'Follow the money' to OPEC
12/28/2001 12:00:00 AM - Jonah Goldberg
"Follow the money." This political cliche was made famous during Watergate, but the idea has been around forever. When you're looking for corruption and criminality, the quickest way to find its source is to follow the money trail, as such diverse figures as Al Capone, Spiro Agnew and Dan Rostenkowski learned.
The Bush administration is doing yeoman's work following this adage in the war on terrorism. In the last two months, the FBI has closed down numerous organizations that claimed to be charities but were actually conduits to Islamic terrorist organizations such as Hamas and Hezbollah. The Treasury Department, in turn, has been turning the screws on scores of banks and foreign governments around the world, forcing them to freeze the accounts of individuals or organizations suspected of funding terrorist organizations.
That's all great. The feds should always go after illegal money-laundering operations when and where they can. But, to borrow another political cliche, the real scandal isn't what's illegal, it's what's legal. The biggest source of funding for terrorist organizations and terrorist states alike is this little operation you may have heard of called the Organization of Petroleum Exporting Countries.
OPEC is one of the last great cartels, setting the price of oil on the world market as it sees fit. Like all cartels, it deserves to be smashed. The U.S. Justice Department has devoted years of effort and millions of taxpayer dollars to shaking down, er, I mean "investigating" Microsoft because it might be a monopoly. Well, cartels are worse than monopolies and, for good reason, even more illegal (remember trust-busting?).
My colleague Rich Lowry, editor of the National Review, has written a devastatingly persuasive essay arguing that the war on terrorism must include a direct assault on OPEC. "The cartel has an anti-Western Third Worldism imprinted on its DNA," Lowry writes.
Indeed, OPEC was born during the heyday of Arab nationalism in the late 1950s. But more importantly, the organization is corrupt because its membership is overwhelmingly corrupt.
Every major increase in the price of oil not only extracts extra billions of dollars from the U.S. economy, but it transfers those dollars to corrupt regimes in the Middle East (and also increasingly anti-American banana republics like Venezuela). This money only further bolsters the strength of oil-barron sheikdoms, which in turn subsidize radical Islamic clerics and organizations.
In Saudi Arabia, the royal family has been able to, in effect, lease the throne by subsidizing the radical brand of Islam known as Wahhabism. On a smaller scale, oil-rich families from Saudi Arabia and other Gulf states directly fund Islamic terrorist outfits, including Hamas, Hezbollah and, of course, al-Qaida.
Looking at it from a broader perspective, OPEC serves to undermine democracy in many of these nations because the money it collects only serves to support regimes opposed to freedom at home and, obviously, free markets abroad.
The fact that these regimes also encourage rabid anti-Americanism of an intensely Islamic flavor as a way to deflect popular discontent away from their own corrupt governments makes this a serious national security issue for America. The terrorists of Sept. 11, after all, were mostly affluent, educated men hailing from our "ally" Saudi Arabia.
We need not publicly "declare war" on OPEC to undermine it. And we need not devastate our own economy in the process. Despite widely feared threats of an oil embargo, OPEC cannot keep America from buying oil. Once it leaves the ports or pipelines of the Persian Gulf, oil is oil. Jared Taylor of the Cato Institute points out that during the oil embargo of 1973, the United States merely bought its oil from European middlemen.
Besides, we have become less dependent on foreign oil, economically speaking. In the 1970s, according to Taylor, the United States spent 9 percent of its GDP on oil. We now spend only 3 percent.
But all of that is relevant only if OPEC tried to retaliate by turning off the spigots. The reality is that OPEC nations need to sell us their oil more than we need to buy it. Yes, America needs cheap oil to make the economy hum at peak efficiency. But the OPEC nations need to sell oil, and lots of it, just to survive.
"The best way to look at OPEC is not as a domestic problem," writes Lowry, "but as a foreign-policy one." The World Trade Organization bars quotas on imports or exports. Six members of OPEC belong to the WTO, and the Saudis are dying to join. If we can't use WTO to cudgel a cartel like OPEC, why have it all?
Also, there are other ways to diminish the power of OPEC; find more oil and use less of it. Environmentalists are smart and correct to push for alternative fuels and greater efficiency as a means to decrease our dependence on foreign oil. The business community is right when it advocates exploiting new sources, like oil in Alaska and various regions of the former Soviet Union. Investment in Russia (which often ignores OPEC) would be a good reward for our new allies in the war on terrorism, and it would further erode OPEC's control of the oil supply.
And of course, the smartest foreign policy we could have is to topple Saddam Hussein and install a pro-America regime that respects not only freedom but, for our sake, free markets as well. But that is a topic for another day.