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SPEAKING
FREELY
US courts should throttle
OPEC
By Sean O'Donnell
Speaking Freely is an Asia Times Online
feature that allows guest writers to have their say.
Please click here if you
are interested in contributing.
COLUMBIA, Missouri - Americans are now facing
the highest oil prices in 13 years as a result of the
oil-production policy of the Organization of Petroleum
Exporting Countries. The last time OPEC sought to
exercise its control over the oil markets, its
oligopolist pricing helped pop the techno-equity bubble
of the late 1990s. According to the International
Monetary Fund, these record oil prices may now devastate
a US economy just starting to produce jobs. And just as
in the late 1990s, this concern arises during the
spectacle of a presidential election.
In
response to OPEC's price gouging, members of Congress
have reintroduced the "NOPEC" legislation. Sponsored
most recently by Senators Mike DeWine (Republican, Ohio)
and Herbert Kohl (Democrat, Wisconsin), this bill would
extend the antitrust laws of the United States to the
international oil cartel. This, however, begs the
question: Why can't the US or its citizens sue OPEC now
under the existing Sherman Antitrust Act?
The
answer goes back to lawsuits arising out of the OPEC oil
boycotts of the 1970s. While it has always been clear
that OPEC's cartel structure violates US antitrust laws
that prohibit such collusion, courts refused to consider
the merits of these suits. Instead, judges refused to
exercise federal jurisdiction based on dubious
exemptions to the Foreign Sovereign Immunity Act.
Since that time, these artificial barriers
fabricated by obstreperous judges have fallen to Supreme
Court decisions and congressional acts. For example, in
1990, the US Supreme Court ruled in W S Kirkpatrick
& Co Inc vs Environmental Tectonics that courts must
hear a case concerning a US contractor who bribed
Nigerian government officials, even though the conduct
occurred overseas and involved a foreign sovereign.
Similarly, in 1993, the Supreme Court decided that a
British insurer was subject to antitrust liability in US
courts because its overseas conduct "produc[ed] a
substantial intended effect in the United States".
Americans feel the intended effects of OPEC's conduct
every day at the pump.
With the demise of
judicially invented doctrines that once stymied
litigation against OPEC, courts can no longer refuse to
sit in judgment of OPEC's criminal conduct. The question
now is why the Justice Department hasn't sued OPEC.
For one, bringing Arab nations to heel involves
issues beyond the usual petro-politics of the past
decade. Many of those nations who pledge allegiance to
OPEC are also those nations who are ostensibly
supporting America's "war on terrorism". The irony of
such a viewpoint, however, is that a review of OPEC
nations finds a hall of shame of nations belligerent to
US ideals. While it may hardly do to call OPEC the
"cartel of evil", we can also hardly expect nations such
as Iran and Libya to consider objectively the well-being
of the global economy.
Ending the cartel's
power, however, does not require litigation against any
of OPEC's Arab member-states. Instead, we can play on
the inherent weakness of cartels by targeting less
sensitive OPEC members such as Venezuela, Nigeria or
Indonesia. Adopting a policy of selectively suing OPEC
nations would exploit the economic frailty of this
cartel.
A more practical concern is the ability
of the US to assert personal jurisdiction over OPEC
members. In the past we have done this by force and by
trickery; such extraordinary efforts wouldn't be
necessary, though, because OPEC does not hide in the
girdle of its member-states or in countries intransigent
to antitrust enforcement. Rather, OPEC can be found at
93 Obere Donaustrasse in Vienna, Austria, safely within
the jurisdiction of the European Union.
It is
true that the minority of economists who argue that high
oil prices do not hurt our economy might balk at
litigation against OPEC. However, their claim that
higher oil prices spur technical innovation, which
reduces oil consumption, is unpersuasive.
First,
the short-term economic damage, inflicted during a
political season, shows a calculated decision by OPEC
once again to introduce itself into US presidential
politics. The sophistication of OPEC is demonstrated by
the army of economists it employs for the sole purpose
of studying and manipulating oil markets. Second, the
vicissitudes of oil prices undermine the economic
predictability that fosters technical change. Think of
it this way: just when a car manufacturer decides to
take the leap into alternative-fuel designs, the price
of gasoline in the United States falls below a buck a US
gallon (26 US cents a liter).
All that is
missing is the political and diplomatic will necessary
to bring an end to one of the most pernicious cartels in
history. Repeated attempts to cajole OPEC into
curtailing its economically deleterious anti-competitive
practices have failed. If this criminal behavior goes
unchallenged, we must ask ourselves, why have the United
States and the European Union shown more resolve in
ending a vitamin cartel than in doing the same to a
petroleum cartel?
Sean O'Donnell is a
lawyer in Jefferson City, Missouri, and a senior fellow
at the Austin, Texas-based American Freedom Center
(www.americanfreedom.org). He
is the author of an article in the forthcoming issue of
the Suffolk Transnational Law Review analyzing the legal
issues involved in suing OPEC. He can be reached
at sean-odonnell@yahoo.com.
Speaking Freely is an Asia Times Online
feature that allows guest writers to have their say.
Please click here if you
are interested in contributing.
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