Economic Crisis, World in Turmoil

?World economy will fall if revolts spread to Saudi Arabia?


Israeli security expert Gal Luft

?If something like we have seen in Egypt or Libya happens in Saudi Arabia, we?re talking about a catastrophic scenario that will bring a global economic meltdown.?

Talking to Gal Luft about security and the effect of oil on the global economy is not for thefaint of heart. The executive director of the Washington-based think tank the Institute for the Analysis of Global Security spoke to The Jerusalem Post on Wednesday during the fourth annual Eilat-Eilot Renewable Energy Conference, in a 45-minute conversation that described the petroleum tightrope on which the world?s economies are teetering.

?The world needs to wake up to the fact that if a country like Saudi Arabia follows the same path we?ve seen in Egypt, Tunisia and Libya, it would be a very, very dangerous situation for every economy in the world ? the rich and poor alike,? said Luft. ?The first thing that will happen is, the poor people of the world will starve; there will be no oil to distribute food in places like Africa. Then all the world markets will collapse.?

He noted that ?every single recession since World War I except for one has been preceded by an oil crisis. When there is an oil crisis, very shortly after, you see a major recession.

The reason that the situation now is so delicate is that we just had a recession. When you have a recession on top of a recession, it?s like a heart attack on a heart attack ? you are too weak, you can?t handle it.?

According to Luft, ?if we get another oil shock, it can roll back all of the economic recovery we?ve had. Then you will see millions of people losing their jobs around the world.?

To make matters worse, Luft said he didn?t believe that a hypothetical Western-led military intervention to secure Saudi Arabia?s oil fields would help matters.

?Let?s say the US sends the military to take over Saudi Arabia. The oil fields in Saudi Arabia are in the eastern, mostly Shi?ite province next to Iran, so the Iranians will start an intifada there. They?d blow up the fields, they?d blow up the pipelines, they?d boobytrap everything there and you?ll see a situation like Iraq or Afghanistan, just in the world?s richest oil province,? he said.

?These are very, very dangerous, catastrophic scenarios, so I don?t think sending the military over will make us any safer economically.
It?s very easy to take over an area militarily. It doesn?t mean you can maintain economic activity in the same place.?
If the world?s oil supply is threatened, security issues for Israel would only worsen, Luft added.

?The flipside is that [in such a scenario,] the very same countries we?re trying to weaken, like Iran, would strengthen. What you would see is a historic transfer of wealth from the world?s poorest people to the world?s richest people. Because people in Africa will have to buy oil for the same price that everybody else does; they don?t get a discount for being poor.?

Luft, who is also the co-founder of the Set America Free Coalition ? an alliance of national security, environmental, labor and religious groups promoting ways to reduce America?s dependence on foreign oil ? said the most crucial necessity was to break oil?s monopoly on the world?s transportation systems.

This, he said, could help end the current situation wherein we ?base our entire future and prosperity and way of life on a group of dictatorships that might collapse in a matter of a few days.?

?The transportation sector, which underlies the global economy, runs on oil. Your food, your clothes, everything is dependent on oil. We?re all treading on very thin ice if we think about this, like a turkey before Thanksgiving. Everything is good, you?re getting your food and you?re happy, and then you wake up and it?s Thanksgiving and life gets very unhappy.?

Luft said the United States must pass laws that would require every new car sold in America be a ?flexible fuel? car, arguing that ?if you?re running out of oil, then it?s folly to continue to put cars on the road that can only run on oil.?

Luft mentioned conclusions drawn in his book, Turning Oil into Salt: Energy Independence Through Fuel Choice, which describes how salt went from being one of the world?s top commodities to just another resource.

?Salt used to be one of the world?s most prestigious commodities because it had a monopoly on food refrigeration,? he explained. ?Then we invented canning, and later refrigeration, and that?s it, you no longer needed to send soldiers to defend salt mines.

Salt became boring. Hopefully the same will happen with oil, making it just another commodity stripped of its strategic power.?

Previous ArticleNext Article

1 Comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Send this to a friend

By continuing to use this website I accept the use of cookies. More information

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we'll assume that you are happy to receive all cookies from this website. If you would like to change your preferences you may do so by following the instructions here