Jane\’s Foreign Report: \"World oil crisis looms\"

April 22, 2004 at 10:18 pm
Contributed by:

Folks,

It’s Earth Day! How appropriate, then, to rediscover all the flaws of Bush’s energy policy, from allowing mercury emissions to increase, to the Bush team’s political manipulations of world oil prices, to the problem of the impending oil crisis, which has now been confirmed by Jane’s.

When Jane’s confirms a story, you can, as Rumsfeld might say, “take it to the bank.” Jane’s is a worldwide, highly respected and authoritative source. And they’re quoting the “newspaper of record,” The New York Times, about Shell’s restatement of their reserves. As I have written here earlier, it’s a shame that Shell got beaten up so badly for coming clean about their reserves, because it is putting a chilling effect on all the rest of the oil producers who need to own up, too.

Anybody who still isn’t quite sure about the Peak Oil problem ought to take notice.
(All I have here is the excerpt from FTW…is anybody out there a Jane’s subscriber?)

Meanwhile, Bob Woodward’s charges, that Saudi Arabia has pledged to increase oil production and lower prices just before the election as a favor to Bush, hang in the air like an egg fart, still unanswered by Bush four days later…although it took his team mere seconds to begin their campaign of character assassination against Woodward. As reported in numerous sources, including this Daily Mislead, the close ties between the Bush and Saud families are finally being examined in the media. Woodward’s book has done much to bring all of this to the attention of the public. I’m sure that regular readers of GRL were not surprised to learn that Prince Bandar, or “Bandar Bush,” knew about the Iraq invasion plan before Colin Powell did. But hopefully the rest of America may now start to see the real dynamics of power in the White House.

–C

World oil crisis looms


Go to original (subscriber content)

21 April 2004

The oil industry has been
gripped by scandal since Royal Dutch/Shell twice this year downgraded its proven
oil reserves by 20 per cent, or nearly 4bn barrels. Shell may not be alone.


Other companies and even governments have hyped up
the estimates of how much oil they have, which is a vital factor in measuring
their economic health. If exaggeration proves to be widespread, it would have an
immense impact on the Middle East, whose economic weight is almost totally
dependent on oil and natural gas.


Geologists and analysts have been saying for some
time that estimates of global oil reserves may be dangerously exaggerated. If
you take oil prices currently at around US$37 a barrel, the highest for nearly
15 years, US petrol prices at record levels and you add terrorist attacks and
diminishing supplies, you have a recipe for inflation and economic slowdown. The
question of reserves becomes a much more important factor.


Earlier this month, The New York Times reported that
internal documents and other data indicated that Shell had over estimated its
proven oil reserves in Oman by as much as 40 per cent. But that seems to have
been done because everyone hoped that the latest drilling techniques would reach
more deposits than in the past and merit upgrading the estimates of
reserves.


The Oman estimates were based on assessments made in
May 2000 by a senior Shell executive who was subsequently fired. He was among
several executives who were said to have known about the unrealistic estimates
of reserves and to have done nothing about it.


If the exaggeration is confirmed, the estimate of
recoverable oil will have to be lowered. That is bad news for Oman, which claims
reserves of 5.4bn barrels and is heavily dependent on oil and gas exports but it
is also bad news for the world as a whole.


As the world’s natural resources shrink and global
warming changes the environment, competition for unimpeded access to them has
intensified and will continue to do so. About four-fifths of the world’s known
oil reserves lie in politically unstable or contested regions.


351 of 810
words
[End of Jane's non-subscriber
extract.]


http://www.janes.com/business/news/fr/fr040421_1_n.shtml

Trust, Don\’t Verify

April 20, 2004 at 6:01 pm
Contributed by:

Folks,

This is an article I’ve been waiting for someone to write. While Dubya follows Karl Rove’s prescription for success, constantly reinforcing his “conviction” and “credibility” regardless of how his position bears up against reality, the rest of us are left to scratch our heads and wonder what planet Bush is living on. Most sensible people, having discovered that what they’re doing is wrong-headed, will stop doing it, not insist that doing it is right because it’s consistent and because they mean what they say. He would do well to remember the First Rule of Holes: when you’re in one, stop digging.

This article explores several instances of how Bush seems unaware that his view of the world is at growing variance with external reality. But he wants us to know that we can count on him to remain unaware. Good stuff.

–C


Trust, Don’t Verify

Bush’s incredible definition of credibility.
By William Saletan

Slate Magazine

Posted Wednesday, April 14, 2004, at 3:27 AM PTOne thing is for certain, though, about me, and the world has learned this: When I say something, I mean it. And the credibility of the United States is incredibly important for keeping world peace and freedom.

That’s the summation President Bush delivered as he wrapped up his press conference Tuesday night. It’s the message he emphasized throughout: Our commitment. Our pledge. Our word. My conviction. Given the stakes in Iraq and the war against terrorism, it would be petty to poke fun at Bush for calling credibility “incredibly important.” His routine misuse of the word “incredible,” while illiterate, is harmless. His misunderstanding of the word “credible,” however, isn’t harmless. It’s catastrophic.

To Bush, credibility means that you keep saying today what you said yesterday, and that you do today what you promised yesterday. “A free Iraq will confirm to a watching world that America’s word, once given, can be relied upon,” he argued Tuesday night. When the situation is clear and requires pure courage, this steadfastness is Bush’s most useful trait. But when the situation is unclear, Bush’s notion of credibility turns out to be dangerously unhinged. The only words and deeds that have to match are his. No correspondence to reality is required. Bush can say today what he said yesterday, and do today what he promised yesterday, even if nothing he believes about the rest of the world is true.

Outside Bush’s head, his statements keep crashing into reality. Tuesday night, ABC’s Terry Moran reminded him, “Mr. President, before the war, you and members of your administration made several claims about Iraq: that U.S. troops would be greeted as liberators with sweets and flowers; that Iraqi oil revenue would pay for most of the reconstruction; and that Iraq not only had weapons of mass destruction but, as Secretary of Defense Rumsfeld said, ‘We know where they are.’ How do you explain to Americans how you got that so wrong?”

Inside Bush’s head, however, all is peaceful. “The oil revenues, they’re bigger than we thought they would be,” Bush boasted to Moran, evidently unaware that this heightened the mystery of why the revenues weren’t covering the reconstruction. As to the WMD, Bush said the chief U.S. weapons inspector in Iraq had confirmed that Iraq was “hiding things. A country that hides something is a country that is afraid of getting caught.” See the logic? A country that hides something must be afraid of getting caught, and a country afraid of getting caught must be hiding something. Each statement validates the other, sparing Bush the need to find the WMD.

Bush does occasionally cite other people’s statements to support his credibility. Saddam Hussein “was a threat to the region. He was a threat to the United States,” Bush told Moran. “That’s … the assessment that Congress made from the intelligence. That’s the exact same assessment that the United Nations Security Council made with the intelligence.” Actually, the Security Council didn’t say Iraq was a threat to the United States, but never mind. The more fundamental problem with Bush’s appeal to prewar assessments by Congress and the Security Council is that these assessments weren’t reality. They were attempts—not even independent attempts, since the administration heavily lobbied both bodies—to approximate reality. When they turned out not to match reality, members of Congress (including Republicans) and the Security Council (including U.S. allies) repudiated them.

Not Bush. He’s impervious to evidence. “I look forward to hearing the truth as to exactly where [the WMD] are,” he told Time‘s John Dickerson at the press conference. A year after Saddam’s ouster and four months after Saddam’s capture, Bush continued to insist that “people who should know about weapons” are still “worried about getting killed, and therefore they’re not going to talk. … We’ll find out the truth about the weapons at some point.” You can agree or disagree with this theory. But you can’t falsify it.

Bush doesn’t see the problem. He’s too preoccupied with self-consistency to notice whether he’s consistent with anything else. “I thought it was important for the United Nations Security Council that when it says something, it means something,” he told Moran. “The United Nations passed a Security Council resolution unanimously that said, ‘Disarm or face serious consequences.’ And [Saddam] refused to disarm.” Never mind that the Security Council didn’t see what Bush saw in terms of Iraqi disarmament and didn’t mean what Bush meant in terms of serious consequences. Never mind that this difference in perception was so vast that Bush ducked a second Security Council vote on a use-of-force resolution. What’s important is that when the Security Council says something, it must mean something, even if the something the council said isn’t the something Bush meant.

As Tuesday night’s questions turned to the 9/11 investigation, Bush retreated again to the incontrovertible truths in his head. “There was nobody in our government, at least, and I don’t think [in] the prior government, that could envision flying airplanes into buildings on such a massive scale,” he told NBC’s David Gregory. Never mind that somebody who had worked in Bush’s administration and the prior administration—namely, counterterrorism coordinator Richard Clarke—had raised precisely this concern about the 1996 Olympics. Never mind that the president’s daily intelligence brief on Aug. 6, 2001—titled “Bin Ladin Determined To Strike in U.S.“—had warned Bush, “FBI information since [1998] indicates patterns of suspicious activity in this country consistent with preparations for hijackings or other types of attacks, including recent surveillance of federal buildings in New York.” These were external phenomena and therefore irrelevant. What mattered was that Bush couldn’t “envision” the scenario.

Three times, Bush repeated the answer he gave to Edwin Chen of the Los Angeles Times: “Had there been a threat that required action by anybody in the government, I would have dealt with it.” Outside Bush’s head, the statement was patently false: The 9/11 threat required action, and Bush failed to deal with it. But inside Bush’s head, the statement was tautological: If there were a threat that required action, Bush would have dealt with it; Bush didn’t deal with it; therefore, there was no threat that required action. The third time Bush repeated this answer—in response to a question about whether he owed an “apology to the American people for failing them prior to 9/11″—he added, “The person responsible for the attacks was Osama Bin Laden.” This is how Bush’s mind works: Only a bad person can bear responsibility for a bad thing. I am a good person. Therefore, I bear no responsibility.

On 9/11, as on WMD, Bush mistakes affirmation for verification, description for reality, and words for deeds. “I was dealing with terrorism a lot as the president when George Tenet came in to brief me,” he told Chen. “I wanted Tenet in the Oval Office all the time. And we had briefings about terrorist threats.” This was Bush’s notion of dealing with terrorism: being briefed by the CIA director. The world that mattered was the Oval Office.

