The Oil Drum has a great article about the natural gas field between Qatar and Iran (the Qatari portion is the "North Field" and the Iranian is "South Pars). Basically, this field is claimed to be huge, with about 1/4 of all natural gas in the world and more total energy than Saudi Arabia's famed Ghawar field. But--surprise, surprise--it looks like this field may be far smaller than the claims. Even though the field area is huge, the estimates are based on only two production platforms (Alpha and Bravo). The recent drilling efforts for Charlie platform--well within the prime "area" of the claimed field, came up dry. Now the Qatari government has suspended any further development attempts until they can further evaluate the field...
Also worth discussing is the recent killing of al-Qa'ida in Iraq leader Abu Musab al-Zarqawi. While much billed as a victory in the "War on Terror," it doesn't seem to me to be an event of much consequence. To evaluate the significance of this event, there are two questions that must be asked: Does this affect any of the underlying causes of the insurgency or support for radical Islamist causes? Does this in any way impact the ability of insurgents and Islamists to develop or implement an effective strategy?
On the first question, it seems clear to me that the killing of a leader does absolutely nothing to address the root causes of the insurgency and support for militant Islamists. Inequality, oppression, actions not in accordance with certain interpretations of Islam, etc.--none of these have changed with Zarqawi's death.
On the second question, I think that the death of Zarqawi may actually be counter-productive because it may facilitate both the development and implementation of an effective strategy. Zarqawi was a relatively successful innovator, particularly in the area of using the media and the internet to advance his cause. However, he also pushed his organization towards an increasingly rigid and hierarchal structure--one that limited innovation not initiated from the top, and that facilitated US intelligence collection on the organization. Finally, and perhaps most importantly, Zarqawi pursued a strategy of fomenting sectarian violence--at the opportunity cost of focusing on other strategies such as infrastructure targeting. The organization without Zarqawi may go in any of a number of directions, but one strong possibility is that it will devolve to a more rhizomatic, decentralized structure. Such a structure would likely exhibit more structural innovation as the many different and more independent cells would explore different tactical and strategic innovations--the result of such a change would be a more effective form of open-source insurgency. Additionally, such a devolution will be a major setback to US intelligence efforts--both killing off existing leads and making the total problem more complex. Most problematic is the enhanced probability that the reshaped organization will hit upon a more effective strategy--say infrastructure targeting combined with an effective campaign to highlight the abuses of US forces. If political concerns hadn't trumped all else, it is my opinion that the best course of action would have been to collect on Zarqawi, not to kill him. Just like the general rule that a lawyer should never ask a witness a question that he doesn't already know the answer to, a leader should never be killed without considering what will replace him.
So, in all, I think that the killing of Zarqawi is a negative development for the US. The press, carefully fed from various think-tanks and spokespeople, disagreed--they found this to be a cause for celebration. All this "good news" from Iraq immediately led to a significant drop in the price of oil--which brings me to a few thoughts on the so-called "risk premium."
The theory is that the price of oil is significantly elevated by a "risk premium"--the market's estimation of the risk of geopolitical instability causing future supply disruptions. There are two problems with this theory: First, it is not reflected by price movements over the medium or long term. Second, it is negated by the actions of the markets.
Take the Killing of Zarqawi. It caused a significant drop in oil prices immediately after its reporting Thursday morning, and this was widely reported by the Main Stream Media. However, by the end of the day prices actually closed higher than they were prior to news of Zarqawi's death--this was not reported. While I haven't conducted any kind of academically rigorous historical study, it seems like geopolitical events have significant impacts in the very short-term, but these gains (or losses) are negated by slightly more gradual corrections back to the equilibrium of supply and demand. These more gradual corrections don't get the same press--and don't have an easily attachable geopolitical explanation (the press doesn't like to speak of supply and demand), leading to the mistaken perception of a significant risk premium.
The second argument for this position is that any risk premium is negated by the markets themselves. The price of oil is determined by trading contracts for future delivery. Let's say one of these contracts expires August 1st. There is clearly a greater chance of some geopolitical event disrupting supply on July 1st--with 30 days before delivery is due--than on July 30th. So, on the surface, one would think that the price should be higher on July 1st , then declining as the expiration date nears and the chances of a geopolitical disturbance grow smaller. Such a phenomenon, however, is not reflected in actual contract prices. Right now, if we compare contracts that are 6 months apart (July '06 and December '06), the later contract is $3.08 / Barrel more expensive. A further 6 months (to July '07) only gains $0.37. This leads me to believe that there is a significant "Hurricane Premium" of about $3/barrel (because July - December spans the traditional hurricane season), but that there no significant "terror" or broader geopolitical risk premium that lasts more than a day or two after significant events. Whatever negligible geopolitical risk-premium that does exist, it is outweighed by the impacts of the time-value of money and the general expectation that long-term prices will drop (as reflected in the contract price of oil 5 years from now being $4.11 cheaper than the price of oil today).
