Election, What's at Stake

Ever wonder why President Bush holds the Saudi Princes hand?  Ever wondered why every American president since OPEC was formed is so tight with the Saudis?  Here you go.  This article clearly lays out the positions the Saudis hold on the global oil market.  They can utilize market swings to make lesser oil producers suffer and sometimes, even collapse.  The Saudis and the American interests are aligned more often than not in global influence.  There's just one problem.  The Saudis use their wealth to promote radical Islam everywhere.  In the end, we may be their stepping stone to world domination without their having had to invest their own blood in a shooting war.  Its a game of chess with more than two players.  Its a strategy game with the world's resources as pawns and neighbors' needs and desires are used by the best strategists and the best resourced to dominate all the rest.  And all our lives hang in the balance.  One promotes democracy having replaced Christianity, one promotes Islam, another forces neighbors into collectivism and the debates and the strategic moves go on for generations.  Your job as a self governed citizen of a global national power is to choose who you want doing the debating and making the decisions.  Good luck, your future and that of the entire world is riding on it.

Global leaders

Geopolitical Diary: The World According to Riyadh

October 24, 2008 | 0207 GMT

The Organization of Petroleum Exporting Countries (OPEC) will be meeting in Vienna on Friday, a month ahead of schedule. The issue on the table is whether or not to cut OPEC production in light of declining global demand for crude as countries the world over are coming down with the financial flu.

OPEC members like Venezuela, Iran, Libya and Algeria — all of which are pulling their hair out watching oil prices slide down to around $70 a barrel — have been issuing statement after statement over the past week, calling on their fellow OPEC members to cut production so that they can maintain the flow of petrodollars coming into their government coffers. Going by their statements, it seemed as if it was inevitable that OPEC would make a decision to cut production and buoy the price of crude.

But earlier in the week, Stratfor cautioned that an OPEC production cut is anything but inevitable — especially with the Saudis in play.

As the world’s largest oil producer and exporter and the cartel’s undisputed heavyweight champion, Saudi Arabia is the ultimate decider when it comes to the issue of increasing or decreasing OPEC production. Since the Saudis have the most oil, they are the only ones who can take enough crude off the market to make a meaningful difference in price.

Upon arriving in Vienna, Saudi Oil Minister Ali al-Naimi was asked whether his country supports the idea of cutting output when the cartel meets Friday. His answer: “Who said anything about a cut? Prices will be determined by the market.”

We have a feeling a number of leaders in oil-producing countries across the globe nearly went into cardiac arrest upon hearing those words.

Anything can still happen at this OPEC meeting, but Saudi Arabia is very clearly indicating that is in no big rush to prop up the price of oil. On the one hand, you might consider Riyadh crazy not to want to keep the petrodollars flowing at a healthy pace when global demand is sliding. But Saudi Arabia isn’t worried about the cash right now (the Saudis already have a nice cushion of at least US$1 trillion in petrodollars to fall back on.) Riyadh’s plans for OPEC run on a much deeper geopolitical calculus.

The 1973 oil embargo was the first time Saudi Arabia learned what it meant to use oil as a tool of foreign policy. The Venezuelans ultimately knocked the legs out from under the embargo when Caracas decided to fill the gap by increasing its own oil exports. But nonetheless, the Saudis developed a taste for using oil as a weapon. In the 1980s, the Saudis, in private collaboration with the Americans, shifted gears and increased oil production to flood the markets. The Saudi move was one of the variables that helped bring about the collapse of the Soviet Union, allowing the Saudi Arabia to drive a major competitor out of the energy market for a good ten years and dismantle what was at the time the greatest foreign policy threat to the West in one fell swoop.

Since then, the Saudis have used their oil wealth primarily as a means of policy to keep U.S. interests in line with those of Saudi Arabia, particularly when it has come to issues of maintaining Sunni power in Iraq and keeping their Persian rivals in Tehran in check. Now, the Saudis are presented with a situation in which the world’s three major economic centers — the United States, Europe and Asia — are approaching recessions nearly simultaneously. The inevitable global economic slowdown spells bad news for the more-vulnerable oil-producing countries such as Venezuela and Iran, whose regime security is almost wholly dependent on oil prices not taking a deep plunge.

From Saudi Arabia’s point of view, it wouldn’t be such a bad idea to hold out a bit longer and allow the price of crude to drop a few more dollars to drive some select competitors out of the market. For instance, by turning the screws on Venezuela, Saudi Arabia could get payback for 1973 and knock down a major irritant in the U.S. backyard.

The Russians also have reason to be worried. The Saudis do not like the idea of a resurgent Russia, especially when it comes to meddling in the Middle East. With the Russians already suffering from major liquidity problems, draining their oil revenue would help deflate their ambitions even more.

The Iranians, who have most vociferously called for a production cut, are on the top of Saudi Arabia’s geopolitical target list. The Saudis want to prevent the Iranians and their Shiite allies from radically upsetting the regional balance of power that has historically been in favor of the Sunnis. With Iran already under deep economic distress, the Saudis would be more than inclined to knock Iran down a few more pegs.

There are, of course, other side effects to bringing down the price of oil, particularly for countries less hostile to U.S. interests — such as Mexico, Canada and Brazil, which are going to take a hit from a decline in energy revenues. Of most concern for the United States is Mexico, which might require substantial bailouts to prevent the chaos from spilling over onto the U.S. side of the border as the country is already struggling with a fight against powerful drug cartels and a tight fiscal crisis. On the other hand, Saudi Arabia’s major energy clients — including the United States — would greatly appreciate a break in oil prices to help reduce production costs at home and ease the pains of the coming recession.

In any case, it would be foolish to think that the cost-benefit analysis running through Riyadh’s head right now is simply based on short-term income numbers. Major geopolitical opportunities are dancing before the Saudis’ eyes. We’ll see in Vienna just how hard and how seriously the Saudis intend to play.

www.stratfor.com