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November 24, 2007


Battlefield Preparation. The Saudis, the U.S. and anybody else paying attention to the movement of oil is convinced that there is an oil war coming, and those you can get to talk about it are convinced it will be an almost-global economic war that will spill violence into the middle east. The neocons are looking past the next war (which until recently was thought to be Iran, but Pakistan is looming as a neocon "must-invade". Simply put, "we" aint ready yet, so the Saudis are guaranteeing us a few years to get ready, both by keeping the dollar from collapsing, attending Annapolis as a way to relieve some tension in the Palestinian issue, and c alming Pakistan's crisis. You may also throw in deterring Sunni-backed violence in Iraq as a recent Saudi act.


Or, it may be that the Saudis, faced with the decline of their oil fields and with it their influence, are trying to solidify one of the two sides in a global fight. Clearly, if this move (or what I interpret to be this move) is successful, you'll have much closer relations between China and Iran and probably Russia, too.

So who wins that war? And what role does Europe play?

Europe might split again along east-west lines, as the poorer newer members are forced to purchase energy from Russia, or face the kind of manipulation Putin has already displayed. They are energy-hungry with few other alternatives. I think China is likely to be in opposition to Russia, but will it be strong enough to keep off their side? China, Russia, the Stans and the newer European countries, and maybe Iran, on one side, everybody else on the other, with Pakistan in chaos. Grim, huh? That is the economic picture, or one version of it, but the violence will probably be limited the the middle east. That's my version, anyway, your logic may differ, but the economic war is, I think, unquestionably coming.

Who wins? I don't see it (the economic war, anyway) ending in the forseeable future, once it begins in earnest. I think that works out to "I have no idea". Doesn't bode well for the American standard of living in any case. Throw aware in the mix and we are talking $200 a barrel oil. minimum.

And the only one who didn't get an invite would be Iran? If I was paranoid, I'd think somebody was pickin' on me...and I'd be right.

Bush's gambit to control the ME is Ovah!

He's punched-out and standing in the middle of the Ring with his arms hanging heavily at his side - the once Mighty Blow-hard who was Certain that Everyone Else was Fucked-up, not him.

The Saudis let Bush push around the sand dunes for six years, waste $2T, and exhaust our fine Military before they stepped-in and starting calling the shots...

Bush's moral bankruptcy, with the slavering help of a weak and timid Congress, has destroyed Our World-wide reputation as Peace-brokers...and left US financially at the mercy of the Saudis and China.

And every step of the way, Bush was bullying and threatening, raising the terror level and silencing critics with his "I know what's best for all of my subjects" intimidation.

Just look at him now...and don't those Goopers look mighty Sheepish, too.

BushCo are Losers, at Our expense.

wild speculation here....

1) is it possible that sharif represents an alternative both the saudis and musharaff are considering supporting? the reason i ask is that bhutto appears to be rejecting the power sharing arrangement with musharaff that was apparently the planned transition favored by the usa. maybe musharaff is looking for another civilian "partner" to give the appearance of democratic transition (while still remaining in power)- one that the saudis will support (if not the usa).

2) it seems extremely unlikely, imo, that normalization of arab relations with israel in exchange for a return to the pre-67 border is "on the table." here's why:

a) there are about half a million israelis living outside the '67 green line (out of a population of about 7 million) - effectively making a return to the '67 borders a political death trap (politicly and probably literally) for any israeli politician who might support it.

b) given point 2a above, the only way i can see serious negotiations on a return to the '67 green line is with major outside pressure (probably from the usa) forcing (or at least appearing to force) the israeli gov to consider the saudi proposal - as a way to make it politically feasible for the israeli gov. ... and given the political situation in DC, i don't see it being politicly viable here either - unless there are serious backroom dealings and arm twisting by the saudis. but what could their motivation be? do they see this as a path to a more stable ME? why would they want to earn enduring hatred of both the israeli and usa gov.s?

i think there is a more likely interpretation - the saudis are playing for time - attempting to stabilize what they can while isolating iran.

