Understanding The Hypocrisy Of The West

People around the world remain confused and amazed at America's and Europe's differing policies towards different countries regarding the ethics of war. People question why, for the past generations, did the U.S. and its allies not intervene in the many massacres in sub-Saharan Africa? Why did it not care about uprisings in Thailand last year or the dictatorial regime currently in Myanmar? Why did it intervene in Libya, but not in Bahrain? When things don't make sense, often we need to make assumptions to fit the equation. By making the assumption that the West - and in reality any developed nation in its modern form - is a hostage of the world's oil supply, logic starts to come together.

Often the argument is made that we would all happily agree to pay an extra few dollars at the petrol pump to save the many thousands of lives dying over the control of oil, but in truth, the powers are not concerned about the price at pump - we will be forced to pay for that, no matter. Oil is much larger than that. Since the great Industrial Revolution spanning the 19th - 20th centuries, governments around the world came to the correct conclusion that whoever controls the world's oil supply, controls the world. And so, following America's powering rise from nation to Super Power following World War II, it became etched in the U.S.' grand national strategy to make claim to this unsustainable resource.

Oil Matters

Take a look around you. Most of the everyday products you consume are made up of some form of derivative of oil. Plastics for one. Who could imagine life without it? And not just your shopping bags. At the average desk you can see an oil derivative in your computer, your monitor screens, mobile phones, bottles of water, pens and the coffee machine. It is what gets you to work by fuelling your cars, powering buses and public transport. It moves the machines that sewed your shirt. It is the lubricant that keeps the global economy alive and the Super Power governments in control. It is the reason that gives the Middle East its relevance to the West, the reason George Bush Snr went for a walk with King Fahd holding hands while Tony Blair sat in Ghaddafi's tent and why George Bush Jnr was not so friendly to Saddam. Oil matters.

Asia Growth

The populations of America and Europe total approximately 1.1 billion lives. This is equal to the population of India alone. China also alone has 1.3 billion people and the total Asian population is 3.9 billion. If the "developed" world is undergoing deleveraging and austerity this generation, the "developing" world is rising. And what a rise it will be. China has a planned 70 airports to be opened within the next 20 years, compared with just 12 in Europe. It is planning major cross-country rail networks and the growth is projected for the long term. India too. It is estimated that only 6% of Chinese own a car. Even less in India. Compare this with 89% of American households that own cars. China and India will be looking to move their populations away from rural locations to more efficient city networks. Newer and larger cities will be built as the world starts to build physically upwards instead of outwards. With their economic rise impressing us quarterly with double digit growth, what we are witnessing is the massive transfer of wealth from the West to the East. As cheap labour still abounds in these countries, efficient western companies are transferring their manufacturing operations abroad to Asia. Wage demands will increase in the East and the population will have more wealth. And with the need to power this growth will come the huge demand for a resource that is quickly running out of supply. Whoever controls oil, controls the world.

The Compliant And The Defiant

The Rebels in Libya played the right cards. They promised the West good access to Libya's oil supply. Agreements previously signed with Gaddafi would be renegotiated more favourably to the West. Gaddafi, in return for acceptance into the Western sphere of influence, agreed to disarm most of his most lethal arsenal. In 2003 after the invasion of Iraq, Gaddafi announced Libya's decision to dismantle all components of its nonconventional weapons programs. Concurrently, Gaddafi declared an abrupt halt to Libya's development of missiles with a range exceeding 300 kilometers and his intent to open all nonconventional weapons stockpiles and research programs to international inspectors. Libya also halted its intended uranium enrichment program and it entered into agreements that the West would not attack Libya, in return for Libya's disarmament. It reality, Libya had exposed itself to just that. Given the opportunity, the West took it - as is currently being witnessed. Iran has watched and learnt from Libya, Iraq and Korea - and understood however correctly or incorrectly - that perhaps the best form of defense is nuclear deterrence.

And so, we have a war in a mostly defenseless Libya with compliant rebels that would provide oil to the West as needed. Iran however, is defiant, and this is where the real problem in Bahrain lies.

The population of Bahrain is mostly Shia. They receive religious and moral support from Iran. Bahrain is governed by minority Sunnis, and is propped up - militarily, religiously and financially - by its larger oil rich neigbour Saudi Arabia. Iran has been steadily growing its influence in the region. Since the downfall of Saddam Hussein, Iran has ensured that it has maximized every opportunity to exert influence in Iraq, Syria and as far as Lebanon. Bahrain, it seems, is another opportunity for Iran to exploit - just as America did in Libya in the chessboard of the Middle East.

