Mideast fallout
Iraqi President Saddam Hussein’s announcement of an immediate monthlong suspension of Iraqi oil exports could not by itself upset the global oil market. Iraq does not have a large share of international oil supplies, which anyway could be compensated for by other oil-producing states. Saddam’s move is therefore primarily a symbolic one, and is related to his estimation that his regime constitutes the next US target. Still, the Iraqi announcement threw the markets into turmoil and sparked a precipitous rise in crude oil prices that were already high because of the Palestinian crisis. The reaction was driven by worries that Iran and Libya could take similar measures as well as concerns about potential reactions by the Arab states to Israel’s incursion into Palestinian areas of the West Bank. These concerns show that should the present situation be prolonged, it could generate a major global economic upheaval, mainly in the oil market. Such a development would intensify (for economic as well as political reasons) recessionary pressures in Western economies – particularly those which, like Greece, have not recovered from the drop in economic activity caused by the September 11 events or completed the structural adaptation to the globalized economy which makes them more vulnerable to crises. For the larger EU states, the prospect of a global turmoil will entail more pressure but any conclusions will probably be primarily political ones, centering on the degree to which America’s strategic decisions serve or damage European interests. For countries like Greece, however, the economic impact is the main concern, and hence political provisions should focus on this fact. It may be a coincidence, but it is still indicative that data on public revenues in the first term reflect an economic downturn which is a result of concerns over the international environment (although obviously also a result of our structural shortcomings). Were an oil crisis – even a minor one – to be added to this picture, the economic impact could be unbearable. The government must take these threats into consideration and not adapt its decisions to the most optimistic scenario – as some have urged it to do for partisan and electioneering reasons. It has a duty to take the requisite measures so as to survive a potential crisis as unscathed as possible.
