The Big Picture 3

Oil flow is vital for the world economy. Any breakdown in the system causes severe imbalances in both world politics and economies. The Oil Boycott clearly showed this unwanted situation to the entire world. The 1973 oil crisis began in October 1973. The Organization of Arab Petroleum Exporting Countries (OAPEC) declared that they would no longer ship petroleum to nations that had supported Israel in its conflict with Syria and Egypt. This included the United States and its allies in Western Europe. Soon oil prices increased rapidly, and due to the dependence of the industrialized world on OPEC oil, the price increases were dramatically inflationary to the economies of the targeted countries, while at the same time suppressive of economic activity.

The targeted countries responded with a wide variety of new, and mostly permanent, initiatives to contain their further dependency.15 The United States closely witnessed the effect of oil on the world’s economies and how important it was for stability. In this regard, it started using the oil flow as a tool to maintain its hegemony. As mentioned in the previous post, China and Europe are posing as two serious rivals to the United States. Both are dissatisfied with the status quo and they are seeking better power and resource distributions. The rapid growth of these rivals is based on oil and gas consumption. The more they consume oil and gas, the more they grow economically. For the United Sates, the only way to foil the threat of these rivals and maintain the status quo is by controlling the source of their growing dynamics, which is the oil-rich Middle East and Central Asia. Since the Middle East is the richest area in the world in gas and oil, and the rival powers try to influence the Middle Eastern countries, the U.S’ military, economic, and political presence in the region is necessary in order to control the oil and gas resources.

9/11 gave legitimacy to the United States for its presence in the Middle East in order to fight so-called global terrorism. Soon after the attacks, the U.S presented a new set of proposals for a Greater Middle East Initiative (GMEI) to be adopted by the eight industrialized nations at their June summit in Sea Island, Georgia. The initiative is part of President Bush's "forward strategy of freedom," by which the expansion of political rights and political participation in the Muslim world is meant to combat the appeal of Islamist extremism.16 However, the GMEI was revised by U.S. Secretary of State Condoleezza Rice in June 2006 and the new term, New Middle East, was introduced to the world in a press conference in Tel Aviv. The new term replaces the older and more imposing term, the “Greater Middle East.” No matter what this project is named, it is all about securing the oil resources and taking full control of the region in order to control the rivals’ growth. The Afghanistan and Iraq wars both aim at this goal.

The United States had two goals in the war in Afghanistan. First, to try the efficiency of its new high-tech weapons; second, to contain another oil-rich country, Iran while enhancing the continuation of the ‘buffer zone series” it created as its allies. One can easily see the series of buffer zones created against the influence of the Shanghai Cooperation Organization members: China, Russia, Uzbekistan, Tajikistan Kyrgyzstan, and Kazakhstan. This series includes India, Pakistan, Afghanistan, Turkmenistan, Azerbaijan, Georgia, Turkey, Ukraine and Poland.

The ongoing politics gets its roots from the rivalry of the US and the rising threats of challenger powers. In March 2006, India and the US reached a nuclear deal that the US would give nuclear power assistance to India to step up its nuclear weapons’ productions. With this deal, the United States aims to contain China by using India as the counterbalance power in the region.

The debate over the installation of the “Missile Defensive Shield” in Poland also is an issue of arm wrestling among the rivals. The Bush administration pushes for such a project in Poland ostensibly to guard the European countries against Iran’s missiles. Russia, however, rejects the implementation of this project. It also “…formally notified NATO governments on Saturday that Russia will suspend its obligations under the Conventional Forces in Europe Treaty, a key cold war-era arms limitation agreement.” (Thom Shanker, NY Times, July15, 2007). The frequent colorful revolutions in Eastern Europe, in Ukraine for instance, were also part of the competition between the United States and the SCO for influence in those crucial regions.




References

1-http://usinfo.state.gov/usa/infousa/facts/democrac/57.htm

2- Liu , Henry C. US dollar hegemony has got to go . Asia Times, 2002. 11 Apr. 2002 .

3- For more information see: The Federal Reserve Board. Currency and Coin Services . The Federal Reserve Board, 14 Mar. 2006 .

4-Heakal, Reem. " What Is the Quantity Theory of Money?." January 7, 2005
.

5- Colin Elman, “Introduction: Appraising Balance of Power Theory,” in John A. Vasquezand Colin Elman (eds.), Realism and the Balancing of Power: A New Debate (Upper Saddle River, N. J.: Prentice Hall, 2003), 8— 9.

6- Paul, T. V. Balance of Power : Theory and Practice in the 21st Century.
Palo Alto, CA, USA: Stanford University Press, 2004. p iii.
http://site.ebrary.com/lib/utdallas/Doc?id=10070387&ppg=3T

7- Beehner, Lionel. "The Rise of the Shanghai Cooperation Organization." Council on Foreing Relations. http://www.cfr.org/publication/10883/.

8- Ramonet I (2004) China wakes up and alarms the world. Le Monde Diplomatique, English edn,15 August.

9- Lardy (2000) Fiscal sustainability: between a rock and a hard place. China Economic Quarterly 2:36–41.

10- Ibid.

11- Bhaskarian (2003) China as potential superpower: regional responses. Frankfurt Voice China special edn. Deutsche Bank Research, January 15. http://www.dbresearch.com/prod/dbr_internet_en-prod/prod0000000000050878.pdf.

12- Shih (2004) The conduct of U.S.-Taiwan Relations 2000–2004, The Brookings Institution,Center for Northeast Asian Policy Studies, Washington, DC.

13- Pocha (2005) The geopolitics of oil. New Perspectives Quarterly 22:50–55.

14- Mulvenon and Swaine (2001) Taiwan’s foreign and defence policies: Features anddeterminants, RAND National Defence Research Institute (MR-1383-SRF), Santa Monica CA.

15-See, e.g., Alan S. Blinder, Economic Policy and the Great Stagflation (New York: Academic Press, 1979); Otto Eckstein, The Great Recession (Amsterdam: North-Holland, 1979); Mark E. Rupert and David P. Rapkin, "The Erosion of U.S. Leadership Capabilities," in Paul M. Johnson and William R. Thompson, eds., Rhythms in Politics and Economics (New York: Praeger, 1985)

16-Wittes, Tamarra C. "The New Proposal for a Greater Middle East Initiative: An Evaluation." The Brooking Institution. www.brookings.edu/views/op-ed/fellows/wittes20040510.htm.