The wars that really are about the oil

You can’t understand any of the world’s crises without understanding petropolitics

30 August 2014

9:00 AM

30 August 2014

9:00 AM

Is international conflict really just a fight over oil? It sometimes seems that way. In Syria and Iraq, the militants of the so-called ‘Islamic State’ sell captured oil while battling to establish a puritanical Sunni theo-cracy. From Central Asia to Ukraine, Russia is contesting attempts (backed by the US) to minimise Europe’s dependence on Russian oil and natural gas. Meanwhile, Obama’s ‘pivot to Asia’ allows the US to threaten the choke points through which most of China’s oil imports must pass.

Conspiracy-mongering petrodeterminists who try to reduce world politics to nothing but a clash for oil are too crude (pun intended). No shadowy cabal of oil company executives pulls the strings of world politics. Most of the world’s oil and gas is the property of government-owned companies, and even private oil companies like ExxonMobil and BP generally defer to their home-country governments. But a grasp of global petropolitics is nonetheless vital to any understanding of the crises in international relations we see today. We also need to know a little recent history.

The end of the Cold War left America’s leadership wondering how to justify the US military protectorates over western Europe and Japan. The 1990 invasion of Kuwait by Saddam provided the answer: instead of temporarily protecting its European and East Asian allies from the Red Army, the US would henceforth perpetually protect them from other threats, including the disruption of the oil supplies on which their economies depended.

By policing critical regions like the Persian Gulf on behalf of all industrial nations, Washington hoped to forestall re-armament and unilateral scrambles for security, including energy security, by the other great powers. George W. Bush expressed this idea in a 2002 address at West Point: ‘America has, and intends to keep, military strengths beyond challenge, thereby making the destabilising arms races of other eras pointless and limiting rivalries to trade and other pursuits of peace.’

The US-Japanese relationship was the best fit for this model of patron-client politics. Japan is dependent for most of its crude oil imports on Saudi Arabia, the UAE, Qatar, and Kuwait, with small amounts from Iran, Russia and the rest of the world. It follows that Japan is also dependent on the US navy to patrol the sea lanes from the Persian Gulf through the Indian Ocean and the waters of East Asia. When Japan contributed cash rather than soldiers to defray the costs of the Gulf War, many Americans protested, failing to understand that this was exactly what American strategy called for.

Americans who hope that ‘energy independence’ can reduce US involvement in the Middle East similarly fail to understand the post-Cold War strategy of their own country. Thanks to the revolution in oil and gas production made possible by hydraulic fracturing technology (fracking) and horizontal drilling, the US has passed Russia as the world’s leading energy producer and Saudi Arabia as the leading producer of crude oil. A relatively small portion of America’s oil imports last year came from the Persian Gulf, chiefly Saudi Arabia (17 per cent), Iraq (4.4 per cent) and Kuwait (4.2 per cent). The biggest share came from Canada (33 per cent). The US military is not in the Persian Gulf to protect oil destined for the US so much as to secure the oil supplies of Europe, Japan and South Korea, and to implicitly blackmail China.

One element of this post-Cold War American grand strategy has been the attempt to minimise the dependence of the European Union on Russia, which supplies about a third of Europe’s natural gas. Ever since the 1990s, the US has favoured the construction of pipelines that would transfer oil or gas from the former Soviet republics of the Caucasus and Central Asia to Europe while bypassing Russian territory. One, the Baku-Tbilisi-Ceyhan pipeline, has been operational since 2006. Another, the Nabucco pipeline, was intended to bring gas from Azerbaijan to Europe through Georgia, Turkey and Bulgaria, but it has been abandoned in favour of two pipelines with much lower capacity. Russia is proceeding with its own alternative, the South Stream gas pipeline, which would bypass Ukraine and bring gas from Russia under the Black Sea to Bulgaria, Serbia, Hungary, Slovenia and thence to Italy. It remains to be seen whether this and other projects fall victim to European sanctions against Russia arising from the Ukraine crisis.

