Nbadan
12-27-2004, 05:58 AM
Back in the halcyon days before the beginning of the second Gulf War in March 2003 the Heritage Foundation, a leading conservative Washington think tank, published an influential paper called 'The Road to Economic Prosperity for a Post-Saddam Iraq' by Ariel Cohen and Gerald P. O'Driscoll, Jr. (http://www.notthistimegeorge.org/framer.cfm?liid=917) that advocated the rapid privatization of the Iraqi oil industry.
Those were also the days when Richard Perle, then the head of the Defense Policy Board, an advisory panel that acted as the unofficial think tank and prime outside advisers for Defense Secretary Donald Rumsfeld and his deputy Paul Wolfowitz, was attracting scores of millions of dollars of investment to his Trireme Investments. The company looked certain to have an inside track on winning contracts for the reconstruction of Iraq. And it was also a time when media mogul Rupert Murdoch, the owner of Fox News, The Times of London, the neo-conservative Weekly Standard, the New York Post and much else beside was openly rejoicing to his friends how the toppling of Saddam Hussein in Iraq would rapidly lead to oil prices falling to only $20 a barrel.
Almost two years later, global oil prices have stabilized -- for the moment -- in the mid $40s a barrel after reaching highs of $54 a barrel, China's exponentially growing hunger for oil, its soaring auto production and its plans announced just this week to launch an inter-province highway program comparable to the vast U.S. construction of the 1950s guarantee that global demand has not peaked but will continue to soar.
In Iraq, the peaceful, stable circumstances that would allow a privatization of the national oil industry is further off than ever. Iran is an increasingly powerful player in the chaotic Iraqi arena and if the Bush administration should stumble into full-scale war with Tehran either by accident or even design this coming year, the Gulf will become the center of even more turmoil.
In this world, it is a seller's market for oil producers and the Organization for Petroleum Exporting Countries is riding higher than ever. Far from destroying its remaining power, as the conquest of Iraq was intended to do, it has revitalized it.
Russian President Vladimir Putin's this week confirmed the forgiveness of 92 percent to 93 percent of the multi-billion dollar debt Iraq owes Russia as the successor state to the old Soviet Union. This was something Putin could well afford. For Russia has surpassed Saudi Arabia for the moment as the world's largest oil exporter, although the size, quality and -- most to all -- easy access of the Saudi reserves suggest the Desert Kingdom will retain its role as the world's crucial 'swing' producer with the most influence of any one nation on global prices for years to come.
Thanks to the soaring global oil price, Putin could afford to forgive the Iraqi debt in a way that would have been inconceivable to his predecessor, President Boris Yeltsin only five years ago. Russia certainly needs billions of dollars of new investment in its aging oil industry infrastructure, but the hunger of Japan, South Korea, China and now also India for Russian oil guarantees that the money will be there. Putin can therefore afford to express his displeasure at the nations of the European Union, as he did in his three and a half hour press conference Thursday, secure in the knowledge that even if major oil corporations of Western Europe could be influenced to defy him -- and so far there is no indication that they or their national governments want to -- he can get the money for his oil that Russia needs elsewhere.
This past week, Putin took a gigantic step in the opposite direction to the one Cohen and O'Driscoll advocated for Iraq before the 2003 war. He presided over a colossal legal shell game whereby three quarters of the shares of Yuganskneftegaz, also known as Yugansk, the core production unit of the Yukos oil corporation, was sold to a hitherto unheard of holding company called Baikal Finans Group for the bargain basement price of $9.35 billion. And Baikal Finans Group then in its turn sold its new holding to the state-backed Rosneft oil company for an undisclosed sum. Putin had already approved the coming merger of Rosneft with Gazprom, the largest natural gas producing company in the world, to create a colossal state-controlled energy monolith.
The failure of oil industry privatization to even begin to get off the ground in Iraq coupled with the colossal reversal of the energy industry privatizations in Russia following the collapse of communism only 13 years ago together mean that an enormous reversal of global economic-political trends of the greatest significance has already taken place. The global oil industry is not going to be dominated in the coming decades by privately-owned international corporations largely based in and influenced by the United States, as Perle, the Heritage analysts, and Murdoch all assumed a couple of years ago. Instead, the old nationalized, left-wing model pioneered by President Lazaro Cardenas of Mexico in the 1930s and globally triumphant in the era of soaring oil prices and embargoes in the 1970s has become the dominant model again.
As if to underline that this is a global trend, left-wing President Hugo Chavez of Venezuela paid a state visit to China this week and was warmly feted there. China is an eager customer for Venezuelan oil and already enjoys far greater influence in Caracas than the United States. Venezuela, of course, was a major participant in the OPEC oil price rises and embargoes of 30 years ago.
This is not good news either for the global economy or for the United States, Historically, eras of great and growing international free trade with major oil corporations competing in the global market place have always seen the widest and fastest rise in standards of living worldwide. State-directed nationalization of oil industries have almost always been followed by rising and rigged global oil prices and economic recession in both industrialized and developing countries.
But like it or not, the old left-nationalization model is back. The failure of the Bush administration to create the stable, peaceful and secure conditions for privatization that it expected in Iraq opened the way for it, and Putin this week completed the job. Far from spitting in the face of history, the president of Russia is now surfing its wave. Welcome back to the 1970s, 21st century style.