Did the briefings lead to action outside the office? No, because there was no “threat that required action.” What about the Aug. 6 brief? “I asked for the briefing,” Bush told Chen. “And that’s what triggered the [Aug. 6] report.” Tuesday’s Washington Post tells a different story: “According to senior intelligence officials familiar with the document, work on it began at the end of July, at the initiative of the CIA analyst [who] wanted to raise the issue” of Bin Laden’s threat to the U.S. mainland. But Bush can’t believe that someone outside his head was trying to tell him something. He’s certain he “triggered” the brief. That’s why, as he explained to Chen, he “didn’t think there was anything new” in it: He assumed it was his idea. He doesn’t understand that the point of a briefing is to be told something you hadn’t already thought of.

This explains the most amazing part of Bush’s answer to Chen: “What was interesting in [the brief] was that there was a report that the FBI was conducting field investigations. And that was good news, that they were doing their job.” Here is a president who reads that the FBI has found “patterns of suspicious activity in this country consistent with preparations for hijacking” and concludes that all is well because the FBI is “investigating” such activity. Why does Bush make this mistake? Because he doesn’t understand that the “suspicious activity” is the subject of the brief. He thinks the “investigations” are the subject. He thinks he’s being told about his version of reality—the world inside his administration—not the world of plots beyond his awareness.

How does Bush square his obtuseness to the threat from Bin Laden with his obtuseness to the absence of a threat from Saddam? “After 9/11, the world changed for me,” he explained Tuesday night. That’s Bush in a nutshell: The world changed for him. Out went the assumption of safety, and in came the assumption of peril. In the real world, Bin Laden was still a religious fanatic with global reach, and Saddam was still a secular tyrant boxed in by sanctions and no-fly zones. But in Bush’s head, everything changed.

To many Americans, the gap between Bush’s statements about the months before 9/11, on the one hand, and the emerging evidence about those months, on the other, raises doubts about the credibility of their government. To other nations, the gap between Bush’s statements about Iraqi weapons, on the one hand, and the emerging evidence about those weapons, on the other, has become the central reason to distrust the United States in other matters of enormous consequence, such as North Korea’s nuclear program.

To all of this, however, Bush is blind. He doesn’t measure his version of the world against anybody else’s. He measures his version against itself. He says the same thing today that he said yesterday. That’s why, when he was asked Tuesday whether he felt any responsibility for failing to stop the 9/11 plot, he kept shrugging that “the country”—not the president—wasn’t on the lookout. It’s also why, when he was asked to name his biggest mistake since 9/11, he insisted, “Even knowing what I know today about the stockpiles of weapons [not found in Iraq], I still would’ve called upon the world to deal with Saddam Hussein.” Bush believes now what he believed then. Incredible, but true.

William Saletan is Slate’s chief political correspondent and author of Bearing Right: How Conservatives Won the Abortion War.

Article URL: http://slate.msn.com/id/2098810/

Things Are Looking Up

April 17, 2004 at 4:44 pm
Contributed by:

Howdy
folks,

 

My
goodness, it’s been five weeks since I last published on GRL. Sigh. I wish I had
unlimited time to read and write about all this stuff. I feel badly for just
letting GRL languish for so long. But my work has taken center stage–as I knew
all along it would eventually have to do, being that I survive on commission in
a difficult, emerging business–and what little energy I have left is spent on
keeping up with the inflow of information that comes to me. I have now given up
on the idea that one day I will return and sift through the 3″ stack of printed
articles I have read in the last five weeks, in order to bring you the best
of it. I am trusting that you subscribe to the Progress Report and Truthout
(at minimum) and read them religiously to stay abreast of events.

 

I am
tempted–sorely tempted–to take on the subjects of the 9-11 investigation, and
the doomed and illegitimate adventure in Iraq, and our deadly embrace with Saudi
Arabia, and Peak Oil, and Medicare, and the economy, and all the rest of it. But
there just isn’t time for all that. Suffice to say that, although the media
still only demonstrates the courage to run out and shoot the wounded, it is,
however weakly, starting to take on these subjects and open them up to public
debate a little, and I take heart in that. My job as publisher of an energy and
politics blog has gotten a little less urgent. I’m no longer a voice in the
wilderness. Those topics are finally on the public’s
radar.  

 

But
today I stole a few moments to make a few more pages’ progress on a couple of
longer things I’m reading. One is Noam Chomsky’s Manufacturing
Consent
, which I left off at halfway right around January, when I went to
work building GRL. I picked it back up at the chapter on Vietnam, and the first
10 pages or so that I read were so utterly applicable to the situation in
Iraq that it was stunning, even though I’ve long noticed the parallels. It
seemed appropriate to talk about it now that Sen. Edward Kennedy is being slowly
roasted in the mainstream press for having the temerity to point them out. Using
the device of analyzing the media according to the “propaganda model” that the
authors set forth at the beginning of the book, they point out how the
entire premise of the Vietnam war was never really given an open debate;
instead, the elites assumed as a priori that the American cause was
noble and just and our eminent responsibility to mankind, and limited the
subsequent debate to questions such as whether we were sufficiently committed to
our cause, or whether the media were too “pessimistic” in their coverage, or
even indeed whether the media were ultimately to blame for the failure of the
American “intervention.” And like Iraq, the entire question of how the
indigenous culture might respond, or how well the American model of democracy
might be exported there, was never allowed the light of day. All critics of the
“intervention” were marginalized and never allowed to participate in the major
debates that the media did cover, and were disparaged as unpatriotic.

 

Iraq
is the same old, same old, of American foreign policy. Our “national interests”
and our “values” are assumed to be right and just and deserving of defense and
export, in any place in the world where we deem it necessary or desirable. That
much is never open to discussion. Which in itself is evidence of the overtly
macho culture that we prize so highly. America Uber Alles, and anybody
who doesn’t think so, and toe the national line at all times, is just a
damned no-good Commie pussy.  

 

Then I dove into a couple more pages of an
excellent article in The Sun, my
favorite magazine (I’ve been a dedicated subscriber for at least 15 years). From
the February 2004 issue, “Biting The Hand That Feeds – How Globalization
Cripples Small Farms” is an interview with Vandana Shiva, an author and leader
in the “social -justice and ecology movements.” God bless ‘em, you can read the
first 7 pages of it right here, but not, unfortunately, the whole thing,
which is really where it gets juicy: 
http://www.thesunmagazine.org/338_Shiva.pdf 
(Caution: PDF file)

 

On page 8 they talk about her book Stolen
Harvest
where she discusses the “masculinization of agriculture,” where
it moved out of the domain of women and sustenance and into “patriarchal
control.” Basically, she points out that by allowing raw capital (in the
form of corporate foreign investment, or outright takeover, under the rubric of
“globalization”) to take control of global agriculture, the natural capital
inherent in plant genetics, and in time-honored local agricultural techniques
developed over millennia by women in pursuit of their own best
nutrition and social values, has been subsumed and largely destroyed by
corporate entities and patriarchal control. India’s own basmati rice was
successfully patented by a US firm, so India has lost control of it and had
their own farming turned monocultural through globalized markets. Likewise, the
natural resources such as water that were once considered to be part of the
commons, have been taken over by large foreign corporations who divert rivers
and build dams and destroy the local agriculture, then when the bottom drops out
of the market, they leave and take their marbles with them…leaving an epidemic
of suicides in their wake (20,000 among Indian peasant farmers in the last five
years). Bechtel took over the water supply of Cochabamba, Bolivia, leading to a
peasant revolt in which the activists were silenced and killed by government
forces. The public eventually won out, but the harassment and lawsuits continue.
(I’m not doing her justice here–pick up a copy and read the whole article
yourself, or check out some of her 50 books.)

 

This is a familiar story too: we’ve seen it happen over
and over again throughout the Third World. But we never question the basic
assumptions of globalization, or try to account for the lost natural capital of
human knowledge, naturally evolved genetics, or the local physical and cultural
means of sustainability that have evolved naturally over millennia in every
place in the globe. Those are unrecognized on the balance sheet–and they have
everything to do with what’s right, and what’s wrong, about our entire
way of life.

 

Capital markets require endless growth, and that
requires the continual conversion of natural capital into hard, liquid capital,
which would not be possible if it were done while respecting the dynamics and
rights of natural capital. And capital markets are well on their way to taking
control of the entire world.

 

This is why I believe that the entire legal fiction of
a corporation must be destroyed. It is through this legal fiction that the
self-centered and rapacious desires of men are converted into blameless,
nameless, faceless, unprosecutable entities that serve their masters while
keeping them immune to the costs of their consumption.

 

Likewise, the masculinization of all of our
enterprises, especially that of agriculture, must end. We need an
entire–forgive the use of the term–paradigm shift into a more feminine
sensibility that is concerned less with short-term profit and more with
sustainability.

 

Fat chance, you say? Well, you know that I believe in
the reality of the Peak
Oil problem
, the climate
change problem
, and the global population problem. These
three factors are going to come together as a perfect storm right around 2050,
the year when a) most of the available and cheap oil and gas will have been
consumed globally, b) the climate change problem will be wreaking global havoc,
and c) the global population is projected to reach 9 billion. I tell ya, I’m not
sure I would want to live long enough to see 2050. It’s going to be uuuuuuuugly
boys and girls. Don’t turn away, and don’t roll your eyes at me. I don’t want to
bum you out, any more than I want to be bummed out. We’ve got to get past all
that, and start taking a cold, hard look at just what in the hell is going on
here.

 

Here’s what’s going on here: the masculine ideals of
Man–dominance, profit, control–are in their heyday. This is the top of the
roller coaster. If you’re not throwing your hands up in the air and going
“Whee!” right now, then you’re going to be severely disappointed by what’s next.
It’s all downhill from here.

 

Even if all of these projections are wrong, and even if
humanity starts making a very concerted effort to contain its growth and its
consumption and find a sustainable point of balance, it’s highly unlikely that
it will be a smooth transition. Lots of people will die. It will be a very bumpy
ride.

