James K. Galbraith

The Future Oil War


Let me state in passing my view that UT’s President Faulkner should not have attacked my colleague Bob Jensen in the early days following September 11, for Jensen’s hot objections to the use of U.S. military force in Afghanistan (and elsewhere). True, Faulkner’s words didn’t bother Jensen much, and no concrete steps were taken against him. But, given Faulkner’s position, he may have sent a signal to others on campus, less secure in their jobs than Bob is, and this is something that a university president should always avoid.

That said, as events have unfolded, it does not appear that Jensen’s immediate position has been borne out. As I write, in much of Afghanistan, the war is nearly over. The Taliban has fled Mazar-i-Sharif, Taliqan, Herat, and now Kabul. As the militia left Mazar-i-Sharif, the residents picked up Kalashnikovs to hurry them along, a sign of civic sentiment. Schools for girls can now reopen.

The U.N. Food Program, having warned of critical shortages, now states that supply lines can be reopened in the North, giving hope that famine will be averted. Without the war, the famine risk there was already serious, and the resources for dealing with that now will be greater than they would have been. While civilians have been killed, one cannot fairly argue that the U.S. targeted this campaign against civilians–as it did do, unmistakably, in Iraq and in Serbia. Most of the recent attacks were on troop lines. Afghanistan is not Vietnam, neither in topography, in politics or military tactics.

For the moment the judgment of the soldiers looks pretty good. The main risks now lie a little further on. We will have to control our allies. The Northern Alliance in particular has a bad track record, which is how the Taliban got to power in the first place. Still, so did the Bosnian Serbs, yet they haven’t much messed with American troops, or with civilians, since we got there. If I were a Pat Buchanan isolationist, intent on keeping U.S. soldiers away from liberal-do-good nation-building programs, I’d be more worried than I am right at the moment.

So, let us suppose that the Afghan war continues to go well and let us hope that the impending occupation is benign. The question remains: What next? Even full victory in Afghanistan can not eliminate Al Qaeda, let alone the unfriendly Mr. Saddam Hussein in Iraq. Moreover we can expect a blow-up in Saudi Arabia sooner or later, to add to the troubles of the oil patch.

Hubbert’s Peak, the new book by Kenneth Deffeyes, tells us what is at stake in the Middle East: a petrochemical reserve of limitless value in an age when world oil production will start declining quite soon. The social philosopher Richard Cheney has told us that we are at the beginning of an age of unending war. Cheney isn’t very social, and he doesn’t know philosophy. But he surely understands the geophysics and the politics of oil.

So, look down the road: If Deffeyes is right, nightmare scenarios come readily to mind. The Middle East has most of the world’s oil, and as production falls the Middle East’s share of the remaining reserves will rise. At home, if we pay a rising dollar price, it could mean an essentially endless depression. Think the 1970s, without Jimmy Carter for leadership and comfort.

But there is another possibility. We could control the dollar price, so that the oil shortfall remains largely invisible to the American consumer. One has to believe that this idea has occurred to the oilmen in charge. The problem then is that conditions elsewhere have to be much worse. For this strategy implies pricing developing countries out of the oil market by driving their currencies down. This can be done by driving a hard bargain on their debts. Eventually, irrigation pumps will run dry, and the Green Revolution would start running backwards. From the standpoint of the developing world, the game is zero-sum; our success in a war for control is their descent into famine.

And either way, on top of the reserve, the financial wealth of Saddam and the Saudis would grow, alongside the attractiveness of those regimes as targets for war and revolution–or for outright military occupation by the United States. Cheney’s forecast, under these circumstances, is realistic. And his policy, which appears to be to fight for and maintain control of oil, fits exactly to the interests of the companies and also, sad to say, the short-term economic interest of the American middle class.

Unfortunately, however, it is also a formula for abandoning those countries on whose cooperation our security now depends. The result: We could face, quite soon, an endless war for a diminishing resource, in which every victory for the American motorist starves a Bengali, an Indonesian, or an Afghan. This outcome is unlikely to bring peace–think Israel and the Arabs on a global scale.

And what is the alternative? There is one, but it would involve finding our way away from over-reliance on oil, back to a mixed economy built around human needs, and back toward a system of regulated development under multilateral control at sustainable interest rates, wiping the slate of unpayable debts built up over thirty years, and managing the oil reserve for the benefit of the whole world.

This could happen; it is almost unfortunate that easy victories in Afghanistan make it less likely. Don’t expect serious progress until the scope of the war still ahead becomes more clear. And by then, of course, for many people it will be too late.

James K. Galbraith teaches at the LBJ School.