Cato’s Justin Logan Hits the Bulls Eye

Cato Institute Director of Foreign Policy Studies Justin Logan

Here the Cato Institute’s director of foreign policy studies, Justin Logan outlines why the Middle East still doesn’t matter.

Nonetheless, three fears have turned this small, poor, weak region into the central focus of U.S. foreign policy: oil, Israel and terrorism. Each of these concerns merits attention, but nowhere near the amount they have received over the last several decades. And certainly, none of them calls for the sort of forward-deployed interventionism both Republicans and Democrats favor.

First, take oil. While their fears are rarely spelled out explicitly, Washington policymakers worry that regional wars or instability will threaten the ability of oil producers to get their output onto world energy markets, creating volatility, hampering economic growth and producing second- and third-order effects that send the global economy into a tailspin. Perhaps this argument is never spelled out explicitly because it’s wrong.

Oil is a fungible commodity sold on world markets. When the price of oil in one country rises, it rises in all countries—even those that have achieved the Shangri-La of “energy independence.” On the supply side, when supply decreases, price goes up and producers have an incentive to produce more oil to reap the higher profits. Combine the self-interest of producers with financial innovations like sophisticated spot and futures markets that allow consumers to hedge risks and it’s easy to see why, historically, supply disruptions have had limited and ephemeral effects on price.

Even the worst-case energy security nightmares don’t stand up to closer inspection. One scenario in which the U.S. military might come in handy is if a state like Iran tried to conquer and consolidate control over a major oil terminal such as Ras Tanura in Saudi Arabia, giving it an uncomfortable, not to say market-making, amount of control over world oil markets. Fortunately, though, Iran doesn’t have anywhere near that kind of power-projection capability and if it did, America’s carrier-based airpower and long-range bombers could handle the threat relatively easily.

Another Middle East fear involves Israel. Here again, the precise problem is rarely spelled out, but people believe that Israel, small and friendly with the United States, lives in a bad neighborhood and benefits from a robust American presence in the region. The problem is that Israel in 2014 fits differently into the region than it did in the dangerous years after its founding. It enjoys an enormous qualitative military edge over any combination of potential regional rivals. It has roughly 200 nuclear weapons deployed on an array of platforms, including submarines, that give it a secure second-strike capability against any state in the region that might dare to threaten its survival. It is hard to see, moreover, how the maelstrom of sectarian conflict that recent U.S. policy has helped unleash across the region has benefited Israel.

Finally, of course, are fears about terrorism. This explanation for why the Middle East supposedly matters is peculiar, in that the basic contours of U.S. policy in the region predate 9/11. It is tough to think that a concern that emerged after a policy began explains the policy. But there is no evidence that terrorism is a threat that warrants an effort to micromanage the Middle East. The chance of an American being killed by terrorism outside a war zone from 1970-2012 was roughly one in 4,000,000. By any conventional risk analysis, this is an extraordinarily low risk. Perhaps this is why, as early as 2002, smart risk analysts were asking questions about counterterrorism policy such as “How much should we be willing to pay for a small reduction in probabilities that are already extremely low?”

The amount we’re paying now to fight terrorism—roughly $100 billion per year—is simply crazy. If someone ran a hedge fund assessing risk the way the U.S. government has responded to terrorism, it would not be long for the world. Indeed, it is difficult to identify how U.S. policy across the region—with the possible exception of some drone strikes and special operations raids—have reduced the extremely low probability of another major terrorist attack. If anything, our policies may have increased them.