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Author Topic: The financial cost of the war on Iraq
VanLuke
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posted 14 January 2006 09:17 PM      Profile for VanLuke     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
...The real cost to the US of the Iraq war is likely to be between $1 trillion and $2 trillion (£1.1 trillion), up to 10 times more than previously thought, according to a report written by a Nobel prize-winning economist and a Harvard budget expert....

http://www.guardian.co.uk/international/story/0,,1681078,00.html

What a sick travesty. It's hard not to get dispondent sometimes.

Just imagine what kind of a "Marshall Plan for Africa" this money could have created. (And I'm not being insensitive towards the people killed and suffering in Iraq and among American families.)

What a world.


From: Vancouver BC | Registered: Oct 2004  |  IP: Logged
Cougyr
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posted 14 January 2006 09:37 PM      Profile for Cougyr     Send New Private Message      Edit/Delete Post  Reply With Quote 
It is hard to understand what this war is all about. Oil, of course, but they could have bought it for a lot less. Ideology? Bush is too stupid to have an ideology. Religion? Somewhat.

One can do the usual and follow the money to see who wins, but I don't think anybody wins this one. I don't even think historians two hundred years from now will find a winner. The war in Iraq looks to be one of mankind's most stupid adventures: of the stupid, by the stupid, for the stupid.


From: over the mountain | Registered: Nov 2002  |  IP: Logged
Phred
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posted 14 January 2006 09:56 PM      Profile for Phred     Send New Private Message      Edit/Delete Post  Reply With Quote 
Amen! Praise God! Pass the ammunition!
From: Ottawa | Registered: May 2005  |  IP: Logged
arborman
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posted 14 January 2006 11:41 PM      Profile for arborman     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Cougyr:
It is hard to understand what this war is all about. Oil, of course, but they could have bought it for a lot less. Ideology? Bush is too stupid to have an ideology. Religion? Somewhat.

Oil. Oil. Oil. Oil. Oil.

The last relatively untapped super field of oil lies in Iraq. It's been undeveloped over the past century for a complex variety of reasons, but it remains largely undeveloped. And it is the last one - everything else is spoken for, and running out. The economic power tied into that oil makes a couple of trillion dollars seem like chump change. If the US doesn't control that oil, their time in the sun is over.

It's about making sure that oil goes to the US, and not China. Period.

[ 14 January 2006: Message edited by: arborman ]


From: I'm a solipsist - isn't everyone? | Registered: Aug 2003  |  IP: Logged
maestro
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posted 15 January 2006 01:39 AM      Profile for maestro     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by arborman:

Oil. Oil. Oil. Oil. Oil.

The last relatively untapped super field of oil lies in Iraq. It's been undeveloped over the past century for a complex variety of reasons, but it remains largely undeveloped. And it is the last one - everything else is spoken for, and running out. The economic power tied into that oil makes a couple of trillion dollars seem like chump change. If the US doesn't control that oil, their time in the sun is over.

It's about making sure that oil goes to the US, and not China. Period.

[ 14 January 2006: Message edited by: arborman ]


I agree with most of what you say, although I'll quibble a bit over the oil going to the US.

I doubt they care much over who gets the oil. Their concern is that they control it.

As you point out, Iraq is the place that has spare capacity, and every drop of that spare capacity is worth an enormous amount.

Whoever controls that spare capacity has a stranglehold on the world economy, and that's where I believe US interest lies.

In my view, even if they had the oil themselves, they couldn't use it productively because they can't compete in terms of manufacturing with China. Their only use for it would be to burn it up for no reason.

However, having a hand on the tap that controls the oil puts a serious crimp on the ability of the Chinese (and others) to expand their economy.


From: Vancouver | Registered: Jan 2005  |  IP: Logged
VanLuke
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posted 15 January 2006 05:38 AM      Profile for VanLuke     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Whoever controls that spare capacity has a stranglehold on the world economy

Questionable.

Canada just became the country with the largest reserves according to CBC News a couple of days ago.

OK it's not the nice liquid stuff like in Iraq and more expensive but oil just the same.

So de we have a stranglehold on the world economy?

I doubt it.


From: Vancouver BC | Registered: Oct 2004  |  IP: Logged
Fidel
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posted 15 January 2006 05:56 AM      Profile for Fidel     Send New Private Message      Edit/Delete Post  Reply With Quote 
"Shock and Appall" was about controlling oil, yes. But it was also about Pentagon tradition and invisible hand worship. And the invisible wizards behind the curtain were only ever the nouveau Roman's who pay lip service to the economic gods of capitalism. So disappointing and so anti-climactic.