China, too, has been involved in the pipeline wars with the US — as a consumer of oil and gas, rather than as a producer like Russia. About 80 per cent of China’s oil imports pass through the Strait of Malacca, between Malaysia and Indonesia, giving the US navy a potential chokehold. This explains Chinese support for a proposed Iran-Pakistan pipeline, which could be extended to China. Opposed by the US, the pipeline has been thwarted by Saudi financial pressure on the Pakistani government. But China has other options for avoiding an American naval stranglehold, including a pipeline across Burma and the Chinese-subsidised port of Gwadar in Pakistan.

China’s claims to the South Sea islands, which have embroiled it in recent conflicts with Vietnam, the Philippines and Japan, are doubtless motivated in part by the desire to develop offshore oil reserves. After China deployed an oil rig in contested waters in May, nearly two dozen died in anti–Chinese riots in Vietnam.

Most consequential of all is the deal between Beijing and Moscow to transport gas to China by pipeline from fields in Siberia. The trade deal was not only the biggest in history but also a dramatic rebuke to the US attempt to encircle and weaken both powers.

China and Russia, along with India and Brazil, are challenging another basis of post-Cold War US hegemony, the ‘petrodollar’. The practice of paying for oil in dollars, even if no Americans are involved, has bolstered the dollar as the world’s reserve currency and helped the US to run large deficits since the Reagan years without too much pain. Many of post-Saddam Iraq’s oil concessions have gone to non-American firms, but the US achieved a small victory by ensuring that the transactions would use dollars.

Far from being reassured that their ‘legitimate interests’ are being protected, China and Russia have doubled down on their efforts to build up their own oil networks at America’s expense. And despite two decades of US support for non-Russian pipeline routes, Europe remains highly dependent on Russian gas. The former German chancellor Gerhard Schröder even sits on the board of a consortium building a Russo-German gas pipeline. At the same time, the American public, having turned against the wars in Iraq and Afghanistan, simply want less foreign policy, and attempts to cut the budget deficit have set US military spending on a downward path.

Two decades after the Gulf War, America’s commitment to secure the oil supplies of the Persian Gulf and the sea lanes needed for their transit on behalf of the other industrial powers has proven to be far more expensive than Washington expected. The stationing of US troops in Saudi Arabia and other Gulf allies enraged anti-American jihadists, Osama bin Laden among them.

The Bush administration cynically used popular panic following the 9/11 attacks and false claims about Iraqi ‘weapons of mass destruction’ to justify the US invasion of Iraq in 2003. In addition to turning oil-rich Iraq into a permanent American military base like South Korea, the invasion was intended to save money, by replacing the post-Gulf War policy of ‘dual containment’ of Iraq and Iran with containment of Iran alone. In March 2003, the undersecretary of defense for policy Paul Wolfowitz told Congress that ‘we’re really dealing with a country that could finance its own reconstruction’, and a month later the Pentagon estimated that the Iraq war would cost $4 billion. Rather than paying for itself, to date the war has cost the US $800 billion, a figure that does not include legacy costs such as a lifetime of medical treatment for wounded veterans, or the losses in life and property to Iraqi nationals.

Had George W. Bush been an Iranian mole, the clerical regime in Tehran could hardly have benefited more from the suborning of the military power of the US and its allies to remove two of Iran’s major enemies: Saddam and the Taleban government in Afghanistan. Instead of serving as an American ally against Iran, post-Saddam Iraq has been ruled by pro-Iranian Shias. The Shi’ite sectarianism of Nouri al-Maliki’s government has in turn contributed to the success of Isis.

The fracking revolution means that America will have so much oil and gas that it needn’t import any by 2035, according to the International Energy Authority. That timetable, of course, assumes America’s energetic environmentalists don’t manage to slow progress, and it still leaves the next 21 years to get through. So if Europe wants to break its addiction to Russian energy, it will need to start doing its own fracking – rather than wait for American imports. Putin’s continued confidence over the Ukraine this week can be explained by a simple fact: winter is coming, and the countries complaining about him need his gas rather badly.

It is almost exactly 41 years since the Saudis and Egyptians discussed using oil as a weapon – then, to penalise America for helping Israel in the Yom Kippur war. Yet pipeline diplomacy is as relevant now as ever. Look hard enough and you can see such games still being played today in pursuit of grand political goals — whether to establish a Sunni caliphate or to preserve American hegemony over developing European countries. Once America believed it would always have to police this global struggle for resources; soon, the American electorate may decide that it’s not worth the cost.

