Refining Oil Profits
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The Middle East has in many senses been the fulcrum of western interest since the end of the Second World War. Oil functions as the world’s most important commodity, when most western companies largely own the oil resources in the various Middle-Eastern states the aim is to maintain direct control of the production and distribution of this oil and its resulting profits.
Despite the fact that American forces turned a blind eye to the looting of Iraq’s archaeological treasures, they moved quickly to gain control over oilfields, refineries and pipelines. Even before Iraqi resistance had been routed, top U.S. officials were already boasting that Iraq’s oil infrastructure was safely in American hands.
Iraq alone possesses the world’s second largest proven oil reserves, currently estimated at 112.5 billion barrels, about 11% of the world total and its gas fields are immense as well. Experts in the West believe that Iraq has additional undiscovered oil reserves, which might raise the total well beyond 250 billion barrels when serious prospecting resumes, putting Iraq closer to Saudi Arabia and far above all other oil producing countries. Iraq’s oil is of high quality and it is very inexpensive to produce ($1), making it one of the world’s most profitable oil sources.
No doubt oil companies hope to gain production rights over these rich fields of Iraqi oil, worth hundreds of billions of dollars. In the view of an industry source it is “a boom waiting to happen. As rising world demand depletes reserves in most world regions over the next 10-15 years, Iraq’s oil will gain increasing importance in global energy supplies. There is not an oil company in the world that doesn’t have its eye on Iraq.” Geopolitical rivalry among major nations throughout the past century has often turned on control of such key oil resources and its access.
In a world that runs on oil, the nation that controls the flow of oil has considerable strategic power, not only over the terms of its own consumption but over other nations. US policymakers want leverage over the economies of bigger competitors, Europe, Japan and China, which are more dependent on Middle Eastern oil.
Last year, world demand was 75 million barrels a day, with more than half going to the West, and the International Energy Agency (IEA) forecasted a rise of 2.4% this year. The reason for the raise in demand for oil is simply economic growth in the rich nations. As their industrial production increases, industry needs more energy. It also needs more fuel to transport its products and raw materials. By 2020, the Gulf will supply between 54% and 67% of the world's crude oil, making the region -vital to U.S. interests.
Moreover, shops and offices need increasing amounts of energy to provide heat, lighting and air conditioning. Economic growth also brings with it consumers who spend more on energy-hungry leisure activities, such as motoring. Oil is the biggest single source of the world's energy, - it’s bloodline.
While it is true there is a mammoth wealth in oil, the economic gap in terms of the flow of petro-dollars between the rich countries and the oil states has always been uneven. The price of oil is lower in real terms since the Second World War; lower than a bottle of mineral water. This has been beneficial to the U.S. It has always wanted the oil price to remain within a set range, though if too low it will harm American manufacturers and if too high will be harmful to the profits of the energy producers. In Britain the government generates more money in oil through taxes than Saudi Arabia. Further-more, maintaining low oil prices, allows oil money to flow right back to America in the form of U.S. security treasuries [bonds], construction projects and military production, and so on. In effect, it allows the US to have their oil and guzzle it. While corrupt and repressive regimes, poor technological know-how within the oil industry, abject poverty, environmental pollution, unemployment and low remunerations characterise those living in the oil nations.
The fairy tale that the oil states can use oil as a weapon over the West through OPEC by threatening to cut off supplies whenever they wish is now indisputably ebbing away through the deal the U.S. signed at the UN, giving her full control over Iraq’s oil money, and a governmental system of her choice, which certainly signals the final death of OPEC. An organisation that the US has previously indirectly controlled in any event. Moreover, Thomas Friedman in the New York Times, stated that “bringing Iraq fully back into the oil market could lead to a sharp fall in oil incomes throughout OPEC that could seriously weaken the oil cartel and rob its many autocratic regimes of the income they need to maintain their closed political systems. In fact, give me sustained $10-a-barrel oil and I'll give you revolutions from Iran to Saudi Arabia, and throw in Venezuela. If that scenario prevails, you could look at an invasion of Iraq as a possible two-for-one sale: destroy Saddam and destabilise OPEC at the same time. Buy one, get one free”.
Surely U.S. policymakers must be exultant for the naivety displayed by the Muslim rulers so far, who did not know what hit them. The control of Iraq’s oil is just part of the grand plan, which is eliminating the will of any state to defy US global hegemony, and to directly control the region and all its resources. The ruling royal family of Saudi Arabia (numbering by some estimates as few as 7,000, by others as many as 30,000), depend on oil money to support the lifestyles of thousands of indolent princes, while at the same time continuing to bribe the country's work-averse young masses with free telephones, water, almost-free gasoline, and other goodies that keep them from overthrowing the monarchy. Saudi Arabia's budget, which counts on oil exports for 70 percent of its revenues, will be in deficit this year, in good part because of princely payments to the royal family and handouts to the restless and unemployable graduates in traditional studies being churned out by the state.
The Muslim rulers collaborate with the West to keep the Ummah’s wealth to themselves, from Saddam Hussein to Paul Bremer, the current U.S. administrator. The Ummah must continue to call for a regime change across the Muslim world, just like Rasul-ul-Allah (SalAllahu Alaihi Wasallam) across Jazeeratul Arab.
Defence Secretary Donald Rumsfeld in response to the Iraqis demands of an Islamic state said it “will be aggressively put down”. The Ummah should disregard such threats and exert their utmost to establish such a state for it is Fard upon her. This entity will surely seek to gain political control for the Ummah and her resources. Simultaneously oil must seem to be used as a weapon, thereby bringing an end to Western hegemony over the Muslim world, this will be the true guarantor of a fair oil cash flow to the Ummah.
The U.S. would be doing the future Dowla Islamia (Islamic state) a great favour by confining OPEC to the dustbin of history; equally the state should not recognise OPEC as it harms the interest of the Ummah and the ownership of Western companies over the Ummah’s resources. Rather it must use its military might to secure the Ummah’s resources as stipulated by Rasul-ul-Allah (SalAllahu Alaihi Wasallam):
“People share in three things: Water, Pasture, and Fire” (oil).
- narrated by Ahmad.
Consequently, this would send the West a clear message to keep their hands off our wealth.
Al-Dowla Islamia will generate public awareness against the one way flow of oil profits maintained by Western financial institutions over the issues of low pricing, through public debates, foreign policy propaganda etc. The forceful seizure of Iraqi oil fields can be brought to the forefront of the world public arena in order to remove America’s control.
The oil sector can be strengthened through technological expertise in petroleum engineering, deep-studies in inland and offshore exploration, and petro-chemical processing by providing funds in education, universities and new technical centres, whilst utilising the expertise of those already in this field. Furthermore, technological transfer from less hostile states, like Japan and N. Korea in the future can be sought through oil deals. This must be backed by a clear industrial policy to build heavy and light industries that would at all times meet the energy demands of the Ummah.
The largest markets of oil trading are in London and New York. The state can change the direction of the flow of oil profits by repositioning and renewing the terms of trade on her turf. It must replace the current financial rules with Islamic trading rites, a fair market rather than free market should prevail by the re-pricing of crude oil to reflect its true value, whilst insisting on a quarterly allocation system depending on favourable political circumstances should produce the desired result of a fair flow of oil profits to the Ummah, and this can all be achieved only after Dowla Islamia has been established.
Abdulwahab Jibrin Khilafah.com Journal 11 Rabee Ath-Thanee 1424 Hijri 11 June 2003
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