Translating every day news from Arabic, collecting news in English, to inform people about the latest developments in the Middle East and the Gulf . And read every Sunday "Sunday Analysis" to get a strategic overview of those developments.
Assessments of the recent round of talks between senior Egyptian and Iranian officials have been generally positive on both sides. Egyptian officials say that their Iranian counterparts demonstrated sufficient good faith regarding the reinvigoration of bilateral relations severed since 1979 in the wake of the Iranian revolution.
For their part, Iranian officials appear to appreciate the positive reception they were accorded in Cairo during talks that took place in early September between Assistant Foreign Minister Abbas Irakachi and three counterparts from Egypt's side.
For Mohamed Sadik Al-Husseini, secretary- general of the Egyptian-Iranian Friendship Association, this positive start ought to be built upon. "Given the regional dynamics at stake, now is the time to move beyond the exchange of diplomatic niceties. Now is really the time to resume full diplomatic relations between Egypt and Iran," Al-Husseini told Al-Ahram Weekly.
For several years, through his Tehran-based NGO, Al-Husseini has been working to end what he qualifies as the "inexplicably extended grey cloud that has haunted bilateral Egyptian-Iranian relations". Al-Husseini's main mission is to encourage officials and civil society on both sides to come to terms with the fact that "no matter what the differences between these two influential and important countries, neither can afford this much- prolonged suspension of full diplomatic relations."
According to Al-Husseini, differences between Egypt and Iran are containable: "Egypt and Iran might disagree on the methods and the style, for example, by which the Lebanese people should defend themselves against the hostilities of Israel, but they certainly agree that the Lebanese have the right of defence against all forms of Israeli aggression. They might disagree on ways to restore stability to Iraq and whether or not the [current Iraqi] government is best placed to handle this task, but they share the same concern over the current state of chaos in Iraq. They might also be more supportive of one Palestinian faction or the other, but they both worry for the fate of the Palestinian cause."
For Al-Husseini, in view of the current escalation of turmoil across the Middle East, especially in spots of direct interest to either country, both Egypt and Iran have to realise that it is in their joint interest as much as it is in the interest of the region in general that they "immediately work on resuming full diplomatic relations." The recent round of Egyptian-Iranian talks is "good and encouraging", according to Al-Husseini, but "there are yet no clear indications that this first step will be followed by more constructive and positive moves" that could lead to the full resumption of diplomatic relations between Egypt and Iran.
"During the meetings that took place [in September] in Cairo, both the Iranian and Egyptian delegations agreed to set up a joint committee [of security officials] to address common concerns on both sides," Al-Husseini told the Weekly. Security has been, and remains, a key concern. In 2005, former president Mohamed Khatami and President Hosni Mubarak met in Geneva on the fringe of the World Economic Forum and decided to give the go-ahead for a resumption of relations. Momentum was interrupted by security concerns, mainly on the Egyptian side. For Al-Husseini, if Cairo and Tehran condition the resumption of relations on the success of a joint committee in resolving all outstanding issues the objective of reinstituting full diplomatic ties will fail.
"We can address some of the obvious concerns, resume full diplomatic relations and then work together in good faith to narrow our differences and solidify our relations," he said. "This is if we are really serious about shaking up the generally frozen relations between our two countries as the Cairo meetings had aimed to," he added.
The beginning of the rift between Cairo and Tehran can be dated to when former president Anwar El-Sadat accorded refuge to the toppled shah of Iran. Leaders of the 1979 Iranian revolution considered this a hostile act. Sadat was already regarded as suspect due to his 1978 peace deal with Israel. Four years later, it was a group of Islamist militants supported by Iran that assassinated Sadat. A main Tehran road has since then been given the name of Khaled Al-Islamboli, one of the Sadat assassins.
Tensions between Egypt and Tehran continued to escalate after 1982, especially in relation to two main issues: settlement of the Arab-Israeli conflict and the fast paced advancement of US involvement in regional affairs. Today, these differences are far from resolved. And unlike the days of former Iranian President Khatami, chemistry is not particularly strong between Cairo and Tehran under the leadership of President Ahmadinejad.
Indeed, Egypt is now a member of an informal diplomatic gathering dubbed "6+2+1" which, formed one year ago, brings the US together with Egypt, Jordan and the six member states of the Gulf Cooperation Council with the aim of monitoring and containing Iranian influence in the Middle East. Despite its opposition to any possible US military attack against Iranian nuclear installations, Egypt has made no secret of its dissatisfaction with the foreign policy style adopted by Tehran. Specifically, Egypt has vocally criticised Iran's interference in Iraq, Lebanon and Palestine.
Nonetheless, for Al-Husseini, despite these crucial points of disagreement, "which are likely to persist even if full diplomatic relations were re- instituted", it is vital that Egypt and Iran "come closer". "Egypt and Iran are very influential countries. If Egypt and Iran were to work together to address hotspots of contention in the Arab-Muslim region, then much can be done," Al-Husseini said. "It is only in the interest of the US and Israel to keep Egypt and Iran apart because these two countries know that the resumption of cooperation between Egypt and Iran could help address [regional] problems and consequently reduce the space of foreign intervention or influence," he added.
"Our region is now confronted with unprecedented challenges. These challenges are not at all about the expansion of Iranian influence as some Western quarters attempt to suggest. These are challenges set by foreign intervention and influence that has been profiting from splits in Arab and Muslim ranks and that is currently working to divide Arab and Muslim countries into small entities as we see in the case of Iraq. If Egypt and Iran cannot stand up to these challenges then the region is going to go through a very difficult time," Al-Husseini argued.
For Al-Husseini, the specific coordination of Egypt and Iran could properly address the issues of nuclear proliferation and the peaceful uses of nuclear energy in the Middle East. Both countries have for three decades been promoting the Middle East a zone free of all weapons of mass destruction. While Egypt is not fully confident that Iran's current nuclear programme is not ultimately tailored to produce a nuclear bomb, it stands firmly against any war on Iran to eliminate its nuclear capacities. Further, like Iran, Egypt rejects Israel's refusal to join the Nuclear Non-Proliferation Treaty. Israel is the only state in the region that has nuclear installations that go unchecked by the International Atomic Energy Agency. It is this level of corresponding strategic interests, for Al-Husseini, that should set the pace for future Egyptian-Iranian relations.
Earlier this year, Ahmadinejad made public statements promoting the prompt resumption of relations with Egypt. Egyptian Foreign Minister Ahmed Abul-Gheit at the time was cautious but welcoming in his reaction. He sent a letter to his Iranian counterpart insisting that any resumption of relations between Egypt and Iran would have to be based on solid grounds. Abul-Gheit's letter suggested that the removal of the Sadat assassin's name from the road in Tehran and the elimination of financial and any other forms of Iranian support for Egyptian Islamist militant groups are basic conditions for any diplomatic progress.
During talks that took place in Cairo in September the same demands were made. "Officials on both sides can work out the details, but our main focus should be the big picture: a region in turmoil," Al-Husseini stressed.
In press statements he made this week, Foreign Minister Ahmed Abul-Gheit indicated a shared awareness of the political hiccups ahead of the region.
