Ken Silverstein, a veteran of Harper's, the LA Times, and many other places, is one of America's great crusading balls-to-the-wall lefty investigative journalists. His new book explores power, intrigue, and corruption in the global oil industry. He will be answering your questions at 1 p.m. Ask your question now!
The oil industry—where gangsters and dictators mingle with global corporations and U.S. presidents—is a great topic for a journalist of Silverstein's talents. You can read an excerpt from The Secret World of Oil here. Silverstein answered a few questions for us— leave your own questions in the discussion section below.
Is the oil industry actually *more* corrupt than other major global industries? If so, why?
Ken Silverstein: Yes, it actually is. The only industry that's remotely as corrupt is weapons and partly for the same reason. If you're selling widgets or paper towels or T-shirts, you make a relatively small amount of money on a lot of contracts. When you're in the oil (or weapons) business, the stakes are a lot higher on individual deals. You may be chasing an energy concession worth tens of billions of dollars that could be generating revenue, and profits, for decades. That encourages you to use any tactic that will reel in that deal, and that often means paying off government officials. Keith Myers, a London-based consultant and former BP executive, told me, "Corruption isn't endemic in the energy business because people in the industry are more corrupt or have lower morals but because you're dealing with huge sums of capital. A million dollars here or there doesn't make any difference to the overall economics of a project, but it can make a huge difference to the economics of a few individuals who can delay or stop or approve the project."
A related reason is that a lot of the energy resources that we want to run our factories and heat our homes and fill our gas tanks is sitting in Third World countries headed by corrupt governments. Or as our illustrious former vice president and Halliburton exec, Dick Cheney, once put it, "The good Lord didn't see fit to put oil and gas only where there are democratic regimes."
Who are the worst, most egregious villains in the oil business today that might not be familiar to most people?
KS: There are a few choice candidates but the big trading firms – the middlemen who strike deals between buyers and sellers – rank high on the list. Almost all are privately owned and based in Switzerland, for tax and secrecy reasons, so it's almost impossible to know precisely what they're up to, but they make a ton of money and their business model depends on cultivating close connections to officials in oil-producing countries. "You have to deal with governments and ministers, and you have to service those people," one Swiss oilman told me. "You can call it corruption, but it's part of the system."
How much moral culpability does the U.S. have for the evils inherent in the global oil industry?
KS: A lot. In public the U.S. government talks about the importance of human rights and democracy but if you're a dictator of a country that's sitting on top of a lot of oil or gas, you don't take it seriously. Sure, you may get a terribly stern public rebuke when you too flagrantly rig an election or mow down a few unarmed demonstrators, but the U.S. is not going to do anything that threatens a relationship with a big energy supplier, and those guys know it.
I feel a little sorry for President Mugabe of Zimbabwe. There are worse African rulers, i.e. President Obiang of Equatorial Guinea, but the latter controls huge energy reserves (and he cleverly awarded them to American oil companies), and poor Mugabe has to import all his oil and gas. So Mugabe is a pariah and when he holds a rigged election the U.S. (and international) press parachutes in to document the fraud and Fred Hiatt at the Washington Post runs 100 op-eds denouncing him. Obiang is "reelected" with 99 percent of the vote in and the media can't be bothered to cover it and the State Department issues a press release saying it is very, very disappointed. I doubt Obiang is losing a lot of sleep over that.
Ken Silverstein will be answering questions about "The Secret World of Oil" in the discussion section below. Image by Jim Cooke.