While there may be reasonable debate about how much the UAE port acquisition would actually affect national security, there's no question that trying to force the deal through and hide the details was a significant political blunder. A huge boner, I think is the correct technical term. And the question of security is hard to debate too, given the terms of the secret agreement itself.
We have to assume, given the political risks, that this is a high priority outcome for the White House. But why? The relevant passage comes from some of the background material on the IOB:
To date, one of the more difficult technical obstacles concerning a euro-based oil transaction trading system is the lack of a euro-denominated oil pricing standard, or oil ‘marker’ as it is referred to in the industry. The three current oil markers are U.S. dollar denominated, which include the West Texas Intermediate crude (WTI), Norway Brent crude, and the UAE Dubai crude.
Huh. West Texas and UAE oil industries. Could there be a relation? Scratching only a little deeper we find this:
Dubai and Oman pricing is based more on the physical trades of Dubai and Oman but due to falling production levels questions are being raised about the appropriateness of Dubai as a marker crude.
In Asia there is no futures exchange where crude oil is traded and which would provide pricing information to the same extent as WTI and Brent. In Asia the pricing mechanism for say Tapis, a marker for light sweet crudes in the region, is based on an independent panel approach where producers, refiners and traders are asked for information on actual trades and where there have been none, their best guess.
The Dubai oil marker is questionable, and there is no Asian oil marker although there is clearly a need for one. Iran's proposed oil bourse would provide an oil exchange in Asia which would marginalize both UAE and US interests. The UAE also provides the use of its ports to support US military actions in the Middle East.
Interesting.
- jack*
UPDATE 2/27: One plausible outcome of aggressive action against Iran would be skirmishes in or an attempted blockade of the Strait of Hormuz, either by Iran to stop oil from flowing from Saudi Arabia or by the U.S. to stop goods from getting to Iran. Just look who's strategically positioned across from Iran. Yup, UAE. And as a bonus zoom in on any satellite images of the area (no link, sorry). UAE is basically a desert attached to one gigantic port facility.
No wonder Bush wanted to sidestep that pesky 45 day inquiry period. The Ides of March, indeed.
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