Is It All about the Oil?

“It’s all about the oil” has been a persistent refrain in response to US Middle East policy for as long as one can remember. Certainly there is much truth in this statement. Since the energy transition from coal to oil and its derivatives, leading imperialist powers have sought to dominate or control global oil resources. And the center of global oil extraction, especially for the US and other powerful capitalist countries, has remained in the Middle East and its periphery. 

When the navy of the then-dominant British Empire shifted from coal-fired, steam-driven warships to dependence on oil, the Middle East became the strategic service station for imperial reach. Accordingly, the status and fate of people, nations, and states in the Middle East became inextricably bound to the interests and the will of the greatest imperial powers. 

After World War I, the British and French hacked and hewed the Middle East into “protectorates” beneficial to their own economic interests. The US, self-sufficient in oil resources, was pushed to the margin-- left to explore the vast underpopulated deserts of the Arabian peninsula. 

Of course the vast expanses of the Arabian peninsula turned out to be the source of vast and cheap oil and natural gas. The Arabian-American Oil Company (ARAMCO) proved providential when US domestic energy reserves began to decline.

As the dominant imperialist power after World War II, the constabulary for the capitalist world, the US took on the task of guaranteeing that oil would be safe and within reach throughout the capitalist world and outside the reach of its Cold War foes and their allies. This necessitated a powerful and agile military. Since oil and gas are transported by sea and pipeline, the US military was ensconced in bases globally, and the US enlisted heavily armed deputies at key positions in the midst of energy-rich areas (pre-revolutionary Iran, Israel, Saudi Arabia, etc.). 

The US (and its closest, most trusted NATO allies) did not serve as a global gendarmerie for free; rather, they extracted a tribute from the oil-producing countries and their peoples. With colonial fetters rapidly breaking after World War II, imperialism established new modes of dominance over the world’s raw materials, including energy resources. Neo-colonial relations replaced total dominance with economic dominance. Despite nominal political self-rule, resource-rich “independent” countries were still the captive of US corporations and their European counterparts. US and European corporations “participated” in the development and ownership of gas and oil resources.  

Because oil and gas are so central to modern economies, imperialist powers display a keen interest in ensuring low, stable prices. Thus, the US and other imperialist countries have invested heavily in oil and gas extraction throughout the world, while installing, when necessary, friendly governments in resource-rich countries. 

Of course even the most empire-friendly governments have sought more of the fruits of resource extraction from their lands. Saudi potentates, among others, have restructured deals, formed production alliances (e.g., OPEC), and exerted their power over global supplies for political purposes. Notably, OPEC producers punished Western countries for their support of Israel with an oil embargo in 1973. 

The 1973 oil embargo proved to be a turning point for imperialism’s relations with the oil-producing states of the Middle East. Differences within imperialism restrained the considered US use of military power to “...forcibly seize Middle Eastern oilfields in late 1973.” Taking advantage of these differences, the Saudis and other countries were emboldened to nationalize their industries and command a measure of independence from Western imperialism. In some cases, the dramatic increase in oil dollars flowing into the oil-producing states’ coffers led to equally dramatic improvements in the lives of citizens (Libya, for example). In other cases, oil dollars only enriched the elites. And, in the case of the Saudis, the enormous bounty of oil-revenue went to promote Wahhabism and an ultra-conservative sectarianism against progressive and radical secular movements in the Middle East and elsewhere.

The US and Israel were successful in channeling Saudi money and resources in support of their own foreign policy objectives, notably by marginalizing, even combatting non-sectarian Arab nationalism, socialism, and anti-imperialism in Palestine, Afghanistan, and many other states. From the rise of Nasserism until today, imperialism and the most reactionary Islamic conservatism have used sectarianism to counter, even destroy, progressive movements. Oil money has subsidized that effort. 

Since the victory over imperialism and sectarianism in Syria, we are beginning to see the encouraging rise of class-oriented, non-sectarian struggles in other countries like Sudan, Lebanon, and Iraq. The setbacks to Saudi Arabia and its Gulf allies in Yemen have also paved the way for a higher, more advanced level of struggle with less of the pernicious confusion of tribal and sectarian division. While there is always a danger of imperialism using the new militancy for its own purposes, it is operating from a weakened position.

