Energy pressure is America’s weapon of choice - oil expert
War always happens for a reason. In the last decades, war has seen violence breaking out over resources, with control over oil being the most contested and cherished goal. Even terrorists join the hunt for black gold. But will that change? How much geopolitical power does oil have? We ask an expert these questions - author of numerous books on energy, Professor Michael Klare is on Sophie&Co today.
Sophie Shevardnadze: Professor Michael Klare, author of numerous books on energy, including “Blood and Oil” and “Resource Wars”, thanks a lot for being with us on our show today. So, Iraq, Syria, Nigeria, South Sudan, Ukraine, the East and South China seas - is any conflicts happening in all these places driven by oil and gas? Is there really any conflict today, in the world, that has nothing to do with energy issues?
Michael Klare: I imagine there are some conflicts somewhere in the world which are not driven by energy. In some areas of the world I think water is the main source of conflict or control over land, land for growing food. But I would say that most conflicts in the world today, at least to some degree, are driven by competition over natural resources.
SS: Now, the Saudi-led and U.S.-back intervention in Yemen doesn’t seem like it’s about oil, since country is not a huge producer - but Yemen is situated on a strategic oil shipping route. So are foreign powers in a race to take control of that?
MK: Yemen has important geopolitical significance because of its location on the Arabian Peninsula, where there are so much oil and gas, and it sits along the Red Sea, the Indian Ocean, where most of the world’s oil travels. So, it does have a relationship to energy, although that’s not a primary reason for the fighting.
SS: Now, as some may remember, a former U.S. Defence Secretary Donald Rumsfeld said “the Iraq war had literally nothing to do with oil” - you’ve argued the opposite in your “Blood and Oil” - if it was so important to secure Iraqi oil, here’s a question: why did the U.S. leave Iraq on its own against ISIS?
MK: Oh, against ISIS...well, here again, we’re talking about a region of the world which has enormous significance because of its production of oil, and ISIS has, indeed, threatened oil fields in Iraq, it seized many oil fields in Iraq, it seized many oil fields and natural gas fields in Syria and Iraq - that oil is essential for the income of the Syrian and Iraqi governments. So, you cannot separate oil from the fighting in Iraq today.
SS: But my question is, if it is so oil-rich and basically a lot of people argue that that’s why the Iraq war happened - then why did the U.S. sort of left Iraq unattended?
MK: The reason for that, I believe, is that President Obama determined that the struggle for Asia was more important strategically. He announced a “pivot to Asia” as it is called, saying that the control over the waterways of Indian Ocean, the South China Sea, East China Sea had become the new center of gravity of world’s political struggle, with China as the new threat - and he thought that the Middle East could be left behind. Obviously it turned out that that was not the case, and now he’s been forced back into the Middle East.
SS: Going back to ISIS taking over the oil production in the region - now the IS in Syria has captured oil fields as well, gets money by selling crude to the black market. The U.S. has been bombing these oil refineries, but is this stopping ISIS’ oil production? Is it hindering it in any major way?
MK: I do think that the air attacks have to some degree damaged ISIS's ability, the ability of IS to profit from selling oil on the black market, but it hasn’t stopped it altogether. They are very resilient, they have found the ways to go around the airstrikes, and they have other sources of income - so the airstrikes have not totally crippled the ability of ISIS to raise money.
SS: Now, you’ve written in your recent article that ISIS is selling its oil through networks, set up by Saddam Hussein who wanted to evade American sanctions when he was in power. So, oil is always in demand, so there will always be a way around an embargo, won’t there?
MK: Yes, I think that’s so. As you indicated, I think the smuggling routes were originally developed when Iraq was under sanctions from the U.S. and the UN, and they established very effective smuggling routes, going through Turkey and Iran, and those remain intact, and that’s what ISIS is using today - so, yes, indeed, oil will find a market.
SS: Now, we’re well-versed in the terms “hard power” and “soft power” but you, Dr. Klare, you speak of “energy power”. Which one of these is most powerful, so to speak?
MK: Well, “hard power”, of course, is the use of military force, and, ultimately, military force is the most powerful means that a nation has to achieve its objectives - but military force is very dangerous, very costly, very risky, and most nations try to prevent using military force if they possibly can. Soft power is diplomacy and trade relations and that doesn’t often achieve objectives. Energy power is something in between, it can be very coercive, if you have an oil embargo. Right now the oil embargo on Iran is very coercive, it pushed Iran to the bargaining table, so energy power, energy pressure seems to be a chosen instrument of the U.S. and other countries when hard power is not an option.
