Oil fuels 21st-century wars

2014-07-20 15:00

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Iraq, Syria, Nigeria, South Sudan, Ukraine, the East and South China Seas – wherever you look, the world is aflame with new or intensifying conflicts.

At first glance, these upheavals appear to be isolated events, driven by their own unique and idiosyncratic circumstances. But look more closely and they share several key characteristics?–?notably, a witch’s brew of ethnic, religious and national antagonisms that have been stirred to the boiling point by a fixation on energy.

In each of these conflicts, the fighting is driven in large part by the eruption of long-standing historic antagonisms among neighbouring (often intermingled) tribes, sects and peoples.

In Iraq and Syria, it is a clash among Sunnis, Shiites, Kurds, Turkmen and others. In Nigeria, among Muslims, Christians and various tribal groupings. In South Sudan, between the Dinka and Nuer.

In Ukraine, between Ukrainian loyalists and Russian-speakers aligned with Moscow.

In the East and South China Seas, among the Chinese, Japanese, Vietnamese, Filipinos and others.

It would be easy to attribute all this to age-old hatred, as suggested by many analysts; but while such hostilities help drive these conflicts, they are fuelled by a modern impulse as well?– the desire to control valuable oil and natural gas assets.

Make no mistake about it, these are 21st-century energy wars.

It should surprise no one that energy plays such a significant role in these conflicts. Oil and gas are, after all, the world’s most important and valuable commodities and constitute a major source of income for the governments and corporations that control their production and distribution.

Indeed, the governments of Iraq, Nigeria, Russia, South Sudan and Syria derive the bulk of their revenue from oil sales, while the major energy firms (many state-owned) exercise immense power in these and other countries involved.

Whoever controls these states, or the oil- and gas-producing areas in them, also controls the collection and allocation of crucial revenue.

Despite the patina of historical enmities, many of these conflicts are really struggles for control over the principal source of national income. Moreover, in an energycentric world, control over oil and gas resources (and their means of delivery) translates into geopolitical clout for some and economic vulnerability for others.

Because so many countries are dependent on energy imports, nations with surpluses to export?–?including Iraq, Nigeria, Russia and South Sudan?–?often exercise disproportionate influence on the world stage.

What happens in these countries sometimes matters as much to the rest of us as to the people living in them.

And so the risk of external involvement in their conflicts – whether in the form of direct intervention, arms transfers, the deployment of military advisers or economic assistance?–?is greater than almost anywhere else.

The struggle over energy resources has been a conspicuous factor in many recent conflicts, including the Iran-Iraq War of 1980-1988, the Gulf War of 1990-1991 and the Sudanese civil war of 1983-2005. At first glance, the fossil-fuel factor in the most recent outbreaks of fighting may seem less evident.

But look more closely and you will see that each of these conflicts is, at heart, an energy war.

As these conflicts and others like them suggest, fighting for control over key energy assets or the distribution of oil revenues is a critical factor in most contemporary warfare.

While ethnic and religious divisions may provide the political and ideological fuel for these battles, it is the potential for mammoth oil profits that keeps the struggles alive. Without the promise of such resources, many of these conflicts would eventually die out for the lack of funds to buy arms and pay troops.

But as long as the oil keeps flowing, the belligerents have the means and incentive to keep fighting.

In a world driven by fossil fuels, control over oil and gas reserves is an essential component of national power.

“Oil fuels more than automobiles and airplanes,” Robert Ebel of the Center for Strategic and International Studies told a US state department audience in 2002. “Oil fuels military power, national treasuries and international politics.”

Far more than an ordinary trade commodity, “it is a determinant of wellbeing, of national security and international power for those who possess this vital resource and the converse for those who do not”.

If anything, that’s even truer today and as energy wars expand, the truth of this will only become more evident.

Someday, perhaps, the development of renewable sources of energy may invalidate this dictum.

But in our present world, if you see a conflict developing, look for the energy.

It will be there on this fossil-fuelled planet of ours.

Strife in Iraq, Syria

The Islamic State, formerly known as Isis or Isil, the Sunni extremist group that controls large chunks of western Syria and northern Iraq, is a well-armed militia intent on creating an Islamic caliphate in the areas it controls. In some respects, it is a fanatical, sectarian religious organisation, seeking to reproduce the pure, uncorrupted piety of the early Islamic era.