usa plans for pakistan (that musharraf stay in power with bhutto giving the appearance of democratic reform) are not working, so the the saudi's are stepping in with sharif (their preferred bhutto replacement).

the annapolis "talks" (including saudi particpation) are an effort to re-brand the status quo as a "peace process" in order to defuse (at least for a while) pressure for real change. the goal of this is to drive a wedge between hamas and iran to prevent what may be developing ties.

i agree with you - that the saudi "goof" was no such thing, and was most likely a dollar threat directed at us... but i don't see how this fits in. is there some action being contemplated by DC that the saudis are warning us against? if so, it could be anything - including an attack on iran or pakistan, or something important to the saudis that would seem small to us in geopolitical terms.

something must be wrong with me... but i'm seeing kabuki every where i look.


I definitely think Sharif may be acceptable to both the Saudis and Musharraf, though I don't see how it's acceptable to the US, except insofar as it stabilizes Pakistan, even while it may destabilize South Asia.

But if the Saudis are threatening to drop dollars, it may well get us talking about things we otherwise wouldn't. Not saying that's enough for Olmert--who is in deep trouble at home, anyway. But it might mean we'd be pressuring it.

Like Selise, it is hard not to look for hidden meanings in the Kabuki patterns. I am going to stick with the obvious for now though. A) The Saudis, like most in the middle east that have a clue (and unlike Bush), know that any real peace in the region starts with resolution of the Palestinian issue; so they support real efforts on that front and figure participation in the Annapolis talks can't hurt. B) The "ggof" on the dollar pegging is further notice to the neocon warmongers to back off of further invasion of middle eastern soil.

emptywheel -

re: sharif. i can see that he would not be acceptable to the neocons... but why not to the "realists"? i'm guessing that usa elites are quite divided now on these "small" details of how best to maintain usa power.

re: I/P and saudi dollar threats. well, i'm gonna hope you are right and that the saudis are threatening the dollar in order to force DC and israeli gov. to negotiate a genuine peace deal with the palestinians. if the talks take either the previous taba negotiations or geneva accords as a starting place, that will be a signal to me that the talks are genuine (and not simply a rebranding of the status quo as "peace process").

fingers crossed.... but as much as i wish for a two state "solution" along the '67 border, i haven't thought it politically possible since my visit in 2002. so hoping to be wrong.... as i think such as deal is in the best long term interests of the israeli and palestinian people - and indeed the region.


But the problem is, if things have gotten so bad the Saudis can push Bush (and Cheney) around like I think they may be, then things are REALLY bad. We'd be the playthings of the Saudi princes, with only their own self-interest in easing the transition away from the dollar slowly keeping them interested in the well-being of the States at all.

See, as much as I hate Bush, we're getting close to the level of colossal fuckup in both ME affairs and the economy (and of course they're related), that we're really going to have to think about hoping Bush (in this case, Condi) succeeds at a terrible solution, or allowing some infinitely more terrible thing to take the place of Condi's terrible solution.

That is, we face either becoming Argentina, on a grand scale (and there's not TELLING what would happen to the US if the economics get that bad; we're a lot less prepared for economic hardship than the Argentines were), or we're going to be run (indirectly) by people who are much worse than Bush. I hope things haven't gotten that bad yet, but I'm not optimistic.

i guess i've been thinking that things really are that bad (in terms of who has power to dictate our policies)... and if the saudis are using their leverage to do something positive - well, that's better than using it to protect some corrupt deal (see BAE systems). if the saudis feel threatened by an iranian/china alliance, it's possible that could motivate them to act responsibly on the I/P front.

while there are, i think, at least a couple of power centers who can crash and burn our economy (china and opec), at the moment they can only do so by trashing their own economies. sadly, i don't see us using this time wisely... indeed we may be crashing our economy all by ourselves.

there's just way to little info for me to see where this is all going... but as of today, it does not look good. i hope we do not have reason to look back on the bush years as "good times."

krugman says we can not become argentina because our debt is in our own currency. but as our debt levels exceed those of argentina, i don't see how he can conclude that (except that he knows what he's talking about and i don't?).

lizard: nobody wins. Peak Oil is a lose-lose prospect. The only long-term solution is to migrate economies away from using petroleum as an energy source- and that won't solve all the problems, becuase we still need petroleum for plastics production. Transportation use is just the biggest target.

