The Sovereign State of BP - Down for the Count?
British Petroleum has operated as though it were a sovereign state since its inception. When they blew the well at their Macondo Prospect in the Gulf of Mexico, it never occurred to them that they would have to take orders from anybody. But that may change largely due to their inability to stop the flow of oil after nearly sixty days of gushing.
President Obama was clear in his speech last night. If any entity is going down as a result of the catastrophe, it will be BP. Today, Obama meets with BP's Chairman of the Board, Carl-Henric Svanberg, and the man he told the chairman to fire, Chief Executive Officer Tony Hayward.
Two sovereign states will collide. The outcome is a foregone conclusion.
BP's Global Reign
British Petroleum began under another name in the oil rich section of Iran. Britain's William Knox D'Arcy convinced Iran's leader to grant an exclusive concession for the tidy sum of £20,000 in 1901 ($16 million current). BP grew on Iran, infecting its politics and economy to assure that the flow of oil never stopped.
By 1953, Iran's new democracy had a movement and leader that lost tolerance for BP's strangle hold on Iranian oil. The government nationalized BP assets. Undeterred by the will of the Iranian people, the company was the beneficiary of the British secret service-CIA staged Operation Ajax; a not-so-covert plan that deposed Iran's duly elected Prime Minister, Mohammed Mossadegh, and installed a puppet regime.
Iran's emerging democracy was assassinated in the service of BP oil assets and income.
There was just one hitch in the post-coup arrangement with Iran. The Shah's government got 50% of the take and BP no longer had a monopoly. They had to share the concession with U.S. oil companies, thus ending their exclusive control of Iranian oil.
Mohammad-Rezā Shāh Pahlavi, the Shah, was firmly in power as Iran's King of Kings. The Shah had the glory but not the legs to survive. He was eventually deposed in 1979 by the Iranian Revolution.
It's fair to say that the 1953 coup to maintain BP interests in Iran authored the current chaos in that country and the threat that its thugish rulers pose to Iranian citizens and the rest of the world. It's no wonder that President Obama cited this coup and an outrage in his 2009 Cairo speech; a little contrition at the shared expense of the special relationship with the Great Britain.
BP Regents Meet the President of the United States
BP's chairman must have been shocked when President Obama first summoned him to the White House for today's meeting. He'd been so respectful of the company's prerogatives in handling the mess they created. By all rights, they should have had nothing to do with the fix. The created the problem in the first place. In addition, their record in two other major disasters in the past five years hardly qualified them to drill anywhere.
President Obama's options are vast. BP is drilling within what's called the exclusive economic zone of the United States. That zone extends 200 miles off shore for nations with coast lines. Operating within that zone requires observation of the controlling nation's rules and regulations. As weak as those safeguards may have been, they will be tightened to extract whatever political capital the administration may need.
The president is well within his bounds by national and international law to apply all the pressure he wants.
Feel the Heat
The rapid demise of the president's popularity and power has not escaped his attention, nor will it be tolerated by his team trained in hardball Chicago politics. It's one thing to foul up the Gulf of Mexico. It's another to threaten those who control the world's most valuable political franchise. But that's exactly what BP's arrogance and incompetence did.
The president doesn't need to cast off his corporate-friendly cloak to know what to do here. At the very least, BP must appear to go down. In reality, an ever more demanding public wants revenge, not just for BP's crimes, but for the collective looting of the Treasury by Wall Street and the big banks.
BP and it's senior management are useful scapegoats to mollify public discontent and satisfy the cries for justice, no matter how loosely related to that aim BP's punishment might be. Their stock is down, they face the loss of $20 billion to start, and the damage to their already poor reputation could make room for gains by U.S. oil giants. There is little love for BP among that group as evidenced by the scathing findings on BP's Texas explosion. The report was produced by a team headed by James Baker.
The public needs a villain. Since no one in power will take on the real villains, crony capitalism and Wall Street fraud, BP will have to do.
It should get ugly very soon. But BP will lose. They have to. There are much more important issues, however.
How much longer will the citizens of the United States have to tolerate a political system that is rigged to make winners of losers, install followers posing as leaders, and transfer wealth from nearly everyone to the those very few in gated communities. There's never a spill of any kind there that isn't cleaned up promptly.
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