Excluding any imminent US attack on Iran, Abul-Gheit was still careful to affirm that when it comes to the current "confrontation between Iran and the West", Egypt is taking a clear position: Cairo supports the right of Iran, as that of every developing country, to acquire nuclear technology for peaceful uses in accordance with terms stipulated in the Nuclear Non-Proliferation Treaty to which both Egypt and Iran are members. Moreover, Cairo is opposed to any military action against Iran and is warning in no uncertain terms of the region-wide repercussions of any military attack on Iran.
Meanwhile, according to Abul-Gheit, Egypt is not being at all apprehensive about the role that Iran is currently assuming in the region, provided that Iran is not using its regional role in relation to Arab affairs -- especially in Lebanon and Iraq -- as a bargaining chip in its confrontation with the West.
Abul-Gheit keenly denied any accusations attributed to him regarding Egyptian apprehension over attempted "Iranian hegemony."
The foreign minister insisted that Egypt does not perceive Tehran as a threat but rather as an important Muslim state with a role to serve the best interests of the stability of the region. Egypt, he said, is willing to duly consider this Iranian contribution provided that Iran is reciprocating.
This said, Abul-Gheit offered no signs of a near- future resumption of full diplomatic ties with Iran. Rather the opposite, the top Egyptian diplomat reacted with caution to questions on the matter. According to Abul-Gheit, both Cairo and Tehran still have considerable work to do before the road is fully paved towards the resumption of diplomatic relations between the two regional powers.
Iraq war was about oil, Alan Greenspan admitted in his memoirs “The Age of Turbulence.”
In the run-up to the “Shock and Awe” in March 2003 and in the following months, from Bush to Condi and Powell to Bremer, every one took pains to underline it was not.
President Bush said: The idea that the United States covets Iraqi oil fields is a “wrong impression.” Condoleeza Rice, in response to the proposition, “if Saddam’s primary export or natural resource was olive oil rather than oil, we would not be going through this situation,” said: “This cannot be further from the truth.” And she emphasized: “This is not about oil.”
Colin Powell: “This is not about oil, this is about a tyrant, a dictator.” Donald Rumsfeld: “It’s not about oil and it’s not about religion.”
Coalition Provisional Authority chief Paul Bremer: “I have heard that allegation and I simply reject it.” General John Abizaid, the former commander, Central Command, said “it’s not about oil.” “It’s not about the oil,” the Financial Times reported Richard Perle shouting at a parking attendant in frustration. Australian Treasurer Peter Costello: “This is not about oil.”
And thus when Washington insider Alan Greenspan said “I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil.”
The primary evidence indicating that the Bush administration coveted Iraqi oil from the start also comes from two diverse but impeccably reliable sources: Paul O’Neill, the Treasury Secretary (2001-2003) under President George W. Bush and Falah Al-Jibury, a well-connected Iraqi-American oil consultant, analyst Dilip Hero argued in a recent piece.
According to O’Neill’s memoirs, the top item on the agenda of the National Security Council’s first meeting after Bush entered the Oval Office was Iraq. That was Jan. 30, 2001, more than seven months before the 9/11 attacks. The next National Security Council (NSC) meeting on Feb.1 was also devoted exclusively to Iraq.
Among the relevant documents later sent to NSC members, including O’Neill, was one prepared by the Defense Intelligence Agency (DIA). It had already mapped Iraq’s oil fields and exploration areas, and listed American corporations likely to be interested in participating in Iraq’s petroleum industry.
Another DIA document in the package, entitled “Foreign Suitors for Iraqi Oilfield Contracts,” listed companies from 30 countries — France, Germany, Russia, and Britain, among others — their specialties and bidding histories. The attached maps pinpointed “super-giant oil field,” “other oil field,” and “earmarked for production sharing,” and divided the basically undeveloped but oil-rich southwest of Iraq into nine blocks, indicating promising areas for future exploration.
According to Al-Jibury, the Bush administration began making plans for Iraq’s oil industry “within weeks” of Bush taking office in January 2001. In an interview with the BBC’s Newsnight program, aired on March 17, 2005, he referred to his participation in such secret meetings.
By January 2003, a plan for Iraqi oil crafted by the State Department and oil majors emerged under the guidance of Amy Myers Jaffe of the James A. Baker III Institute for Public Policy at Rice University. It recommended maintaining the state-owned Iraq National Oil Company, whose origins dated back to 1961 — but open it up to foreign investment after an initial period in which US approved Iraqi managers would supervise the rehabilitation of the war-damaged oil infrastructure. The existence of this group would come to light in a report by the Wall Street Journal on March 3, 2003.
Unknown to the architects of this scheme, according to the same BBC Newsnight report, the Pentagon’s planners, apparently influenced by powerful neocons in and out of the administration, had devised their own super-secret plan.
It involved the sale of all Iraqi oil fields to private companies with a view to increasing output well above the quota set by the Organization of the Petroleum Exporting Countries (OPEC) for Iraq in order to weaken, and then destroy, OPEC.
On Oct. 11, 2002 the New York Times reported that the Pentagon already had plans to occupy and control Iraq’s oilfields. On Oct. 30, Oil and Gas International revealed that the Bush administration wanted a working group of 12 to 20 people to (a) recommend ways to rehabilitate the Iraqi oil industry “in order to increase oil exports to partially pay for a possible US military occupation government,” (b) consider Iraq’s continued membership of OPEC, and (c) consider whether to honor contracts Saddam Hussein had granted to non-American oil companies.
By late October 2002, columnist Maureen Dowd of the New York Times would later reveal that Halliburton, the energy services company previously headed by vice president Dick Cheney, had prepared a confidential 500-page document on how to handle Iraq’s oil industry after an invasion and occupation of Iraq. This was, commented Dowd, “a plan (Halliburton) wrote several months before the invasion of Iraq, and before it got a no-bid contract to implement the plan (and overbill the US).
Those who had doubts lost them in the chaotic first post-invasion days when US troops guarded the Ministry of Oil and the Ministry of Interior and stood by as looters picked bare and torched official buildings all over the city and ransacked Iraq’s national museum.
It is in this perspective that the current Iraq oil draft fiasco has to be seen. Mid-September, it was reported that the carefully constructed compromise on a draft law governing Iraq’s rich oil fields, agreed to in February after months of arduous talks among Iraqi political groups, appears to have collapsed.
The oil law — which would govern how oil fields are developed and managed — is one of several benchmarks that the Bush administration has been pressing the Iraqis to meet as a sign that they are making headway toward creating an effective government. That doesn’t seem to be moving — at least for now.
Realpolitik dictates oil assets to be under control. Henry Kissinger in an op-ed column in Washington Post last week underlined that control over oil is the key issue that should determine whether the US undertakes military action against Iran. Another Iraq in the making — a trillion dollar question indeed!
Informed sources in Yemen said that the Supreme National Committee for the fight against corruption sent a letter to the Yemeni Prime Minister demanding clarification to the Ministry of Electricity on the project to build five nuclear reactors over ten years, worth 15 billion dollars, compared to five million dollars for the costs of the study.
A Yemeni journalist living in America, Munir Maori, detected the presence of suspicions about the company owned by Yemeni immigrants in America. He revealed fears that the project was done to facilitate the "bury of nuclear waste" and the possible existence of corruption in the deal.
According to him, the Ministry of Electricity and Energy should cancel the agreement with the American company.
