Peace accord good for Arab producers

The historic but tenuous peace accord signed this month by Israel and the Palestine Liberation Organization (PLO) will influence oil markets years from now. The effect's nature will depend upon how Arab oil producers respond to what has occurred.

Sept. 20, 1993

3 min read

Everyone recognizes weaknesses of the accord. It was not the Arab world's-nor, perhaps, Palestinians'-leading representative who shook hands with a reluctant Israeli Prime Minister Yitzhak Rabin last week in Washington, D.C. It was PLO Chairman Yassir Arafat, who in preceding months had suffered more than a few setbacks. He and his organization had lost favor of the most radical Palestinians and financial support from the old Soviet Union and Persian Gulf oil producers. Weakened financially ind politically, Arafat needed to close a big deal.

Power as catalyst

In the Middle East, however, any deal between former antagonists is something, especially when one of them is Israel. Once the PLO acted, Jordan, Lebanon, and Syria showed varying interest in negotiating with Israel, too. The peace agreement between Israel and the PLO thus may not encompass a full measure of people spilling one another's blood in the Middle East, but it seems to hold sway as a catalyst.

Questions for the petroleum world are whether and how Arab oil producers-especially those on the Arabian Peninsula-will align themselves with the accord. Iraq can be expected to oppose peace with Israel. Other Arab producers can be expected to want not to take sides. But that isn't an option.

As more Arab entities enter relations with Israel, anti-Israel politics will become weaker as a unifying force in the already fractured Arab world. Differences between wealthy and poor Arab countries, aggravated by militant Islam, then could become the Middle East's principal political fault line. Saudi Arabia, Kuwait, Qatar, the United Arab Emirates, Oman and Yemen have two alternatives to alignment with countries moving toward recognition of Israel. They can rely on protection from powers elsewhere, which might not be forthcoming if they resist Middle East peace now. Or they can try to work something out with Iraq and another early opponent to the peace deal, Iran.

The choice should be easy. If Arab producers don't align themselves with either peace or militancy now, they'll have to do so eventually under duress.

Easy choice

A pragmatic reason for Arab producers to choose peace is simple economic self-interest. Overt Arab support of the Israeli accords would be a move toward stabilization of the Middle East. Stability would be good for oil, a crucial disadvantage of which is that so much of it comes from such a volatile region. Oil consuming countries know they can buy all the oil that they need from Middle Eastern producers now but have reason to doubt they will have such ready commercial access10 or 15 years hence.

Early participation by Arab oil producers in the fledgling peace process thus would help the process itself and do much for security of oil demand. A good start would be diplomatic recognition of Israel, which some producers are said to be discussing. Opposition to the accord by Arab producers would intensify political pressures and threaten long term petroleum demand.

A better reason for Arab producers to choose peace is that peace is infinitely better than the bloody status quo. The Israeli-PLO accord is risky. It may provoke violence from opponents. Its failure might deepen ancient hatreds. But it raises hope for reconciliation in a region too often at war. It's a first step toward a future better than the past-for oil, for the Middle East, and for the world.