Wednesday, February 23, 2011

Libya, Bahrain, Oil Prices - and Martian Landings

Sitting in a faculty meeting a couple of days ago, a colleague stunned all of us when he noted that when he referred to recent developments in Egypt while conversing with one of his (political science) students, the student peered at him with that glassy-eyed, deer-in-the-headlights look that so many of us know, and asked, "Huh? What are you talking about?"  You could have sworn that the student had just landed from Mars.

Segue now to local (Saginaw-Flint-Bay City, Michigan) TV news last night, with the lead story featuring 2 to 3 minutes of clumsy interviews at local gas pumps, with motorists pissing and moaning that the price per gallon had shot up as much as 30 cents in one day, but making no mention of any knowledge (or concern) as to why prices had shot up.  Only then - priorities properly established - did the news-show anchor cut in with all of 15 seconds of film from Libya, and dutifully read from the teleprompter that perhaps 300 have been killed.  

How can people with - at their fingertips, literally - so many potential avenues to be not-clueless, be so clueless?

Well, as Rami Khouri now hints (in the Daily Star) - and the CFR's Michael Levi warns (in Financial Times) - Americans had better start clueing in, pronto.  If current trends do indeed persist, and popular representation takes greater hold in oil-producing Arab countries, and "the people" (rather than "the regimes") take more charge of decision-making as to the disposition of petroleum resources - if America's ties to Middle Eastern oil go from Dick Cheney's wet dream to his worst nightmare - the "We the People of the United States" may begin to find that (to channel Cheney again) the "American [oil-based] way of life" is indeed "negotiable."

Levi warns us that 

New approaches to oil market speculation are also needed. The G20 is currently overhauling rules in response to the 2008 oil price spike, which saw prices rise to $147 a barrel. However this was driven by economic factors – particularly surging Chinese demand – not a geopolitical shock. The responses have, understandably, focused on how to deal most effectively with similar circumstances in the future.
The type of speculation that would follow disruptions in Saudi Arabia or Iran, however, could be different. In such cases speculators would be responding to elusive political changes, rather than steady economic developments. Speculation is normally healthy, but their moves could add volatility as panicked traders hoard oil. It would be wise to consider and, if necessary, prepare for exceptional new restrictions on speculation during such moments of extraordinary geopolitical stress.
None of these measures replaces the need for a long-term transformation in the global energy economy. But such broader thinking must not crowd-out short-term measures to cope with present problems. We don’t know how our newly globalised economy will respond to a sharp geopolitical oil price shock. But we should prepare, before we find out the hard way.
Rami Khouri's essay again reflects the excitement and optimism about the Arab future that have been so palpable ever since Mr. Mubarak bailed out to his villa. And he looks hopefully to a future when Arab peoples - not those autocrats who have been all too content to do the West's bidding when it comes to regulating and expending their countries' oil.  He's wise enough to recognize that that day may be a while in coming. Speaking first of Libya and Bahrain (where the outcomes still hang in the balance):
If these two states that are deeply anchored in the Arab oil and energy world pursue policies that are faithful to their people’s sentiments, we could see major changes in how Arab countries work more closely together to pursue more collectively beneficial domestic, regional and global policies (as Western Europe did after World War II, for example). More democratic Arab countries with plenty of money are likely to become more sovereign countries, rather than puppets of Western powers or hostages to Israeli concerns (for example, seeing their armed forces limited by what Israel allows Western countries to sell them).
Sovereign and wealthy Arab states that think for themselves are likely to make major adjustments in their relations with the three major non-Arab regional powers, namely Israel, Turkey and Iran. This would mean being more critical of Israel, less hostile to Iran, and more inclined to associate more closely with Turkey and its impressive economic and regional policies. If the United States, Europe and others abroad deal equitably with the Arabs, and also address Israel and Iran on the basis of law and legitimacy rather than naked self-interest driven by indigenous emotionalism and pro-Israeli political blackmail, they will find themselves welcomed as valuable friends and partners across the Arab world.
The changes under way in Tunisia and Egypt point the way to a historic change in how Arab countries are governed and what policies they pursue. The transformations that have been unleashed and are spreading across the region will need years to settle into a permanent pattern of new policies and governance systems. When such changes reach the Arab countries associated with oil and energy, like Libya and Bahrain, as has been happening these weeks, the stakes suddenly become much greater.

From the perspective of the citizens of these countries, however, the process at hand is the same. Arab men and women want to be treated like human beings and citizens, with God-given human and civil rights. The advent of citizens with full rights and freedoms in Arab oil-producing states is a novelty that they and the world have never known. We should welcome it with open arms, because it may mark a very important boost to the development of the entire Arab region in a more rational, balanced, sustainable and accountable manner than has happened in the last several generations.

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