Putting the Free Market to Work in the Interests of National Security

Monday, August 29, 2011

By Thomas J. Buonomo

While domestic energy policy is not a silver bullet, it can help extricate the United States from foreign entanglements that have long confounded American decision-makers. History’s painful lessons offer us the power to move our elected officials to act in the interest of renewed economic vitality and national security. From the tragedy of U.S.-Middle East relations is born opportunity.

Saudi Arabia

Longstanding U.S. energy investments in Saudi Arabia began to face intense scrutiny following the September 11th, 2001 attacks on the World Trade Center and Pentagon. 15 of the 19 hijackers were Saudi nationals and U.S. intelligence officials have since identified numerous Saudi-based charities as financial patrons of Al Qaeda.  The Saudi monarchy maintains an uneasy coexistence with clerical leaders who propagate a highly xenophobic worldview while buttressing the regime’s fa├žade of religious legitimacy in the eyes of its citizens.  The September 11th attacks, along with Al Qaeda’s targeting of Saudi oil facilities, have demonstrated to U.S. political leaders that relying on Saudi Arabia to ensure a steady flow of oil at a moderate price is becoming increasingly problematic.

Iraq

American oil investments in Iraq date back to 1928, during which time Iraq was governed under British rule.  British political advisors continued to shape Iraq’s domestic and foreign policies until 1958, when the Iraqi monarchy was overthrown in a military coup.  Iraq was a founding member of OPEC and by 1972 completed nationalization of its oil industry under Saddam Hussein as a means of achieving economic independence from Western powers. 

Following the 1991 Gulf War, U.S. military forces enforced no-fly zones over Iraqi territory while UN weapons inspectors attempted to wrangle the Iraqi government into fully complying with numerous Security Council resolutions.  More than a decade of hostile relations culminated in the 2003 invasion of Iraq, motivated by uncertainty over the status of Saddam Hussein’s weapons programs, the erosion of the UN sanctions regime against him, and the vast supply of oil under his control.  

Bush administration officials speculated that the Iraq War might cost as little as $60 billion and asserted that the Iraqi public would greet American troops as liberatorsU.S. military planners and policymakers anticipated a brief military operation followed by the guided election of a friendly Iraqi government that would welcome foreign investment in its oil industry

This hopeful scenario turned into a bloody occupation that has cost the lives of nearly 4,500 American troops and over 100,000 Iraqis to date. The Iraqis’ initial expressions of gratitude quickly turned to distrust and hostility after a series of policy blunders resulted in mass unemployment, the collapse of social support infrastructure, a refugee crisis and civil war. 

Approximately 3 million Iraqis remain refugees or internally displaced, hundreds of thousands of them with minimal access to basic public services.  Thousands of America’s veterans are being lost to what CBS News has unequivocally called a “suicide epidemic” as a consequence of their deployments to Iraq.  The long term cost of the war, including health care for our veterans, has been estimated at more than $3 trillion.

Iran

A defining point in the United States’ relationship with Iran can be traced back to 1953, when U.S. intelligence operatives collaborated with their British counterparts in the overthrow of the Iranian Prime Minister due to his defiant opposition to foreign control of Iran’s oil industry.  A period of surface-level stability under the rule of the U.S.-friendly shah was shattered by the 1979 revolution, which brought a theocratic and virulently anti-Western regime to power.

Throughout the 1980-1988 Iran-Iraq War the United States backed Saddam Hussein despite his use of chemical weapons against Iranian troops, further embittering already distrustful Iranian political and military leaders.

U.S.-Iran tensions continue to heighten as growing evidence indicates that the Iranian government is developing a nuclear weapons capability.

The Consequences of Energy Dependency

U.S. dependence on the international oil industry has ensnared the United States in a web of national security liabilities and threats throughout the Middle East region.  Efforts to maintain security of oil supplies, some with highly destructive consequences for the people of the region, have over the last several decades led to the rise of increasingly hostile political actors who in the most dangerous cases believe that the only way to deter the U.S. from pursuing designs over their natural resources is to acquire a nuclear deterrent.  But weapons ostensibly intended for defensive purposes can also be used as instruments of coercion in the hands of zealots with expansionist ambitions of their own.  The rhetoric and actions of Iranian officials are hardly reassuring.   

The Solution

Although we cannot wave a magic wand to solve these problems overnight, we can take immediate steps to address their underlying causes.  One of the most important actions we can press our elected officials to take is to establish a free market in the transportation fuels industry in order to allow alternative fuels to compete based on their own merits.  The Open Fuel Standard Act of 2011 does exactly this. 

Less reliance on oil from the Middle East would conceivably reduce the pressure or temptation to take a hard power approach to problems in the region.  The historical record demonstrates that the consequences of this approach- including political radicalization, terrorism and nuclear proliferation -are less predictable and potentially more costly to manage in the long term, however necessary they may be viewed at the time. 

Fuel diversification would also help reduce global demand for oil and relieve pressure on supply capacity, thereby reducing the price of gasoline and alternative fuels over the long term and reducing OPEC’s power over the U.S.  A reduction in the price of oil would help accelerate and sustain a U.S. economic recovery, stimulating private sector job creation and enabling our government to pay back more than $1 trillion in debt to China.

Given the oil industry’s insidious political influence over Congress, this is not likely to happen without a major concerted push from the American public.  Our elected officials need to be pressed to defy this influence and demonstrate their support for our troops and free market principles by passing legislation to open the transportation fuels market to competition.

The power is in our hands but we have to be ready for a fight.  We can expect the oil industry to invest its massive profits in lobbying from the shadows, buying influence through campaign contributions, co-opting media outlets, and engaging in public disinformation campaigns.  We must remember that the stakes are high and be determined to win.  If we neglect to address this systemic problem we can be sure that our troops will remain in the Middle East for a long time to come and our future economic growth will remain constrained by an industry that wields far too much power over our elected officials.

Thomas J. Buonomo is a former U.S. Army Intelligence Officer. He holds a Bachelor of Science in Political Science and Middle East Studies from the U.S. Air Force Academy and has spent the past six years researching U.S. foreign energy policy in the Middle East.

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