The Third Persian Gulf War has proved once again that for the U.S., oil takes precedence over human life, political principle, international law and the will of the international community at the UN. This should serve as a wake up call to OPEC members that all their holdings in Western banks –in the form of bonds, shares and futures– are not worth a bag of beans if the energy resources are not there to back their face value. The relationship between energy supply and Western financial health is far simpler than most commercial lawyers would like to admit. To put it in layman terms, every single recent recession in the Western world has followed a rise in oil prices. Without a cheap source for supply of energy all the fine achievements of the Anglo-U.S. business community would not be worth the paper it is written on. The U.S. has chosen to rely on unethical international practices such as the use of military muscle to force the supply of cheap oil from the third world under subsequent agreements suited only to its own economy and those of its allies. Its business community’s claims of superior knowledge and prowess appear correct on the surface only thus. The U.S. thrives and survives only thus. Indeed the survival of the English-speaking world and its sophisticated banking system depends –to a large extent– on acquiring cheap energy under whatever pretext. The U.S. occupation of Iraq simply brought to public attention the ugly nature of its petroleum politics once more.

The lack of a coherent U.S. post war policy in Iraq graphically portrayed by reemployment of Saddam’s police to keep order on the streets is another tell-tail sign that the U.S. is currently playing it by ear and making the rules as it goes. Efforts at staving off the world community's curiosity demonstrate the U.S. reluctance to own up to facts for fear of sharing interests. Following the Anglo-U.S. invasion and occupation of Iraq, coalition spokesmen and press have led an extensive campaign to hide the terrible nature of their undertaking. The fact is that the unilateral action against Iraq was a financial gamble by the coalition from the start. The frequency of U.S. warnings to and intimidation of Iraq’s neighbors and the Arab world as a whole is further proof that the gamble has yet to pay off. All is far from well at the bank for U.S. and Britain, although listening to their "victory speeches" you would never know it. The war against Iraq took far longer and cost three times more than had been originally planned by the coalition. The U.S. senate has had to slash Bush’s promised tax cuts by half and delivering the remaining half to the U.S. public will translate into pushing the financial burden over to the next two presidential terms. The United airline has filed for and American Airlines has closed to bankruptcy. Major U.S. aircraft manufacturing companies are suffering in silence and laying off workers. Next year’s budget deficit stands at over $500 billion. U.S. exports make dismal readings and unemployment stands at over 6% as the recession is set to continue.

If the Iranian stance did not set the correct course for a brighter economic future for OPEC and the region as a whole some argue, perhaps the U.S. treatment of Iran would be different.

Little wonder then, that the world markets have not rallied post-Saddam as the victorious coalition expected. The presence of U.S. and British troops on Iraqi streets –very much like the Israeli incursions into the West Bank– no longer fill investors with confidence. It is like the world has changed and somebody has forgotten to tell Bush, Blair and the powerful Jewish lobby about it. The U.S. gamble for an increase in oil production to prepare the ground for short-term market gains will also backfire once OPEC has adjusted to its new prowess on the world stage and the English-speaking world’s major banks realize the extent by which their credibility has been undermined as a direct result of their government’s actions and once the true costs for the reconstruction of Iraq’s shattered infrastructure have been calculated.

Iraq’s peak oil production capacity was 3.5 million bpd at the end of the last Gulf war but Iraqi petroleum extraction equipment, pump houses, pipes and ports are mostly outdated, rundown and have deteriorated since 1991, so Iraq’s peak oil production capacity stands closer to 2.5-2.8 million bpd at present. France and Russia hold prior agreements for the sale of some 1.2 to 1.5 million bpd of Iraqi oil. Furthermore Iraq’s foreign debts to France and Russia alone stand at over $12 billion. Should we take into account the cost of reconstruction of Iraq added to war reparations owed to Iran –estimated at over $90 billion– and the $200 billion cost of war to be repaid to the coalition, as well as Kuwait’s share in the foray, Iraq will have to be pumping oil at 6/7 million bpd just to keep its head above water for the next couple of decades. Iraq will have to sacrifice national growth, education, health and prestige in due course. The promise of a healthy successful Iraq will prove to be yet another American pipe dream canvassed to the gullible.

