Oil industry and national pride: A deep disconnect By Dr. Bobby Srinivasan and Dr. Sudhakar Balachandran

March 31, 2015 | Posted by bobbysrinivasan << back to blog

The sudden drop in the oil prices allowing it to drop from a peak of 147 dollars a barrel to the current 45 dollars is the beginning of how things are going to pan out in the near term. Iran and Russia are hurting badly as nearly 30 to 40 percent of their annual budgets counts on oil prices remaining high, perhaps above $ 80 a barrel. For example with every drop in the oil price per barrel, Russia’s pride is getting hurt badly. The Russian currency has dropped from 32 to a dollar to 63. Their interest rates have moved up by nearly 7 percent with more to come. Once a thriving economy is brought to its knees because of the collapsing oil prices. They are currently swallowing their pride and their humiliation which could push them to extreme action which will involve ruthlessly interfering in the internal affairs of a country. Example: Ukraine.

After the election in January, the Greek Prime Minister Alexis Tsipras made a vow to the voters. He said and I quote “On Monday, national humiliation will be over. We will finish with orders from abroad. Isn’t his statement reflect the feelings of many countries in the world? Currently from what I observe, Russia, the Eurozone the Middle East and East Asia are all filled with rage because of national or cultural humiliation.

Greek wants to take it out on Germany whose austere measures they believe have hurt their economy and more importantly the national pride. The Greek Prime Minister as his first act after assuming the office made a visit to a memorial created in the honour of Greek resistant fighters executed by the Nazis. This is definitely an act to bring the Greek national pride back and indirectly hitting at the war atrocities of Hitler and now the current Eurozone creditors.

Putin of Russia wants to show to the world that his country cannot be bullied by the “arrogant Americans”. Putin’s recent rhetoric seethes with a sense of national humiliation. Russia, he insists, can no longer be ignored. Russia’s nuclear arsenal is mighty big this is enough reason for others to fear them.

Recently when the revolution broke out in the Middle East in 2011 (Cairo uprising) it seemed that many Arabs had thought that it was their own governments that were the real causes of their misery and humiliation. They have since changed their mind. The government of Iran and the Islamic state of Iraq and the Levant (ISIS) loathe each other but they shared rhetoric and promise to reject the perceived humiliation whether it is Iran insisting on its right to have a nuclear program or ISIS preaching against the western values.

Finally, it all amounts to national pride. If the global crude oil prices were to fall steeply from here, it is certain that the oil producing countries will blame not drop in global demand but the economically outmaneuvering by the west, especially, the US. This definitely will not augur well for the global peace.

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