Enjoy (which you won't unless you're a huge nerd, in which case I love you).
Oil and Foreign Policy
Among Earth’s natural resources, not one has caused as much contention and strife in the 20th and 21st century as oil. Petroleum—reverently referred to as “black gold”—is the fuel of the industrialized world. As such, it is often at the center of international economic, diplomatic, and military firestorms. Oil’s importance cannot be denied—but to what extent does it influence the actions of the United States government? Specifically, how does American reliance on petroleum imports affect U.S. foreign policy in the Middle East? As this paper will demonstrate, oil’s significance as a natural resource and as a trading commodity places it at the forefront of the U.S. agenda in the Middle East.
The United States government was always careful to ensure steady supplies of oil. Ever since the early 1920s, the American government had placed the acquisition of petroleum from foreign nations as a priority in foreign policy. The Mineral Leasing Act of 1920 established the “principle of reciprocity,” whereby foreign-owned corporations seeking to exploit domestic oil and minerals must provide equal benefits to American companies. Royal Dutch Shell, a prominent international corporation that exported petroleum from its vast colonial holdings, soon came into the fold as a partner of the United States (“Multinational Oil Corporations and U.S. Foreign Policy”).
Following in the footsteps of the great colonial powers at the time, such as Britain and the Netherlands, the U.S. began taking a more aggressive and interventionist route to establish petroleum holdings in the Middle East. Where Britain had exclusive rights to oil in Kuwait and Bahrein, the U.S. found its oil cow in Iraq, which was encouraged to have an “open door” policy that reduced restrictions on foreign development. Spearheaded by American oil industries, U.S. petroleum interests quickly spread to the nearby kingdom of Saudi Arabia, resulting in the creation of the oil company later known as Aramco (“Multinational Oil Corporations and U.S. Foreign Policy”).
The first example of America’s willingness to bend the rules when it came to protecting oil occurred during WWII. American oil industrialists in Saudi Arabia, afraid that the British would outbid them for Saudi oil, took advantage of oil shortage fears and convinced the Roosevelt administration to provide funds to Saudi Arabia under the Lend-Lease Act. This was in direct violation to the Act, which authorized funding only to “democratic allies,” and marked a paradigm shift in government perception of international corporations. At the insistence of the Joint Chiefs of Staff, who viewed overseas oil companies such as Aramco as vital to national security, President Roosevelt approved the creation of the Petroleum Reserves Corporation. The PRC’s first move was to establish government ownership of Aramco, an ambitious and unprecedented action. After its bid to buy out Aramco failed during negotiations, the PRC proposed the construction of a pipeline in the Persian Gulf, which was shelved after vehement opposition from the oil industry (“Multinational Oil Corporations and U.S. Foreign Policy”). The PRC’s failure to bring the oil industry under government control was a victory for the free market, but would lead to future troubles in the international hunt for oil.
After the war, an era of prosperity resulted in America’s transition into a consumer-driven economy. In the ‘50s and ‘60s, Americans began indulging in the form of capitalism as we know it today—a market dominated by consumer goods, often luxuries, and that demanded a continuous influx of raw material and supplies from overseas (Sabin 157). As expected, one of these resources was oil. Backed by high demands back home, Western oil companies based overseas were booming. Left to their own devices by lasses-faire, petroleum importers were gaining inordinate power and influence in the oil-rich lands of the Middle East. British Petroleum, a remnant of the might of the former British Empire, maintained an iron grip in the Iranian oil market. Dissatisfied by their unfair cut of the oil revenue, Iranians pushed for greater shares of the profit and were met with minor successes. However, when Dr. Muhammed Mossadeq, then Chairman of the Oil Commission of the Iranian Parliament, demanded even more control over Iranian oil, he was snubbed by the British government. In March of 1951, a Mossadeq-led parliament voted for the nationalization of Iranian oil industry, and the British were removed from the deal altogether.
Outraged by its ousting, British Petroleum led a boycott of the newly formed National Iranian Oil Company. With the backing of the British court, BP asserted that any purchase of formerly BP-owned oil constitutes as theft. Robbed of their most profitable export, Iran sank into a period of economic chaos. Turned away by the Western Hemisphere, the Iranian government saw the rise to prominence of the Iranian Communist Party, or Tudeh, which sought to broker a deal with the Soviet Union.
