Lockerbie And Crude Ethics

The Times of London claims that people within the British government turned over convicted Lockerbie bombing participant Abdelbaset Ali Mohmed al-Megrahi to Libya as part of an attempt to secure a major oil deal. The Times reported “Gordon Brown’s government made the decision after discussions between Libya and BP over a multi-million-pound oil exploration deal had hit difficulties.” The heinousness of the Lockerbie bombing gives the apparent “trade” a special level of abhorrence, but it is not the first time that the interests of profits have outweighed better ethics.

There have been charges by fringe groups that the primary reason that the US had in supporting Iraq, even at the costs of thousands of lives, was to protect American energy interests in the region. There has never been proof that this is true. But, it is nearly certain that US support of the Saudis and other countries in the region which do not share the political and human rights values of most Americans is due to the strategic interests of the federal government.

Ethics and oil have a long history in the Middle East and adjacent areas and some if it is particularly troubling. Tycoon Oscar Wyatt went to jail for a year and a day in 2007 for masterminding a scheme called oil-for-food. It had the appearance of being a humanitarian arrangement to get crude from Iraq in exchange for staples to be distributed to Iraqi citizens. Wyatt used the program to bribe the Saddam Hussein government to get oil contracts.

Charges that Western governments will act without regard to morals to get access to crude go back at least as far as WWII when Arabian American Oil supposedly paid Saudi Arabia extraordinary royalties to keep access to the kingdom’s crude. Arabian American Oil was supposed to cover the additional royalties by supplying oil to the US Navy.

A major cut in the supply of oil to America could start an economic spiral as the Arab Oil Embargo demonstrated in 1973 and 1974. The question is what kind of concessions are the governments of the UK, the US, and other major economies willing to pay to protect strategic energy interests. Perhaps turning over a terminally ill Libyan terrorist is not a terribly significant price. The fact that the UK government tried to conceal the plan is at the very least a sign that it believed that the principles which guide and inform behavior of its public servants were compromised.

The US and UK operate in a world where China competes for crude as aggressively as any country in the history of energy acquisition. The Chinese may be no more or less ethical in their practices for gaining access to large supplies of crude. They unquestionably have more capital to make sure that their energy interests are served. China’s recent deal with Petrobras to loan the Brazilian oil company $10 billion is an example that the mainland government can and will write large checks. China has similar deals with energy interests in Venezuela, Kazakhstan, and Russia. China’s large oil company Sinopec recently arranged to buy Swiss-based oil company Ad-dax.

The US relies primarily on energy companies like Exxon Mobil (XOM) to use their private assets to secure supplies of crude. The UK has BP (BP) as its lead private oil company. But, the firms are not government controlled as Sinopec  (SNP) and Cnooc are in China. There is no way for the US or UK to guide the investment of large exchange listed companies in order to match their private enterprise plans with government goals.

That leaves Western governments to struggle in the pursuit of their perceived strategic energy needs. These governments do not have access to huge capital reserves particularly as their national debts increase.  This may fuel the temptation to trade criminals for oil agreements and probably other arrangements that the public will never know about.

Where there’s smoke, there’s fire.

Douglas A. McIntyre