Big News Network (http://feeds.bignewsnetwork.com/?sid=e05de74be9671ce3)
Those were also the days when Richard Perle, then the head of the Defense Policy Board, an advisory panel that acted as the unofficial think tank and prime outside advisers for Defense Secretary Donald Rumsfeld and his deputy Paul Wolfowitz, was attracting scores of millions of dollars of investment to his Trireme Investments. The company looked certain to have an inside track on winning contracts for the reconstruction of Iraq. And it was also a time when media mogul Rupert Murdoch, the owner of Fox News, The Times of London, the neo-conservative Weekly Standard, the New York Post and much else beside was openly rejoicing to his friends how the toppling of Saddam Hussein in Iraq would rapidly lead to oil prices falling to only $20 a barrel.
Almost two years later, global oil prices have stabilized -- for the moment -- in the mid $40s a barrel after reaching highs of $54 a barrel, China's exponentially growing hunger for oil, its soaring auto production and its plans announced just this week to launch an inter-province highway program comparable to the vast U.S. construction of the 1950s guarantee that global demand has not peaked but will continue to soar.
In Iraq, the peaceful, stable circumstances that would allow a privatization of the national oil industry is further off than ever. Iran is an increasingly powerful player in the chaotic Iraqi arena and if the Bush administration should stumble into full-scale war with Tehran either by accident or even design this coming year, the Gulf will become the center of even more turmoil.
In this world, it is a seller's market for oil producers and the Organization for Petroleum Exporting Countries is riding higher than ever. Far from destroying its remaining power, as the conquest of Iraq was intended to do, it has revitalized it.
Russian President Vladimir Putin's this week confirmed the forgiveness of 92 percent to 93 percent of the multi-billion dollar debt Iraq owes Russia as the successor state to the old Soviet Union. This was something Putin could well afford. For Russia has surpassed Saudi Arabia for the moment as the world's largest oil exporter, although the size, quality and -- most to all -- easy access of the Saudi reserves suggest the Desert Kingdom will retain its role as the world's crucial 'swing' producer with the most influence of any one nation on global prices for years to come.
Thanks to the soaring global oil price, Putin could afford to forgive the Iraqi debt in a way that would have been inconceivable to his predecessor, President Boris Yeltsin only five years ago. Russia certainly needs billions of dollars of new investment in its aging oil industry infrastructure, but the hunger of Japan, South Korea, China and now also India for Russian oil guarantees that the money will be there. Putin can therefore afford to express his displeasure at the nations of the European Union, as he did in his three and a half hour press conference Thursday, secure in the knowledge that even if major oil corporations of Western Europe could be influenced to defy him -- and so far there is no indication that they or their national governments want to -- he can get the money for his oil that Russia needs elsewhere.
This past week, Putin took a gigantic step in the opposite direction to the one Cohen and O'Driscoll advocated for Iraq before the 2003 war. He presided over a colossal legal shell game whereby three quarters of the shares of Yuganskneftegaz, also known as Yugansk, the core production unit of the Yukos oil corporation, was sold to a hitherto unheard of holding company called Baikal Finans Group for the bargain basement price of $9.35 billion. And Baikal Finans Group then in its turn sold its new holding to the state-backed Rosneft oil company for an undisclosed sum. Putin had already approved the coming merger of Rosneft with Gazprom, the largest natural gas producing company in the world, to create a colossal state-controlled energy monolith.
The failure of oil industry privatization to even begin to get off the ground in Iraq coupled with the colossal reversal of the energy industry privatizations in Russia following the collapse of communism only 13 years ago together mean that an enormous reversal of global economic-political trends of the greatest significance has already taken place. The global oil industry is not going to be dominated in the coming decades by privately-owned international corporations largely based in and influenced by the United States, as Perle, the Heritage analysts, and Murdoch all assumed a couple of years ago. Instead, the old nationalized, left-wing model pioneered by President Lazaro Cardenas of Mexico in the 1930s and globally triumphant in the era of soaring oil prices and embargoes in the 1970s has become the dominant model again.
As if to underline that this is a global trend, left-wing President Hugo Chavez of Venezuela paid a state visit to China this week and was warmly feted there. China is an eager customer for Venezuelan oil and already enjoys far greater influence in Caracas than the United States. Venezuela, of course, was a major participant in the OPEC oil price rises and embargoes of 30 years ago.
This is not good news either for the global economy or for the United States, Historically, eras of great and growing international free trade with major oil corporations competing in the global market place have always seen the widest and fastest rise in standards of living worldwide. State-directed nationalization of oil industries have almost always been followed by rising and rigged global oil prices and economic recession in both industrialized and developing countries.
But like it or not, the old left-nationalization model is back. The failure of the Bush administration to create the stable, peaceful and secure conditions for privatization that it expected in Iraq opened the way for it, and Putin this week completed the job. Far from spitting in the face of history, the president of Russia is now surfing its wave. Welcome back to the 1970s, 21st century style.
Big News Network (http://feeds.bignewsnetwork.com/?sid=e05de74be9671ce3)