Happy new year 2003

by Stan Gotlieb

As the drums of war beat ever more loudly to cover the sounds of your sons, daughters, wives, husbands, fathers, mothers or neighbors dying on Iraq’s battlefields, along with hundreds of thousands of Iraquis, hapless conscript and civilian “collateral” alike, some of the events taking place in our very own hemisphere go almost completely without notice. The simplistic analysis that you are being fed by the government and its tame corporate press corps gives only peripheral mention to the coming boom and bust in oil prices that will accompany this costly venture toward world domination, and the terrible fate of those who will be directly affected.

This “war” is clearly about oil. (It’s certainly not about terrorism: no credible evidence exists that Iraq fosters terrorism; in fact Iraqi leaders regard Kurdish and Suni Muslim minority factions in their country as practicing terrorism against Iraq.) More specifically, it’s about plans by Halliburton (a large scale developer and producer of petroleum closely tied to Vice President Cheney) and other major oil companies in the United States to take control of the world’s second largest known reserves of black gold.

With oil, as with many things in our increasingly globalized world, action in one part of the map is not without consequences elsewhere. Mexico, like most of the larger oil producers in the world, relies on oil for the most significant part of its income, and by far the largest part of its hard currency. Venezuela gets about half its income from its oil fields. Both countries sell almost all their oil output to the United States.

In Peru and Columbia, U.S. “experts,” “advisors,” and “counter-insurgency specialists” are busy helping the government fight against the growers and refiners of the drugs that our users demand—especially in the areas around the oil pipelines that feed the shipping points for Columbian oil, a product which has become ever more vital to the Columbian economy now that their coffee industry has been bankrupted by cheap coffee from Vietnam, grown using subsidies from the World Bank which is mostly U.S. financed.

In Venezuela, elected President Hugo Chavez, whose “revolution from the roots” has uplifted millions of poor people at the expense of the managerial / landowner class that has benefited from their poor health, poverty and illiteracy for decades, has once again managed to narrowly defeat a coup attempt sponsored by friends of U.S. corporate interests. This time, the coup plotters managed to enlist the help of the top management at the state-run petroleum company, who promptly shut down plants, refineries and ships, and then, when they were unable to force Chavez to resign, ordered their hired thugs to sabotage strategic locations, hoping to bring the government down by spreading economic chaos. The result is that these executives (whose average salary was a quarter million dollars a year) have been dismissed—as were the top military who attempted the first coup in April, almost all of whom had been trained in the secret and notorious “School of the Americas” run by the U.S. Army in Georgia. Chavez, for now apparently victorious against what many observers believe is a U.S. sponsored attempt to return the government to “more friendly” hands, faces a few months of difficult work bringing the vital oil export industry back up to capacity. If, as predicted, the U.S. attacks Iraq in January, it will be without previous levels of supply from Venezuela.

Mexico, whose production infrastructure is aging and suffering from inadequate maintenance, has a lot of oil reserves, but no present means of getting to them quickly and safely. As world oil prices soar due to the war, Mexico will come under increasing pressure to make up for Venezuelan shortfalls. That pressure will come from outside (the United States) and from inside (social programs and industrial sectors) looking for a boost in the economy and some quick infrastructure building.

There are “good” and “bad” ways of extracting petroleum. The bad ways give you a quick hit from a pocket while increasing the danger of collapse and loss of the field. President Fox has thus far been unable to resist any of George Bush’s demands, and many fear long-term damage to Mexico’s oil fields.

While the price of oil will soar, bringing a boom to Mexico for a while, two results are likely: runaway inflation, pushed by too-rapid injections of capital; and an eventual collapse once the United States has control of the vastly larger Iraqi fields and begins to pump unprecedented amounts of petrol, driving the price down to unheard of lows.

2003 may hold good news for the drivers of gas-guzzling SUVs, but remember Rome: empires just don’t seem to work very well for their citizens, in the long run.

[Stan Gotlieb has been living in, and writing about Oaxaca (and Mexico) for nine years. His “Letters From Mexico” can be read on the Web at http://www.realoaxaca.com and his e-mail address is stan@realoaxaca.com.]