Hike in oil prices on horizon as world crude prices push higher
Step risks sparking street protests by angry labor unions
By Osama Habib
BEIRUT: Increasing the prices of gasoline and fuel oil will be one of the top agendas of the next government in Lebanon once contending groups reach an agreement on the president of the republic, economist and oil importers said on Tuesday. With the price of the barrel of oil exceeding $81, the current government has avoided raising the prices of gasoline and fuel oil, fearing that this step may trigger widespread protests.
Taxi drivers and trade unions have already threatened to block streets and stage demonstrations if the government makes the decision to raise the prices of oil.
The General Labor Confederation (GLC) has warned that hiking the prices of oil will only "inflame the street."
Bahij Abu Hamzeh, the president of the oil importing association, said the government's revenues from oil and its derivatives have shrunk from LL16,000 per 20 liters of gasoline four years ago to around LL3,000.
"The government is biting the bullet because it is watching its revenues from taxes on oil falling drastically," Hamzeh told The Daily Star.
The government's annual revenues from taxes on oil fell from $1.1 billion to less than $300 million since the prices of oil surged since 2005.
Gasoline and fuel oil are subject to the Value Added Tax (VAT).
"At one point, revenues from oil excise represented a big chunk of the government's revenues and now the amount they collect is very trivial," economist Kamal Hamdan said.
A source, who spoke on condition of anonymity, said the opposition groups will be compelled to seriously consider hiking the prices of oil once a coalition government is established.
"Even the opposition realizes that they can't ignore forever the rise of oil on the international markets but they are too afraid to say anything in order not to loose public support," the source said.
Hamzeh said that if the prices of oil exceed $100 a barrel due to the looming showdown between Iran and the West, the Lebanese government will loose all the revenues from oil.
"I can't imagine what will happen in Lebanon if the oil barrel hits $100. Everybody will lose: the government and the public," Hamzeh said.
He added that Lebanon imports more than 4.5 million tons of oil and fuel oil each year.
Hamzeh does not believe that the Arab oil-producing countries will donate oil shipment to Lebanon.
"Oil is a commodity and cannot be treated as otherwise. The Arab states have no control over the prices of oil in the international market," he said.
Hamzeh said the International Monetary Fund has urged the Lebanese government to raise the prices of gasoline and fuel oil to boost revenues. "This recommendation is part of the Paris III paper and I don't know for how long the government can avoid this issue," he said.
A study prepared by GTZ, a German research center, said that Lebanon has the 40th lowest gasoline and diesel prices in the world. It added that the prices of oil in Iran, Saudi Arabia, Qatar, Bahrain, Egypt, Yemen and Algeria are cheaperbecause of heavy subsidies.
It added that the Lebanese government capped the price of gasoline in May 2004 due to increasing word prices.
Finance Minister Jihad Azour has said that the government has no intention to raise the prices of gasoline at the moment but declined to say if the next government will take this step.
DUBAI - Saudi Arabia, the world’s biggest exporter, said on Tuesday that it remained committed to stability in world oil markets ahead of a meeting of OPEC heads of state next month.
“The third OPEC summit that will be held in Riyadh comes in the framework of routinely holding the OPEC summit in a member nation,” Saudi Oil Minister Ali al-Naimi said in a statement carried by the official SPA news agency.
“It also affirms the kingdom’s devotion to stability in the world petroleum markets to serve the interests of the producing and consuming countries, the petroleum industry and the global economy, especially the economies of developing countries.”
The Organization of the Petroleum Exporting Countries agreed last month to a 500,000 barrels per day increase in output from Nov. 1. Naimi made no mention of the increase or any predictions for the upcoming OPEC summit, which he said would take place on Nov. 17-18.
Venezuelan Energy Minister Rafael Ramirez said on Tuesday that OPEC should not increase oil production again after November.
Oil fell below $80 a barrel on Tuesday, retreating for a third day as a strengthening dollar and concerns about the world economy prompted investors to take profits.
The price has been above $80 for much of the last three weeks however, despite OPEC’s Sept. 11 agreement to cut.
Naimi said the OPEC summit would focus on energy-saving, environmental protection and global prosperity.
TEHRAN - Egyptian Foreign Minister Ahmed Aboul Gheit has said Iran is an “influential Islamic power” in the region, the London-based Asharq Alawasat reported on its website on Monday.
“We do not see Iran as a threat,” the minister told the pan-Arab daily.
Egypt supports Iran’s right to peaceful nuclear technology and insists on the need to avoid any military action against the country, Aboul Gheit stated.
He also said Iran should take the advice of Egyptian friends who are seeking peace in the region.
The West is trying to create the belief that Iran’s nuclear program is intended for military purposes, but actually no evidence has been found to that effect, he observed.
He also said Egypt does not follow the policy of creating division between Shia and Sunni and it is necessary to avoid terms like “Shia crescent” and the like.
BAGHDAD: The largest Shiite political bloc in Iraq criticized the U.S. effort to cooperate with Sunni tribes on Tuesday, stating in clear, sharp language that Sunnis from militant backgrounds should not be allowed into the official police forces.
The United Iraqi Alliance, the largest political bloc in Parliament, whose members control the government, said that the U.S. military's recruiting of Sunnis in sensitive areas in and around the capital amounted to empowering men with histories of militancy.
"We refuse and denounce giving protection to those terrorists who committed hideous crimes against the Iraqi people and allowing them to be responsible for security," the statement read. The groups are "the reason for the bad security situation," it added. "We demand the American administration hasten in stopping this adventure."
The statement was the first broad public criticism by the country's most powerful group of Shiites of the American effort to change the course of the war by setting local Sunni tribes against militants who claim ties to Al Qaeda.
The effort has been largely successful in Anbar, a vast desert province in western Iraq that is almost exclusively Sunni, and senior Iraqi officials, including Prime Minister Nuri Kamal al-Maliki, have proudly showcased the cooperation.
But the military now is beginning to recruit Sunnis inside the capital, the center of Iraq's political and economic power and nearly a quarter of its population. That development is upsetting Shiites, who fear empowering Sunnis with militant pasts will deepen the war and shift the power balance that has favored Shiites over the past year.
Recruitment drives are being carried out in more than a dozen Sunni neighborhoods across the city.
Late last month, 744 Sunnis became policemen in Baghdad's western-most neighborhood, Abu Ghraib. On Monday the military announced that more than 300 applicants had been approved for training in Ameriya, a neighborhood farther east.
Iraqis to take over in Basra
Iraq will take over security from British troops in Basra Province within two months, Maliki said Tuesday after meeting with Prime Minister Gordon Brown of Britain, who said that 1,000 more British troops would be withdrawn by Christmas, The Associated Press reported from Baghdad.
The U.S. military commander in Iraq, General David Petraeus, who met briefly with Brown during his one-day unannounced swing through Iraq, gave his qualified assent to the British withdrawal.
"There are innumerable challenges in the security situation in Basra," he said, "but there are really Iraqi solutions that are emerging to some of these."
Top American military officials are concerned that the reduced British presence in southern Iraq could open security gaps along key supply and transit routes to Kuwait. The roadways are a vital lifeline for U.S. forces.
"We are prepared to take over security of Basra within two months, and we will," Maliki said. "Basra will be one of the provinces where Iraqi forces will completely take over security."