US Oil Imperialism Today

“I always said, if you are going in, keep the oil.” -- Donald Trump

Commentators were abashed by Trump’s audacity when he linked involvement in Syria with expropriating Syrian oil. Most were embarrassed that Trump publicly exposed that oil thievery so easily ties in with US foreign policy goals. They preferred to mask US objectives behind an almost comical alarm that ISIS would rise again without US presence. This thin excuse stood in sharp contrast to the fact that the entire US military engagement combating ISIS was through air power.

So, is the US meddling in Syria, Iraq, Saudi Arabia, Libya, and other countries to steal, secure, or expropriate energy sources? Are these instances of the century-old imperialist plunder of global energy sources?

Certainly US imperialism and its allies continue to serve monopoly capitalist concerns in their quest to exploit global resources. But that is not the entire story today. 

Thanks to the fracking, shale oil revolution, the US is also an intense competitor with global energy producers. This is a new twist that is now shaping US imperialist policy, moving it in other directions. With the US today exceeding the oil and gas production of all other countries, it is less committed to securing, commandeering, protecting, or exploiting global energy resources and more directed toward garnering a greater market share of worldwide sales. 

The war-- and it is war-- for more markets for US energy supplies favors the US when other suppliers are threatened, made less reliable, or more costly by wars, political upheavals, or other causes of chaos. Where US post-war, Cold War oil politics were directed toward stability, low, constant prices, and secure transit, the US benefits today from global instability, volatile prices, dangerous sea routes, and thwarting pipeline infrastructure.

The endless US wars, the stirring of big-power hostility, saber-rattling in sea lanes, blatant military action against stable energy-producing states, and inflated threats of terrorism and banditry all contribute to favoring energy supplies from a politically and economically stable state with the most powerful and far-reaching military in history-- the US.

It is important to place US-induced chaos in the perspective of no real, existing imminent threat from any major power or from so-called “terrorism.” Nearly all of the global chaos is simply manufactured and sustained by imperialism.

US determination to reign over energy markets was decisive in warding off the Saudi price attack of 2014. With production costs half or less of those for US shale, the Saudis, through both calculated collective inaction and overproduction, drove the price of oil down from historic highs, hoping to cripple the vastly expanding US shale market. Saddled with debt piled up from exploration and the high initial costs of rigs, the emerging US shale industry struggled in the face of collapsing prices. But Wall Street came smartly and decisively to the rescue; the loans are only beginning to be called in today. 

With oil-producing Libya a failed state, with oil-producing Iran expelled from commerce, with the Persian Gulf becoming a war zone, with oil-producing Venezuela sanctioned from markets, with Boko Haram disrupting Nigerian oil production, with giant oil-producing Russia forced into a new Cold War, with the Saudis about to sell chunks of ARAMCO to US and other capitalist investors, and now with Donald Trump keeping Syrian oil out of global markets, the US is busy hustling its oil as the most reliable and readily available. 

The same could be said for the US efforts to expand its markets for liquified natural gas. The manic desire to depict Russia as an existential threat looming on the borders of Eastern and Central Europe is meant to stigmatize Russia as a dangerous partner and undermine its standing as the chief supplier of inexpensive, pipeline-supplied natural gas to Europe. Accordingly, the US hopes to kick open the door to that market by establishing LNG terminals in the most anti-Russian states. Similarly, the chaos in the Straits of Hormuz and Iran-bashing have cast a shadow over the reliability of the US’s biggest LNG competitors: the vast Iranian and Qatar gas fields.

In this competition for global energy markets, the US relies upon economic sanctions as its weapon of choice, especially shutting down trade activity of its energy rivals.

Where imposing stability on a capitalist world dependent upon energy imports was the former goal of US imperialism, overproduction of energy from revolutionary technologies has set new goals. Because the US lusts after the traditional markets for oil and natural gas, US imperialism is content to live with, to even foster global instability. It is no accident that endless destructive wars, global hotspots, threats, and hostilities are features of the twenty-first century. 

Bolstering energy exports and arms sales makes the US the biggest troublemaker in a volatile, ultra-competitive capitalist world. 

US energy imperialism makes an already unstable world even more dangerous.

Greg Godels

zzsblogml@gmail.com

Inching Towards Armageddon

Gerald Seib, The Wall Street Journal’s chief political commentator, is right about the attack on the Saudi Arabian oil facilities: “In any case, the timing is deeply suspicious.” But hampered by his ties to officialdom, his suspicions take him only to the Iranians and their allies. Like all those drawing a salary from the monopoly entertainment industry, Seib cannot, by choice or by diktat, color outside the establishment lines.

