Poor Barack Obama. If it weren't for all these geopolitical crises, he'd have some fairly decent-sounding news to spin.
U.S. retail sales rose 1% in February, led by a 2.3% rise in auto sales. That's the eighth straight month of increased retail sales.
Meanwhile, the unemployment rate hit a two-year low at 8.9%, down nearly a point in only three months. Some 200,000 new jobs were added last month.
Even the Obama White House wouldn't say the economy is great, even though it's a far cry from the Depression the country was sliding into when Obama became president. But the gains can be washed away -- slowly, or all at once -- by rising oil prices. It all depends on how high they go, and how long they stay up.
After Saudi troops arrived, Bahrain declared martial law in the island kingdom, home to the U.S. Navy's 5th Fleet, which guarantees the oil flow and counters Iran.
One very large key, perhaps the largest, to Obama's presidency lies in the Gulf. In particular, in Saudi Arabia. If Libyan oil is off the market, Saudi Arabia accounts for 70% of OPEC spare oil production capacity.
I've been hearing various apocalyptic scenarios about the domestic economy since the 1970s.
And the name of the movie would have to be Apocalypse Not Now.
But there's one thing that my old friend Tom Hayden told me 30 years or so ago that I always remember. It's one word.
"Riyadh."
All the other apocalyptic scenarios have come and gone, with America left more or less intact, if not what it once was. But that's only true so long as the oil flows, and so long as it flows at arguably affordable prices.
Even the devastation of Japan, a global economic powerhouse which in some ways is the most modern country in the world, is not as threatening to America -- and to Obama's re-election -- as the potential fall of the Gulf oil system of which Riyadh, Saudi Arabia's capital, is the center.
The biggest political problem on the horizon for Obama is increased oil prices due to the heightened geopolitical risk premium caused by the Arab revolt. Economists say this is already shaving off likely economic growth. Should prices rise higher, the recovery will be threatened. Should oil prices shoot up dramatically on a major geopolitical event or events in the core Middle Eastern oil producing sector, the economy could plummet back into recession.
Many have forecast the fall of the House of Saud and it's still standing at the forefront of Saudi Arabia's ultra-conservative society.
Last Friday's much touted, Facebook-driven "Day of Rage" in Saudi Arabia fizzled. Why? The answer reminds me of that old Warren Zevon song, "Lawyers, Guns and Money."
* The Saudi clerics all declared demonstrations to be against Islamic law.
* The Saudi security forces blanketed Riyadh and most of the country.
* And the king had already promised nearly $40 billion in new social subsidies.
Taken as a whole, the power of lawyers, guns, and money turned the power of social media into so many dispersed electrons.
Did Obama say anything about the suppression of protest in Saudi Arabia? Of course not. Not even when a few protesters the night before the flopped Day of Rage got themselves shot in the eastern part of the country, not far from the oil fields. Which probably helped drive home the preferred point that taking part in the Friday protests was an unwise idea.
Saudi troops moved across the King Fahd Causeway into Bahrain on Monday to secure strategic locations.
Saudi Arabia's leaders had already expressed their displeasure with the Obama Administration's rhetorical support, incoherent though it was at times, for the protesters in Egypt and Tunisia, whose deposed president now lives in Saudi Arabia. They were particularly upset about the abandonment of Hosni Mubarak. They could see the wave coming.
Obama and the America we know is in the vicinity of a world of hurt. Obama is now dealing with a multiplicity of factors in multiple venues. The more uncertainty introduced into a situation, the more unstable it becomes.
Tunisia and Egypt were the opening act, even in their own revolutions, which are still in early stages. Libya is a huge sideshow, dramatic and entertaining, but not central. Which illustrates the danger, because even with only 2% of the world's oil, Libya sends shudders through the whole system.
There was a massive security presence Friday in Riyadh, capital of Saudi Arabia.
Center stage, of course, is the Persian Gulf, which the U.S. Navy and many of the people who live there prefer to call the Arabian Gulf. We're relying on Saudi Arabia to provide stability in the global oil market, but Saudi Arabia itself is in danger of becoming unstable. That's why the king is doling out some $40 billion to students and the poor and why he's re-shuffling his cabinet.
Of course, Saudi Arabia is the perhaps the ultimate double-edge sword for America. It is the single most important provider of our oil fix, but it's also the biggest financier of jihadism. It's a country that embraces the West economically but, at least officially, reviles it through its dominant form of Islam.
It can directly stabilize the global economy, as we see now, with the promise of greater output (Saudi Aramco says its normal 9 million barrels a day can be upped to 12.5 million, though some say its peak oil has already passed), and indirectly disrupt it through its financing of jihadism.
Like Obama, the oil autocracies are playing for time, with the rich Gulf states planning to subsidize the poorer ones: Bahrain, home of our 5th Fleet, and Oman, on the other side of the Strait of Hormuz from Iran, the choke point through which nearly half the world's oil shipped by tanker must pass.
Protests continue in Oman, even though Sultan Qaboos has sacked most of the cabinet, replaced the national police chief, and promised more social spending.
