U. S. Vs Opec: Does Charity Actually Begins At Home Or Abroad?

Ifeanyi Izeze

The ‘customer is always right’ mentality in United States congress’ move to declare the Organisation of Petroleum Exporting Countries (OPEC) illegal at best could be described as a potent mix of inspiration and western gimmick rather than the usual American arrogance. In a unanimous vote, the Congress on May 23, 2007 passed a bill which criminalizes the formation and operation of any cartel by oil producing countries. The bill: “No Oil Producing and Exporting Cartels Act of 2007” (NOPEC) provides for court action against the indicted countries in the U.S. and denies the “accused state” sovereign immunity.

The proposed law which was predicated on the accusation by U. S lawmakers of price-fixing conspiracy by OPEC was meant to address the allegation that the oil cartel has unfairly driven up the price and cost of imported crude oil to satisfy the greed of oil exporting countries especially those in the cartel.

If it scales through the U.S. Senate, it would be illegal in U.S and a violation of the proposed Act “for any foreign state or instrumentality thereof to act collectively or in combination with any other foreign state or any other person, whether by cartel or any other association or form of co-operation or joint action, to limit the production or distribution of oil, natural gas, or any other petroleum product, to set or maintain the price of petroleum, or to otherwise take any action in restraint of trade for petroleum, when such action has a direct, substantial, and reasonably foreseeable effect on the market, supply, price, or distribution of petroleum in the United States.”

The bill specifies that any country that is involved in such an action would be denied the defense of sovereign immunity from the jurisdiction or judgments in a U.S. court once an action is brought against such country in America based on the bill. “No U.S. court shall decline, based on the act of state doctrine, to make a determination on the merits in an action brought under this Act.”

From obvious indications, the U.S. legislators hope to remove the one voice with which the cartel has succeeded so far in determining the prices of the product at the international market by the No OPEC law if it scales through the Senate. This is the American lawmakers’ will.

The enforcement strategy of the American anti-OPEC law may target the assets of culprit OPEC member nations in the U.S. which may become subject to court action, including seizure or confiscation. To ignore this dangerous development without proper contingency measures by OPEC members or wait until the Act becomes an enforceable law would be a great mistake by member countries especially primary producers. Nigeria which is the kingpin of primary producers, supplies about 12 percent of the entire American crude oil import and is the third largest suppliers of imported crude stock to the U.S.

For several years, U.S. lawmakers have been known to be much opposed to the idea of OPEC, even though the cartel’s leaders, especially the Saudi Arabians, are known to have struck a deal with the U.S. Government in the early ‘60s and ‘70s to denominate the price of oil in dollars, an agreement that raised the status of the dollar then as the ultimate internationally convertible currency.

Technically, the propose Act is seen as a direct clash with OPEC member-countries and Nigeria is currently leading the cartel in the supply of crude oil to the U.S., followed by Saudi Arabia and Venezuela. Other OPEC members are Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Qatar, and the United Arab Emirates. OPEC member-countries, generating well over 40 per cent of world’s oil production are also known to hold at least two-thirds of the world’s oil reserves.

Supposing America succeeds in breaking or rather killing the cartel, the effects on national economies of OPEC countries particularly primary producers would be very devastating. America is currently the highest buyer of Nigerian crude oil and although the country may still continue to patronize the Nigerian oil but at their own terms. The U.S. will set the price it would buy from any producer that is willing to sell. The implication will be that the producing countries would be at the mercy of the U.S as the Americans would ensure the terms of any such contracts must guarantee a long term “reasonable” price regime.

Another implication is that prolific producers like Saudi Arabia, Kuwait and Russia may just flood the market to cover for the American-induced low price regime. Nigeria cannot afford such luxury because of the trouble in the Niger Delta oil fields where production cuts have become a daily routine as a result of the refusal of by Federal Government to listen to the protest of the Niger Delta resource rights activists over deliberate neglect. In addition, the new found love for deep offshore oil and gas arena by Asian and Nigerian traders turned oil technocrats may become very unattractive thereby negating the nation’s hope of increasing its proven and producible reserves.

The angle that should worry the real Nigerians pertains to the obvious drop in revenue earnings from oil and gas exports. If we earn so much now and don’t have electric power, manageable roads, portable water even in satellite cities like Abuja, Port Harcourt and Lagos, how would it be when the current earning profile drops drastically? By the time the rogues in government don’t have enough funds in the coffers, they will simply steal everything.

In addition, Nigeria is a core primary producer that simply pumps raw crude oil for export and cannot afford to start processing its crude oil as all the existing refineries (Warri, Port Harcourt and Kaduna) are dead. Despite the booklet of licenses issued by the Obasanjo administration for establishment of private refineries, even bush clearing work is yet to kick-off at any of the sites.

Though the American initiative obviously looks selfish, Nigerian lawmakers should learn the great lesson in the entire U.S stand-off. From the American viewpoint of patriotism, the latest action by Congress deserves commendation. The lawmakers, as it is typical with American politicians, prefer to be in the good books of the people that elected them no matter what anybody elsewhere feels or thinks. Tie the American move to the manner in which Nigerian lawmakers have handled the omnipresent domestic fuel crisis that has bedeviled the country since the reign of king Obasanjo part one and two, you would have an idea of how far the Nigerian electorates are from real representation by the people at both the national and states Houses of Assembly.

Our lawmakers need to copy the American Congress example and begin to take genuine actions to protect the interest of the electorates rather than those that selected them into office.

IFEANYI IZEZE IS A PORT HARCOURT-BASED ENABLING ENVIRONMENT CONSULTANT (iizeze@yahoo.com)

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