Oil
The Decline (But Not Fall) of US Hegemony in the Middle East
Americans who voted for “compassionate conservatism” in the November 2000 presidential election have been disappointed. George W. Bush has proven to be much more radical than his moderate campaign rhetoric implied. In the area of environmental policy, Bush’s moves to lift regulations on pollutants, promote the use of nuclear power and “clean coal” and encourage oil exploration off the coast of Florida and in the Arctic National Wildlife Refuge have triggered opposition even on the right. Where Ronald Reagan sought to overturn the social policies of Franklin Roosevelt, George W. seems to seek an even wider reversal of the health and labor regulations instituted by Theodore Roosevelt.
From the Editor (Fall 2001)
Upon its installment in the White House, the second Bush administration was universally expected to be the loyal handmaiden of Big Oil. The US oil and gas industry lavished $1,387,975 upon the hastily assembled committee which planned the inaugural festivities for George W. Bush and Dick Cheney. BP-Amoco contributed $100,000, and executives from Conoco, Chevron and Exxon Mobil ponied up the same amount. In all, Big Oil gave $26 million to Bush, Cheney and their fellow Republicans in the 2000 election campaign.
Running for Cover: The US, World Oil Markets and Iraq
Last week's panic within the Clinton Administration over a potential winter spike in heating oil prices has greatly eased, as oil prices have begun to fall. The Democrats' political planners feared that Republican candidate George W. Bush and voters would blame Clinton and Vice President Al Gore for failing to forestall the price rise that dominated the news for the last two weeks.
Oil and the Middle East
The contemporary international political economy of oil presents a puzzle: political instability in regions where oil is found coexists with steadily falling prices. This combination of continuing political conflict and uncertainty in the Middle East (particularly the Gulf), and the continuing slide in the real price of crude oil encourages consideration of relations between world oil markets, Middle East politics and the international role of the United States. To comprehend these relations, one must consider both the political and geopolitical objectives of the states involved and the economic motivations of the key actors in the international oil industry.
The Containment Myth
Among those who direct American foreign policy, there is near unanimity that the collapse of communism represents a kind of zero hour. The end of the Cold War so transformed the geopolitical landscape as to render the present era historically discontinuous from the epoch that preceded it. Policy makers contend that America’s mission abroad has had to change to keep pace with these new circumstances.
The End of the Counterrevolution?
Over the last 50 years, a massive infusion of petrodollars enabled the new monarchies of the Gulf to engage in impressive experiments in counterrevolution. During the 1970s, King Faysal of Saudi Arabia attempted to preserve the traditional social hierarchy of his country by modernizing without industrializing. A decade earlier, the Shah of Iran staged a preemptive strike against demands for change by launching his own “white revolution.” Yet the most successful counterrevolution in the Gulf was the massive and successful program of the Sabah dynasty in Kuwait to preserve its power by building the region’s first modern welfare state.
The Taliban, the Shari’a and the Pipeline
Underlying the appearance of the Taliban movement, first of all, are factors internal to Afghan society, in particular the discrediting of the government and the “commandos” born out of the resistance to Soviet intervention. The rapid expansion of the militia, culminating with the conquest of Kabul on September 26, 1996, cannot be understood without considering the direct support of Pakistan, abetted by the US and Saudi Arabia, as part of a larger project to export fossil fuels from Central Asia to Western markets via Afghanistan and Pakistan, bypassing Iran and Russia.
The Saudis, the French and the Embargo
The successful maintenance of a near total embargo on Iraq owes to a number of factors, ranging from geography to post-Cold War global economies. Iraq’s limited access to the sea can be easily monitored, while its record of regional aggression has deprived Baghdad of local friends. Despite some breaches of the export embargo involving high-ranking officials in both countries, Iran is not going to give Iraq much economic relief. The same goes for Syria. Turkey and Jordan, Iraq’s two lifelines to the outside world, cannot risk more than limited and calibrated breaches of the embargo because of their own susceptibility to US pressures.
Books on Oil
Simon Bromley, American Hegemony and World Oil (Pennsylvania State, 1991).
Daniel Yergin, The Prize (Simon and Schuster, 1990).
These two books present a historical account of the development of the international oil industry and the struggle for control of oil over the past century. Both authors take the position that oil is a strategic commodity which has played a critical role in the strategies of nations and multinational corporations, but their perspectives and conclusions are substantially different.
Oil and the Gulf War
No blood for oil! The rallying cry of many of those who took to the streets in protest against the Gulf war is simple. Is it too simple? “Even a dolt understands the principle,” said one unnamed US official, “We need the oil. It’s nice to talk about standing up for freedom, but Kuwait and Saudi Arabia are not exactly democracies, and if their principal export were oranges, a mid-level State Department official would have issued a statement and we would have closed Washington down for August.” [1]
Arab Economics After the Gulf War
On February 6, 1991, Secretary of State James Baker admitted before the House of Foreign Affairs Committee that economic factors, particularly widespread Arab resentment that oil wealth was not more equitably distributed, had played a role in the dynamics leading to the Gulf war and would remain one of the primary “sources of conflict” in the region. To ease these tensions, he proposed the creation of an economic organization through which oil-rich states could fund the reconstruction and development of their poorer neighbors. [1] The following day, Baker advocated the creation of a multinational “Middle East Development Bank” to attain these objectives. [2]
US-Arab Economic Trends in the Reagan Period
US economic relations with the Arab states have entered a new phase in the last two years, one that reproduces many of the features that characterized the end of the Carter administration. US exports to the region rose by about 13 percent from 1986 to 1987 with shipments to Iraq, Egypt and the United Arab Emirates accounting for most of the increase. But this was more than offset as US imports from the region jumped some 35 percent, largely due to greater imports of crude petroleum. As a result, by the end of 1987 the US trade deficit, which had stood at $179 million the previous year, totalled more than $2.1 billion. Only a doubling in the value of American military sales to the region prevented this figure from ending up even higher.