If you haven't done so already, read you some Kenneth Deffeyes. We're already past the peak and on the way down the other side. Global warfare over oil reserves is just the most obvious consequence of declining world oil production. Wait until food production crashes becuase there is no petroleum left to make fertilizers for agricultural use.

I think Krugman is correct in that statement; but saying we cannot become Argentina is meager food for starving souls. I would also think that, while having most all of our debt in our own currency is good as far as allowing a range of options to prevent total collapse, it may well also present roadblocks to fast restructuring and recovery. I also think that two plus decades of neglect and evisceration of our physical, educational and social safety net infrastructure is going to geometrically exacerbate the pain and recovery effort.

bmaz: remember the bumper stickers after Florida 2000 that said something like "we're all wearing the blue dress now" ... ?

Your comment makes me imagine something similar, along the lines of: "we're all from New Orleans"

Tekel, I fear there is some sad truth to that.

EW, the number of times that I have marveled at your ability to offer up odd tidbits and connect dots that others seem to miss cannot be counted. But this one, IMHO, is a stunner.

The complexities of US (and global) politics escape me, as they escape any human mind. I generally try to imagine that I'm watching this sh*t play out from some distant planet. (It makes me less angry.) But for at least four years now, it's seemed increasingly evident that Cheney and the Neocons are repeatedly boinked by some external source. I'd always assumed the source was Israel, or perhaps Darker Forces related to pre-revolutionary Iran. (Assuming that those Niger forgeries connect Iran+Neocons via: Italy > ?Ghorbanifar > IranContra (i.e., GHWB's CIA resources on behalf of Global Capitalism??) > ? Ghorbanifar&maybeChalibi? > Ledeen&Neocons). In other words, some toxic mix of old CIA operatives with malcontents who lost out on sumptous, wealthyForever lives when those revolutions started rolling around the ME 25 years ago, and who sought to game the US into getting their national wealth back for them. That's one wildarse guess; I have no clue how the world actually functions. The point is that NONE of those players would give a rat's ass about a functioning DoJ, or a functioning FBI, or a system of laws. NONE of those people give a rat's ass about 'good government', although they want the facade of 'democracy' (free elections, the appearance of courts, and contract law) because they need 'contracts' to legitimize resource grabs. But apart from 'democracy' as a means to grab resources, they don't really give a sh*t. Apart from DemocracyAsFacade for contracts that legitimate extracting resource wealth, I don't see any common patterns among those players.

I view this whole disaster as a Morality Play (lack of ethics, tolerance of lies leads to loss of trust, and loss of respect, which translates to greater weakness...). Shorter: unethical conduct is a good short-term, profit-taking strategy, but a disastrous longer term proposition.

I think that most Americans, BECAUSE we believed in 'the rule of law' were willing to take a deep breath over that stolen 2000 election and have faith that the system would right itself. That naive view failed utterly to consider the very sobering possibility that BushCheney 'handlers' were not Americans, and not acting in American interests. Or, to flip the coin over, too many of us failed to recognize that 'globalization' meant that the uber-wealthy class is now more invested in moving capital around the globe with no government interference of any kind, than they were (emotionally, financially, psychologically) invested in any distinctively American type of government. Therein lay our error.

I think things have become as grim as you state. (Worse if you toss in global warming, resource scarcity, and water issues.) Like you, as much as I despise Bush and find Cheney reprehensible, they've handed our collective asses on a platter to forces who don't give a rat's ass about our wellbeing.

Condi won't succeed. Someone else might, and allow her to take credit. But read Scott Horton's interview with Craig Unger (over at No Comment); it synchs with every other thing that I've read by any thoughtful analyst about Condaleeza. Grim.

