Arab revolutions, China and oil

Muammar Gadhafi’s speeches grow ever more delusional: Last Thursday he accused al-Qaeda of putting hallucinogenic pills into the coffee of unsuspecting Libyan 17-year-olds in order to get them to attack the regime. But he also said something important. Defending his massacres of Libyan protesters, he pointed to the example of China, arguing that “the integrity of China was more important than [the people] on Tiananmen Square.”

The Chinese regime will not be grateful to him for making that comparison, but it is quite accurate. Gadhafi, like the Chinese Communist Party, claims that there are only two choices: his own absolute power, or chaos, civil war and national disintegration. The “integrity of Libya” is allegedly at stake. Also like the Chinese ruling party, he is willing to kill hundreds or even thousands of his own fellow-citizens in order to maintain his rule.

Ruthlessness will not save Gadhafi now: He has already lost control of more than half the country and the oil revenues that enable him to reward his allies and pay mercenaries will soon dry up. But ruthlessness certainly did save the Chinese Communist regime in 1989, when the army slaughtered between 300 and 3,000 young pro-democracy protesters in Beijing’s central square. Might it need to deploy such violence again in order to survive?

 So far the current wave of revolutions has been an entirely Arab phenomenon, apart from some faint echoes in Iran, but the example of successful non-violent revolution can cross national and even cultural frontiers. It won’t matter that it’s a very long way from the Arab world to China if large numbers of young Chinese conclude that the same techniques could also work against their own local autocracy.

 It is very unlikely that that sort of thing is brewing in China now. There were online calls for a “jasmine revolution” last week, but few people actually went out onto the streets of Chinese cities to protest, and those who did were swiftly overwhelmed by swarms of police. Even the word “jasmine” is now blocked in Internet searches in China, and tranquility has been restored.

But what if the Chinese economic miracle stalled? Then the situation could change very fast, for the regime is not loved; it is merely tolerated so long as living standards go on rising quickly. And what could cause it to stall? Well, the economic side-effects of the current wave of revolutions in the Middle East might do the trick.

 Sometimes, it really is all about oil. The last two times the world economy really took a nosedive, way beyond the normal, cyclical recessions, were both oil-related. In 1973, after the Arab-Israeli war of that year and the subsequent embargo on Arab oil exports, the oil price quadrupled. In 1979, when the Iranian revolution cut that country’s oil exports, the impact was almost as severe. So could it happen again?

 Non-violent revolutions should not affect oil exports at all. Heavy fighting of the sort we are now seeing in Libya can damage oil-producing facilities and drive out foreign workers who are needed to run those facilities, but Libya is not a big enough producer to affect the global supply situation much by itself.

 What drove the oil price up to $120 a barrel at one point last week (it later fell back to $110) was not the loss of Libyan production, but the fear that, as the contagion of revolution spreads, one or more of the major Middle Eastern oil exporters may fall into the same chaos. Then, the oil pundits predict, the price could hit $180 or even $220.

 Never mind the direct impact of such an astronomical price on the Chinese economy (although China imports a lot of oil). Far worse for China would be the fact that the whole global economy would go into a period of hyper-inflation and steeply falling consumption, for China is now integrated into that economy.

 So the Chinese goose stops laying its golden eggs, and young Chinese start looking around for someone to blame. They would, of course, blame the regime – and at that point, the Middle Eastern example of successful non-violent revolution becomes highly relevant.