Iraqi oil production will not reach its current capacity peak of 2.5-2.8 million bpd for another quarter. Iraq’s oil production will need major investment for infrastructure upgrades in order to reach 7 million bpd, which will take at least another two to three years to attain and implement. This can be achieved only if Iraq remains stable, the chances of which are remote given the differing internal and external factional politics and Arab dislike for U.S. and British sponsored governments. Western investors have the benefit of retrospective reflection on the Israeli failure to hang on to a 20 kilometer wide corridor in southern Lebanon defended by a mere 300 - 400 lightly-armed Hezbollah resistance fighters despite overwhelming Israeli military superiority. The U.S. cannot seriously contemplate occupying Iraq for the next five years as the U.S. appointed governor Jay Garner has claimed and the notion put forward might in time prove to be an ill-conceived bluff. The so-called democracy that the U.S. will leave behind will also be viewed with suspicion and will be subject to serious challenges from all parties involved.

It is under these dire circumstances in the region that Saudi Arabia has waved all objections to the Iranian presidency of OPEC and has indicated it would support such an outcome after nearly a quarter of a century. A reluctant Iran, itself under pressure by U.S. rhetoric, will nevertheless seek by majority consent to introduce measures to put right problems that have dogged OPEC at the grassroots level from its natural progression thus far. Iran will endeavor to drive home its message that the speed by which the regional countries discard their squabbles and unite politically and fiscally in the energy sector will actually be the crucial factor in determining the outcome of the latest Anglo-U.S. action, not the coalition protestations. The Middle East must realize that the world public opinion is unequivocal in support of its arguments more than ever before with regards to the double standards issue. The U.S. and Britain have sidelined themselves and lost moral ground in their latest efforts at proof of their international prominence, placing the ball unawares, very firmly in the Arab world’s court to decide the course of events in the years to follow. The point is not whether Iraq has the second largest proven oil reserves in the world; the point is how much oil everybody else including Russia has. Iran will argue that this perspective is the only realistic option for calming the fraught nerves.

OPEC has appeared united in recent years with regards to setting production quotas but OPEC is not a real economic community. This is because different members opt for exploration, extraction, refinement and production process contracts with different companies from various countries from the non-oil producing world. This is despite the fact that most of the skills required have advanced over the years and exist within OPEC. Companies in Iran, Russia, Saudi Arabia and Venezuela can provide almost all services required in the petroleum industry including extinguishing oil fires. All countries mentioned are major oil producers so they lack the motives to create instability to get at energy resources under false political pretexts. Yet they are left out in the cold time after time even when it comes to minor short-term contracts. This is just one example in a long line of miscalculations by OPEC members. Iran will insist the community must become self sufficient in most, if not all aspects of the industry drawing on indigenous technological and human resources to avoid becoming entangled in "the great game" politics for which it does not qualify.

The lion’s share of the oil market profits goes to non-oil producing outsiders because the members are not willing to trust and subsequently deal with fellow oil producers. This thoughtless approach complicates matters since it creates deep political divisions unrelated to OPEC member’s status quo. Each OPEC member is currently influenced by its first world technological partner’s politics, irrespective of whether the political differences abound actually relate to it. It is unbelievable to most that over the years OPEC members have fought over issues imposed from abroad rather than peacefully settling outstanding regional issues that directly effect their respective populations. Iran might like to see implemented through the possible course of its OPEC presidency an "Opeconomic" trade zone where member countries reduce or discard duties and tariffs on goods from fellow member countries. This will create a true economic community, which is self-sufficient in technology, goods, services and energy; a Utopia denied to the West by geography. Iran is aware this cannot be achieved overnight but where OPEC begins to prevent a loss, it profits. Iran will remind OPEC that there are no serious initiatives for such an eventuality at present and should the issue be swept under the carpet again the consequences will prove to be grave indeed.

OPEC must guide itself through the fog of overconfidence exuding from the coalition post-Saddam. Iraq may or may not reach peak production in two months time depending on the political and social situation on the ground. U.S. and Britain do not have a crystal ball either. Therefore OPEC must gather itself and remain confident to set new quotas and ensure members adhere to them regardless of the clever publicity campaign conducted by the Coalition. Should Iraqi oil enter the markets in earnest there can be another meeting to address the change. It is funny for most people, the fuss made whenever OPEC members meet. However, should the meetings become routine to keep up with the pace of rapidly changing markets, the community will be able to play a more robust and effective role in world business affairs and hang on to their initiative.