Posted on 7-1-2002

Oil and the Islamists
by George Caffentzis*

The hidden civil war within the oil-producing countries from Algeria to
Iran may help to provide a context for the brutal attacks on the World
Trade Centre and the Pentagon. The role of the US has been the crucial
factor in the region, as exemplified by the devastation of Iraq, unstinting
US support for Israel, the US Government's proprietary attitude to oil
resources in the Middle East, and the building of US bases in Saudi Arabia,
Islam's most sacred land.

The result has been deep divisions within the ruling elites which pit
pro-American governments - often consisting of royal dynasties in the
Arabian Peninsula - against dissidents who, in the name of the Qur'an,
accuse them of being corrupt, of squandering the region's resources, of
selling out to the US, of having betrayed Islam. These dissident
fundamentalists have used their wealth to create a multinational network of
groups stretching through every continent, and offered an alternative
'social contract' to the poor of North Africa, the Middle East and West Asia.

From Cairo's bread riots of 1976, through the uprisings in Morocco and
Algeria of 1988 - both crushed in bloodbaths - to the more recent anti-IMF
riots in Jordan (and the list is much longer), it is evident that it has
become more and more difficult for poor sectors of the population to
survive. The fundamentalists have attempted to win over people in urban
areas through providing basic necessities such as schooling and healthcare
that have been suffering as a result of cuts in government subsidies and
programs dictated by the World Bank and IMF. It is the Islamic
fundamentalist networks, for example, that organise healthcare and
education in the Palestinian 'territories', almost functioning as an
alternative government to the PLO at grassroots level. But Islamic
fundamentalism also continues to have an attraction within the ruling
circles of the wealthiest Muslim nations. This internal contradiction has
created a tangled net of consequences which is now embarrassing many not
just in the governments of the Middle East, but in the US Government too.
For they have financed and trained the very generation of dissidents who
are now so violently turning against them.

On the one side, a portion of Middle Eastern oil revenues has been used to
fund assaults on symbols of the New World Order; on the other, the US
Government financed and trained many members of this dissident branch of
the Middle Eastern ruling classes in its effort to destabilise the Soviet
Union in Afghanistan. Many of those who have been brought back into power
in George W Bush's administration were the ones who were responsible,
during his father's presidency, for the training and financing of the very
organisations they now hunt under the banner of 'terrorism'.

The executive dynasties in both the US and Saudi Arabia must both be
worried about family members who have been compromised by their past
connections to the networks they now claim to be responsible for the events
of 11 September - and this includes the US President's family. For example,
The Wall Street Journal of 28 January reported that George Bush Senior
works for the bin Laden family business in Saudi Arabia through the Carlyle
Group, an international consulting firm - as do other close associates of
the President like former Secretary of State James Baker.

The 11 September attacks were, however, symptoms of desperation, not of
power, resulting in a devastating US military response with predictable
results: the destruction of thousands of Islamic fundamentalist militants
along with tremendous collateral damage to the people of Afghanistan and
probably other countries in North Africa, the Middle East, and West Asia.
Who on the ground can survive in such a maelstrom? Indeed, the actual
perpetrators and their accomplices, whoever they are, must have been very
desperate to take such a risk with their own network and the lives of
millions of people of the region. Clearly something so very important was
going on that the perpetrators of 11 September needed to thwart by
desperate and inherently uncertain measures. What was it? My view is that
the source of this desperation involved the oil industry and globalisation
in the Arabian Peninsula. Here is my hypothesis.

In 1998 (after the collapse of oil prices due to the Asian financial
crisis), the Saudi monarchy decided, for 'strategic reasons', to globalise
its economy and society, beginning with the oil sector. The oil industry
had been nationalised since 1975, which means that foreign investors were
allowed to participate only in 'downstream' operations like refining. But
in September 1998 Crown Prince Abdullah met senior executives from several
oil companies in Washington DC. According to Gawdat Bahget, writing in Arab
Studies Quarterly: 'The Crown Prince asked the oil companies' executives to
submit directly to him recommendations and suggestions about the role their
companies could play in the exploration and development of both existing
and new oil and gas fields.' These 'recommendations and suggestions' were
then submitted to the Supreme Council for Petroleum and Mineral Affairs in
early 2000 (after being vetted by the Crown Prince) and in the middle of
2000 the Saudi Government ratified a new foreign-investment law.

