Tuesday, July 25, 2006

Now, Back to the Oil

Today's NYT:

...But Iran's ability to rebuff the West on these matters has only increased as oil prices have risen from about $27 a barrel at the start of the Iraq war, to $65 a barrel in the spring as tensions rose over Iran's nuclear program, to $75 on Monday as the conflict continued in Lebanon.

Indeed, according to Cambridge Energy Research Associates, each $5 increase in oil prices translates into $85 million a week for Iran's bank account, emboldening its leaders and making whatever aid it supplies to Hezbollah easier to finance even as the crisis threatens to spread.


New oil money has given not only Iran but also Russia more resources to resist Western pressure. As he played host to the Group of 8 summit meeting in St. Petersburg last week, President Vladimir V. Putin was able to swat away criticism from President Bush about Russian domestic and foreign policies.

He boasted, in fact, that Russia's oil, natural gas and nuclear energy capacities made it the biggest energy player in the world.

Months before the summit meeting, Russia was hoping to use the final communique to endorse its approach on energy, in which the state basically controls the oil sector. The Bush administration joined with Europe to block such an endorsement, American officials say.
But energy remains a major American irritant with Russia and by extension China.

The Bush administration has stepped up its efforts to support pipelines that would carry oil and natural gas to the West, bypassing Russian territory.

Russia, in turn, has pressured Central Asian countries to oppose American energy projects and the use of the area for military bases.

To do that, Russia has joined with China to mobilize a five-year-old group called the Shanghai Cooperation Organization, whose members include several Central Asian countries. The Defense Department is even worried that the group could move from its focus on energy to become a military alliance to rival NATO.

Many American analysts say energy issues are driving Russia and China into each other's arms politically, and that if anything American policies are accelerating the trend.

Meanwhile, the new oil politics are rearranging the international playing board, not simply giving Iran latitude in the Middle East but allowing Venezuela, for another example, to try to blunt Washington's influence in Latin America.

"We are seeing a radical change in how countries like Russia, Iran and Venezuela on the supply side, and China and India on the demand side, bring the world marketplace to bear on foreign policy," said Carlos Pascual, a former top aide to Ms. Rice and now foreign policy studies director at the Brookings Institution.

"I don't think any of us have done a terribly good job of thinking through how far behind the eight ball we are on these issues," he said.

So, our support of Israel's aggression in the Middle East, our invasion and stymied occupation of Iraq, and our sabber-rattling towards Iran have helped drive up the price of oil, which in turn has increased the wealth of our new supposed worst enemy, Iran. Meanwhile, Russia and China have forged an economic-energy pact, and Russian in particular, is reviving its opposition to American hegemony throughout Asia by encouraging resistance to sponsoring American military bases and forcing the U.S. to hope for an oil-gas pipeline that bypasses Russia. And if each $5/barrel increase in oil prices results in an extra $85 million/week for Tehran, than the increase in oil prices from approximately $25/barrel before the Iraq invasion to $75 now means that we've enriched Iran by approximately $75-$25 = $50, and $50 is 10-$5's meaning that 10*$85 million = $850 million/week, or about $45 billion/year. That may be chump change, or the price of one year's estate tax revenue here. But it probably helps out a lot over there.

And, oh yeah, a former top aide to Secretary Rice says we haven't done a terribly good job of thinking through these issues. Ya think?

But General Kristol and our American Mullahs still want us to attack Iran, and Syria while we're in the neighborhood.

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