The Great Detente Disaster, by Edward Friedland, Paul Seabury, Aaron Wildavsky
The Great Détente Disaster: Oil and the Decline of American Foreign Policy.
by Edward Friedland, Paul Seabury, Aaron Wildavsky.
Basic Books. 210 pp. $7.95.
Multiple authorship rarely succeeds; haste and passion are the enemies of thought. But this book, written in obvious haste by three dissimilar authors, and evidently strongly felt, has one very great merit that easily outweighs its faults: the oil-price crisis caused by OPEC is treated thoughout as a political crisis, and not as a natural catastrophe or a dissociated economic phenomenon. Nothing is more revealing of the essential shallowness of American foreign policy under Secretary Kissinger’s regime than its failure to do likewise.
It was perfectly apparent that there was a causal nexus between the laissez-faire stance of American policy in the first days of the October 1973 war and the first talk of output reductions by the Arab oil producers; and it was only by slow stages and with obvious hesitation that the reductions were imposed by men who clearly feared and half-expected a strong American reaction. But in Washington there seemed to be no recognition of the obvious possibilities for strong diplomatic action: the response, by omission, was total acquiescence. Only one member of the cabinet urged that the Arabs be told publicly and clearly that an embargo would be treated as a hostile act. He was promptly overruled.
There followed the spectacle of the Saudi oil minister being wined and dined in Washington even while a Saudi oil embargo was in force against the United States; and he was the first of many. During the talks conducted in the wake of the war to secure an Israeli retreat, a peculiar one-way linkage preceded the one-way “disengagement”: while Arab spokesmen continually threatened further supply cuts unless the Israelis withdrew, at no point did Washington choose to make an Israeli withdrawal conditional on a lifting of the embargo.
Much more destructive in its consequences was American passivity toward the price-rigging of OPEC. In fact, the administration itself virtually provided the rationale for the price increases in the person of James Akins (now ambassador to Saudi Arabia), author of a now notorious article in Foreign Affairs which came close to advocating both the Arab embargo and the extortion of OPEC. It was only with agonizing slowness and with an ill-concealed reluctance that the State Department finally formulated an oil policy—which astonished the world. At a time when the West was in deep crisis because the price of oil had suddenly increased from $1.40 to more than $10.50 per barrel, the main plank of this policy was to insure a high floor price, its major preoccupation being that a decline in the price of oil would remove the incentive to conservation and energy substitution. The preoccupation was well founded, but protective tariffs have been used since the 7th century C.E. precisely to stimulate domestic production. Indeed, after yet another delay, the energy side of the Ford administration came out in favor of a high tariff that would make a floor price unnecessary. The man who is officially charged with such matters in the State Department, Assistant Secretary Thomas Enders, spoke on the same day on the same issue as did Secretary Kissinger, one stressing the importance of a high floor price even while prices were still rising, the other making feeble statements about the need to reduce prices, if only just a little. The resulting confusion has not been dissipated to this day.
In the meantime, the only active aspect of State Department policy was to insure that visiting dignitaries from the Arab oil states were treated as royalty. Men whose only claim to importance was that they had successfully cartelized a natural resource found and developed by Western money and Western talent were thus taught the personal lesson that the way to fame and power was more extortion. It is a lesson they have learned well.
Official policy cannot be faulted for the disorientation the mass media manifest in the eager submissiveness shown to the pretensions of the oil producers, and the enthusiasm with which Middle Eastern potentates were promoted to the rank of leaders of world caliber. It would be a grave mistake to ignore the purely personl dimension of the issue. Arab leaders and the Shah do not see themselves through the spectacle of their own controlled media but are heavily influenced by those of the West, and especially the American. The message relayed by the media was that the oil producers had become great powers, and could do as they liked. The oil producers acted accordingly. After having done all they could to injure the West, the Shah of Iran and Faisal must have been pleased, though a little surprised, to see themselves portrayed as loyal friends of the United States. (Faisal missed the culminating spectacle of a TV reporter on a major network, very near to tears, mourning the death of “a great friend” of the United States.)
On a more tangible level the policy of the United States continues to endorse these attitudes. Nothing whatsoever has been done to mobilize countervailing economic pressures against the oil producers; no attempt has been made to restrict their access to American products or American financial markets. None of the various counter-cartel proposals, such as the rejection of short-term “hot” money deposits or the creation of a bidding system for oil sales, has been tried. Instead, there is still more wining and dining, and the wholly unrestricted sale of military equipment. Neither amounts to a policy.
