In Wednesday’s post, I wrote that the European Union seems set to repeat its Cyprus error with the Palestinians. But perhaps that’s unsurprising. For in both cases, willful disregard of the evidence has subverted its policies.
In Cyprus, the EU effectively killed a peace plan by promising accession to Greek Cyprus regardless of the outcome of an April 2004 referendum, but to Turkish Cyprus only if both sides voted yes. Unsurprisingly, since Greeks had nothing to lose by holding out for more, 75 percent voted no, while Turks, having something to lose, voted yes. Indeed, Greek Cypriot President Tassos Papadopoulos openly opposed the plan, telling his countrymen they could get a better deal; so did the largest Greek Cypriot political party.
Subsequently, then-enlargement commissioner Gunter Verheugen accused Greek Cypriot leaders of “cheating” their way into the EU: they vowed support for reunification until accession was assured, then reversed course. But why did Europe deem their promises credible enough to justify sacrificing the accession card?
After all, evidence to the contrary wasn’t lacking. For instance, the Greeks refused to sign an earlier draft of the plan in December 2002 but were nevertheless offered membership later that month. They rejected another version in February 2003, yet the EU made no effort to postpone that April’s signing of the accession treaty, which made accession unstoppable. Indeed, Greek leaders repeatedly demanded more than the plan offered, while polls showed most Greeks opposing the requisite concessions.
The answer is that Europe viewed Cyprus in black and white: since Turkish Cyprus was created by Turkey’s 1974 invasion, it deemed Turkish Cypriots the villainous “occupiers” and Greek Cypriots the victims. Never mind that Turkey invaded in response to a war Greek Cypriots started by staging a coup, with backing from Athens, to create an all-Greek government and merge the island with Greece. Or that Greek Cypriots’ history of oppressing Turkish Cypriots gave the latter good reason to fear the coup and beg Ankara’s assistance, and Ankara good reason to intervene to protect them. Or that the war made thousands on both sides refugees.
Then, having assigned its roles, the EU simply assumed that the victims would “support peace” while the villains would oppose it, regardless of actual behavior. Thus in March 2004, while Papadopoulos and his Turkish Cypriot counterpart were both denouncing the plan’s latest draft, Verheugen still blamed Turkish Cyprus alone for the failed talks.
The Israeli-Palestinian parallels are obvious. Here, too, Europe ignores the fact that Israel conquered the territories in a defensive war, or that every previous Israeli withdrawal has exacerbated anti-Israel terror. It ignores repeated polls (see here and here) showing that Palestinians oppose two states if one of them remains Jewish. It ignores “moderate” Palestinian leaders’ unrelenting insistence on relocating all Palestinian “refugees” to Israel (here and here for instance), their claims that the Western Wall isn’t Jewish, their demand for judenrein territory. It even ignores their rejection of Israeli statehood offers in 2000, 2001, and 2008. Hence its growing support for recognizing “Palestine” without an agreement, thus killing any chance for negotiations.
The EU has decided that Israelis are villainous, peace-hating “occupiers” and Palestinians are peace-loving victims. And never mind the facts.
Recent regional election results in Venezuela were a disappointment to Chavez and his party. Maybe this will be some sort of opportunity. Chavez loves Ahmadinejad and Medvedev more than he cares about his own people.
George Jochnowitz, yes, Hugo does. Therefore, let’s do something that will result in his retirement so that he can spend even more time in Iran and Russia.
why doesn’t the US try and breac the cartel?
because our leaders and former leaders are all being paid off by the arabs..
the arabs own the State Dept and every retired President to begin
ploome, yes, this could be a factor, sad to say.
One reason not to try to break up OPEC is that any effort expended in an attempt to prevent a bunch of oil ministers from getting together in a room every now and then and commanding the tides to roll in and out would be completely wasted. There’s no evidence that OPEC has ever been the slightest bit effective at influencing oil prices. When market conditions force prices up, OPEC solemnly claims credit and declares “quotas” that members largely ignore in order to capitalize on the windfall; when conditions push prices down, OPEC frantically orders production cuts that its members largely ignore in order to keep revenue up. If OPEC has any effect at all, it’s probably that its illusion of power prevents oil producers from organizing a more effective cartel. Trying to destroy it would be at best useless, and at worst counterproductive.
I agree we should attack the cartel by drilling for oil in ANWR and the offshore fields now barred from exploitation. Alternative energy sources are also important so we should build 150 new nuclear power plants in the next five years. By 2015, we should be getting 75% of our electricity from nuclear. Research in oil substitutes like methanol from non-food sources is also important but unlikely to be economical until the world economy recovers and demand for oil rises again. By that time, we could be largely self sufficient. The only problem ? The ideology of the incoming administration, which will spend billions, if not trillions, on dead end technologies like solar and wind. They will not allow drilling or nuclear to be developed. The next oil crisis will come in 2015.
