 at 19:47 | #5

    “I’m disappointed you would subscribe to such a silly view. Why not just accept that BushCo genuinely believed Iraq had WMDs? BushCo no doubt thought that if Iraq had WMDs it could destabilise the Mid East and disrupt oil flows, but I doubt oil had anything else to do with it.” – Mel

    Maybe because there is plenty to suggest they had no evidence of continuing Iraqi WMD, and their wishful thinking on the issue was irrelevant. As the British revealed, WMD was the agreed upon pretext for war that would enable it to be sold to the public.

    The only “silly view” is one that disagrees with the statement that “one of the many motives for going to war was the desire to put Iraq’s oil under the control of a government friendly to the US”.

  6. September 2nd, 2008 at 20:05 | #6

    “Maybe because there is plenty to suggest they had no evidence of continuing Iraqi WMD, and their wishful thinking on the issue was irrelevant.”

    I don’t think even the Quiggler himself goes that far. But anyway, if being an oil truther rocks your boat then I’m all for it.

  7. Iain
    September 2nd, 2008 at 20:09 | #7

    Melaleuca – oil was a factor in the Iraq war.

    The US factored in controlling oil revenues to pay for the war. This is on public record.

  8. pablo
    September 2nd, 2008 at 20:19 | #8

    And it is a factor in Australia’s Iraqi role. How else do you explain the RAN’s continued patrolling in the Iraqi end of the Persian Gulf with seemingly no indication from Rudd and Co for an end?

  9. September 2nd, 2008 at 20:20 | #9

    “…the Great War that began in 1914 led to the ruin of all the parties”.

    That isn’t actually true, in these respects:-

    - the USA emerged much better off;

    - Britain was not ruined by that war but by the war after, having reached a position of making net gains by the late ’30s (and arguably, if the USA hadn’t insisted that all the Soviet war debt repudiation fall on Britain or if there had been no repudiation, it might have done so a decade earlier).

    The thing is, a lasting 19th century style peace after 1918 would have allowed Britain a full recovery by the 1950s, much as the Dutch eventually recovered from the Napoleonic Wars and the 1830s rebellions. The 1914-18 war alone wasn’t enough to ruin Britain, unlike most other European participants, although it really did set Britain back enough for the next war to do it. And, of course, such a peace would eventually have led to French and German recovery too, sometime later in the century – though obviously not Austrian or Russian. (We can speculate on what might have happened if the continent had been beset by revolutions; in that case, most likely only Britain would have recovered.)

  10. jquiggin
    September 2nd, 2008 at 20:43 | #10

    “the USA emerged much better off;”

    Only relatively, and this is unsurprising since the US stayed out until 1917, and didn’t enter on a large scale until the final months

  11. swio
    September 2nd, 2008 at 22:39 | #11

    “that countries with control over valuable resources can use that control to further their own geopolitical ends.

    But examples where either of these strategic ideas has been applied with success are thin on the ground to say the least.”

    That is a bit of an overstatement. Germany and Japan’s inability to get sufficient oil supplies was a significant factor in their defeat in WWII. While the examples may be few, their significance would be hard to overstate.

    Also to say that the ability to control oil can’t be used to acheieve geopolitical ends is really quite unrealistic.

    The US has strategic and global control of oil by two means. Firstly it has its own proxy governments in control of significant amounts of oil. Secondly it has the world’s only major blue water navy. It can shut down any oil tanker route in the world with ease.

    Modern war requires enormous amounts of oil. And so do modern economies. Any country that is denied access to oil will have to surrender within about 18 months if it decides to go to war. In other words the US control of oil has given it the ability to win any war, with any major country (except Russia) almost without firing a shot. That is a clear example using the control of oil to acheive a geopolitical end (supreme international power) that defines the entire modern world’s current political structure. And you can be well assured that the US political and military elites are aware of this and have actively pursued the control of oil with this exact purpose in mind. They carefully studied the reasons that Japan and Germany lost WWII.

  12. MontyA
    September 2nd, 2008 at 23:04 | #12

    JQ, Great Britain and France collectively owed the US about $2 billion while Germany owed only $27 million when the US entered WW1. Seems a no brainer to me as to why the US eventually entered the war on the side of Britain and France, the 128 US citizens among the 1195 who died when Germany sank the Lusitania notwithstanding.
    I agree with P M Lawrence – the US did spectacularly well out of WW1 given it’s GDP rose from $36.5 billion in 1914 to $78.3 billion in 1919. During WW2 the rise in US GDP was again stellar – from $92 billion in 1939 to $222 billion in 1945. The treasures of Britain and France were exchanged for the machinery of war provided on terms that overwhelmingly favoured the US. The empires of Britain and France crumbled soon after the end of WW2 as they no longer had the wealth or the military power to maintain them. The US prospered from both WW1 and WW2.
    Whether or not Iraq’s oil was the driver of the US invasion of that country (and I remain to be convinced that it was not) the costs of funding the wars in Iraq and Afghanistan are resulting in US wealth being transferred to the big oil producing countries and ‘cheap’ labour countries such as China. The US’s moral credibility, power and influence are now waning and will continue to do so as it becomes poorer and less able to finance its global empire.