Brown confirmed Maliki's plans and said, "We can move down to 4,500" troops from the current level of about 5,500.
He said that would allow 1,000 of the troops to leave the country "and hopefully they will be home by Christmas."
Brown is said to be contemplating early elections in Britain, where the war is deeply unpopular.
Most of the British contingent in Iraq is at an air base on the fringes of Basra, the second-largest Iraqi city, 550 kilometers, or 340 miles, southeast of Baghdad.
Brown added that any further decision on British troop withdrawals would be made next year.
British troops vacated their last remaining central Basra base last month, which accelerated calls from the British public to reduce the force levels further.
British military leaders hope their troops will remain in charge only of training Iraq troops and border guards, securing key supply lines and responding to emergencies when called on by Iraqi commanders.
Brown disclosed the troop withdrawal before flying to Basra for meetings with British troops and their commanders.
Iran will open oil-marketing bureaus in China and India
The marketing manager of the National Iranian Oil Co. has announced the imminent opening of Iran's oil marketing bureaus in China and India.
Pointing to the booming economy and growing energy demands in China and India, Mohammad Ali Khatibi said President Mahmoud Ahmadinejad has welcomed the opening of Iran's marketing offices in both countries.
Khatibi added that the National Iranian Oil Company already had bureaus of international affairs in the UK, the Netherlands, and Singapore.
The Iranian Oil Company was awaiting China's and India's authorizations, before announcing the inauguration date, the official said.
WASHINGTON: The United States maintained its role as the leading supplier of weapons to the developing world in 2006, followed by Russia and Britain, according to a Congressional study. Pakistan, India and Saudi Arabia were the top buyers.
The global weapons market is highly competitive, with manufacturing countries seeking both to increase profits and to expand political influence through weapons sales to developing nations that reached nearly $28.8 billion in 2006.
That sales total was a slight drop from the 2005 figure of $31.8 billion, a trend explained by the strain of rising fuel prices that prompted many developing states - except those that produce oil - to choose upgrading current arsenals over purchasing new weapons.
The report, "Conventional Arms Transfers to Developing Nations," was produced by the nonpartisan Congressional Research Service, an office of the Library of Congress, and presents a number of interesting observations linking arms sales and global politics.
For example, Russia has been a major supplier of weapons to Iran in past years - including a $700 million deal for surface-to air-missiles in 2005.
But anxieties over Iran's nuclear program can be seen as having deterred Moscow from concluding significant new conventional arms deals with Tehran in 2006 that could be viewed as overly provocative as the Security Council debates new sanctions on Iran.
At the same time, though, Russia continues to nurture an arms-trade relationship that is deeply disturbing to the Bush administration, by signing weapons deals with Venezuela and its anti-American leader, Hugo Chávez.
The Russian agreements with Venezuela in 2006 included the sale of two-dozen Su-30 fighter aircraft valued at more than $1 billion, along with attack and transport helicopters valued at more than $700 million.
Russia also sold Venezuela a large number of AK-series assault rifles in a deal that included a pledge to build a factory in Venezuela to produce those rifles and bullets, together valued at more than $500 million.
"Venezuela's populist president, Hugo Chávez, has taken a hostile approach to relations with the United States in recent years," wrote Richard Grimmett, a specialist in national defense at the Congressional Research Service.
"Thus his decision to seek advanced military equipment from Russia is a matter of U.S. concern," Grimmett said in the report. "Chavez appears embarked on an effort to make Venezuela an important military force in Latin America."
In 2006, the United States agreed to sell $10.3 billion in weapons to the developing world, or 35.8 percent of these deals worldwide, according to the study. Russia was second with $8.1 billion, or 28.1 percent, and Britain was third with $3.1 billion, or 10.8 percent.
Pakistan concluded $5.1 billion in agreements to purchase arms in 2006. That total was followed by India with $3.5 billion in agreements and Saudi Arabia with $3.2 billion in deals.
The combined value of arms sales worldwide to both developed and developing nations in 2006 reached $40.3 billion, a decline of nearly 13 percent from 2005.
Grimmett's study uses figures in 2006 dollars, with amounts for previous years adjusted to account for inflation, to give a constant financial measurement.
Lebanon, like Israel, prefers to put off the really important questions until "after the holidays." The Lebanese Parliament, which convened - though not at its full strength - on September 25, has decided to postpone the question of electing a president until its October 23 session, after the month of Ramadan and the Id al-Fitr holiday. This affords more time to strike a deal on a candidate.
The Lebanese presidential elections are ostensibly an internal matter, but in fact, 20th- and 21st-century Lebanese history has been tied to the history of the world, particularly the Arab world. The domestic political crises in Lebanon have, at least in part, stemmed from outside involvement, and therefore Lebanon has been and remains a microcosm of the region's problems.
The civil war that erupted in 1958 was a result of an internal struggle over extending the Maronite Christian president Camille Chamoun's term, but also stemmed from Egyptian leader Gamal Abdel Nasser's pan-Arabist influence. The Sunnis, who were ideologically and politically close to Nasser, supported joining a Syrian-Egyptian union, while the Christians opposed the move, which was liable to harm their dominance in Lebanon. The West supported the Christians, and United States marines were sent in to protect Lebanon in the wake of the July 1958 revolution in Iraq, which was perceived in the West as Pro-Soviet.
Both the Cold War and the struggle between the two Lebanese factions were manifested in the Civil War. Although Chamoun's term was not extended and Fouad Shihab was elected as his successor, the danger of Communism and "assimilation" into the Sunni Arab world were pushed off.
Another example of this microcosm is the 1975-1990 Lebanese civil war. This war stemmed from a political expression of the Muslims' growing proportion of the population, as this group demanded a change to the National Pact of 1943 that would grant them more political clout. However, beyond this internal issue, the civil war also reflected a number of major Arab issues. The first was Syria's regard for Lebanon as an arena of influence within the inter-Arab struggle, manifested by the Syrian force that entered Lebanon and remained there through April 2005. The second was the struggle between Egypt and Saudi Arabia for regional hegemony, as seen in their diplomatic intervention to end the war. The third was the strengthening of the Palestine Liberation Organization in Lebanon, after its defeat in Jordan during the events of Black September in 1970. This focused the Israeli-Arab conflict on the Palestinian issue and led to the first Lebanon war in 1982. Finally, there was the beginning of Iranian involvement to help the oppressed Shi'ites.
The Arab involvement led to the end of the civil war with the 1989 signing of the Taif agreement. This agreement introduced several changes to the National Pact, but did not solve the Syrian problem or the question of dismantling militias fighting Israel, such as Hezbollah.
War, take two
During the Second Lebanon War last summer, Lebanon again became a microcosm of regional conflicts. Although the war was conducted as a bilateral fight between Israel and Hezbollah (and not the Lebanese government), it actually reflected several broader conflicts. First on the list was the conflict between the West and Iran. This conflict is being conducted around the nuclear issue, but Iran's influence on Shi'ite communities plays a large role. Hezbollah is perceived as an Iranian proxy in the struggle for control of Lebanon and the Shi'ite world and as part of an "axis of evil" that includes al-Qaida, Hamas and Syria.
