'Kuwait and Saudi Arabia are not exactly democracies' The central role of oil in the Persian Gulf crisis

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'American soldiers are in Saudi Arabia because we are a society dependent on Arab oil.' 14 SOCIALIST ACTION OCTOBER 1990 Dick Roberts, former editor of International Socialist Review, is the author of several books and pamphlets on oil and the Middle East. The following are excerpts from the talk he prepared for the Sept. 14 Berkeley teach-in and the Sept. 15 San Francisco Socialist Action forum on the crisis in the Middle East.

There is little doubt in anyone's mind that oil lies behind the terrible crisis that looms in the Persian Gulf.

Iraqi President Saddam Hussein has been charged with planning nuclear capability, and spokespersons for the Bush administration have hinted that this is the real problem. We should keep in mind that in 1981 a bombing raid by Israel destroyed the French-supplied Osiraq research reactor outside Baghdad. It has not been replaced since then.

A 1988 in-depth "country study" of Iraq by the Federal Research Division of the U.S. Library of Congress (pp. 231-2) found no evidence of nuclear-weapons production in Irag and pointed out that at the time of the 1981 Israeli attack on the Iraq reactor, no weapons had been manufactured there.

The so-called nuclear threat posed by Saddam Hussein cannot therefore explain plans to position the vast armada President Bush has ordered into the Persian Gulf. And oil, of course, is not the only reason for this highly combustible situation. Years of economic underdevelopment in the Middle East, long-standing policies of the United States and Europe, the evolution of Israel and its conquest of Palestine and occupation of the West Bank-all these count.

But oil is, indeed, a central factor, and it is worth focusing attention on this factor to shed light on critical aspects of the Persian Gulf crisis. As the New Yorker magazine of Aug. 20 stated: "The American-Iraqi War, if there is to be such a thing, is not about freedom, or, really, about deterring aggression. This war is a war for oil. American soldiers are in Saudi Arabia because we are a society dependent on Arab oil."

The centrality of oil Soon after the United States began to deploy troops to Saudi Arabia, an unnamed Bush adviser told Time magazine (Aug. 20), "Even a dolt understands the principle. We need the oil. It's nice to talk about standing up for freedom, but Kuwait and Saudi Arabia are not exactly democracies."

The centrality of oil in the capitalist world economy cannot be understated. According to the Los Angeles Times (Aug. 14): "In 1989, 52 of the world's 500 largest industrial corporations-and four of the top 10were oil companies, accounting for a staggering $758.9 billion in combined sales.' Three of the 10 largest corporations mentioned are U.S. oil companies: Exxon, Mobil and Texaco. Up until 1974 these three companies and Standard Oil of California owned 100 percent interest in ARAMCO the Saudi Arabian Oil Company.

Today these giant corporations do not own the Arabian oil wells-but they ship, refine, and distribute a large percentage of oil internationally. The United States itself consumes 25 percent of world oil. For these companies, a stable supply of Middle Eastern oil undoubtedly is vital to their profits.

In the 1970s and '80s, as oil prices fluctuated in world markets, the distribution of oil became more monopolized in the United States. We are all familiar with the lack of significant price competition at the gas pump and the speed with which the oil companies pass price increases on to consumers. In the first four days after the Persian Gulf crisis began, they raised gasoline prices 7.1 cents per gallon, thus reaping an immediate $1 billion windfall profit.

Underdeveloped nations

The nations of the Persian Gulf are all economically underdeveloped. Oil, their most vital economic asset, remained under foreign ownership until the 1970s. It was World War II that touched off renewed anti-colonial struggles, ultimately leading to the independence of the Arab nations.

Eliminating the foreign ownership of oil was even more prolonged than the gaining of political independence.

It began earliest in Iraq, under nationalist pressures, when in the 1950s Iraq began taking half of the oil profits. Iraqi army officers overthrew the monarchy in 1958. Iraq saw a series of governments, leading to the rule of the Arab Baath Socialist Party in 1968. Saddam Hussein, a longtime Baathist leader, came to power in 1979. The process of nationalizing Iraqi oil was completed in 1973.

These countries are entirely dependent on oil for any economic development. For Iraq, oil constitutes 95 percent of its exports. It lacks the industrial and agricultural base to achieve any significant degree of self-sufficiency. It relies on imports for 70 percent of its wheat and nearly all its chicken feed, meat, cheese, sugar and cooking oil.

Kuwait, where water is so expensive that only 1 percent of land is used for agriculture, is even more dependent on food imports. These statistics underline Washington's strategy of boycott and show why the people of Kuwait are even more harmed by it than those in Iraq.

Nor did ownership of the oil pass from foreign owners into the hands of the people. In Kuwait and Saudi Arabia, it was the ruling emirs who gained possession of the oil. In Iraq the oil is owned by the government. This has made a handful of Arab families immensely wealthy.

