Rochelle Yeung

Eco 357L

 

Midnight Notes, The Spy and the Assasin: On the Basic Causes of the War in the Gulf

 

            The main point of this article is that Midnight Notes disagrees with the idea that the Pentagon is trying to protect low oil prices.  Midnight Notes thinks that the US have troops in this region to make sure oil prices actually rise.  They also claim that US wish to have troops stationed in the Gulf permanently.  What the US wants is control of the revenues from oil.  When the price of oil rises, the countries of the Middle East will see a gain in revenue.  However, the US wants this additional revenue to go towards not funding social programs to help citizens or wage increases, but that the revenue will help pay off bank loans from the West, and also increased arms purchases from the US.

 

OIL

            Oil is a basic commodity, and its necessity means that fluctuations in its price affects everyone from the US to Europe.  If wages for oil workers do not go up, then the increase in the price of oil actually cuts the workers’ wages.  Most oil production in Kuwait and other Middle East countries comes from foreign workers, mainly from Egypt, India, and Pakistan.  Although they escaped their country to work in Kuwait and the United Arab Emirates, they are still some of the poorest people in the world.  They do not have the right to own property, initiate trade unions, and are made to work long hours for little pay.  Working in the oil fields is also dangerous, with death and mutilation commonplace.  The workers have begun to organize to attempt to lessen the brutality of the working conditions, and as a result labor has been controlled through military action and state terror.

 

WORK/ENERGY CRISIS

            Capital’s response to the failure to control the Middle East working class in the 1970s was to have oil prices decrease, to initiate war between Iran and Iraq, and to fuel the Debt Crisis.  In 1986 Saudi Arabia doubled oil production, which collapsed prices, which in turn led to a decline in revenues for oil-producing states and profitability of oil companies.  One thing learned from this was that in order to raise oil prices and prevent the surplus from being absorbed through workers’ demands, the methods for regulating and policing the oil industry has to change.  Therefore, the IMF implemented its austerity programs, and the military became more involved, which hit the workers the hardest, cutting into wages and decreasing their standard of living.  For example, when the IMF imposed devaluations of the currencies in the oil-producing states, it lowered the wages of the foreign workers who must exchange their money before sending home.  With austerity, war became commonplace and police forces and military budgets increased. 

 

PRICE RISES

            Due to the austerity measures, foreign workers are accepting a 2/3rds pay cut.  On the other hand, there have been massive riots and demonstrations in many countries.  So by 1990, the USSR, US, Saudi Arabia, Iran and Iraq agreed that oil prices need to rise.  For the latter two countries, increase in oil prices would help them pay for the war, and for the other countries, higher oil prices meant a halt to decreasing oil company profits, and more money to invest in production expansion. 

 

PETRODOLLARS

            At first the Bush Administration agreed to the attack of Saudi Arabi by Iraq because of Kuwaiti refusal to abide by production guidelines set by OPEC.  The problem was that after the invasion, Iraq claimed Kuwait, which would have given it too much power over the international oil industry, and the US did not want that to happen.  At the same time, Iraq cancelled all its war debts to Kuwait and refused to pay back Saudi loans of 50 – 60 billion dollars.  By doing this, Iraq interrupted the cycle of 60 billion petrodollars being invested in the US and Europe.

 

CONTROLLING THE WORKING CLASS

            The military crisis is also being used to recompose the working class in the Middle East.  The Saudi government has expulsed 1.5 Yemen workers out of Saudi Arabia.  Many Asians also working in Saudi Arabia that want to leave because of fear of war and being denied exiting visas.  Both Saudi Arabia and Kuwait want their workforce to primarily its own citizens.  This is not possible, however, because it is considered ‘grunt work’, which the citizens refuse to participate in. 

            The main target of the attack is on Palestinians though.  They are being expelled from Saudi Arabia and other countries and put under police surveillance.  The devaluation of the Jordanian dinar has meant reduction in savings, and exports are decreasing as well as revenue.  In Israel, a new policy is being set forth where Palestinian workers have to attain permits and be paid minimum wage.  This resulted in  80,000 lost jobs.  They also have to suffer with curfews, arrests, military rule, and conviction rates of nearly 100%.