At the same time, it is engaged in a conventional nation-building project, seeking to create a fully functioning state with all its attributes.

As the US learnt to its dismay in Iraq and Afghanistan, nation-building is costly: institutions must be created and financed, armies recruited and paid, weapons and fuel procured, and infrastructure maintained.

Without oil (or some other lucrative source of income), the group could never hope to accomplish its goals. But as it now occupies key oil-producing areas in Syria and oil-refining facilities in Iraq, it is in a unique position to do so.

Oil, then, is absolutely essential to the organisation’s grand strategy.

Syria was never a major oil producer, but its prewar production of about 400?000 barrels a day did provide the regime of Bashar al-Assad with a major source of income. Now, most of the country’s oilfields are under the control of rebel groups, including the Islamic State, the al-Qaeda-linked Nusra Front and local Kurdish militias.

Although production from the fields has dropped, enough is being extracted and sold through various clandestine channels to provide the rebels with income and operating funds.

“Syria is an oil country and has resources, but in the past they were all stolen by the regime,” said Abu Nizar, an antigovernment activist.

“Now they are being stolen by those who are profiting from the revolution.”

At first, many rebel groups were involved in these extractive activities, but since January, when it assumed control of Raqqa, the capital of the province of that name, the group has been the dominant player in the oilfields.

It has also seized fields in the neighbouring Deir Ezzor province along the Iraq border. Many of the US-supplied weapons it acquired from the fleeing Iraqi army after its recent drive into Mosul and other northern Iraqi cities have been moved into Deir Ezzor to help in the organisation’s campaign to take full control of the region.

In Iraq, the rebels are fighting to gain control over the country’s largest refinery at Baiji in the central part of the country.

It appears that they sell oil from the fields they control to shadowy middlemen who arrange for its transport?–?mostly by tankers?–?to buyers in Iraq, Syria and Turkey.

These sales are said to provide the organisation with the funds needed to pay its troops and acquire its vast stockpiles of arms and ammunition.

Many observers also claim it is selling oil to the Assad regime in return for immunity from government air strikes being launched against other rebel groups. “Many locals in Raqqa accuse it of collaborating with the Syrian regime,” said Kurdish journalist Sirwan Kajjo.

“Locals say that while other rebel groups in Raqqa have been under attack by regime air strikes on a regular basis, its headquarters have not once been attacked.”

But as the fighting in northern Iraq plays out, it is obvious oil is a central factor there.

The Islamic State seeks to deny petroleum supplies and oil revenue to the Baghdad government and to bolster its own coffers, enhancing its capacity for nation-building and further military advances.

At the same time, the Kurds and various Sunni tribes?–?some allied to the organisation?–?want control over oilfields located in the areas under their control and a greater share of the nation’s oil wealth.

South China Sea

In the East and South China seas, China and its neighbours claim assorted atolls and islands that sit astride vast undersea oil and gas reserves. The waters of both have been the site

of recurring naval clashes in the past few years with the latter grabbing the spotlight.

An energy-rich offshoot of the western Pacific, the South China Sea, long a focus of contention, is rimmed by China, Vietnam, the island of Borneo and the islands of the Philippines.

Tensions peaked in May when the Chinese deployed their largest deepwater drilling rig, the HD-981, in waters claimed by Vietnam.

Once in the drilling area, about 193km off the coast of Vietnam, the Chinese surrounded the rig with a large flotilla of navy and coast guard ships.

When Vietnamese coast guard vessels attempted to penetrate this defensive ring, they were rammed by Chinese ships and pummelled by water cannons. No lives have yet been lost in these encounters, but anti-Chinese rioting in Vietnam in response to the seaborne encroachment left several dead and the clashes at sea are expected to continue for several months.

The riots and clashes sparked by the deployment of HD-981 have been driven in large part by nationalism and resentment over past humiliations. The Chinese, insisting various tiny islands in the South China Sea were once ruled by their country, still seek to overcome the territorial losses and humiliations suffered at the hands of Western powers and imperial Japan.

