About a month into his new job, US Secretary of State Colin Powell has been conducting a lightening tour of the Middle East, before continuing on to Europe for a meeting of NATO foreign ministers. His trip took him through most of the regional hotspots, but his advance staff had been quick to point out that Powell would not be making any grand policy initiatives. Instead, the staff said, the secretary would be listening to what the leaders he would be meeting with have to say.
In other words, five weeks after George W. Bush was sworn in as US president, the future direction of the United States’ Middle East strategy remains very much up in the air. But there are indications where things are headed. The oil industry credentials of the new-look White House appear to be extremely important, although the presence of former oil executives among US policy-makers does not necessarily mean that all the decisions that will be taken will be to the liking of the Middle East oil producers.
The Middle East policy of the Clinton administration was concentrated almost entirely on the Israeli-Palestinian agenda. Bush’s foreign policy staff is aware that it cannot sideline that issue, but it is intent on making it but one aspect of a more comprehensive regional strategy, which first and foremost will have to serve the interests of the United States.
When Republicans—and particularly those from Texas—look coldly at the Middle East and consider US national interests, they see two main areas of concern: oil supply and the potential for military conflagration. And as the United States learned in 1973, the two are sometimes related.
It may be considered by some as an unfortunate coincidence, but the former oil-man Bush’s ascension to the White House came after a year in which the OPEC cartel finally got its act together and brought about what was the most impressive rise in fuel prices since the oil crisis of the mid-1970s. It was possibly this set of circumstances that led the formulation of what appears at this stage to be one of the United States’ most clearly defined foreign policy strategies—to conduct a dialog with foreign oil producers, including those that are members of OPEC, while at the same time reducing the United States’ reliance on foreign oil imports.
Speaking in December before he entered the White House, Bush expressed his intention of maintaining a dialog with OPEC, in order that he may convince the cartel to increase production, rather than cut back—as it was believed it would do at its January meeting. For its part, OPEC was polite but non-compromising. Its secretary general, Ali Rodriguez, noted that the organization had earlier increased its members’ production by four million barrels a day.
The frustration of dealing with OPEC was evident in the twilight of the former administration, when the outgoing energy secretary, Bill Richardson, admitted his failure to secure an OPEC promise for a “modest” production cut. Instead, the United States decided to concentrate its efforts on wooing two non-OPEC oil producers—Norway and Mexico.
Norway’s oil minister, Olav Akselsen, came out against an oil production cut. Norway wishes to see stability in the market, as well as a balance between supply and demand, he said.
Mexico, at first, appeared a much harder nut to crack. Its government’s attitude toward OPEC is traditionally much more lenient–or, at least, so it was during the days of the former Mexican president. On January 9, the new Mexican oil minister, Ernesto Martens, said that a production cut is logical because of an excess of supply.
Significantly, Bush’s first foreign trip as president was to Mexico, where he met with the newly incumbent President Vicente Fox. Oil is just one aspect of the US-Mexican relationship, and it is unlikely that the Mexicans would like to clash with their northern neighbors about energy policy.
Bush’s energy secretary, Spencer Abraham, met with Martens on February 17. On the agenda was the increased supply of Mexican oil and gas to the United States, as well as a variety of other bilateral economic issues. Following the meeting, an unidentified source—probably in the Mexican delegation—said that Mexico must retain “sovereignty” over its oil and gas resources.
Abraham also met with the oil minister of OPEC-member Venezuela, Alvar Silvo. Although the meeting was supposed to function as a forum where the two officials could “get to know each other better,” it is reasonable to assume that production rates as well as oil price were discussed. It should be remembered that Venezuela is among those who favor cuts in production and prices between $25-$28 a barrel.
It should be noted that Abraham—who incidentally is of Arab descent—had earlier been fiercely critical of the Clinton administration’s energy policies, saying that it had made the United States too dependent upon foreign oil. Abraham spoke eloquently of the “vast energy resources within the United States.”
However important these steps are, ultimately the most important shift from the perspective of the Middle East could be what is in Bush’s words the need to end the “addiction to Persian Gulf oil.” The US president is planning a seven-billion-dollar, 10-year plan, which aims to reduce imports to 50 percent. Currently, the United States’ imports satisfy as much as 55 percent of its energy needs, and by 2010 that a figure is expected to climb to 61 percent.
The plan to reduce this reliance on oil imports is getting top billing. Heading the task force that will design a strategy is Vice President Dick Cheney—himself an oil-man and the former head of Texas-based Halliburton Oil.
So what are the alternatives that the task force may consider? It could seek permission for oil exploration—through legislation—in the environmentally sensitive area of the Arctic National Wildlife Refuge (ANWR), in the hope that major discoveries will add to the nation’s depleted oil reserves.
The administration also is considering cutting the royalties due on oil discoveries in the Gulf of Mexico. Companies, which turn over greater portions of their oil to the government, would be the primary beneficiaries. The oil in turn would be added to the national reserves. Royalty payments by major oil companies would be reduced if and when prices fall below $18 a barrel for 90 consecutive days. Owners of low-volume oil and gas wells would receive tax credits if they keep them running rather then close down.
Another possible measure, which is more intended to provide short and medium-term solutions, is to allow older refineries to run at full capacity during peak seasons, even if it means violating existing clean air regulations. Other measures include incentives for producing renewable fuels and improved fuel standards for government vehicles.
But, the Bush administration is not only looking for ways of breaking free from those oil producers who enjoy economic leverage over the United States. On the contrary, it appears to be seeking ways of eliminating several of the political commitments that it inherited and which it believes places overly severe limits on the US business community’s ability to compete internationally.
One of these commitments is the so-called policy of dual containment, according to which the United States has enforced severe sanctions against Iraq and Iran, with the stated aim of preventing both from aiding and abetting terrorism and developing weapons of mass destruction, all of which it is claimed threaten US interests in the region and elsewhere.
As things stand at present, the new US administration is unlikely to reduce pressure on Iraq, and indeed may turn up the heat some. On Monday, Powell joined festivities in Kuwait, celebrating the 10th anniversary of the country’s liberation from Iraqi occupation. The secretary of state was of course the chairman of the US Joint Chiefs of Staff during the Gulf War, and President Bush’s father was his commander in chief. Vice President Cheney was the secretary of defense at the time.
But, when it comes to Iran, the approach is likely to be different. As Tehran opens its oil industry to foreign investors, the US oil majors are looking on, dismayed as their European counterparts are rushing in while they are forced to stand on the sidelines. Bush has not unequivocally spoken out on the issue, but Cheney, while still at Halliburton, publicly called for sanctions against Iran to be lifted.
Iran and Iraq are not the only Middle Eastern countries operating under the burden of US sanctions. Libya and Sudan—both of which are oil producers—are subject to sanctions for allegedly assisting terrorist groups, as is Syria.
In December, before the Bush team entered the White House, representatives of several US oil companies traveled to Libya, under a special exemption, to consider investment opportunities in the country. The chairman of one of the companies making the trip, Archie Dunham of Conoco, later said he was optimistic that President Bush would lift sanctions against Libya, allowing US oil firms to return to the country.
"I think this administration is more willing to re-look at sanctions policy, which has been a total failure," Dunham told reporters during a recent visit to Venezuela. Judging by earlier statements made by the US secretary of state, Powell may have been inclined to agree. — (Albawaba-MEBG)
© 2001 Mena Report (www.menareport.com)