A second issue was the ideological Shi'ite-Sunni struggle within the Muslim and Arab world. The U.S. occupation of Iraq and the Shi'ites' rise to power there adversely affected the intra-religious balance in the Arab world. Egypt, Saudi Arabia, Jordan and other Sunni Arab countries saw the war through the prism of the Shi'ite-Sunni struggle, and therefore it is not surprising that they secretly sided with Israel. Within Lebanon, too, the anti-Syrian March 14 Alliance - the civic alliance, also known as the Cedar Revolution, that arose in the wake of former prime minister Rafik Hariri's assassination in 2005 - consists mostly of Sunnis and Druze, who fear the strengthening of the country's Shi'ites. The fact that the war did not end with a clear outcome means these parties are preparing for the next round in the fight over the presidency.
Lebanon's transformation into a focal point for regional rivalries has several historical reasons. First off, Lebanese society is composed of a mosaic of ethnic groups and religions. The traditional split between Christians (Maronites, Greek Orthodox, Greek Catholics, Armenians and more) and Muslims (Shi'ites and Sunnis) - for a total of 18 official communities - does not always help in understanding the politics, which rests on alliances that cross community and religious lines. In this struggle, various groups have found allies outside of Lebanon - including France, the United States, Egypt, Syria and Saudi Arabia. With the rise of the Shi'ites in Lebanon since the 1980s, Iran has become a major factor in the Lebanese political and military arena.
As a result of the Lebanese state's weakness, various external elements have found themselves compelled to intervene in internal matters in order to maintain the balance among the communities. The PLO, Syria and Israel have become the major players in the Lebanese arena, because of their geographical proximity and their national interests. However, more distant factors, such as Iran and the Western powers, also have found allies that serve their interests. The weakness of the state stems from the weakness of its institutions - especially the army, which has also been split among the various communities, leading to the establishment of sectarian militias. It is no wonder, then, that the strengthening of the army in recent years also presages a strengthening of the state.
The current struggle for the Lebanese presidency is being conducted between the players in the Second Lebanon War, minus Israel. To a large extent, this is a more intensive and impassioned fight than the one over President Emile Lahoud's term - which finally was extended in the wake of Syrian pressure and a 2004 constitutional amendment. There is no doubt that the next president - if one is indeed elected and a political vacuum is not created - will be a Maronite Christian, in accordance with the recognized rules of the game. However, Syria and Iran are interested in seeing former army commander Michel Aoun elected. Aoun, who returned about a year ago from a long exile in Paris, surprisingly has linked up with Hezbollah. Through Aoun and his allies, Syria is hoping to continue to influence the decision-making process in Beirut, after having been compelled to retreat shamefacedly in the wake of the anti-Syrian Cedar Revolution in May 2005.
The Shi'ite challenge
The influence of Syria in Lebanon could serve the former by canceling or postponing the work of the international commission investigating Hariri's assassination. In parallel, Hezbollah - supported by Iran - is interested in strengthening its political hold in order to reap dividends from the Shi'ite population growth and the Second Lebanon War. This camp rests on a Lebanese political coalition that links Christians and Muslims (mostly Shi'ite Hezbollah supporters), who are expecting to benefit from the unholy alliance between Iran and Syria.
On the other side is a large camp that includes the U.S., Europe (mainly France and Italy) and Sunni Arab countries, mainly Egypt and Saudi Arabia, and is concerned about the strengthening of Iran and Syria. Members of this camp fear the growth of Shi'ite strength in Lebanon and, as a result, throughout the Arab world, which would bolster Iran's status in the Middle East. This camp also is interested in isolating Syria and in weakening its influence in Beirut, which would return Lebanon to the path of rehabilitation it left after Hariri's assassination.
This approach relies on Lebanese forces that have come quite a way since the Beirut spring, including the March 14 Alliance and other Christian, Sunni and Druze elements. The most important change in this group has been its partnership with Sunnis, mainly in the wake of Hariri's assassination, which led many to forgo the delusion of the Sunni Arab solution (Syria) in favor of full Lebanese independence. The latest assassinations in Lebanon, which apparently were carried out by Syria or its emissaries, targeted individuals associated with this camp, and were aimed at weakening the bloc that seeking an independent president, in order to prevent the completion of the process of regaining independence.
Given that Lebanon constitutes a microcosm of regional processes, it is tempting to see the presidential elections as a struggle for the future of the Middle East. This conclusion may be too strong, because walking on the threshhold and compromises are the name of the game in Lebanese politics. The elections undoubtedly constitute an important juncture that will determine whether Lebanon is headed for rehabilitation and whether patriotism will be strengthened, at the expense of sectarianism. The Lebanese press also sees the elections as a crossroad, and is emphasizing that this is the time to prove the country is capable of determining its own fate. By November 24, the last date by which the Parliament can elect the president - we will know the answer.
Israel, naturally, is following what is happening in Lebanon with concern. Its interests place it, of course, with the Western and Sunni Arab countries. However, unlike them, Israel does not need to intervene in what is happening in Lebanon. It appears that the era of Syrian influence must end with the election of an independent Lebanese president; however, the strengthening of the Lebanese Shi'ites due to regional processes (Iraq) and the demographic increase indicate that this era has not yet ended. Given that the number of Christians is constantly decreasing - due to both emigration and a low birthrate - it appears that over the long term, Israel will have to deal with the Shi'ite challenge, with all the problems this entails.
The writer is a professor and head of the Islamic and Middle Eastern Studies department at the Hebrew University of Jerusalem.
This week confirmed the U.S. willingness to develop its implantation in nuclear energy business. After Jordan, a U.S. company won a deal to establish the first nuclear power plant in Yemen. So maybe now, every time a country will ask for help in this sector, Washington will be willing to help. Israel is said also to be searching a nuclear agreement with U.S. like the one that was signed with India.
Latest developments in Syria are quite relevant as well. Israel has been revealing that a commando could have been in Syria to steal some uranium in last month air raid target, in order to prove U.S. allies that Syria was really developing nukes, or nuclear knowledge at least. Nevertheless, some others analysis in the region, more specifically in Jordan’s press, acknowledged allegations about Northern Korea presence in Syria, but analyzed this presence through another angle than nuclear cooperation. And I think this is more accurate. To them, North Korea is known for their specialty: middle range and long range missiles. And Syria would have more interest in developing their missiles than their nuclear knowledge, they could add to the missile heads some chemicals or bacteriological devices, which they do already have. And even if what Israel has been hitting was not nukes but missiles, we still can understand why they did it; in this case, their territory would have been threatened as well. And to a certain extent, we can understand as well Bolton’s reaction in the media this week, asking for an attack on Syria, here seen as a proxy for Iran. It would be a good way of using Israel’s security interests for another purpose, attacking the enemy of those days, Iran. And as Bolton is not really known for being discreet, he could have been using this occasion, spreading rumors and allegations to justify a war on Syria, and indirectly on Iran.
Meanwhile, the war of words is spreading in the region, with Gulf countries press and Iran’s press attacking at each others, and rhetoric becoming more and more aggressive between Iran and U.S. Saud al Faysal, Saudi Arabia’s foreign minister, met with other GCC’s foreign ministers and Rice to speak about Iran, and they reached an outcome according to which a confrontation is coming in the region.So maybe soon, words will not be enough anymore for this confrontation.