 

Here’s the simple truth: Globalization, and the
concentrations of power that make up the modern world, have been made possible
by cheap transportation fueled by cheap oil and gas. Humanity started to
industrialize about 150 years ago. And the Industrial Age is going to be
over in about another 50. In that 150 years, our population has
exploded threefold. The whole way of life that we know, our incredible
individual wealth (when measured historically), has been the result of this
consumption. It’s a very, very, short story, but for some reason, we all seem to
believe otherwise, that somehow this is an inevitable flowering of the story of
our species, and that it will always continue to grow and flower more
bountifully. It’s hard, when you’re a small benighted human with an extremely
short attention span and little purview of history, to realize just where we
really are.

 

Things are looking up. All of these awful
problems of the modern industrial age are going to, literally, run out of
gas soon enough. And we will find ways of living within the means of our local, natural endowments. On the whole, I believe the modern world will find it a much better way of living. That’s the good news.

The bad news is that they’re not going to
give up without a fight. And global wars over fossil fuel, food, and
water will certainly be a part of that fight. The invasion of Iraq is but a
small harbinger of things to come. The Bush “oiligarchy” has
shown that it is made up of the hardest, most vicious, thumb-in-the-eye fighters around. They will
pursue their agenda at all costs. They care nothing about the truth, law,
perceptions, traditions, alliances, public benefit, or anything other than
succeeding at their objectives. They’ve largely gotten away with it so far,
and the complicit media has been reduced to asking pre-submitted, approved
questions in carefully orchestrated press conferences with a President who
almost never directly confronts the press. (And when he does, makes us all
squirm in discomfort as we realize that he literally can’t think on his feet, or
speak a complete and grammatically correct sentence, while the man who really
wears the pants in the White House, Dick Cheney, sits and grimaces behind him in
the shadows.) But as soon as gas hits
$3/gallon, which could easily happen before the
end of this summer,
the problems of
the global
energy situation will reach the public eye. And I think that
the recent polls show that the public isn’t quite as sleepy and stupid as it has
seemed to be. The slumbering beast is waking up, and it is not happy.


 

It’s an awful realization. It does really take the wind
out of you. But then you get your breath again, and you steel your resolve, and
you set out with a pick and shovel to make a new life in a new age. Either
that, or you curl up in a ball and wait to die. At least, that’s how it
looks to me. There is an undeniable, enormous volume of data that points
that way, and all there is on the other side of the argument is an unreasonable
faith in humanity and its wisdom, including the wisdom of the fiction known
as markets. I can appreciate that faith, and I know
what it’s good for. But it has shown that it’s about as useful as
teats on a boar when it comes to seeing its time aright, and foretelling the
future. It really amounts to little more than wishful thinking. And we all know
where that gets you.

 

(Many thanks to alert readers Wayne and Aaron for their
engaging discussion which prompted this little
outburst.)

 


–C

 

Further reading:

 

The
Party’s Over – Oil, War, and the Fate of Industrial Societies
by
Richard Heinberg

 

Biting The Hand That Feeds –
How Globalization Cripples Small Farms
(The Sun Magazine, February
2004)

 

Stolen
Harvest
 by Vandana Shiva

 

Population, A Lively
Introduction
(Population Reference Bureau, December 2003) (PDF
file)
Check out the chart on p. 33!

 

Global Human Population Curve (KZPG)

 

Global
energy demand to rise 54 pct by 2025-US EIA
(Reuters, April 14
2004)

Global
Climate Change and Peak OilThe Sword of
Damocles Has Two Edges
 (From the
Wilderness, April 2004)
Yes, I know the full article is for subscribers only.
So quit yer bitchin’ and subscribe. I did ask them for permission to reprint. If
I get it, I will.


Booming China’s crude oil imports soar (Reuters, April  12,
2004)
“Crude
imports in booming China, the world’s second largest oil consumer, soared
35.7 percent year on year to 30.14 million tonnes in the first
quarter of 2004.”



The evolution of America’s preemptive-strike policy (CS Monitor, March 16
2004)
About the forthcoming book, Rise of the Vulcans: The History of Bush’s War
Cabinet
, about the 30-year history of Bush’s cabinet and how “this elite
group led them to overhaul America’s national security strategy to one
advocating sole, preemptive action based on America’s superpower
status.”

 

About the forthcoming book by journalist Bob Woodward,
Plan of Attack

Heinberg, Richard – The Party’s Over

April 17, 2004 at 4:35 pm
Contributed by:


The Party’s Over: Oil, War and the Fate of Industrial Societies

by Richard Heinberg


An excellent and well-researched book on the realities of Peak Oil, overpopulation, and unsustainable economics. I can’t recommended it highly enough. Should be required reading for every college freshman in my opinion. Packed with enough charts and data to make it worthy of your reference shelf, yet lively and empathetic enough to make the subject accessible to all.

Franken Launches Liberals’ Air America Radio

March 31, 2004 at 2:31 pm
Contributed by:

Franken Launches Liberals’ Air America Radio

By Larry Fine

NEW YORK (Reuters) – Liberals added their voice to talk radio on Wednesday as comedian Al Franken launched the Air America Radio Network with "The O’Franken Factor" show, offering a sharp contrast to conservative hosts like Rush Limbaugh, who dominate the U.S. airwaves.

Franken brought the network to life with his opening: "Broadcasting from a bunker 3,500 feet below the bunker that (Vice President) Dick Cheney (news – web sites) is in, this is Air America Radio."

That was the opening salvo, according to network chief executive Mark Walsh. He added he got "chills up my spine" listening to the start up of the network that can be initially heard in New York, Los Angeles, Chicago, San Bernadino, California, Portland, Oregon, XM Satellite Radio and over the Internet at <a href="http://www.airamericaradio.com">www.airamericaradio.com</a>.

Franken’s three-hour program featured interviews with former Sen. Bob Kerry of Nebraska on the Sept. 11 commission and documentary filmmaker Michael Moore (news), a satirical piece on airport security in London and call-ins from listeners, including former Vice President Al Gore (news – web sites).

Walsh said the goal was to provide a liberal voice that has been missing on the airwaves and to present it in such as way as "to make you laugh. You will giggle when you listen although we will be tackling serious subjects."

He said the aim of the network was not simply to derail the reelection bid of President Bush (news – web sites).

"We’re not regime change radio," Walsh said. "We do want to make a buck. We expect to go profitable in year three."

The "O’Franken Factor" title sends up conservative broadcasting rival Bill O’Reilly’s program on Fox News, The O’Reilly Factor.

Walsh said other stations would be added soon, with San Francisco joining on April 15.

"We clearly have a political tilt," Walsh said. "It’s obvious we are in direct philosophical conflict with virtually every other talk show host today.

Air America is armed with $30 million in investor cash and a $30 million credit line is being used to lease AM stations.

"I think what you’ll see in a short time, is that we will close deals with traditional consumer goods companies," said Walsh. "Liberals buy beer, they drive trucks, they take vacations, they have arthritis. We’re also consumers."

Help defeat George W. Bush, the easy way…

March 18, 2004 at 10:15 pm
Contributed by:

Folks,

Please consider responding to this alert reader’s request for contributions to Kerry’s campaign. C’mon, he’s even put up a challenge grant out of his own pocket!

–C




Got a credit card? Good. Contribute to John Kerry’s campaign here. I will match the first $1000 contributed dollar-for-dollar

It will take less than 2 minutes. Contribute early, contribute often (subject to the FEC limits of $2000/individual).

Myself, despite considering myself politically aware, I never gave a single dollar to any political campaign. But that changes now. This may be the most important presidential election of our generation. This isn’t just about choosing a leader, it’s about choosing how we define ourselves as a country and what kind of country we will leave to our children.

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Please, take the time now to contribute whatever you can and I’ll increase the impact by matching it. And regardless of whether you contribute, make sure you vote!

–Mark A. Gollin

Illusions of Empire: Defining the New American Order

March 18, 2004 at 12:21 pm
Contributed by:

Folks,

This submission by an alert reader is an juxtaposition of book reviews on the subject of American empire. It’s a bit on the scholarly side, but if you’re interested in the topic, you will probably find it worthwhile.

You might also want to see some past GRL articles on American empire

–C



An interesting overview of some recent books on US Foreign Policy from the Council on Foreign Relations. The whole thing has a lively pace. I particularly enjoy the part where the author dismisses the French essayist Emmanuel Todd’s assertion that “a rapacious clique of frightened oligarchs has taken over U.S. democracy is simply bizarre.” The very idea is unthinkable!


Illusions of Empire: Defining the New American Order
By G. JOHN IKENBERRY


From the March/April 2004 issue of Foreign Affairs.
G. John Ikenberry is Peter F. Krogh Professor of Geopolitics and Global Justice at Georgetown University and Transatlantic Fellow at the German Marshall Fund of the United States.


The Sorrows of Empire: Militarism, Secrecy, and the End of the Republic. By Chalmers Johnson. New York: Metropolitan Books, 2004, 400 pp. $25.00


Colossus: The Price of America’s Empire. By Niall Ferguson. New York: Penguin Press, 2004, 368 pp. $25.95.


Fear’s Empire: War, Terrorism, and Democracy. By Benjamin R. Barber. New York: Norton, 2003, 192 pp. $23.95.


Incoherent Empire. By Michael Mann. New York: Verso, 2003, 284 pp. $25.00.


After the Empire: The Breakdown of the American Order. By Emmanuel Todd. New York: Columbia University Press, 2003, 192 pp. $29.95.


The debate on empire is back. This is not surprising, as the United States dominates the world as no state ever has. It emerged from the Cold War the only superpower, and no geopolitical or ideological contenders are in sight. Europe is drawn inward, and Japan is stagnant. A half-century after their occupation, the United States still provides security for Japan and Germany — the world’s second- and third-largest economies. U.S. military bases and carrier battle groups ring the world. Russia is in a quasi-formal security partnership with the United States, and China has accommodated itself to U.S. dominance, at least for the moment. For the first time in the modern era, the world’s most powerful state can operate on the global stage without the constraints of other great powers. We have entered the American unipolar age.