The Pentagon System
(military Keynesianism)/(socialism for the rich) = 1

quote:
Public acquiescence was largely secured by fear. By the 1980s, however, the cry that "the Russians are coming" was losing its efficacy. The problem of the vanishing pretext was a troublesome one throughout the decade, heightened by the erosion of public tolerance in the face of growing economic problems. Major propaganda efforts were undertaken to conjure up new demons: international terrorism, Qaddafi and crazed Arabs generally, Sandinistas marching on Texas, Hispanic narcotraffickers, etc. The absurdity of the pretexts did not prevent them from having a certain effect though with only temporary success, a problem that must be faced. ...

Much of world trade (close to half, by some estimates) consists of intrafirm transfers -- centrally managed trade, internal to particular TNCs and guided by a highly "visible hand," to borrow the phrase of business historian Alfred Chandler. In an important critical analysis of the GATT World Bank economists Herman Daly and Robert Goodland point out that in prevailing economic theory, "firms are islands of central planning in a sea of market relationships." "As the islands get bigger" they add, "there is really no reason to claim victory for the market principle" -- particularly as the islands approach the scale of the sea, which departs radically from free market principles, and always has, because the powerful will not submit to these destructive rules.


Chomsky 93


From: Viva La Revolución | Registered: Apr 2004  |  IP: Logged
maestro
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posted 15 January 2006 04:07 PM      Profile for maestro     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by VanLuke:

Questionable.

Canada just became the country with the largest reserves according to CBC News a couple of days ago.

OK it's not the nice liquid stuff like in Iraq and more expensive but oil just the same.

So de we have a stranglehold on the world economy?

I doubt it.


And I doubt it too. I was speaking of spare capacity, the ability to increase production at will. That is definitely not the case with the tar sands.

In addition, increasing production in the tar sands is not necessarily about money, but about energy in/energy out.

For instance, much of the tar sands production needs a diluent to allow the product to flow in a pipeline. The ratio of diluent to tar sands product is 1:2. In other words, one barrel of diluent to every two barrels of product.

The diluent is a highly refined condensate of natural gas, and is currently in short supply. One of the tar sands producers has recently purchased the mothballed Methanex plant in Kitimat to use it for the importation and refining of diluent. They will build a pipeline from Kitimat into northern Alberta.

In addition, tar sands production already uses up to a billion cu. ft. of natural gas every day just to get the stuff out of the ground.

At the same time, the conventional oil reserves are declining, so the tar sands production will do little more than replace conventional production with very high energy input bitumen.

This is hardly spare capacity.

Edited to add a couple of points:

While I believe the energy in/energy out ratio is of prime importance, it's also true that the dollar cost is a factor.

For a period of time last winter, tar sands producers were paying US$75/bbl for the diluent, which meant they were losing money on every barrel sold. Now there's fine economics for you.

Secondly, as lacklustre as the tar sands are, the US government has made it clear that they are counting them as part of the 'continental' energy reserves, which means they take that source quite seriously, and are probably ready to demand Canada reserves that supply for the US.

They're not willing to spend the money they are in Iraq, which speaks directly to their evaluation of the tar sands, but they covet the resource nevertheless.

[ 15 January 2006: Message edited by: maestro ]


From: Vancouver | Registered: Jan 2005  |  IP: Logged
Fidel
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posted 15 January 2006 07:51 PM      Profile for Fidel     Send New Private Message      Edit/Delete Post  Reply With Quote 
Canada, the US, and the Tar Sands

quote:
If and when the gas is stolen, liquefied, transported and is readied for burning to allow for the turning of mud into oil, the land where the tar sands sits is not uncontested either. Among many other nations in the area, the Lubicon Lake First Nation-- who have recently won UN International Court rulings stating Canada’s refusal to negotiate any agreements with them constitutes a violation of their human rights-- now are preparing to resist the further sale of their land by an Alberta that doesn’t own it, sale of "resource rights" to corporations in what will be only a part of a further mad grab of resources on unceded lands. "They don't even have running water in their homes. and in the meantime about $13 billion of oil and gas resources have been stolen from them,"3 stated Kevin Thomas, spokesperson for the Lubicon.

Mac Stainsby


From: Viva La Revolución | Registered: Apr 2004  |  IP: Logged
VanLuke
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posted 15 January 2006 10:13 PM      Profile for VanLuke     Send New Private Message      Edit/Delete Post  Reply With Quote 
maestro

I think you might have misinterpreted what I said.

I did not say that * I am a fan* of the development of the tar sands. (I am not)

I was reacting to your statement, which I consider hyperbole.

