Libyan chaos will benefit Russia’s economy
Any oil price rise as the result of Libyan chaos will benefit Russia’s economy. Russia can afford much more when oil is $110/barrel than when it is at $60/barrel. For Russian officials who might see international relations as a zero-sum, a lengthy American entanglement might seem beneficial.
Valdaiclub.com interview with Michael Rubin, a resident scholar at the American Enterprise Institute, and senior lecturer at the Naval Postgraduate School
The slogan of the Libya campaign is "protecting the civilian population", but a number of experts determines it as the military intervention aimed at "establishing control over the oil resources." What do you think about such statements, taking into consideration that the region delivers up to 2% of global oil production?
Whenever the United States intervenes in the Middle East, critics air the accusation that oil motivates the intervention. The accusation is tired and inaccurate: First, the United States has intervened in many Muslim countries: Not only Iraq and Libya, but also Bosnia, Kosovo, and Somalia. The common factor is humanitarian, not oil. Second, the cost of intervention is often greater than that which would be derived from oil. Third, the cheapest way for the United States to gain energy security would be by exploiting its own untapped reserves offshore or in the shale beds of Appalachia. For Europe, however, energy concerns and fear of migration probably play a greater role than human rights concerns which often, for Europe, are a fig leaf.
James Stavridis, the NATO Supreme Allied Commander in Europe, said that there are indications that Libyan rebels may include some members tied to al-Qaida and the radical Shiite group Hezbollah. Does this mean that the coalition’s decisions were taken in a hurry, not taking into consideration the real alignment of forces in Libya? And also that the political situation in the country and speeches of the opposition were just a pretext to interfere in the affairs of Libya?
The intelligence was far from complete, but that’s the nature of intelligence anywhere. Libya is the third most autocratic country on earth, after North Korea and Turkmenistan. For years it was an information black hole.
Nor is the opposition a monolith: There are different strains and figures. Some may seek democratic reform, others may be ambitious for power, and still others may embrace radical interpretations of Islam.
Certainly, there was hurry, but decisions cannot be made in isolation from events. Would it have been ideal to debate the issue for another month? Yes, it would have been ideal, but had international leaders waited another week, Benghazi might lay in ruins, and there could be tens of thousands of armed refugees fleeing to Egypt. Action has consequence, but so too does inaction.
There is a perception that the war in Libya will not have a quick end. How will this affect the world economy? Before the outbreak of hostilities, 80% of Libyan oil was exported to Europe and the United States, the daily export was up to 1.59 million barrels of oil per day. Foreign companies have already started counting their losses. Who will get the Libyan oil after all?
Certainly, it looks like the Libyan war could go on much longer than anyone would like, and the resulting oil crunch will affect everyone, since oil is fungible. As for who gets the oil: If neither side wins and the frontlines stabilize, both sides will ultimately export oil produced in their respective regions. In such a scenario, smaller oil companies more prone to risk and less fearful of retaliation by the other Libyan side will seek to exploit the market, much as they do in Iraqi Kurdistan and other high-risk areas.
Does war in Libya have any advantages for Russia? Today, Russian companies have suspended multi-million dollar contracts and incur losses. Will they be able to recover their position in the future? But the oil price increases.
Any oil price rise as the result of Libyan chaos will benefit Russia’s economy. Simply put, despite Russia’s investment in Libya, Russia can afford much more when oil is $110/barrel than when it is at $60/barrel. For Russian officials who might see international relations as a zero-sum, a lengthy American entanglement might seem beneficial. If the Kremlin seeks to cultivate Qadhafi based on his antipathy toward the United States and NATO, it might be Russia who loses, since Qadhafi is famously mercurial and will not hesitate to bite the hand that feeds him.