June 25, 2017
By Zoltan Zigedy
Developments over the last few weeks further remove the fog obscuring the foreign policy objectives of the US ruling class. A series of seemingly unrelated events casts light on the goals of US policy makers in an era of intensifying international rivalries. Further, it is becoming clear that President Trump is now largely deferring to the ruling-class consensus on foreign affairs; his straying from the fold has been substantially checked.
In February, I wrote of the implications of the widely ignored shift in the status of the United States from an energy-seeking, petroleum-importing country to a net exporter, a trader in all energy resources.
The US still has a significant but shrinking position in the international export of coal. Of course, coal use is both third in importance among hydrocarbons and shrinking in use (coal production internationally fell by the largest percentage on record in 2016). But petroleum imports became essential to fuel the critical transportation needs of the US as well as the massive military machine in the mid-twentieth century.
After the oil crisis of the 1970s, dependence on petroleum imports became even more acute and an even more vital factor in setting US foreign policy. Often, and for good reason, the left was quick to associate the thirst for energy resources with war-mongering and neo-colonial intrigue.
But matters are changing rapidly, even if many seek to obscure or ignore the new reality. As I argued in February:
Matters began to change in the last decade, with US domestic oil production nearly doubling between 2010 and 2014. In the last few years, US oil production has reached levels in line with the world’s largest producers, Saudi Arabia and Russia. For the first time in decades, the US is again exporting extracted energy products. In fact, many experts expect the US to become a net energy exporter in the next decade.
The evidence has only mounted since the February posting. Despite low prices of oil, US drillers are producing like there is no tomorrow. From its low in mid-year 2016, the rig count has nearly doubled in North Dakota. As the Wall Street Journal reported on June 19, the big companies, Chevron, Royal Dutch Shell, and Exxon Mobil are investing tens of billions in the Permian region of the Southwestern US. The giant multinational, monopoly-capital producers are stepping in where smaller producers have failed because of costs and limited capital. They are projecting Permian production at 4 million barrels a day within a decade, about the production of modern-day Iraq. Chevron, alone, anticipates a four-fold increase of Permian production within a decade. Exxon is projected to spend half or more of its massive investments in the next three years on North American oil production.
Where will this oil go?
In a June 8 article, Wall Street Journal writer Lynn Cook stated bluntly: “American [US] oil exports are emerging as a disruptive new force in global markets.” From January to April, US suppliers shipped 110 million barrels to foreign destinations, chiefly India, Hong Kong, and Denmark. Asian buyers account for 39% of purchases, with China showing, by far, the greatest growth. With massive production increases coming online, is there any doubt that US producers will be competing furiously with OPEC and other traditional exporters for existing and new markets? Should we not expect the foreign policy and the covert and overt military strategies to reflect this intensifying competition?
Similarly, the US is becoming an increasingly important exporter of natural gas. As new technologies of liquefying and shipping natural gas are implemented, the competition for markets is becoming ever more ruthless. Seaborne liquid natural gas accounts for 40% of the market today. As the world leader in natural gas production, along with Russia, the US has a strong interest in exporting natural gas and acquiring new markets. Among the exporters of liquid natural gas (LNG), Qatar is the world leader, with every intention of maintaining its position, recently opening its North field, believed to be the largest gas reservoir in the world.
The long fostered model that views US imperial interests as served by the US securing and protecting its access to energy sources, by guaranteeing energy for its Cold War allies, is in need of a new look. Today, US interests lie in acquiring markets within the global economy, competing with other energy suppliers, and creating political and economic conditions favorable to US suppliers. Oil, gas, and energy remain central to the imperialist enterprise, but the roles are shifting in important ways, with important implications.
I sought to define that role more clearly in February, when I wrote:
It should be clear, then, that the approaching oil independence of the US, the changing role of the US from consumer to producer, and the attention to markets-for-oil over sources-for-oil profoundly influences US strategic policies, including the weakening or souring relations with other major oil-producing nations like Saudi Arabia and Russia.
Events have only strengthened that observation. The rabid, crude intensification of hostility toward Russia, the renewed demonization of Iran, the sudden and bizarre isolation of Qatar, and the heightened aggression in the numerous destabilizing wars throughout the Middle East underline the evolution of an emerging foreign policy consistent with securing new energy markets.
The introduction and expansion of US military forces to hot spots like Syria, Iraq, and Afghanistan promise little resolution of the conflicts, but guarantee further instability of energy sources and the flow of hydrocarbons. The sale of a vast cache of military weaponry assures the deepening and lengthening of the Saudi incursion into Yemen.
The unexpected hostility toward Qatar shown by the other Gulf States in the wake of Trump’s recent vulgar performance in Riyadh, Saudi Arabia is likely directed against Qatari global leadership in the exporting of Liquid Natural Gas, the market that the US hopes to further penetrate. It is no accident that the Qatari gas fields are jointly owned with Iran and both countries have cooperated in the exploitation of the fields and the production of LNG. At the same time, the Saudis have surrendered in the price war with US shale drillers. With sovereign wealth shrinking from a costly war and low oil prices, the Saudis are more interested in finding the best moment to take ARAMCO public, to sell off portions of the national oil company and refresh the kingdom’s coffers. The king and his retinue are content to loyally serve the US in its global mission to command energy markets. Saudi leadership of OPEC in its fight for market share with US petroleum producers proved disastrous. The Saudi/OPEC output cut “has been deemed an OPEC failure and a US production win,” according to Tony Hendrick of CHS Hedging, as quoted in the WSJ (6-21-17).
The latest US anti-Russia (6-15-17) sanctions are clearly directed at markets for Russian natural gas. The Senate voted 98-2 to “broaden sanctions on Russia’s energy sector,” as reported by The Wall Street journal. While the message might have been lost on the mainstream media, wallowing in neo-McCarthyism, and while it might have been missed by a distracted left, it was not lost on Europeans. They immediately saw it as an attack on the Nord Stream 2 pipeline project that would bring Russian gas to Germany, Austria and other European countries. And they saw it for what it was; Germany and Austria immediately lashed out with a joint statement: “We cannot accept a threat of extraterritorial sanctions, illegal under international law, against European companies that participate in developing European energy supplies.”
They added sharply: “Europe’s energy supply is Europe’s business, not that of the United States of America.” and “The actual goal [of such sanctions] is to provide jobs for the US gas and oil industry…”
And there it is— naked recognition that US anti-Russian acts are thinly concealed covers for US imperial goals. The US wants the European gas business currently done with Russia.
Lest anyone pretend that US imperialism-with-a-new-twist is strictly a product of Trump, it should be noted that the 98-2 Senate vote was no aberration. Writing in the Washington Post (6-8-17), David Gordon and Michael O’Hanlon— two solidly connected Washington insiders— pointed to “several hopeful signs” with Trump’s foreign policy. They lauded the President’s national security team and his stance in the Middle East. They were especially enthusiastic about his continued belligerence toward Russia.
The reckless foreign policy of the Trump administration still deviates occasionally from the ruling class consensus expressed in the editorial pages of The New York Times or The Washington Post. But more and more it is reckless because it conforms to that consensus. The endless wars and the escalation of those endless wars are not met with ruling class impatience, but appear to be more the new global norm.
The destabilization of countries and the promotion of sectarianism appear less as unintended consequences and more as those resulting from the deliberate, calculated tactics of an imperialist power benefiting from chaos.
As in the classic pre-World War I era of reckless imperialist competition, US imperialism is aggressively advancing its economic agenda against rivals, including recent “allies.” The dangers posed by these intensifying rivalries threaten to spark even more devastating clashes and widening wars.