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Editor’s blog – Will oil and globalisation continue to keep the peace?

By Dean Carroll

Just two years ago Iran was threatening to close the Strait of Homurz – through which 32 per cent of global oil supplies and 28 per cent of the world’s liquefied natural gas supplies pass every day – because of tighter European Union sanctions on the country’s fossil fuel exports. Fears of any blockade of the vital ocean corridor and a spiral towards both military conflict and global economic stability have long since passed. Iran, the United States and Europe are engaged in a new era of glasnost – or at least that is the image being presented to the world at large. But what surprises might 2014 bring?

We know that Saudi Arabia – the West’s key ally in the Middle East despite the human rights abuses – has been asked to step up oil production and distribution through the kingdom’s east-west pipeline. It can carry more than five million barrels a day – the Strait of Homurz carries in excess of 15.5 million barrels daily – and is seen as a lifeline. Imagine if unrealistic EU demands and chicanery by the US and Israel push Iran’s clerical elite too far during diplomatic talks, therefore disrupting the global oil supply yet again. With the Organisation of Petroleum Exporting Countries predicting that oil demand will grow by millions of barrels per week this year – the stage seems set for another oil crisis at some point in the medium to long-term future.

Even if the tipping point between America-Israel and Iran is never reached, events in Syria and the disruptive domino effect across the Middle East – and beyond – are sure to upset the applecart. Plenty of big-time oil producing countries are experiencing conflicts within or near their borders.

Returning to Iran, we know that Russia backs the country – mainly, for trade reasons – and would oppose any United Nations military operation against the country should things escalate once more. Meanwhile, China has in the past only gone as far as stating that it thinks a nuclear-armed Iran would be dangerous for global stability – without advocating its own embargo on the country’s oil. And, in any case, oil embargoes have never achieved much in the past. You only have to look to South Africa, Iraq, Cuba and Rhodesia to learn the lessons of history in that respect.

But closure of the crucial Strait of Homurz trade route again in the future would certainly force the West into action – as might other similar moves in volatile areas across the globe. For many years now, the world’s fragile geopolitical balance has been held together by oil and commerce. And as Paul Stevens, senior research fellow at the respected Chatham House think-tank, wrote in The Financial Times during the 2012 scare: “Cutting off Gulf oil supplies represents an existential threat to the West that it would have to use force to counter. The response, if transit were seriously threatened, would rapidly degenerate into a shooting war between Iran and the US supported by many of its allies. While oil prices might reach unprecedented new levels, the US Navy would quickly restore access.”

Back in 2002, the then US President George W. Bush labelled Iran, Iraq and North Korea as an “axis of evil” for the countries’ support of terrorism and dogged determination to obtain weapons of mass destruction. One of my old left-wing politics professors used to say that the axis actually represented the states seeking to switch from the dollar to the euro for oil trading. He was only half-joking. But the serious point here is that with many experts still predicting that peak oil is approaching or may, even, have already passed – combined with the worsening situation in the Middle East – major instability looks inevitable.

The very things that have prevented geopolitical chaos and major wars for many decades – namely, globalisation, bountiful commodity prices and the oil trade – could yet be the cause of international collapse. Whereas, oil was once the glue holding together the global framework of relative peace and cultural tolerance it now threatens to obliterate those intergovernmental relationships. Just as Pax Romana was destined to end with hegemonic collapse and bitter military conflict, our modern version of empire – better known as ‘the international community’ – may now face a critical juncture. We could be at the crossroads that defines much of the early 21st century. And the next few months and years could well determine which way the cards fall for Europe and America.

Dean Carroll is editor of Policy Review. Follow him on Twitter @poljourno and follow Policy Review @Policyrev

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