Of course Seib is not alone in pointing fingers at the Iranians; the entire US foreign policy/intelligence cabal can only see Iran’s hand in the attack. They are determined to gin up enthusiasm for some kind of military adventure against Iran. That unanimity alone is cause to be “deeply suspicious.”

As for timing, what sense does it make for the Iranians to stir up trouble when Trump had just fired John Bolton, the most violently anti-Iranian policy maker in his administration, when Trump had alluded to a possible deal with Iran and dangled $15 billion bait before the Iranian leadership? Little sense indeed-- and “deeply suspicious timing.”

While liberals will choke before applauding any of Trump’s foreign policy initiatives, his bizarre confidence in “deal-making” has pulled the US back from more than one bloodletting venture planned by the policy hawks and the generals. Certainly the attack on Saudi Arabia played into the hands of the belligerent factions that stood with Bolton (and Pompeo) on the road to war. They benefit from the attack.

With a close election and a history of crying “Iran is evil!” at every opportunity, Israeli Prime Minister Netanyahu would have sought to benefit from the attack. 

And the US domestic oil industry-- now the largest producer in the world-- definitely benefits from the attack. Violence and instability in the Middle East, the traditional oil spigot, only makes the US a more attractive source, as Trump has bluntly advertised. With the Strait of Hormuz a risky bottleneck and Saudi Arabian facilities ablaze, cautious customers might be well advised to buy US energy resources guaranteed by a trillion-dollar military. 

At the same time, energy insiders have exposed the explosive crisis facing the fracking-driven US oil industry. Caught in the scissors of massive overproduction and collapsing earnings, the industry is facing a cold, calculating Wall Street, calling in the enormous debt accumulated over the years. Wall Street financing allowed the industry to survive the 2014 Saudi Arabian attack on the US shale revolution, but now finance capital wants to see a return. The unprecedented rise in oil prices in the aftermath of the attack certainly helps the US industry, as a back page article in The Wall Street Journal concedes: “Frackers Seek to Profit on Saudi Oil Attack” (9-17-19).

For over two years, I have been arguing that US imperialism is shaped more and more by the explosive growth of US energy production. New and greater markets for oil and liquified natural gas play a larger role in shaping US foreign policy. Rather than using US might to dominate and safeguard energy production, US foreign conduct is today directed toward disrupting competing sources. The chaos in the Middle East (and the intervention in Venezuela) certainly further that agenda.

Apparently, the Russians stand to benefit as well. President Putin suggests that maybe Saudi Arabia, with the third largest defense budget in the world, should spend some money on Russian air-defense systems like their touted S-400. Clearly, the Saudi defense system, based on the most sophisticated and costly US defense systems, failed to stop the attack, a great embarrassment to the US and the Saudis. 

US officials, including the Joint Chiefs of Staff, scrambled to explain the failure. They argued that the multi-billion-dollar systems were focused on threats from the Houthis in Yemen. Of course that claim contradicts the long-standing, fundamental charge that Iran is the principal danger to the region. To deflect attention from the defense failure, the US and the Saudis must instead maintain that they were bushwhacked by the Iranians. Any alternative explanation would point to an enormous intelligence and military-hardware failure. Surely the poor, backward Houthis could not outsmart the best and brightest of the Western defense establishment. The illusion must be maintained.

Liberals, and even many on the left, have failed to grasp the current imperialist paradigm. We witness the clash and competition of big and little imperialist powers. The Cold War paradigm is now obsolete. And in its place are postures, maneuvers, and actions by many rivals to gain advantage over or escape the dominance of others; we live in an era of escalating inter-imperialist conflict between capitalist countries of every size and political persuasion. 

We have to go back over a hundred years to find a real, existing parallel to the events transpiring on and around the Arabian peninsula.

Like the events in Sarajevo in 1914, we may never clearly identify a “villain.” Nor will it really matter. It may soon be overshadowed by the war and destruction that comes in its wake.

Greg Godels

zzsblogml@gmail.com

US Imperialism: Changing Direction?

 

Developments over the last few weeks further remove the fog obscuring the foreign policy objectives of the US ruling class. A series of seemingly unrelated events casts light on the goals of US policy makers in an era of intensifying international rivalries. Further, it is becoming clear that President Trump is now largely deferring to the ruling-class consensus on foreign affairs; his straying from the fold has been substantially checked.