SS: But the oil weapon, like you say, that’s being wielded against Iran at this point, but also Russia, certainly has had some effects - like you said, it brought Iran to the negotiating table. But, at the end of the day, you know, Iran still keeps its nuclear energy programme funded, Russia sends its oil to whoever it wants, and it’s not changing its foreign policy - so, are you, maybe, overestimating the power of the oil weapon you’re speaking of?
MK: That remains to be seen over the course of time. I think the Iranians may decide to walk away from the negotiations, or the U.S., but I think that they feel under tremendous pressure to try to reach a solution. So, again, energy power is not the same thing as military power, it cannot achieve the same thing, but it can exert a lot of influence, and I think that’s why the U.S. likes to use it, and other countries like to use energy power as a tool.
SS: Now, you’ve also said that oil was first used against the U.S. during the 1973 oil crisis, and now it is used as a weapon by the Americans. What happens if other countries find a way to wield that weapon against the U.S. today? Can oil producers afford to cut off the American market this time?
MK: I am critical myself of the use of energy or oil weapons, because I think it can lead to this kind of global competition and it could be very dangerous. So, yes, I think if other countries behave in the same way it could increase the risk of conflict, rather than to eliminate it. So, I am critical of using this form of warfare.
SS: I understand that, but theoretically speaking, can anyone use oil against the U.S. today?
MK: The countries that are closest to the U.S. and would have that option are Canada and Mexico - and that’s highly unlikely. The U.S. has become less vulnerable to this kind of pressure, because it is producing more of its oil domestically through the use of fracking, through hydro-fracking to develop shale fields, and it’s getting more of its oil from Canada and Mexico and in general from Western hemisphere. And this, by the way, I think is a result of a strategy of U.S. leaders to reduce their reliance on, say, Africa and the Middle East, precisely to avoid the kind of dangers of which you speak. So, the U.S. is much less vulnerable than other countries for this reason, to the use of oil weapons against it.
SS: Now, oil prices have plummeted over the past months. Some, like Iran, blame this on Saudi-U.S. plot against oil producers - Russia and Iran. What do you think? Is there a political element to the oil price drop?
MK: You know, there has been a lot of speculation about that, particularly with regard to Saudi Arabia. In the past, when the oil price has plummeted like this, Saudi Arabia has cut back its production in order to push the price back up. This time around, Saudi Arabia has not reduced its production, it continues to produce in high volume. Now, why - this is not entirely known to us, they are very secretive, the Saudis, but I guess it’s a combination of economic and political motives on their part. I think, on one hand they want to use this moment to try to damage the shale production in the U.S., which has been so beneficial to the U.S., but has contributed to a shift in production from the Middle East to the U.S. - they want to damage that. At the same time, I think Saudi Arabia would like to damage Iran and Russia because of Russia’s support for Syria, on one hand, and because they view Iran as their natural enemy in the Persian Gulf area. So they see both economic and political reasons, I believe, for keeping oil prices low.
SS: I understand why they would want to damage Iran, because, like you’ve said, they are enemies in the region - but do you really think that the Saudis would actually risk their alliance with the U.S. in terms of politics and strategy for oil?
MK: I see what you’re saying. Yes, I think that they are prepared to take on oil producers in the U.S. and to cause them economic damage. I don’t think that this would affect the strategic relationship between the U.S. and Saudi Arabia. A lot of companies in the U.S. that are producing this shale oil are a smaller companies, they are not giant companies like Exxonmobil for example, that have more political clout. They are smaller, independent companies, and I think the Saudis hope to damage a lot of them to put them out of business.
SS: There’s currently a ban in place on selling American crude oil abroad - but what would happen if the U.S. does start selling overseas? Would those millions of barrels dump the price even lower?
MK: Right now, the price of oil in the U.S. is considerably lower than it is in the rest of the world - $10, sometimes more, per barrel - I think, what that would do is to equalize the price around the world for oil. The price in the U.S. would rise, and the price in Europe would probably drop. But I don’t think it would have a huge effect on the world’s oil supply, because I don’t think that the U.S. is able to export that much oil. The U.S. is still a net import dependent country.
SS: So fracking has given the U.S. what you call “energy power” but it also does huge and potentially very costly damage to the environment? Will fracking go on no matter the damages, or will the environmental costs force the U.S. to back away from fracking one day?