There will be much discussion of the world’s future at next week’s Nato summit in Wales. America’s European allies have reduced their military capabilities over the years, persuaded that Uncle Sam would always protect their energy supply if things grew difficult. Such old certainties are fast disappearing. Europe may still have to learn the hard way that petropolitics still matters.

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  • saffrin

    Oil created Israel.
    Without it, the USA wouldn’t have taken the opportunity to support and ally itself with a ready made bridge head should the Russians invade the Middle East during the early days of the cold war crisis.

    • Kenneth O’Keeffe

      Speaking of Israel and natural resources, the first gas from their huge new fields in the Med. has now come onstream. Europe should be doing business with the Jewish State and buying their gas, rather than with those mad mullahs in the neighbouring hellholes or the Russians.

  • Toby Tyke

    No Shit Sherlock….of course modern day wars are about nothing but ‘Oil’. Historically wars were about Politics or Religion but now its all about Black Gold and the wealth it creates with those who have it by the plenty

    • cybervigilante

      Except most “religious” wars were also about money and resources, with “religion” as the pretext.

  • Miss Mekhong

    Old Hat! You have been reading Asia Times

  • well since we agree oil is important to industry and lifestyle let hope we’re willing to kick ass to keep it that way.

  • xoanon

    Fracking is already in decline in the US, it now costs more money, and takes more energy, to get gas and oil out of the ground using fracking, than it generates.

    • cybervigilante

      Fracking resources are wide but not deep – they only last a few years. And Oklahoma is now home to swarms of earthquakes. One really big one and fracking will be dialed back, at least in states that are not really stupid.

  • TheKritik

    Of course,there is no conspiracy and the word should be removed from every dictionary because nobody has ever teamed up with others to achieve a common goal.

  • Innit Bruv

    Bang on the money….

  • Vernon Goddard

    The liaison of China and Russia is the most important aspect of this article. Once they begin to cooperate at a more strategic level other countries, including America will lose out on the ability to dictate how the world looks.

  • WFB56

    This whole story is long on suppostion and short on facts cobbled together with suspect comments, such as the quote from George Bush:

    ‘America has, and intends to keep, military strengths beyond challenge, thereby making the destabilising arms races of other eras pointless and limiting rivalries to trade and other pursuits of peace.’

    This is offered up as an example of how oil was central to this notion but that’s not what the quote says nor, I suspect, is oil mentioned anywhere in the whole text of this speech.


  • mohdanga

    “In addition to turning oil-rich Iraq into a permanent American military base like South Korea…”. Except that there are no American troops in Iraq.

  • NotYouNotSure

    When the hell is somebody out there going to make fusion power viable ? Whoever does this should get 10 Nobel peace prizes

    • Jackthesmilingblack

      Cold fusion’s worth a second look.

      • cybervigilante

        Alas, MIT skewered cold fusion on purpose by misreporting their results in verifying it, so everyone piled on to poor Fleischman and Pons. MIT also ridiculed the experiment before they started – a very unscientific attitude. One exec there quit due to their hiding data. Why? Because they got millions for hot fusion, which is Always “ten years in the future” and has been for thirty years. So Sacred Cow MIT is not so honest after all.

  • Mike

    Oil is becoming far less of an issue since the US is self sufficient in oil through fracking and even Europe is becoming less dependant on middle east oil.

    Considering the cost of military intervention both in money and western lives, it would be a lot cheaper to build a wall around the middle east and let the Muslims sought out their own problems. Without oil revenues they’ll soon calm down after a few million have killed each other.

    • Bruce Lewis

      The viability of the American economy is still based on the “petrodollar,” and will be for long into the future. Rather than oil being the basis for the adventurism of American foreign policy, I’d say it is the “high finance” based on the dollar being the “reserve currency” for the purchase of fuels EVERYWHERE ON EARTH.

      • Mike

        Accepted but the reliance on Arab oil is diminishing. When the costs of ensuring cheap oil continues by using military action exceed a marginally higher cost of say fracking oil, Arab oil becomes unnecessary.