  13. Ernestine Gross
    September 2nd, 2008 at 23:33 | #13

    Interesting discussion. It seems to me JQ’s paragraph 3 contains the only ‘legitimate’ justification for embarking on the project ‘globalisation’ that can be derived from what economists call the theory of a market economy. IMHO, this project has come to a halt with the Iraq war if not with the 11 September 2001 event. Furthermore, various comments suggest to me that ‘capitalism’ does not obey the logic of ‘market economics’.

  14. Hermit
    September 3rd, 2008 at 07:30 | #14

    Resource blackmail is only just warming up. Australia’s threat to withhold uranium has got the Russians hopping mad
    http://afp.google.com/article/ALeqM5jn4B6Qn-RuxcTEbIpvDBaUMexj9g
    with the ambassador’s threat of ‘severe economic consequences’. Seems they can dish it out but they can’t take it.

  15. derrida derider
    September 3rd, 2008 at 11:56 | #15

    JQ’s argument isn’t that control of oil doesn’t matter – just that attempts to do it by war don’t work. And one reason for that is that war almost always does far more economic damage even to the winner than its initiators think.

    And melaleuca do you really believe that if Iraq and its neighbours had as much oil as, say, Zimbabwe, the US would have launched a war? Oil was the issue that raised the stakes enough for them to care.

    Of course as the self-proclaimed Republican reptile PJ Rourke commented, “who’da thought it would turn out to be much cheaper to buy the oil than to steal it?”. Which makes exactly the point John was making.

  16. gerard
    September 3rd, 2008 at 12:52 | #16

    I would have to disagree that modern nations can only lose by fighting over war and resources. that is only true if the nations involved are of comparable strength. Where would the West be without centuries of pillaging the resources of the ‘third world’?

    at any rate, I think you can’t understand a thing about the modern world until you stop looking at it from the perspective of what benefits ‘nations’ and start considering what benefits the classes that control these nations’ governments. what is bad for the country as a whole can be quite good for its ruling class, as smiths pointed out.

    was the oil embargo really such a ‘geopolitical disaster’? considering that the OPEC nations and oil companies made heaps of money off it, and then went on to spend this money on buying weapons from America and investing in American banks, I think it worked out quite nicely for the elites of all countries. the main problem, however, was that the Soviet Union, being in possession of very large oil reserves, was also a beneficiary. it was actually the fall in the price of energy in the 80s, after the high prices of the 70s that did in the Soviet Union’s economy as much as anything else.

    Cheaper to buy the oil than steal it? Cheaper to whom? Remember that from the neocons point of view, the war doesn’t COST money, it MAKES money – money from the American taxpayer (or should I say foreign bondholder) straight into their own M.I.C. pockets. Also, expensive oil translates into higher profits for the barons in charge of the white house, you think they’d go to war to bring down prices at the pump? no way! If it drives prices up, so much the better – as long as the companies profiting from it are the same American companies that run the white house and not foreign competitors. Most importantly the US military NEEDS oil to function. If oil is becoming scarcer and more expensive, and China and India are becoming richer and able to pay a higher price, it puts American hegemony at the mercy of the free-market – which is NOT in America’s national interest.

    Finally, it’s a waste of time to point this out, and anybody arguing the point is just trolling anyway, but… you’d have to be a complete imbecile to actually believe that the war in Iraq was NOT a war for oil, or that the aggressor nations actually believed Iraq posed a serious threat to anybody. everything from the downing street memo, to cheney’s secret meetings, to the ‘office of special plans’ to hans blix to wolfowitz’s own admission, to just plain old fashioned common sense make it impossible for anybody to fail to see this unless they are totally stupid or pretending to be.

  17. Chris Lloyd
    September 3rd, 2008 at 15:01 | #17

    “You’d have to be a complete imbecile to actually believe that the war in Iraq was NOT a war for oil.�

    It was only one factor. The others were Israeli security, the need to kick arse after 9/11, the delusion of building a democracy in the middle east, and Saddam’s public insults directed against the US and the West. Different parties gave different weight to the different reasons. But the cumulative effect of them was enough to get the idea up.

  18. derrida derider
    September 3rd, 2008 at 16:42 | #18

    Of course gerrard’s right – the “interests of the nation” have always in practice meant “the interests of those who run the nation”.

    I recall reading a book years ago whose thesis was that the main benefit to Britain of acquiring an Empire was to create a gigantic welfare system for the turbulent and impecunious younger sons of the gentry. A few centuries earlier they dealt with the same problem by sending them off to the middle east on a crusade – perhaps the yanks are reverting to that method.

  19. gerard
    September 3rd, 2008 at 16:44 | #19

    of course oil wasn’t the only factor involved. but I was responding to this:

    “BushCo no doubt thought that if Iraq had WMDs it could destabilise the Mid East and disrupt oil flows, but I doubt oil had anything else to do with it”.

    come to think of it, that might have just been sarcasm, I can’t really tell. it’s almost impossible to parody these peoples’ ignorance.

