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“Libya: The Gathering Storm: Turkey, Egypt and the Wrestling Match for Libyan Oil” Tuesday, July 28 2020. KGNU: Hemispheres, Middle East Dialogues – Segment 1

July 31, 2020

Turkey’s political wet dream: ship natural gas from E. Libya to Turkey and from there to Europe.  Control of E. Libyan oil and natural gas fields the heart of the conflict between Turkey and Egypt

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(Although this month’s program was, in the end, of decent quality overall, for the first time in 11 years of doing “Hemispheres’ Middle East Dialogues” we had technical problems with the transmission. I have tried to edit out some of the discussions of those technical problems in the audio. As I am rather novice at it, the result is a bit choppy at the beginning, but still I believe of some social value and so it is reproduced in its edited form here.)

KGNU Hemispheres – July 28, 2020 – Transcript…Part One. (Edited)

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There is an opposing narrative that argues that U.S. foreign policy is framed by its dependence on oil. A wealth of material exists substantiating the second claim (that oil is central to U.S. foreign  policy making). We note the “revolving door” between the State Department and the major oil producing corporations. They bounce back and forth between the State Department and the oil industry. The go from the industry to the State Department and then back into the oil industry again.

We have ample proof of this relationship.

  • Ibrahim Kazerooni

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But Kissinger wanted to fashion the (post 1973 Middle East War oil agreement) in such a way that much of the profits that oil producing countries would now enjoy would somehow find their way back to the United States and the West. His genius was to find a way to recycle those oil profits and thus stabilize relations between oil producing and consuming countries of the core of the global economy.

  • Rob Prince

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Host Jim Nelson: Tonight we’re going to be discussing the danger of a war igniting in Libya between Egypt and Turkey, the background of which we discussed in some detail last month. Something that I enjoy about doing this program that explores events taking place elsewhere in the world. Despite the Coronavirus pandemic, the upcoming presidential elections “the world still turns” and there are developments taking place internationally that we don’t often hear in the corporate mainstream.

This is one reason I enjoy hosting the Middle East Dialogues. It keeps us informed and often the news presented is “breaking news.” Tonight the news about Libya is no exception. A lot going on in the region that we don’t often read in the American press.

Gentlemen, who starts?

Rob Prince: I’ll lead off.

Tonight’s subject is the impending war in Libya in which the main players will be Egypt and Turkey, but to begin with we’d like to put it in context. For starters, some relevant memories.

In 2004, Ibrahim and I participated in a panel at George Washington High School in Denver dealing with the March 2003 U.S. led invasion of Iraq. At the time, what we were hearing, including from other members of the panel was that the main reason for the U.S. led invasion that overthrew Saddam Hussein was that a humanitarian intervention was required to save the Iraqi people from Saddam, that the Iraqi military possessed weapons of mass destruction, etc.

Our argument was that, in its essence, this was an invasion about controlling Iraq’s massive amounts of oil and natural gas.

We all know how that played out.

Fast forward to 2011, I am at another forum at the University of Denver’s Korbel School of International Studies where I taught for 23 years.

The panel includes a former high level U.S. State Department diplomat and negotiator, Christopher Hill who was Dean at the time, along with Nader Hashemi, chair of the Center of Middle East Studies there. They were arguing ardently for NATO military intervention. This discussion was just prior to the NATO led invasion, once again in the name of humanitarian intervention to save the Libyan people from Khadaffi committing war crimes against his own people.

In opposition, I argued that as with Iraq in 2003 with Ibrahim, the claim of “humanitarian intervention” is little more than a pretext for a war about controlling Libyan oil and gas.

There was a large audience – 100 or so, mostly international studies students. The audience is overwhelmingly sympathetic to the expert and State Dept. rep, and generally hostile to me. Most of the people in the room – and the other panelists – supported the NATO invasion.

I use these examples to make a point: between 2001 and 2012, 13, as a series of U.S. led wars in the Middle East – Afghanistan, Iraq, Syria, Libya – that (apart from Afghanistan) that these were essentially oil wars. They were wars essentially about controlling pipelines – the Syrian case, or dominating the production of oil and natural gas as was the case in Iraq and Libya.

