Oil as a Weapon of Mass Destruction

Oil as a Weapon of Mass Destruction – Why Saudi Arabia should be occupied by a UN peacekeeping force.

Predictions that an era of ‘peak oil’ was imminent are wrong, or so the new orthordoxy would have us believe. Instead of supplies levelling off followed by declining output and historically high prices, techniques like fracking have transformed the global picture leading to the exploitation of new and abundant sources. Prices have dropped from $114 per barrel in June 2014 to a low of $36 per barrel in January 2016. While there will always be fluctuations in demand and output dependent on global economic activity, any prospect of the stratospheric prices associated with peak oil no longer applies.

But the underlying dynamics are still very much alive. All the traditional and easy-to-access-sources, like the giant Saudi Arabian fields, have been exploited while newer ones, particularly shale oil and gas from the United States, require energy-intensive techniques for extraction and processing that are only viable through higher prices. So the first stage of peak oil is taking place now, with a shift from the low-hanging fruit to more technologically-challenging sources, in an attempt to expand overall output.

What was never fully appreciated was how the Saudi regime would be prepared to use oil in a massive, geo-strategic game of economic russian roulette. By swamping the market at drastically reduced prices, it has attempted to undercut, and ideally, bankrupt new entrants, calculating that the short-term pain of reduced revenues and the serious impact on the national finances, would be offset by the longer-term benefits of continued, dominant supplier status.

The fundamental argument, traceable back to the Limits to Growth analysis in the 1970s, still applies. The combination of dependency on non-renewable energy sources, allied to expanding economic output is unsustainable.i Here the increased investment in renewable energy is to be welcomed and should not be underestimated. But this is in the context of overall world demand for energy that is expanding and boosting fossil fuel output, despite a relative slowing of growth after the financial crash of 2007-08. Opec has estimated that $10 trillion dollars of oil investment will take place up to 2040 with the Middle East remaining the major crude oil exporter.ii

The urgency of the argument has been made even more acute by the growing understanding that the disastrous environmental effects of carbon emissions on climate change require that fossil fuels should be kept in the ground Only by making a rapid transition to a post-carbon economy can temperature rises be stabilised and the nightmare scenario of irreversible climate change avoided.

International efforts to control carbon emissions have culminated in the Paris agreements, signed in January 2016 with a commitment to stabilising temperature increases to below 2% of pre-industrial levels. Critics argue that agreements are totally inadequate as they only come into operation in 2020, omit highly polluting sources like aviation and shipping fuels, and have no binding obligations backed up by sanctions or other penalties. Ultimately, without a radical approach focusing on supply-side dynamics of oil production, the agreement will fail.iii

In the short-term, the economic consequences of market saturation by Saudi Arabia have been extremely serious and, for some developing countries dependent on oil revenues, little short of disastrous. Venezuela provides the most graphic example, with the Chavez and Maduro governments implementing social programmes that were both popular and effective in reducing poverty. But oil made up over 90% of exports and 40% of government revenues in 201. Following the collpase in oil prices, the country has experienced a debt and currency crisis with runaway inflation, all leading to growing political turmoil.iv Many other developing countries face similar conditions as oil revenues are slashed.

To some extent, the Saudi strategy of market saturation has worked. Investment in new sources with higher costs has declined and some US-based fracking companies have been declared bankrupt. But the effect over the medium-term will be to re-inforce the arguments made for investment in domestic supplies. Particular emphasis is given to energy security through indigenous production in the West because of uncertainties over future Saudi behaviour and the broader Middle East crisis, including tensions between Saudi Arabia and Iran, the other major oil power in the region. Opec’s recent intervention in September 2016 led to an agreement by the main producers on controlling output but the reduction has been modest, reflecting the limits to Opec’s influence.v

There is a perverse incentive to support the exploitation of hard-to-access, energy-intensive and heavily polluting fossil fuel supplies, including state subsidies worth billions of dollars, at a time when their use should be drastically reduced and, ideally, eliminated. International efforts to limit carbon emissions, even by the inadequate standards of the Paris agreement, are impossible to reconcile with this underlying oil supply dynamic that continues to dominate strategic thinking.

If it is accepted that peak oil represents the major security challenge of the 21st Century, with potentially civilization-threatening economic and environmental consequences, then the conclusion is inescapable. The Saudi regime is using oil as a weapon of mass destruction and the international community must treat it as an enemy in the global war against climate change.