Perhaps Baker Botts is behind the scenes trying to salvage the current disaster. But a check of the Iraq Oil Report blog shows that at least some within US Admin aren't happy with Baker Botts (but who's p*ssed, and why, is still illusory). Who knows what tug-of-wars are happening between the Saudi's, the neocons, the Israeli's, and Baker Botts? (Perhaps if Sara comes by, she'll shed some light; she always has amazing insights, too.)

Anyway, your ability to bring seemingly disparate 'dots' together and ponder their collective meaning is a constant source of amazement to me. With respect to this post, I (sadly) happen to think that your hunches are, if anything, probably understated.

As for Europe and Russia (and energy politics), Google 'Gazprom'. Word of friendly advice: have a stiff drink next to your keyboard before you read too many details. Nice people? Probably only if you're a close relative.

As for 'predictable outcomes' -- in a world with mushrooming populations in very poor nations, with Flash drives, cell phones, and too many undernurtured, underfed people -- the whole notion of 'predictable outcomes' strikes this reader as foolhardy. Syriana, indeed.

Note to self: Must. Write. Shorter. Comments.
And now... back to work 8(

Tekel - Most peak-oil hysteria fails to take into account the gradualness of the curve, that is, the very very long depletion time. This allows a much softer and more gradual shift to other energy sources. As the curve of production descends, more money (hypothetically) is generated (as a percent of petro prices) to pursue ever-more expensive means of energy production. Why the gradualness of the curve is so important is this: in most of the alternate-fuel cases, ALL of the increase in production costs over petroleum are frontloaded, and after the initial investment is made, the costs drop off dramatically in a fashion that mirrors the petroleum production decline. The economic war will not be about the quantity of oil available as much as where the profits will be allocated.

I agree with EW that you have to root for success on this one, but I don't think it is achievable with the players who will be siting at the table.

Steve Clemons has a post up on this as well, and he and lotus at folo had an exchange about it:
and there is also this related piece:
with info from some other sources, including the Pakistani paper, Dawn.

which includes this:

. . . the Saudis had been stung by criticism in Pakistan since September, and were mindful of general elections due on January 8. “They don’t want Saudi Arabia to become an election issue in Pakistan. They conveyed to Nawaz Sharif that there’s no reason why we should keep him,” he said.

Pakistan is the haven for al-Qaeda and pretty much spawned the Taliban and supported the mujahadeen elements. It is physically closer to Saudi Arabia and it is peppered with elements who are not happy with the Saudi Royal Family and who also have ties with the Pakistani ISI and military. So I think in part the Saudis are just wanting to rid themselves of someone who brings more attention from hostile groupings to bear on them.

And as to the talks, where Clemons has much the same take as EW, I have to say that this:

Of significance, Bush will personally participate in the Annapolis conference,

may show how much Bush is finally taking an interest, but it is not a good sign for progress. He's destruction and chaos in cowboy boots that will never touch a stirrup.

Readeroftealeaves...Your comment about who the Bush/handlers were from the beginning is the worst fear of many americans, almost too difficult to comprehend. I think also this is why the 911 issue, along with the Bush bankruptcies and bailouts by the Saudi's, The Bush dynasty long term family relationship with the Saudi Royals, all make sense. I think someone was telling Bush not to act on the terrorist threats. I continue to think that he allowed 911, but this of course, it just my gut feeling. I think the Bush's through greed have been manipulated by the Saudi's for a very long time.

There is only one real solution. It is to develop an alternative fuel source and to hell with the oil cartel. It's the same decision that a battered woman must make when she leaves an abusive relationship. It will be most difficult in the short term, but it's the only way for America to become America again.

There is short term comfort in staying. It's very much like the analogy of the frog in the warm water slowly set to boil. We must get out of the relationship and the dependency with these nations. We must accept that our gov't is corrupt and that it is the dependency on oil making it corrupt.

It was very concerning when Cheney went for his very quiet special meeting with the Saudi Prince and this summer and left without success. I thought at the time that the Bush regime was likely just coming to the realization that they were never in charge.


Game. Set Match.
We need to get our asses in gear.

Katie, thx. No clue how the world works, but the levels of complexity are beyond humans to comprehend. Which is no reason not to pay attention.