The Vietnamese, long accustomed to Chinese invasions, seek to protect what they view as their sovereign territory. For common citizens in both countries, demonstrating resolve in the dispute is a matter of national pride.

But to view the Chinese drive in the South China Sea as a simple matter of nationalistic impulses will be a mistake. The owner of HD-981, the China National Offshore Oil Corporation, has conducted extensive seismic testing in the disputed area and evidently believes there is a large reservoir of energy there.

The Chinese news agency, Xinhua, said: “The South China Sea is estimated to have 23?billion tons to 30?billion tons of oil and 16?trillion cubic metres of natural gas accounting for one-third of China’s total oil and gas resources.”

Moreover, China announced last month that it was deploying a second drilling rig to the contested waters.

As the world’s biggest consumer of energy, China is desperate to acquire fresh fossil fuel supplies wherever it can.

Although its leaders are prepared to make increasingly large purchases of African, Russian and Middle Eastern oil and gas, they unsurprisingly prefer to develop and exploit domestic supplies.

For them, the South China Sea is not a “foreign” source of energy but a Chinese one, and they appear determined to use whatever means necessary to secure it. Because other countries, including Vietnam and the Philippines, also seek to exploit these oil and gas reserves, further clashes, at increasing levels of violence, seem almost inevitable.

Ukraine, Crimea and Russia

The present crisis in Ukraine began in November last year when President Viktor Yanukovych repudiated an agreement for closer economic and political ties with the European Union (EU), opting instead for closer ties with Russia.

That act touched off fierce antigovernment protests in Kiev and eventually led to Yanukovych’s flight from the capital. With Moscow’s principal ally pushed from the scene and pro-EU forces in control of the capital, Russian President Vladimir Putin moved to seize control of Crimea and foment a separatist drive in eastern Ukraine.

For both sides, the resulting struggle has been about political legitimacy and national identity?–?but as in other recent conflicts, it has also been about energy.

Ukraine is not itself a significant energy producer. But it is a major transit route for the delivery of Russian natural gas to Europe.

According to the US Energy Information Administration, Europe obtained 30% of its gas from Russia last year?–?most of it from the state-controlled gas giant Gazprom?–?and about half of this was transported by pipelines crossing Ukraine.

As a result, that country plays a critical role in the complex energy relationship between Europe and Russia, one that has proved incredibly lucrative for the shadowy elites and oligarchs who control the flow of gas, while provoking intense controversy.

Disputes over the price Ukraine pays for its own imports of Russian gas twice provoked a cut-off in deliveries by Gazprom, leading to diminished supplies in Europe.

Given this background, it is not surprising that a key objective of the “association agreement” between the EU and Ukraine that was repudiated by Yanukovych (and has now been signed by the new Ukrainian government) calls for the extension of EU energy rules to Ukraine’s energy system?–?in essence eliminating the cosy deals between Ukrainian elites and Gazprom.

EU officials claim that by entering into the agreement, Ukraine will begin “a process of approximating its energy legislation to the EU norms and standards, thus facilitating internal market reforms”.

Russian leaders have many reasons to despise the association agreement. For one thing, it will move Ukraine, a country on its border, into a closer political and economic embrace with the West.

But of special concern are the provisions about energy, given Russia’s economic reliance on gas sales to Europe?–?not to mention the threat they pose to the personal fortunes of well-connected Russian elites.

Late last year, Yanukovych came under immense pressure from Putin to turn his back on the EU and agree instead to an economic union with Russia and Belarus, an arrangement that would have protected the privileged status of elites in both countries.

But by moving in this direction, Yanukovych put a spotlight on

the crony politics that had long plagued Ukraine’s energy system, thereby triggering protests in Kiev’s Independence Square (the Maidan)?–?that led to his downfall.

Once the protests began, a cascade of events led to the current standoff, with Crimea in Russian hands, large parts of the east under the control of pro-Russian separatists, and the western areas moving ever closer to the EU.

In this ongoing struggle, identity politics has come to play a prominent role with leaders on all sides appealing to national and ethnic loyalties. Energy, nevertheless, remains a major factor in the equation.

