The Political Economy Of Oil
And The War Against Terrorism

by Haider A. Khan

March 3, 2003

It may seem that only intense and irrational religiosity motivated bin Laden and his criminal cohort. There is some truth to this. They were indeed misguided fanatics. Yet, in the rush to see an apocalyptic clash of civilizations, even many scholars seem to have forgotten that bin Laden was a successful businessman, an ally of US military and political elites, and a politician himself. The murky history that turned an erstwhile US ally into a deadly enemy is more complex than simply a sickening morality play of our religion vs. theirs.

In the 1970s and 1980s the bin Laden family amassed billions as the construction firm they headed built roads, mosques, and military bases for the Saudi government. But the ambitions of Osama were higher both economically and politically. He wanted both for himself and Saudi Arabia a higher share of the oil profits. Realizing that this would lead them in direct conflict with the US oil companies and their backers in the US government and military, the Saudi rulers who had welcomed the bin Ladens into their fold lost their nerve (Said Aburish, "The Rise, Corruption and Coming Fall of the House of Saud," St. Martin's Press, 1996). The royal family apparently refused to cut bin Laden a share of the more lucrative oil business, which it reserves for itself and the Exxon Mobil group of companies. It seems that a desperate bin Laden made a bid for state power in the late eighties/early nineties.

In 1990, after Iraq had invaded Kuwait, bin Laden tried to raise an army of his Afghan war veterans to "safeguard" Saudi Arabia. But the Saudi royal house, aided by a half a million US troops, prevented what would have amounted to an in-house coup. The threat of bin Laden was taken seriously enough so that he was promptly stripped of Saudi citizenship for his act of treason, and was forced to move to the Sudan where he began aiding Exxon Mobil's rivals in the guise of a missionary. In the Sudan bin Laden led an Islamic "anti-poverty" project that built a road from Khartoum to Port Sudan, literally paving the way for an oil export pipeline that the China National Oil Company and France's Total soon exploited. To this day, the non-royal Saudi businessmen continue to fund bin Laden's cause in the Sudan.

But bin Laden and his horrible tactics represent much more than one ruthless individual with wealth and political ambition. bin Laden reflects the growing threat to the Saudi royal family and, therefore, the continued U.S. control of Saudi oil and gas. The worsening economic conditions in the country, the Saudi government's many internal contradictions, general social decay, as well as periodic strikes by foreign workers in the oil fields in Saudi Arabia "have shaken the kingdom to its foundations," wrote a serious London-based Palestinian journalist in 1997. "The only thing keeping Saudi Arabia from disintegrating or falling to an Islamic group is the absence of a cohesive force capable of replacing the royal family. But [such groups] are gaining strength at a rapid rate" (Said Aburish, The Rise, Corruption and Coming Fall of the House of Saud, St. Martin's Press, 1996, p. xvi).

For complicated tactical reasons, bin Laden moved his operations from the Sudan to Afghanistan, where the increasingly powerful fundamentalist Taliban had what may seem like strange hopes of becoming a new set of energy barons. Actually, as the US analysts have recognized for some time, Afghanistan could be a strategic geopolitical spot in the political economy of oil. The US Energy Information Agency recently published a report that began: "Afghanistan's significance from an energy standpoint stems from its geographical position as a potential transit route for oil and natural gas exports from Central Asia to the Arabian Sea. This potential includes the possible construction of oil and natural gas pipelines through Afghanistan..." Others have seen this as part of a far grander geopolitical strategy. This goal was most clearly explained by Brzezinski in a 1997 book entitled "The Grand Chessboard:" "For America, the chief geopolitical prize is Eurasia. [It] is the chessboard on which the struggle for global primacy continues to be played." (p. 31) His strategic precept appears increasingly to be serving as a blueprint for US strategy and tactics in the middle-east and central Asia.

In the mid 1990s, Unocal and some non-US firms were proposing pipelines that would carry gas and oil from Turkmenistan through Afghanistan to Pakistan. "The Taliban's control of the pipeline route made the pipeline possible," said the husband of Pakistan's then Prime Minister Bhutto (Taliban: Militant Islam, Oil, and Fundamentalism in Central Asia by Ahmed Rashid).

But almost immediately the Taliban turned against the US oil companies which returned the compliment both by their own retaliatory policies and via the US government's then not-too-effective anti-Taliban policy. First, Unocal unilaterally set the Taliban's future price at a miserable 15 cents per 1,000 cubic feet. "The Taliban were incensed because they were not consulted about the gas price, and they demanded a larger transit fee" (Rashid). Then in 1999, the Clinton administration forced Unocal to drop the project entirely. U.S. rulers felt that the Taliban could not or would not guarantee a stable Afghanistan, especially since Russian influence in the region was rising under the newly elected Putin. From now on, Washington would employ a "get tough" policy against the Taliban.

If oil-deprived Afghanistan receives so much strategic attention simply because of the geoeconomics and geopolitics of oil, it should come as no surprise that oil-rich locations in the Middle East such as Saudi Arabia, Iraq, UAE and Iran are considered to be of paramount strategic importance by the US policy makers. The loss of control in Iran was a major blow to this strategy. The recalcitrant behavior of Iraq which has the second largest proven reserve of oil and a vast amount of gas has been a thorn on the side of the US strategists since the Gulf War.

Whatever were the immediate causes of the tragic events of 9/11, the long and festering economic and political conflicts underlying this and other acts of terrorism cannot be ignored. By engaging in a dangerous game of wealth and power during and after the cold war the U.S. helped create a Frankenstein-like scenario. Ironically, it was the CIA that funded, armed, trained and helped build the bases for bin Laden's fighters in the 1980s during its crusade against the former USSR. Furthermore, the Iraqi leaders attacked Iran in the 1980s with a fully conniving and approving U.S. cheering on the Iraqis from the sidelines. Without a thorough coming to terms with this history, no sensible policy in the Middle East that will secure long term peace and stability in the region can be formulated.

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Haider A. Khan is a political economist, poet and critic. He is a professor at the graduate school of international studies, University of Denver, and a visiting professor at the University of Tokyo. This is Khan's first contribution to Swans.

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Published March 3, 2003
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