🧆History of the Middle East – 1800 to Present Unit 8 – Oil and Politics in the Modern Middle East

Key Historical Context

• Middle East home to vast oil reserves discovered in early 20th century
• Prior to oil discoveries, region primarily agricultural and nomadic societies
• Ottoman Empire controlled much of Middle East until its dissolution after World War I
  • Allied powers divided former Ottoman territories into mandates and spheres of influence
  • British and French mandates in Iraq, Palestine, Transjordan, Syria, and Lebanon
• Discovery of oil coincided with rise of automobile industry and increasing global demand for petroleum
• Oil became a strategic resource, attracting foreign investment and political interest

Major Oil Discoveries

• First major oil discovery in Middle East occurred in Iran (Persia) in 1908
  • British businessman William Knox D'Arcy obtained concession to explore for oil
  • Discovery led to formation of Anglo-Persian Oil Company (later British Petroleum)
• Iraq's Kirkuk oil field discovered in 1927, becoming a major source of oil production
• Saudi Arabia's massive Ghawar oil field discovered in 1938 by American geologists
  • Ghawar remains the largest conventional oil field in the world
• Kuwait's Burgan oil field discovered in 1938, becoming a significant contributor to global oil supply
• Smaller but significant discoveries made in other Middle Eastern countries (Qatar, UAE, Oman) throughout mid-20th century

Rise of Oil-Based Economies

• Middle Eastern countries with oil reserves transitioned from agricultural to oil-based economies
• Governments nationalized oil industries, creating state-owned companies (Saudi Aramco, National Iranian Oil Company)
• Oil revenues used to fund infrastructure projects, social welfare programs, and modernization efforts
  • Examples include roads, hospitals, schools, and desalination plants
• Rentier state model emerged, where governments rely on oil revenues rather than taxes
  • This model can lead to reduced accountability and democratic representation
• Some countries (UAE, Qatar) used oil wealth to diversify economies and invest in tourism, finance, and real estate

Political Power Shifts

• Control over oil resources became a source of political power and influence
• Western oil companies initially dominated Middle Eastern oil industry through concessions and partnerships
  • Examples include Anglo-Persian Oil Company in Iran and Arabian American Oil Company (Aramco) in Saudi Arabia
• Governments gradually renegotiated contracts and nationalized oil industries, asserting greater control
• Organization of the Petroleum Exporting Countries (OPEC) formed in 1960 to coordinate oil policies and prices
  • OPEC members include Saudi Arabia, Iran, Iraq, Kuwait, and UAE, among others
• Oil wealth allowed some Middle Eastern countries to exert regional and global influence
  • Saudi Arabia emerged as a key player in Arab and Islamic world
  • Iran's oil revenues supported its ambitions as a regional power

International Involvement

• Western powers, particularly the United States and United Kingdom, have long been involved in Middle Eastern oil politics
• U.S. foreign policy in the region has been shaped by desire to secure access to oil and maintain stability
  • Examples include support for Saudi Arabia and other Gulf states, as well as interventions in Iran and Iraq
• Soviet Union also sought influence in the region during Cold War, supporting left-leaning governments and movements
• Arab-Israeli conflict has been influenced by oil politics, with some Arab states using oil as a weapon
  • 1973 oil embargo imposed by Arab states in response to U.S. support for Israel during Yom Kippur War
• China and other emerging economies have become increasingly involved in Middle Eastern oil trade and investment

Conflicts and Crises

• Control over oil resources has been a factor in numerous conflicts and crises in the Middle East
• Iran-Iraq War (1980-1988) was partly driven by disputes over oil-rich Shatt al-Arab waterway
  • Both countries targeted each other's oil infrastructure during the conflict
• Gulf War (1990-1991) began with Iraq's invasion of Kuwait, largely motivated by oil disputes
  • U.S.-led coalition intervened to protect Saudi Arabia and liberate Kuwait
• 2003 U.S. invasion of Iraq was partly justified by allegations of weapons of mass destruction
  • Critics argue that securing oil supplies was a key motivator for the intervention
• Attacks on oil infrastructure by non-state actors (terrorists, insurgents) have disrupted production and exports
  • Examples include attacks on pipelines in Iraq and Saudi Arabia by Al-Qaeda and ISIS

Economic and Social Impacts

• Oil wealth has transformed economies and societies of Middle Eastern countries
• Oil revenues have funded development projects, education, healthcare, and social welfare programs
  • Examples include free healthcare and education in some Gulf states
• However, oil-dependent economies are vulnerable to price fluctuations and boom-bust cycles
  • Economic downturns can lead to social unrest and political instability
• Uneven distribution of oil wealth has contributed to income inequality and regional disparities
  • Examples include the contrast between wealthy Gulf states and poorer countries like Yemen
• Rapid modernization and urbanization have challenged traditional social structures and values
  • Influx of foreign workers in Gulf states has created demographic imbalances and social tensions

Current Issues and Future Outlook

• Climate change concerns and the global transition to renewable energy pose challenges for oil-dependent Middle Eastern economies
• Countries are seeking to diversify their economies and reduce reliance on oil revenues
  • Examples include Saudi Arabia's Vision 2030 plan and UAE's focus on tourism and technology
• Geopolitical tensions and regional conflicts continue to impact oil production and trade
  • Examples include ongoing conflicts in Yemen, Syria, and Iraq, as well as tensions between Iran and Gulf states
• The U.S. shale oil boom has reduced American dependence on Middle Eastern oil, changing the dynamics of the region
• The COVID-19 pandemic has disrupted global oil demand and prices, forcing Middle Eastern producers to adapt
  • OPEC+ (OPEC and other producers like Russia) have coordinated production cuts to stabilize prices
• The future of oil in the Middle East will depend on global energy trends, technological advancements, and geopolitical developments