MK: That’s a very important political question in this country. Many of my friends in the environmental community are deeply opposed to fracking for oil and natural gas, and I think that the opposition will increase. But to explain to your viewers, in the U.S. this policy is not determined at the federal level, and the national level. The policy over fracking is set at the state level, and so, states like Texas and North Dakota and Pennsylvania that are very friendly to oil and gas development have very liberal policies on fracking, whereas states like Maine, Massachusetts and neighbouring states, New York state, are very opposed to fracking. So this is a battle that will take place state by state by state; in some places fracking will be opposed, and in others it will be allowed - and I think that’s the way it will continue, but opposition will increase.
SS: Now the U.S. oil giants, Chevron and Exxonmobil are being forced to back out of major russian energy projects because of U.S. sanctions. Now, are these companies big enough to lobby interests through, or - just because they’re big, they are at the beck and call of their government?
MK: I think that the giant companies like Exxonmobil, Chevron and the others pretty much do what they want. In the case of the sanctions on Russia, this is the sort of thing when their lawyers tell them that they must obey federal law or they’ll be subject to lawsuits and that sort of thing. But in many respects, they go their own way wherever they can. They operate their own foreign policy as much as they possibly can.
SS: So you think they can do whatever they want?
MK: Well, as I said, there are limits to what they can do, and the restrictions on what they can do are growing because of concern over the environment and climate change. But, historically, giant companies like Exxonmobil have run their own foreign policy in places like Nigeria and Venezuela and other places around the world. They’ve been able to operate with very little governmental interference. Now, that’s changing. Countries are becoming more and more restrictive about what these companies can do. That explain, for example, why they are so interested in the Arctic region, because there they can pretty much operate with impunity from these kinds of local environmental laws, and that’s why they go into the deep waters.
SS: You’ve also said that if nothing changes, America will keep being drawn into oil war after oil war. So what could change to stop that from happening?
MK: This is a very interesting question, and I think we’re going to come into a time now, where oil plays less of a significant role in the global energy equation. I think we’re in transition time from reliance on fossil fuels to growing reliance on alternative fuels, on green energy. I think this is gaining momentum, and as a result, I think the importance of oil will diminish, and therefore, reasons to going to war over oil will diminish. I’m not saying this is going to happen right away, but I do think that as time goes on, more and more of our energy will come from wind and solar and other green energy, so oil will have a diminished role in the energy policies of countries.
SS: So you say, if the U.S. is running on wind farms and solar roofs and hydrogen cars tomorrow, that would actually spell the end to America’s wars, right?
MK: No. I won’t say that exactly, because America’s allies, some of them remain very dependent on sources of oil. Japan and Philippines, another U.S. ally, are in contention with China over disputed oil and gas fields in the South China Sea and the East China Sea. This has led to clashes between Japan and China, between Philippines and China, between Vietnam and China, and the U.S. has become involved militarily because of its determination to remain the dominant naval power in those areas of the world. So, it’s not about oil exactly, but oil is a key factor in these continuing struggles in the key water areas off of China, Japan, Philippines and so forth.
SS: Now, the title of one of your books “The Race for What's Left” speaks for itself. So you say countries are hunting for resources and the final frontiers, but when it comes to oil and gas: there’s fracking and technology never stops moving ahead. There seems to be more oil found every year, no less. So, the final frontiers are being pushed further and further, it seems like there’s no end to this.
MK: Cost of production in these frontier areas is much higher than it is in traditional producing areas, and so as the transition away from oil and gas occurs to other materials, other sources of energy, it may become too costly to invest in places like Arctic. Now, the transition to new forms of energy will create different kind of geopolitical race, for things like rare minerals, rare earths, and Lithium that are used in batteries. So, I don’t see the race to what’s left coming to an end, but it may shift from oil to other materials like Lithium.
SS: You brought up something very important in the beginning of the programme, which is conflicts that are going to be caused around the lack of water in the world. So, the race for resources means wars not only over fossil fuels, but things that are basic for our survival, like water. So, aren’t the oil wars just a precursor to all-encompassing water wars?
SS: I worry terribly about the prospects for wars over water, because as climate change advances, many areas of the world are going to have less water, and I think this is going to lead to disputes over shared water supplies - for example in Africa, disputes over Nile river could become more intense, or in Asia, disputes over the Indus river and Brahmaputra river as these rivers decline in the amount of water they carry, population is going to increase, the temperature is going to get hotter. So, I worry terribly that there’ll be increasing conflicts over water in the future.
SS: Professor, thank you very much for this interesting interview. We were talking to professor Michael Klare, author of “Resource Wars”, “Blood and Oil”, talking about the geopolitical power of energy, how oil and gas are triggers of conflicts worldwide, and if there’s a way to prevent wars.