Taylor Moore

POLS 420
Dr. Al Sayyid
December 5, 2010

Petro-politics in the Middle East

The importance of oil in the global arena was noted in the early twentieth century with the
dominance of new technologies needed petro-based fueling. The Middle East, which hosts fifty-
five percent of the world’s oil reserves, would inevitably be dragged into drama of petro politics,
use this platform to display its importance in the international economy, and allow oil to become
one of the major factors shaping this region today. Initially, the constant supply of oil was not a
problem for world superpowers because they had gained access to oil reserves in the Middle East
by means of the mandate system and oil concessions in the period following World War II. It
wasn’t until oil countries in the Middle East recognized their influence that petroleum became a
major driving force in domestic politics within the oil countries, as well as opening the doors for
even further Western intervention. Not only has the rise of petro-politics affected politics in the
region, but the vast amounts of revenue being gained from petroleum has had economic, social,
and cultural impacts on the once seemingly “simple” Gulf people. This essay will briefly review
the history of oil and oil concessions in the Middle East, while also focusing on the importance
oil for oil producing countries and the prices they have paid for housing such a resource.

The first time oil was recognized as a commodity for exchange was during the Qajar dynasty
in Persia in the early 1900s. It was here that the first oil concession in the Middle East . was
granted to William Knox d’Arcy, an adventurous Australian entrepreneur, causing the well-
known d’Arcy concession to become the paradigm for later oil concessions in the region.
Specifically, this concession granted d’Arcy a “special and exclusive privilege to search for,
obtain, exploit, develop, render suitable for trade, carry away and sell natural gas, petroleum,
asphalt and ozokerite” anywhere within the Persian empire for sixty years. (154) In exchange,
the Shah received £2000 and 16% of future profits. The vast injustice of this of this arrangement
is apparent. It is obvious that the Shah of Persia and following monarchs in the Middle East
deemed the black liquid worthless, especially since at the time the equipment was scarcely
available to process and distribute it. We must also remember at this time, the world’s
dependence on oil was much less significant. Oil concessions, following the first in Persia, gave
rise to the Seven Sisters, the seven oil companies which formed the "Consortium for Iran" and
dominated the global petroleum industry from the mid-1940s to the 1970s. The group was made
up of Standard Oil of New Jersey, Standard Oil Company of New York (now ExxonMobil)
Standard Oil of California, Gulf Oilm Texaco (now Chevron), Royal Dutch Shell and Anglo-
Persian Oil Company (now BP).This relationship allowed for oil companies to maintain a
parasitic relationship with oil countries, giving them the advantage in all oil related politics and
agreements, and causing the masses to grow angry.
Oil soon become a highly contested issue among major global powers, causing them to
emulate the imperialistic tendencies of strategically ‘obtaining’ lands to procure the
monopolization of oil routes, such as the Suez Canal. The canal became a strategically important
conduit for the shipment of oil. After Egypt’s decision to nationalize the canal in 1956, Britian,
France and Israel attacked in what was known as the “First Oil War.” The most defining moment
in the history of oil in the Middle East was the oil embargo of 1973. In October 1973, the
members of Organization of Arab Petroleum Exporting Countries or the OAPEC proclaimed an
oil embargo in response to the U.S. decision to re-supply the Israeli military during the Yom
Kippur war; it lasted until March 1974. This oil embargo was a way for the Middle East to
finally flex its muscle and show its importance in world politics. Although Western countries
have worked to decrease their dependency on Middle Eastern oil, their attempts to prevent
another oil embargo are apparent in their closely knit interests in the Gulf countries. Today, even
after the nationalization of many Middle East oil fields, the West continues to manipulate the
domestic politics and economic policies of many oil countries to ensure their accessibility to oil
supplies.
The effects of oil production in the Middle East can be seen within the economy, society,
transforming culture, and domestic politics in the oil countries. These impacts are necessary to be
broken down for one to understand the complex impact oil has had on Middle Eastern countries.
In terms of economy, many Middle Eastern countries with indigenous oil reserves have
experienced vast structural changes since the discovery and production or oil began. For
example, Saudi Arabia was made up mainly of bedouins who made their living by grazing or
fishing. That all changed in 1938, when oil was found. Today, Saudia Arabia hosts a $613 billion
dollar GDP, and is not recognizable at all from the minimal country it once was. The gulf’s
massive oil wealth has allowed it to become a financial resource for many Middle Eastern
countries, where it was once dependent on countries such as Egypt, to send food aid before 1964.
There is, also, a lot of discussion among scholars about the presence of oil allowing for the
creation of rentier states, and the question of dependency. A rentier state is a state which derives
all or a substantial portion of its national revenues from the rent of indigenous resources to
external clients or, in the cases of other Middle Eastern countries, is dependent on foreign aid
from external clients. The Gulf States, especially Saudi Arabia, have always been dependent on
some form of income. It’s interesting how although the type of dependency tends to change, the
dependency still remains. There has also been an emergence of migrant labor in the Gulf, on
which many Gulf States are dependent, along with the states that benefit from the labor
remittances. The standards of living in all Gulf countries are top notch. The Gulf states have also
seen a rise in occupational movements, as migrant workers wish to set standards for their work
and are demanding their rights. Countries such as Kuwait and Qatar give astounding benefits to
citizens, such as free housing, free schooling, no taxes etc
There have also been extensive social and cultural impacts of oil in the Middle East. Human
development has increased greatly, especially in the Gulf states. With the emergence of a new
middle class, there is more than enough money to create suitable school systems and numerous
community resources to benefit society. The economic benefits of oil have also changed the
position of women within Gulf societies. While women may still not have the same rights as man
in some Gulf states, they have been given wider access to education and the work force due to
the growing economic development. It is a sad irony that human rights are being denied to Gulf
women, when they are living in the richest countries in the world. The prominence of oil has also
caused for a dominance of conservative values. Many oil countries are able to house political
Islamist movements, which tend to maintain gender inequality in the region. Moreover, domestic
and international politics have been greatly affected by oil in the Middle East. States with an
untapped flow of income that is not derived from taxation tend to be unaccountable for their
actions, as well as the population becoming unmotivated to participate within society and the
policy making process. More so, there is a great rick of intervention from world superpowers
who wish to dominate oil reserves for their personal benefit. The world has seen many wars over
oil, most recently the US-Iraq war that began in 2001 after the September 11 in New York.
The foreign policy of many Gulf states has been to try and appease Western powers and to
create similar interests so that countries like Saudi Arabia do not risk invasion like Iraq. It will be
interesting to see how the decline of oil in these countries begins to effect the region, and how
Western powers will adjust their interests in the Middle East.