The attached paper was written to be given as a speech in the United
States. Many Arabs, particularly Saudi Arabs who were most intimately
threatened in the various articles on occupation of Arab oil
[Page 174]
fields,2
believed that the U.S. Government inspired the articles, that it was
preparing the U.S. public for a new war. This Embassy believed the
speculation should be stopped by a forthright condemnation of the idea
of invasion. The Department, however, believed that it might stimulate
more public doubt on the subject and suggested that the paper be
submitted as an airgram or given as a classified talk to a Washington
audience. It is herewith submitted. It could be given later as a
speech.
The military aspect of invasion has been discussed with the American
military officers in Saudi Arabia. The action of Iran which is crucial
in many of the invasion articles, has been discussed with the Iranian
Ambassador in Saudi Arabia. The technical aspects of destruction of the
oil fields have been discussed with Aramco staff. The conclusion, of course, is my own.
Enclosure No. 13
[Omitted here is a table of contents.]
WAR FOR OIL: ARMAGEDDON AS FUN CITY
I. Introduction
Secretary of State Henry
Kissinger in an interview in January said the United
States would react with force if we were being strangled by a cutoff in oil deliveries. The question was
hypothetical, but no one could maintain that there could have been
any other response than the one he made. To have intimated that we
would simply allow ourselves to be “strangled” would have called for
his immediate impeachment. Secretary Kissinger in a subsequent interview said that he
obviously had not meant there could be military action just to bring
down oil prices.
The implications of the first remark nonetheless were noted with
concern in most of the Organization of Petroleum Exporting Countries
(OPEC) and in Europe. Many of
them condemned the Secretary and the United States for this
“provocation.” Saudi Arabia made no public statement and no
representations to us. Saudi officials told us in private
discussions that they understood what the Secretary meant and they
trusted us. In spite of significant differences of opinion and
actions on the Middle East problem they regarded their friendship
with us as a cornerstone of their foreign policy. They knew we knew
this and they
[Page 175]
knew Saudi
Arabia was too important to the United States and its allies for us
to jeopardize this close association.
The invasion issue would probably have been quietly forgotten had it
not been picked up, embellished, and presented to the world in five
separate articles, all of which were widely quoted and discussed in
the United States, Europe, and the Middle East. The first was in a
prominent journal of intellectual opinion; it appeared shortly after
Secretary Kissinger’s
statement and was reproduced in the Sunday edition of Washington’s
morning newspaper. Then there were two articles in widely-circulated
American newspapers which were based on “sources” inside the
Pentagon. Then in mid-February, the Sunday edition of another major
newspaper carried a detailed account of how many actions could be
taken against OPEC short of war
but that even war could be carried out if necessary and occupation
of Arabia should be easy. Most recently and most provocatively was
the lead article in the March issue of a literary magazine. Some of
the articles and the related commentary concentrated on military
action against all the Arabs, some against the Arabs of the Persian
Gulf, but a common theme to all of them was the necessity of
occupying Saudi Arabia. Some insisted this move be taken immediately
as the West was already being “strangled” by the high oil prices;
all five articles agreed this would be done in time of war. And all
five agreed that only Saudi Arabia had enough oil to force down
world oil prices. The premise, on which all the articles were based,
was that the high price of oil is the main problem the world’s
economy faces today; that inflation and unemployment are caused by
the price of oil and that there is no way we could or should
cooperate with the OPEC countries.
This being accepted, the authors continued that we have the right to take the oil, that we could take it
with a minimum of difficulty, that supplies would be disrupted for
only a very short time, that Saudi Arabia and its OPEC allies would be powerless to
react, and that the Soviet Union, because Saudi Arabia was a
“friend” of the United States, would not intervene or allow its
Middle East allies to intervene.
Invasion, it was argued, would be simple, cheap and easy.
Furthermore, it would be morally justified. In fact, it is a moral
imperative for us to take over Saudi Arabia, produce its oil and
sell it for almost nothing. The world’s inflation would then be
cured; unemployment would end; and we would devote ourselves to the
task of finding new energy sources when the Saudi oil would finally
be exhausted. The losers would clearly be the Saudis. To some, the
dispossession of six million Saudis would be regrettable, but—it
would be argued—a small price to pay for world happiness. The 200
million living in other OPEC
countries: Indonesia, Iran, Venezuela, Nigeria, Algeria, would of
course also be hurt but they would not be invaded. Their loss of
income
[Page 176]
would just be one
of life’s difficulties to which they would have to adjust.
The January article was answered by I.F.
