Pax Americana and the Middle East

Royal Saudi Air Force F3 Tornado.

As it becomes increasingly more likely that Iran had a role in this past week's drone strikes on Saudi Arabian oil production facilities which resulted in a 5% reduction in the world's oil supply (albeit at a time in which that doesn't matter much) the question has increasingly become, what will the U.S. do about that?

Note that it doesn't seem to be the case that people are debating whether or not the US should do nothing at all.

There are, of course, a lot of reasons for that.  A primary ones is that a strike by a rogue nation that has a long history of crossing the line in participating in wars and quasi wars outside of its own borders is hard to ignore.  Iran does more than aid its allies, including irregular allies, in the region, it directly participates in the struggles in those countries and invariably through a lens that's filtered through a very Shiia view, even if Iran's people aren't necessarily on board with such actions.  Perhaps a larger reason, however, is that a strike in this fashion on 5% of a critical resource used around the globe is impossible to ignore.

Having said that, however, there seems to be a simple assumption that the US should and will do something about this.

We're less dependent upon Saudi oil than most European nations are and than Asian nations are.  As American oil production increases, we're now a net energy (not oil) exporter.  The 5% reduction in the global supply wouldn't really hurt us if the supply was tight, which it isn't.

And Saudi Arabia is a nation which shares no values with the US whatsoever.  Iran is an Islamic republic, which is a term that has debatable meaning but which means, in its case, that Shiia clerics have a sort of an extra governmental role in the country and that it's not a real democracy.  But Saudi Arabia is a Sunni monarchy.  It's not democratic either.

Of course, Iran has had an expansive view of itself in which it has had sort of a missionary zeal, now much reduced among its population, to spread a certain sort of Islam wherever it can, and by whatever means, including violent ones, that it has.  Saudi Arabia never had that, with its founding family's alliance with a certain conservative brand of Sunnism at least somewhat for convenience.  It's goals were local, and it ceased being expansive in the 1920s.  That does make it distinctly different.

Be that as it may, it has a military and that military has an air force.  And that air force is a good one.

The Saudi army is a tiny one and real questions exist about its ability to do anything much in the case of a real war.  It never has had to fight one on its own, and it's likely not accidental that its army is small.  A standing army is a threat to a monarch.  Iran's standing army did nothing to aid the Shah when he fell, basically taking the Hindenburg/Ludendorf option when that time came.  Egypt's standing army deposed its monarch and still basically runs the country over 60 years later.

But Iran's army isn't all that great either and at this point, frankly, there are likely real questions about its loyalty.  And Iran and Saudi Arabia do not share a border.  Iran can make trouble for Saudi Arabia with terrorist forces, which Saudi Arabia no doubt knows and which is likely part of the reason that the desert monarchy is taking a role in the Yemeni civil war.  So while Iran can make things worse for Saudi Arabia, it's not holding back all that much now.

And Iran doesn't really have much of an air force. It's had a hard time getting modern aircraft since the Islamic Revolution and therefore while it has military aircraft, it's really frozen in time with them and has a hard time maintaining the aircraft it has.

The long and the short of that is that Saudi Arabia can undoubtedly hit Iran from the air and there's not all that much Iran can do about it.

But due to the Pax Americana, it won't, and we likely will do something.

Saudi Arabia is not, contrary to what pundits will claim, our "ally", at least in a formal sense.  There are unspoken arrangements, to be sure, however.  And since 1945, or perhaps really since 1941, we've decided that there are certain things that our allies shouldn't do, or our clients shouldn't do, or that we'd rather other countries not do, so we do them ourselves.  We're not the world's policeman, to be sure, but perhaps more the world's ranger, or sheriff, or something.  Maybe just the local bodyguard in other ways.

Anyhow, as part of that, it's interesting to see that everyone is so acclimated to the concept that the question isn't, "will Saudi Arabia strike back?", but will we?

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September 19, 2019

A couple of interesting developments in this story today.

The first links back to something I mentioned above, more or less. The New York Times has an editorial headlined We Are Not The Saudi's Mercenaries.  In other words, it's up to the Saudis to do something about this situation, not the U.S.

Other headlines keep noting that Secretary of State Mike Pompeo stated that the attacks were an "act of war".  He did, but the way he said it gives rise to how the press can be accused of inaccurate reporting, at least in headlines.  Pompeo actually said it was an act of war upon Saudi Arabia, and specifically noted that the Iranian backed strikes was upon that country.  That strongly suggests that the US was noting the strikes as an act of war, which if Iran launched them directly, it definitely is.  But his further remarks suggested an effort to push Saudi Arabia to act or at least that the US regarded the strikes as an act of war upon a friendly nation.

That may very well be a predictor on how this will play out.  Something will happen, but it may not be obvious to us what it is.  Saudi Arabia has been strongly opposed to Iran for decades, but it has never shown an inclination get into a war with Iran, or any major Middle Eastern power, and it's unlikely to do so now.  By noting that it was an act of war upon Iran, the US may be indicating that it will support what Saudi Arabia does, but that shouldn't be taken as a signal that the US will necessarily be the country that takes action.  Indeed, President Trump, while he has talked tough on Iran, has been pretty openly reluctant to take military action against it where prior Presidents of both parties might have been.

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September 20, 2019

Iran's foreign minister declared yesterday that if the United States or Saudi Arabia strike its territory there will be "all out war".

If any more proof was needed that Iran's self isolation has reduced some of its government to being dangerously deluded in a "we only listen to ourselves" sort of way, this would be it.  You can't really launch an air strike, by any means, including by proxy, and not be aware that this is itself an act of war.

It seems increasingly likely that Saudi Arabia will be taking the lead in a response and that there will be one.  Iran's action seem to bizarrely be done in the belief that by attacking Saudi Arabia people will be convinced to deal with it as its a dangerously armed nation having a temper tantrum.  It's sort of like a drunk trying to get admission to the bar by smashing a window.