I don't spend much energy on 9/11. I'm just collassally weary of political preening and mutual insults from insolent, screwed up people, who continue to ignore underlying biological dynamics related to global warming, oil dependency, and risks to food and water supplies. While they fight over nukes, the world gets more polluted by the day. Very self-defeating and foolish.

reader -

Thats the problem isn't it? Over Thanksgiving dinner mom sez (85-year-old mom... raised by my grandmother) she was worried about Muslim's coming to this country and chopping off her head. And she was serious.

On the flight home I was shaking with anger. Mom - 85 years old, was worried about having her head lopped off. Who the fuck made her that way. WHO!?! I want to grab those bastards and beat the living shit out of them. My 85 year old mom is afraid her head is going to be cut off. Really afraid. This isn't coming from nowhere. This is beyond evil. Its not on the news.. but I want it to be. Its criminal fraud. No... its just criminal.

readerofTeaLeaves said

I have no clue how the world actually functions.


That's why I spend my time here and in other similar places.

I'm 25, and I want to know.

Has anyone ever thought of combining blog and book club? That is something that really needs to happen. ... ... ... If you do it right, it has the potential to become an auto-directing online college. Self-assembling classrooms, shifting avenues of inquiry...

Hm. This is where the internet meets the deschooling movement.

I bet some of what I just said will actually come to pass sometime. I may need to make some efforts so that it happens in time for me to benefit from it though. That or just go back to real school I guess.


Here's what I want to know.

In the battered woman analogy, it really is technically possible for the battered woman to leave her husband. It is a huge mental and social leap, and the economic consequences are very real if temporary, but it is literally possible: there's a hostel, a shelter, something, somewhere, and the ability to eat, stay warm, be employed, and provide for children does in fact exist.

What I don't know (and it's a simple technical question, at first at least) is what the non-oil alternatives really are, and if they really are adequate to national survival. Is there really anywhere else to go with present technology? If we by magic elected a government not personally tied to the situation (that is, definitionally corrupt and compromised), are there solutions that exist that we could invoke? Because that question is the difference between 1) we could do this right now but won't because it is not to the benefit of the American Ruling Class and 2) we can't do this.

Now, even a technically feasible solution may not be politically feasible; ie, supposing we could go to 100% nuclear electricity in 5 years, the Saudis could still just yank the dollar out from under us or take any number of other deterrent actions, and we'd just be giving China free oil, etc. But there is still some interaction between technical limitations and political limitations, and at some point I'm gonna have to go track down a sense of how much of our limitations are technical.

... this was a rather crude (no pun!) way of discussing this subject, but I'm in a bit of a rush now, sorey.

There is no fast solution, which is part of the problem...they, the oil cartel fights back. The technology exists, the problem is the infra structure, the power structure (power as in money). They will fight a large scale shift and they have the money and resources to fight it.

Does the technology exist. I would say "yes". Does the infrastructure exist, and would it be supported so that large scale change can take place. Not by the people with the gold today. He who has the gold has the power.

It will have to be a large group of people who gather a lot of money and as much power as they can, to make a big change. This will be fought at every turn. It is not a simple solution.

I get your point however, that an alternative is an unknown. But many scientists don't feel that it's an "unknown". The problem isn't the technology it's putting it in place. That is the monumental job and it is questionable as to whether or not that could get done. It would take the american people being willing to fight for a long term picture. This, more than technology has been the problem since the 1920's.

It would take the american people getting passionately behind "the solution". It would be a monumental task. But it must be done. To save the earth, and to save our country.

We cannot stand by and wait, we need capitalists who want power, who want to beat the oil cartel. But whoever wins that competition, wins the power.

On Annapolis (as in relation to many other events) I would recommend reading Tony Karon.

pretty remarkable given Israel's apparently successful recent strike in Syria.

You don't really believe Syria was constructing an above ground reactor facility, do you?

Why would Syria they act in the open and leave a strategic asset vulnerable to destruction.

Its as if Syria faxed the IDF targeting solutions.