Edward Friedland, Paul Seabury, and Aaron Wildavsky address the different aspects of the oil-price problem—economic, monetary, and physical (there is no physical oil shortage in the simplistic sense conveyed by the mass media)—but always within the dominating political framework. By contrast, the analyses that find a ready welcome in journals like Foreign Affairs are distinguished by an insistence on treating the oil problem as a purely economic issue, but with the addition of a few words on the sound ethics of transferring wealth to the deserving rich who inhabit the Persian Gulf. Nor do the present authors, like so many of their colleagues, insist on viewing the problem in terms of the best-case assumptions that dominate much of the debate. The widely circulated estimate by a senior official of the World Bank that the “cost of OPEC” to the Western world is 2 per cent of GNP is, for example, based on the assumption of a very healthy rate of economic growth, 4 per cent or more per annum. It continues to be quoted, even though there has been no econnomic growth at all, or very little, in most Western economies, while in the United States there has been an absolute decline in the GNP.
The oil-price crisis is one of those rare and peculiar problems that may usefully be examined from a crude Marxist perspective. We find the international bankers, and those who speak for them, quite happy with the situation: the capital surpluses being accumulated by the oil producers are to be “recycled” and all will then be well for the Western economies, not to speak of the bankers who will do the recycling. In fact, according to the bankers, capital inflows from OPEC will help a great deal, given the inadequacy of long-term industrial investment in the United States.
But how is this additional capital created in the first place? We know that it is now “accumulated” by additional production (and savings) in the oil-producing states. The answer is obvious: it is extracted from the mass of Western consumers, and very regressively, since George Ball and the average worker pay exactly the same price for their heating oil and gasoline. In other words, the capital that the oil producers are accumulating in spite of their penchant for jet fighters and other expensive toys comes from the pocket of the consumer in the Western world, and is to be recycled into the industry of the Western world, thus benefiting in the first instance the owners of industry and the bankers who control the transaction. Eventually, it is true, some benefits will filter down by way of increased productivity, but in the meantime ordinary people are being forced to sacrifice their standard of living for the benefit of those much richer than they, both in the Persian Gulf and closer to home.
It is possible to satisfy the Shah and his colleagues by one policy; it is possible to satisfy George Meany by another sort of policy; but not both at the same time. The effects of the price-rigging of OPEC are sharply asymmetrical in their impact on different layers of our own society. This no doubt explains the curious alliance between foreign oil-producing states and much of the Eastern establishment, an alliance which has done so much to paralyze American reaction to OPEC.
The authors of The Great Détente Disaster are appropriately cautious in their discussion of the option of force. At present, the possibility of another Arab embargo, or of a further round of politically-inspired cuts in output, seems remote, but then the situation in the Middle East is always volatile. As against this, a further sharp increase in the price of oil is already in prospect for the autumn.
The slow strangulation of ever-higher oil prices inflicts damage as real as that of any supply cut but cannot constitute a casus belli: those who can, will pay; those who cannot, will go without. But none will fight over high prices. The option of force, now much more realistic since the military has been prepared and a variety of arrangements have been made, remains applicable only if there is an embargo.
No serious observer expects any conference with the oil exporters to lead to beneficial results other than more of that “good atmosphere” which the mills of détente are forever venting. The leaders of the oil states have seen the countermeasures being readied against them, and they are not impressed. As in any adversary relationship, a balance of threats and incentives is needed to make a compromise possible, and no such balance exists. For the same reason, few serious observers expect very much to come from the consumers’ union that has now been formed largely owing to the brilliant political staff work of a small band of dedicated Europeans (one of whom, Roger Ockrent of Belgium, ought to be remembered, for he almost certainly died of overwork in the effort). It is symptomatic that American diplomacy played no great part in the detailed work needed to create the energy agency, the one thing which gives some substance to consumer cooperation. Secretary Kissinger’s reluctance to cooperate with allies, his insistence on secret and therefore narrow staff work which makes collaboration with other departments virtually impossible and the steady opposition of those holding the Arab and oil-state desks in the State Department, all militated against a vigorous effort.
It is now apparent that the only action that will count is energy substitution at home, both to reduce dependence on OPEC and to relieve the pressure on other consuming states which lack the resources for large-scale substitution. Industrial bottlenecks are being overcome, but the formidable obstacles to increased energy production, and to the more efficient use of energy already available, are legal—that is to say, political. The post-1969 environmental hysteria has already crystallized in much legislation which compels inefficiency in the use of coal and gasoline and restricts the development of nuclear power. Other legislation compels the inefficient use of natural gas. Until very recently, a strip-mining bill threatened to impede the rapid exploitation of the most important resource of all, surface coal.
Protection of the natural environment is the most general of common interests, but it is obvious that many separate strands of restrictionist legislation can gulliverize America and fatally constrict efforts to produce more energy. By now it is obvious, in addition, that much of the environmentalist movement is animated by a desire to arrest growth and development tout court, a desire which reflects an unacknowledged hostility to the civilization itself—hence the lack of enthusiasm for gradual and cumulative measures which would eventually reduce pollution in the same degree but without disrupting the economy. Fortunately the ordinary person is beginning to realize that he, and not just big business, is the real victim of environmental restrictionism. Upon this realization, and its successful translation into effective political action, our hopes must rest.