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Jewish World Review Jan. 15, 2002 / 2 Shevat, 5762

Mort Zuckerman

Mort Zuckerman
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Consumer Reports

Putting our house in order -- PRESIDENT Bush may say that a tax increase would be passed only over his dead body, but what will he do-what can he do?-about the equivalent of a tax increase now imposed on us by the Saudis? With exquisite timing, the self-serving Saudi-led oil cartel we call OPEC has already begun cutting supplies so as to boost prices, hitting global incomes just when the world is in the throes of a recession.

And why should Saudi Arabia care that this is a recession intensified by the fallout from 9/11, or feel any responsibility that Osama bin Laden is a Saudi, or that his money is Saudi and that 15 of his 19 terrorists were Saudis, or, perhaps most of all, that the Saudi regime funds religious schools throughout the Muslim world that brainwash children with anti-American hate?

The Saudis know that oil is critical. The price spike during the crisis in 1972-1973 caused a GDP decline of 4.7 percent in the United States, 2.5 percent in Europe, and 7 percent in Japan. But the threat is even greater now. In the year ending March 2000, price rises cost consumers around the world about six times as much as the spike in the early 1970s-$15 per barrel, or $869 billion. If anything, the world economy's vulnerability is even greater today.

We are held hostage, and there's no light through the bars of our cell. The United States now imports close to 60 percent of its oil, or about 11 million barrels a day; about half of that comes from the Middle East. This will grow to 80 percent by 2020, at which time two thirds of our oil will have to come from the Middle East. No matter what happens to bin Laden, we will remain dependent on a handful of countries located around the Persian Gulf, especially since non-OPEC oil will begin to dry up by the end of this decade. Saudi Arabia alone sits on a quarter of the world's proven reserves-and like other sources in the region, its extraction costs are among the world's cheapest.

Grim risks. The instability in the Middle East that made prices go through the roof in the 1970s and in the early 1980s is still with us. As the Economist magazine pointed out, "It may not matter, so far as the price of oil is concerned, whether the Saudi regime is friendly to the West, but it certainly matters whether it is rational." That is a relative question, given the fact that after 9/11 we have a keener sense of the frailty of the Saudis. Should a Taliban-like regime take over the country and its oil fields, we would face grim risks. Such a radical regime could choose any number of reasons to "justify" a cutoff of supplies to the West.

However the political games play out, the United States, as the leading superpower, cannot escape a responsibility to protect the world from having oil used against it as a weapon. We cannot tolerate having at our throat a bunch of volatile sheiks, kings, generals, and dictators. We have kowtowed all too often to this bunch, hazarding the ideals, reputation, and safety of America through a deepening involvement with their decadence, a stain with which most Americans are blissfully unfamiliar.

America must confront its vulnerability now. It will take years to wean us of dependency. A decade ago, when access to oil at reasonable prices (and the rule of law) was menaced by Saddam Hussein, we fought a successful war. But we let the decade go while doing virtually nothing to reduce the risk of catastrophe. Now we are in a second war. Americans have been put in harm's way once again by an enemy fueled by oil money and by a terrorist network whose principal objective is to destabilize Saudi Arabia.

It is very well to say, as some do, "Don't worry; look at the decline in prices we have enjoyed." Such complacency is unjustified. The price drops were the result of the world slowdown; when the global economy revives, the pressure on prices will resume. Well, says the do-nothing brigade, "No matter who runs these countries, they will have to sell us their oil. We are the only buyers." That begs the question. A monopoly seller is in a position to sell on terms equivalent to political or economic blackmail. The do-nothing set may say that would never work with a resolute United States, but they forget: We are not alone.

We must remember that our allies in Europe and Japan may be willing to make compromises, private or public, that we would abhor. They might be asked, for instance, on pain of a shutdown, to change their attitude toward Iraq, or Iran, or toward terrorism and financial pressure on al Qaeda. Or perhaps the pressure point will be Israel, or their own relationship with the country the questioner might style "the Great Satan."

The terrorist attacks have made it clear that the risks of destabilization are much higher than we were previously willing to acknowledge publicly and will be sharply higher for the foreseeable future. The American public understands this. In a poll conducted after 9/11, almost 40 percent said that protecting our national security is the most important reason for a comprehensive energy plan to reduce our dependency.

But what energy plan? What is our best defense? Exploitation? Conservation? Next week, I'll return to explore the options.

JWR contributor Mort Zuckerman is editor-in-chief and publisher of U.S. News and World Report. Send your comments to him by clicking here.


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12/24/01: The shape of things to come
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12/04/01: Apocalypse now
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11/06/01: What it will take to win
10/22/01: Getting the mayor's message
10/08/01: A remedy for repair
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09/26/01: Our mission, our moment
09/11/01: Running the asylum
08/29/01: Hail, brave consumer
06/14/01: Blackouts --- or blackmail?
06/01/01: A time to reap --- and sow
05/25/01: A question of confidence
05/18/01: A question of confidence
05/04/01: Making the grade
04/26/01: The caribou conundrum
04/19/01: Chinese boomerang
03/27/01: The man of the moment
03/20/01: The Fed must be bold
03/15/01: Japan on the brink
03/01/01: Rethinking the next war
02/09/01: The education paradox
01/08/01: How the bottom fell out
01/03/01: Quipping in the new year
12/20/00: A time for healing
11/13/00: The need for legitimacy
10/30/00: Arafat's bloody cynicism
10/18/00: Arafat torches peace
10/03/00: A great step backward
09/08/00: The Perfect Storm
08/29/00: Don't blow the surplus
08/15/00: Voting for grown-ups
08/01/00: Arafat's lack of nerve
07/17/00: Can there be a new peace between old enemies? Or will new enemies regress to an old state of war?
07/11/00: A time to celebrate
06/19/00: A bit of straight talk
06/08/00: Using hate against Israel
05/26/00: Is the Federal Reserve trigger-happy?
04/18/00: Tensions on the 'Net
04/13/00: A paranoid power
03/10/00: Fuel prices in the red zone
02/25/00: Web wake-up call
02/18/00: Back to the future
01/21/00: Whistling while we work
01/11/00: Loose lips, fast quips
12/23/99: The times of our lives
12/14/99: Hey, big spender
11/18/99: Fountain of Youth
11/04/99: An impossible partner
10/14/99: A nation divided
10/05/99: India at center stage
09/21/99: Along with good cops, we need a better probation system
09/08/99: Though plundered and confused, Russia can solve its problems
08/31/99: The military should spend more on forces and less on facilities
08/05/99: Squandering the surplus
07/06/99: More than ever, America's unique promise is a reality
06/24/99: The time has come to hit the brakes on affirmative action
06/15/99: America should take pride in honoring its responsibilities
06/02/99: The Middle Kingdom shows its antagonistic side
05/11/99: Technology's transforming power is giving a lift to everything
05/04/99: The big game gets bigger
04/30/99: On Kosovo, Russia talked loudly and carried a small stick
04/21/99: No time to go wobbly
04/13/99: The Evil of two lessers

© 2001, Mortimer Zuckerman