Anncr:  Number of minutes in debate: 90.

Number of times John McCain mentioned the middle class: Zero

McCain doesn’t get it.

Barack Obama does.

Barack Sync:  The fundamentals of the economy have to be measured by whether or not the middle class is getting a fair shake...

And when you look at your tax policies...
you are neglecting people who are really struggling right now. I think that is a continuation of the last eight years, and we can’t afford another four.

Barack VO:  I’m Barack Obama and I approve this message.

A prime goal of U.S. oil diplomacy over the past two years has been to break up the Organization of Petroleum Exporting Countries. The U.S. tried to weld consuming countries into a bloc that would reduce oil imports and accelerate development of alternative sources of energy, with the aim of shrinking OPEC revenues enough to prod some of its 13 member nations to cut prices, thus dissolving the cartel. The strategy seemed justified: OPEC's quintupling of prices since late 1973 has aggravated both inflation and recession in industrialized countries. But the attempt simply did not work, and now the policy is being quietly shelved. The U.S. Government has decided that it cannot beat the cartel and that, as a result, it may just as well learn to live with it—perhaps even gain politically from its existence. Assistant Treasury Secretary Gerald Parsky sums up the new mood: "Breaking up OPEC would be detrimental to the direction in which we want to go."

The softening U.S. attitude is prompted by several factors. Early predictions that a massive transfer of wealth to the oil-producing states would cripple the industrial world's financial and production systems have proved unfounded. Most of the newly rich producers have become big spenders, and are creating lush export markets for U.S., European and Japanese goods.

Much of the rapid rise in oil prices has already been absorbed by consumer countries. According to a recent study by the Brookings Institution, even with higher oil prices the growth of disposable income in the developed world will be slowed by only 3% or so between now and 1980.

Then, too, the Administration has been unable to rally Europeans and the Japanese to its anti-OPEC strategy. They are far more dependent on oil imports than the U.S. and are exceedingly reluctant to annoy the producing states.

France has refused even to join the International Energy Agency, which the U.S. hoped would unite consumer nations in a struggle against OPEC pricing policies. Britain, which is pinning its hopes for recovery on North Sea oil, is banking heavily on continuing high crude prices; Prime Minister Harold Wilson says it is "not entirely misplaced humor" that Britain eventually might actually join OPEC. Non-OPEC producers like Canada and Mexico have also benefited from the towering cost of oil and are not about to press for reductions.

Moreover, OPEC has proved remarkably resilient because its members are well aware that their power to fix prices lies in their ability to maintain a united front. Thus cartel members have been able to hold traditional animosities in check—at least so far. Iran and Iraq managed to settle a long-smoldering border dispute, and radical Algeria fell in line behind Saudi Arabia's moderate pricing policies when the Saudis presented Algeria with a generous loan. Un-gluing OPEC, if it could still be done at all, would require extraordinarily disruptive measures by the U.S.; for example, actively fostering friction between such rivals as Iran and Saudi Arabia.

But experts fear that disruptive measures could lead to unpredictable turmoil, especially in the already explosive Middle East. That kind of strategy, says a State Department Middle East specialist, would be "so politically damaging as not to be worth the effort."

Ending Confrontation. Instead of confrontation, the U.S. is now seeking to influence OPEC through accommodation with Saudi Arabia, the cartel's most influential member and biggest producer. The Saudis' avid antiCommunism, their support of Egyptian President Anwar Sadat against more radical Arab leaders and their relatively moderate position on oil pricing make them particularly acceptable to American policymakers. Despite its vast wealth, Saudi Arabia is still essentially a feudal state badly in need of both industrial and agricultural development. In the past year or so, the U.S. has signed agreements to provide the Saudis with military and technical assistance, including electrification projects and agricultural development programs. Says Saudi Information Minister Muhammed Abdo Yamani: "We see signs that make us optimistic about American policy."

The strategy worked last fall, when the Saudis held the latest OPEC price boost to a stated 10%, though some cartel members had wanted much more. Whether OPEC will continue to present even a facade of moderation, however, remains open to question. Iranian Interior Minister Jamshid Amouzegar recently noted that with the expected worldwide economic recovery, new oil price boosts "will become possible again in mid-1976."

As many of us know, the war against Iraq wasn’t about Iraqi freedom as the Bush administration tried to convince us, it wasn’t about terrorism, it was about oil. It was about the fact that in 2000, Saddam Hussein “insisted Iraq’s oil be sold for euros, a political move, but one that improved Iraq’s recent earnings thanks to the rise in the value of the euro against the dollar.” 

            For the same reasons the United States attacked Iraq, the United States is now flexing its military muscle to intimidate Iran. In the summer of 2003, Iran began discussing plans to stop selling oil in dollars and instead begin trading in euros. To further this plan, Iran also began making plans to create its own stock exchange, the Iranian Oil Bourse. This would create problems for the United States because oil is currently exchanged on the New York Mercantile Exchange (NYMEX) and the London International Petroleum Exchange (IPE), both exchanges are owned by American corporations. Last fall, Iranian President Ahmedinajad at the OPEC meeting in Saudi Arabia announced that the U.S. dollar was worthless due to its depreciation and the losses were being sustained by oil exporters. Ahmedinajad, along with Venezuelan President Hugo Chavez, tried to get support at the OPEC meeting for a proposal that would trade oil in a variety of currencies and replace the dollar.

            In response to Iran’s impudence, the US has put pressure on European and Asian banks to isolate Iran by accusing Iran of terrorism and attempting to build a nuclear weapons program which Iran vehemently denies. However, the threat Iran poses to the United States is not nuclear, it’s economic. According to William Clark, the author of Petrodollar Warfare: Oil, Iraq and the Future of the Dollar, “the drop in demand for petrodollars would cause the value of the dollar to plummet further, thereby undermining the U.S. position as the global economic leader." This past week Iran has officially divorced itself from the dollar, isn’t it a coincidence that during this same period there is another aircraft carrier on its way to the Persian Gulf?

A factor which concerns the Bush/Cheney administration is that China is one of Iran’s biggest trading partners. China’s dependence on Iran for energy is similar to the United State’s dependence on Saudi Arabia. If the U.S. were to attack Iran, it would cause severe strain to American ties with China. This is because China has over $1 trillion in foreign reserves, and as of November 2006, $700 billion or 36% of that was held in U.S. treasury securities.  (Remember a few months ago when the Fed loaned $200 billion in U.S. Treasury securities in exchange for mortgage backed securities that have lost their value). Joe Biden wasn’t being flippant last summer when he said that China owned the mortgages on our homes. The U.S. can’t afford to antagonize China because economically speaking, China owns us. We’ll need some kind of pretext to intimidate Iran without provoking China or threatening China’s interests in the region. Hence, the narrative of the Bush administration about Iran: Iran is determined to acquire nuclear weapons, Iran is responsible for the deaths of US troops in Iraq, and Iran is a part of the axis of evil. It’s interesting to note that the Bush administration has no evidence that Iran’s government is responsible for the deaths of US troops, in fact, Admiral Mullen, the chairman of the Joints Chiefs of Staff, confesses that there is, “no smoking gun which could prove that the highest leadership (in Tehran) is involved.”