The Specter of Our Time:

Oil, War, and Global Polity

Professor Cyrus Bina

Columbia University Seminar on Globalization, Labor, and Popular Struggles #671

Faculty House, Columbia University, New York Monday, September 30, 2013: 7:15 PM – 9:00 PM

OIL, WAR, and GLOBAL POLLITY

• • • • • • • • • • • •

The Evolution of Petroleum: An Overview

Early Cartelization Era (pre-1928) The Achnacarry Agreement (1928): Full Control The International Petroleum Cartel (1928) Colonial Oil Concessions: The ME’s Middle Name The Rise of Independents: Challenge to Full Control Oil, Colonialism, and Nationalism The So-called 50-50 Profit Sharing Oil and the Overthrow (1953 CIA Coup) Formation of OPEC (1960) and an Inner Fracture The 1973-74 Oil Crisis: Defeat of Monopoly by Competition The Collapse of International Petroleum Cartel (1972) Decartelization, Spot & Futures Markets, Globalization (1970s)

International Petroleum Cartel (1928-72)

The Achnacarry Agreement

• • • • • • •

MAINTAINING

the market shares of members – ‘As Is’ ;

PROVIDING

Facilities belonging to members must be made available, but not less than the actual cost to the owner;

ADDING

new facilities only as actually needed to supply increased demand;

MAINTAINING

for each producing area the financial advantage of its geographical location;

DRAWING

supplies from the nearest producing area;

PREVENTING

any surplus production in a given geographical area from upsetting the price structure in any other area;

OBSERVING

of these principles would benefit not only the industry but consumers as well.

Periodization of Petroleum

I. The Era of Colonial Oil Concession

–

Vastness of Area under Concession, often Whole Country;

–

Lengthy Interval in Excess of Fifty or Sixty Years;

–

Handful of United, Interlocking National Cartels ;

–

Display Little Payment on Oil Royalty ;

–

Uniformity Payment; of Feature and Homogeneity of Royalty

–

Little Change in Terms or Length of Concession .

–

Extra Judicial Practice in Settling the Disputes .

Periodization of Petroleum cont.

II. Transition Period Toward Decartelization

–

Nationalist Awakening and Colonial Barriers;

–

50-50 Profit Sharing in Calculation of Oil Royalties;

–

1951 Nationalization of Oil in Iran Under Mossadegh;

–

1953 CIA Coup d'état Against Premier Mossadegh;

–

1954 Denationalization of Oil in Iran;

–

1960 Formation of OPEC in Response to Price Cut;

–

Rise of Independent Oil Companies.

Periodization of Petroleum cont.

III. Globalization of Oil

• • • • • • •

Decartelization and Competitive Globalization of oil; 1972 Collapse of International Petroleum Cartel ( IPC ); Objectification of Highest Cost Oil Producer (US Oil) as Center of Gravity of Long-Term Price ; Spot (Futures) Markets and Abolition of ‘Posted Prices’; Arbitrary ‘Royalty’ Gave Way to Differential Oil Rents ; Parodies of ‘Security’, ‘Dependency’, ‘Physical Access’, Need for ‘Oil War’, and ‘Energy Independence’; Birth of Global oil , Hoax of ‘National Security’ and Cut off of US Foreign Policy from Umbilical Cord .

Transformation of Global Power

Hegemony and Hegemonic Leadership

• • • • • • • • •

Hegemony and Nature of Leadership Drawing on Antonio Gramsci’s View Spontaneously Consensual Internally Arisen Historically Sanctioned Holistically Undivided Structurally Synthetic Institutionally Mediation Hegemony arises from mutuality whole—

NOT

of system as the separate property of the hegemon.

Postwar Pax Americana (1945-1979)

Hegemonic Economic Institutions • • • • • • • • • •

The Bretton Woods Monetary System ( 1944-1971 ) Direct Dial with God Gold – Dollars: the Messenger International Monetary Fund (IMF) World Bank and Affiliated Channels and Institutions Marshall Plan for the Postwar Reconstruction General Agreement of Tariffs and Trade (GATT) Agency for International Development (AID) Universal Land Reform Programs in the ‘Third World’ Unfolding Spread of Capital and Capitalist Relations Incubator for Transnationalization of Social Capital

Postwar Pax Americana cont.

