Transcript (Edited) – The Corona Virus Spreads Through The Middle East (Continued) – Part Two. KGNU 1390 AM, 88.5 FM – Hemispheres, Middle East Dialogues with Ibrahim Kazerooni and Rob Prince. Tuesday, April 28, 2020. 6-7 pm Mountain Time. Hosted by Jim Nelson.

Iranian medical workers in April, when the Coronavirus started finally to slow and slipped below 1000 cases a day for the first time. Photo Credit: al Jazeera

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The addition of oil from shale on the international market was already lowering the price per barrel of oil to such a degree that it was hurting all oil producing countries. Venezuela had to be included as well. Then the coronavirus pandemic comes along and does its damage but the interesting thing is – what is it that is collapsing? – What’s collapsing is the U.S. domestic oil industry. The oil shale industry. It’s in trouble, I don’t see it lasting much longer.

Rob Prince

The other issue is the risk of confrontation either by accident or by design. When too many U.S naval vessels in the region (Persian Gulf) – in that small restrictive space where the Iranians are agitated and they want to prove that they can defend their own country and their own waters, accidents are almost inevitable, some unforeseen event that leads to a confrontation between two warships – one that fires, the other responds… and that is ‘the beginning of the end.’

Ibrahim Kazerooni

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Part Two: (continued from Part One)

Ibrahim Kazerooni: Rob, you spoke earlier about the oil glut, can you shed a little bit of light now and explain its origins?

Rob Prince: Yes, I wanted to delve into this a little bit more because in a certain way, it all kind of comes together – the oil glut and the Middle East.

If you look at the U.S. oil shale industry, it never made sense economically – and still doesn’t. Meaning what? That to process the shale and get the oil from it is very costly, It’s quite different from drilling a hole in the ground in Saudi Arabia or Libya or Iran.

Ibrahim Kazerooni: By the way Rob, you are right – the wells are unstable. What is the reality? The reality is that oil has been entrapped in porous holes in different kinds of sand and rock, To get at it, what is necessary is to drill three, four, five holes and then inject either brime or steam or the like so that the mix of oil and rock liquefies so that it can be extracted from the ground.

It’s totally different from Middle East oil extraction.

Rob Prince: Yes, it’s a very complex process and of course a very polluting process.

Given that both the (U.S.) government and the major oil companies are well aware of what we just described, Ibrahim, one has to wonder why are they engaged in such a non-cost effective process anyhow.

Why are they doing it?

The answer goes back to the early years of the George W. Bush Administration when the then vice president, Dick Cheney, who more or less ran the show, put together put together a big energy task force that produced a report. One of the conclusions of that report was that the United States had grown too dependent upon Middle East oil in a region of “unstable governments” – I think that was the term used and that Washington should work towards “energy independence.”

What that meant was expanding oil development particularly in sub-Saharan Africa to increase production there, but quite frankly, everywhere else as well, although sub-Saharan Africa then got a big shot in the arm.

Another part of the program was to increase U.S. domestic oil production. The problem was that there wasn’t as much “plain oil” – the kind extracted from the ground in Texas and Oklahoma – left in the ground to begin with.

What was driving increased domestic production thus was not market economic considerations but rather the strategic position of the United States visa vis the oil industry.

But there was another fact involved: to put pressure on other producers to undermine OPEC in particular and some oil producing “adversarial” countries – Russia and Iran. As the U.S. domestic oil industry grew, it put pressure on the global oil market – to flood it, perhaps not to the degree it is now – to reduce its price and profitability. The price of oil would be kept low.

In those days, this was a way to undermine the Russians who were shifting gears with the passing of Yelstin and the emergence of the Putin government. That was a big factor.

And certainly – this is just prior to the 2003 U.S. led invasion of Iran – Washington had its eyes on weakening Iran, Iraq and what were then the more secular oil producing countries of the Middle East, all those outside of the U.S. orbit. The whole purpose of developing the domestic oil shale industry was political. From an economic view point it never made any sense anyhow.

The addition of oil from shale on the international market was already lowering the price per barrel of oil to such a degree that it was hurting all oil producing countries. Venezuela had to be included as well. Then the coronavirus pandemic comes along and does its damage but the interesting thing is – what is it that is collapsing? – What’s collapsing is the U.S. domestic oil industry.The oil shale industry. It’s in trouble, I don’t see it lasting much longer. 

Ibrahim, you wanted to interject?

Ibrahim Kazerooni: Yes, perhaps around the beginning of the millennium, around the year 2000, there were specific countries that the U.S. Administration targeted with fluctuating oil prices but if we return all the way to 1970, using the excess capacity of Saudi Arabia and a few of the Emirates in the Persian Gulf, the United States was all along undermining OPEC.

Rob Prince: OPEC and Russia.

Ibrahim Kazerooni: Russia, at the time the Soviet Union. But at that time Kissinger and others said that OPEC needed to be turned into a useless organization that would not be able to control oil prices – as the prices had to be controlled by the U.S. Administration.

So now the Trump Administration is doing exactly the same thing, but this time instead of targeting OPEC – because now Russia is there, they are targeting particular countries like Venezuela, Iran, Russia.

