OPEC NOW invites its members to increase their production and prevent disruptive oil shortages. With that, Iraq has been abandoned by its partners in the oil cartel. In terms of oil policy, the Iraqis have succeeded in achieving the opposite of their intentions. Their stated purpose in invading Kuwait was to punish it for exceeding its OPEC quota and driving world oil prices down. Now OPEC is abandoning its country-by-country quotas altogether and has left it to each member to follow its own policy.
The consensus at the OPEC meeting suggested that total production for all 13 members is to be at roughly the level set at its meeting last month -- meaning that others would now increase exports to compensate for the boycott of Iraq and Kuwait. The purpose of the quota then was to reduce production and lift prices. Now it's the opposite -- reasserted by the cartel in the name of stability and reliability of supply.
The principal beneficiaries in terms of dollars will obviously be the industrial democracies. But in terms of standards of living, it is the countries of the Third World that have the most at stake in this attempt to protect world markets from another enormous surge in oil prices. The OPEC communique made that point.
The great increases in oil costs during the 1970s hurt the rich countries, but they rapidly regained the lost ground. The damage has not been so easily repaired in less wealthy countries, particularly in Latin America and Africa. The oil price increases were the origin of the enormous debts that most of the Latin countries are still carrying. They borrowed desperately to protect their living standards, to a point at which the weight of the debts threatened to crush them. The effects in Africa have been even more severe, for most of those countries were poor to begin with. Iraq has tried to portray its invasion of Kuwait as a crusade of the poor against the rich. But no countries have a greater interest in stable oil pricing than the poor ones. While that's hardly OPEC's chief reason for its decision, to its credit it acknowledges that lesson of the past decade.