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may be
many humanitarian reasons for toppling Saddam Hussein's regime in
Iraq, but with OPEC again cutting production to raise global
oil prices, one of the hard-headed reasons should be obvious: oil.
As I write
in the latest issue of National Review, there are two principal
sources of power for Middle Eastern states and terrorist groups
hostile to the West: weapons of mass destruction and oil. Therefore,
the war on terrorism should also seek at least to diminish the influence
of — and perhaps to destroy — OPEC.
An increase
in the price of oil from, say, $10 a barrel to $30 transfers tens
of billions annually from the American economy to oil sheiks. The
sheiks, in turn, spend the money both on their lavish corruption,
thus indirectly fostering resentment and Islamic radicalism, and
on buying off their militant critics, thus directly fostering
resentment and Islamic radicalism.
OPEC's threat
is not, as is widely thought, that it might cut off oil to the West.
As the Cato Institute's Jerry Taylor tirelessly argues, this is
essentially impossible. Although OPEC may be able to sell oil that
would have been sold to the U.S. to someone else, there's nothing
stopping that third party from reselling it to the U.S., which is
what happened during the 1973 embargo.
The problem
with OPEC is that it enriches what are to varying degrees nasty,
undemocratic, and anti-American regimes, from Iran to Venezuela,
from Libya to the mother of all contemptible oil states, Saudi Arabia.
And, of course,
Iraq. Oil is always a dictator's best friend, and Saddam is no exception.
First, there is the money. Saddam is estimated to make as much as
$2 billion per year in illegal revenues, totally outside of the
U.N.'s so-called "food for oil" program. Then, there is
diplomacy (read: extortion). Iraq has in recent years said that
it will rip up French contracts to develop Iraqi oil unless Paris
opposes U.S. attempts to keep sanctions on Baghdad.
If the French
et al. have their way, then, oil might keep America from confronting
Saddam. But, instead, it's oil that should help impel the U.S. into
Iraq. Before the invasion of Kuwait, Iraq was pumping 3.5 million
barrels a day. By 2000, it was back up to 2.6 million barrels. When
sanctions are lifted, Iraq hopes to go to 6 million barrels, and
even higher.
This is an
enormous untapped potential that the U.S. currently attempts to
suppress through sanctions that both indirectly hurt the Iraqi people
and ultimately don't work. Toppling Saddam and installing a pro-Western
regime outside of OPEC would be good for Iraqis, enhance U.S. security,
and make for a devastating blow against the cartel.
Ideally, it
would also bring to Iraq a free-market economy, the most important
predicate for the political liberalization of the Middle East.
The problem
is that the Bush administration doesn't necessarily take such a
dim view of OPEC's handiwork. The Saudis, with the biggest, cheapest
oil reserves, have traditionally worked to "moderate"
OPEC prices, keeping them from going so high that the Saudis lose
market share, or so low that they lose revenues.
The American
government tends to appreciate both, but especially the floor that
keeps prices from declining too far. That keeps in business the
thousands of marginal U.S. producers (in places like West Texas)
who would have to ditch the cowboy boots and the oil business if
the price fell to, say, $10 a barrel.
But maybe there
can be a compromise. All those West Texas oilmen put out of business
by low prices can find new work developing oil in a liberated Iraq.
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