Stone in the New York Review of
Books February 6. In his essay “War for Oil,” Mr. Stone condemned the immorality of
the invasion proposal and details how it could lead the world and
particularly the United States to disaster. The invasion proposal,
as such, was attacked by Terence McCarthy in the March issue of Ramparts. His thesis was that the United
States, unable to discipline itself into facing its internal
economic problems, would attempt an external solution. It would try
to seize the Arab oil fields, restore its own prosperity, and reduce
Europe and Japan to vassalage. It would also run the very real risk
of a nuclear war in which the Soviet Union, because of its still
fairly primitive society, would be the relative winner.
I gave a press interview in Jidda in early March in which I
characterized those who call for war as being criminally
insane.4 The interview was
widely quoted in Saudi Arabia and the Arab world and Prince Fahd,
now the Saudi Crown Prince, said this went a long way toward
defusing the issue. Secretary Kissinger in Riyadh on March 19 said again that war
for economic reasons was impossible, that our policy was
“cooperation not confrontation.” His statement was quoted in the
Arab world, but was lost in the United States in the flurry over the
deterioration of Southeast Asia.
The feeling of unease in the Middle East continued. True, the polls
and letters to the editors in the United States strongly condemned
the invasion idea, and the articles by Stone and McCarthy were favorably quoted. Yet even
those who opposed a war for oil assumed that it was a possibility.
Some even publicly expressed their fears that the United States was
preparing its people for a new military adventure. This fear,
unfortunately, was shared by many in the Middle East—some even in
Saudi Arabia.
There was another flurry of excitement in the Middle
East—particularly in Saudi Arabia—at the time of the death of King
Faisal. We were
[Page 177]
alleged to
be alerting the Seventh Fleet, to be preparing our citizens for
evacuation, to be spreading the story of disturbances in the Kingdom
in order to justify occupation of the oil fields to prevent
sabotage.5 No matter that there had been no
disturbances.
The main reason for this continuing fear of war is almost certainly
that there has been no strong, detailed condemnation of the invasion
concept by a member of the American Administration, no analysis of
why it could bring only disaster to the United States and to the
world, and why it could not be considered for both moral and
practical reasons. This is what I intend to do.
II. The Flaws in the Basic Premise and the
Moral Issue
There can be no doubt that the sudden rise in oil prices by 400
percent has contributed to the world’s current economic ills. But it
is conveniently forgotten that the world faced a serious inflation
before the massive oil price increases of 1974; that unemployment
was large and growing; that wages were growing faster than
productivity; in short, that we were living beyond our means.
Imported energy helped our economic expansion for over twenty years.
It enabled us to escape the consequences of increasing real wages
faster than productivity increased. Oil was very cheap. Its price,
even in current dollars, declined from 1950 to 1972 and its 1972
price in constant dollars was half that of the early 1950’s. The oil
producing states increased their incomes only by allowing production
to grow faster than real prices declined. All of the oil producers,
by 1970, had come to realize that their oil reserves were finite, in
some cases quite small; all could see when their oil production
would start to decline and all had begun to think of how to increase
income per barrel. All, that is, except Saudi Arabia which was and
is unique.
It is a truism to state that oil is a wasting asset, that once used
it is gone forever. But most consumers chose to ignore this; they
compared the profit on a barrel of oil with the profit on a bushel
of wheat and they seemed convinced that the comparison was valid.
The oil producers, on their side, believed they must maximize their
income, invest their money and prepare to face the post-oil age.
With the shortages caused by the Arab oil boycott in late 1973, all
OPEC countries saw what the
world would pay for oil. The Shah of Iran announced that OPEC would no longer subsidize the
industrialized West. The era of cheap oil, he said, was over
forever. OPEC took
[Page 178]
advantage of its new knowledge to
increase oil prices, some say to intolerable levels.
It would surely have been far better if the world had agreed to a
gradual increase in oil prices, but the consumers before 1973 were
not willing to consider such ideas. Our professional soothsayers
told us oil prices were low of necessity and would go even lower. We
believed them and we did nothing to develop alternative sources of
energy. But can it be pretended that the current high cost of oil is
the sole source of our economic problems? Or can anyone seriously
think that a forced reduction of oil prices could miraculously solve
all our problems? To think so is to share the fairytale beliefs of
certain academicians newly converted to the dubious pleasures of
militarism. Alan Greenspan,
the President’s chief economic advisor put very well recently: We
had inflation before the oil price increases and we would still have
it if oil prices decline. Inflation, he said, is a productivity
problem, not a commodity problem.
No discussion of price gouging would be complete without some
reference to our own role in food exports. The same magazine which
in March carried an article calling for the immediate invasion of
Saudi Arabia carried in its February issue an article which asserted
that our monopoly of food exports was more complete than OPEC’s in oil and much more damaging
to the underdeveloped countries. Wheat prices go up by 400 percent;
rice by 300 percent; soybeans by as much and we speak only of
“market forces” of “supply and demand” but the effect on the
consumer is as brutal as that caused by any cartel.
