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Advancing Austrian Economics, Liberty, and Peace

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Making Economic Sense
by Murray Rothbard
(Contents by Publication Date)

Chapter 93
Why the Intervention in Arabia?

Amidst the near-universal hoopla for President Bush's massive intervention into the Arabian Peninsula, a few sober observers have pointed out the curious lack of clarity in Mr. Bush's strategic objective: is it to defend Saudi Arabia (and is that kingdom really under attack?); to kick Iraq out of Kuwait; to restore what Bush has oddly referred to as the "legitimate government" of Kuwait (made "legitimate" by what process?); to depose or murder Saddam Hussein (and to replace him with whom or what?); or to carpet-bomb Iraq back to the Stone Age?

There has been even less discussion, however, about a somewhat different even more puzzling question: why, exactly, are we suddenly hip-deep into Saudi Arabia? Why the hysteria? Why the most massive military buildup since Vietnam, and the placing of almost our entire army, air force, navy, marines, and a chunk of reserves in this one spot on the globe where there is not even a U.S. treaty obligation?

(1) Big guy, little guy. What is puzzling to some of us is crystal clear to General H. Norman Schwarzkopf, commander of U.S. forces in "Operation Desert Shield." Growing testy under media questioning, the general replied: "Don't you read the papers? You all know why we're here. A big guy beat up a little guy and we're here to stop it."

The general was obviously using the Police Action metaphor. A big guy is beating up a little guy, and the cop on the corner intervenes to put a stop to the aggression.

Unfortunately, on further analysis, the Police Action metaphor raises far more questions than it answers. Aside from the obvious problem: why is the U.S. the self-appointed international cop? The cops, seeing the bad guy flee and lose himself in his neighborhood, do not surround that neighborhood with massive force and starve out the entire neighborhood looking for the bad guy. Still less do cops carpet-bomb the area hoping the bad guy is killed in the process. Cops operate on the crucial principle that innocent civilians do not get killed or targeted in the course of trying to apprehend the guilty.

Another crucial point: governments are not akin to individuals. If a big guy sets upon a little guy, the aggressor is invading his victim's right to his person and to his property. But governments cannot be assumed to be innocent individuals possessing just property rights in their territory. Government boundaries are not productive acquisitions, as is private property. They are almost always the result of previous aggressions and coercion by governments on both sides. We cannot assume that every existing state has the absolute right to "own" or control all the territory within its generally arbitrary borders.

Another problem with the alleged principle of the U.S. cop defending all borders, especially those of little states: what about the big U.S. government's own invasion of decidedly little Panama only a short time ago? Who gets to put the manacles on the U.S.? The usual retort was that the U.S. was "restoring" free elections in Panama. An odd way to justify intervention against Iraq, however, since Kuwait and Saudi Arabia are each absolutist royal oligarchies that are at the furtherest possible pole from "democracy" or "free elections."

(2) Saddam Hussein is a very bad man, the "Butcher of Baghdad." Absolutely, but he was just as much a butcher only the other day when he was our gallant ally against the terrible threat posed to the Gulf by the fanatical Shiites of Iran. The fanatical Shiites are still there, by the way, but they--as well as the Dictator of Syria, Hafez Assad, the Butcher of Hama--seem to have been magically transformed into our gallant allies against Saddam Hussein.

(3) But some day (three but more likely ten years) Saddam Hussein may acquire nuclear weapons. So what? The U.S. has nuclear weapons galore, the result of its late Cold War with the U.S.S.R., which also has a lot of nuclear weapons, and had them during the decades that they were our Implacable Enemy. So why is there far more hysteria now against Saddam than there ever was against the Soviet Union? Besides, Israel has had nuclear weapons for a long time, and India and Pakistan are at the point of war over Kashmir, and they each have nuclear arms. So why don't we worry about them?

The appeal to high principle is not going to succeed as a coherent explanation for the American intervention. Many observers, therefore, have zeroed in on economics as the explanation.

(4) The Oil War. Saddam, by invading Kuwait and threatening the rest of Arabia, poses the danger, as one media person put it, of being "king of the world's oil." But the oil explanation has invariably been posed as the U.S. defending the American consumer against an astronomical raising of oil prices by Iraq.

