Friday, March 17, 2006

Toward a Modus Vivendi

In 1683 a Turkish army stood at the gates of Vienna for the second time in 150 years. Its defeat by Austrian and Polish forces destroyed the Ottoman dream of expanding further into Europe and began the unraveling of their empire. A bit more than three centuries later, the Austrian energy company OMV has acquired a controlling interest in Petrol Ofisi, the largest Turkish fuel distributor. This represents one of those interesting little turnabouts of history, but it's also symbolic of the choices we face in the ongoing friction between Islam and the West. Contrast the normalcy of the OMV/Ofisi transaction with the xenophobia that greeted the Dubai Ports World acquisition of P&O's seaport interests in the US. Which is the better model for our future relationship with the Islamic world?

Clearly this issue isn't confined to energy, but its energy dimension is disproportionately large, because of the accident of geology that left 60% of the world's remaining conventional oil under the sands of Arabia and the Near East. It's understandable and appropriate that 9/11 and the Iraq War have changed our relationship with the Middle East in profound ways, in both directions. We need to think carefully, though, about how we'd like this to look in the future, and the degree to which our actions reflect that vision.

There are so many contradictory views on this, but I'm struck by one set, in particular. Tom Friedman of the Times, for whom I have a high regard, was courageous in his criticism of the public and political reaction to the ports deal. His editorial, "Dubai and Dunces" (Times Select subscription required) minced no words describing our hypocrisy. Good for him. Yet the Geo-green strategy that he has heralded in a series of articulate columns is built around the deliberate intention of driving oil prices down to a level of pain sufficient to force the Saudis and other oil-rich Arab countries to rethink everything they are doing. Diversification of energy supplies to manage our risks is one thing; a technology-driven reverse embargo is quite another, even if I'm skeptical about its effectiveness.

For good or ill, energy will remain the region's primary entre to the global economy for some time. Pursuing a policy of drying up their trade flows--as an explicit goal, rather than as a side-effect of addressing our greenhouse gas emissions or some other energy-related problem--seems to fit better with a 19th century mercantilist approach, rather than the 21st century, WTO/globalization mindset we espouse to them.

This doesn't remotely let the Arab world off the hook for nurturing a death cult like Al Qaeda or for explaining a century and a half of underperformance solely in terms of colonialism and conspiracy theories. But the sooner we realize that the world economy cannot do without the energy resources these countries own, and that isolating them isn't in our interest any more than it is in theirs, then the more realistic we are likely to be about evaluating the costs and benefits of a connection such as the one we've just foregone with Dubai. Ultimately, we need to decide whether we want our future relationship with the Middle East to look more like the OMV/Petrol Ofisi deal, or the Battle of Vienna.

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