Middle Israel: What will we drink?

Producers discovered oil's extortionist potential, and the results were astonishing.

amotz asa el 88 (photo credit: )
amotz asa el 88
(photo credit: )
King Ibn-Saud, founder of Saudi Arabia, was neither stupid nor wicked. Once, for instance, when a woman came to him demanding he execute a man who had accidentally fallen out of a tree and killed her husband, the monarch asked the vengeful widow whether she was suggesting the killing was deliberate. She wasn't, and in fact admitted the two men had never met, but she still demanded the man's head - literally. The king tried, and failed, to persuade the woman to take money rather than a life. Exasperated, he finally conceded that it was the woman's right to avenge her husband's death, but added that it was his royal right to decide how the killing be done. The killer, ordered Ibn-Saud, would be tied to a palm tree like the one from which he fell on the deceased, while the widow would climb to the treetop and drop on her husband's killer. Lifting her eyes to the summit from which she was supposed to dive, the woman finally came to her senses and decided to make do with money. SUCH WISDOM sadly escaped America's first petro-ally when he met FDR in 1944 aboard the USS Quincy in the Great Bitter Lake of all locations - the place where Roosevelt was told the terrified Israelites asked Moses "what will we drink?" Now, as the king approached the Quincy on a destroyer called Murphy, the amused president took stock of the "great, big whale of a man… sitting in a Louis Quinze chair up on the forward gun deck on a great pile of Turkish carpets" while 40 servants, including a food tester and an astrologer, waited in a tent in the bow and 80 sheep congregated at the stern.* Once on the vessel, the Saudi expressed interest in the president's wheelchair, and was immediately granted one, as well as an airplane. Roosevelt also did not emerge empty-handed, as the king gave him robes, perfumes and a diamond-studded sword. But then, when it came time to talk business, FDR's request that Ibn-Saud approve 10,000 Holocaust survivors' admission into Palestine was flatly rejected. The Jews, said the king, should return to Europe. Moreover, when FDR presented his vision of irrigating the desert, Ibn-Saud said such projects were of no interest to him "if this prosperity would be inherited by the Jews." Roosevelt's subsequent pledge, "to do nothing to assist the Jews against the Arabs," fit his confession in a press conference earlier that year: "I am worried about the future supply [of oil]; I am thinking of 50 years from now." Sixty-two years on, and even while oil prices are soaring, FDR can stop worrying; the historic tide is turning against Ibn-Saud's diplomacy of ransom and politics of destitution. THE ARABS were not the first to marry natural resources and geopolitics. If anything, they were initially passive, compared with Imperial Japan and Nazi Germany, which focused much of their aggression on oil-rich destinations. Eventually, however, producers did discover oil's extortionist potential, and when they did the results were astonishing: A barrel that on the eve of the Yom Kippur War sold for $2.85, and during that day on the Great Bitter Lake had sold for about $1.50, sprang by 1975 to $12.20; economically, the industrialized world was condemned to an inflation crisis and a global recession; and diplomatically the Jews were suddenly being pressured to heed Arab demands. Now, with Chinese and Indian demand having sent prices within seven years from less than $12 to more than $60, Ibn-Saud's spiritual successors across the Middle East seem confident that history is on their side. If only they understood the gravity of their situation. FIRST, untapped oil deposits in numerous places outside the Arab world, from Alberta to Siberia, will sooner or later be efficiently extracted and transshipped because crude's high prices will make such enterprises lucrative. Secondly, and much more importantly, having been overdone, the Ibn-Saud strategy backfired, as oil buyers, like all victims of piracy, began to seek ways to end the extortion. Brazil, for instance, is already supplying its entire energy needs, with 29,000 stations filling cars with ethanol produced locally from sugar cane and costing 20% less than oil. Sweden has just unveiled a plan to become oil-free by 2020. Japan, while also seeking alternative energy sources, has done wonders in disciplining consumption. With major consumers like Nippon Steel slashing consumption by nearly 90%, Japanese oil consumption has shrunk by some 15% since the great Arab oil embargo, even though the entire economy more than doubled in those years. Thirdly, and most importantly, the Ibn-Saud strategy has degenerated Arab economies, addicting them to easily won and thoughtlessly squandered wealth. That is how one in three oil barrels was used to buy arms (which often ended up used in intra-Arab fighting, from the Western Sahara to Kuwait) while much of the remainder ended up with the thin upper crust that rules the Arab world. They, in their turn, usually invested the petrodollars abroad as greedy individuals, rather than locally as concerned citizens. The result is that during more than half-a-century when the Middle East was a major fountain of cash, and even while the rest of the world was energetically globalizing and prospering, this region's petro-economies stagnated, growing at a negligible average annual pace of 0.5% and producing collectively less than Spain alone. Now, with the industrialized world's effort to abandon crude maturing, the moment is fast approaching when the Arab world will lose even the very option to make prudent use of its mineral riches. Maybe then, millions of Arabs will finally pause to ask, like the Israelites, "what will we drink?" Maybe then they will choose, like that woman looking up the palm tree, to seek less death for others, and more life for themselves. * See Frank Freidel, Franklin D. Roosevelt, 1990