From: Rakesh Bhandari (rakeshb@stanford.edu)
Date: Wed Nov 06 2002 - 21:36:45 EST
I sent this reply to Fred's 7801 offlist a couple of weeks ago. Perhaps someone may want to comment? So far the only serious discussion we have had of Cyrus Bina's work which I think Anwar Shaikh has called somewhere the most essential work on global oil put forth in the last twenty years was commenced by Patrick Mason who quite unfortunately quit OPE-L. rb In the putatively leaked Cheney report which in fact reads to me as war propaganda, one is led to infer that Cheney, et al. wants to topple Saddam in order to control the supply of oil, that is, ensure that Iraqi oil is both not used as a weapon towards political ends, viz., Palestinian rights, and positively used to break the power of a Sa'udi-led OPEC as a price fixing cartel. Of course OPEC is not a price fixing cartel led by the Sa'udis or anyone else. As Cyrus long ago argued, posted OPEC prices follow spot and future prices. A new pricing system dominated by future markets has emerged. Under this system, traders set up key futures prices based mainly on expectations of market conditions. Transaction prices have become closely linked to prices established in the organized trading markets. The large influence and the functioning of futures trading have resulted in more transparency in the petroleum market, enabling not only consumers but also speculators to react to shifts in supply or demand more rapidly, as Kunibert Raffer and Hans Singer have also come to recognize. 'Control' of Saudi or Iraqi oil does not or would not yield power over price. Or in other words even if Saddam or Bush controlled Iraq and Sa'udi Arabia, neither would not have power over price. Moreover, the Cheney report is wrong to imply that Saddam is in a position to embargo oil for any significant period and do without revenue. US foreign policy is not in fact comprehensible as an effort to maintain, stabilize or increase the supply of oil to the world market--the oilism thesis. This thesis implies that US foreign policy is a benevolent effort to ensure that the world is not blackmailed by sheiks, shahs and dictators as long as it remains dependent on Middle Eastern oil, yet the world remains on the whole opposed to the benevolent US' war mongering; the oilism thesis not so subtly has become an apologia of US imperialism. In terms of its external objectives, US foreign policy remains best understood as an attempt to divert oil rent towards its own ends--the petrodollarism thesis. And of course the US and Israel both have an interest in preventing the Ba'ath Party from using future, post-sanctions revenue to build up any kind of regional military power which could conceivably challenge an expansionist Israel in possession of scores of weapons of mass destruction (see the excellentand prescient Perry Anderson piece on Palestine-Israel conflict in OPE-L 7154, May 2002). Which is not to say that the ends to which rentier states would otherwise put oil rent are in any way progressive (see recent piece by Cyrus on Iran as rentier state). All the best, Rakesh
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