As to the actual reserves *potentially available* from the tar sands I read the estimates (more or less in line with what the CBC reported) a year ago (or more).

Not being able to expand at will?

Why?

All you need is the equipment.

The Japanese are even thinking of shipping the gunk to Japan.

edited to add:

quote:
For a period of time last winter, tar sands producers were paying US$75/bbl for the diluent, which meant they were losing money on every barrel sold. Now there's fine economics for you.

Please provide some evidence for this statement or explain otherwise why there is so much ongoing investment in this 'loosing game'.

Besides, for how long do you think the price of oil is going to remain around 60 - 70 dollars a barrel?

[ 15 January 2006: Message edited by: VanLuke ]


From: Vancouver BC | Registered: Oct 2004  |  IP: Logged
VanLuke
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posted 15 January 2006 10:19 PM      Profile for VanLuke     Send New Private Message      Edit/Delete Post  Reply With Quote 
Fidel

Not that you said otherwise but just to be clear:

Nowhere did I express approval of tar sands development or say it is desirable.

I had the honour of sitting next to Bernard Ominayak during a sweat he invited me to attend. I am quite aware of the treachery the Lubicon have suffered for a long time.

But do tell me, isn't Little Buffalo a long way from the oil sands?

[ 15 January 2006: Message edited by: VanLuke ]


From: Vancouver BC | Registered: Oct 2004  |  IP: Logged
Michael Watkins
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posted 16 January 2006 12:07 PM      Profile for Michael Watkins   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Cougyr:
It is hard to understand what this war is all about. Oil, of course, but they could have bought it for a lot less.

NO NO NO NO NO.

Its not about the cost of oil, its about the CONTROL of oil - not only that which is in Iraq but maintaining essential control over as much of the Persian Gulf as possible.

In an era of tightening energy supplies, control, not price, is the key issue. Sometimes no amount of cash will allow you to buy that which you do not control... that's what drives US policy in the area and has for 4 decades now.


From: Vancouver Kingway - Democracy In Peril | Registered: Dec 2005  |  IP: Logged
Cougyr
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posted 16 January 2006 12:38 PM      Profile for Cougyr     Send New Private Message      Edit/Delete Post  Reply With Quote 
Ok, I'll accept control of oil as the motivation, for the moment. Did it work? Do the Americans now control the oil? In all this, how do we separate Americans from oil companies? Have the American people been duped one more time into fighting the battles of powerful trans-nationals?

What I'm getting at is that powerful trans-national oil companies have no loyalty to anyone other than themselves. If it suits them to be American, then they will be, but they will prosper under any flag they choose. (We Canadians, with so many branch plants, probably see understand this better than Americans do.) So, I'm still left wondering why the American government chose to go to war. Sure, Bush, Chenney and a few others stand to personally benefit, but one would expect more rational opposition.


From: over the mountain | Registered: Nov 2002  |  IP: Logged
Michael Watkins
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posted 16 January 2006 04:11 PM      Profile for Michael Watkins   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by maestro:
For instance, much of the tar sands production needs a diluent to allow the product to flow in a pipeline. The ratio of diluent to tar sands product is 1:2. In other words, one barrel of diluent to every two barrels of product.

Traditionally the ratio was 25:75 percent for natural gas liquids originated diluent; some producers are using synthetic crude as the diluent to move bitumen around, with a 50:50 mix.

quote:
Originally posted by maestro:
The diluent is a highly refined condensate of natural gas, and is currently in short supply. One of the tar sands producers has recently purchased the mothballed Methanex plant in Kitimat to use it for the importation and refining of diluent. They will build a pipeline from Kitimat into northern Alberta.

That would be EnCana. They are north america's largest natural gas producer although a recent merger elsewhere will create a new top dog shortly. Little known - EnCana is the largest oil sands land-holder by far, although they are not the largest oil sands producer, they are in the game and given their sources of diluent plus plans to import more one can probably expect they intend to be part of the game in a bigger way. Expansion plans call for it.

quote:
Originally posted by maestro:
At the same time, the conventional oil reserves are declining, so the tar sands production will do little more than replace conventional production with very high energy input bitumen.

True enough, although its probably more fair to say that the growth in conventional oil "reserves" is not growing at a rate high enough to overcome depletion from annual production. Net effect is the same though - increasingly Canada's oil production will be from oil sands.

