The wars that really are about the oil

Source: Spectator UK

http://www.phantomreport.com/the-wars-that-really-are-about-the-oil 

Excerpt:

Americans who hope that ‘energy independence’ can reduce US involvement in the Middle East similarly fail to understand the post-Cold War strategy of their own country. Thanks to the revolution in oil and gas production made possible by hydraulic fracturing technology (fracking) and horizontal drilling, the US has passed Russia as the world’s leading energy producer and Saudi Arabia as the leading producer of crude oil. A relatively small portion of America’s oil imports last year came from the Persian Gulf, chiefly Saudi Arabia (17 per cent), Iraq (4.4 per cent) and Kuwait (4.2 per cent). The biggest share came from Canada (33 per cent). The US military is not in the Persian Gulf to protect oil destined for the US so much as to secure the oil supplies of Europe, Japan and South Korea, and to implicitly blackmail China.

One element of this post-Cold War American grand strategy has been the attempt to minimise the dependence of the European Union on Russia, which supplies about a third of Europe’s natural gas. Ever since the 1990s, the US has favoured the construction of pipelines that would transfer oil or gas from the former Soviet republics of the Caucasus and Central Asia to Europe while bypassing Russian territory. One, the Baku-Tbilisi-Ceyhan pipeline, has been operational since 2006. Another, the Nabucco pipeline, was intended to bring gas from Azerbaijan to Europe through Georgia, Turkey and Bulgaria, but it has been abandoned in favour of two pipelines with much lower capacity. Russia is proceeding with its own alternative, the South Stream gas pipeline, which would bypass Ukraine and bring gas from Russia under the Black Sea to Bulgaria, Serbia, Hungary, Slovenia and thence to Italy. It remains to be seen whether this and other projects fall victim to European sanctions against Russia arising from the Ukraine crisis.

China, too, has been involved in the pipeline wars with the US — as a consumer of oil and gas, rather than as a producer like Russia. About 80 per cent of China’s oil imports pass through the Strait of Malacca, between Malaysia and Indonesia, giving the US navy a potential chokehold. This explains Chinese support for a proposed Iran-Pakistan pipeline, which could be extended to China. Opposed by the US, the pipeline has been thwarted by Saudi financial pressure on the Pakistani government. But China has other options for avoiding an American naval stranglehold, including a pipeline across Burma and the Chinese-subsidised port of Gwadar in Pakistan.

China’s claims to the South Sea islands, which have embroiled it in recent conflicts with Vietnam, the Philippines and Japan, are doubtless motivated in part by the desire to develop offshore oil reserves. After China deployed an oil rig in contested waters in May, nearly two dozen died in anti–Chinese riots in Vietnam.

Most consequential of all is the deal between Beijing and Moscow to transport gas to China by pipeline from fields in Siberia. The trade deal was not only the biggest in history but also a dramatic rebuke to the US attempt to encircle and weaken both powers.

China and Russia, along with India and Brazil, are challenging another basis of post-Cold War US hegemony, the ‘petrodollar’. The practice of paying for oil in dollars, even if no Americans are involved, has bolstered the dollar as the world’s reserve currency and helped the US to run large deficits since the Reagan years without too much pain. Many of post-Saddam Iraq’s oil concessions have gone to non-American firms, but the US achieved a small victory by ensuring that the transactions would use dollars.

Far from being reassured that their ‘legitimate interests’ are being protected, China and Russia have doubled down on their efforts to build up their own oil networks at America’s expense. And despite two decades of US support for non-Russian pipeline routes, Europe remains highly dependent on Russian gas. The former German chancellor Gerhard Schröder even sits on the board of a consortium building a Russo-German gas pipeline. At the same time, the American public, having turned against the wars in Iraq and Afghanistan, simply want less foreign policy, and attempts to cut the budget deficit have set US military spending on a downward path.

Two decades after the Gulf War, America’s commitment to secure the oil supplies of the Persian Gulf and the sea lanes needed for their transit on behalf of the other industrial powers has proven to be far more expensive than Washington expected. The stationing of US troops in Saudi Arabia and other Gulf allies enraged anti-American jihadists, Osama bin Laden among them.

The Bush administration cynically used popular panic following the 9/11 attacks and false claims about Iraqi ‘weapons of mass destruction’ to justify the US invasion of Iraq in 2003. In addition to turning oil-rich Iraq into a permanent American military base like South Korea, the invasion was intended to save money, by replacing the post-Gulf War policy of ‘dual containment’ of Iraq and Iran with containment of Iran alone. In March 2003, the undersecretary of defense for policy Paul Wolfowitz told Congress that ‘we’re really dealing with a country that could finance its own reconstruction’, and a month later the Pentagon estimated that the Iraq war would cost $4 billion. Rather than paying for itself, to date the war has cost the US $800 billion, a figure that does not include legacy costs such as a lifetime of medical treatment for wounded veterans, or the losses in life and property to Iraqi nationals.