Iraq's draft oil and gas law, which was approved by the Iraqi government in April and which is scheduled for parliamentary approval, is one of the most dangerous laws issued since the occupation of the country began in 2003.
The permanent constitution, passed in 2005, is another dangerous document that threatens the future of Iraq.
Some chapters of the draft oil law are based on the constitution, which is opposed by a large number of Iraqis. Many Iraqi politicians and lawmakers see the law as a major threat to Iraq's national interests.
Lawmakers and politicians from various ethnic, political and sectarian backgrounds have expressed deep reservations about the new law.
The Council of Ministers, which approved the Bill, is one of the three executive branches of the Iraqi government. Yet, it was formed after an election held under difficult circumstances in a country under foreign occupation.
However, no positive changes have yet to be seen since the start of the political process and the formation of the government of Nouri Al Maliki.
On the contrary, it had added fuel to the fire in the war-ravaged country and made a bad situation worse, taking the country to the point of no return. The new oil law is expected to play a negative role in shaping the future of Iraq.
Lawmakers must lay down flexible laws that encourage foreign investors to invest in Iraq, while preserving the national interest and giving Iraq the upper hand in controlling its natural wealth without depriving investors of their rights. This is simply because Iraq has had a record of disputes with foreign oil companies since the discovery of oil in the early 20th century.
The same scenario is taking place in Iraq following the government's approval of the new oil law. Iraqi workers in oil companies have engaged in confrontations with the Iraqi police, protesting at the new law.
In Basra, workers were involved in confrontations with Iraqi policemen and called for a civil strike last month.
In the 1960s, all political forces called for regaining Iraq's national control over its oil production. The struggle led to the passing of Law No 80 for 1961 through which Iraq managed to regain 99 per cent control over its oil fields.
Many lawmakers and oil experts have examined the technical aspects of the new oil law. They have unanimously expressed deep reservations, considering the law a step backward for Iraq whose oil revenues constitute 90 per cent of its annual budget.
Technical aspects
Here it is extremely important to highlight the negative technical aspects of the law. Al Maliki's government and the parliament must take into consideration Iraq's national interest and the future of its oil industry before endorsing it.
First, the law is a step towards - for the first time - privatising the oil sector.
Second, it establishes a framework for unusual commercial ties with foreign oil firms by giving these firms generous terms under long-term contracts that could last for 30 years without being changed.
The law could benefit foreign oil companies at the expense of the Iraqi people, deny Iraq economic security, create greater instability, and move the country further away from peace.
Third, it contains contradicting provisions.
For example, article No 111 of the permanent constitution states that oil and gas are owned by all the people, while the new law stipulates that oil and gas are owned by the Iraqi people in all the regions and provinces.
Authority
This contradiction is open to misinterpretation and gives provinces the authority to negotiate and conclude contracts with other parties and submit them to the Supreme Council, which is based on a sectarian quota system.
Under article No 1, the law may spark differences between provinces over their rights of handling oil fields, which exist in these provinces.
The controversy and exchange of accusations between the province of Kurdistan and the ministry of oil on the heels of signing the contracts with oil companies by Kurdistan, is another example.
Fourth, the law stipulates in its article No 6 that the powers of the Iraqi National Oil Company do not exceed the management and operation of existing oil fields and developing the discovered ones.
Even worse, the Iraqi oil company will not have the right of exploration for oil without obtaining a licence for that, just like other foreign companies.
Obviously, the new law does not provide protection to the national oil company and considers it unqualified to compete with foreign companies.
Fifth, the law does not oblige foreign companies to abide by a timetable to produce oil.
This allows these companies to influence global markets and apply political pressure on Iraq, causing harm to development plans in the country.
Sixth, it does not oblige these foreign countries to pledge not to use Iraqi oil to apply political or economic pressure on other countries.
Furthermore, the so-called exploration risk contracts are the most dangerous part stipulated in this law, because drilling for oil takes place in tough areas like deserts and seas.
This gives these oil companies the right to gain 40 per cent of the extracted oil.
Finally, the law is a fruit of the sectarian quota system installed by the occupation, while the Iraqi citizen is the victim of this odious system based on sectarian affiliation, and not on qualification or loyalty to the nation.
Therefore, in Iraq's interest, the parliament should not rush this law through, as this would shape the future of Iraq and its future generations, who have the right over their country's oil wealth.
The Iraqi parliament is required to pass this real test and place Iraq's supreme interest above other considerations.
Allegations that the Bush administration was driven to invade Iraq by a lust for the country's oil have been part of the anti-war movement's narrative since even before the war's first shots were fired. The image of a White House hijacked by a cabal of former oil executives who steer foreign policy to advance Big Oil's interests gained credence as disillusionment from the war grew.
This idea is now being reinforced by former Federal Reserve Chairman Alan Greenspan, whose memoir hit bookstore shelves this month.
"I'm saddened that it is politically inconvenient to acknowledge what everyone knows - the Iraq war is largely about oil," wrote the man dubbed "The Oracle."
As long as such allegations came from Michael Moore, they could be brushed aside, but echoed by Mr. Greenspan, one of Washington's most influential yet least controversial figures, it's time to expose the charge to serious scrutiny.
As director of an organization dedicated to reducing America's dependence on oil, I'd be last to deny the toxic influence oil dependence has on America's foreign policy, its international conduct and its selection of "friends and allies" in the Middle East. There is no doubt that since the 1945 meeting between President Franklin D. Roosevelt and Saudi King Ibn Saud, the United States has been militarily committed to the stability of the Persian Gulf and time and again has used its muscle to guarantee the supply of oil from the region.
But while there is no gainsaying America's oil dependence, attributing oil motivation to every U.S. activity in the Persian Gulf is a gross extrapolation.
While proponents of the view that "it's the oil, stupid" offer little evidence to support their claim, the evidence to the contrary is ample. Take, for example, the report of the 2000 National Energy Policy Development Group, also known as the Cheney Report. This policy paper, composed by no fewer than eight Cabinet members, reflects the pre-9/11 mindset within the Bush White House on how to achieve energy security. Yet it has almost no mention of Iraq and its vast oil reserves. The opposite is true: The report warns against concentration of world oil production in one region and calls for the United States to diversify its energy supply away from the Middle East.
Despite the involvement of Saudi nationals in the 9/11 attacks, the Bush team did not for one moment contemplate invading oil-rich Saudi Arabia. Instead, it chose to invade Afghanistan, the country with the least amount of oil in Central Asia. Furthermore, the administration decided to end the decades-long American military presence in Saudi Arabia, a country that produces five times as much oil as Iraq, and move U.S. bases to Qatar, which produces one-tenth as much as Saudi Arabia, and Bahrain, which has essentially run out of oil - a questionable move for a nation whose supposed main driver was oil.
The administration's actions before the 2003 invasion of Iraq raise another question. At the time, Iraq was exporting hardly any oil and was under a strict sanctions regime that prevented international companies from investing in its ailing oil industry. For profit-driven companies such as Exxon and Halliburton, the sanctions were an impediment to business, and they lobbied the administration to review them. The last thing they wanted was the uncertainty associated with war. Yet since his inauguration in early 2001 and up until the war's start in March 2003, President Bush was persistent in maintaining the sanctions regime, providing competitive advantage to non-American companies bidding for Iraqi oil. Mr. Bush's decision to go to war against the interests of Big Oil rather than lifting the sanctions pokes a huge hole in the Iraq-is-about-oil narrative.
