Hussein Suspends Iraqi Oil Exports in Protest

Iraq suspended oil exports Monday to protest Israeli military actions in the West Bank, a strategic decision that caused the world price of crude oil to jump and increased pressure on Arab regimes to take action against Israel and the United States.

In a speech beamed by satellite to all corners of the Arab world, Saddam Hussein sought to present himself as the only Arab head of state willing to act on behalf of the Palestinians. His go-it-alone embargo is expected to have a far greater impact on the tense political landscape of the Middle East than on world oil supplies, especially if Israel continues its offensive and other countries follow Iraq’s lead.

The price of oil jumped by about $1, to $26.98 a barrel, after the announcement, before closing in New York at $26.54, a 33-cent increase. Perhaps a more telling barometer of the decision’s impact came in a statement issued by the radical Islamic group Hamas. It accused Arab leaders of treason to “God and the nation of Islam,” praised the Iraqi gesture and called on other regimes to follow suit.

The Arab public is burning with anger over the Israeli military operation and America’s support for the Jewish state. Radical voices are dominating the public dialogue. After Sept. 11, it would have been unthinkable for crowds to march in Jordan chanting Osama bin Laden’s name, even if they had wanted to. But they were doing just that on Monday.

Iraq’s gesture also undermined the White House effort to oust Hussein from power.

“Saddam Hussein is trying to incite the street and embarrass the oil-producing countries,” said one well-placed Arab official. “He is cashing in on the fact that the street is boiling, watching what is unfolding. He is trying to exploit this to his advantage.”

Throughout the 18-month Palestinian intifada--including Israel’s current offensive--Arab regimes have resisted taking any tough measures such as imposing a coordinated oil embargo or opening their borders to allow volunteers to fight alongside the Palestinians. Those steps are perceived by leaders from Riyadh to Cairo as against their own political, social or economic interests.

But as the Israeli operation continues, that calculation is changing. Egypt and Jordan, the only two Arab states to have signed peace treaties with Israel, are under pressure to expel Israeli diplomats and sever all ties with the Jewish state. Both have indicated that they will have to respond to pressure from the street if Israel does not relent soon.

Oil as Political Tool Seems More Relevant

Persian Gulf states that rely on oil sales for most of their revenue are also feeling pressure to use the commodity for leverage.

“The question of oil as a political tool really is becoming very relevant now,” said Radwan Abdullah, a political analyst in Amman, the Jordanian capital. “There is a feeling of anger among the masses in a way never felt before. If there is nothing forthcoming in political negotiations, or at least an end to the massacres, it will become a relevant question in the near future.”

But even if the immediate crisis calms, America’s interest in the region may already have been permanently damaged. Moderate regimes have historically argued to a skeptical public that ties with the United States gave them a means to advocate the Arab cause. But these days, the perception is that Arab voices are going unheard in Washington.

Arab leaders are holding their collective breath, hoping that events in the West Bank cool before they are pushed to take some action that will hurt them too.

“We all applauded the American statements for telling Israel to comply with American demands. We are watching and observing the behavior of the United States,” said an informed source from a Gulf state who declined to be identified because of the volatility of the situation. U.S. credibility was on the line, the source added.

For months, as U.S. officials tried to round up support to topple the regime in Iraq, Hussein also sent his emissaries to lobby in Arab capitals. His surrogates even reopened talks with the United Nations about allowing weapons inspectors back into the country.

On Monday, Hussein himself delivered Iraq’s message.

“The Iraqi leadership declares the complete stoppage of oil exports starting from this afternoon--for a period of 30 days, when we will further decide policy, or until the Zionist entity’s armed forces have unconditionally withdrawn from the Palestinian territories,” he said, standing at a lectern.

Playing to feelings of hurt pride and victimization among Arabs, he said that Israel and the United States had “belittled the capabilities” of Arabs.

Iraq’s decision is likely to have little impact on world oil supplies. The oil-rich country exports 2 million barrels a day, or just 4% of what is available on the international market. Most of its oil is purchased by the United States and Europe. The price increase was more a reflection of jitters over the worsening situation in the region than the loss of Iraqi crude on the market.

Even if the Organization for Petroleum Exporting Countries does not make up the shortfall, it is expected that other producers such as Russia will step in. The only way for Iraq’s move to really hurt the industrialized world would be if it kicked off a trend, either inspiring or embarrassing other nations to follow suit.

That has not yet occurred. Kuwait immediately announced it would not stop pumping oil. Sources in the Gulf region said Saudi Arabia had not agreed to go along. Iran and Libya have both supported the concept of using oil as a political weapon, but they did not give any indication Monday of whether they would cut back.

Other Efforts Failed to Disrupt Markets

The last time Arab nations used oil for leverage was in 1973, when reduced exports caused a global energy crisis and played havoc with Western economies. Since then, the world’s wealthiest nations have created a cushion for themselves against such disruptions.

Hussein’s government has cut off oil sales in the past for political reasons but has failed to disrupt world energy markets. Iraq last halted exports for five weeks last summer to protest the proposed imposition of so-called smart sanctions by the U.N., which would expedite imports of approved civilian goods but place tighter controls on items with potential military applications. The new sanctions system was later endorsed by the Security Council and is scheduled to go into effect in June.

If there is any pain from the Iraqi move, it may be felt primarily by Iraqis.

Iraq is still functioning under sanctions imposed after the 1991 Gulf War. It is allowed to sell crude only under a U.N. oil-for-food program. Although Iraq reportedly manages to smuggle millions of barrels of oil to Syria, Jordan and Turkey, which it does not plan to curtail, revenue for the purchase of most necessities comes through the U.N. program.

There should be little immediate impact on critical imports to Iraq, said Hasmik Egian, an official at the U.N. office that supervises the sanctions. The country could be strapped for cash if the cutoff continues for 30 days or more. Iraq had already overestimated its anticipated oil income for the year’s first quarter, Egian said.

The White House responded to Hussein’s announcement by repeating its accusation that Hussein, not the West, bears the responsibility for the suffering of the Iraqi people. Iraq’s action is “another sign that Saddam Hussein is willing to starve his own people,” White House Press Secretary Ari Fleischer said.

But that message is not likely to have much resonance now in the Arab world.

In Jordan, at least 4,000 people gathered for the funeral of an 11-year-old boy who died Sunday of an injury suffered during an anti-Israeli protest two days earlier. As they marched through the dusty streets of the Baqaa refugee camp, they chanted slogans in support of Bin Laden.

In Sudan, protesters marched in the 104-degree heat, chanting, “Strike back, Bin Laden!”

In Egypt, where authorities have struggled to hold down public anger, state-run news media did not mention Hussein’s announcement. But the pan-Arab satellite network Al Jazeera did. “This is very important in gaining the support of Arab public opinion,” commentator Moustafa Al Razrazi said on the broadcast.

Times staff writer William Orme at the United Nations contributed to this report.

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