Resource Wars: Week 2

April 8th, 2008

Focus on 20th Century

• Resource wars existed in the 20th century and quite severe
• Oil was a constant factor in the 20th century wars
• Some countries don’t go to war in the common sense, but are willing to apply soft power over oil issues
• British and American influence are hard to tell apart: the head and tail of the dog that often get reversed
• Several cases where US policy about the cold war and oil got mixed up

Saudi Arabia

• Continuous monarchy rule since 1920s.
• British did contribute to the ultimate cohesion and dominance of Saud family
• Discovery of oil took place before WW I
• Oil explorations started in 1937 and found Dahrain
• They hired outside people for top management
• Locals for the lowest level jobs who were not treated well, like African-Americans were treated in the South
• This created problems for the masses of Saudis (and Iran) who do not have good memories of American involvement
• To this day, we don’t seem be very cognizant of how unpopular we are with the common people
• Although we are still able to wheel and deal with the ruling class
• We extended our use of oil to such an extent during WWII that US government officials realized that they needed another source of oil, even though we hadn’t reached peak yet
• When FDR met with ibn Sahud in 1944 and struck the deal, this attached America to the ruling class
• Deal was that they would supply us oil and we would supply them with protection against (Russia, Bath extremism, Sunni, etc)
• This extends to Iraq and Sadaam Hussein who originally was complacent with us, but then turned. (More?)
• 1943 President of Venezula, Jimenez(?) established a 50/50 split between their oil companies and Exxon. The oil companies didn’t really lose anything because of tax benefits.
• In mid 50s when ibn Saud saw the deal with Venezula, he wanted the same and started Aramco – Arab American Oil Company and become 50% receiver of profits.
• The was partially due to the recognition of the problems of the state of Israel caused, also by the new alignment of states, like the blockage of the Suez canal.

Iran

• Mossadeq was a Nationalist from the upper class, very popular in Iran – almost Jeffersonian
• Iran had a constitutional monarch
• M wanted a 50/50 split but British didn’t think they were capable of running an oil company
• In 1950s, any country that declared itself neutral between the Soviet bloc and US was considered “red” to many in Midwest and some in East and West.
• CIA created out of Strategic Services after WWII in 1948 because we were without intelligence services
• Iran was the first CIA venture and began to track M in 1953
• US considered M would go over the Soviets.
• Right after WWII Soviets occupied N. Iran. They were probably more concerned about having communist bordering countries rather than oil. Iranians fought back and the US supported them and succeeded in pushing back the Soviets. So there were some justifiable concerns about Soviet influence, but not about M being sympathetic to the Soviets.
• Kermit Roosevelt, major Middle Eastern expert on Iran, was the Station Chief in Iran, decided to hire people to demonstrate to create chaos to demonstrate against M and spent $1M, and this brought down M
• M replaces by a General that supported Anglo-American
• This remains a sore point with Iranians to this day.
• We supported a monarch against a democracy. The Mossadeq government was elected by the people and we caused it to be overthrown and a monarch installed instead.
• Was it the US pursuing its interest in oil? Dubious because of our Saudi deal and British Iran deal. Probably due to the cold war.

Iraq

• Iraq didn’t have the cohesion of Iran (even though Iran didn’t have a very high cohesion either although they did have a common history)
• Iraq had a common Mesopotamia history, but not much else
• Qasim (Kassim) was in power from 1958 to 1969. His main concern was to unify the Iraqi state. He was ruthless and we didn’t support him.
• There was an attempted coup against him. One of the leaders was Saddam Hussein. Saddam didn’t have a lot of education but did have a muscular bravado that was appealing to others.
• Sadaam was part of a movement that came out of Syria called Baathists. They were secular, pro-Arab, but focused on the greatness of Iraq rather than on all Arabs. Was also the ruling party in Syria.
• Iraq has the 4th largest oil reserves
• CIA helped Sadaam overthrow Qasim in 1969 who ruled for 34 years.
• He immediately disengaged from US by engaging in oil barter trade with the Soviets.
• Saddam ruled with a heavy hand.

Iran with Shah

• Shah also engaged in heavy handed ruling
• Ayotolla Khomeini revolution dismantled government

OPEC

• Organization of Petroleum Exporting Countries
• In 50s, there was a glut of oil.
• Venezuela initiated OPEC to hold down supply and Saudi Arabia ran with it
• Iran, Iraq, Saudi Arabia, Kuwait, Venezuela, UAE
• Changed the game because oil companies had to seriously negotiate with these countries
• At first OPEC was more benevolent and not geared towards price fixing
• Prices started to go up in the 60s that benefited both the oil companies and the producing countries
• 1967 Arab Israeli war changed a lot. It causes instability in the region and caused Arab concern about the expansion of Israel into Arab country
• US was trying deal with Israel and maintain the agreement with Saudi Arabia
• In 1973 Saudi’s started to clamp down on shipments of oil to the west.
• This on top of the Vietnam war threw the US economy into a tailspin that took 10 years to get out of.
• Oil companies still didn’t mind the oil price increases
• In 1971 US based peak oil production and so became more dependent foreign oil imports. People started using more and the importance of oil became much more visible
• Once we stopped making money from oil export, we had to export something and so we started selling armaments to Saudis, Iran, and other Middle East countries. After Yom Kippur war we gave both Egypt and Israel more arms.

Iraq War Problems

• Barry always thought it was wrong to go to war in Iraq
• Dessert communities form villages and fight over water and other resources. This means that fighting will continue even with a stabilizing force
• We went into Iraq because some (stupid) people thought that the oil would flow right away, within weeks or months. Others thought it would take 2 years.
• The fact is that still after 5 years oil flow still hasn’t opened up. And a lot of the oil that flows goes into the black market.

Iran Iraq War

• Started when Saddam who had been in power for 10 years so the undressing of the Iranian state and was concerned about the exposure of Basra, border issues and who would be the dominant power.
• Probably not about oil
• Iraq went 100s of miles into Iran but couldn’t stretch their supply lines. Then Iran pushed Iraq back.
• It stretched the military of both countries but Iraq came out slightly ahead because US supported Saddam.

Resources

• “All The Shah’s Men” book about Mossadeq overthrow