Even if oil prices were as crucial to the world’s economy as is
pretended, and even if food prices or declining productivity were
irrelevant, could we seriously propose invasion, an act of
international brigandage so contrary to our national traditions and
repugnant to our religious heritage? Senator James McClure of Idaho asked in
January if our Viet-Nam venture would have been justified in the
eyes of the New Hawks if we had said we had gone to South Asia to
appropriate its rice to feed the world’s poor.
To say that we have the right simply to take oil or any commodity
because its price is too high, as our authors have suggested,
threatens the relatively stable political order the United States
has hammered together since the Second World War. After a successful
seizure of the Arabian oil fields—why not foreign deposits of
bauxite, lead, zinc, tin, chrome, and other resources in short
supply? Even renewable resources such as rubber, cotton and food
would seem fair game. To postulate that the United States and only
the United States would be allowed dispensation for such
imperalistic action would be naive. Yet one writer who purports to
be a “defense consultant” concluded his article calling for invasion
of Arabia by asking why we needed to spend
[Page 179]
$85 billion a year for our Armed Forces if we
were not going to try to get something out of them. Presumably he
had never heard of Defense or of Deterrence.
There are ample recent historical precedents for aggression of this
sort, but they are not ones we should be quick to quote. Japan went
to war to establish its “Greater East Asian Co-prosperity Sphere”;
that is, to secure access to land, tin, rubber, rice and oil. Hitler
said he had a “right” to Poland because the efficient Germans could
use the land more effectively than the “lazy Slavs.” Hitler also
found the concentration of wealth in the hands of Jewish merchants
an intolerable burden to Aryan pride. While neither the Japanese nor
the Nazis pretended to benefit the entire world, the parallels
between their actions and these new proposals are close enough to be
uncomfortable.
Senator McClure commented on
his amazement at the call for invasion and wonders why it had not
been soundly denounced in the United States, particularly by those
who deplored our Viet-Nam war. Why, he asked, is every newspaper in
the country not beseiged with letters decrying the immorality of
such an idea? He and others have commented on the curious
transformation of Viet-Nam doves into Middle East hawks.
The entire idea of invasion by the United States should be laid to
rest solely by the moral argument. There should be a wave of
indignation, of outrage that the idea is considered and even
justified by respected intellectuals. Invasion for economic reasons
is something one would expect to read only in standard communist
propaganda describing the moral bankruptcy of America.
Unfortunately, the idea continues to be discussed; and the
conclusion in some parts of the world—at least Europe and the Middle
East—is that someone may be trying to soften up the American people
for a new war; that American morality—at least as publicly
expressed—has been blunted. If such is the case, and I am certain it
is not, then it would still be necessary for us to examine carefully
how United States interests would be affected by such a war before
advocacy of war be translated into policy.
[Omitted here are sections on “The Reactions of Others to Invasion,”
“The Invasion and its Costs,” “Saudi Actions and Reactions,” and
“The Length of the Cutoff and the Consequences.”]
VII. The Alternatives to War
This Armageddon scenario is postulated because it is alleged there
are no alternatives. It is alleged that capital accumulation in the
OPEC countries will be so
enormous the world will not be able to adjust to it. The New Hawks
heap scorn on those who say the problem can be handled in the
context of normal trade, banking and investment.
[Page 180]
Yet the alternatives to war are in fact straightforward and not at
all esoteric. They would entail some transfer of real wealth, but
this would not be the first time in history this had happened. They
could entail some temporary leveling off in increasing standards of
living, but this need be only of short duration. Charles Shultz, now
with the Brookings Institute, wrote in the Washington Post the end of January that “over the
Seventies we might have expected real consumption per capita to grow
by 30 percent; the higher oil prices, when fully paid for, will
reduce this to 27 or 28 percent. Important, yes. But worth a Middle
East War?” Robert Roosa, Carroll Wilson and three non-Americans, in
an excellent article in the January issue of Foreign Affairs, pointed out that high oil prices are a
form of forced saving—a means of capital accumulation—and they
suggest how this could be put into productive use in Europe, Japan,
and the underdeveloped world. A proposal for an OPEC mutual fund would bring the
money into the areas where it was needed, would supply capital for
new ventures, would create a new wealth, and we would have a no-lose
situation. Professor Richard
Cooper of Yale even thinks there is an excellent
chance “this second great Arab eruption into Western history will,
in the end, leave both the West and the Middle East more sound and
secure than ever before.”
The Arabs would profit through their investments and the developed
world would also profit through a renovation or the expansion of its
industry and increased employment. Some of the new American industry
might be partially owned by foreigners, but this would not be a new
experience in our history. Nor should it be objectionable to a
country which itself has made such massive foreign investments.