The Bush administration’s war on terrorism, invasions of Afghanistan and Iraq, expanded military budget, and controversial 2002 National Security Strategy have thrust American power into the light of day — and, in doing so, deeply unsettled much of the world. Worry about the implications of American unipolarity is the not-so-hidden subtext of recent U.S.-European tension and has figured prominently in recent presidential elections in Germany, Brazil, and South Korea. The most fundamental questions about the nature of global politics — who commands and who benefits — are now the subject of conversation among long-time allies and adversaries alike.


Power is often muted or disguised, but when it is exposed and perceived as domination, it inevitably invites response. One recalls the comment of Georges Clemenceau, who as a young politician said of the settlement ending the Franco-Prussian War, “Germany believes that the logic of her victory means domination, while we do not believe that the logic of our defeat is serfdom.” At Versailles a half-century later, he would impose just as harsh a peace on a defeated Germany.


The current debate over empire is an attempt to make sense of the new unipolar reality. The assertion that the United States is bent on empire is, of course, not new. The British writer and labor politician Harold Laski evoked the looming American empire in 1947 when he said that “America bestrides the world like a colossus; neither Rome at the height of its power nor Great Britain in the period of economic supremacy enjoyed an influence so direct, so profound, or so pervasive. …” And indeed, Dean Acheson and other architects of the postwar order were great admirers of the British Empire. Later, during the Vietnam War, left-wing thinkers and revisionist historians traced the same deep-rooted impulse toward militarism and empire through the history of U.S. foreign policy. The dean of this school, William Appleton Williams, argued in The Tragedy of American Diplomacy that the nation’s genuine idealism had been subverted by the imperial pursuit of power and capitalist greed.


Today, the “American empire” is a term of approval and optimism for some and disparagement and danger for others. Neoconservatives celebrate the imperial exercise of U.S. power, which, in a modern version of Rudyard Kipling’s “white man’s burden,” is a liberal force that promotes democracy and undercuts tyranny, terrorism, military aggression, and weapons proliferation. Critics who identify an emerging American empire, meanwhile, worry about its unacceptable financial costs, its corrosive effect on democracy, and the threat it poses to the institutions and alliances that have secured U.S. national interests since World War II.


THE “E” WORD


No one disagrees that U.S. power is extraordinary. It is the character and logic of U.S. domination that is at issue in the debate over empire. The United States is not just a superpower pursuing its interest; it is a producer of world order. Over the decades — with more support than resistance from other nations — it has fashioned a distinctively open and rule-based international order. Its dynamic bundle of oversized capacities, interests, and ideals constitutes an “American project” with unprecedented global reach. For better or worse, other states must come to terms with or work around this protean order.


Scholars often characterize international relations as the interaction of sovereign states in an anarchic world. In the classic Westphalian world order, states hold a monopoly on the use of force in their own territory while order at the international level is maintained through the diffusion of power among states. Today’s unipolar world turns the Westphalian image on its head. The United States possesses a near-monopoly on the use of force internationally; on the domestic level, meanwhile, the institutions and behaviors of states are increasingly open to global — that is, American — scrutiny. Since September 11, the Bush administration’s assertion of “contingent sovereignty” and the right of preemption have made this transformation abundantly clear. The rise of unipolarity and the simultaneous unbundling of state sovereignty is a new and volatile brew.


But is the resulting political formation an empire? And if so, will the American empire suffer the fate of great empires of the past: ravaging the world with its ambitions and excesses until overextension, miscalculation, and mounting opposition hasten its collapse?


The term “empire” refers to the political control by a dominant country of the domestic and foreign policies of weaker countries. The European colonial empires of the late nineteenth century were the most direct, formal kind. The Soviet “sphere of influence” in Eastern Europe entailed an equally coercive but less direct form of control. The British Empire included both direct colonial rule and “informal empire.” If empire is defined loosely, as a hierarchical system of political relationships in which the most powerful state exercises decisive influence, then the United States today indeed qualifies.


If the United States is an empire, however, it is like no other before it. To be sure, it has a long tradition of pursuing crude imperial policies, most notably in Latin America and the Middle East. But for most countries, the U.S.-led order is a negotiated system wherein the United States has sought participation by other states on terms that are mutually agreeable. This is true in three respects. First, the United States has provided public goods — particularly the extension of security and the support for an open trade regime — in exchange for the cooperation of other states. Second, power in the U.S. system is exercised through rules and institutions; power politics still exist, but arbitrary and indiscriminate power is reigned in. Finally, weaker states in the U.S.-led order are given “voice opportunities” — informal access to the policymaking processes of the United States and the intergovernmental institutions that make up the international system. It is these features of the post-1945 international order that have led historians such as Charles Maier to talk about a “consensual empire” and Geir Lundestad to talk about an “empire of invitation.” The American order is hierarchical and ultimately sustained by economic and military power, but it is put at the service of an expanding system of democracy and capitalism.


Fundamentally, then, the debate over the new American empire hinges on how extensive and deeply rooted these characteristics are — and whether its assertion of power since September 11 constitutes a fundamental break with this liberal past.


THE GLOBAL RACKET


In The Sorrows of Empire, Chalmers Johnson advances the disturbing claim that the United States’ Cold War-era military power and far-flung base system have, in the last decade, been consolidated in a new form of global imperial rule. The United States, according to Johnson, has become “a military juggernaut intent on world domination.”


Driven by a triumphalist ideology, an exaggerated sense of threats, and a self-serving military-industrial complex, this juggernaut is tightening its grip on much of the world. The Pentagon has replaced the State Department as the primary shaper of foreign policy. Military commanders in regional headquarters are modern-day proconsuls, warrior-diplomats who direct the United States’ imperial reach. Johnson fears that this military empire will corrode democracy, bankrupt the nation, spark opposition, and ultimately end in a Soviet-style collapse.


In this rendering, the American military empire is a novel form of domination. Johnson describes it as an “international protection racket: mutual defense treaties, military advisory groups, and military forces stationed in foreign countries to ‘defend’ against often poorly defined, overblown, or nonexistent threats.” These arrangements create “satellites” — ostensibly independent countries whose foreign relations revolve around the imperial state. Johnson argues that this variety of empire was pioneered during the Cold War by the Soviet Union in Eastern Europe and the United States in East Asia. Great empires of the past — the Romans and the Han Dynasty Chinese — ruled their domains with permanent military encampments that garrisoned conquered territory. The American empire is innovative because it is not based on the acquisition of territory; it is an empire of bases.


Johnson’s previous polemic, Blowback, asserted that post-1945 U.S. spheres of influence in East Asia and Latin America were as coercive and exploitative as their Soviet counterparts. The Sorrows of Empire continues this dubious line. Echoing 1960s revisionism, Johnson asserts that the United States’ Cold War security system of alliances and bases was built on manufactured threats and driven by expansionary impulses. The United States was not acting in its own defense; it was exploiting opportunities to build an empire. The Soviet Union and the United States, according to this argument, were more alike than different: both militarized their societies and foreign policies and expanded outward, establishing imperial rule through “hub and spoke” systems of client states and political dependencies.


In Johnson’s view, the end of the Cold War represented both an opportunity and a crisis for U.S. global rule — an opportunity because the Soviet sphere of influence was now open for imperial expansion, a crisis because the fall of the Soviet Union ended the justification for the global system of naval bases, airfields, army garrisons, espionage listening posts, and strategic enclaves. Only with the terrorist attacks of September 11 was this crisis resolved. Bush suddenly had an excuse to expand U.S. military domination. September 11 also allowed the United States to remove the fig leaf of alliance partnership. Washington could now disentangle itself from international commitments, treaties, and law and launch direct imperial rule.


Unfortunately, Johnson offers no coherent theory of why the United States seeks empire. At one point, he suggests that the American military empire is founded on “a vast complex of interests, commitments, and projects.” The empire of bases has become institutionalized in the military establishment and has taken on a life of its own. There is no discussion, however, of the forces within U.S. politics that resist or reject empire. As a result, Johnson finds imperialism everywhere and in everything the United States does, in its embrace of open markets and global economic integration as much as in its pursuit of narrow economic gains.


Johnson also offers little beyond passing mention about the societies presumed to be under Washington’s thumb. Domination and exploitation are, of course, not always self-evident. Military pacts and security partnerships are clearly part of the structure of U.S. global power, and they often reinforce fragile and corrupt governments in order to project U.S. influence. But countries can also use security ties with the United States to their own advantage. Japan may be a subordinate security partner, but the U.S.-Japan alliance also allows Tokyo to forgo a costly buildup of military capacity that would destabilize East Asia. Moreover, countries do have other options: they can, and often do, escape U.S. domination simply by asking the United States to leave. The Philippines did so, and South Korea may be next. The variety and complexity of U.S. security ties with other states makes Johnson’s simplistic view of military hegemony misleading.


In fact, the U.S. alliance system — remarkably intact after half a century — has helped create a stable, open political space. Cooperative security is not just an instrument of U.S. domination; it is also a tool of political architecture. But Johnson neglects the broader complex of U.S.-supported multilateral rules and institutions that give depth and complexity to the international order. Ultimately, it is not clear what the United States could do — short of retreating into its borders or ceasing to exist — that would save it from Johnson’s condemnation.


PAX AMERICANA


In Colossus, Niall Ferguson argues that the United States is indeed an empire and has been for a long time. To Ferguson, however, it is a liberal empire that upholds rules and institutions and underwrites public goods by maintaining peace, ensuring freedom of the seas and skies, and managing a system of international trade and finance. The United States is the imperfect but natural inheritor of the British system of global governance; it is open and integrative and inclined toward informal rule. Accordingly, Ferguson’s worry is not that the world will get too much American empire but that it will not get enough. U.S. leaders, for all their benign intent, have unusually short attention spans and tend to go “wobbly.”


In Ferguson’s view, the United States shares many characteristics with past empires. Like Rome, it has remarkably open citizenship. “Purple Hearts and U.S. citizenship were conferred simultaneously on a number of the soldiers serving in Iraq last year, just as service in the legions was once a route to becoming a civis romanus,” Ferguson writes. “Indeed, with the classical architecture of its capital and the republican structure of its constitution, the United States is perhaps more like a ‘new Rome’ than any previous empire — albeit a Rome in which the Senate has thus far retained its grip on would-be emperors.” The spread of America’s language, ideas, and culture also invites comparison to Rome at its zenith.