Gazprom has repeatedly raised the price it charges Ukraine for its imports of natural gas and on June 16, cut off its supply entirely, claiming nonpayment for past deliveries.

A day later, an explosion damaged one of the main pipelines carrying Russian gas to Ukraine?–?an event that is still being investigated. Negotiations over the gas price remain a major issue in the ongoing negotiations between Ukraine’s newly elected president, Petro Poroshenko, and Putin.

Energy also played a key role in Russia’s determination to take Crimea by military means. By annexing that region, Russia virtually doubled the offshore territory it controls in the Black Sea, which is thought to house billions of barrels of oil and vast reserves of natural gas.

Prior to the crisis, several Western oil firms, including ExxonMobil, were negotiating with Ukraine for access to those reserves. Now they will be negotiating with Moscow.

“It’s a big deal,” said Carol Saivetz, a Eurasian expert at the Massachusetts Institute of Technology.

“It deprives Ukraine of the possibility of developing these resources and gives them to Russia.”

Nigeria and South Sudan

The conflicts in South Sudan and Nigeria are distinctive in many respects, yet both share a key common factor?– widespread anger and distrust towards government officials who have become wealthy, corrupt and autocratic thanks to access to abundant oil revenue.

In Nigeria, insurgent group Boko Haram is fighting to overthrow the existing political system for a puritanical, Muslim-ruled state.

Although most Nigerians decry the group’s violent methods, it has drawn strength from disgust in the poverty-stricken northern part of the country with the corruption-riddled central government in distant Abuja, the capital.

Nigeria is the largest oil producer in Africa, producing about 2.5?million barrels a day.

With oil selling at about $100 a barrel, this represents a potentially staggering source of wealth for the nation even after the private companies involved in the day-to-day extractive operations take their share. Were these revenues used to spur development and improve the lot of the people, Nigeria could be a great beacon of hope for Africa.

Instead, much of the money disappears into the pockets of Nigeria’s well-connected elites.

In February, the governor of the Central Bank of Nigeria, Lamido Sanusi, told a parliamentary investigating committee that the state-owned Nigerian National Petroleum Corporation had not transferred some $20?billion (R213.8?billion) in proceeds from oil sales to the treasury, as required by law. It had all evidently been diverted to private accounts.

For many Nigerians?–?most of whom live on less than $2 a day?–?the corruption in Abuja and the wanton brutality of the government’s security forces is a source of abiding anger and resentment, generating recruits for Boko Haram and winning it begrudging admiration.

The conflict in South Sudan shares a common link.

Its formation is a product of oil politics. A civil war in Sudan that lasted from 1955 to 1972 only ended when the Muslim-dominated government in the north agreed to grant more autonomy to the people of the south, largely practitioners of traditional African religions or Christianity.

When oil was discovered in the south, the north Sudan rulers repudiated many of their earlier promises and tried to gain control over the oilfields, sparking a second civil war lasting from 1983 to 2005.

About 2?million people lost their lives in this war. In the end, the south was granted full autonomy and the right to vote on secession.

After a January 2011 referendum in which 98.8% of southerners voted to secede, the country became independent on July 9.

The new state had barely been established when conflict with the north over its oil resumed. While South Sudan has a plethora of oil, the only pipeline allowing it to export it stretches across North Sudan to the Red Sea.

This ensured the south would be dependent on the north for the major source of government revenue. Furious at the loss of the fields, the northerners charged excessively high rates for transporting the oil, precipitating a cut-off in oil deliveries by the south and sporadic violence along the two countries’ still-disputed border.

In August 2012, the two sides agreed to a formula for sharing the wealth and the flow of oil resumed.

But fighting has continued and despite several attempts to negotiate a ceasefire, it goes on with thousands of people killed and hundreds of thousands forced to flee their homes.

As of March, the Paloch field in Upper Nile state was producing some 150?000 barrels a day, worth about $15?million to the government and participating oil companies.

About the author

Klare writes for TomDispatch.com. He is a professor of peace and world security studies at Hampshire College and the author, most recently, of The Race for What’s Left. A documentary movie version of his book Blood and Oil is available from the Media Education Foundation. Copyright © 2014 Michael T Klare

– distributed by Agence Global

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