OIL CRISIS EXERCISE BARES US ‘IMPOTENCE’

Agence France Presse
Nov 2 2007

WASHINGTON (AFP) – It’s August 2009, oil prices have topped 150
dollars a barrel and a secret uranium plant has been detected in Iran.

Tehran and Caracas are slashing oil exports by 700,000 barrels to
punish the West for sanctions, and the US military is ready to move
its entire Pacific fleet into the Middle East to counter threats.

It may be tomorrow’s headlines, but on Thursday a high-powered
panel of Washington insiders acting as the US president’s national
security council found they would face almost impossible choices
and be powerless in such a case, baring the United States’ growing
inability to lead in global crises.

"In this kind of hostile environment (Iran and Iraq) would have the
upper hand," said Gene Sperling, former president Bill Clinton’s
national economic adviser, who played the treasury secretary in
the exercise.

It "would make us look impotent," he added.

"This scenario could start tomorrow," said retired general John
Abizaid, the former US Central Command chief.

Put on by the Securing America’s Future Energy and the Bipartisan
Policy Center, the unscripted one-day simulation sought to emphasize
the danger of the extremely narrow gap between world oil production
capacity and demand, and the heavy US dependence on oil imports.

But it exposed the strained US military’s incapacity to project its
power over multiple regions, and the ability of even small countries
to provoke a world political and economic crisis.

To play a White House team reacting to the news in real time, SAFE
brought together nine former top presidential advisors and officials
with intimate knowledge of national security affairs.

The "council" included former treasury secretary Robert Rubin playing
the president’s national security advisor, former deputy secretary of
state Richard Armitage as secretary of state, former navy secretary
John Lehman as secretary of defense, and former national security
council official Philip Zelikow as national intelligence director.

The scenario they woke up to on May 4, 2009 was the loss to world
markets of one million barrels a day in oil supplies when saboteurs
in Azerbaijan caused the shutdown of the Baku-Tbilisi-Ceyhan pipeline.

The action heightened geopolitical tensions in the region and sent
oil prices from the mid-90 dollar range to 115 dollars a barrel.

With the stock markets plummeting, the council has to advise the
president what to say and do, and finds its hands tied by the strains
of the Iraq war and by domestic politics.

"Energy Secretary" Carol Browner — head of the US Environmental
Protection Agency in the 1990s — says the president can release oil
from the strategic reserve to alleviate gasoline prices, or call
for conservation with lower speed limits, a Sunday driving ban,
and other measures.

Looking at possible Russian or Iran involvement in the Azerbaijan
blast, "joint chiefs chairman" Abizaid says the strategic reserve
has to be kept for military needs.

Others say the public and Congress would not accept forced
conservation.

With no information on who made the Azerbaijan attack — Armenians?

pro-Russian elements? Iran? — the defense and intelligence officials
say they have to be on alert but do not know what else to do.

"Our ability to project power into this area is very limited. We are
strung out all over the globe," said Lehman, noting that the military
hasn’t begun to rebuild after years in Afghanistan and Iraq.

Rubin points out that with global production capacity almost maxed out,
there is little possibility of replacing the lost oil flow.

"It shows how weak our hand is," he says, as the group falters on
urging the president to do more than assuage US consumers.

Three months later, the situation has drastically worsened. A secret
uranium enrichment plant was discovered in Iran, confirming its nuclear
weapon ambitions; oil production in Nigeria has been curtailed by
rebel attacks.

As the council meets, Iran has just replied to threatened new Western
sanctions by cutting back its oil production and Venezuela follows
suit, sending prices past 150 dollars.

The president’s advisors say there are no short-term measures to
soften the economic or political blow. They also admit sanctions
on Iran have little effect, that high oil prices and short supply
actually encourage producer cutbacks.

Militarily, with Israel threatening to take action on Iran itself,
the Pentagon says the US has to project force in the region. But
doing so means moving the entire Pacific fleet to the Middle East,
ceding power in the Pacific — and Taiwan — to China.

After years following the 9/11 attacks of not demanding sacrifice of
its people, the new crisis has brought things to a head, Lehman said,
as he suggests restarting the draft.

"We are facing a mortal threat to our way of life here," he said.