Cyprus Mail
CM Regular ColumnistOpinion

By the grace of Oil, kneel and be thankful

By Hermes Solomon

AFTER the ‘successful’ invasion of Iraq by the US and Britain in March 2003, the cost of keeping US ‘boots on the ground’ amounted to $10 million a day. To cover the cost, the US ‘took’ Iraqi oil to the tune of around $100 million daily.

The price of oil during US occupation of Iraq rose from $46 a barrel in 2003 to its highest point ever of $145 by 2008, this sudden and dramatic rise being the major cause of the 2008 worldwide economic recession/financial crisis and rise of Al-Qaeda.

Today, French economist, Thomas Piketty believes massive inequality in the Middle East caused the rise of ISIS/ISIL/Daesh – call it what you will. Many American economists say that is baloney.

In a controversial op-ed published recently by Le Monde, Piketty argues that terrorism is an extreme version of a peasants’ revolt. All oil money in the Middle East is concentrated in the hands of a few rich people in a few wealthy countries. He doesn’t say which people or countries, but certain Arab states and the US jump to mind!

“One thing is obvious: Terrorism thrives on the inequality in the Middle East, which is a powder keg we have largely contributed to creating,” wrote Piketty, who is best known for his 2013 best-selling book, Capital in the Twenty-First Century, chronicling the explosion of inequality in the U.S. and Europe.

The thefts of oil by world powers and self-proclaimed caliphates from war ravaged regions do not make headlines.

Oil is today’s God and only true currency. Without oil, we in the so called civilised world are lost, and with too much of it, the planet is lost. So are we on a lose/lose path?

Shortly after the ‘Paris Massacres’, a panel of experts on TV5 Monde discussed how best to rid the world of ISIS. A French senator insisted that the only way to destroy ISIS was to hit its ‘pocket’ by bombing its 500 lorry convoys transporting illicitly acquired Iraqi and Syrian oil into Turkey in exchange for arms and gold.

When the senator was informed by an expert in ME affairs that France, among other EU nations, was importing some of that stolen oil at ridiculously cheap rates (less than $20 dollars a barrel) and this was the reason there was a glut of oil flooding world markets, the senator visibly blushed.

‘Satellites’ have known all about the processionary caterpillar like oil convoys crossing into Turkey ever since ISIS took control of a number of oil installations in Iraq and Syria – how many convoys cross daily and how much of that oil is either consumed by Turkey or exported from south eastern Turkish ports. Perhaps that’s what Thomas Piketty meant when he said, “Terrorism thrives on the inequality in the Middle East…”

As the West’s most faithful ally, Turkey (more specifically the Turkish ruling elite and their families, accused by Italy as well as Russia of laundering ISIS oil money) is making an absolute ‘bomb’ out of this war, while the US, France, Russia and now the UK spend an absolute bomb bombing ISIS, although the US denies knowledge of ‘dirty dealing’ between Turkey and ISIS and has left the bombing of convoys to the other three.

Oil is dealt in one currency only – dollars! The value of the dollar has risen hugely against all currencies these past six months – 20% against the euro, 50% against the rouble since May and 5% against the usually unassailable Chinese Renminbi.

Stock markets worldwide have been bouncing up and down like basketballs this year; the Dow Jones Index (30 large publicly owned companies based in the US) is barely better off today than it was at the beginning of the year. But if you’re a European investor, holding dollar nominated stocks, you’ve made a killing due to the massive move in exchange rates.

Now that’s quite legal – you haven’t directly stolen, killed or destroyed anything. But indirectly you’ve benefitted from the low price of oil and rise in the value of the dollar, cheap oil being a major component in the cost of industrial production and the engine behind US growth and full employment.

But the ECB prints money and bombs with abandon, yet the EU is struggling for growth/increased employment to keep its head above water and move from stagflation to inflation. Why?

The value of oil in storage tanks or the ground is worth more than gold, which you can’t eat or use to heat your home, and now stands at its lowest price since 2009.

The real world is all about Oil – forget the ephemera, the religious fanaticism, the jingoism and terrorism. And by the grace of Oil, kneel and be thankful that its price has plummeted.

In 1974 it jumped to $50 a barrel, and if $40 today isn’t deflationary, I don’t know what is…

Alors, ‘Touchez pas au Grisbi’ (1954 classic French movie about gangsters and stolen ‘grisbi’, slang for gold/silver/money, and now oil) or we’ll bomb the hell out of you!

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