• • •

Iron Curtain Speech ( March 5, 1946 ) – Going for Jugular Soviet Atomic Bomb – the ‘Monkey wrench’ Three-Prong US Cold War Strategy of Containment :

– – –

Containment of the Soviet Union Containment of Nationalist & Democratic Movements , thus ruining the roots democracy in the ‘Third World’ Containment of US Progressive Political Movements , including Labor Unions , Etc.

•

Strategy of Détente vis à-vis the Soviet Union

Globalization and Downfall of Pax Americana

“What is done cannot be undone.”

• • • • • • • • •

Eurodollars and Unraveling of the Bretton Woods System (August 1971) US Balance of Payments Suddenly Turns Red International Monetary Fund Wobbling and Limping World Bank Becomes a Relic of the Past The 1973-74 Oil Crisis Leads to Globalization of Oil Multinational Capital Sheds Its Nationality Transnational Social Capital is Born US ‘Plants Closing’: Mop-up Operation of the 1980s Economic Crises Are Now Interdependent & Global

Globalization and Downfall of Pax Americana cont.

• • • • • • • •

With the 1972 Collapse of International Petroleum Cartel, ‘Postwar Petroleum Order’ Comes to an End With Revolutions in Iran and Nicaragua , The ‘Third World’ Client Sub-System Virtually Ends in 1979 The European Community Turns to European Union Euro is Born and US Dollar is No Longer Lonely!

Globalization Germinates Amid the Outmoded Polity Globalization is Polity are Now NOT ‘Americanization’ as Economy and Marching to a Different Drummer Hegemony is NOT Domination By Force American Hegemony is Contradiction in Terms

Rightwing Theory and Leftwing Regurgitation

“The United States has gone to war now [ in the early 1990s ], and the American people presume this will lead to a choice to

secure access

independent to oil by secure oil supply . As a society, we have made a military to a large degree of what that means. The alternative is to become secure access (Challenge, 1991).”

—James Schlesinger, Economist with a Harvard Ph.D. and First US Secretary of Energy A September 2013 E-mail Received from one of my dearest leftist friends at URPE :

“Cyrus, you have a lot of interesting things to say, but in this invitation you are once again being rather insulting to the Left general. Calling a war an ‘oil war’ ! Why would a leftist listen to you if you are calling us all stupid? I have said this before - I believe while these wars are more than oil wars, oil is certainly an important part of them, and of US imperialism in opens people eyes to broader dimensions of US foreign policy.

It's a slogan.

smithereens, and where the profits go.

A slogan is supposed to arouse interest, not explain the world. Just because there is a world oil market, doesn't mean that political influence has no effect on future access , how the industry is developed, whether a country can actually produce oil or whether it is blown to It seems to me that a market is a temporary arrangement, which changed in the past and can change again.”

Oil:

The Mismeasure of “Blood”?

“Oil is not an object but a trajectory, indeed a constellation of exigencies, events, actions and reactions, disputes and refutations, disparity and deviation, and, above all, contradiction and conflict across historical time and social relations fused and conjoined .... This is the story of old colonialism bleached in neocolonialism … and carried over and conveyed by the schizophrenic rubric of Pax Americana, before becoming history in past tense. This was the end of a history and the beginning of a new one. [Thus, the end of history did not turn up] in the intended fashion of Fukuyama’s … would make jovial ruse. The irony of history the ‘last man’ the very last US president in charge of the now defunct Pax Americana.”

Oil, War, and Global Polity (Bina 2013)

•

Conclusion:

Toward A Multipolar Global Polity

Globalization of Oil is a Critical Lenz for:

– –

Assessing the Rise and Fall of American Hegemony Appreciating of Capitalist Competition in Presence of Integration

– –

Understanding of OPEC and Its Today’s Role Grasping that Speaking of the Middle East ‘Oil Dependency’ is a Babble

– –

Accepting that ‘Energy Independence’ is a Wishful Thinking Realizing that If ‘Fracking’ Displaces the Old US Domestic Fields, Long-Term Global Price of Oil is Still Determined Within the US Oil Region

• • • • •

Globalization is the Negation of American Hegemony Hegemony Belonged to the Defunct Pax Americana (1945-1979) Pax Americana Collapsed By Internal Forces The Real Cause of the War is the US Reaction of to Its Lost Hegemony By Military Domination, US Will Dig a Deeper Hole for Its Further Decline