Before the war, the United States imported very little oil from Iraq, and oil stood at $30 a barrel. Today, only 4 percent of U.S. oil imports come from Iraq, and oil is at $80. With 160,000 American troops in Iraq, America's oil companies are nowhere to be seen. Russian and Chinese companies are enjoying the spoils of war. If the "Iraq is about oil" cohort is right, and Iraq was truly about oil, then our failure there is even bigger than we thought.
But it isn't. Oil played at best a supporting role in the decision-making process that led to the war, and the notion that Mr. Bush was oil-driven deserves a decent burial. Mr. Greenspan's statement has only one significance: It serves as a painful reminder of the administration's failure to provide a compelling explanation for why we are in Iraq. And in the absence of such explanation, even oracles can get confused.
When you work about 600 miles outside the Washington, DC Beltway you can spend a lot of time on the road going to conferences and meeting with interview subjects. This week we were fortunate in having home field advantage during the visit of Middle East specialist and former Washington Post Middle East bureau chief Thomas Lippman to Middle Tennessee under the auspices of the Tennessee World Affairs Council's distinguished visiting speaker program. Tom, author of "Inside the Mirage: America's Fragile Relationship with Saudi Arabia," spent four days talking with students at Vanderbilt University, Tennessee Technological University, and area high schools, as well as civic clubs, receptions and discussion groups on a variety of issues related to Saudi Arabia and the United States' role in the Middle East.
Thomas Lippman talked about the foundations of the US-Saudi relationship with members of the Cookeville (Tennessee) Rotary Club. (Photo: Patrick W. Ryan) SUSRIS caught up with him in Cookeville, Tennessee where he talked about important political and economic news of interest. In coming days we will share his interview about meeting with Saudi students at Tennessee Tech, his presentation to a Rotary club on the foundations of US-Saudi relations and his interview with Nashville Public Radio. Today, we are pleased to share his perspective on the news.
Political and Economic Developments in Saudi-US Relations
A Conversation With Thomas Lippman
SUSRIS: We are joined today by Thomas Lippman, Adjunct Scholar from the Middle East Institute, veteran Washington Post correspondent as well as author of a number of books including “Inside the Mirage: America’s Fragile Relationship with Saudi Arabia.” He will talk about current issues in the US-Saudi relationship and developments like the participation of Saudi Arabia in the Middle East Peace Conference, Saudi support for US positions in Iraq and recent economic news like the Dollar-Riyal currency peg. Thanks for joining us today Tom.
Thomas Lippman: My pleasure.
SUSRIS: First lets talk about the prospect for a Middle East peace conference and the prospects of Saudi Arabian participation.
Lippman: Well as you know, President Bush has made it a point, a big point, and staked a lot on the prospect for having a multinational conference thatClick for larger map. would address the large questions that remain on the Israel Palestinian issue. It is an issue that’s been complicated by the split, the breach between the Palestinians that has split off Gaza under Hamas from the West Bank under the Fatah led by Mahmoud Abbas. The Palestinians are divided themselves.
There has been a big question about whether Syria would be invited to such a conference, I believe that question has now been answered in the affirmative, and also whether the Saudis if invited will participate.
The Saudis have said, Prince Saud al Faisal, the Saudi Foreign Minister has said, Saudi Arabia agrees in principle to participate if the prospect holds the conference will be bringing up and resolving substantive issues -- really making progress on the nuts and bolts of a peace deal, of an agreement between Israel and the Palestinians.
I believe his exact words were, “We don’t want to go to a meeting for the sake of going to a meeting,” I read that as a signal to the United States the Saudis are not going to go there and to possibly jeopardize or undermine their own position among other Arabs just to do Washington a favor. They’re not committed to making peace with Israel on any terms; they are committed to peace with Israel on terms acceptable to the Arabs in general and the Palestinians in particular.
It seems to me that this is a big question because the Saudis are in a tough spot. It would really be a neuralgic decision in Washington if the Saudis were to be invited to such a conference and declined to participate. It’s always important to remember in discussions of the relations between the United States and Saudi Arabia that while strains always arise – differences, sometimes very bitter differences pop up over this issue and that issue -- neither side has ever wanted and neither side wants now any kind of fundamental breach.
The decision by President Bush to undertake a major new sale of military equipment and arms to Saudi Arabia and the other countries of the Gulf was accompanied by many statements of American officials including Secretary Rice and Under Secretary Burns to the effect that these arms sales represented new U.S. commitment to our relationship with Saudi Arabia and other friendly countries in the Arabian Gulf. And I think the Saudis took it in that spirit.
Of course no arms sales have yet been approved by Congress, but the fact that the White House made the announcement in a way that was cast as not being a step against Iran, but a step being an affirmation of our friendship with Saudi Arabia and other friendly states of the Gulf I think was important. Whether under those circumstances the Saudis are going to want to stand up and say, “We were invited, but we’re not coming” I don’t know. The Saudi preference of course would be to say in private, Mr. President that’s not good enough; we can’t do that, and then not get invited. So they wouldn’t have to say no. But this is the most immediate big question mark about the relationship.
SUSRIS: Let’s turn to another question that arises from the visit to Saudi Arabia in August of Secretary Rice and Defense Secretary Gates in which the arms sale and the peace conference were discussed with the King and Prince Saud al Faisal. That was the question of Saudi Arabia’s support for the US position in Iraq, specifically efforts to reduce the number of Saudis who were going to Iraq as foreign fighters and the possibility that Saudi Arabia will reopen its embassy in Baghdad.
Lippman: Well on the first point, three or four months ago several very senior American officials including Defense Secretary Gates were saying in public that Saudi Arabia was not doing enough to help us out in Iraq. And in particular that the transit from Saudi Arabia to Iraq through Syria of whatever you want to call them -- bombers, Jihadis, terrorists, trouble makers going to Iraq -- was continuing and it was a troubling issue.
Last week I had occasion to put this question directly to David Satterfield who is the State Department senior point man on Iraq and his answer was interesting. He was very emphatic in saying that the transit of troublemakers through Damascus is continuing undiminished, but he didn’t say where they were coming from. He had an opportunity to renew the statement that they were coming from Saudi Arabia to a great extent, and that the Saudis were not doing enough to stop them. He didn’t do that. I took this as a sign that we Americans may be making some progress on that front, and that the Saudis may be doing more to help us there.
SUSRIS: Well let’s explore a little bit more the question that not being helpful in regard to Jihadis from Saudi Arabia. In late July, Ambassador Khalilzad was very outspoken but there has been no more comment from him on this subject. Is that an indicator that that was a minor blimp or is there.
Lippman: Well you know frankly the Saudis were quite baffled by Khalilzad’s remarks which I believe he made in an op-ed in the New York Times.
SUSRIS: They were initially in an op-ed but he explained them on a Sunday talk show, meaning specifically Saudi Arabia.