But Ferguson is even more taken by parallels with the British Empire. U.S. presidents, from Woodrow Wilson, Franklin Roosevelt, and John F. Kennedy to Ronald Reagan, Bill Clinton, and George W. Bush, have put their power to work promoting the great liberal ideals of economic openness, democracy, limited government, human dignity, and the rule of law — a “strategy of openness” that is remarkably similar, Ferguson argues, to the aspirations of the British Empire in the second half of the nineteenth century. After all, it was a young Winston Churchill who argued that the aim of British imperialism was to “give peace to warring tribes, to administer justice where all was violence, to strike the chains off the slave, to draw the richness from the soil, to place the earliest seeds of commerce and learning, to increase in whole peoples their capacities for pleasure and diminish their chances of pain. … ”


Most of Colossus retells the familiar story of the rise of U.S. global dominance as an exercise in liberal empire. What is distinctive about American imperialism, according to Ferguson, is that it has been pursued in the name of anti-imperialism. For each phase of U.S. history, Ferguson nicely illuminates the tensions between republican ideals and the exercise of global power and shows how those tensions are often resolved. The Cold War — and George Kennan’s doctrine of containment — provides the ultimate example of this fusion of anti-imperialism and hard power. Security, openness, democratic community, political commitment, and the mobilization of U.S. power went together. The core of U.S. global rule involved the enforcement of rules of economic openness, but the United States was also willing to act forcefully to integrate countries into the liberal order.


Ferguson’s most interesting claim is that the world needs more of this liberal American empire. This argument stems in part from the uncontroversial claim that the current international order needs enlightened leadership and that only Washington can provide it. (Ferguson holds little hope that Europe will ever overcome its preoccupation with the internal contradictions of its enlargement.) It is especially the wider system of sovereign but failed states that needs imperial supervision by Washington. In vast swatches of Africa, Asia, and the Middle East national self-determination has led to much grief. Ferguson argues without qualification that “the experiment with political independence — especially in Africa — has been a disaster for most poor countries.” To Ferguson, the extension of liberal empire into these regions (even involving some form of colonial rule) is necessary. What precisely these imperial arrangements would look like, however, remains unclear.


When Ferguson says that he is “fundamentally in favor of empire,” he is to some extent pulling a conceptual sleight of hand. What Ferguson means by “liberal empire” scholars have previously called “liberal hegemony”: a hierarchical order that is still very different from traditional forms of empire. By virtue of its power, the liberal hegemon can act on its long-term interests rather than squabble over short-term gains with other states; it can identify its own national interests with the openness and stability of the larger system. The United States thus shapes and dominates the international order while guaranteeing a flow of benefits to other governments that earns their acquiescence. In contrast to empire, this negotiated order depends on agreement over the rules of the system between the leading state and everyone else. In this way, the norms and institutions that have developed around U.S. hegemony both limit the actual coercive exercise of U.S. power and draw other states into the management of the system.


Ferguson’s case for the virtues of American empire hinges on his claim that in the aftermath of the Soviet Union’s collapse, the world could have gone one of two ways: international order organized around independent nations or an American imperium. He maintains that a world of decentralized, competing states, many of which are not democracies, would result in chaos. This may be true; he is certainly right that stability and open markets are not easily sustained without the support of powerful states. But the notion of liberal empire conflates very different types of U.S.-led order. One in which Washington coerces other states into obedience is very different from a system of multilateral rules and close partnerships. The challenges of peace and economic development that Ferguson identifies are best pursued by advanced democracies working together. Ultimately, such a cooperative order would require that Washington transcend the atavistic habits of empire rather than pursue a more complete realization of it.


In the end, Ferguson finds invoking the image of empire useful for political reasons. Unlike the British, Americans do not believe that they operate an empire. As a result, the United States makes a flighty and impatient imperial power (in contrast to the British, who acquired a cultural mentality for global rule). Ferguson thinks that speaking honestly about the reality of American empire will foster understanding of its duties and obligations.


Yet precisely the opposite is true. The United States does not need to view the world as its Raj and deploy a colonial service to the vast periphery; it needs to find ways to exercise its power in sustained, legitimate ways, working with others and developing more complex forms of cooperative international governance. It is also extremely doubtful that the American people would accept such a massive imperial undertaking: last September, as soon as President Bush revealed the price tag for occupying Iraq, public support plummeted immediately.


IMPERIAL INSECURITY


Benjamin Barber’s Fear’s Empire presents a case against the recent unilateral impulses in U.S. foreign policy. According to Barber, empire is not inherent in U.S. dominance but is, rather, a temptation — one to which the Bush administration has increasingly succumbed. In confronting terrorism, Washington has vacillated between appealing to law and undermining it. Barber’s thesis is that by invoking a right to unilateral action, preventive war, and regime change, the United States has undermined the very framework of cooperation and law that is necessary to fight terrorist anarchy. A foreign policy oriented around the use of military force against rogue states, Barber argues, reflects a misunderstanding of the consequences of global interdependence and the character of democracy. Washington cannot run a global order driven by military action and the fear of terrorism. Simply put, American empire is not sustainable.


For Barber, the logic of globalization trumps the logic of empire: the spread of McWorld undermines imperial grand strategy. In most aspects of economic and political life, the United States depends heavily on other states. The world is thus too complex and interdependent to be ruled from an imperial center. In an empire of fear, the United States attempts to order the world through force of arms. But this strategy is self-defeating: it creates hostile states bent on overturning the imperial order, not obedient junior partners.


Barber proposes instead a cosmopolitan order of universal law rooted in human community: “Lex humana works for global comity within the framework of universal rights and law, conferred by multilateral political, economic, and cultural cooperation — with only as much common military action as can be authorized by common legal authority; whether in the Congress, in multilateral treaties, or through the United Nations.” Terrorist threats, Barber concludes, are best confronted with a strategy of “preventive democracy” — democratic states working together to strengthen and extend liberalism.


Barber’s overly idealized vision of cosmopolitan global governance is less convincing, however, than his warnings about unilateral military rule. Indeed, he provides a useful cautionary note for liberal empire enthusiasts in two respects. First, the two objectives of liberal empire — upholding the rules of the international system and unilaterally employing military power against enemies of the American order — often conflict. As Barber shows, zealous policymakers often invoke the fear of terrorism to justify unilateral exercises of power that, in turn, undermine the rules and institutions they are meant to protect. Second, the threats posed by terrorism and weapons of mass destruction are not enough to legitimate America’s liberal empire. During the Cold War, the United States articulated a vision of community and progress within a U.S.-led free world, infusing the exercise of U.S. power with legitimacy. It is doubtful, however, that the war on terrorism, in which countries are either “with us or against us,” has an appeal that can draw enough support to justify a U.S.-dominated order.


BALANCING ACT


Michael Mann also warns of a dangerous, and ultimately unsustainable, imperial turn in U.S. foreign policy. This “new imperialism,” he argues in Incoherent Empire, is driven by a radical vision in which unilateral military power enforces U.S. rule and overcomes global disorder.


Mann believes that this “imperial project” depends on a wildly inflated measure of American power; the United States may have awesome military muscle, but its political and economic capabilities are less overwhelming. This imbalance causes Washington to overemphasize the use of force, turning the quest for empire into “overconfident and hyperactive militarism.” Such militarism generates what Mann calls “incoherent empire,” which undermines U.S. leadership and creates more, not fewer, terrorists and rogue states.


In his distinguished scholarly work on the history of social power, Mann, a sociologist, has argued that four types of power drive the rise and fall of states, nations, empires, regions, and civilizations: military, political, economic, and ideological. Applying these categories to the United States, Mann concludes that it is, in a jumble of metaphors, “a military giant, a back-seat economic driver, a political schizophrenic, and an ideological phantom.”


Mann acknowledges that the United States is a central hub of the world economy and that the role of the dollar as the primary reserve currency confers significant advantages in economic matters. But the actual ability of Washington to use trade and aid as political leverage, he believes, is severely limited, as was evident in its failure to secure the support of countries such as Angola, Chile, Guinea, Mexico, and Pakistan in the Security Council before the war in Iraq. Moreover, Washington’s client states are increasingly unreliable, and the populations of erstwhile allies are inflamed with anti-Americanism. American culture and ideals, meanwhile, hold less appeal than they did in previous eras. Although the world still embraces the United States’ open society and basic freedoms, it increasingly complains about “cultural imperialism” and U.S. aggression. Nationalism and religious fundamentalism have forged deep cultures of resistance to an American imperial project.


Mann and Barber both make the important point that an empire built on military domination alone will not succeed. In their characterization, the United States offers security — acting as a global leviathan to control the problems of a Hobbesian world — in exchange for other countries’ acquiescence. Washington, in this imperial vision, refuses to play by the same rules as other governments and maintains that this is the price the world must pay for security. But this U.S.-imposed order cannot last. Barber points out that the United States has so much “business” with the rest of the world that it cannot rule the system without complex arrangements of cooperation. Mann, for his part, argues that military “shock and awe” merely increases resistance; he cites the sociologist Talcott Parsons, who long ago noted that raw power, unlike consensus authority, is “deflationary”: the more it is used, the more rapidly it diminishes.


EMPIRE UNRAVELLING


The French essayist Emmanuel Todd believes that the long-term decline predicted by Mann and Barber has already started. In a fit of French wishful thinking, he argues in After the Empire that the United States’ geopolitical importance is shrinking fast. The world is exiting, not entering, an era of U.S. domination. Washington may want to run a liberal empire, but the world is able and increasingly willing to turn its back on an ever less relevant United States.