 

In February, I wrote of the implications of the widely ignored shift in the status of the United States from an energy-seeking, petroleum-importing country to a net exporter, a trader in all energy resources.

 

The US still has a significant but shrinking position in the international export of coal. Of course, coal use is both third in importance among hydrocarbons and shrinking in use (coal production internationally fell by the largest percentage on record in 2016). But petroleum imports became essential to fuel the critical transportation needs of the US as well as the massive military machine in the mid-twentieth century. 

After the oil crisis of the 1970s, dependence on petroleum imports became even more acute and an even more vital factor in setting US foreign policy. Often, and for good reason, the left was quick to associate the thirst for energy resources with war-mongering and neo-colonial intrigue.

 

But matters are changing rapidly, even if many seek to obscure or ignore the new reality. As I argued in February:

 

Matters began to change in the last decade, with US domestic oil production nearly doubling between 2010 and 2014. In the last few years, US oil production has reached levels in line with the world’s largest producers, Saudi Arabia and Russia. For the first time in decades, the US is again exporting extracted energy products. In fact, many experts expect the US to become a net energy exporter in the next decade.

 

The evidence has only mounted since the February posting. Despite low prices of oil, US drillers are producing like there is no tomorrow. From its low in mid-year 2016, the rig count has nearly doubled in North Dakota. As the Wall Street Journal reported on June 19, the big companies, Chevron, Royal Dutch Shell, and Exxon Mobil are investing tens of billions in the Permian region of the Southwestern US. The giant multinational, monopoly-capital producers are stepping in where smaller producers have failed because of costs and limited capital. They are projecting Permian production at 4 million barrels a day within a decade, about the production of modern-day Iraq. Chevron, alone, anticipates a four-fold increase of Permian production within a decade. Exxon is projected to spend half or more of its massive investments in the next three years on North American oil production.

 

Where will this oil go?

 

In a June 8 article, Wall Street Journal writer Lynn Cook stated bluntly: “American [US] oil exports are emerging as a disruptive new force in global markets.” From January to April, US suppliers shipped 110 million barrels to foreign destinations, chiefly India, Hong Kong, and Denmark. Asian buyers account for 39% of purchases, with China showing, by far, the greatest growth. With massive production increases coming online, is there any doubt that US producers will be competing furiously with OPEC and other traditional exporters for existing and new markets? Should we not expect the foreign policy and the covert and overt military strategies to reflect this intensifying competition?

 

Similarly, the US is becoming an increasingly important exporter of natural gas. As new technologies of liquefying and shipping natural gas are implemented, the competition for markets is becoming ever more ruthless. Seaborne liquid natural gas accounts for 40% of the market today. As the world leader in natural gas production, along with Russia, the US has a strong interest in exporting natural gas and acquiring new markets. Among the exporters of liquid natural gas (LNG), Qatar is the world leader, with every intention of maintaining its position, recently opening its North field, believed to be the largest gas reservoir in the world.

 

Geopolitical Implications

 

The long fostered model that views US imperial interests as served by the US securing and protecting its access to energy sources, by guaranteeing energy for its Cold War allies, is in need of a new look. Today, US interests lie in acquiring markets within the global economy, competing with other energy suppliers, and creating political and economic conditions favorable to US suppliers. Oil, gas, and energy remain central to the imperialist enterprise, but the roles are shifting in important ways, with important implications.

 

I sought to define that role more clearly in February, when I wrote:

 

It should be clear, then, that the approaching oil independence of the US, the changing role of the US from consumer to producer, and the attention to markets-for-oil over sources-for-oil profoundly influences US strategic policies, including the weakening or souring relations with other major oil-producing nations like Saudi Arabia and Russia.

 

Events have only strengthened that observation. The rabid, crude intensification of hostility toward Russia, the renewed demonization of Iran, the sudden and bizarre isolation of Qatar, and the heightened aggression in the numerous destabilizing wars throughout the Middle East underline the evolution of an emerging foreign policy consistent with securing new energy markets.

 

The introduction and expansion of US military forces to hot spots like Syria, Iraq, and Afghanistan promise little resolution of the conflicts, but guarantee further instability of energy sources and the flow of hydrocarbons. The sale of a vast cache of military weaponry assures the deepening and lengthening of the Saudi incursion into Yemen.