Last week, the rich members of the Gulf Cooperation Council -- Saudi Arabia, the United Arab Emirates, Kuwait, Qatar (home to Al Jazeera), Oman, and Bahrain -- authorized a $20 billion fund to try to stabilize the poorer members, Bahrain and Oman. The decision was taken during a GCC foreign ministers meeting in the Saudi Arabian capital, Riyadh, on Thursday. On Friday, the Saudi Day of Rage was successfully suppressed.
On Monday, after more massive protests in Bahrain that shut down the financial sector, Saudi troops moved across the 15-mile King Fahd Causeway connecting the two countries to secure strategic facilities.
It was a surprise when it happened, in a new year suddenly full of cascading surprises, but hardly a shock. After all, when Saudi King Abdullah returned home in February after three months of medical treatment and convalescence in New York and Morocco, it was the king of Bahrain who flew that very day to Riyadh to welcome him back and consult on the Bahraini crisis.
Many protesters have been hospitalized in the last few days in Bahrain, many suffering from unusually severe effects after being tear-gassed.
It's a crazy situation, and because of our outmoded energy economy we've placed ourselves at the mercy of the sort of events we haven't controlled very well in the past, from the Arab oil embargo of the '70s on, and may well not be able to control at all in the future.
Can the Saudis control their own future? Repression never really works, not in the long run. Especially not with people who've had even a taste of freedom.
Which is the case in Bahrain, if not in Saudi Arabia itself. But even there, a growing and youthful population -- nearly half under 18 -- may prove less amenable to monarchy and theocracy than its elders. Especially with structurally high unemployment and an economy that remains relentlessly geared to oil.
Would the Saudi royals in the end fire on their own people for more than effect? Or would they decamp for their homes in London, Paris, New York, and California? I would guess the latter. Which is easy enough for me to say.
In any event, that eventuality, if it ever occurs, is probably well down the line. In the meantime, there's plenty of potential crises much closer at hand. And that's why Barack Obama has to be hoping that, one way or another -- be it through autocracy, democracy, or some jury-rigged combination in between -- the Gulf oil flow continues, and at arguably reasonable prices.
To be clear. Why isn't Obama out front criticizing the suppression of protest in Saudi Arabia, not to mention a Saudi military incursion in Bahrain that may well further inflame the situation in the home of the Navy's 5th Fleet?
Or at least as out front as he was on Egypt?
One word. Oil. Which in the American geopolitics of this moment, as it was some 30 years ago, is synonymous with Riyadh.
If we were all driving around in electric cars or other vehicles with alternative fuels, things would be very different.
You can check things during the day on my site, New West Notes.
http://www.huffingtonpost.com/william-bradley/is-libya-a-turning-point-_b_837775.html
http://www.newwestnotes.com/2011/03/17/non-random-notes-throughout-the-day-301/
Al Jazeera had gripping coverage today.
Did the UN resolution have anything to say about any action that will be taken to put in place an immediate ceasefire and start negotiations in an effort to transition to a new and legitimate government before resorting to decisive military action by the international community? (Don't even think it - I can hear it now!)
My favourite think tank, the International Crisis Group, sent an open letter to the Security Council outlining a couple of options that the UN should immediately consider. Their recommendations seem, to me at least, to be a very prudent and effective approach to take.
You can read the letter here http://www.crisisgroup.org/en/publication-type/media-releases/2011/open-letter-unsc-libya.aspx
Libyans and Bahrainis sheikh, rattle and roll
http://www.atimes.com/atimes/Middle_East/MC17Ak01.html
By which I mean he was slow to pick up on Gaddafi winning the civil war (even though Gaddafi is backed big time by Fidel Castro, Daniel Ortega, and Hugo Chavez) and thought the Saudi Day of Rage would go somewhere.
He is realistic in not blaming Obama for what's happening in Libya.
On top of everything else, President Obama is having to deal with the fact that, since 9/11 and maybe even before that, the special relationship between Washington and the House of Saud has taken a few decidedly ... oh, how shall I say ... ‘sour’ turns, crudely speaking.
Saudi Arabia’s primary geopolitical concerns increasingly revolve around the growing influence of Iran in the region. And, more distressing still for Obama is the undeniable reality that already limited US influence in the kingdom is apparently waning as Riyadh reaches out to China and Russia, among others, seeking new oil markets and arms suppliers.
Still, the ties that bind are strong - the oil for security basis of the relationship between the US and Saudi Arabia will probably mean that the two are joined at the hip for a long time to come. After all, the jihadist threat on the Arabian peninsula isn’t going away any time soon and, Saudi Arabia has an obvious vested interest in stabilizing the price of oil at arguably reasonable/affordable levels.
I think the Saudis are genuinely concerned about Iran's growing influence, and that they brandish it as a straw man argument against reforms.
If their greatest concern was about Iran, they would pay more attention to Obama's wishes, as the US is the only real security guarantor for Saudi Arabia against Iran.
And we are about to conclude a $60 billion sale of US arms to Saudi Arabia ...