        Energy supply is primarily about costs, we saw it in the UK with coal when we shut down our mines and imported it. Oil is no different and if proper accounting is applied to the purchase of energy, where we source it would change.

        Example – If western oil companies had to fund the military actions required for Iraq oil, the cost of a barrel would rocket from that region.

        The problem with governments is they don’t look at the complete economic picture and it was exactly the same over CFL light bulbs and now LED light bulbs vs Tungsten. The total cost of pollution was never factored into the equation. On windmills for electricity there is blatant distortion of the economics where its only viable if coal or gas fired electricity subsidizes windmills.

        I’d love to see the true economics of what middle east oil really costs us when the military costs, the human costs, the hospitalization of troops are added in. Perhaps fracking or undersea oil is a lot cheaper than Arab oil or even nuclear energy.

  • Bonkim

    The main cause for Japanese entry in WW2 was the Western Powers not allowing Japan access to the East Asian oil fields. Japan was industrialised and needed oil badly. It was that simple.

    • Kenneth O’Keeffe

      Japan could have come to a commercial arrangement with the Chinese to supply not just oil but other raw minerals to drive its industrial production machine. Instead, it got greedy and decided to take the lot, for free and invaded (free, that is apart from the relatively minor – to the Japanese – cost of conducting the occupation, of course).

      • Bonkim

        China was run by War-Lords and despite Chiang Kai Shehek’s attempts was unstable, with a civil war raging. Chinese occupation and war that lasted to 1945 therefore taking advantage of the situation and Japanese militarism. Trying to find the rationale today for the mindsets of the Japanese, British, Chinese or the US of the 1930s achieves little. Both the Germans and Japanese were jealous of the British Empire and also growing American dominance in controlling world resources and wanted a piece of the action. That they unleashed a global war and finally lost is another matter. Both Japan and Germany developed technologically and organisationally and were able to recover (with some help in capital investment from the US) soon after the war and dominate world manufacturing and trade. The war had its benefits.

      • Jackthesmilingblack

        Thanks Ken. For that trip down memory lane.

  • BoiledCabbage

    Oil is an non-movable income stream, so yes you have to fight for the ground it lies on if you want the income. Or the fuel for the army and airforce.

    Europe has got so lazy. It cannot go to war because it does not control enough oil, and can hardly defend what it does have, without the US. A Russian incursion into the N Sea and E Med would be a stranglehold.

    • cybervigilante

      The Russians really aren’t expansionists, despite the alarms whose purpose was to increase Pentagon spending. They’re also not good at fighting outside their own land. Little Japan whipped them in the Russo-Japanese war, tiny Finland humiliated them during WWII, Afghanistan ate their lunch. What they really want is buffer states so they can be left alone. But our Ukraine policy is to take over their buffer states, get right up to their border with proxies, then wonder why they’re getting upset – even though we went nuts when Russia came to Cuba.

  • Noa

    As Europe deploys its armies of wind turbines it has no need to rely on Russian gas…

  • Jackthesmilingblack

    “The wars that really are about the oil”
    There you go. Finally flashed to 21st century reality.

  • cybervigilante

    And it explains why we are an ally to terrorist, murderer, oppressive, slaving Saudi Arabia and its rotten princes – even though they were the real force behind 9-11.

    • Mikaeel

      Don’t forget the US’ damning role in allowing 911 to happen after repeated warnings. Ignorance is bliss, they say (wink)..

  • Albin

    No doubt but what the writer says “has been” true, but tha’t the operative tense. There are huge shale and offshore deposits all over the world, even in central Europe. USA is only a few years ahead in extraction and exploration technologies. By the mid-20s the Middle East, North Africa, Nigeria, Russia and other benighted societies will no longer be essential repositories, and oil will not be worth a war anyplace.

  • cromwell

    Yes we know its about oil do you think we are stupid?

  • Toto

    I am familiar with databases of the IEA, EIA, O&GJ, JODI and BP. In none of them the US comes even close to Saudi or Russia in term of crude oil production. On which database are the claims in this article based?

  • Mayonnaise Hands

    Is “Taleban” the British spelling?