Oil
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.
Libya’s Revolution Revisited
When the United States sent its warplanes to bomb Libya last spring, a first and then a second invasion of Western journalists descended upon the country. With the media in box seats, the scenario conjured up visions of the 1830 French invasion of Algiers, when well-heeled citizens of the Republic hired luxury liners to observe the military proceedings first hand.
Oil Politics in the Arab World
Giacomo Luciani, The Oil Companies and the Arab World (New York: St. Martin’s Press, 1984).
Yusif Sayigh, Arab Oil Policies in the 1970s (London: Croom Helm, 1983).
Abdulaziz al-Sowayegh, Arab Petro-Politics (New York: St. Martin's Press, 1984).
David Howdon, ed., The Energy Crisis Ten Years After (London: Croom Helm, 1984).
Hangover Time in the Gulf
After a decade of soaring revenues and frenetic spending, the six “Eldorado” states of the Gulf (Saudi Arabia, Kuwait, Bahrain, Qatar, United Arab Emirates—the states of the Gulf Cooperation Council) are now in a tight economic and financial squeeze. Experts and analysts in the Gulf and around the world are feverishly studying the consequences of this new phase, including its political implications. Symptoms which began to show up back in 1982 are now quite apparent in the litanies of international experts and the lives of the countries’ six million immigrant workers.
Prospects for the Gulf
All of the small Arab states of the Persian Gulf are now well into their second decade as independent political entities. Bahrain, Qatar and the seven principalities making up the United Arab Emirates became independent in 1971. Kuwait’s independence goes back another decade. Oman, though never a colony, traces its present regime to the British-induced palace coup of 1970. Whether because of or in spite of the startling explosion of wealth in the 1970s, because of or in spite of the fall of the shah and the war between Iran and Iraq, they have survived as states and their regimes have displayed unanticipated continuity. The turbulence of the 1970s roared around them, as around the eye of a storm.
Oil Find Could Alter YAR-Saudi Relations
In July 1984, the Hunt Oil Company announced it had struck oil in the Yemen Arab Republic. Tests so far suggest that the field will produce a minimum of 75,000 barrels per day (b/d). This would be the threshold for commercial exploitation, given the field’s location nearly 500 kilometers inland and separation from the coast by a 10,000 foot high mountain range. By some estimates, the field has a potential of 300,000 b/d, a considerable margin for export over North Yemen’s present consumption of 17,000 b/d.
Books on Oil Prices
Steven A. Schneider, The Oil Price Revolution (Baltimore: Johns Hopkins University Press, 1983).
Robert Sherrill, The Oil Follies of 1970-1980: How the Petroleum Industry Stole the Show (New York: Anchor Press, 1983).
Oil and the Outcome of the Iran-Iraq War
Excerpts from a report by Thomas McNaugher and William Quandt of the Brookings Institution, published on May 14, 1984 by Cambridge Energy Research Associates. These excerpts appeared in Arab Oil and Gas (Paris), June 1, 1984.
Recession Hits Saudi Oil Sector
A visitor to the kingdom might be startled to hear Saudis speak of a “recession” here. Non-oil growth of the gross domestic product (GDP) is proceeding at a 6 percent clip. Unemployment is nil and construction sites still appear to be eating up the desert around every major city. It hardly looks like a recession. Nevertheless, a leaner economic climate is unmistakable. Saudi and foreign contractors alike complain of a slowdown in government payments that leaves them short of cash. The private sector is pruning payrolls and expenses, and layoffs are underway at two of the country’s largest employers, Aramco and the national airline, Saudia. Demand for many key goods and services has stabilized, leaving traders in the lurch.
Restructuring the World Energy Industry
A decade ago, the states that make up the Organization of Petroleum Exporting Countries (OPEC) took a number of important steps to alter the structure of the world oil industry by encroaching on the prerogatives of the international oil companies. The producers unilaterally increased the “posted price” for crude oil and boosted royalty and tax rates. They took over direct ownership of their crude reserves, and created state firms which subsequently took charge of oil operations in many (though not all) producing countries. The monopoly power of the international oil companies was further eroded a few years later when these governments slashed long-term supply contracts and undertook to sell their oil directly to consumer governments and small private traders.
OPEC’s Decade
No one can deny that the past ten years have witnessed great changes in the international oil industry. A decade ago, the seven largest international oil companies — Exxon, Shell, British Petroleum, Texaco, Standard of California, Mobil and Gulf — still dominated the industry in virtually every respect. In 1972, these seven companies accounted for three fifths of the non-communist world’s production of crude oil and refined products, and similar shares of transport and marketing as well. Even these figures fail to reflect the relative profitability of these “seven sisters.” They controlled only one third of oil production in the United States, where costs were relatively high and profits correspondingly lower.
Ten Years After
It is still possible, even likely, that history will take note of the remarkable events of late 1973 and early 1974: Egyptian troops crossed the Suez Canal and penetrated the supposedly impregnable Bar Lev line in a matter of hours; the kings and presidents of the Arab oil producing states, led by Faysal of Saudi Arabia, decreed a boycott of the world’s most powerful state; the major Third World oil producers, grouped in the Organization of Petroleum Exporting Countries (OPEC), doubled the price of crude oil in a single afternoon and, a few weeks later, doubled it again. The grievances and frustrations of many generations, it seemed, had finally overturned the old and accustomed hierarchies in cumulative bursts of political energy.
The Arab Economies in the 1970s
The 1970s were undoubtedly the most dramatic and important years in recent Middle Eastern history. The decade began politically with the death of Nasser, the formal withdrawal of the British from the Gulf and the first sharp increase in the price of oil. Oil — its production and marketing, its revenues, its social impact — was at the center of the economic transformation of the region. By the end of the decade, most Arab oil regimes (with the exception of Saudi Arabia) had nationalized their reserves and producing facilities and taken formal control of pricing and rates of production. Huge sums of money accrued to the major oil exporters, encouraging mammoth infrastructural investment and equally massive labor migration to the Gulf states and Libya.
What the Carter Doctrine Means to Me
The following document is edited from the official transcript of a speech by Secretary of Defense Harold Brown to the Council on Foreign Relations in New York City on March 6, 1980.
The 1970s closed with the Soviet invasion of Afghanistan. The 1980s opened with the ensuing debate, both in this country and around the world, about how to respond to the invasion. At times confused, at times angry, at times profound, this debate is not yet resolved.
The Carter Doctrine and US Bases in the Middle East
On Thursday, July 10, a squadron of 12 brown and green camouflaged F-4E Phantom fighter-bombers landed at Cairo West Air Base after a non-stop 13-hour flight from Moody Air Base in Georgia. A week earlier five C-141s and 28 C-5s airlifted some 4 million pounds of equipment and supplies and more than 500 US Air Force personnel from Dover Air Base in Delaware to Cairo West; this was the first Middle East dry run of the Air Force’s “bare base” capability.
Iran’s Oil Workers
A shroud of silence seems to have enveloped Iran’s oil industry since last fall when the top oil official Hassan Nazih was dismissed under charges of treason, allegedly for failing to purge non-Islamic elements from the ranks of the National Iranian Oil Company (NIOC). Even production and export figures have become state secrets. Reports of difficulties in maintaining the officially sanctioned production level of 3.5 million barrels a day are almost impossible to confirm.
