Terrorists’ power comes through a barrel of oil

MAO said, “Political power grows out of the barrel of a gun.” But for terrorist groups in the Middle East, power grows out of a barrel of oil. Western nations should heed this lesson if they ever hope to put an end to the so-called war on terror.

And people around the world ask, when, if ever will it end? Most of the terrorist action is not so much Islam v the West but Sunni Islam v Shiite Islam. It is a bit like the violence in the struggle between Protestant and Catholic Christians during the Reformation and Counter-Reformation in the 16th century.

That struggle took more than 100 years before it substantially subsided, though it continued in Ireland to the end of the 20 th century, nearly 400 years after the Reformation began.

But that analogy should not be drawn too far.

In the 21 st century, a few oil-rich countries fund the vast bulk of Islamic terrorism, most importantly Saudi Arabia. And you have to wonder whether the terror would wither if the funding dried up.

Saudi Arabia’s role was acknowledged by then US Secretary of State Hillary Clinton in a cable that was included in the vast amount of WikiLeaks cables in 2010. But it has been known well before that.

It is no coincidence that the resurgence of Islam and the rise of modern Islamic terror came in the mid-1970s just after Saudi Arabia and other members of the Organisation of Petroleum Exporting countries used their cartel power to jack up prices and cause a massive flow of money into the Middle East, particularly, Saudi Arabia, Qatar, Kuwait and the United Arab Emirates.

These countries have provided the vast bulk of funding for terrorist organisations and for the schools that teach the fundamentalist style of Islam that the terrorist groups find so attractive.

The US has left its criticism of these regimes to behind the scenes.

The US is much more public in its criticism of Pakistan, but Pakistan has no oil.

If the West were smart it would give much greater attention to the oil money in its fight against terror.

And we need to go back a step from just urging Saudi Arabia to do more to stop the vast flows of cash which come in with pilgrims and get delivered to “religious charities” which are fronts for terrorist organisations.

Oil (and with it gas) is at once both a strength and vulnerability for Saudi Arabia, Qatar, Kuwait and the United Arab Emirates and the terrorist organisations funded out of those countries.

The strength for them is that oil delivers a lot of money and comparatively speaking terrorist organisations do not need a large amount of it to make a mark.

The vulnerability lies with the dependency. These countries have not used their oil money wisely to develop and diversify their economies.

Some Australians criticise our own economy for being one of digging stuff out of the ground and exporting it.

But compared to these four Arab countries we are a model of intelligent development and diversification.

Nearly all (90 per cent or so) of government revenue and export revenue in these countries is oil-based. And it has been that way for decades. Half of Saudi Arabia’s economy is oil. That is a huge portion, given that you need retail, transport, health and dozens of other things to keep a country going.

So if you can reduce or eliminate foreign purchases of these four countries’ oil, the funding for terrorist organisations will concomitantly dry up.

The West may be dependent on Middle East oil, but the corrupt, autocratic regimes of the Middle East are even more dependent on it.

Of course, if these countries had developed and diversified, they would not be so oil dependent and could withstand huge reductions in foreign demand for their oil. But if they had done that, radical Islam would have had less appeal.

But they haven’t. Moreover, instead of building the skills of their own people, including women, they have imported virtual slaves from desperate South and South-East Asian countries. Those workers will all leave if the oil money dries up.

The US approach to reducing dependency on Middle East oil has been to find more home oil, no matter how environmentally sensitive the sites.

Australia seems to have reduced its dependency by accident – preferring cheaper options closer to home.

As it happens, Australia does not take much oil from the Middle East, but oil it is all one market and to the extent that any western country reduces its dependency on oil it will hit the Middle Eastern countries.

The West should all be reducing our dependency on all oil. Renewable energy, particularly solar is getting cheaper. Recent breakthroughs in battery technology will make it cheaper to store solar-gathered power for use later in the night.

Solar will be able to charge the batteries on electric cars, ultimately making the petrol engine as redundant as a vinyl record.

Electric cars (charged through solar and grid electricity) more than anything will reduce oil dependency.

Australia has the highest domestic roof-solar rate in the world. But there two obstacles to improvement. More people are living in units. And there is no incentive for landlords to put solar panels on rented property because the tenant pays the electricity bills.

Body corporate schemes and some scheme to force landlords to pay for the first chunk of electricity consumption should be worked into the renewable energy policy.

Renewable energy is not an issue for latte-drinking inner-city dwellers.

Renewable energy is good for the environment, good economics, good for the economy and will help reduce climate change.

Perhaps just as importantly, if it helps dry up the oil money, it can help reduce terrorism. It is a matter of national security.
This article first appear in The Canberra Times and other Fairfax Media on 6 June 2015.