Clearly, the House of Saud is paying less attention to wishes emanating from the White House, an indication of waning US influence. And, the Saudis have begun to hedge their bets by expanding their horizons with respect to arms and oil.
It's not like the Saudis view Iran as an existential threat so they can afford to be a little dismissive of Obama's wishes. That Riyadh would send troops into Bahrain is a good sign that the Saudi ruling family believe they have Washington over a barrel. :)
"If we were all driving around in electric cars or other vehicles with alternative fuels, things would be very different. "
that's a nice thought, unfortunately its not that simple. An America run on alt fuels would not look anything like the current version some enormous and fundamental changes would need to be made.
most likely we'll continue on course, things will start to break down (economically,oil prob.) no one will really understand why and will start blaming each other and dividing into factions.
if ppl could understand the fundamental causes of difficult times that are inevitably ahead are no ones fault and we could all work cooperatively in the same direction . . . we might have a chance.
as Chinanski said -if i bet on humanity id never cash a ticket . .
America would certainly be different if we were going about in differently powered vehicles.
But Americans don't really want a lot of change, you know, affecting their daily lives. Ecotopia was a nice novel, though the sequel wasn't as good ...
New vehicles can be slotted in without trying to turn the country into a green socialist would-be utopia.
Where was it again? Northern California, Oregon, and Washington?
Don't they cut a lot of trees down up there? :(
If it’s alright, I’m going to go ahead and assume that this excellent piece is just the first in an ongoing series that takes a look at current US/Saudi relations and how the “Riyadh” scenario plays out. You’ve covered a lot of critical ground here but things are moving relatively quickly and in directions that defy prediction.
All of this makes for an extremely fascinating story to watch unfold, exhilarating in its unpredictability and wide-ranging impact on geopolitical events, crises and otherwise ... not to mention life as we know it!
>If it’s alright, I’m going to go ahead and assume that this excellent piece is just the first in an ongoing series that takes a look at current US/Saudi relations and how the “Riyadh” scenario plays out. You’ve covered a lot of critical ground here but things are moving relatively quickly and in directions that defy prediction.
obama is so conflicted
his silence and in action speaks volumes.
he want to champion freedom an democracy but alas our economic and strategic interest trump those idealistic notions.
BTW, Mexico City, my adopted city also has fallen prey to the same oil addiction as LA. There are close to 4 million motor vehicles in the general Mexico City metropolitan area, and both the smog and traffic are terrible.
Thank you for another excellent article.
Richard in Mexico City.
LA, unfortunately, became the exemplar for endless Sprawl development. And everything that has happened since is in one way or another an attempt to mitigate or obfuscate.
It's hard to know what to make of a comment such as this but it appears to be motivated by an acute hypersensitivity that prevented you from getting past the first few sentences of this important piece, which you have obviously and wildly misinterpreted.
You should really go back and carefully read this perceptive analysis of the central role Riyadh may play in the future of the Obama/Biden administration before making any further knee-jerk type comments that do nothing to add to what promises to be a very spirited discussion here over the course of the next several days.
Fascinating ...
I don't talk about McCain, Palin, Bush, or Cheney because none of them are president in this crisis and there are too many real, relevant things to cover without ritual genuflection to hyper-partisan tropes.
What is that wave of the future?
I also wonder about the actual remaining supply of Saudi oil fields, which is a closely guarded state secret based on my readings. What if the Saudis have less oil to bargain with than they're currently acting like they do? If Wikileaks or a similar organization published that info with credible sourcing, that would kill that affordable gas supply dead in a hurry. Thus, the race would be good and truly on for a real alternative.
It is long past time to nationalize our CONUS oil.. Drill Baby Drill will go on until the last drop. Everyone wants to drill what little oil and gas we have left in the CONUS and sell it overseas to make a dollar today. (save 3 cents)
No matter how green we go we will always need access to oil. Pump it dry now and we will be as helpless as Germany was to defend ourselves for any length of time.
This is a National Defense issue. All oil and gas on Federal property should be Nationalized anyway!
They come out of public lands (or seas) ergo, they belong to "We the People", but have been sold for political donations and revolving door jobs to the corporations.
We sell our riches for a few dollars and trillions go to international corporations.
If we are going to drill, let OUR Nation reap the benefits, not just a few corrupt politicians.
Why can't the United States be a good businessman with their own resources?
Because free market ideologues vote to give away our riches.
"Our enemies are innovative and resourceful, and so are we. They never stop thinking about new ways to harm our country and our people, and neither do we." --GWB
as it is done in other countries,in the U.S its the opposite oil owns the gov.
the U.S. gov has been hijacked by mufti national corps and acts in there interest first.
Franklin D. Roosevelt wrote “ The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is fascism--ownership of government by an individual, by a group, or by any other controlling private power."
"We The People" are supposed to be in power, but we have let it be stolen from us like Jefferson, Eisenhower and many, many others warned.
# 1 fan
Welcome
hold on! . .take a ride on a broken train
I did say "no need for most war's".
Another great article. Thanks