  20. Adrian
    September 3rd, 2008 at 21:50 | #20

    9/11 spooked the US. The hijackers were mostly Saudi, OBL is Saudi and they and many other Saudis wanted the US out of Saudi Aarabia. The US came to the conclusion that their military bases in Saudi Arabia would not be able to be maintained in the medium term, and so they looked for other countries in the Middle East to host them. (That US troops were needed in the Middle East to ensure “energy security” was unquestioned.)

    And so along came Iraq; a two-birds-for-the-price-of-one project where the US could remove an unfriendly government and install a friendlier one that would be happy to host US troops (or at least unable to resist hosting them).

    The WMD argument was the sales spiel, but the underlying reason was to have a secure location for US troops that had been previously hosted by the Saudis. And those US troops are there to ensure that US corporations have access to Middle East oil.

    It’s not exactly “stealing their oil”. It’s more to ensure that the oil will be sold to the US on the open market and to negate the threat of Middle-Eastern oil nationalism.

  21. gerard
    September 4th, 2008 at 11:39 | #21

    good point Adrian, and with the Americans now leaving Saudi Arabia I think one can say that 9/11 was a total success from OBL’s point of view. Mission accomplished!

  22. September 4th, 2008 at 12:28 | #22

    JQ quotes me “the USA emerged much better off;â€? then writes “Only relatively, and this is unsurprising since the US stayed out until 1917, and didn’t enter on a large scale until the final months”.

    Digression and deviation. “Relatively” is only accurate in the short term; after the early 1920s the USA was absolutely better off in overall terms (even during the Depression it had greater capacity). Also, stating the reason why it was a counterexample to “the Great War that began in 1914 led to the ruin of all the parties” – absolutely accurately – does not in any way stop it being a counterexample, it just clarifies what was really happening if we choose to draw the correct conclusions.

  23. wbb
    September 5th, 2008 at 00:33 | #23

    Of course, showing that it’s stupid to go to war over oil doesn’t prove that people won’t do it.

    Ah, finally. Been waiting to read that here for 5.5 years.

  24. jquiggin
    September 5th, 2008 at 06:09 | #24

    #22 The relevant comparator is to trend growth. There’s nothing to show that the US was better off than if it had stayed out altogether rather than being a marginal participant. But if you want to say “all the main parties”, I don’t have a problem with that.

    #23 Hmm. I thought I’d been pretty clear on this point, but maybe not. I made it six years ago here in almost identical terms. But I’ll spell it out more in future.

  25. wbb
    September 5th, 2008 at 08:45 | #25

    #24 I don’t mean the theory. It’s the signs of a growing readiness to view specifically the US invasion of Iraq as having an economic motivation, that I had awaited.

  26. September 5th, 2008 at 13:02 | #26

    JQ, you are again digressing and playing rhetorical tricks, as follows:-

    - You are the one who made the original overstatement “the Great War that began in 1914 led to the ruin of all the parties”, which I refuted.

    - Therefore “The relevant comparator is to trend growth” is false, two ways: it’s not “the” but “a”; and, a relevant comparator is any comparator that tests your assertion.

    - “There’s nothing to show that the US was better off than if it had stayed out altogether rather than being a marginal participant” has indirect evidence against it. One, Machiavelli’s comments that the winners would always sideline neutrals at the peace conference, and two, empirical evidence in support of that, e.g. Austro-Hungarian neutrality and Savoy/Sardinia participation in the Crimean War weakened Austro-Hungary in Italy. If the USA had not been active, it would have been in a poor position to press for debt repayment; I expect the Allies would have made that a charge on Germany.

    - ‘But if you want to say “all the main partiesâ€?, I don’t have a problem with that’ isn’t your call, it’s your readers’ call. That is, you made the original inaccurate charge, and it’s not down to me or anyone else to provide an accurate one instead. As it happens, that is also inaccurate, because of what I reported about Britain. To be accurate you would have to firm it up even further, e.g. defining “main parties” as France, Russia, Germany, Austro-Hungary and Turkey – and Belgium. Only, that is not very well defined because Britain is arbitrarily excluded to make the data fit, while Belgium and Turkey are dragged in; neither of those chose that war but rather had it thrust upon them. (Serbia in a sense gained Yugoslavia.)

    In sum, your position has something to it but is overstated and it is impossible to draw out anything useful and informative because it only works with fudge factors. Now if only something general could be found to make the fudge less arbitrary…

  27. Stephen J. Cheleda
    September 9th, 2008 at 20:15 | #27

    The security of trading patterns, hence access to resources is important. It is not just profits for individual companies, but the livelihoods of millions depend on it.

    Those entrusted with defending the trading patterns and the access to resources, do get it spectalurlarly wrong. Why? Could it be because everyone, the world over, has`a right to maintain their trading patterns and their access to resources – hence a global security system needs to be seriously considered?

  28. wbb
    September 14th, 2008 at 20:45 | #28

    a global security system needs to be seriously considered?

    Yes – but over the Whitehouse’s (for one) dead body.

  29. scott
    September 17th, 2008 at 19:31 | #29

    So the US Embassy in Yemen comes under rocket attack.

    Is this a response to the US invasion of Pakistan?

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