Again, however, there are many problems with the Oil Price explanation. The same Establishment that now worries about higher oil prices as a "threat to the American way of life," treated OPEC's quadrupling of oil prices in the early 1970s when we were far more dependent on Gulf oil than we are now, with calm and fortitude. Why was there no U.S. invasion of Saudi Arabia then to lower the price of oil? If there is so much concern for the consumer, why do so many politicians long to slap a huge 50 cents a gallon tax on the price gasoline?

Indeeed, it is clear that the power of OPEC, like all cartels, is strictly limited by consumer demand, and that its power to raise the price of oil is far less than in the 1970s. Best estimates are that Saddam Hussein, even conquering the entire Gulf, could not raise the oil price above $25 a barrel. But the U.S., by its embargo, blockade, and continuing threats of war, has already managed to raise the price of crude to $40 a barrel!

In fact, it would be more plausible to suppose that the aim of the massive Bush intervention has been to raise the price of oil, not to lower it. And considering Mr. Bush's vice presidential visit to Saudi Arabia specifically to urge them to raise prices, his long-time connections with Texas oil and with Big Oil generally, as well as Texas's slump in recent years, this hunch begins to look all too credible.

But the likeliest explanation for the Bush intervention has not been raised at all. This view focuses not on the price of oil, but on its supply, and specifically on the profits to be made from that supply. For surely, as Joe Sobran has emphasized, Saddam does not intend to control oil in order to destroy either its supply or the world's customers whom he hopes will purchase that oil.

The Rockefeller interest and other Western Big Oil companies have had intimate ties with the absolute royalties of Kuwait and Saudi Arabia ever since the 1930s. During that decade and World War II, King Ibn Saud of Saudi Arabia granted a monopoly concession on all oil under his domain to the Rockefeller-control-led Aramco, while the $30 million in royalty payments for the concession was paid by the U.S. taxpayer.

The Rockefeller-influenced U.S. Export-Import Bank obligingly paid another $25 million to Ibn Saud to construct a pleasure railroad from his main palace, and President Roosevelt made a secret appropriation out of war funds of $165 million to Aramco for pipeline construction across Saudi Arabia. Furthermore, the U.S. Army was obligingly assigned to build an airfield and military base at Dhahran, near the Aramco Oilfields, after which the multi-million dollar base was turned over, gratis, to Ibn Saud.

It is true that Aramco was gradually "nationalized" by the Saudi monarchy during the 1970s, but that amounts merely to a shift in the terms of this cozy partnership: over half of Saudi oil is still turned over to the old Aramco consortium as management corporation for sale to the outside world. Plus Rockefeller's Mobil Oil, in addition to being a key part of Aramco, is engaged in two huge joint ventures with the Saudi government: an oil refinery and a petrochemical complex costing more than $1 billion each.

Oil pipelines and refineries have to be constructed, and Standard Oil of California (now Chevron), part of Aramco, brought in its longtime associate, Bechtel, from the beginning in Saudi Arabia to perform construction. The well-connected Bechtel (which has provided cabinet secretaries George Schultz and Casper Weinberger to the federal government) is now busily building Jubail, a new $20 billion industrial city on the Persian Gulf, as well as several other large projects in Saudi Arabia.

As for Kuwait, its emir granted a monopoly oil concession to Kuwait Oil Co., a partnership of Gulf Oil and British Petroleum, in the 1930s, and by now Kuwait's immensely wealthy ruling Sabah family owns a large chunk of British Petroleum, and also keeps enormous and most welcome deposits at Rockefeller-oriented Chase Manhattan and Citibank.

Iraq, on the other hand, has long been a rogue oil country, in the sense of being outside the Rockefeller-Wall Street ambit. Thus, when the crisis struck on August 2, the big Wall Street banks, including Chase and Citibank, told reporters that they had virtually no loans outstanding, nor deposits owed, to Iraq.

Hence, it may well be that Mr. Bush's war is an oil war all right, but not in the sense of a heroic battle on behalf of cheap oil for the American consumer. George Bush, before he ascended to the vice presidency, was a member of the executive committee of David Rockefeller's powerful Trilateral Commission. Mr. Bush's own oil exploration company, Zapata, was funded by the Rockefeller family. So this Oil War may instead be a less-than-noble effort on behalf of Rockefeller control of Middle East. 

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