Posted: September 12, 2007

As U.S. Gen. David Patraeus makes the rounds of Washington reporting on the status of the Iraq war, here’s a startling forecast of the political and energy future for that crucial region of the world from George Friedman, noted political scientist and head of the private intelligence firm Stratfor.

Friedman told EnergyTechStocks.com that he anticipates the U.S. will withdraw its troops from Iraq, sending some home but redeploying others in a newly-created demilitarized zone (DMZ) along the border between Iraq and Saudi Arabia, just inside Iraq. The purpose of this DMZ, which would stretch down into a big U.S. base in Kuwait, would be to protect Saudi Arabia – and its oilfields – from any attempt by Iran to exert political or possibly even military influence over the Saudis.

If Friedman’s forecast proves correct, the U.S. will essentially have ceded control over Iraq’s plentiful oil supplies to Iran, because in the wake of the U.S. withdrawal, Tehran likely would move to fill the political vacuum by exerting direct control over the Shiite-dominated regime in Baghdad. But Friedman emphasized that it is better to lose control over the large amount of oil in Iraq than the far larger amount of oil in Saudi Arabia, which he fears would be the outcome if the U.S. chose any option other than to create a DMZ.

“I have one choice and it sucks,” Friedman said flatly. “There is no other word to describe (the situation the U.S. is in). We’re down to all bad choices.”

According to Friedman, the other choices Washington has that would be even worse than creating a DMZ include the rapid withdrawal of U.S. troops, which Friedman said would leave the Saudis completely exposed and force them to cede to Iran at least partial control over Saudi oilfields. Another option – a slow withdrawal – would be “by far the most irrational,” according to Friedman, because it would cost a great many U.S. lives and still leave Saudi Arabia politically exposed to Iran. The only other option Friedman sees – continuing the present U.S. policy – ties up too many U.S. forces, leaving America vulnerable to military opportunism by Russia and others, he said.

Friedman cautioned that the DMZ option carries a heavy price tag: the sacrifice of the independent Kurdish province in northern Iraq. Friedman believes that a U.S. troop withdrawal would quickly lead to Turkish troops exerting control over Kurdistan. “If the Kurds resist, there will be a shooting war. It will be short and sweet,” with the Kurds on the losing end, according to Friedman.

Looking at Friedman’s forecast from an energy perspective, all this military redeployment in the world’s most important oil region likely would increase the war risk premium traders put on crude prices. Over the long term, however, it’s possible the energy market would take comfort in knowing that any attempt to take over Saudi Arabia’s oilfields – the most important oilfields in the world – would be openly met with a major show of American force.