The economics of producing energy from those sands may prove difficult to justify in the future too, causing all sorts of odd things to be proposed like nuclear energy plants in the oil sands region (to displace using costly natural gas) - already being discussed. With NG prices likely to remain high (supply is going to be tight, even if some plants are moving elsewhere in the world to escape high North American NG prices) such bizzare moves will probably be seen as rational before too long.

quote:
Originally posted by maestro:
For a period of time last winter, tar sands producers were paying US$75/bbl for the diluent, which meant they were losing money on every barrel sold. Now there's fine economics for you.

While the price spikes happen, its a mistake to "tar" the entire industry with an "its not economical" brush. You are over simplifying the case. "In-situ" (in-place) oil sands production (which uses much more natural gas and diluent as well - which mining-based extraction has no need of) is quite different than "mining" oil sands production. The economics of the two general approaches are quite different, and change based on realities of the day measured against the underlying assumptions which justify such projects.

quote:
Originally posted by maestro:
Secondly, as lacklustre as the tar sands are, the US government has made it clear that they are counting them as part of the 'continental' energy reserves, which means they take that source quite seriously, and are probably ready to demand Canada reserves that supply for the US.

Here's the real problem - Canada too close to the US for our own, long-term, strategic good. Ultimately some big regional or world-wide crisis is going to cut off a big chunk of oil supply to the US for a period of time, or permanently.

Even without crisis, natural cause and effect will take its toll through simple depletion of the resource. This wouldn't be an issue if steps are taken, well in advance, to mitigate such problems, but some how I doubt, given the history of our modern world, that we will do what makes sense.

Mexico's giant field, Cantarell, appears to have reached its peak production (in 2005). US domestic production is declining by some 5% per annum and some of last year's storm damaged production will likely never come back on line again. And there are other "allies" who have their own petro issues. Britain depends on North Sea oil production which is in steep (double digit) decline.

Meanwhile, South America is shifting to the left, and some of the key players (Chavez in particular) are concerned over peak oil / resource conservation. I don't believe he is saying that to score points; Venezuela has been concerned since the time of the formation of OPEC - as one of the two key founding members, that was one of their primary concerns.

As for the US, Canada is the only place where the US can get their hands on "secure" oil supplies. In the 80's Pres. Carter issued a doctrine, a western equivalent of a fatwa (!), which said that the US would do whatever it took to keep control over middle eastern oil. Somehow I suspect a similar, but undisclosed, presidential directive exists with regards to Canada.

I think the oil situation is going to get much worse and soon; but even if the situation remains relatively stable for a period of years, its extremely likely that "peak oil" production and a lack of mitigation activity will result in some sort of US/Canada crisis.

In short the US will spend whatever it has to on Iraq and the region, because they don't want anyone else to gain control of the region. Its a recipe for ultimate disaster.


From: Vancouver Kingway - Democracy In Peril | Registered: Dec 2005  |  IP: Logged
Michael Watkins
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posted 16 January 2006 04:21 PM      Profile for Michael Watkins   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Cougyr:
Ok, I'll accept control of oil as the motivation, for the moment. Did it work? Do the Americans now control the oil? In all this, how do we separate Americans from oil companies? Have the American people been duped one more time into fighting the battles of powerful trans-nationals?

In short, duped again? Absolutely. And its again happening - indeed never stopped happening, in Iran.

Anyway, globalization is not the goal, power is. We'll see countries retreat when global trade is not in their interest. Oil companies have by and large always been closely aligned with their home governments. Exxon is very much American. BP is very much British, so much so that for much of its history you'd have a hard time seperating BP from government itself. At least in the US one side of the govt - the side obsessed with justice - would try to limit the power of the oil co's. The brits never understood this obsession, seeing control of energy resources as vital to national interest.

The American's did too and managed to muzzle Justice when it made sense. This biz in Iraq is no different than other times in its history.

Its a mistake to look at Iraq with a 2 or 3 year time span... just a drop in the bucket really compared to all the actions taken in the region, and all the action likely to transpire going forward.

We can look at Reagan's fight against communism in a similar vein. Was it about human justice? Or gaining the global upper hand on power? The latter of course, and there was/is an oil angle there too.

Split the USSR up in to a variety of states and all of a sudden the US has the ability to forge alliances with nations that either have oil, or are located where pipelines / shipping must transit. That could never be done with the USSR.

The entire Caspian basin is a case in point - the nations around the Caspian sea are now, on balance, more friendly to the US than Russia mind you Putin is not remaining idle. There are treaties dating back to the early 1900's which suddenly open up oil wealth in a post-USSR world.

Given the Caspian basin has massive energy stores, gaining rights, access and control are not inconsequential objectives for a superpower determined to remain as such to the exclusion of all others.

I just don't see the US ever leaving Iraq, not on their own volition.