The figures of surplus OPEC funds
have been grossly exaggerated. We have heard of capital
accumulations or unspent money of $1.2–$1.6 trillion in the next
decade. The most recent U.S. Treasury studies indicate it will be
more in the order of $300 billion. Some of this will be invested in
the United States, some will be invested elsewhere. If we are lucky
enough to entice half of it to the United States, i.e., $150
billion, this would amount to less than 4 percent of the $4 trillion
of new investment we need in the next
decade.
While some OPEC countries might be
able to gain positions of influence in a few companies, their
accumulated capital scarcely would permit a “take over of American
industry.” Some American companies do not find Arab or OPEC capital to be in any way
offensive or dangerous and are now trying to get Saudi capital into
the States. While relatively little has come yet, there is no doubt
it will come unless legal obstacles are placed in its way.
Saudi Arabia has already agreed this year to place enough in Treasury
notes and FNMA issues to cover
more than half our balance of payment deficit—scarcely action of an
enemy country. I would not
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venture to say how much longer they will continue their investment
in view of the provocative statements and articles coming out of the
United States. Not very long if the invasion threats are taken
seriously. I hope, however, we can end now all speculation that the
United States could consider invasion of an oil producer merely to
bring down oil prices—or indeed for any other reason than actual
“strangulation” in its precise meaning: that is, we are dying and we
take desperate action, no matter how dangerous, to save ourselves
from death. Scarcely a description of the gasoline shortages of the
winter of 1973–74, or of the economic situation in the world
today—even if our problems could all be ascribed to high oil
prices.
VIII. Conclusion
There are several crucial questions which need to be asked about all
those who are advocating confrontation—economic or military. We need
to know their motives. Why are they proposing risking the
destruction of the Western alliance, even nuclear war? Why are they
advocating a policy in which the only conceivable winners would be
the two great communist nations? And neither of them could “win” a
nuclear war, any more than could we. Why the concentration on the
Arabs as the enemies when other countries in OPEC have been fully as anxious to
maximize their income from oil? And why the concentration on Saudi
Arabia, one of our closest friends in the Middle East? What interest
do the advocates of aggression have in damaging relations with the
Arabs in general and Saudi Arabia in particular? And why do they so
resolutely reject the cooperative approach which has been advocated
and described by Secretaries Kissinger and Simon, and by Messrs. Roosa, Wilson and Cooper? Is it simply to deprive
the Arabs of their “oil weapon,” and remove pressure on Israel? This
hardly seems possible, as even Israel could not “win” in such a
world catastrophe. Perhaps these New Hawks have no motive at all;
their guiding light may be simply malice and stupidity.
If the New Hawks are trying to frighten the OPEC countries into submission or into a dramatic
reduction in their oil prices, they have not succeeded. If they are
simply trying to disturb or destroy American relations with OPEC, with the Arabs and especially
with Saudi Arabia, they have been somewhat more successful—primarily
because, until now, there has been no detailed rebuttal of the war
call. And they also seem to have put a fright into all those—in
OPEC as well as the developed
world—who know the ultimate victor in such an adventure would be
Russian imperialism but nonetheless believe invasion is possible simply because they question
America’s sanity.
Fortunately, the world can relax. The arguments for invasion fall of
their own weight. Those who understand the difficulty in preparing a
major secret operation are appalled at
this call to war; they are joined
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by those who know how an oil field is operated
and who know the ease of its destruction and the difficulties in its
restoration and by responsible political scientists who know what
would happen in a Europe or a Japan deprived of oil for several
years. In short, everyone who knows anything of the military, of our
system of alliances, of the difficulties in producing oil after
oilfield installation has been destroyed, concludes that talk of
invasion for economic reasons must be one gigantic bluff perpetrated
by writers of distorted and immoral imagination, of varied degrees
of sanity and with varied motives but with no
authority.
The United States is governed by moral men of good will. But
“morality” is a subjective characteristic and we cannot expect the
world to assume the United States, for moral
reasons, would recoil from an imperialistic war. Self-interest is
more objective and the world should know that we are governed by
rational men who are not bent on committing national suicide.
The American public shows no tendency whatsoever to follow the New
Hawks to Armageddon. The initial reaction in January to the invasion
proposal seems now to have been one of pure disbelief. It was this
troubling silence to which Senator McClure addressed himself. But as the stories of
invasion continued and enlarged, American outrage has grown. If the
provocateurs were launching trial balloons, they must have been
surprised at the rapidity with which they were pricked. Let us now
put this story to rest. We should not forget it, as it illustrates
how fragile peace is; and it illustrates how we could be drawn into
another disaster for “noble” motives. This time, however, we’ll look
more critically at the consequences than we did in Viet-Nam.