Lippman: Yeah, and I think in my understanding is that the Ambassador went a bit beyond his brief with those remarks. You don’t often see an issue where an Ambassador like that goes beyond what the Secretary of Defense and Secretary of State have been willing to say. There has been no repetition of that, and I take that as a sign that this issue is under active discussion at levels that are not immediately visible to us. I assume that to be the case. Who is actually doing the talking to whom, I do not know. I don’t recall that either General Petreaus or Ambassador Crocker expressed in their extensive appearances in Washington, expressed public criticism of Saudi Arabia on this point. And I took that as a sign that they are making progress. Maybe they did, but I don’t recall that they did.
SUSRIS: Turning to the question of the embassy in Baghdad, what do you see as the status of movement in that area?
Lippman: Well this is an important issue. My understanding is that most Arab countries, perhaps all of them, have refrained from opening or reopening embassies in Baghdad because it was too dangerous. There were attacks on diplomats there. They either can’t afford or don’t want to spend huge amounts of money necessary to provide security for daily life in Iraq.
But the Saudis did send a delegation to Baghdad to explore the possibility of opening an embassy. And they may well do that. Whether it will be staffed by a senior Saudi diplomat with the full rank of Ambassador Extraordinary and Plenipotentiary, I don’t know because the Saudis have not made much secret of the fact that they are not big fans of the Maliki government -- which they regard as essentially an agent of Shiite domination of Iraq. And they may do it in the interests of pleasing Washington and promoting Arab solidarity hoping to achieve something on the Iraqi stability front, but I don’t think anything is imminent.
SUSRIS: Lets shift from regional security and politics to economic developments in the Kingdom. In the backdrop of $82 a barrel oil it was just announced that Saudi Arabia will have a $77 billion surplus. What’s the impact of that on the country?
Lippman: Well you know its actually been a long time since we’ve had a conversation about whether OPEC is gouging Americans and whether the Saudis should be doing more to help us out on this.
We’ve lived with oil at $65 and more for quite some time now and you don’t see the kind of intemperate editorializing about this that you used to see in the past – you know, calls for taking over the oil fields and all that sort of thing. It’s true that Saudi Arabia announced, this week, a budget surplus for their fiscal year, an all time record budget surplus of about $77 billion. And that’s because the money is really flowing in. Saudi Arabia is the world’s largest oil exporter and oil prices are very high. But it’s also true that they traditionally prepare their budget on a basis of the relatively low estimates of what the price of oil is going to be. In this case I don’t know what their budget figure was, what they anticipated the price of oil would be, it certainly wasn’t $80 a barrel. So on one level you could say, “The Saudis have a $77 billion dollar surplus so they ought to do more to bring down the price of oil for the benefit of American consumers.”
Well first the Saudis have committed themselves, more than a year ago, the Saudis committed themselves to an increase in their national production capacity up to more than 12.5 million barrels a day over the next few years. At the recent meeting of OPEC, they led the OPEC countries in a commitment to get another 500,000 barrels a day into the worlds market to try to stabilize prices. The Saudis never want to be in the position where the price of oil is so high that it truly stimulates substantial investment in other forms of energy.
They read the ethanol numbers, they read about bio- diesel and that’s not the way they want to go and they will wish to keep oil at a price that we can afford. But they do not completely control the world oil market. A lot of oil prices are set by people in New York bidding on oil contracts who have other considerations in mind, not just supply and demand but conditions of risk assessment for example, or the possibility of a U.S. confrontation of Iran would interrupt supplies coming out of the Gulf. The so-called “fear premium” is part of the price of oil, the Saudis can’t do much about that.
On the other hand I think you can argue the Saudis are doing Americans a big favor every day by continuing to denominate all international oil price transactions in dollars, in taking only dollars in payment for oil. In effect, this is a subsidy to American consumers of more than thirty percent because of the very low value of the dollar on a lot of world currency markets. To the extent that the Saudis have a contract in, lets say Germany, they’re really getting beaten up by the fact that it now costs a $1.41 to buy a Euro and they have never seriously considered, from my understanding, of breaking away to the often proposed basket of currencies for pricing international oil transactions. They have reaffirmed the link of their own currency to the dollar, even though the Kuwaitis severed that link. I think the Saudis have an interest in fiscal stability here and in maintaining good relations with the United States on this point. And to that extent I think things are on a good plane between the United States and Saudi Arabia.
SUSRIS: Any last remarks on current trends or indicators in the news bearing on US Saudi relations?
Lippman: Well here’s something that I think a lot of people didn’t pay attention to. After the Sharm el Sheik conference a month or so ago, which involved the United States, Egypt, Jordan and Iraq’s neighbors including Saudi Arabia, the participating countries including the United States issued a joint communiqué. People don’t often pay attention to these documents, but they are prepared and ascribed to after weeks and months of negotiation over their exact language. In there was a real sleeper clause I thought people didn’t pay enough attention to.
All the signatory countries, including the United States, expressed support for what this document called the “universality of the Nuclear Non-Proliferation Treaty in the Middle East.” That is to say that they want everybody to join the Nuclear Non-Proliferation regime set down in the Non-Proliferation Treaty.
There is only one country in the region that isn’t a participant in the Non-Proliferation Treaty regime and that’s Israel. And this was, in my opinion, this was an acceptance by the United States of long standing Saudi policy, which calls for a nuclear free Middle East. And I thought no one paid much attention to this, to me I thought it was a gesture that the United States gave to the Saudis and I think the Saudis probably appreciated it.
SUSRIS: Well thanks for bringing that to our attention and for the discussion of politics and economics relative to Saudi Arabian-U.S. relations.
Lippman: My pleasure.
Thomas W. Lippman is an adjunct scholar at the Middle East Institute in Washington. In four years as the Washington Post's Middle East bureau chief, three years as the Post's oil and energy reporter and a decade as the newspaper's national security and diplomatic correspondent, he traveled extensively to Saudi Arabia. He is the author of Inside the Mirage: America's Fragile Partnership with Saudi Arabia, Madeleine Albright and the New American Diplomacy, Understanding Islam, and Egypt After Nasser. A writer and journalist specializing in U.S. foreign policy and Middle Eastern affairs, he lives in Washington, DC.
TEHRAN (Reuters) - An Iranian oil official predicted on Sunday that the price of WTI crude could rise to about $90 per barrel by December if the U.S. dollar continues to lose value, Iran's state broadcaster IRIB's web site reported.
"If the value of the dollar continues to drop, the price of ... WTI ... will reach about $90 in three months," said Hojjatollah Ghanimifard, international affairs director of the state-owned Iranian oil company.
WTI crude slipped $1.22 on Friday to $81.66 per barrel as traders took profits from near record prices and as worries lingered about a slowdown in the U.S. economy. WTI (West Texas Intermediate) is a benchmark oil grade on the U.S. market.
Ghanimifard said recent crude price rises had no connection with crude oil supply.
"The increase of crude price is not related to the amount of supply. The drop of the dollar's value against the euro is one of the main reasons for the recent rise in the price of crude," he said.
A Reuters poll of analysts showed on Wednesday tight oil supplies, red-hot global demand and a weakening dollar will boost average oil prices to a record level next year.
Analysts raised their average 2008 oil price forecast for U.S. crude to $67 a barrel as many believe the current rally will continue well into 2008. The forecast surpasses the record average of $66.24, reached in 2006.
Analysts believe prices will peak in 2008 with average U.S. crude prices declining to $62.74 the following year and $59.41 in 2010.