But the overall picture is somewhat bleaker. Middle East expert Mohammad Tarbush summed up the economic situation of Middle Eastern Arabs in an Aug. 29 Los Angeles Times column:

Bill Gentile for NEWSWEEK There are now about 200 million Arabs dispersed in 22 heterogeneous states. A high percentage of them live below subsistence level, while a few thousand have wealth that neither they nor their descendants could ever live long enough to spend."

It is to these poor that Saddam Hussein is now appealing in his effort to break Arab governmental support of Washington's blockade. And these people side with Saddam Hussein against the United States.

Saudi Arabia: A special case Within the context of Third World underdevelopment, Saudi Arabia is, nevertheless, a special case. It has by far the greatest amount of known oil reserves that are the least expensive to produce. The super-profits from these wells go directly to the Royal Family to use as they please.

As the wealth of the Saudi rulers vastly increased, U.S. ties to Saudi Arabia became even more important to Washington. U.S. corporations in 1988 held $2,047 billion worth of direct investments in Saudi Arabia. Saudi Arabia is the largest purchaser of U.S. military equipment abroad. Bendix, Lockheed, and Boeing all have significant military dealings with Saudi Arabia.

Two of the largest construction companies in this country, California-based Bechtel and Fluor, also have significant operations in Saudi Arabia. These firms were major backers of Reagan's 1980 election campaign, according to author William Powell, in his "Saudi Arabia and its Royal Family" (1982). Bechtel vice chairman, George Shultz, was Secretary of the Treasury under Nixon and managed Reagan's election campaign. Shultz became U.S. Secretary of State.

Saudi Arabia also has major holdings in the United States, including a significant share of Texaco. Its present ruler, King Fahd, gave large sums to support the CIA's operations in Afghanistan (over $1 billion) as well as to the Nicaraguan contras ($30 million).

Kuwait owns 9 percent of British Petroleum. A March 7, 1988, Business Week article placed the figure for Kuwait's foreign assets at "at least $100 billion and possibly $200 billion.

What is important to recognize is that much of the great wealth that the emirs have gained from nationalized oil properties has not gone back into the economies of their own countries. It is invested abroad. And this makes the financial interests of these families ever-more closely tied with the interests of the advanced capitalist nations that they are investing in.

U.S. aims in the Persian Gulf The oil of Kuwait and Saudi Arabia is not vitally important to the United States in a physical sense. There are vast discovered reserves in this country that aren't being tapped; the undiscovered reserves are believed to be even greater. The inefficient way in which the United States consumes petroleum is a factor. One commentator on the Gulf crisis made the remark that "the principle we hold most dear is 18 miles to the gallon.

Japanese citizens use about a third as much energy as their U.S. counterparts. If the United States used oil as efficiently as Japan, it would consume 9.2 million barrels a day instead of the 16.6 million barrels it consumes.

But the oil companies in the United States are privately owned and they have sought the oil that is cheapest and most profitable to produce-and that oil is currently in the Middle East, especially in Saudi Arabia. In doing this they have deepened their ties to the ruling sheiks in Saudi Arabia and Kuwait with whom they have been producing oil for more than six decades, at great profit to both.

At the same time, the profound problems of the world economy have worsened the situation of the masses of Arab people. There can be no doubt at all that Washington greatly fears Saddam Hussein's ability to arouse these discontented masses. A "senior State Department official" told The Los Angeles Times (Sept. 5): "The Arab masses are looking for a hero, and Saddam can't become that hero."

The Bush administration is seeking, at the least, an increased and possibly permanent military presence in the region. The Wall Street Journal declared in the first week of the crisis that, "The allied forces will be in a position to take steps to ensure that there are no further crises of this type in the Persian Gulf. That will entail a permanent force of some power in the region."

But this is only one of Washington's objectives. Militarily seizing Kuwait and inflicting enough damage against Iraq to topple Saddam Hussein-and these are President Bush's implied threats-will cost countless thousands of American and foreign lives.

"This is a deal with no known end, no predictability," said an unnamed White House aide, who was quoted both by Time magazine and The New Yorker.

A war with no known end sounds familiar. That is the way the war in Vietnam went, year after year. We must surely ask ourselves if the protection of oil sources in the Middle East is worth that kind of a toll on human life.

"Bodes well for our side"

Let me end this talk by again stating how grateful I am to have been able to appear at the teach-in at Berkeley last night [Sept. 14]. It cannot be stressed too strongly how significant that turn-out of 1800 eager and supportive people is. This is 45 days into the Persian Gulf Crisis.

During the Vietnam War the first teach-ins weren't held until 1965-66, three and four years after the war began. And they were quite different. There weren't antiwar Vietnam veterans there like Ron Kovic. There weren't marine reservists like Eric Larsen standing up and opposing the war. There weren't Chicano leaders like Carlos Muñoz, or trade union leaders like Jim Ryder, or trade union rank-and-file activists like Dianne Wang.

We start today with so much more knowledge, with such a diversity of human experience, and understanding—and with the real desire to listen and to learn from each other. This bodes very well for our side; it is tremendously encouraging. It is not good for the warmakers.

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Bill Gentile for NEWSWEEK 'American soldiers are in Saudi Arabia because we are a society dependent on Arab oil.'