MIDEAST INSTABILITY HURTING OIL'S FUTURE

Events are validating the worst fears of Middle Eastern oil producers. Oil consuming countries propose new layers of taxes on crude oil and petroleum products. U.S. President Bill Clinton wants to tax all energy, oil most of all. Germany's government seeks new taxes on gasoline and diesel fuel to finance railroad repairs. Who will be next?

March 15, 1993

3 min read

Governments traditionally turn to oil when they need money. But the habit has taken on a new twist. Petroleum taxes are gaining favor as a way to suppress an activity increasingly thought to be contrary to industrial nation interests: oil consumption. Environmentalism explains some of this revulsion toward oil, of course. But so does a perception of the Middle East as a rapidly arming bomb with an ever-shorter fuse.

BOUNDLESS COMPLEXITY

The Middle East's complexities, as regional experts always point out, know no bounds. Conflicts fester between Islamic sects, between Islamic and non-Islamic groups, between Arabs and non-Arabs, between wealthy and poor. National boundaries reflect decisions of the colonial powers of yesteryear. Bedouin traditions thrive in the most modem and wealthy Middle Eastern capitals. Recognition of these and other complexities must precede any attempt to understand Middle Eastern politics.

It is just as necessary for Middle Eastern oil producers to recognize that the oil consuming world has growing doubts about their region's reliability as supplier of 30% of the world's most important source of energy. In politics, that simplistic perception works to the detriment of oil itself.

What are consuming nations to make of the rapid arms build-up now under way in most of the Middle East, especially around the Persian Gulf? Of wars past and seemingly imminent? Of Middle Eastern connections to international terrorism? Of succession questions in crucial monarchies? Of perpetual contests for political hegemony? The Middle East provides oil in needed quantity at market prices today. But what about tomorrow? Why, given recent history, would anyone expect political conditions in the Middle East 5 or 10 years from now to look anything like they do today? And if all this makes the next Persian Gulf crisis seem not to be a question of whether but of when, why would an industrialized world with other energy options not consider something more costly but also more secure?

A DILEMMA

For Middle Eastern producers, the dilemma is daunting. Iraqi President Saddam Hussein has shown what can happen to the undefended. Yet the industrialized West recoils from the consequent rush to arms. There ought to be a better way, and there is. Sovereign nations can form treaties and alliances, even with nations from other ethnic and religious groups. They can refuse to use trade as a political weapon, except in extreme circumstances such as the embargo of Iraq. Leaders can forswear terrorism and assist with terrorist investigations. Governments can take steps to assure continuity of leadership. Current autocracies can even move toward participative government and dissipate some of the dangerous internal pressures with which they now contend.

Middle Eastern countries must forge some structure beyond simple self-defense for regional peacekeeping. They must demonstrate to the world that they can settle differences and share power without hasty resort to their new machines of war. They must renounce terrorism. Future oil sales may well depend upon steps the Middle East takes now toward stability. If nothing else, stability is good business. Besides, life in any culture improves as a function of distance from the brink of violent discord.