What is strange is that they have tried it (flooding the oil market to lower the price of oil) a couple of times over the past four or five years. Every time it has boomeranged back, resulting with a negative effect on the United States. And yet they still go ahead and do the same thing.

Rob Prince: Ibrahim, besides talking about oil shale and the oil glut, I wanted to respond to your comments about the current U.S. threats to Iran and Trump’s tweet that if Iranians “harass” – a very vague term – American ships in the Persian Gulf, that those ships should fire on Iranian vessels. All kinds of potential scenarios here – a war could start by accident, it could be a planned provocation, etc.

When I first heard of Trump’s tweet, I have to admit that from a rational viewpoint it didn’t sound logical that it this moment in time that the Trump Administration would want to go to war with Iran. It’s got so many reasons not to:

So what are the themes suggesting that this is not the moment for the United States to go to war with Iran.

1. One of the themes on which we’re just scratching the surface is the fact that this [coronavirus] pandemic has already hit the U.S. military and particularly U.S. military forces on foreign military bases and on naval vessels.

How serious is this? We got a hint of it from the spread of the pandemic on the Theodore Roosevelt. It suggests that from the viewpoint of fighting a war that the health of the U.S. military is suffering.

Remember how the American government has worked for some time now, since Vietnam days actually. What’s the post-Vietnam rule? The rule is that if the United States is going to go to war, it does so with assurances that it is going to win. The United States is not sure of the outcome in a war with Iran.

Interestingly enough, it is particularly the people at the highest ranks of the U.S. military have taken the Iranian statements of a swift and extensive military response to any U.S. attack very seriously. Iran has proven (the missile attack on Al Asad military base in western Iraq) that it can hurt the United States militarily in its response to the assassination of [Qassem] Suliemani.

There are too many question marks concerning the costs of going to war against Iran at this time.

2. There is also the fact that Donald Trump is in deepening trouble every day over the poor and irresponsible handling of the coronavirus pandemic, going from bad to worse. And what we’re seeing is that his standing in the polls is starting to plummet. A couple of months ago his poll standings were actually rising. He was getting 47-48% approval ratings in national polls. But now they are dropping precipitously.

What’s the card he’s always played? It doesn’t matter what he does but if the economy – as measured by the stock market – continues to grow, there is a good chance he’ll get re-elected, even if it’s along the neo-liberal lines that his Administration is wed to. Well now we’re on the edge of who-knows-what – but from all appearances, a depression that will match the Great Depression of the 1930s, if not worse.

So to go to war at such a moment as to whether the war could be won as the country (and the world) is entering a period of extreme economic hardship will effect not only the country but the world as a whole.

From a rational point of view my take is that this isn’t the time and the United States isn’t going to strike Iran but the problem is we’re dealing with Trump (and his apocalyptic foreign policy advisers.

Finally as we’ve said on this program repeatedly, we remind listeners of how the situation differs from the Cold War days. During that time, when there was some misunderstanding between the United States and the then Soviet Union, either the U.S. president or the Soviet Secretary General could pick up the “hot line’ and ask “Hey, Is this really serious; what’s going on? What are you doing?” – and could get a response. That direct contact between the world’s two greatest nuclear powers, led to a reduction of tensions.

In this situation (between Washington and Teheran) there is no direct communication, – none, between the United States and Iran on this level. So misunderstandings – rather than being reduced – can swell into much larger crises.

Ibrahim Kazerooni: Rob, remember we debated this question around 2003, 2004 if my memory serves me correctly.

At that time we asked the same question, what’s the rationale for invading a country that doesn’t have anything – which was the case with Iraq. If we were to approach possible war against Iran today from a rational viewpoint, saying exactly what you said concerning the weakness of the United States, and also taking into consideration the military capabilities of the Iranians who have proved that they are prepared to use their weapons if they are pressed up against the wall, then it is reasonable to conclude that it is highly unlikely that war between the United States and Iran is about to break out.

But at the same time one has to be mindful – as you noted – we’re dealing with Donald Trump.

The other issue is the risk of confrontation either by accident or by design. When too many U.S naval vessels in the region (Persian Gulf) – in that small restrictive space where the Iranians are agitated and they want to prove that they can defend their own country and their own waters, accidents are almost inevitable, some unforeseen event that leads to a confrontation between two warships – one that fires, the other responds… and that is “the beginning of the end.”

Rob Prince: And then you have those who would want to provoke this kind of a war – the Israelis, the Saudis – those pushing the United States to do the dirty work that they would like to see done in the region.

So there are these unknown factors.

Finally as we’ve said on this program repeatedly, we remind listeners of how the situation differs from the Cold War days. During that time, when there was some misunderstanding between the United States and the then Soviet Union, either the U.S. president or the Soviet Secretary General could pick up the “hot line’ and ask “Hey, Is this really serious; what’s going on? What are you doing?” – and could get a response. That direct contact between the world’s two greatest nuclear powers, led to a reduction of tensions.

In this situation (between Washington and Teheran) there is no direct communication, – none, between the United States and Iran on this level. So misunderstandings – rather than being reduced – can swell into much larger crises.

Congested waters in the Persian Gulf (note – many of these are oil tankers – Add to this congestion, military vessels to get the broader picture)