Geopolitical factors and the risk of terrorism DO influence prices--so far as they impact the actual supply and demand. But any reactionary emotions among traders that create a temporary risk-premium bubble is quicly traded down by arbitrageurs who can protect against the short-term risks with opposing long-term covering contracts.
Now the recent Saudi admission that their existing fields are declining at 8% a year WILL have an impact on prices... but it might take a few months.
6 comments:
On the question of the value of Zarqawi's death you to "address the root causes of the insurgency and support for militant Islamists. Inequality, oppression, actions not in accordance with certain interpretations of Islam..." I'm not sure of the basis you have for assuming that those ARE the root causes of the insurgency or the actions of militant Islamists. I wish to be able to say this without sounding flippant, but your position seems to presume that the insurgents and Islamists are struggling to create a social structure that combines egalitarianism and libertarianism.
Additionally, I think you're painting with an overly broad brush here. Is Zarqawi and his group "the insurgency?" Is the insurgency monolithic? I would argue no to both questions. "The insurgency" seems to be a label thrown on any group of people in Iraq, Iraqi and foreign (with the exception of coalition forces) that seem to be intent upon delivering violence to ordinary Iraqis, Iraqi government and its extensions, and coaltion forces. It would seem that all of these groups (Sunni, Shia, foreign AQ elements) have different goals and means and that consequently addressing the "underlying causes" of their motivation would require different approaches.
An alive Zarqawi, continuing to engage in mass murder and continuing to evade coalition forces, certainly was not helpful for the US or the formation of a new Iraqi government. For all of the talk about the power of an image of a martyr, one would suspect that the image of someone successfully carrying on would be a much larger source of inspiration.
Morale is important. Hopefully, with the death of Zarqawi some might get the idea that the fight is futile or not worth engaging in. Some might begin to have troubles hooking up with the necessary resources to engage in the fight. Some might believe they've been compromised and might thus engage in an operational pause.
To suggest that Zarqawi's death makes no positive impact on the situation in Iraq and that further it is, in your words, a "negative development" seems rather baseless. It's certainly not anywhere near to a single, decisive "blow for freedom" or whatever. But to suggest that an alive Zarqawi planning, organizing, and directing mass muder is somehow preferable to him being dead (and not doing any of those things) seems a bit of a stretch.
Zarqawi, and AQI in particular, are by no means "the insurgency," but rather as you observe only a relatively small part of the picture. That said, I do think that there are a certain generic and broad base of root causes that fuel portions of the populace to lend support to--or to withdraw support from--these groups, either en masse or individually. Inequality and oppression--specifically the perception of such--are critical elements to why significant portions of the populace DO support these groups. Addressing this perception--preferably through correcting its reality--WOULD have a significant impact on the vital popular support off which many of the opposition groups survive. The death of Zarqawi does not accomplish that. Secondly, "actions not in accordance with certain interpretations of Islam" (namly Salafism) is certainly NOT a suggestion that this is somehow a struggle to create egalitarianism or libertarianism--rather, it is quite explicitly a suggestion to the contrary. As for the "insurgency" being represented by Zarqawi, or it being monolithic, I think you'll find that I've written extensively about how neither of those are the case--but it is precisely because Zarqawi was leading his organization closer towards hierarchy that we have been able to deal with them as effectively as we have (which is to say, minimizing how much success they have). A decentralized, rhizomatic structure--which I think is the likely trend after Zarqawi--is likely to be more innovative, more adaptable, and more successful.
I do not dispute that "an alive Zarqawi, continuing to engage in mass murder...was not helpful for the US or the formation of a new Iraqi government." What you aren't considering--and what I think was pointed to in my thoughts--is that killing Zarqawi will not necessarily produce a new leadership that is somehow more "helpful." In fact, as I stated, it is my opinion that the resulting devolved remnants of AQI will actually be worse for the US and the Iraqi government--they will, in my opinion, be more innovative, more adaptable, and more successful because of exactly the structural changes created by the killing of Zarqawi.
So I think that it is not at all baseless to suggest that the death of Zarqawi is a negative development from the perspective of the US government. The key to remember is that it is a choice between Zarqawi alive, organizing attacks and some unknown replacement leadership alive and organizing attacks.
Fighting "Inequality, oppression, actions not in accordance with certain interpretations of Islam..." != "struggling to create a social structure that combines egalitarianism and libertarianism."