The pretext, the excuse for war making, in all these cases was that the United States and/or NATO was going to war to somehow help the peoples of the countries involved – some form of humanitarian intervention.

At the moment, we’re at the edge of another war, this time, again, in Libya, a war over control of that country’s oil and natural gas – a country in chaos and on the verge of a major regional military confrontation.

According to a US Geological Survey report published in 2010, the Levantine Basin, which straddles the maritime borders of Cyprus, Egypt, Israel, Palestine, Lebanon and Syria, contains an estimated 1.7 billion barrels of oil and 122 trillion cubic feet (tcf) of gas. It estimates that eventually there will be enough gas to meet regional and European power demand for decade

For starters, we want to put the Libyan situation within a broader context and that context is how natural resources – in particularly oil and gas – plays a pivotal role in American foreign policy and how that plays out in the Middle East, using the Libyan case as a example.

Ibrahim, we have over the past decade pretty well decimated the idea that U.S. Middle East Foreign Policy is based upon the principle of “Right To Intervene” – for humanitarian interventionalist purposes… and have repeatedly underlined control of natural resources – oil and gas in particular – in determining the main pillars of U.S. Middle East policy.

We want to put the current crisis in Libya in its more global context.

Where should we begin here?

2.

Ibrahim Kazerooni: We want to put the current crisis in Libya in its more global context. The Western media narrative presented the rationale for the NATO invasion as a case of humanitarian intervention but any in depth analysis proves something quite different.

There are two types of narratives concerning the driving forces behind U.S. foreign policy.

One simply argued that, yes, oil is an important factor, or at least important economic factor for the United States but it has nothing to do with shaping or framing U.S. foreign policy which is based upon more “noble concerns.”

There is an opposing narrative that argues that U.S. foreign policy is framed by its dependence on oil. A wealth of material exists substantiating the second claim (that oil is central to U.S. foreign  policy making). We note the “revolving door” between the State Department and the major oil producing corporations. They bounce back and forth between the State Department and the oil industry. The go from the industry to the State Department and then back into the oil industry again.

We have ample proof of this relationship.

To understand the role of oil in U.S. foreign policy, we need to look back historically. Although in some ways this history overlaps with the Libyan issue, the role of oil and natural gas in forming the foreign policy of the United States – and particularly in the relations with a number of oil producing countries such as Libya, Saudi Arabia, Iraq and others – becomes critical.

There is an article published by the Council on Foreign Relations entitled “Oil Dependence and U.S. Foreign Policy 1850-2017.” In that article the author clearly establishes the fact that “U.S. dependence on oil has long influenced its foreign policy.” Then it gives a timeline for U.S. dependence .

“The United States’ dependence on oil has long influenced its foreign policy. This timeline traces the story of U.S. oil development, and the resulting geopolitical competition and environmental concerns, in more than forty milestones. The three major periods include the rise of oil as a commodity, beginning in 1850; the post-WWII age of geopolitical competition; and the current era of deregulation and diversification.”

A brief historical sketch is in order.

Although the United States moves into oil production soon after 1850, primarily it’s the First World War, when oil becomes vital for modern warfare that the United States becomes more involved in finding and controlling oil supplies.

Once, at WW1’s end, the British and French decide to carve up and dominate the Middle East oil industry, their cooperation led to what is known as the Red Line Agreement of 1928 in which the United States forced its way into the British-French monopoly on Middle East oil production. The agreement stipulated that the United States should be allowed to benefit from Middle East oil production.

This would open the door for the U.S. development of soon-to-be-discovered Saudi oil. In 1938 vast quantities of oil were discovered in the eastern regions of Saudi Arabia. Soon thereafter, in 1943 with American concerns of diminishing domestic oil production growing, President Roosevelt declared Saudi oil vital to U.S. security. U.S. Saudi ties were cemented two years later, in February 1945 when Roosevelt, returning from meeting Stalin and Churchill in Tehran, Iran, met with Saudi King Abdul Aziz aboard a U.S. ship on the Suez Canal to “discuss closer ties.”