Under the new law, 'tax holidays are abolished in favour of sweeping
reductions in tax on profits payable by foreign entities, bringing them
nearer to levels that apply to local companies. Wholly owned foreign
businesses will have the right to own land, sponsor their own employees and
benefit from concessionary loans previously available only to Saudi
companies.' Clearly 'the right to own land' would be a red flag for anyone
committed to the sacred character of the Arabian Peninsula. Experts on the
Middle East were literally falling over themselves in their effort to
highlight the new Investment Regulation. 'Keep your fingers crossed,' said
one, 'but it looks as if Saudi Arabia is abandoning almost 70 years of
restrictive, even unfriendly policy toward foreign investment.' This law
constituted, in effect, a NAFTA-like agreement between the Saudi monarch
and the US and European oil companies.

At the same time as this law was being discussed, a ministerial committee
announced that up to $500 billion of new investments would be deployed over
the next decade to change the form of the Saudi national economy. Around
$100 billion of this investment was already promised by foreign oil
companies. In May 2001 the first concrete step in this stepped-up
globalisation process was concluded when Exxon/Mobil and Royal Dutch/Shell
Group led eight other foreign companies (including Conoco and Enron from
the US) into a $25-billion natural-gas development project in Saudi Arabia.
The financial press noted that the deal would not be very lucrative in
itself, but that 'it's part of a long-term ploy of the oil companies,
[which] want ultimately to get access again to Saudi crude'.(1)

By the summer of 2001 the Saudi monarchy had cast the die and legally,
socially and economically crossed the globalisation Rubicon. It did so not
because Saudi Arabian debt was unmanageable (as was the case with most
other countries which bent to the globalising dictates of the IMF) but
because, faced with a intensifying opposition, the Royal circle realised
that only with the full backing of the US and European Union could they
hope to preserve their rule in the years to come. Their strategy was aimed
at getting the economy moving again and thereby reducing three things: its
dependence on oil exports; its large and growing youth unemployment rate;
and its huge foreign labour force (around 6-7 million in a population of
about 22-23 million). This required a radical departure from the patronage
the Saudi monarchy had exercised in the past to keep social peace, made
possible until recently by its immense oil wealth. But this wealth is not
infinite and is declining. GNP per capita fell from approximately $13,000
in 1983 to $8,000 in 1993 and has since continued to fall.(2)

Inevitably, this strategy was bound to impact on the economic policies of
the other oil-producing governments in the region, especially Oman, Qatar,
United Arab Emirates, Bahrain, and Kuwait. But if it worked, it would also
deal a decisive blow to the Islamicist opposition, undermining its ability
to recruit converts - people employed in the upper echelons of a
'globalized economy and society' would be distinctly less likely to respond
than those driven to despair by political powerlessness and long periods of
unemployment. The cat-and-mouse game that the Saudi monarchy had played
with fundamentalist dissidents (in which the King and his dynasty claimed
to be even more fundamentalist than them) would end. But the introduction
of foreign ownership of land and natural resources, backed up by large
investments, and the hiring of more expatriates from Europe and the US,
would also bring major social change in its train. Whatever hopes the
Islamic opposition in the ruling classes of the Arabian Peninsula had ever
harboured of getting their governments to send American troops packing and
turning their oil revenues into the economic engine of a resurgent Islam
were facing a historic crisis in the summer of 2001. Without a major
turnaround, the Islamic fundamentalist opposition would have to face the
prospect of total civil war in their own countries or face extinction.

It is possible that elements of this opposition decided that only a
spectacular action like the 11 September attack could turn back the tide.
Perhaps they hoped that the turmoil and uncertainty generated by the
attacks on New York and Washington would generate a strategic US retreat
from the Arabian Peninsula - just as the bombing in Lebanon in 1983 led the
US to pull out from there. On the basis of this analysis, then, the 11
September attacks on New York City and Washington DC were linked to a
struggle over the fate of oil politics in its heartland: the Arabian
Peninsula. We should be watchful of developments there, which will
undoubtedly be hidden from sight, and not just the sound and fury directed
towards Afghanistan. And in this context, it is pertinent to ask: how can
the populations of North America and Europe continue to be blind to the
social cost of the oil they put in their cars, and the economic and social
inequities built upon it?

1 Los Angeles Times, 19 May 2001.
2 Anthony Cordesman, Saudi Arabia: Guarding the Desert Kingdom, Westview
Press, 1997.

George Caffentzis is a co-ordinator of the Committee for Academic Freedom
in Africa and an Associate Professor of Philosophy at the University of
Southern Maine. Article from - the New Internationalist, December 2001,
www.newint.org