The Oil Weapon
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|Edwin Black||October 13th 2008|
This continuing coverage on the oil weapon arises from the just released book, The Plan: How to Save America When the Oil Stops—or the Day Before (Dialog Press). Buy it here.
Libya has become the first Arab nation to once again unleash the oil weapon as the petropolitical Cold War has suddenly heated up in the most unlikely of nations: Switzerland.
In the roiling dispute—ignored by a national media distracted by presidential politics and an economic morass—Libya is close to declaring total economic war against Switzerland. The incident vividly demonstrates how frivolous and unpredictable petropolitical blackmail can be—and how costly. Switzerland has a plan for oil interruption but the United States does not.
The conflict began on July 15 when Swiss authorities arrested Hannibal Qaddafi and his wife at a Geneva hotel for allegedly beating two servants. Hannibal Qaddafi is the son of Libya’s volatile strongman Muammar Qaddafi. One of five Qaddafi sons, Hannibal has accumulated a record of run-ins with police departments across the Continent over allegations of violence and drunk driving. In 2005, France issued him a four-month suspended sentence and ordered him to pay a 500 EU fine for causing bodily harm against his pregnant partner—who later became his wife—and illegal possession of a firearm.
A year earlier, Hannibal was taken into custody by the Paris police after speeding through red lights on the Champs Elysees in his expensive Porsche. Reportedly, the Arab playboy was under the influence and driving on the wrong side of the famous Paris boulevard.
Days after the latest incident in a Geneva hotel, and after a resolute Switzerland would not relent in the arrest, Qaddafi threatened to stop oil shipments to the Alpine nation. Libya supplies some 20 percent of Switzerland’s oil—about 2.5 million tons —via the Libyan national oil enterprise known as Tamoil. A Libyan tanker was ordered to turn around mid-ocean, but then was allowed to proceed when Swiss authorities finally dismissed charges and released the Qaddafis from detention. The dismissal and release occurred after the Tunisian man and Moroccan woman hired as servants dropped their battery charges. The servants received “compensation” as part of the arrangement. The Qaddafis and their servants then left Geneva and returned to Libya. But that did not end the row.
Libya has now demanded that the Swiss government humble itself and apologize. When that did not happen, Qaddafi renewed his pledge to halt oil shipments, and ramped up the pressure by then asking all other OPEC nations to join in an international embargo. At the same time, Libya threatened to pull $7 billion in deposits from Swiss banks.
Oil retaliation would cause Libya economic harm as well. Some 323 gas stations in Switzerland are own by Libya’s state-run Tamoil SA, and they depend completely on Libyan crude which is transported by mainly Libya-owned tankers to the Italian port of Genoa. From Genoa, Libyan oil courses through a 340 km pipeline to Libya’s Collombey refinery located on the banks of the Rhone River in the Swiss canton of Valais. From there, the oil is distributed throughout Switzerland.
“The whole of Tamoil's business in Switzerland is at risk,” stated Rolf Hartl, the director of the Swiss Petroleum Union in Zurich. That does matter to Qaddafi. Indeed, Tamoil CEO Issam Zanati explained to a reporter, “It is a decision of Libya and not Tamoil."
Libya’s state-run Jana press service declared that the oil and dollar embargo would continue and Tripoli would "put an end to all economic cooperation with Switzerland" in retaliation for "poor treatment of Libyan diplomats and businessmen by the canton of Geneva." Unnamed foreign ministry officials were quoted in Jana’s report.
Oil officials in Geneva assured that if the embargo proceeds, Switzerland could find alternative supplies. Swiss President Pascal Couchepin asserted that Libya's actions will not threaten the economy. "The current situation on the oil markets is not tense and, prices show that there is sufficient oil on the market. So there's no danger for Switzerland," he told a Swiss German-language television program adding, “but it is never okay when a country with which we are trying to maintain friendly relations takes measures against Switzerland."
However, the tension has increased. Tripoli refused to allow two Swiss nationals to leave Libya. Geneva’s protests had been ignored, but in another reversal, the two were then allowed to leave. However, air traffic between the two countries has now been restricted, Libya stopped issuing visas to Swiss nationals, and Qaddafi’s police abruptly shuttered the Tripoli offices of two major Swiss companies, ABB and Nestle.
At press time, no one in Libya or Switzerland knows if Qaddafi’s threats will escalate, and whether oil will or will not continue flowing between the North African nation and the Alpine country. But the standoff is a reminder that industrial nations are at the mercy of oil potentates who, at the flick of a wrist. can stop or increase the flow of petroleum upon which modern society depends.
Edwin Black is the New York Times bestselling investigative author of IBM and the Holocaust, Internal Combustion and his just released book, The Plan: How to Save America When the Oil Stops—or the Day Before (Dialog Press). More information about The Plan can be found at www.planforoilcrisis.com.