By Franz Schurmann

fschurmann@pacificnews.org

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Prediction #71 for Tuesday, August 1st, 2000

If Bush wins on November 7 American policy will stress oil and work closely with the Saudis. To forestall this Clinton will have to produce a credible Mideastern settlement, fast

Many political observers, here and abroad, have written off the two national party conventions as scripted with no surprises in sight. But one surprise is the implication of George W. Bush's selection of vice-president. With an 18 point lead over Gore according to a Time magazine poll it looks as if Bush junior is already preparing an administration that will simply continue that of Bush senior terminated on January 20, 1993.

One of the top political analysts for the Chinese-language daily, the "World Journal," (get English name of Meng Hsuan/Xuan from the World Journal) said on a popular Mandarin-language talk show called "China Cross Talk" that Bush's choice of Dick Cheney indicates he already was planning his administration even before being formally nominated. Governor Bush has no experience in Washington, Meng said, but Cheney has been on the Washington scene since 1976.

Meng says that while Cheney is thoroughly conservative he is a "prince." During the campaign and, if elected, during his administration critics will lash out fiercely against George W. Bush but will likely not do so against Cheney. The Republicans are already promising a sharp difference in moral character between a Bush administration and the current Clinton one.

But character will not the most important difference between the two administrations. The big difference can be stated in one three letter word, oil. While Bush's grandfather Prescott was a blue-blood Connecticut Republican his father made himself a Texan by working in that state's giant oil industry. He filled the two top cabinet posts of his administration with Texan oil men, one James Baker III who was his secretary of state and the other Dick Cheney secretary of defense.

Generals Powell and Schwartzkopf played key roles in the spectacular victory of the Gulf War. They were both centers of attention during the Philadelphia convention. Secretaries Baker and Cheney played key roles in the subsequent Arab-Israeli peace process that led to the pivotal Madrid and Oslo agreements. Unlike Cheney, Baker is out of the limelight because former president Bush still holds him responsible for his defeat in 1992.

During the Gulf War and later in both the broader Middle Eastern and the Israeli-Palestinian peace processes Saudi Arabia played a central role. Most important during the Bush presidency Saudi Arabia allowed American troops to be stationed in the eastern oil-rich regions of the kingdom. That aroused the fury of Islamic fundamentalists including Osama Bin Laden.

However during both Clinton terms the White House kept Saudi Arabia at arm's length. The Clinton peace process was based on getting Israeli prime minister Netanyahu out of office and returning the Labor party into power. Meanwhile Clinton nurtured ties with the Palestinians and Iranians. The culmination came with the 2 week long Camp David II talks. Reluctant to accept failure Clinton is still pressuring Barak and Arafat hard to reach an agreement in September.

Shortly before the Camp David II talks began in mid-July Saudi Arabia demonstrated real Arab power on a scale no other Arab country could have done. King Fahd and Prince Abdullah unilaterally opened wide the taps of Saudi oil production. Within hours global oil prices fell. Second ranking oil power Iran protested but there was nothing it could do. The Clinton White House, on the other hand, was relieved because it meant the miraculous bull market would continue.

Saudi oil reserves are so immense that the kingdom literally holds the global economy hostage. By now it is apparent that global oil prices largely determine whether inflation rates and currency values go up, down or stay stable. Twice before the kingdom showed its oil power. In mid-October 1973, during the Yom Kippur war, it cut production, driving up inflation rates and creating the great recession of 1974-75. And in 1980 when revolutionary Islamic ripple-out effects were fast spreading out from Iran it did the same, and once again inflation rates soared.

There are good grounds to believe that Nixon made a tentative resignation decision in late 1973. And it is widely known that Jimmy Carter lost his re-election bid because of soaring inflation and the Iranian hostage crisis.

In this year's campaign the Saudis are pleased that both parties' candidates have oil connections. As an editorial in the Saudi-financed As-Sharq Al-Ausat put it "both Bush and Cheney got their formation and fortunes through the oil industry and Al Gore is connected to it through family wealth."

Baker is out of the limelight. But Cheney is not only back but with even better credentials than before. Until August 16 he still is chairman and CEO of the Halliburton Company founded in 1919. It styles itself as "the world's largest provider of products and services to the petroleum and energy industries."

If oil really is what keeps the global bull market going then Saudi power plays a central role. George W. Bush has made a key move to show which way his administration is going to move in this arena. The best response the Democrats could offer is to present both a credible agreement between Israel and the Palestinians but also between Israel and Syria. That's a tall order to be achieved well before November 7.