Tuesday, November 20, 2007

Should OPEC Flex Political Muscle?

Tuesday, 20 November 2007
By Sabria S Jawhar

THE most telling thing about the OPEC summit this week in Riyadh was King Abdullah's gentle rebuff of Venezuelan President Hugo Chavez who had hoped to use oil as a political weapon against his enemies - namely the United States and other Western, fuel-hungry nations.
On Saturday Chavez suggested boldly that OPEC should become more political. "OPEC was born as a geopolitical force and not only as a technical or economic one in the ‘60s," Chavez said. "We should continue to strengthen OPEC, but beyond that, OPEC should set itself up as an active political agent."
He added that "if the United States was mad enough to attack Iran or aggress Venezuela again the price of a barrel of oil won't just reach $100 but even $200."
My heart tells me, "More power to you, friend. Give them what they deserve." But my head tells me, "Ouf, this could be a disaster of catastrophic proportions."
There's a good many people who would like nothing more than to dangle oil in front of the United States like a carrot to encourage good behavior. Their bullying tactics over the past six years have inflamed just about every Muslim from Indonesia to the United Kingdom. We feel helpless with this aggressive, unrelenting campaign against us.
But we can't let our emotions run away with us and we must look at the long-term consequences. And that would make an already angry lion even more angry and it just might tip things into a direction none of us want to go.
King Abdullah didn't have to think twice about the answer.
"Oil is an energy for building and prosperity; it shouldn't become a means of conflict," he said. "Those who want OPEC to become an organization of monopoly and exploitation ignore the truth."
He reminded OPEC leaders that "OPEC had always behaved moderately and wisely."
And with that appraisal others followed. Ibrahim Ibrahim, who represents Qatar Petroleum, credited Chavez with helping OPEC become stronger but he also said, "There is no need for OPEC to be a political force now. It just has to ensure that the oil market is stable."
President George Bush will be out of office in 14 months. Americans are already wearing buttons that simply read "01-20-09." In other words, dark days will end when another president is sworn in on that date. We must be patient. If we use our heads now, just maybe the Americans will use their heads as their presidential election comes. The same can be said for the push by Iran and Venezuela these past few days for OPEC to sever its connection to the US dollar. Several OPEC members are said to want to switch selling oil from US dollars to Euros.
Prince Saud Al-Faisal, Foreign Minister, disagreed and King Abdullah put the weakened dollar and its impact on oil consumption in perspective.
"The current price of oil, if we take into consideration inflation, is less than what it was in the early 1980s," he said.
The consequences of leaving the dollar for the Euro would not be beneficial to Saudi Arabia and other oil-producing countries in the long-run, because it would only further weaken the dollar and put the Bush administration in a more desperate situation.
I'm not suggesting that we adopt an appeasement policy with the United States just so they don't turn on us. But the region is in a precarious position at the moment and we can't make impulsive decisions based on our emotions that would further destabilize it.
With King Abdullah's moderate, if not calming, approach to these issues, he steered away two pressing issues that could lead oil-producing nations into disaster: using oil as a weapon and abandoning the dollar. At the same time, the King managed to turn the summit into another direction by announcing the Saudi government will donate $300 million to finance programs to explore solutions to global warming.
This is the long view of the world and certainly more sensible than leaving an unpredictable country like the United States high and dry. Yes, my heart says let them go through a little suffering, but the brain says patience is a virtue.

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