Often in the popular press, which up until the invasions of Afghanistan and Iraq really had very few people with any understanding of military matters, economic policy is often seen as being completely separate from foreign policy and light years from waging war. However, these are in fact very closely related. If you are able to strangle your enemy’s economy, you in fact reduce his capacity to effectively wage war against you. That is one reason why the U.S. engaged in strategic bombing against the cities of Germany and Japan in WWII; to destroy the factories that were building tanks, planes and ships. In fact, the reason Japan suddenly attacked Pearl Harbor was not, as is often assumed, to eventually conquer the U.S., but rather to get the U.S. to sue for peace that would include relaxing its oil embargo which was strangling Japan economically. In this light, what is currently happening to oil prices is of massive strategic importance to us in relation to our enemies, specifically Russia and Iran.

Recently, the Federal Reserve ended its bond buying program, also known as quantitative easing. The impact of this has been to reduce the downward pressure on the U.S. dollar. This, coupled with the fact that the world is still economically weak and in political turmoil (i.e. the Middle East, the Ukraine, etc.) and the fact that the U.S. economy (although admittedly sluggish) is still better than most, means that the U.S. is still seen as a safe haven which has the effect of strengthening the U.S. dollar. Because international oil prices are still quoted in U.S. dollars, a strengthening of the dollar has the effect of lowering oil prices.

Also of note is that increased U.S. oil production (the highest in 30 years) is also driving down the oil price. Normally, OPEC would cut production in order to prop the price of oil up. However, Saudi Arabia has indicated that it is completely willing to live with a low oil price (currently in the mid-70s, down from over $100). Why? Because a low oil price is undercutting Saudi Arabia’s mortal enemy’s (Iran) ability to support its economy, which is very dependent on oil exports. In addition, from our perspective, the low oil price is hurting several of our enemies. For example, Venezuela needs $120/barrel oil to keep its economy afloat, Iran needs $136/barrel, and  Russia needs oil to be somewhere around $110/barrel. Keeping oil prices low hampers the ability of these governments to grow their economies thereby undermining support for the regimes and also reducing the ability and incentive of these states to make mischief over the long term, something which is in our best interest.

Now are any of these things Obama’s doing? Given that he has, to say the least, not shown a lot of leadership and toughness on the world stage (and that everyone seems to ignore him) certainly allows for some skepticism in this regard. However, the fact that the independence of the Federal Reserve from political pressure has been called into question in recent years along with the fact that he appointed Janet Yellen to head the Fed (as opposed to simply holding over Ben Bernanke from the Bush Administration) at least leaves open the possibility that he is having more influence than he theoretically should. And if he isn’t having this influence, at least he doesn’t appear to be actively trying to undermine the positive effects that a stronger dollar is having on the geopolitical stage. Whatever the case, more oil production and a stronger dollar are undermining our enemies. Obama should either keep doing what he is doing on this front, or at least not get in the way of these positive developments.