From: Vancouver Kingway - Democracy In Peril | Registered: Dec 2005  |  IP: Logged
wireq2005
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posted 16 January 2006 04:45 PM      Profile for wireq2005        Edit/Delete Post  Reply With Quote 
Just imagine what kind of a "Marshall Plan for Africa" this money could have created. (And I'm not being insensitive towards the people killed and suffering in Iraq and among American families.)

1 trillion added with the hundreds of billions Canadians and Americans have already given would buy a lot more fancy palaces and luxury automobiles, but maybe some of that extra money might seep down to the poor who really need it in Africa

That fucking Bush and his war!

[ 16 January 2006: Message edited by: wireq2005 ]


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Cougyr
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posted 16 January 2006 05:01 PM      Profile for Cougyr     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Michael Watkins:
As for the US, Canada is the only place where the US can get their hands on "secure" oil supplies. In the 80's Pres. Carter issued a doctrine, a western equivalent of a fatwa (!), which said that the US would do whatever it took to keep control over middle eastern oil. Somehow I suspect a similar, but undisclosed, presidential directive exists with regards to Canada.

Interesting that you put it like this. I have endured abuse for years because I'm convinced that if Canada ever tried to claim control over its own oil, the Marines would invade to save us. I have no doubt that the US will do what ever it needs to obtain whichever Canadian resources it wants.


From: over the mountain | Registered: Nov 2002  |  IP: Logged
arborman
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posted 16 January 2006 05:41 PM      Profile for arborman     Send New Private Message      Edit/Delete Post  Reply With Quote 
Any reasonable reading of the involvement of US and other countries in the Middle East over the past 100 years would have to be wilfully blind not to realize that everything, and I mean everything, that happens there stems from oil.

If there was no oil under the sands, there would be no war.

It is about control of oil - not prices. Although high oil prices can be very profitable for oil interests, they need to keep replacing their reserves. They haven't been, and they hope to do so in Iraq.

Re: the difference between the tar sands and Iraq. Iraqi oil is extremely easy to get at, tar sands are not. The profit margin on a barrel of Iraqi oil is an order of magnitude larger than on a barrel of Alberta tar sands oil.


From: I'm a solipsist - isn't everyone? | Registered: Aug 2003  |  IP: Logged
Michael Watkins
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posted 16 January 2006 06:01 PM      Profile for Michael Watkins   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Cougyr:
Interesting that you put it like this. I have endured abuse for years because I'm convinced that if Canada ever tried to claim control over its own oil, the Marines would invade to save us.

You are probably right, but I doubt that "control" (which in our case will mean active conservation) will ever come about. Few Canadians in any part of the traditional political spectrum even know or believe that supply problems lurk in the not-distant future.

The best hope for Canada's own domestic security and sovereignty is to take oil out of the picture somehow, and the best way is to see alternative energy actively developed. To that end I'd sure like to see our country take a leading role in that.

As to what happens in times of major crisis who can tell. Given our financial systems and heavy linkage with trade - in both directions - with the US, it seems hard to imagine how we are not marching in lock step with them in terms of energy.

Its easier to picture Venezuela imposing limits but then again we also picture a big target on Chavez's back for suggesting the prospect.

The past is so much easier to see than the future


From: Vancouver Kingway - Democracy In Peril | Registered: Dec 2005  |  IP: Logged
Michael Watkins
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posted 16 January 2006 06:06 PM      Profile for Michael Watkins   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by arborman:
Although high oil prices can be very profitable for oil interests, they need to keep replacing their reserves. They haven't been, and they hope to do so in Iraq.

It will be interesting to see what the end-game in Iraq is with respect only to that country's oil reserves.

Currently Iraq is producing significantly less oil than before the war. Bonus for Saudi Arabia and Iran, but mostly for S.A. as it was the only OPEC producer with sufficient spare capacity to take up the slack, and at much higher prices.

Almost as if it were designed that way ...

Today Iraq has to import gasoline; oil deliveries are continually disrupted; production way down; and it has massive rebuilding costs and reparation costs still hanging over its head. An ideal situation to keep the country off-balance, dealing from a position of weakness.

As well, some experts believe that ham-handed handling of the Iraqi oil fields may have permanently damaged the fields, thus limiting their ultimate productive capacity. Unproven yet but a real risk.

Again, for Saudi Arabia, a country which tells the world that it can produce at current capacity for eons (disputed by some experts too), if they really believe that, the Iraq situation is all-good for them.


From: Vancouver Kingway - Democracy In Peril | Registered: Dec 2005  |  IP: Logged

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