Maybe this needs to be filed under the “even a stopped clock is right twice a day” department, but Tom Friedman actually wrote an interesting and probative column a couple days ago about what’s going on with the falling price of oil, and I’m still picking myself up off the floor in amazement. Here are the three key paragraphs:
Is it just my imagination or is there a global oil war underway pitting the United States and Saudi Arabia on one side against Russia and Iran on the other? One can’t say for sure whether the American-Saudi oil alliance is deliberate or a coincidence of interests, but, if it is explicit, then clearly we’re trying to do to President Vladimir Putin of Russia and Iran’s supreme leader, Ayatollah Ali Khamenei, exactly what the Americans and Saudis did to the last leaders of the Soviet Union: pump them to death — bankrupt them by bringing down the price of oil to levels below what both Moscow and Tehran need to finance their budgets. . .
The Russians have noticed. How could they not? They’ve seen this play before. The Russian newspaper Pravda published an article on April 3 with the headline, “Obama Wants Saudi Arabia to Destroy Russian Economy.” It said: “There is a precedent [for] such joint action that caused the collapse of the U.S.S.R. In 1985, the Kingdom dramatically increased oil production from 2 million to 10 million barrels per day, dropping the price from $32 to $10 per barrel. [The] U.S.S.R. began selling some batches at an even lower price, about $6 per barrel. Saudi Arabia [did not lose] anything, because when prices fell by 3.5 times [Saudi] production increased fivefold. The planned economy of the Soviet Union was not able to cope with falling export revenues, and this was one of the reasons for the collapse of the U.S.S.R.”
Indeed, the late Yegor Gaidar, who between 1991 and 1994 was Russia’s acting prime minister, observed in a Nov. 13, 2006, speech that: “The timeline of the collapse of the Soviet Union can be traced to Sept. 13, 1985. On this date, Sheikh Ahmed Zaki Yamani, the minister of oil of Saudi Arabia, declared that the monarchy had decided to alter its oil policy radically. The Saudis stopped protecting oil prices. … During the next six months, oil production in Saudi Arabia increased fourfold, while oil prices collapsed. … The Soviet Union lost approximately $20 billion per year, money without which the country simply could not survive.”
I have no idea whether the dynamics of the current oil market are the deliberate result of Obama Administration policy, but what I find more interesting here is Friedman’s retrospective ratification of the Reagan Administration’s deliberate policy to squeeze the Soviet Union economically back in the 1980s. Back in the day, liberals argued that the Soviet Union decided to throw in the towel on the Cold War because of the enlightened liberalism of Mikhail Gorbachev alone, and discounted any effects of deliberate Reagan policy. (We know that the Reagan Administration worked on the Saudis to help us crush Soviet oil revenues.) And now here’s Friedman saying that’s what happened after all, though he leaves Reagan out of it.
Wonder what Friedman’s successor will be saying about George W. Bush 25 years from now. I have a guess.