 

The unexpected hostility toward Qatar shown by the other Gulf States in the wake of Trump’s recent vulgar performance in Riyadh, Saudi Arabia is likely directed against Qatari global leadership in the exporting of Liquid Natural Gas, the market that the US hopes to further penetrate. It is no accident that the Qatari gas fields are jointly owned with Iran and both countries have cooperated in the exploitation of the fields and the production of LNG. At the same time, the Saudis have surrendered in the price war with US shale drillers. With sovereign wealth shrinking from a costly war and low oil prices, the Saudis are more interested in finding the best moment to take ARAMCO public, to sell off portions of the national oil company and refresh the kingdom’s coffers. The king and his retinue are content to loyally serve the US in its global mission to command energy markets. Saudi leadership of OPEC in its fight for market share with US petroleum producers proved disastrous. The Saudi/OPEC output cut “has been deemed an OPEC failure and a US production win,” according to Tony Hendrick of CHS Hedging, as quoted in the WSJ (6-21-17).

 

The latest US anti-Russia (6-15-17) sanctions are clearly directed at markets for Russian natural gas. The Senate voted 98-2 to “broaden sanctions on Russia’s energy sector,” as reported by The Wall Street journal. While the message might have been lost on the mainstream media, wallowing in neo-McCarthyism, and while it might have been missed by a distracted left, it was not lost on Europeans. They immediately saw it as an attack on the Nord Stream 2 pipeline project that would bring Russian gas to Germany, Austria and other European countries. And they saw it for what it was; Germany and Austria immediately lashed out with a joint statement: “We cannot accept a threat of extraterritorial sanctions, illegal under international law, against European companies that participate in developing European energy supplies.”

 

They added sharply: “Europe’s energy supply is Europe’s business, not that of the United States of America.” and “The actual goal [of such sanctions] is to provide jobs for the US gas and oil industry...”

 

And there it is-- naked recognition that US anti-Russian acts are thinly concealed covers for US imperial goals. The US wants the European gas business currently done with Russia.

 

Lest anyone pretend that US imperialism-with-a-new-twist is strictly a product of Trump, it should be noted that the 98-2 Senate vote was no aberration. Writing in the Washington Post (6-8-17), David Gordon and Michael O’Hanlon-- two solidly connected Washington insiders-- pointed to “several hopeful signs” with Trump’s foreign policy. They lauded the President’s national security team and his stance in the Middle East. They were especially enthusiastic about his continued belligerence toward Russia.

 

The reckless foreign policy of the Trump administration still deviates occasionally from the ruling class consensus expressed in the editorial pages of The New York Times or The Washington Post. But more and more it is reckless because it conforms to that consensus. The endless wars and the escalation of those endless wars are not met with ruling class impatience, but appear to be more the new global norm.

 

The destabilization of countries and the promotion of sectarianism appear less as unintended consequences and more as those resulting from the deliberate, calculated tactics of an imperialist power benefiting from chaos.

 

As in the classic pre-World War I era of reckless imperialist competition, US imperialism is aggressively advancing its economic agenda against rivals, including recent “allies.” The dangers posed by these intensifying rivalries threaten to spark even more devastating clashes and widening wars.

Zoltan Zigedy

zoltanzigedy@gmail.com

New Developments in Political Economy: The Politics of Oil

Since the military build-up leading to the First World War, petroleum production has been the figurative, if not literal, motor for economic growth. Modern machines of war demonstrated the future. The imperialist powers recognized the crucial role of motorized vehicles, airplanes, and naval vessels and their thirst for oil in modern warfare, as well as anticipating the many important peacetime uses to come. At the same time, these same powers foresaw that securing sources of crude oil would be an essential, if not the essential, key to achieving and maintaining a dominant position in the global economy.

It is not far-fetched to view the post-First World War victor’s settlement, especially regarding the peoples of the Middle East, as significantly driven by considerations of future energy resources. The secret Sykes-Picot agreement likely had as its unspoken goal the guarantee of access to petroleum in the Middle East by both France and the British Empire. The conquest and oversight of oil reserves and the anti-Communist crusade became two essential pillars of twentieth-century imperialism.