Todd’s prediction derives from a creative — but ultimately suspect — view of global socioeconomic transformation. He acknowledges that the United States played a critical role in constructing the global economy in the decades after World War II. But in the process, Todd argues, new power centers with divergent interests and values emerged in Asia and Europe, while the United States’ own economy and society became weak and corrupt. The soft underbelly of U.S. power is its reluctance to take casualties and to pay the costs of rebuilding societies that it invades. Meanwhile, as U.S. democracy weakens, the worldwide spread of democracy has bolstered resistance to Washington. As Todd puts it, “At the very moment when the rest of the world — now undergoing a process of stabilization thanks to improvements in education, demographics, and democracy — is on the verge of discovering that it can get along without America, America is realizing that it cannot get along without the rest of the world.”


Two implications follow from the United States’ strange condition as “economically dependent and politically useless.” First, the United States is becoming a global economic predator, sustaining itself through an increasingly fragile system of “tribute taking.” It has lost the ability to couple its own economic gain with the economic advancement of other societies. Second, a weakened United States will resort to more desperate and aggressive actions to retain its hegemonic position. Todd identifies this impulse behind confrontations with Iraq, Iran, and North Korea. Indeed, in his most dubious claim, Todd argues that the corruption of U.S. democracy is giving rise to a poorly supervised ruling class that will be less restrained in its use of military force against other democracies, those in Europe included. For Todd, all of this points to the disintegration of the American empire.

Todd is correct that the ability of any state to dominate the international system depends on its economic strength. As economic dominance shifts, American unipolarity will eventually give way to a new distribution of power. But, contrary to Todd’s diagnosis, the United States retains formidable socioeconomic advantages. And his claim that a rapacious clique of frightened oligarchs has taken over U.S. democracy is simply bizarre. Most important, Todd’s assertion that Russia and other great powers are preparing to counterbalance U.S. power misses the larger patterns of geopolitics. Europe, Japan, Russia, and China have sought to engage the United States strategically, not simply to resist it. They are pursuing influence and accommodation within the existing order, not trying to overturn it. In fact, the great powers worry more about a detached, isolationist United States than they do about a United States bent on global rule. Indeed, much of the pointed criticism of U.S. unilateralism reflects a concern that the United States will stop providing security and stability, not a hope that it will decline and disappear.


RULERS OR RULES?


Is the United States an empire? If so, Ferguson’s liberal empire is a more persuasive portrait than is Johnson’s military empire. But ultimately, the notion of empire is misleading — and misses the distinctive aspects of the global political order that has developed around U.S. power.


The United States has pursued imperial policies, especially toward weak countries in the periphery. But U.S. relations with Europe, Japan, China, and Russia cannot be described as imperial, even when “neo” or “liberal” modifies the term. The advanced democracies operate within a “security community” in which the use or threat of force is unthinkable. Their economies are deeply interwoven. Together, they form a political order built on bargains, diffuse reciprocity, and an array of intergovernmental institutions and ad hoc working relationships. This is not empire; it is a U.S.-led democratic political order that has no name or historical antecedent.


To be sure, the neoconservatives in Washington have trumpeted their own imperial vision: an era of global rule organized around the bold unilateral exercise of military power, gradual disentanglement from the constraints of multilateralism, and an aggressive effort to spread freedom and democracy. But this vision is founded on illusions of U.S. power. It fails to appreciate the role of cooperation and rules in the exercise and preservation of such power. Its pursuit would strip the United States of its legitimacy as the preeminent global power and severely compromise the authority that flows from such legitimacy. Ultimately, the neoconservatives are silent on the full range of global challenges and opportunities that face the United States. And as Ferguson notes, the American public has no desire to run colonies or manage a global empire. Thus, there are limits on American imperial pretensions even in a unipolar era.


Ultimately, the empire debate misses the most important international development of recent years: the long peace among great powers, which some scholars argue marks the end of great-power war. Capitalism, democracy, and nuclear weapons all help explain this peace. But so too does the unique way in which the United States has gone about the business of building an international order. The United States’ success stems from the creation and extension of international institutions that have limited and legitimated U.S. power.


The United States is now caught in a struggle between liberal rule and imperial rule. Both impulses lie deep within the American body politic. But the dangers and costs of running the world as an American empire are great, and the nation’s deep faith in the rule of law is undiminished. When all is said and done, Americans are less interested in ruling the world than they are in creating a world of rules.

Energy bill on last gasps?

March 11, 2004 at 10:40 pm
Contributed by:

Folks,

You know what they say about politics and sausage: if you like them, you don’t want to know how they’re made.

This droll little article from Grist Magazine gets us down in the dirt with the key players who can make the once-beaten energy bill die or fly. Even in its current slimmed-down form, the bill is still rotten. Sen. John McCain called it “the same old package of pork — it’s rancid pork.”


Best of all:

DeLay is so committed to his special interests that he’s willing to defy his own president; by doing so, he may serve the public interest after all.

It’s great to know that, with dire problems like Peak Oil looming straight ahead, that the Congress is playing their little selfish games and holding up any real progress? That they can slavishly serve their cash contributors and their own careers, while letting us all careen headlong into the void created by so many decades of just such politicking? When are we going to have some leaders who actually care about the public good, and who want to see us on a path to energy sustainability, first and foremost, above any special interest?

At least we have the satisfaction of knowing that it is the opposition of people just like us that has so far successfully stalled this travesty. But somebody in Congress is going to have to offer up a real energy bill alternative, and with the way our political machine works, that’s not too likely.

It’s too early to rest on our laurels, though. The bill will come back up for another vote, and probably soon. Sen. Tom Daschle, the most reprehensible of all the bill’s backers, thinks he has enough votes to pass it this time around.

Here’s a useful bookmark for ya: The 108th Congress’ Energy Bill Web site. Check it for the latest news.

–C
A Twitch Before Dying?

Grist Magazine

Energy bill may be gaining ground, but prospects are still dicey

by Amanda Griscom

09 Mar 2004

U.S. oil prices jumped to their highest levels since the Iraq war this week, hitting $37.51 a barrel, for an average of about $1.74 a gallon — unwelcome news for those feeling the pinch at the pump, but great news for supporters of the newly overhauled but still-stalled energy bill.

“They’ve been waiting for something like this — a blackout, a spike in gas prices, a terrorist attack — anything to convince a majority in the Senate that they have no choice but to steamroll this energy bill through,” said a staffer at the Senate Committee on Energy and Natural Resources.

Sure enough, on Monday, Sen. Pete Domenici (R-N.M.), chair of the ENR committee, reasserted that the energy bill would likely come up for consideration again at the end of this month — when high gas prices will still be fresh on senators’ (or, more to the point, senators’ constituents’) minds.

Right on cue, a chorus of Bush officials chimed in to play up economic fears: Energy Secretary Spencer Abraham said last week that the administration is “extremely concerned” about gasoline prices and called on Congress to pass the energy bill. His colleague Treasury Secretary John Snow used concern about rising oil prices — expected to continue their upward trajectory through the summer — to call for “greater access to reliable and dependable U.S. energy supplies like ANWR.”

Support for the energy bill isn’t just coming from the GOP — Senate Minority Leader Tom Daschle (D-S.D.) is now among its most enthusiastic proponents. The bill became more palatable to Daschle once deals were struck to remove a controversial provision that would have given liability relief to manufacturers of the fuel additive MTBE, which has contaminated water supplies throughout the nation, and to cut the corpulent $31 billion package to a comparatively lean $15 billion — though it still channels plenty of pork to polluting energy companies.

Daschle not only expressed support for the new version of the bill, but anticipated bringing along up to six new Democratic yea votes. “It’s Sen. Daschle’s belief that there’s a reasonable chance that this new version will pass when it comes up for reconsideration,” his spokesperson, Sarah Feinberg, told Muckraker.

Domenici’s team is equally upbeat: “We’re feeling pretty confident,” said Marnie Funk, spokesperson for the majority in the ENR committee. “We think we’ve made the necessary changes to get the bill through the Senate — changes that will appeal to Democrats who disliked the MTBE issue and the Republicans who were worried about cost. The vote count seems promising.”

According to an ENR committee staff member who asked to remain anonymous, Senate Majority Leader Bill Frist (R-Tenn.) and Daschle have been getting positive feedback on the Republican side from Sens. Rick Santorum (Penn.), Jon Kyl (Ariz.), Don Nickles (Okla.), and John Ensign (Nev.) — all of whom had grumbled about the high costs of the original bill.

But critics of the energy bill are singing a very different tune: “Put your bullshit detector on high alert,” said Kevin Curtis, vice president of National Environmental Trust. “We’re in election time, and from now to the end of this session it’s less and less about passing legislation and more about emphasizing the differences between certain politicians and parties.”

Bill Wicker, communications director for the Democratic minority on the ENR committee, adds that he has heard nothing definitive about new votes promised since the energy bill was reworked.

It’s no secret that Daschle, for instance, has political reasons to put on a happy face. He’s in a tight battle for his Senate seat this year, and the energy bill includes tax subsidies for ethanol production that would increase corn prices by as much as $0.50 per bushel, create an estimated 10,000 new jobs in his state, and generate $620 million for South Dakota’s economy, Daschle says. Whether or not the bill is likely to pass, it behooves the senator to convince his constituency that he’s making progress pushing it through Congress.

Likewise, Domenici’s optimism should be taken with a grain of salt: One senior Republican Senate aide confessed to a reporter at the Albuquerque Journal in Domenici’s home state of New Mexico over the weekend that the bill’s prospects are not so hot. “The odds of getting an energy bill along the lines of what we have proposed is maybe 25 percent,” the aide said.

Another indication that the forecast is gloomy came in a Monday article in CongressDaily about Senate Republicans with so little faith in the energy bill’s passage that they are maneuvering key portions of it onto other pieces of legislation that have better chances of making it to President Bush‘s desk. Senate Finance Committee Chair Charles Grassley (R-Iowa) is orchestrating the process; last month he inserted ethanol tax provisions into a transportation bill, and last week he proposed an amendment to a corporate tax bill that would extend a tax credit for wind energy production for a year. “Both provisions are crucial to maintaining the coalition … needed to move a large energy bill through the Senate,” wrote CongressDaily reporter John Stanton.

