High Oil Prices Are "Curse of Saddam"

by Eric S. Margolis

Steadily rising fuel prices -- approaching $40 per barrel -- have driven motorists and truckers across Europe to open insurrection. If petroleum prices keep rising and shortages develop, Americans, and even usually passive Canadians, may also stage a modern version of medieval peasants revolts. No wonder politicians on both sides of the Atlantic are running scared. The Curse of Saddam has struck.

Western oil consumers take for granted that cheap oil is theirs by divine right. For them, 'normal oil prices' means a return to the good old days before 1970 when tame Mideast puppet rulers gave away oil at $2 per barrel in return for protection and blondes.

"How dare those Arabs sheiks raise the price of our oil," is what many people angrily mutter -- unaware, of course, that most of North America's imported oil comes from West Africa, Venezuela, and domestic sources, not the Mideast.

Angry western demands that oil producers lower prices are pure, unabashed economic imperialism. The Mideast, for example, imports over half of its food and 95 precent of its medicines from western nations -- commodities even more precious and imperative than oil. Do we see our farmers lowering prices of grains or meats sold to the Mideast? Or Detroit, Silicon Valley or drug firms slashing export prices of goods they sell to oil producers? Of course not.

We are simply demanding by right of might that exporting nations, many of whom rely on oil as their sole source of income, cut their prices so it costs us less to tank up our road hogs. The United States produces over 6 million barrels daily: why are there no calls for American or Canadian producers to slash their wellhead prices?

Amidst all the finger-pointing over who is to blame for high oil prices, and inevitable pre-electoral threats by the Clinton Administration, to bomb the usual Iraqis, it is simply amazing that no one has asked the most obvious question: does the 10-year embargo of Iraqi oil play a role in this mess?

The answer is, of course. Before Saddam's invasion of Kuwait, Iraq, which has the Mideast's second largest proven oil reserves after Saudi Arabiam-- 120 billion barrels -- exported over 3 million barrels per day and was expanding its petro-infrastructure to export 4.5-5 million barrels by 2000.

Today, under the decade-old UN sanctions regime, Iraq is allowed to export up to 2.3 million barrels daily. Iraq is supposed to get half the proceeds for food and medicine; the rest goes to the UN's bureaucracy and to Kuwait.

But Iraq's actual exports are considerably lower because the U.S. has steadily blocked or delayed Iraq's purchase of equipment and spare parts for its crumbling oil industry.

Now, ironically, western governments fear Saddam may throw world oil markets into a new crisis by halting Iraq's modest oil exports. World petroleum consumption has hit 76 million barrels daily. Oil is so scare right now that even a minor reduction could trigger an international panic that could spill over into financial markets. In short, our punishment of Iraq has come to haunt us.

Another nice irony. During the made-for-TV Gulf War, Americans thrilled as they watched armadas of macho armored vehicles sweep across the desert. This ignited consumer lust for tough-looking, road-warrior vehicles. A friend, psychiatrist Dr. Clotaire Rapaille, conducted in-depth studies of post-war American auto consumer psyches for Chrysler and discovered that both men and women wanted 'aggressive' looking extreme cars.

The result: the enormous upsurge in huge, menacing RV's and now, paramilitary Humvees -- both major gas guzzlers. With nearly half the vehicles on the road getting 12-13 mpg, and with booming economic times, is it any wonder gas prices are sky high? Dr. Rapaille also helped conceive Chrysler's new PT Land Cruiser, which are selling like crazy precisely because consumers say it looks "menacing," and like a "gangster car of the 30's."

If Iraq's oil industry was quickly refurbished and allowed to export at full capacity, there would be no shortage, and prices would fall sharply. This column predicting way back in 1991 that oil shortages would ensure if Iraq was kept out of the market. And so they have.

But Iraq's Arab oil 'brothers,' as well as competitors Iran and Russia, don't want Iraq to resume exporting because prices would drop. Kuwait knows Saddam thirsts for revenge. Israel exerts intense pressure on the Clinton Administration through its American lobby and influence over the State Department to keep Iraq bottled up. Britain wants Iraq shackled to protect its lucrative Gulf markets. No American politician wants to risk being called "soft on Saddam" or letting him out of his cage.

None of the above care much that 5,000 Iraqi children die each month from disease and malnutrition mainly caused by the cruel western embargo. When asked about this, Secretary of State Madeleine Albright replied, in words that will one day come to haunt her and the United States, it's "a price worth paying."

It would be far cheaper and more humane to lift the embargo, let Iraq export oil, and bribe ogre Saddam to be good, as Washington has done and continues to do with nuclear-armed North Korea.

Instead, consumers in Europe and North America are paying the cost, via high gas bills, of sustaining Iraq's long imprisonment and prolonging the suffering of its people.