In the wake of the 1973 Middle East War, seeing the degree to which the United States sided with and aided Israel against its Arab adversaries – Egypt and Syria – a number of Arab oil producing countries instituted an oil embargo against the United States. When the embargoes ended, the price of oil spiked, tripling from its pre-war rates. Out of this came an overall agreement, particularly between the United States with two countries – Saudi Arabia and Iran – In exchange for the two countries, at that time the major oil producers, assuring from this point on no interruption of oil flows, in return the United States offered no objection to the oil producing countries raising the price for their crude oil.

The crude price hike “permission” was conditioned on the producer countries recycling much of the profits back to the United States and the West. The agreement was that the oil revenues from producer countries would be used to purchase U.S. (and other Western) arms, invested in the U.S. (and other Western) banking and financial institutions, to give priority to American (and other Western) construction companies for infrastructural development in the producer countries.

As a result, most of the revenues from Saudi and Iranian oil and natural production were recycled back to the United States and its main partners. Thus the age of petrodollars intensified. The earlier relationship between the U.S. dollar and gold – the so-called Bretton Woods System – was dismantled, the dollar was “floated” because the United States did not have enough gold resources to support the dollar.

There was another part of this agreement. The Saudis and other members of OPEC agreed to sell their oil only in U.S. dollars as a support for that currency. That was important for the United States. Ever since, it has been a part and parcel of U.S. foreign policy until today. Every major event in the Middle East in recent times – the 1990 U.S. led coalition to kick Iraq out of Kuwait, the maximum pressure and covert war against Iran, the 2003 U.S. invasion of Iraq – in one way or another – has been to control oil and the profits that come from oil production as well as to influence the politics of oil producing countries that might be used against U.S. interests.

To date we have ample evidence that control of oil and its manipulation is a major factor that dictates the parameters of American foreign policy not only around the world but specifically in the Middle East. Keep in mind that even in Trump’s case, his first Secretary of State appointment, Rex Tillerson, came directly from Exxon-Mobil. The “oil industry connection” was also there in Obama’s case, Clinton’s case but particularly in Bush Jr.’s case given the influence of Dick Cheney.

Rob do you want to add anything?

Rob Prince: Yes. Just want to add a couple of points in response to Ibrahim’s remarks.

In terms of U.S. global control of oil since World War II. There are a few points to keep in mind:

– While it’s true that even early on the United States was importing some foreign oil from the Middle East, but most of that oil was going to Europe and East Asia, regions which were far more heavily dependent upon Middle East oil flows. But those oil flows were controlled essentially by Washington. Control of those oil flow gave the United States a powerful lever over all of its allies which continues until today.

– Secondly, Ibrahim referred to the deal that was constructed at the end of the 1973 Middle East War, referred to as “the Kissinger Deal” as it was in large measure shaped by then U.S. National Security Adviser, Henry Kissinger.

Two quick points about that deal;

Firstly given the history of unusually low prices for crude oil from producing countries, Kissinger understood that there was no way to stop the producing countries from raising the price of oil, and receiving more profit from this natural resource. He accepted the fact that the era of dirt cheap prices for crude oil was over.

But Kissinger wanted to fashion the agreement in such a way that much of the profits that oil producing countries would now enjoy would somehow find their way back to the United States and the West. His genius was to find a way to recycle those oil profits and thus stabilize relations between oil producing and consuming countries of the core of the global economy.

For sure some of the profits remained in country, explaining how oil producing countries were able to achieve rather dramatic infrastructural development.

But most of that money returned back to the United States in one way or another, in the form of massive construction contracts with American companies (like Bechtel) as Ibrahim mentioned, the purchase of large quantities of military hardware – in this case the Saudis are the classic example, most of which by the way over this entire period of time they didn’t even know how to use, and thirdly was investing in the U.S. financial system, both in terms of buying government bonds to keep the dollar strong and investing in the stock market and real estate.

Ibrahim Kazerooni: And up until now all this still continues with the Saudis. All of their investments as a result of the Kissinger Deal, all of that is invested even in the American or British banks.

That is exactly right. And that created another problem which we’ll have to leave aside for the moment – the Third World Debt problem because these banks didn’t know what to do with that money. They started loaning it out, quite irresponsibly to Third World countries that didn’t use it well in many cases, leading to an explosion of debt.

End Part One. Link to Part Two, Part Three

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