But let’s say Domenici, Daschle, and Frist manage to maneuver the energy bill through the Senate in late March. There’s no guarantee that it will then make it past the House. In fact, last week House Majority Leader Tom DeLay (R-Texas) gave the Senate version the big, fat Texas finger, saying it’s unacceptable because it doesn’t protect MTBE manufacturers, the overwhelming majority of which are in his state. Even after a personal call from Bush entreating him, essentially, to get over himself, DeLay held his ground: No energy bill without MTBE liability relief would get past him.

The situation is rich with irony: DeLay is so committed to his special interests that he’s willing to defy his own president; by doing so, he may serve the public interest after all.

Grist Magazine: Environmental news and humor

© 2003, Grist Magazine, Inc. All rights reserved.

9-11: Bush knew. And did nothing.

March 11, 2004 at 6:15 pm
Contributed by:

Folks,

It’s amazing to me that Bush is still getting away with stonewalling the 9-11 investigation, and limiting his questioning to one hour, with a small selection of friendly investigators, behind closed doors, when we KNOW that he and others in his administration have lied about what they knew, and what they did, on the morning of 9-11.

I don’t know about you, but I am mad as hell about this. I don’t care what the politics are. I don’t care whose heads will roll. We deserve the truth about 9-11.

Here are some facts for your consideration.

“Bush Knew” presentation

This is an excellent video presentation on the timeline of events on 9-11, including the lies that Bush told about it that morning:
Bush Knew

20 crucial questions about 9-11

See this previous GRL article for a list of 20 crucial questions that we deserve to have answered, plus links to other detailed chronologies of 9-11 and the Bush cabinet’s actions: 20 Crucial 9/11 Questions

Bush in bed with Saudi terrorist financiers

Today’s Progress Report had a bunch of great new information, read it! Here’s one small sample:

AFTER 9/11 – CLASSIFYING INCRIMINATING EVIDENCE: In 2003, more and more evidence began to appear tying the Saudi royal family to the attacks. For instance, Newsweek reported that thousands of dollars in charitable gifts from Princess Haifa, the wife of Prince Bandar, “ended up in the hands of two of the September 11 hijackers.”  Yet, as congressional committees prepared to release a bipartisan report on the 9/11 attacks, the Bush Administration swiftly moved to classify a section of the report which dealt with the Saudi ties to the attack. According to CBS News, that section “examined interactions between Saudi businessmen and the royal family that may have intentionally or unwittingly aided al Qaeda or the suicide hijackers.” Not surprisingly, months after 9/11 Vice President Cheney went on Fox News to announce the Administration’s full opposition to an independent 9/11 commission.

BEFORE 9/11 – STRENGTHENED BUSH-SAUDI TIES: Despite the clear ties to terror, the Bush Administration maintained and strengthened its ties to the Saudi government upon taking office. As the Boston Herald reported, a “revolving U.S.-Saudi money wheel” exists “within President Bush’s own coterie of foreign policy advisers.”

What Congress isn’t doing about it

Time required by Bill Clinton to describe his personal relationships to a grand jury:


4 hours, 59 minutes – 15 people [Source]

Time limited by Bush to talk about the events of 9/11: 1 hour – 3 people

What you can do about it

Join the email, phone and fax campaign begun by the families of the 9-11 victims, to demand “open testimony under oath from President Bush and members of the cabinet as well as a full and complete response to a list of questions prepared by the Family Steering Committee for the 9/11 ‘independent’ commission.” Please see: Statement of the Family Steering Committee
for The 9/11 Independent Commission

Watch the progress

For information on how to participate and see what effect the campaign is having, please visit:

septembereleventh.org

tomflocco.com

911visibility.org

Please, don’t let them get away with this. Contact your Congressmen. Pick up the phone. Flood their offices with faxes. Demand a full investigation. Demand the truth.

–C

[More GRL articles on 9-11]

Cheap oil myths and energy transition

March 10, 2004 at 11:09 pm
Contributed by:

Folks,

This article from Petroleum World (Latin American Energy, Oil & Gas – Venezuela) confirms the Peak Oil phenomenon, and states in no uncertain terms that we are headed for a major “restructuring.” The author, an energy economist, debunks the typical myths about cheap oil such as “high oil prices hurt growth,” and explains how the time-honored tool of raising interest rates “to bring down oil demand through provoking recession and mass unemployment” will not work this time around.

One good quote to get you started:

Current leaderships of the North will, this decade, learn that no amount of munitions and ordnance can solve or defeat the geological problem of oil depletion.

I thought this was very good reading. Check it.

–CCheap oil myths and energy transition

By Andrew McKillop


Record
economic growth and high oil prices

The US economy in late 2003, for about
one trimester, attained up to 7.5% economic growth on an annualised base, and
this was hailed by administration friendly media as ‘the highest growth for 19
years’. In 1984, the US economy attained about 7.5% economic growth on a 12-month
base, its highest-ever whole-year postwar growth of real GDP. Expressed in dollars
of 2004 corrected for inflation and purchasing power parity, the 1984 oil price
was in the range of USD 55 – 68/barrel. Earlier in 2003, many respected economic
analysts and gurus repeatedly claimed that the invasion and military occupation
of Iraq would ‘surely’ reduce oil prices and increase US economic growth. While
oil prices in fact increased, economic growth did so too. Those well publicized
economists and journalists who chant the slogans that “high oil prices hurt
growth”, and low prices ‘surely’ increase it must explain these simple and
recent facts of US economic history, or abandon their constant baying for cheap
oil as the ‘passport to growth’.


Myth
and reality


We can trace the root events that generated these slogans (and
studies designed to ‘prove’ them) to the 1979-81 period, in which, through a combination
of supply cutoff and geopolitical uncertainty due to the Iranian Revolution oil
prices were bid up to well over USD 80-per-barrel. All OECD countries suffered
fast falls in stock market indices, investment, economic growth and employment.
Inflation increased, and this was reacted to by a new ‘monetarist’ policy of extreme
interest rates.

Through 1980-83, the industrialized world experienced its
deepest recession since the 1930s. The interest rate ‘medecine’ was applied in
OECD countries with such ferocity that rates attained extremes we associate today
with the meltdown process in Latin American and African countries unable to achieve
‘structural adjustment’. US base rates exceeded 22%/year in 1981, with regular
or high street banks operating minimum loan rates at 25% p.a. In other developed
countries, national governments vyed with each other to crank interest rates ever
higher, in a race to cut economic activity and slash demand for oil. The objective
was to bring down oil demand through provoking recession and mass unemployment,
and cutting oil prices because these were judged as the major, or even sole cause
of the inflation fireball that ripped through the economies of the OECD countries
from late 1979 and into 1981 and 1982.


Whatever
the oil price, or any other factor at play in the economic mix, we can be sure
that extreme interest rates will cut economic growth, bankrupt enterprises and
cause massive rise of unemployment. Mainstream media and gurus of the New Economy
will surely not add that extreme interest rates will themselves maintain inflation,
and limit any rapid fall in price rises for the simple reason that more expensive
money and higher re-financing costs for existing debt are added to the list of
things that get more expensive. In addition, in the early 1980s, oil prices had
no difficulty remaining high – not for reasons of depletion of capacity shortage
- but through geopolitical uncertainty. At the time, and depending on data source,
the supply shortfall due to the Iranian Revolution was in the range of 5% or 6%
(about 3.25 Million barrels/day, for a period of about 6 months). In dollars of
2004, the peak oil price in late 1979/early 1980 attained about USD 108-per-barrel.
Gold prices of the time, again in dollars of 2004, attained over USD 1300-per-ounce.
The plunge in world stock markets through 1980-82 was attributed to oil prices,
but operators were in fact and at that time suffering a meltdown in confidence
through high interest rate-fear. The length and severity of the stock market panic
in the overall period of 1979-82 was far greater than following the 1973-74 oil
shock, after which interest rates had not been violently raised, but during which
oil prices had risen about 300%, compared with 110% in 1979-81.


A
new context – sequels of the recent past


Today, the world’s oil supply
system is faced by cumulative problems which, on the supply side, feature reserve
depletion and slow capacity growth. On the demand side, after about 10 years of
typical annual growth rates around 1.25%-1.5%, growth has significantly increased,
leading to average 3-year demand increase rates moving towards 5% or 6%, with
a potential for further increase; annual average demand growth rates are now well
above 2%. Overall, the supply/demand system is both fragile and stretched to the
limit. Several key suppliers and their national oil companies are intensely exposed
to the sequels of many years in which oil revenues, in real purchasing power terms,
retreated each and every year. For the richer oil importer countries of the OECD
group, this period – the Cheap Oil interval of 1986-99 – was one of ‘benign neglect’
to constantly falling commodity and oil prices. The sequels have naturally included
sharply cut exploration-development activity in the oil and gas sector, and lowered
investment by oil producer countries, neglect of installations and equipment,
reduced maintenance, and exposure for their civil societies to the stress and
tension that declining real revenues entrain. In the worst case, of national unrest,
civil war or military conflict, production and exports can rapidly diminish or
even be shut down to almost nothing. Civil unrest leading to interrupted oil production
and exports, has affected a number of producer countries, notably Nigeria and
Venezuela.



The
present context of slowed supply growth and increasing demand growth is essentially
not remediable without higher, more stable prices. The most recent, last and largest
era of major discoveries (individual fields of above 5 Bn barrels, annual discoveries
up to 40 Bn barrels total) is situated in a period (about 1955-63) that is now
very far behind the present. This has several implications: annual capacity loss
for ‘conventional’ oil through depletion will only increase, net additions to
production capacity will cost more than previous, several producers (including
large ones) are destabilized through the economic and political sequels from long
years of ‘benign neglect’, and the world demand context is characterised by rising
annual growth rates. We can estimate that supply loss through civil unrest, strike
action, embargo, etc, of even 3% of world supplies (about 2.5 Million barrels/day),
if maintained over a few months, would likely trigger a free-for-all bidding spree
on the world oil market able to push oil prices well above USD 75/barrel.


World
supply fragility at this time is increased by the unexpected and unplanned length
of time taken by the post invasion administration in Iraq to restore even the
prewar level of net exports (about 2 – 2.4 Mbd). Continuing political, economic
and social problems in several oil producer countries (including Venezuela and
Nigeria), and declining transparency, going forward, for the world’s two largest
exporters (Russia and Saudi Arabia) complete this unstable, fragile and unsure
supply system. Any sudden and large rise of oil prices could entrain finance ministers
of the OECD countries into a round of interest rate hikes, despite the almost
unlimited risks this would bring for world stock markets and the world economy
at this period in time.



