author/s: book title, edition number – edit on master slide oil and political economy in the...

Author/s: Book title, edition number – edit on master slide

Oil and Political Economy in the International Relations of the Middle East – Week 7


Iraq


Short History of ME Oil Politics

25th May, 1908 Oil Discovered in Iran

Oil was discovered in Persia by the Anglo-Persian oil company.Discovery of oil in 1908 in Iran was a turning point in the future of the Middle East.

11th Nov, 1918

WWI Ends and the Middle East Becomes the World's Supplier

The US decided to enter the oil game in the Middle East. The British government allowed the United States to begin drilling in Iraq and other countries near the Persian Gulf

1918 The Ottoman Empire is Defeated

Britain and France. The Middle East was split between Britain and France. Britain gained control of the resources in the Middle East.


• A consortium of 7 companies ( known as 7 sisters),

5 of which are American, is given financial interst in

Iraq Petroleum Company, and the companies agree

to not indepedently develop oil in an area that spans

form Turkey to Iraq and Saudi Arabia.

• Its ‘self-denial clause’ allows seven companies to

control the bulk of Mideast oil production by the early

1930s.

The Redline Agreement (1928)


The Red Line Agreement (1928) -2


Seven Sisters


Developing US-Saudi Arabia Relations (1943-45)

• In 1938, SA is found vast quatities of oil.

• In 1943, with concerns growing about diminishing US oil production capacity, President Roosevelt decleares Saudi Oil vital to US security and provides financial support.

• A few years later, the world’s biggest oil fields is found in SA, and it quickly becomes the world’s largest exporter of oil – though not a significant US supplier for several decades.


President Roosevelt and King Abdul Aziz Ibn Saud ( Feb.1945)


• In August 1953, the Iranian military, with the help of

British/US intelligence agencies, overthrows Iranian

Prime Minister Mohammed Mossadeq – who

nationalized the country’s oil industry.

• In October 1954, the Iranian government led by the

Shah agrees to a consortium of mainly US companies

to manage Iran’s oil industy.

US- Iran Oil Consortium (1954)


• In July 1956, Egypt nationalizes the Suez Canal, which has been controlled by Britain and France.

• In a coordinated attack with Israel temporarly seize the canal in October.

• Half of the canal’s traffic is petroleum, and the ensuring crisis from its closure threatens Middle East oil shipments, which supply about 800,000 barrels a day to Europe.

• Eisenhower compels a withdrawal to avoid confrontation with the SU.

The Suez Canal Crisis (1956-7)

1st Jan, 1945 The Need for Oil Increases

After WWII, the need for oil .Until then the Middle East was only producing about 5% of the world’s oil. American companies going into the oil industry in the Middle East made the industry what it is today.

10th Sep, 1960

Organization of the Petroleum Exporting Countries (OPEC) is formed

In 1960, OPEC was created. These countries were moving toward nationalism in the oil industry.

10th Sep, 1960 OPEC is Formed: Continued

OPEC was to protect the oil resources and how the country gained revenue from them with foreign companies having so much control. OPEC is still a monumental part of regulating oil and making sure it is fair for all those involved today.


1st OPEC Conference, Baghdad, September 10–14, 1960


• On June 6,1967,Israel enters into an armed conflict with Eqypt,Syria,and Jordan,known as the Six Day War.

• In return, Arab oil ministers call for an embargo on countries friendly to Israel.

• US production surges and largely offsets the teporary loss of Mideast oil globally.

• By September, the embargo is lifted.

First Arab Oil Embargo


• On October 6, Syria and Egypt attack Israel.

• On October 19,the Nixon administration announces military aid package to Israel.

• In return, Arab states suspends oil exports to Israeli allies, reducing traded oil supplies by 14% internationally and skyrocketing oil prices.

Oil Crisis (October 1973)


• In October 1978, thousands of oil workers go on strike in Iran, as part of a cycle of unrest protesting the Shah.

• Doping in Iranian oil output, 5% loss in global production.

• As a response to the hostage crisis, Pr.Carter ordered severing diplomatic relations and embargoing Iranian oil imports.

• Between January 1979-Dec. 1979,global oil prices more than double.

Iranian Revolution (1978-79)


Carter Doctrine (1980)

“ An attempt by any outside force to gain control

of the Persian Gulf region will be regarded as

an assault on the vital interests of the

United States of America, and such an

assault will be repelled by any means

necessary, including military force ”


• Continuing attacks on both Iraqi and Iranian

oil facilities remove 4 million barrels a day in

oil production from global production.

• Regan’s national security directive in 1983 to

increase the US military presence in the

Persian Gulf to protect the oil facilities and

shipments to allies.

Iran-Iraq War (1980-88)


• Iraq invades Kuwait on August 2,1990, following

a dispute over the Rumaila oil field on the

border.

• In response, Bush says Iraq’s aggression poses

an economic threat to the US ,declares the

‘sovereign independence’ of SA a vital interest’

and deploys troops to the country.

Iraq’s Invasion of Kuwait (1990-1)


• In February 2011,Libya becmoes the first major oil-producing nation ( 2% global oil output) to join Arab uprisings.

• Though the country does not supply oil to the US, concerns grow that the situation in Libya and potentila unrest in other oil-producing nation could lead to a new global oil crisis.

• In a March 30 speech, Obama says: ‘ We will keep on being a victim to shifts in the oil market we get serious about a long-term policy for secure, affordable energy.’

Libya Rocks Oil Markets


• Strategic interest in oil since early 20th century, e.g.

British policy in the Gulf.

• Fundamental influence in shaping boundaries and

independent existence of many states in the region.

• Instrumental in consolidation by favouring

aggregation around the oil sector.

• Oil is a supporting cause to violence, but not a

primary one.

Oil and the Consolidation of the State System


• Impact of oil on relations between countries of the region as

well as relations with the rest of the world.

• British, and later American, attitudes towards the Middle East

strongly influenced by oil.

• Oil as a tool, rather than an objective: sanctions against

Libya, Iraq, Iran make access more difficult in order to

pursue political goals.

• For producers, oil is not a prominent issue in shaping foreign

policy , but their ‘ regime security’ is .

Oil and the International Relations of the Middle East


• Oil rents (i.e.petrodollars) are paid directly to the state from abroad, which in turn supports society by allocating this rent.

• Production (taxes coming from society) vs Allocation.

• Not all Arab states are rentier. • Implications of rentierism for state: no need to seek

legitimacy through democratic representation, and autonomy in policies.

• Challenge of establishing representative democracy in a rentier state prospects for Arab Spring?

Oil and Domestic Politics: The Rentier State Paradigm


• Dialectic between oil-poor and oil-rich states in the region.

• Authoritarian rentier states do not need a “national myth”.

• Oil-poor state claims to share of rent. • 1970s rent boom led to period of international

redistribution.• Balance of power has shifted to the newer, oil

rich states such as the countries of the GCC

Oil and Inter-Arab Relations


• Being an oil producer seems to help against

uprisings.

• Arab Spring’s challenge to Gulf countries:

divided responses.

• Outcome of ‘revolutions’ will determine impact:

pressure for democracy in the Gulf, or

business as usual?

Regional/International Environments and Political Order


• Middle East plays a central role in international

oil.

• Debate over whether oil is a political commodity.

• Apart from rents, control of oil has not brought

special political or military benefits.

• Polarisation between oil-haves and oil-have-nots

Conclusion

author/s: book title, edition number – edit on master slide oil and political economy in the...

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oil production

oil exports

major oil

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global oil output

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iranian oil facilities