'Kuwait and Saudi Arabia are not exactly democracies' The central role of oi 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 "eres, former eduor of Internaivalis Review, is she author wk ere Dempelets onei ind Fi he pendergr he tent. ei-eandd Sept. !s Nan Prar MI * ARRO thr.EN ROUDON that SEEN 15501 :23 LEE HOT! he :h:00% hideed correlactoriodes nee 1ughe e tical aspects of the Persian *all crisis. As the New Yorker magazine of tag. 20 stated: "The American-Iraqi War, iT here a to be such a thing, as not about Ireedom. or, really, about deterring aggression. This war is a war for oil. Amencan soldiers are in Saudi Arabia hecause we are a sociely dependent on Arab oil."

The centrality of oil Soon alier the United States began 1o deploy troops 10 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 1o the Los Angeles Times (Aug. 14): "In 1989, 52 of the world's 500 largest industrial corporations--and four of the top 10—were 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 ARAMCOthe 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 Il 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 ihe 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 ot 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 because we are a "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 significan 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 forcign 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 cunnies. I is invested abroad. And this makes the francial interess of these families ever-more closcly ted with the interests ofthe advanced capitalisi nations that they a cavesty & aims in the Persian all The doi kowade and Sandi Arabia la nos rate grapest ole ten Slates in a physic sense Tee are vose ancovered tr serves in this country tet aren's hele tapped,the undiscovered reserves are behaved to be even greater. The meeticient way in which the United States cancames petroleum i a lacior One comme date on ine finil crise made the remark that "de prinerple wr hold most doors iN anes to the gallon.

apanese 0021401 counterpars. 11 JaV in. i. grea years saddam cheese a alties i arouse these discomented masses. A *kentor State Departmem officia:" to The Las Angees domes Sept a "The Arah masses are looking for a hero, and Saddam can't become that hero."

The Bush adminstraten a seeking, at the icast, an increased and possibly permaner military presence in the region. The Wall Street Journal declared in the ürst 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 abie 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 10 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.