Dan Simon, you wrote: “There’s no evidence that OPEC has ever been the slightest bit effective at influencing oil prices.” Really? Not in 1973? After we discuss this timeframe, we can talk about the present.
oil has dropped so low because of the dollars strength. the dollar has strengthened because so many people ahve taken theirmoney out of the stock market. when the economy improves and people begin to invest again the dollar will drop and oil will rise
It is not OPEC but alternative energy that is in danger of destruction.
This crisis is serving OPEC in undermining alternative energy. Investors once again see how cheap gasoline is positioned to sabotage their stake in alternative fuels.
OPEC itself, regardless of the eco/pol problems its member states now face, will be all right once demand picks up, which eventually it must.
The way to truly defeat OPEC is with taxes at the pump which will prevent the price of oil from falling further and returning us to our oil guzzling habit. And it will encourage continued large investments in alternative energy.
At the same time we must resume building nuclear plants (45% of South Korea’s electricity comes from nuclear power) tap our virgin oil fields, and subsidize conservation measures.
Gordon, OPEC doesn’t have the market power today to do what it did in 1973. There is also a serious question whether it has the political unity. OPEC’s power to act it did in ’73 was broken by the next decade, with the worldwide explosion of oil recovery. You may recall the analyses at the time of Israel-Lebanon ’82 that OPEC was no longer able to impose a unilateral price spike because of the oil industry’s diversification — in the North Sea, the Americas, and Asia (Russia, Indonesia, South China Sea) — since the ’73 price hike.
We should definitely expand drilling in the US — ANWR, off the coasts — and encourage stable, non-exclusionary conditions for it elsewhere, such as in the South China Sea, the Mediterranean, and non-OPEC Africa. The more non-OPEC producers put out, the less market power OPEC has.
Market realities mean that as long as demand is low and prices are down, the incentive to expand non-OPEC drilling is lower than it is when prices are up. We are going to run into that as a political problem right here in the US: the next Congress is unlikely to do much about drilling in ANWR while gas at the pump is so cheap. (And in constant-dollar terms it is very cheap right now.)
The good news, though, is that OPEC is already hemmed about with enough non-cartel competition that it literally cannot set prices as it desires. It can reduce or increase production in OPEC nations, but it can’t force anyone to pay through the nose for oil today. There are too many alternatives to OPEC oil.
OPEC performs today as it was originally intended to when it was formed in 1961. Its objective was to manage the oil resources of member nations over their lifetime, to the optimum benefit of the members’ economies and trade prospects. OPEC is a form of central planning and management — and as such, I can certainly agree that it was never a good idea, even for its members. I’m an unreconstructed free marketeer. But in today’s market, in which India and China mean as much to demand as the US and the EU, and in which a growing number of non-OPEC producers create real competition for the cartel, “breaking” OPEC has lost much of its meaning. In 1973, OPEC was able to quadruple the price of oil by fiat. In 2008, OPEC has cut production across its membership — a sensible central planning move, to avoid selling off a non-renewable resource at declining prices — and has still been entirely unable to affect the downward slide of oil prices.
It’s tricky in a recession in a country addicted to cheap fuel, but we probably ought to tax imported oil so it doesn’t get too cheap, use some of the money to subsidize fuel costs for the very poor, and some for alternative energy.
Complete energy autarchy is probably not achievable, but with nuclear, more domestic drilling, tighter mileage and conservations standards, as well as solar, etc., we can reduce the stranglehold that the Saudis and others have over us and improve our balance of payments. The moment to have done this was after 9/11 when the country might have heeded a call to sacrifice instead of a call to go shopping, but it still might be possible during the Obama honeymoon.
Gordon,
In 1973, OPEC was willing to stop selling to us. That quickly drove prices up. And when deliveries resumed, prices promptly collapsed.
There’s a big diff between an all-out sales embargo and an effective strategy to keep prices trading within a tight range. OPEC’s never shown it can do the latter. It’s done the former once.
Grumpy, most of America’s imported oil comes from Canada. I grant oil is fungible, and a reduction in consumption will affect price, but import taxes, given the source of most of the US’s imports, doesn’t strike me as the answer.
“If other governments can act in their own interests, why can’t ours act in America’s?”
We most certainly DO act in our own interests…as well we should.
Alternative energy is still 10-20 years away from being free-market competitive with oil, nuclear and hydro-power. As long as oil is under $100 there will be no real incentive to drill offshore, in ANWR nor to overcome the environmental lobby’s opposition to increased use of nuclear power.
Newton’s first law of conservation, the law of inertia applies: “A body (societies) continues to maintain its state of rest or of uniform motion unless acted upon by an external unbalanced force.”
