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7 April 2003updated 27 Sep 2015 5:20am

It’s all about control, not the price of petrol

After the war, a new, US-dominated oil cartel will determine economic prospects in China and India

By Mark Almond

Few things get Tony Blair as angry as the charge that the war is all about oil. Trust me, he seems to be saying, the price of petrol will not fall with victory.

There is a lot of evidence that the Prime Minister is telling the truth when he swats simplistic theories that the war is about making oil cheaper so that America’s SUV drivers will back George W Bush in November 2004.

Ironically, the only point of agreement between many supporters and opponents of the war is the belief that a coalition victory will deal a death blow to Opec and so oil will flow more freely and cheaply afterwards. As usual, the consensus is wrong.

Tony Blair and front-line propaganda ministers such as Peter Hain have a point when they insist that Saddam Hussein “would sell his oil to anyone”, so why fight an expensive war to get it? Britain is self-sufficient in oil and America buys proportionately much less oil from the Gulf than do non-belligerents such as France or Japan. But the obsession with price overlooks the question of ownership. Profit is good, but control is better.

US and British taxpayers may be funding a war to liberate Iraqis or hunt down weapons of mass destruction, but America’s strategists are using their money to fight for a monopoly of the global oil market. They don’t aim to push down prices for US consumers, let alone squeeze profit margins, but to provide a key tool for disciplining potential rivals to the US in the future.

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When Dick Cheney was defence secretary under George I, he drafted the Pentagon’s long-term plan to deny any state the possibility of challenging US hegemony after the cold war. The doctrine of pre-emption now carried out in Iraq (and threatened against Syria and Iran in the near future) is just the implementation of that strategy. But the real targets of Washington’s neoconservatives are outside the Arab world. The domination of the Middle East underpins a wider strategic aim. With only 5 per cent or so of the world’s population but more than 20 per cent of the world’s economy, American strategists fear that rapidly growing rivals such as China and India could begin to challenge US dominance in the coming decades.

But both China and India have the same Achilles heel: growing dependence on oil imports as the consequence of economic and population growth.

China’s oil imports rose 15 per cent last year. This year, China is developing a strategic oil reserve, and its oil imports are predicted to continue to rise. Forty per cent of China’s current needs are already imported; by 2020, imports will account for more than half. Even if China’s economy and energy use grow only at a modest 5 per cent – well below the past decade’s growth rate – energy bottlenecks could become acute, especially if a US-organised Opec restricts sales.

Saudi Arabia and Iran are roughly equal as chief suppliers to China, but if Iran follows Iraq under a US-sponsored regime, China could find its oil supplies controlled by a ring of Anglo-American companies with hotlines to the Pentagon and Whitehall.

India sees the Middle East as the obvious oil supplier with the shortest transport routes, but Indian strategists worry that Arab producers might back Muslim Pakistan in a future conflict. They now anticipate that a US-dominated region might use the oil weapon to pressure New Delhi to obey Washington’s agenda.

What an Anglo-American victory will mean is control of supply. The US plans for postwar Iraq include privatisation of the oil industry. Who doubts that when Iraq’s assets are auctioned off, the man wielding the gavel will be an American general? Unlike Saddam Hussein, the winners in that auction won’t sell their oil to just anyone.

Sanctions and blockades are routine features of US foreign policy. America may have been outraged by Opec price hikes in 1973-74 and 1979-80, but Washington happily uses economic coercion on a daily basis – and not just against pariahs like Iraq. With the bulk of the world’s known oil reserves under its protection in a post-Saddam Middle East (backed up by the US role in central Asia, where China fears another US foot on its fuel pipeline), America will be able to switch off the Chinese economic boom.

Far from promoting a free market in oil, a coalition victory will create the greatest cartel in history. Emerging markets and emerging superpowers such as China and India, as well as potentially awkward rivals for market share such as Russia, will find themselves disciplined by a price-and-supply mechanism operated by Washington. For the rest of us, there will be higher taxes and interest rates to pay for the wars that bring about this new world order – but at least petrol prices won’t fall, so we don’t need to feel hypocritical about backing our boys after all.

The author is fellow of modern history at Oriel College, Oxford

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