US oil companies joined the European imperialists in sourcing Middle Eastern oil to complement domestic production. And the acquisition of sources of oil played no small part in the Second World War. All three Axis belligerents-- Germany, Italy, and Japan-- lacked sufficient petroleum access to sustain their imperial designs. The course of their aggression was shaped, to a great extent, in order to accommodate their thirst for oil.

In the Cold War era, the US took responsibility for securing oil for itself and its allies, installing Iran and Israel as Middle Eastern gendarmes. The oil issue became particularly acute with the collective organization of oil-rich nations into the Organization of Petroleum Exporting Countries in 1960, a development coming to a head with the oil embargo of the early 1970s that debilitated the advanced capitalist economies. This blow coincided with the beginning of a decline of US domestic oil production, sending shock waves through the US ruling class. A further shock struck with the loss of the Shah’s policing of the Middle East as a result of the Iranian Revolution.

Thus, the US entered the last two decades of the twentieth century facing shrinking domestic oil supplies and Middle East instability, two developments prompting more imperialist attention upon the affairs of oil-producing nations.

The Iraq-Iran War, beginning in 1980, further destabilized the region; US imperialism sided with Iraq out of fear that the Iranian revolution would spread throughout the Middle East, jeopardizing oil security.

And in 1991, the US undertook a massive military intervention in Iraq to protect the government of Kuwait, a reliable oil source threatened by an Iraqi invasion. US imperialism then recognized both Iran and Iraq as major threats to imperialist dominance of the region.

The Twenty-first Century

With the demise of the Soviet Union, the US enjoyed an unprecedented freedom of action. At the same time, US rulers faced growing dependence on foreign petroleum resources-- the US imported twice as much crude oil as it produced domestically at the turn of the new century. The Bolivarian Revolution in Venezuela was perceived as a threat to a once reliable source of petroleum products. Long-compliant allies in the Cold War sought their own independent arrangements with oil producers, stoking inter-imperialist rivalries. The explosive growth of the People's Republic of China and its dramatically expanded energy needs stressed global oil production.  

A panicky US ruling class looked to different paths to ensure access to resources for its mighty military machine and to assuage a restive public rocked by energy-price volatility. On one front, the US began to explore moving away from traditional sources of oil imports. Capitalist Russia enjoyed vast petroleum reserves and production capacity rivaling Saudi Arabia. And capitalist Russia was also in need of foreign investment. Two factors blocked this route (see Bloomberg Businessweek, 1-16/1-22-17, An Oily Reset in US-Russia Relations): first, Russian nationalization of some of its private oil business, and, two, the beginning of a revolution in domestic energy extraction (fracking and shale production). US allergy to supporting nationalization and the emergence of promising technologies (not to be shared with an imperialist rival) soon closed the opening to Russia in the eyes of many policymakers.

On the other hand, a substantial sector of the US ruling class favored achieving oil security through military intervention and under the guise of human rights and democratization. Tested in the Cold War, this strategy of imposing US capital’s will upon other nations by posturing as high-minded saviors proved even more effective after the demise of the Soviet Union as a counterforce. Before, imperialism promised to bring civilization to its victims; today, it is human rights and democracy.

The twenty-first century overt and covert interventions in Afghanistan, Iraq, Libya, Iran, Egypt, Syria, and possibly Turkey can all be seen, through the lens of the politics of oil, as related to securing or protecting petroleum resources. Because of active resistance to US domination, because of the strategic importance of oil, the US has been at continual war in the region since 2001 under the tattered banner of fighting terrorism.

Matters began to change in the last decade, with US domestic oil production nearly doubling between 2010 and 2014. In the last few years, US oil production has reached levels in line with the world’s largest producers, Saudi Arabia and Russia. For the first time in decades, the US is again exporting extracted energy products. In fact, many experts expect the US to become a net energy exporter in the next decade.

The return of the US as an energy competitor has predictably shifted US foreign policy. The Obama administration began to sour on leading the way in regime change in the Middle East as US energy production ramped up domestically. ENI, the Italian oil company led the call for regime change in Libya, backed up by the Italian and French governments. ENI’s relations with Gaddafi had worsened. The US joined, but did not lead the intervention. Obama later spoke of regret at being drawn into the schemes leading to the overthrow of the Gaddafi government.

Similarly, the US intervention in Syria was modest in contrast to the massive military expedition in Iraq eight years earlier. The Obama administration refrained from establishing a “no fly” zone, a military maneuver expected to open the way to the defeat of Syria’s military.

