'Each man takes the limits of his own field of vision for the limits of the world'
-- Arthur Schopenhauer, Essays and Aphorisms

'Artists are tricky fellows sir, forever shaping the world according to some design of their own'
-- Jonathan Strange, Jonathan Strange & Mr Norrell

Sunday, 6 March 2011

West wants Oil; East wants Oil Wealth

Fighting against Tyranny, fighting for...?

'Two factors determine the price of a barrel of oil: the fundamental laws of supply and demand, and naked fear.'

When historians distill from the1789 French Revolution its essence, they see that wonderful slogan, 'Liberte, Egalite, Fraternite.' What did the barricade desire? Freedom (from oppression), equality (instead of inequality) and unity (brotherhood instead of dischord and internecine strife). And they got it. At least, for a while. The aristocracy was dissolved. Freedom from tyranny was brought forth by the Enlightenment principles of citizenship (the social contract) and inalienable rights. Equality was produced through anarchy; everyone is equal since a state of nature begins, where 'every man is wolf to every man' (Hobbes, Leviathan, 1651). Brotherhood was a watchword because they stood forth at the barricades and died, fighting against oppression. It's fine when you're fighting against something. But you also have to understand what you're fighting for. 

The revolution in France was a beast that has shaped understanding of liberal democracies, secularism (partition of religion and state) and ideologies as disparate as fascisim and Marxism. In Britain, Edmund Burke, the philosopher and member of parliament argued against the revolution - the inattention of the revolutionaries to the relations that needed to be comprised in a modern government, especially in connexion with liberty, was matched by the inappropriateness to a sovereign regime of structuring its institutions around equality rather than around effective command. This led Thomas Paine, in arguing against Burke, to compose his famous, Rights of Man 1791. Four years after the revolution, the year long reign of terror led to the murder of between 16 000 and 40 000 'citizens'. From the ashes of Liberte, Egalite, Fraternite, France would come to see restorations of the monarchy, two subsequent revolutions, and be governed by a republic, a constitutional monarchy, and two empires (First and Second World Wars). The right to govern can be a long process.

The West has distilled from these uprisings in the Middle East and north Africa (MENA, to use industry-speak) that the protestors want democracy. Actually, the idea of demos doesn't seem to be anywhere on the protestors' banners, in their interviews or tweets or blogs. They want an end to the current tyranny that sees the presence of self-enriching elites possessing little or no accountability. They then, presumably, want the best system of government to ensure equal prosperity, based around a system of meritocracy. Don't we all? We know what we don't want, which makes the initial phase easy. When we don't know what we want, we have no real idea, no coalesced voice, of what the nature of government should look like. Hence noone should be suprised that firstly the Egyptian transitional President Safick was sacked or secondly that news of his replacement was met with confusingly mixed reactions. Some saw it as a sacking of the old guard, others as a conspiracy theory, that Safick was going to blow the whistle on elements of an army coup. The West distilled from this confusion the only thing it could do - uncertainity, lack of direction, no purpose, no figurehead, no plan. No requested system of government, noone to govern. Egyptian shares overseas have tumbled.

Iraq has an elected democracy,  which many commentators see as the proper end result. In which case the current protests in Iraq, over corruption and poor services, are a little worrying. On February 16, 3 protestors were killed in the Southern city of Kut and dozens have been killed in clashes with police in Baghdad's Tahrir Square, with a several thousand strong angry mob convening each Friday. In Fallujah, scene of the 2004 infamous American incursion there (twice, the second time as Operation Phantom Fury), protestors seemed to enjoy the monopoly on violence, burning down the Mayor's office and forcing the council to resign en masse.

So democracy is the end-game? Not at all - the end-game is a system that changes the status quo, defeats corruption and antiquated notions of patronage, replacing them with universal education and a meritocracy. Easy? It's want everyone at the bottom of the food chain wants. Afghanis would probably rise up en masse also, if the nation wasn't so decentralised, tribal and far too poverty-stricken to spend time protesting. After all, Karzai's government in Kabul must be one of the most obviously self-aggrandizing elites of any nation in the world - the media know well enough that Kabul Bank has become a loan-shop for the elites to buy property abroad (mostly Dubai) and fund business ventures.

For the West, the essence distilled from these uprisings is oil. After all, what more personal message can these faceless, abstract Middle Eastern and Maghreb protests convey than that they might be to the detriment of the Western lifestyle? The message is that we are an oil-based lifeform and employ it in every facet of our daily lives to implement our apparent right to the affluent pursuit of happiness. If you think I'm wrong about the West see what we're reading - the Economist runs a three page analysis of how 'a complex chain of cause and effect links the Arab world's turmoil to the health of the world economy'. It is also their Leader article, ('The 2011 oil shock'). The FT trumps the Economist though in the battle for Brent Crude inches, noting that the protests have moved from oil importers (Egypt, Tunisia, Jordan) to oil exporters (Libya, Oman, Bahrain) with the implication that the protests are moving to more serious locations for Western interests.

Libya represents 2% of worldwide barrels per day (1.4m of 70 million barrels per day) and its composition is suitable only for distillation in the refineries of Europe or Asia, which limits the geography of its potential for export. Stock markets are wary, but in fact, all eyes are on Saudi Arabia. North Africa produces 5% of total barrels, but the Middle East makes up 30%. Saudi pumps about 9 million per day and there's an OPEC ability to pump 4-6million extra, of which Saudi makes up 3-4 million of that, therefore suppressing any volatlity in the market caused by small restrictions. The Kingdom says it is pumping an extra 600 000 a day at the moment to offset the Libyan shock. Strange also that little attention was paid to a Feb 26 terrorist attack that closed Iraq's biggest oil refinery. The Saudi stock exchange may have taken note - the stock market fell 7% on March 1st.

America should be sitting pretty but of course it isn't - and if they sponsor intervention here, since the waves seem to spread, they could be involved in massive interventionism and a huge propensity for mission creep. Intervention in today's globalised media world means images of American military activity - that can only be bad.  Still, Obama has just given first permission for offshore drilling in the Gulf of Mexic since the Deepwater Horizon tragedy and US reliance on foreign oil has been dropping for the last five years and may well drop for the next five, due to a revitalised domestic industry.

Perhaps it's about oil for the protestors, too. After all - they know oil wealth is the key to immediate economic gains. One protestor in Libya, still working at a refinery, was quoted as reasoning that, ' We don't like him. We are not here for him. We are here to protect the oil, for our people'. And for Iraq too - protests over lack of prosperity and now terrorist attacks on economic infrastructure. Perhaps this represents a change of strategy for the terrorists there - attempting to nurture and exacerbate economic, rather than political, grievances. Economic grievances are easier to isolate and they seem to provoke a more universal coagulation of dissent. Clearly the protestors don't want aid from the West, they want reduction in trade barriers and prevention of MNC parallel economies. And why shouldn't they? 

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