The resulting American intervention had tremendous repercussions for decades to come. Taking advantage of the American Cold War-mentality, the British convinced the Truman administration to oust Prime Minister Mossadeq. Subsequently, the CIA carried Operation Ajax, which resulted in a coup d’état that gave power to pro-Western Shah Mohammad Reza Pahlavi. The reinstated Shah quickly signed an agreement giving developmental rights and revenue to BP and other Western oil companies (“History of Iran: A short account of the 1953 Coup”). Despite his pro-Western sentiments, the Shah was brutally authoritarian, and his reign was characterized by corruption and political repression. In 1979, the Shah was overthrown, and a theocratic republic was instated in place of the monarchy. Shortly after the revolution, disgruntled Iranians stormed the U.S. embassy and captured 52 American diplomats. Even though the hostages were later released, the crisis, coupled with Iranian distrust of the U.S., destroyed American-Iranian diplomatic relationships (“Iran hostage crisis”).
To understand the American government’s attitude toward oil-related issues in the Middle East, one must consider the economic impacts an oil shortage would have on the United States. Besides a minor oil scare in WWII, the American public’s first experience with an oil crisis was in 1973, during the Yom Kippur War. Upset that the U.S. was aiding Israel, Arab oil-exporting nations formed the Organization of Arab Petroleum Exporting Countries (OAPEC), which consisted of the Arab members of the similar organization OPEC. Using oil as a political and economic weapon, the OAPEC launched an embargo against all nations giving assistance to Israel. This embargo came at a tough time for the U.S., which was already suffering from inflation and one of the worst stock market crashes in its history (Woodard). After the Iranian Revolution of 1979, oil prices jumped even further. Not only did oil costs hit unemployed Americans hard, the image of long lines caused by gas rationing was also embedded into the American consciousness as one of destitution and despair.
The economic woes of the ‘70s were cause for public discontent, which translated into Election Day troubles for the incumbent party. Among other issues, failures to successfully address the recessions led both Gerald Ford and Jimmy Carter to lose their second presidential bid. The oil crises on the ‘70s brought the issue of America’s dependence on Middle Eastern oil into light for the first time, and since then, politicians have been careful to prevent similar incidents from reoccurring. The stepping up of U.S. participation in Middle Eastern politics can thus be attributed to the oil paranoia. In his State of the Union Address on January 1980, President Jimmy Carter denounced the Soviet invasion of Afghanistan. One of his main concerns was Afghanistan’s rich oil supply and strategic position, the conquest of which would “[pose] a grave threat to the free movement of Middle East oil” (Carter). To prevent Afghanistan from falling into Soviet hands, the CIA was given authority to covertly aid the mujahideen insurgents in their fight against the communists. Most of the aid came in the form of money and weapons, which contributed to the eventual Soviet withdrawal in 1989.
Oil ignited another conflict in the Middle East in 1990. In the aftermath of the ‘70s oil crisis, non-OPEC nations had overcompensated for the previous shortage by producing surplus petroleum. The temporary glut in the international oil market led to a significant price drop. While the surplus came as a blessing to oil-consuming nations like the United States, oil exporters suffered from loss of revenue throughout the ‘80s. Iraq, which had just waged a costly eight-year war with Iran, blamed neighboring Kuwait for contributing to the surplus. Accusing Kuwait of “stealing” Iraqi oil as its casus belli, Saddam Hussein ordered the invasion of the smaller nation in August, 1990.
When the United States entered the fray, its chief concern, along with Kuwaiti liberation, was to protect nearby Saudi oil fields. Saddam had long been threatening Saudi Arabia with belligerent rhetoric, and would be able to consolidate 40 percent of the world’s oil reserves by conquering it (“U.S. Interests in the Gulf War”). In response, the U.S. launched Operation Desert Storm, one of the most efficient military campaigns in U.S. history, and managed to completely rout Saddam’s forces within seven months. The Gulf War also established oil-rich Kuwait as an U.S. ally.
When analyzing U.S. foreign policy in the Middle East, it is not too difficult to discern one of the most importance motives. Since petroleum became a daily necessity, the United States has built its foreign policy around the interests of the oil industry, and has taken steps to secure oil supplies with its significant diplomatic and military clout. The ongoing “War on Terror” and its subsequent occupation, planned and executed by the Bush administration, were accused by many of being a cover for oil acquisition, and have raised many questions about the sincerity of foreign involvement. Whether the U.S. was justified in its intervention of foreign affairs would be left up to history; as of now, all facts point to oil as a principal driving force behind American operations to bring “democracy” to the Middle East. As long as there is oil in the Persian and Arabian sands, the U.S. will remain an imposing presence in one of the most hostile and unpredictable regions in the world.