Malaysia: War in Iraq May Push Oil Price to $50 a Barrel -  War could spark more attacks: Mahathir

www.quicken.com Thursday, Febuary 20, 2003 01:26 AM ET  Printer-friendly version Associated Press

PUTRAJAYA, Malaysia -- Malaysian Prime Minister Mahathir Mohamad warned that any war with Iraq could push the price of oil up to US$50 a barrel and spark a surge in terrorism by angry Muslims.

Mr. Mahathir, who assumes chairmanship of the Non-Aligned Movement next week, also said that a new U.N. resolution on Iraq shouldn't merely rubber-stamp efforts by the U.S. and U.K. to justify an attack.

"It must be meaningful, not just a change of words with the intention that whatever happens, war must be declared on Iraq," Mr. Mahathir said in an exclusive interview with the Associated Press.

Washington and London are preparing to introduce a new security council resolution that could pave the way for military action against Baghdad if it fails to prove it has eliminated all weapons of mass destruction.

Mr. Mahathir said this was unacceptable to the Non-Aligned Movement - which groups 114 mostly developing nations and is one of the world's largest political organizations.

In a wide-ranging interview, Mr. Mahathir, who has been in office since 1981, warned that Iraq might destroy its oil fields if attacked and that world prices would rise quickly.

"Looking at what Iraq did in Kuwait, where it burned its oil fields, for a long time its oil will not be available and we still have dependence on Saudi oil and oil from Venezuela ... which of course will cause a rise in the price of oil maybe to US$50 a barrel," Mr. Mahathir said.

Nymex crude-oil futures rose Wednesday to a fresh 29-month high, with the March contract up 20 cents to $37.16 a barrel, as traders continued to fret about military action against Iraq.

The Malaysian leader also predicted that an attack on Iraq could set back efforts against international terrorism.

"I don't think overthrowing Saddam and trying to install a new democratic government is a solution that can actually happen," he said. "At the same time, it will cause a great deal of anger among Muslims worldwide and will contribute toward increasing the possibility of terrorism."

Malaysia has been an active ally in the U.S.-led war on terrorism, arresting scores of suspected terrorists and assisting Indonesia in its hunt for militants suspected in nightclub bombings in October on the Indonesian island of Bali where more than 200 people died.

But Mr. Mahathir criticized Washington's conduct of the war on terrorism, saying its focus had shifted to the confrontation with Iraq.

Mr. Mahathir complained that the West ignored a key cause of religious extremism, namely "the expropriation of Palestinian land to create the state of Israel."

"We insist that you should look into the causes. People don't just blow themselves up without reason," Mr. Mahathir said.

Dow Jones Newswires 02-20-03 0126ET