With Iran clearly the Defiant and Saudi Arabia clearly the Compliant when it comes to trade with the West, the last thing that the West would want is Bahrain falling into the sphere of influence of Iran. And with much predictability, the west remained silent on the barbarous crackdown on protestors in Bahrain. Indeed, Robert Gates was in the region not too long before the crackdowns began, quietly lending support to the suppression while publicly voicing contempt for it.

What was supposed to be a domestic protest about rights and freedoms is quickly becoming an international dilemma on many dimensions. There is a trend in the Middle East that is potentially very dangerous and that is the division between the Sunnis and Shia of the region. In the Lebanon, the two political camps are divided between the Sunnis and the Shia with the other sects divided amongst them. Hassan Nasrallah, leader of the Hezbollah, stepped further outside his boundaries by declaring he was ready and willing to support the protests in Bahrain and accusing the suppression of being sectarian. He has also previously stated his readiness to do Iran's bidding, including war with Israel if and when needed. As a result, the Bahraini regime has moved to expel Lebanese from the country and has halted all flights to Lebanon, Iraq and Iran. Iran has not kept quiet and has also voiced support for the protests and called the suppression and post-crackdown reactions as going too far.

With the world's largest oil producer being Sunni majority Saudi Arabia, and the world's second largest oil producer being Shia majority Iran, a military rift between these two nations will have absolutely devastating consequences on global oil supply and hence the global oil price. It threatens the current global recovery and the standing of the governments of the Super Powers. And so it seems the international football match will be played on Bahraini soil, with the oil prize hot and the spark ever so near.

Oil Price And Recessions - Oil As A Weapon

During the 1973 Yom Kippur War, Arab states placed an Oil Embargo on all countries that were in support of Israel during the war. Arab states correctly understood the importance of oil to the developed world and utilized it very effectively. Placing price restrictions on the supply of oil, the price of crude more than quadrupled from $3 a barrel to $12 a barrel. The world economy was already struggling with the breakdown of the Breton Woods agreement and the introduction of a new fiat monetary system after Richard Nixon cut the money-gold link in 1971. Incessant high inflation, low growth and shocks to the oil supply were enough to cause a stock market crash of about 48% in the S&P 500 Index from early 1973 to late 1974. This had a terrible effect on the public psyche, so much so that Richard Nixon invoked "Project Independence" - not much unlike the urgency behind "The Manhattan Project" - to eliminate America's dependence on foreign energy, mostly notably Arab oil and introduce sustainable self sufficient energy programs (quite clearly a failed project).

2008 and the price of Crude has traded above $148 a barrel. Many multiples above the $12 price during the oil embargo but in real terms taking into account inflation, the $12 price was just as damaging. At $148 a barrel and the U.S. economy staring down the pipe of a housing subprime crisis and 3 months before Lehman Brothers implosion, the cost of crude helped create a deep and sharp recession to be later labeled as "The Great Recession". The crash in oil prices was a good relief for the global economy trading as low as $33 dollars a barrel. I was one of the voices supporting the notion that oil was a grand bargain at any price below $50.

Currently we are trading at $108 a barrel. Barely 26% below all time highs, and ever so close to an all out oil crisis yet again stemming from the Middle East. With the global economies struggling uphill against a deterioration in public finances, deleveraging private sector and austere governments in Europe, a shock to the supply side of oil will be sure to send the stock market prices downward once again. Keep an eye out for the relationship between oil and stock prices.

A Global Solution - Thorium

Humans are not as stupid as they are greedy. I would like to bring to your attention the peaceful energy alternative - nuclear Thorium. It is a resource that is abundant, clean, safe, cannot be used for weapons, sustainable, used in small scale and large scale applications and - more importantly - has the ability to change the globe forever. It has the ability to bring peace to nations forever fighting over the world's energy needs. But greed stands in the way of peace. When the likes of Dick Cheney, Big Oil company men, and oil lobby groups pushing the resolutions of Congress as they see fit, not funding the progress of development of Thorium, or blocking any research, is enough to halt the development of this clean and safe alternative. As an alternative, it would provide just that - an alternative to oil, greater prospects of world peace and stability and the demise of the Big Oil men. I would suggest more people do their research on Thorium and help promote it as a viable alternative. It is not susceptible to the dangers of nuclear fuel as witnessed in Japan today either. As I type, a quick Google search brought up the below article found in The Telegraph dated 20 March 2011. "Safe nuclear does exist, and China is leading the way with Thorium"

Here is the link to the article: http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8393984/Safe-nuclear-does-exist-and-China-is-leading-the-way-with-thorium.html#

Wikipedia also has a good summary.