I understand why it matters who buys U.S. debt but it was my understanding that pegging any commodity to a currency only added a benefit in transaction costs (for exchanges, etc.) that is very small relative to the economy.

Here's economist John Quiggin of Crooked Timber on the subject in '03:

"The US directly benefits from the ‘reserve currency’ status of the dollar through international seignorage, that is, the fact that the US government can print dollar notes for which foreigners, notably in Eastern Europe, are willing to exchange real goods and services. A shift towards the euro would reduce or eliminate this benefit. However, as Lawrence H. Meyer of the US Federal Reserve Board of Governors, has observed, the total benefit of international seignorage is about $US15 billion per year - not much of a motive for a war that has already cost about $US50 billion and is likely to cost much more. [...]

The [UK Centre for Economic Policy Research] conclude that the impact of the euro replacing the dollar for most international transactions would be:

The consequence could be a welfare gain of 0.5% of GDP (annually) for Europe, with a similar loss for the US as well as the other economic and geopolitical attributes of the hegemonic world currency.

On this estimate the cost to the US would be around $50 billion per year, still well below the cost of maintaining military hegemony, which will certainly raise annual US defence expenditure by at least $100 billion per year, while having only a marginal impact on currency hegemony."


Any thoughts?


No, not at all--I don't think it had anything to do with nukes. But I do think it had something to do with proving to Syria and Iran that it could bomb them if it wanted and that it was in their shorts as far as surveillance.

In other words, it was designed--regardless of what the target was--to intimidate Syria and push it to make concessions. If so, then why may Syria be coming to a negotiating table with more in hand than it has had in my lifetime?


I'm definitely not an economist, so I you shouldn't accord what I'm about to say with too much weight. While I accept that the current benefit from being the exchange currency may be small, I think the dollar exchange is important in two different ways.

1) If the euro becomes the reserve currency, that means the trillions of dollars developing nations (in particular) now hold in dollars will become trillions of euros instead. That would mean there would be a MUCH greater demand for euros and a MUCH lower demand for dollars, which would basically tank the dollar. (See, here the emphasis is on reserve currency rather than exchange.) Arguably, that's one of the two biggest factors in the fact that the dollar is currently tanking (the other being that our interest rates are so low that it's not worth investing in bonds). If the Saudis were to move away from the dollar as the unit of oil exchange, it would accelerate the move away from teh dollar as reserve currenct, and probably pretty precipitously (they're definitely moving in any case, though they appear to be trying for a soft landing for the dollar).

2) If the world moves away from the dollar, it's going to change how we incur debt. Meaning we, like the rest of the world, can't go into debt in a currency that we can also print. That'll take a longer time to happen. But if it does, it'll mean we'll have to dramatically cut back on govt services, bc we can't afford them.

Rice won't fire State department employees breaking the contracts. They have their own foreign policy agenda and use Iraq to achieve it and their goals as employees - eliminating the requirement to work anywhwere(why they are paid so much).

Bush and the Saudis will make no difference. Rice won't be making any history.

Lebanon and Syria just want money. That is all the Isreali invasion was; money from Rice. Lebanon got allot and soon Syria will be treated fairly after the CIA bio terror truck rumor has been sold off by Plame.

What about the lone wolf terrorist group that is threatening the summit? Do they operate alone in their own cell like Jack? Are they trained? Are they going after the subs or is it a dirty nuke Jack Bauer scenario or bio terror? What would make them all act at once if they are their own cells? Is there some code like Saudi or something? Pakistan is getting 750 million in USAID and now the Saudis force the sherriff back to town. Is he a religious sherriff like in Iran and is that why the terrorists are acting at the summit becuase of the huge cash out pay from the CIA to Pakistan and the ability to pay terrorists like special forces and NGOs did in Afghannistan? When the money is cut off, will these lone wolves attack or are they attacking in anticipation of payment at the summit? If they are attacking in anticipation, will they respond when themoney is cut off with an insurgency or does CIA need to pay them again?

Oh ya, the oil is going to be above US dollars and that is really popular world wide.

;) good news.

consolidated pakistani news at


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