The UN is the only international organisation with the apparatus to deliver a mandate for intervention and to organise a peace-keeping force to occupy Saudi Arabia’s major oil facilities under an international body that will supervise production and distribution. The mandate for occupation is a clear one – to end the use of oil as a geo-strategic weapon causing severe economic disruption while making it impossible to achieve the global commitment to reduced carbon emissions. Under occupation, the UN will provide an internationally accredited oil supply, the revenues from which will be used to assist the transition to a post-carbon economy. At the same time, other, more polluting sources across the world will be kept in the ground.

The usual objections will be made about national sovereignty. But the Saudi regime, apart from the fact that it is one of the most despotic and corrupt on the planet, has done nothing other than occupy the space above a vast reservoir of oil and gas and then apply a fairly basic technological infrastructure to exploit a natural resource. National sovereignty has never been sacrosanct under international law and has to be weighed against the regime’s ability to dictate a global oil rent that is causing so much devastation.

In the period of occupation, the UN carbon-transition body (UNCARB) would control the output of oil at a stable price and to an agreed timetable for progressively reduced output. Given these conditions of price stability and guaranteed supplies, other countries would have neither the political nor economic incentive to exploit new sources. UNCARB’s revenues would be used as an investment fund for renewable technologies, ensuring all countries, including those developing countries dependent on oil revenues, had a share of the investment. This way, more ambitious targets can be set for an accelerated elimination of carbon emissions as UN oil output is cut, in tandem with massive increases to renewable energy and energy-efficiency investment.

Laying out this scenario, I understand that the possibility of any coordinated action by the international community is zero, that I am totally deluded, should be strapped tight into a straitjacket, taken to a secure facility and held there for pyschological evaluation and rehabilitation. But who are the real madmen? There is a global emergency, the outcome of which will determine whether we can live in peace and relative prosperity, or in a world characterised by economic and environmental breakdown. We have to stop the use of oil as a geo-strategic weapon of mass destruction, we have to recognise the urgency of a transitional programme to a post-carbon economy, and we have to leave the vast proportion of fossil fuels in the ground where they belong.

Instead, the Saudi regime is venerated by Western leaders as our major ally in the greater Middle East, despite its appalling human rights record at home and its responsibility for exporting an extremist form of Wahabbi Islamo-fascism around the region. With justification, it could be held partly responsible for the murderous ideological framework of ISIS and other extremist groups that have exploited the chaos and secterian violence of failed Western interventions to gain traction.

If anything symbolises the moral bankruptcy of the West, it is the fact that the Saudis can bomb innocent people in the Yeman through an arms trade between the military-industrial complex and the Saudi regime worth billions of dollars and that absorbs 15% of the Saudi’s overall public expenditure. Here is the West’s oil transfer mechanism, to feed the profits of giant arms corporations (themselves a major source of demand for oil) as well as the already bloated coffers of the Saudi elite through bribes, euphemistically described as commissions, when those funds could be used for the transition to a post-carbon economy.vi

As the tragedy of warfare, failed states, refugee diasporas and irreversible climate change unfolds, it is hard not to contrast the United States and UK’s illegal invasion and occupation of Iraq in 2003 with the present crisis. Literally trillions of dollars were spent to remove a dictator who had previously been supported by the West but whose control of oil was deemed a threat to Western security interests.

In a sop to international opinion, Bush and Blair suggested a UN-controlled development fund to guarantee that a proportion of oil revenues would be made available for the Iraqi people in what was to be the glorious nirvana of post-invasion democracy. All such promises turned to dust and were conveniently forgotten. The over-riding objective was always to install a compliant regime that would guarantee access to Iraqi oil for Western corporations. The development fund vanished into the black-hole of corruption and graft that fed social breakdown and secterian violence, while oil production by foreign corporations for export markets soared.vii

Any occupation of Saudi Arabia would need a radically-reformed United Nations that genuinely reflected global opinion rather than the interests of Western military and corporate elites; an effective peacekeeping system properly funded and accountable; and the democratic control of a global, sovereign fund for non-renewable energy to accelerate progress towards a zero-carbon economy. Fundamentally, we need to ask ourselves why the West can continue to spend trillions of dollars on armaments and military interventions and only a fraction of that on genuine economic and environmental security.

Steven Schofield

November 2016