Thomas P.M. Barnett :: Weblog

INTERNATIONAL EDITION of WSJ: “OPEC Leader Looks for Foreign Investment: Cartel Needs Help To Meet Demand,” by Guy Chazan, Washington Post, 6 June 2007, p. D4.

One reason why I liked Bush’s timing on Iraq was that it corresponded with the inflection point on rising Asia’s demand for Middle Eastern energy. I know Friedman goes the other way on that, but my reading of economies in the region said that none of them were really so flush that they’d be stockpiling money and thus have more than enough to manage the required investment in raised output.

Simply put, the region--with the exceptions of the tiny Gulf states--tends to spend the money as fast as it gets it (here, rising populations and expectations work in our favor), meaning they’re as addicted (or even more so, given their lack of options) to selling energy than the Core is to buying energy (we’re just not motivated enough financially to move off the current profile).

You place this consistently high demand on the system and the logic of markets will force the Core to have to step into the Middle East with investment dollars to tap the cartel’s “vast reserves.”

The problem, of course, is that that OPEC countries are famous for keeping out foreign investment (their zero-sum mentality knows no bounds).

But already this nut gets ready to crack. OPEC’s GenSec says his members “need to invest as much as $500 billion by 2020 to satisfy demand” and that OPEC’s NOCs (national oil companies) can’t do it all by themselves (as PEMEX has proved and Chavez is proving).

Even in the cases where outside money is less needed, like the richest Gulf states, there is the need for outside technology and expertise.

Not surprisingly, Iran is failing on both counts, and thus stands as one of the neediest. As it’s production continues to fall due to under-investment, the soft-kill possibilities grow.

Globalization IV remains the main conduit of Big Bang-like changes in the Middle East and throughout the Gap. Decisions like taking down Saddam can speed the inevitable killing, but they aren’t the overwhelming drivers of either success or failure that so many make them out to be. They simply give the U.S. a chance to paddle faster than the current now and then.