US relations with Iran improved during the later years of the Obama administration as well, despite Iran’s independent foreign policy.

These developments signal the change brought on by the US shift from a voracious consumer of Middle Eastern oil to becoming a potential rival for markets.

This shift is further demonstrated by US relations with the two largest oil producers in the world: Saudi Arabia and Russia. During the later years of the Obama administration, officials and a compliant press ginned up a new Cold War against Russia. Sanctions, saber-rattling, and hysteria brought tensions far beyond the actual points of contention. An energy-hungry, resource-poor EU has grown dependent upon Russian energy supplies, particularly natural gas. As the US is fast achieving energy independence and beginning the export of liquefied natural gas, the battle for the European market is intensifying and driving hostility with Russia.

Similar tensions arose between the US and its long-term ally, Saudi Arabia. The growth of the US as an energy producer certainly alarmed the Saudi regime. With the threat of a former customer becoming a rival, and with the effects of dramatic increases in global production, Saudi leaders reacted. While they may not have precipitated the collapse of world oil prices in 2014, they did nothing to stop it. They made no effort to lobby OPEC for price-supporting cutbacks.

A falling price of oil advantaged the Saudis, who had one of the lowest costs of production among producers and harmed the new US producers, who had a much higher break-even point. Indeed, the price drop slowed, even reduced US production, but at great cost to the Saudis. Despite having efficient production, their reserves are diminishing. But more importantly, their social costs, budget balance, and the maintenance of foreign exchange reserves require a much higher price for oil. Saudi Arabia has achieved all the trappings of a modern, wealthy state thanks almost entirely to oil. But that state cannot be supported without high oil prices, a massive surplus over their low cost of production. Moreover, the costly war that Saudi Arabia has pressed in Yemen has helped drain reserves and expand the budget. It is not lost on the Saudis that the Obama administration was less than enthusiastic about this adventure.

Consequently, the Saudis surrendered going into the new year, working a deal to cut production in the OPEC states and with other producers, raising the price of oil.

It should be clear, then, that the approaching oil independence of the US, the changing role of the US from consumer to producer, and the attention to markets-for-oil over sources-for-oil profoundly influences US strategic policies, including the weakening or souring relations with other major oil-producing nations like Saudi Arabia and Russia. Oil self-sufficiency also accounts for the reluctance, on the part of the Obama administration, to resolve the profound Middle Eastern antagonisms created by US intervention. Instability among oil-producing nations only secures the US a better opportunity to penetrate new markets and a higher margin over relatively high costs of production.

While it is too early in the Trump administration to be confident, the appointment of Rex Tillerson, the CEO of Exxon/Mobil, to direct State Department policy would seem to suggest a significant change. As the world’s largest multinational energy company and one of the largest corporations in the US, Exxon/Mobil has enormous interests in nearly every energy-producing country. With extensive investments in Russia, it feels neither bound nor moved by diplomatic or political niceties; the Obama-era sanctions on Russia cost Exxon/Mobil hundreds of millions of dollars.

Tillerson’s direction of foreign policy will likely return to embracing, protecting, and securing oil-producing countries while seeking enemies elsewhere to appease the military-industrial complex. The most recent US casualty in Yemen, a death dramatically acknowledged by Trump, would seem to support a friendlier approach to Saudi Arabia. The hysterical pre-emptive attack on better relations with Russia would likewise seem to suggest that improved links with Russia are seen by a prominent section of the ruling class as imminent and to be contested.

Some may see a contradiction in Obama, the internationalist, having moved towards a nationalist foreign policy, or in Trump, the nationalist, opting for an internationalist Secretary of State; but they are contradictions only if the decisive control of the state by monopoly capitalism is neglected. Ultimately, the dominant interests of monopoly capital always defeat professed principles.

The disparate interests of the smaller domestic drillers of shale oil and the large multinationals like Exxon/Mobil are reflected in US foreign policy. The upstart domestic drillers need higher prices, modest capital investments, and growth to insure profits; the giant international oil companies need massive capital investments for development of new reserves and continual cost cuts to guarantee profits.

Trump’s new regime reminds us that bourgeois politics is not about personalities or civility, but about differing visions of service to monopoly capital. The politics of oil underscores this truth. Further, the politics of oil tells us that inter-imperialist rivalries are coming to a boil.

Zoltan Zigedy

zoltanzigedy@gmail.com