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September 24, 2019

Germany, the United Kingdom and France yesterday proclaimed their certainty that Iran is behind the recent drone strikes on Saudi oil production.  Iran dismissed the charge claiming that if it had been, the destruction would have been much more complete.

At this point there seems little doubt that Iran's behind the action in one fashion or another. The question therefore has become what shall be done, and who shall do it.

Weaponized Drones and Wyoming Oil

In the Clancy book Red Storm Rising an Islamic terrorist in Russia starts the globe off towards World War Three by sabotaging the oil terminal in which he works.

In 1941, the Japanese, cut off from American oil, launched attacks that brought the United States (and Japan) into World War Two.

In 1973 the OPEC nations, upset over American support of Israel in the Yom Kippur War, embargoed the shipment of oil, making a weakened American economy spiral into inflation and wrecking the economy for half a decade.

Of course, the first item noted is fiction, but well studied fiction. The second two are history and, to add to it, the 1941 event boosted oil production in Wyoming, which was already being boosted by the September 1939 event, the German invasion of Poland which started the Second World War in Europe. The 1973 event resulted in a massive boom in Wyoming.

This past weekend an attack was launched on Saudi oil process facilities. They were carried out by ten drones.  They were so effective that they'd destroyed, on a no doubt temporary basis, 5% of the world's oil output.

What does that mean?

Well, maybe, indeed probably, less than we might suppose.

To start off with, let's just look at the impact. The attacks pushed the price up, but not because they'll result in an oil shortage. There's an oil glut right now and American production remains so high that the real economic impact is at best muted.  It pushed the price of oil up to $63.00/bbl, which is over the Wyoming economic viability line, but still only barely.  Oil back a couple of decades ago was well over $100 bbl.  In 2008 at one point it spiked up to $145 bbl. We're a long ways from that.

And because of the oil glut, we probably won't be seeing a massive rise in price any time soon.

Now for the second part.  And that may impact things. Who is responsible for this Middle Eastern drone Pearl Harbor?

Well, it's still being debated.

Saudi Arabia is fighting in the Yemeni civil war, along with the UAE, against Houthi rebels. The rebels took responsibility for the attacks and at a bare minimum, my guess is that the Houthi were at least made aware of it at some point, perhaps after it occurred, and at a bare minimum were happy to take responsibility. 

The war in Yemen hasn't gotten much press here, as nothing that happens in Yemen does.  Yemen is a backwards state on the Arabian peninsula that has oddly been prey to the twists and turns of global movements in various ways.    It was divided into two states following the British departure in which South Yemen, which the British had controlled, becoming a Communist state, showing the influence of the Cold War in the third world at the time.  North Yemen became a monarchy. The two countries did not get along and fought, but in 1990 they united in a troubled republic that has more or less been in a civil war since that time.

The war is along tribal and religious lines, with the Houthis controlling most of what had been the former kingdom in the north.  Most of them are members of a branch of the shiia sect of Islam.

Which is why the Saudi's likely don't want them to win and are backing the government.  Iran is backing the Shiia's, not surprisingly.

The Houthi's, as noted, claim responsibility. But the flight path would be 1,000 kms. That's a lot for rebels that are fighting with a lower level of military technology.  It's not impossible, and it could be accomplished with a fair amount if Iranian help, of course.  And they have used Iranian built drones before.

Or perhaps the Iranians pulled it off themselves, which is what the U.S. is claiming.

The Saudi's aren't claiming that.  Perhaps that's because they're not sure. And perhaps because that does seem extraordinarily risky, even for Iran. A drone strike is a clear act of war that can't be ignored.  If its the Houthi's, the Saudis are already fighting in that war and a dramatic air response will be likely. 

If its the Iranians, the Saudi's might choose to view it as the Houthi's, particularly if the strike was launched from Yemeni territory.  Iran taking a direct role in regional wars from inside the territory of the warring nations isn't anything new at all, and even though this would be a dramatic escalation of it, it would have a precedent and therefore the response would as well.

If, on the other hand, if the drones were launched from Iran, that's another matter.

My guess is that they were launched from Yemen with a lot of Iranian technical assistance.  That will mean that some Houthi positions are going to get completely blasted off the face of the earth.  It might mean that the Saudis will simply invade the Houthi region, which they are perfectly capable of doing, and then turn it over the to government, after which a lot of Houthi rebels will never be heard from again.

But that's not the only possible outcome, and some possible ones would have a big impact on the price of oil.

It's interesting to note, in all of this, that John Bolton is now gone.  His absence probably helps to prevent one of those other options from becoming immediately in the forefront.

Lex Anteinternet: Lex Anteinternet: Lex Anteinternet: And the band p...

Lex Anteinternet: Lex Anteinternet: Lex Anteinternet: And the band p...: Today the price of oil actually declined below $40/bbl.  This is probably temporary, but how amazing.

And indeed it did prove to be temporary, but perhaps signalling how down in the dumps and perhaps permanent these price depressions may be (as in economic permanent, that is long term), a jump in the price to $45-$47/bbl was due to Saudi Arabia sending troops into northern Yemen in order to keep rebels there from consolidating their forces.  So it's regional instability in the Middle East, with a major oil producer, i.e., the one keeping the price low, that's caused the price to jump.

On the other hand, it turns out that Ecuador has been producing  oil below its cost.  It's oil has been selling for $30/bbl, and they only break even at $39/bbl.  Its crazy for them to sell it at that cost, but there must be some internal economic reason for them to keep selling it at a lost.  In most real free markets, they'd shut their wells in.  Perhaps they will, and indeed, they'll have to, resulting in taking that oil off the market for a time.