"TONY BLAIR is swept away in October. George W Bush loses in November. President John Kerry and Prime Minister Gordon Brown rush to pull US and British troops out of an Iraq descending into civil war. The Saudi monarchy falls before the triumphant march of Islamist extremism. The oil price breaks through $60 a barrel and the world economy heads for stagflation. America's growing isolation in the world makes way for the return of American isolationism, globalisation for global protectionism."
These speculations about the immediate future appeared in the Financial Times on Friday last week. They were written by Philip Stephens, a columnist normally close to the Blair court. They are a sign that the terrible images coming out from Iraq don't just frighten ordinary people but also many in the Western ruling classes. What is scaring them is the way in which the war in Iraq is threatening to destabilise the entire world system.
Stephens thus links the Iraqi catastrophe with the sharp rise in the oil price, which has risen in recent weeks to over $40 a barrel. This worries a lot of people, with good reason. The three global recessions of the past generation-in the mid-1970s, the early 1980s, and the early 1990s-were all associated with big increases in the oil price.
These economic slumps had much deeper causes that can be traced ultimately to the fall in the rate of profit in the leading capitalist countries at the end of the 1960s.
Nevertheless in each case the disruption caused by crisis in the oil markets helped to tilt the balance towards recession. Could this happen again? The honest answer to this question is that nobody knows. It depends in part on how high the oil price goes and for how long. Past oil crises had economic causes, but in each case they were precipitated by a political crisis in the Middle East.
In 1973, the Arab oil producers responded to the October War between Egypt and Israel by imposing a boycott on the US. The oil price rose fourfold. An even greater increase followed the 1978-9 revolution that overthrew the Shah of Iran, a key US ally in a major oil-producing state.
The last big spike in the oil price came after Saddam Hussein seized Kuwait in August 1990 and threatened the oil fields of Saudi Arabia. Most analysts stress economic factors when explaining the current rise in the oil price.
They acknowledge the impact of recent terrorist attacks aimed at the oil industry in Iraq and Saudi Arabia. But they argue the key problem is that surging demand for oil, particularly from the US and the big Asian economies-Japan, China, and India-is exceeding the available supply.
Certainly the strong growth of the Chinese economy-estimated to be in double figures-is sucking in raw materials from all over the world and pushing up their prices.
This boom is now overheating, in part because of growing energy shortages. The Asian powers' need for oil is likely to be a source of political conflict among them. "We all will struggle for Middle East oil among the three of us-China, India, and Japan," says Yoichi Funabashi of the Tokyo Asahi Shimbun paper.
But one leading expert, Peter Odell, says there isn't a long term supply problem and that the emerging oil crisis has political causes. He argues that in the late 1990s the US developed a close relationship with leading members of the OPEC oil cartel-particularly Saudi Arabia-to manage global supply and demand. It also maintained the oil price at a level acceptable to both producers and consumers.
"But subsequent political events, notably the attacks of 11 September 2001 and Washington's decision to invade Afghanistan and then Iraq, have destroyed the basis of this accord," he says.
The key factor has been "the undermining of the powerful relationship between Saudi Arabia and America", reflected in, for example, the "exclusion of US companies from contracts to develop Saudi Arabia's large gas reserves". Odell predicts that the breakdown of US-Saudi cooperation will mean "anarchy in the [oil] market" for "the rest of the decade".
Bush and Blair justified their imperialist adventure in Iraq by saying that it would bring stability to the Middle East. Instead they have created a vicious spiral.
The economic instability they have caused is likely in turn to intensify the political chaos in the Middle East and spread it globally. That's why it's so important to stop them and to create a political alternative to free market imperialism.