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February 25, 2000 | The Clinton administration is baffled by the role of Kuwait in driving up oil prices to the $30-a-barrel range, a near threefold increase. The price hike is creating
inflationary pressures that could lead the Federal Reserve Board to raise interest rates again and threaten the long-running bulls on Wall Street.
Noting Kuwait's key role in boosting prices, one American oil expert complained to The New York Times that Kuwait's behavior was strange given the fact that the United States went to war nine years ago to
free Kuwait from Iraqi occupation.
"That's gratitude for you," groused the expert. [NYT, Feb. 24, 2000]
But there is a different way of assessing where Kuwait might be placing its gratitude. After all, it was President George Bush who led the coalition that decimated the Iraqi military force and restored
the sheikh and other members of Kuwait's royal family to their luxurious mansions.
Kuwait's royal family could be demonstrating its gratitude to the Bush family. Kuwait's actions could undercut the Clinton-Gore economic successes and could contribute to a more restless U.S. electorate
in November.
After a summer of sharply higher gasoline prices and months of declining stock portfolios, the American voters might not be as eager to see the continuation of Clinton-Gore policies as they might be
otherwise. Vice President Gore would have to explain a suddenly beleaguered U.S. economy.
Clearly, Bush's eldest son, Texas Gov. George W. Bush, would stand to gain, if he is the Republican nominee in the fall.
But, it should added, there is no evidence that any intermediary from the Bush family has encouraged these Kuwaiti-led oil price hikes or that the Kuwaitis consciously are trying to influence the November
elections.
Meanwhile, the Clinton administration has moved to counter the oil-price threat. On Thursday, Energy Secretary Bill Richardson convinced the Kuwaitis to soften their hard-line position, at least slightly.
But whether the Kuwaitis will acquiesce to higher oil production -- and somewhat lower prices -- is still unclear.
In another oil-related move, the Clinton administration is considering easing economic sanctions on Iraq. The administration justifies this possible relaxation on humanitarian grounds. But the step would
let Iraq release more oil into the world market and take some of the pressure off international oil prices.
What is clear is that the "Great Game" of Middle Eastern oil politics is never too far removed from the hardball game of power politics in the West.
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