The “external unbalanced force” is the price of oil when it rises above $100
J.E. Dyer, I agree with all you say except the part about ANWR. Yet just because OPEC has lost pricing power since 1973 does not mean that it might not become an effective force in the future. So while it’s down, it’s time to finish it off once and for all.
One reason is that others may think they can create other cartels. Russia, for example, wants a gas OPEC. Even though it probably won’t succeed, this is one trend we need to nip in the bud.
Grumpy, I agree that the failure of President Bush to call for sacrifice after 9/11 was a disastrous mistake. Perhaps an import tax is not the answer–I don’t know–but there does need to be a national effort to develop our own energy sources. Not to do so is folly.
Cash, you wrote “It’s done the former once.” If it can do that once, it may someday try to do that again. Maybe it cannot accomplish this now, but I don’t want to continue to rely on its good will.
Geoffrey Britain, thanks for citing Newton’s first law of conservation. I hope that we’re smarter than a ping pong ball and can change our course even though the price of oil is now low.
Gordon,
Of course we’re smarter but we’ll do nothing.
That is because of the polarized nature of the status quo.
Republicans want to drill and start construction of nuclear power plants.
Democrats, who will effectively control things for at least 4 more years, are adamantly opposed to those solutions. The alternative energies they promote are at the very least, not ready for prime time. Nor will they be for at least a decade. They may never be adequate as substitutes for oil. The ‘bottleneck’ with alt. energy is energy storage NOT production.
The ‘fickleness’ of wind and solar makes energy storage of particular importance in the eventual implementation of those technologies and neither addresses the main usage of oil by our civilization, transportation.
At present, and as long as the price of oil remains below $100, it ‘cements’ in place the ‘Gordian Knot’ of the polarized nature of the energy status quo in the US.
Just as Alexander ‘resolved’ the puzzle of the Gordian Knot with his sword, so shall rising oil prices ‘smite’ the energy ‘logjam’ we are locked into.
I’d be curious to hear what the pragmatic Thomas Friedman has to say about this proposal. He has noted in past columns the existence of an inverse relationship between oil prices and democracy. I.e. when oil prices plummet, democracy flourishes in oil-producing nations. When it soars, democracy takes a blow in those same nations. By this logic, it is our DUTY as the defenders and promoters of global democracy to break the OPEC cartel.
Would Friedman agree? Or have the Arabs bought him too?
gordon,
I like the way you think. If only our elected “representatives” shared your point of view.
Friedman is an irrelevant poseur
/feh
Geoffrey Britain, I agree we will do nothing for the reasons you note. Thanks for laying all this out.
Diane, I don’t know what Friedman would think, but he is rarely in favor of ideas that are out of mainstream thinking, at least “mainstream” as defined by his paper, the New York Times.
Rininger, I appreciate the kind words. Thank you.
hahaha Gordon, kind words from Rininger it’s sort of creepy, isn’t it!
Even more important than the price of oil is the price of our politicians. They have too often been bought by the Saudis and have lost track of whom they should represent.
Want to break OPEC? Ask Henry the K. He got it fired up in the first place. Just reverse what he did.
Weighing all the factors and pressing issues, the best strategy among our bad options would be for the US to significantly raise fossil energy taxes and import fees while deeply cutting income, corporate, dividend, and capital gains taxes. Such a move would undoubtably cause a few unintended second order effects, but on the whole, would serve the following ends:
–attacks the deficit.
–rewards conservation.
–supports alternative energies.
–supports domestic production.
–stimulates investment.
–weakens dysfunctional petro-states.
RPM, sign me up.
Chang has the right idea. But our inept politicians can be counted on to miss this opportunity.
A couple of months after the US invaded Iraq, the New York Post published a column by Nicole Gelinas titled “The Iraqi Dagger at Opec’s heart.”
I clipped the article and had it on my desk for a few years before misplacing it.
It was about increasing Iraqi production so much that it would break Opec and bankrupt Opec members.
Easier said than done, lol.
Btw, many people argue that if Opec was never created, consuming countries would have created a system to ration production anyway.
This is oil we’re talking about. What our modern civilization is based on.
Colleen, you wrote “This is oil we’re talking about. What our modern civilization is based on.” Today, you are correct. But we can change things if we have the will. Once civilization was based on stone implements. So we can make progress if we want to.
I understand, but let’s be careful about it.
i.e. the example of overfishing. Is a world without fish progress?
colleen, a world without oil would not be progress either. So let’s find a way to use something else.
Of course, you’re right about the need to be careful when we discuss the use and management of such a vital commodity. We should be able to make the transition from excessive oil dependence relatively smoothly, however.
JLiuser,
kind words about the tyrants misruling the “People’s” Republic are much creepier than anything I could write.
Rininger or Smelly Bob,
Can’t really figure out what pribumi did to you when you were in Indonesia that makes you hate Islam so much, a fellow African American middle-named Hussein seems had great time there and will spend the next four years in the White House, I feel your pain.