What if al-Qaeda conquers Arabia?

Crude oil prices surged to their highest in 21 years after the terrorist attacks in Khobar, Saudi Arabia’s oil city, on May 29. The lifting five days later of output quotas by oil producers did little to calm jitters. For, the first extra barrels from the Organization of Petroleum Exporting Countries will come in July at the earliest. Conversely, high demands by China and the west are not about to curb. Moreover, analysts foresee worse terror strikes in the near future, not just on oil-related complexes but on vital oil fields. A fear factor is straining fuel inventories worldwide, as countries big and small stock up to protect their economies.

Already the west is hurting. Pump prices in the US breached $2 per gallon this month, when a tenth of Americans start driving on vacations. Germany’s leaders forecast a Europe-wide slowdown in the next five years. Poor countries are hurting more. Gas prices in the Philippines have risen six times since Jan. by P4.35 per liter; diesel, by P3.15. The remarkable 6.4-percent GDP growth in the first quarter will be short-lived. Economists expect a drop to 5.5 percent this quarter, and to 4.9 by yearend. More fuel spikes could wipe out bus and jeepney fare increases that will start on June 12. Inflation can dampen factory output and push unemployment beyond 11 percent. Price stabilizing via more production of basic goods, espoused by the Malacañang spokesman, may not work. As securities trader Joseph Roxas explains, "Any fuel price hike is bad for the domestic front because it takes away disposable income; there will be less spending." Malacañang would find it harder to keep this year’s deficit spending below P200 billion, thus pushing up further the P4.2-trillion public debt.

The unthinkable is putting the world on edge. Al-Qaeda cells, while plotting to hit western cities anew to replicate 9/11, possibly with a "dirty bomb", have also trained its cross hairs on the homeland of leader Osama bin Laden. They have found Saudi Arabia’s vulnerability: oil. The Khobar killing orgy was the second in a month. On May 1 gunmen shot their way into a western oil office in Yanbu, killing seven foreigners and locals.

The strikes were as methodical as the throat-slitting in Khobar. Al-Qaeda figures it can bring down the enemy of Islam – that is, the west – by shutting down Saudi oil installations. Saudi Arabia holds one-fourth of the world’s oil deposits, and kicks in one-tenth of supply. With such size, it rules OPEC outputs, quotas and prices. The US in turn sips up a quarter of the world oil produce. With Japan and Germany, it maintains 17 million barrels in strategic reserves from the OPEC, half of it from Saudi Arabia. For al-Qaeda, thus, attacks to disrupt deliveries to America and partners will bring them to their knees.

Saudi authorities didn’t see it coming. Jihadis first struck on Saudi soil in 1996, when a truck bomb killed 19 US servicemen, also in Khobar. In 2000-2001 came a flurry of attacks on expatriates, wrongly blamed on gang wars over the illegal liquor trade. Only last year did the kingdom wise up to the truth that jihadis were out to get it. By then, there were 10 violent incidents, including the Dec. suicide bombing of a residential area in Riyadh with 17 dead. The latest Khobar attack, in which 22 foreigners were killed, mostly Asians, is the 12th clash since Jan.

So far, only offices and homes of expatriates have been attacked. Still, the effect has been chilling. The US and some European governments have urged their citizens to pack up. An exodus could leave the state-run Saudi Aramco with no western experts to run its oil wells and related industries.

Security analysts are not discounting attacks on oil fields in a second wave of al-Qaeda aggression. Nick Alcantara, president of Petron, owned jointly by the RP government and Aramco, says the wells are heavily defended by soldiers with missiles. "But that’s good only for external assaults," he quotes Arab partners. "What if the terrorists infiltrate the oil complexes, or recruit from inside?"

The jihadis aim ultimately to capture power from the House of Saud. They revile the monarchy for "collaborating with imperialists" in trade and military bases. By attacking oil-related complexes for the moment, then oil wells in the future, they hope to weaken the king to submission.

It does not help any that the monarchy has refused to open up. There will be elections for the first time in Oct. for half the seats in town councils, then a conference of women’s rights. But reformists, who also oppose the al-Qaeda, are not hopeful. "All the reforms recommended in the last such conference have yet to be implemented," The Economist quotes a Saudi human rights activist. With the press and public muzzled, analysts cannot tell for sure how much support the al-Qaeda commands.

Any major tremor in Saudi Arabia will rock the Philippines as well. Close to 900,000 Filipinos work in the kingdom, and more than a million more in surrounding countries.

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Meralco is disputing arson investigators’ reports that its newly-installed but faulty transformer caused the May 14 fire in a Quiapo hotel (Gotcha, 2 June 2004). In so doing, vice president Elpi Cuna quotes the electric monopoly’s own electricians, who are blaming two other causes. Service cables installed by the hotel contractor had burn marks from short circuit, he says, which points to faulty wiring, not faulty transformer. He adds that Meralco found LPG tanks near the transformer and cables, a possible source of the explosion that preceded the blaze.

The hotel is suing Meralco for actual and opportunity losses of P150 million. But Cuna says the transformer cannot be the culprit since it tested to be in excellent condition before installation and switch-on. Acquired by Meralco in June 2001, the unit conforms with international standards in using R-Temp, a special insulating fluid approved by the US Underwriters Laboratories. The US National Fire Protection Association has no previous report of fires caused by R-Temp transformers. "To prove its point," Cuna says, "Meralco is willing to have the unit in question examined by any qualified third party."

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Catch Linawin Natin, Mondays at 11 p.m., on IBC-13.

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