To take an example we might understand better, consider the typical American theocrat, an increasingly widespread subspecies of the religious right that quite explicitly calls for the full union of church and state and the erection of Christianity as a state religion. They believe that is is oppression to not be subjected to strict religious intolerance--a violation of their "right" to, and I quote, "live in a godly society."
When confronted with an overwhelming oppressive power, there are many possible responses. Among them are fundamentalism and an extreme, even repressive, religious sentiment. But even when this ultimately creates a situation that is even more oppressive, we shouldn't mistake its historical roots. Militant Islam emerged only after many other strategies failed. It has succeeded because, to date, it alone has shown any promise of relieving Western-backed oppression.
"The key to remember is that it is a choice between Zarqawi alive, organizing attacks and some unknown replacement leadership alive and organizing attacks."
This presumes a more effective leader/organization was sitting, waiting in the wings, but that somehow Zarqawi and co were keeping it from flowering. That could very well be, but I don't see any reason to believe that it is the case. One could argue that *possibly* the death of Zarqawi will create an opening through which a more formidable organization could rise. But one could also take the position that if Zarqawi was still organizing murder and still being targeted by US forces that another group could more easily form. With Zarqawi gone the US can divert resources to other targets.
"What you aren't considering--and what I think was pointed to in my thoughts--is that killing Zarqawi will not necessarily produce a new leadership that is somehow more "helpful.""
Well, of course I agree with that. Just as killing Isoroku Yamamoto didn't necessarily produce a more helpful Japanese leadership in WW2. But this didn't mean killing Yamamoto was a negative development.
The crux of your argument in your original post comes down to this: "The organization without Zarqawi may go in any of a number of directions, but one strong possibility is that it will devolve to a more rhizomatic, decentralized structure. Such a structure would likely exhibit more structural innovation as the many different and more independent cells would explore different tactical and strategic innovations--the result of such a change would be a more effective form of open-source insurgency."
Hmmm.. Well, you noted "may" and I'll agree. But likely? I'm skeptical. Decentralization can also lead to a noticeable lack of sharing resources. It can lead to compartmentalization whereby new techniques aren't spread rapidly throughout the organization. Because, in effect, there is no organization.
The leadership of an organization not only concentrates the elements towards a unifying goal but also provides the organization with flows of resources to assist in carrying out the operations. If the leadership is taken out, yes, the lower elements may act in a more free-lance way. But at the same time they have to cope with a less reliable stream of resources and less coherency in their operations. There may be "more innovation" but it would seem that there would be greater likelihood of reinventing ineffective wheels or creating less coherent overall effects.
Basically I have difficulty with your claim that this would lead to greater effectiveness of Zarqawi's minions, that it would "likely" lead to more effectiveness. I believe I understand the argument that you are making but at the same time I believe you're overestimating the capability of fractured organizations to re-form into more effective autonomous sub-organizations that can continue to secure resources and carry out effects and do it more effectively and with less conflict/lower cost than the original organization. If I understans you correctly, you're suggesting that bringing disorder into this system (Zarqawi and co) will likely lead to a higher level of order. While such things DO occur in the natural world and appear to occur with great frequency, the more likely result is that increased disorder to any system is a net harm.
Jason
(First, for those unfamiliar with C operators I'd like to point out that != means "does not equal.")
The point I wished to make in my initial comment, and I see that I clearly didn't make it, was that from my understanding of the history of conflict there is rarely little of people "fighting oppression" or driven to violence due to inequality. My own guess is that people engage in conflict for reasons they themselves largely do not understand and that we shouldn't confuse ourselves with either their slogans or 19th century Western notions of conflict.
"Militant Islam emerged only after many other strategies failed. It has succeeded because, to date, it alone has shown any promise of relieving Western-backed oppression."
When do you pinpoint the emergence of militant Islam? And by "succeeded" do you mean something other than "expanded" or "continued" or "grown?" Or do you mean to imply that it has successfully accomplished something?
The European colonial powers remarked that Islam was largely irrelevant to Middle Eastern politics. This was largely true--until 1979. Western-style democracy had been tried; Nasser attempted to use pan-Arabian nationalism; Mossadegh was more in the socialist vein of modern Europe; the Ba'ath Party in Iraq and Syria tried fascism; others attempted Communism. All promised to free the Muslim world from European domination. Some enjoyed momentary success, but all, ultimately, failed to deliver their promise. What changed, in 1979, was the use of radical, fundamentalist Islam, with the Iranian revolution. That is the real origin of the modern radical Islamist movement: the success of the Islamic Revolution to remove European power, where all other approaches had failed. Their slogans generally revolve around holiness and Shari'a, so this isn't an emic perspective at all. If this is at all shocking (it shouldn't be), Lewis' Crisis of Islam or Scheuer's Imperial Hubris are well worth a read.
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