Through 2000-2002, and into
early 2003 world stock markets suffered a slow motion meltdown, pushing index
levels back to those of the mid-1990s. Since the end of the Iraq War there has
been substantial, but unconvincing recovery. Total losses of notional ‘value’
on world stock markets through 2000-03 were around $ 6 000 Billion. Attempts at
explaining this as wholly or mainly due to oil price rises since late 1998, when
the most recent trough in prices was reached (about $9.70/barrel or well below
the real price in 1973) have a hollow ring. In the present context of stock exchange
operators seeking to rebuild equity strength, the rational hope of investors is
for continuing low interest rates. Any event leading rates to move sharply up
will logically result in rout on world stock markets. We can therefore, at least
temporarily, exclude moves by OECD country finance ministers to sharply raise
interest rates, and especially to double-digit levels in the developed economies.
If however this was attempted the result would surely entrain major or even complete
collapse of world stock market indices, runaway ‘domino effect’ bankruptcy of
many major corporations, mass layoffs and unemployment, and grave problems for
the financing of structural trade and budget deficits of the US, the UK and other
countries.

The
intensifying fall of the US dollar, depriving commodity exporters whose exports
are traded in dollars of real revenues at a time when many minerals and agrocommodity
prices, outside gold, oil and gas, remain at low levels, or suffer from very high
volatility, is itself a downside factor for world economic growth, and a guarantee
of future supply shortage through investors delaying decisions to take risk in
the face of volatile prices. Yet recourse to the interest rate weapon when or
if oil prices climb through sensitive and psychological barriers, like the $40
- $45/barrel range, could well intensify the flight from the dollar rather than
bring it rapid new strength, while the UK pound might be shielded to some extent
by its declining petromoney status, before it is almost inevitably abandoned with
UK entry to the Euro. Overall, any use of the interest rate weapon in the face
of fast-rising oil prices would likely entrain an OECD-wide recession, and further
destabilize the lengthening list of ‘emerging’ economies such as Russia with highly
unstable national currencies, severe debt, and major financial restructuring burdens.


No
longer ‘awash with oil’



Current world oil output of about 78.5 Mbd on a
year-average base (IEA figures give a January 2004 peak at 82 Mbd) includes that
by 24 producer countries whose output is well beyond peak, and falling, with some
in decline at over 4%-per-year. Production capacity loss is especially sustained
for the 3-largest OECD producers, the USA, Norway and UK at about 0.9 Mbd/year.
Annual demand increase on a worldwide base is forecast by many influential sources
(like the US EIA and OECD IEA) as likely to be above or close to 1.6 Mbd. In much
less than 6 years, at that rate of demand growth, a “new Saudi Arabia”
is required to satisfy the increase in world demand. No “new Saudi Arabia”
will be discovered, proven, developed and produced. As the special case of Iraq
shows, major producers can almost overnight collapse, with restoration of production
able to cover national or domestic demand taking many months through 2003. Oil
exploration-development, still at a low level for a mix of reasons (including
declining prospectivity or success rates), has resulted in an inevitable fall
in annual discoveries, that are at best one-third to one-fifth of annual consumption
on a worldwide base. Underlying this trend is the simple fact of physical depletion
of the world’s geological reserves of oil, as we move towards Peak Oil, or the
absolute peak of production that can be achieved. This is probably below 90 Mbd,
with a sharply increasing proportion of ‘non conventional’ oil, as easier produced
‘conventional’ oil declines. The expansion of nuclear electric power, at one time
believed to shield against rising oil prices through producing far-from-cheap
electrical energy, is almost everywhere stalled, with the number of reactors in
service actually declining (from 443 to 441) in the last 2 years.



No
genius is needed to decide what these and other facts strongly imply for oil prices.
Using interest rate hikes to provoke a so-called ‘soft landing’ or controlled
fall in economic activity, leading to a fall in oil demand and a fall of oil prices
if producers do not cut back their export offer as demand shrinks, is a dangerous
weapon at this time. World population growth continues at around 80-90 Million
persons per year and the world economy has structurally changed, to higher energy
intensity since the period of 1985-95. By consequence oil markets will likely
never again be “awash with oil”. The oil-lean service economies of the
aging OECD countries have massively de-industrialized and outsourced their manufacturing
activity, first to the Asian Tigers, and now to China, Brazil and India. This
change has itself set a high floor to any worldwide falls in oil demand when or
if the OECD bloc decided, through inflation fear, to engage a round of interest
rate hikes, believing this could master the challenge of ‘runaway oil prices’.


Oil
price hikes or interest rate cuts to stimulate growth?


Economic policymakers
should understand that if, or rather when oil prices attain $40-$50/barrel in
dollars of 2004, and are maintained in that range, global economic adjustment
to higher prices can restore and stabilize economic growth, worldwide. The revenue
impact of increased oil and energy prices, entraining higher earnings for exporters
of energy-intense commodities, can rapidly improve the prospects for growth in
the straight majority of the world’s economies. With or without inflation, higher
oil prices that are not resisted by slugging interest rate hikes can ease and
speed structural reform and financial adjustment in many, sorely pressed primary
commodity exporter economies. In the recent (1986-99) context of unstable and
low real oil prices, and the present context of runaway trade and federal budget
deficits of the US economy, and crumbling consumer confidence in most OECD countries
due to fears of job losses, terrorism, climate change and other worries in what
are essentially consumption saturated economies, few other strategies for restoring
conventional economic growth in fact exist.


Longer-term
transition


The writing is surely on the wall for cheap oil, for the very
simple reason of physical depletion. Large oil price rises are coming within the
next few years, whatever the current rulers of Saudi Arabia or Russia may do.
Price rises may or may not lead to a repeat of military adventure in Iraq, or
so-called ‘regime change’ in other candidate countries such as Iran, but if there
has been one lesson from the US-UK adventure in Iraq it is that geological problems
do not have military solutions. In addition, rising oil prices are not amenable
to any significant long-term control through utilization of so-called ‘strategic’
petroleum reserves, the constitution of which always increases total demand. A
structure of higher and stable prices will likely generate relatively rapid falls
in oil demand by the OECD North, where the price-elastic function has some real
scope and application. Conversely, world oil demand cuts through reduction of
OECD-North demand will soon be compensated by increasing demand in the NICs and
low-income countries. The period in question – the number of years in which world
total oil demand could be held below Peak Oil output – may be 3 or 5 years, perhaps
more, but this transition period is one we should focus for meaningful, long-term
oriented energy transition.

Greater liquidity in the world economy, aided
by higher oil, gas, gold and other real resource prices, with relatively low interest
rates can enable poorer countries to break free from their indebtedness to the
North’s financial institutions, have real freedom of economic policy choices,
and avoid development strategies entraining total dependence on fossil fuel-based
economic structures and systems. Their experience of the Neoliberal 1980s should
give them reason to consider more autonomous or autarchic domestic development
as a better choice than pursuing the impossible strategy of Globalization. Victims
of this, like Argentina and a string of African countries, are there to provide
concrete examples of what this illusory policy does to the economy, the environment
and to the finances of weaker countries, as well as to general human wellbeing
in those countries.


Oil
price triggered change in rich countries


Conversely, in the OECD North
and particularly the USA, oil price rises to around $60-$70/barrel will firstly
and mainly provide a ‘wake up call’ not only for their stagnant economies, but
for needed restructuring of the economic system and cultural values. Apart from
handwringing and tubthumping, and of course military adventures, there will be
little margin of action and decreasingly few options open to political and economic
decision makers. As noted above, the ‘interest rate weapon’ at this time is more
than a double-edged sword; cranking interest rates to double-digit levels in reaction
to oil price rises driven by physical depletion is not only unreasonable but will
almost certainly bring about another 1929 crash and Great Depression. In addition,
and within about 12 months from any upcoming Oil Shock, increased solvent world
demand will trickle up to the OECD North, in the form of increased demand for
higher value manufactured goods and sophisticated services supplied by the North.

Shrinking
growth of oil production due to geological depletion will tend to lock on oil
prices at higher levels. Soon we will no longer hear, even less believe that the
world is awash with oil. Maintained higher levels of world oil and energy prices,
and prices for energy-intensive commodities – that is real resources – will enable
and facilitate long-delayed, but inevitable structural changes of the energy intense
OECD North economies. Overall restructuring, both social and cultural, as well
as economic, can easily achieve large compression of per capita oil demand. In
the USA, currently using about 26 barrels per person/year, and without serious
harm to strictly defined human wellbeing, demand compression could target as much
as 60%-75%. In Europe at least 33% cuts could easily be targeted without civil
war and famine being in any way possible or probable. Conversely, low-income countries
where per capita oil demand in rural areas can be well below 1 barrel/person per
year cannot reasonably be expected to further compress their demand, to ease price
pressures for the OECD North


No
way out but restructuring


Current leaderships of the North will, this decade,
learn that no amount of munitions and ordnance can solve or defeat the geological
problem of oil depletion. Some current leaderships of the North already produce
‘landmark speeches’ about the need to shift to renewable energy some time after
2050. In fact, even by 2025, per capita oil use will be about 40%-50% down on
today and the climate and environment consequences of continued high rates of
fossil fuel burning will be impossible to deny. Sooner and not later, therefore,
it will be understood that there are no military solutions to geological problems
of fossil energy depletion. International cooperation, an almost forgotten term
from the 1970s and early 1980s, when oil prices attained about $100/barrel in
dollars of 2004, should rapidly be reinstated as the way forward to preparing
all persons, both in the North and South, for a future in which at least two-thirds
of our current and easily producible supplies of ‘conventional’ oil and gas will
be exhausted by about 2035.


Andrew
McKillop
is Founder member, Asian Chapter, Internatl Assocn of Energy Economists Former
Expert-Policy and programming, Divn A-Policy, DGXVII-Energy, European Commission.

Copyright
©Andrew McKillop 2004, All rights reserved




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