Oil and Political Economy in Middle East

Introduction

Oil plays an important role in shaping the political economy of the Middle East either domestically or on the international stage. According to Tetreault (1), oil is the most valuable resource in the Middle East, yet it adversely dictates the region’s economic status due to the nature of its huge income values. However, she points out that the economic income value, associated with oil production in the Middle East, especially in the Arab countries, have turned out from being a blessing to a curse, because it continues to affect their political stability and economic status. She notes that leaders of the Arab countries have used the oil wealth in exercising their power intrigues that, in turn, has built political corruption in the Arab countries, thereby distorting their national economies by hindering development projects and strategies.

In contrary to countries, which mainly depend on farming and enable foreigners to own large territories and dictate their economic wellbeing, oil production in the Middle East, especially in the Arab nations, is localized. Tetreault (1) points out that the localization of oil production in Arab nations has been the main economic dependency that has shuttered the interest of the local population, even in cases where foreigners invade these regions for their selfish interests. Additionally, she notes that the Arab populations are subjected to political economic instability when their leaders envisage their selfish interest by excessively using oil money to influence their political powers in undermining the Arab population either through dictatorship or oppression. This, in turn, results in political disconnect between the Arab States and their corresponding societies. Tetreault points out that oil production and its associated high income values have adversely affected the absolute transparency and integrity of political participation of the Arab nations, due to its effects on the political economy of these nations.

The paper, through highlighting oil and political economy, in the Middle East, discusses the relationship between oil and political economy in the Arab Nations. It studies the primary role displayed by oil production in these countries in affecting the political economy of the Middle East.

Relationship between Oil and Political Economy in Arab Nations

According to Tetreault (6), the political economy of Arab nations is dependent on oil production and vice versa. She points out that, while the Arab leaders use oil revenue and income to influence their political economy, the same happens to oil production, as it is dependent on the political economy of the Arab nations. She notes that oil and political economy of Arab nations are intertwined, and any effect on one of them results to counter effect on the other. In addition, she points out that the ability of Arab nations to produce and export oil is squarely dependent on their political economy, either on the local level or in the international trading markets.

For instance, Henry and Springborg (2) point out that before the Cold War, which began in 1946 and ended in 1989, Iran, one of the Arab countries, had a stable political economy. This enabled it to invest in oil reserve, thereby producing more oil, from which it used to receive income and revenue. This adequately helped in improving the economic status of the citizens in Iran, who were by then three times more numerous as compared to the Iraq population. They note that the political economic stability of Iran resulted into the increased cash flow, at that time. It was categorized by effectiveness in producing and exporting its oil resources. At one moment, they point out that, by then, Iran leader Shah was encouraged by the country’s increased cash flow that was based on its stable political economic state. He even dreamt of creating a world’s third super power, a strong military state. However, such illusive ideologies were refuted when the Cold War broke, thereby, creating political economic instability between the Arab countries and Israel, which in turn affected the oil production in some Arab countries, as Iran (Henry, and Springborg 2).

Henry and Springborg (2) point out that the Cold War was characterized by the Arab leaders’ selfish interests of using their political powers excessively, which had been caused by increased incomes from oil trading in extending their territorial units. They note that while oil trading had improved the Arab country’s economic status, it created a political economic imbalance, which resulted into war with other countries, like Israel, thereby affecting both their political economy and oil production. For instance, the Cold War led to attack the Arab’s oil installation, including their oil outlets, such as oil pipelines of Iraq Petroleum Company (Tetreault, 6). She notes that this did not only affect oil production and trading in Arab nations, but it also created political economic instability, as most of the Arab populations were losing trust in the credibility and legitimacy of political leaders in enhancing their economic stability.

On the other hand, the relationship between the oil and political economy in the Arab countries can be best described by the role of oil in enhancing states’ interaction. According to Carother and Ottaway (188), the oil production and trading by the Arab countries ensures active participation of these countries in the international market, thereby initiating their international interaction with other states. However, they point out that political economic instability that might rise in Arab countries will not only affect the production and trading of their oil resources in the international market, but also will affect their interaction with other countries. They note that the intervention by some western countries in restoring democracy of Arab countries in Middle East is essential in creating a stable political economy. This, in turn, will improve oil production and trading in the international market, thereby enhancing interaction of Arab countries with the rest of the world.

Carother and Ottaway (188) point out that Iraqi’s former President, Saddam Hussein, had alleviated his political powers, as a result of massive income collection from the country’s oil exportation. He authorized the Iraqi armies to venture into war with Iran in order to conquer additional oil reserves. He targeted Kuwait in the Middle East, which in turn affected its international interaction with other countries. They point out that since the war primarily targeted oil reserves, especially oil pipeline outlets of the Kuwait Oil Company, this resulted into the U.S. and the U.N. intervention in not only restoring oil production and trading that had been affected by the war, but also creating political economic stability in Iraq. It was supposed to enhance its international interaction through exporting oil into international markets.

According to Carother and Ottaway (189), both the war with the United States and economic sanctions by the United Nations against Iraq during the reign of Saddam Hussein, aimed not only at fighting terrorism activity in the country. It was also intended to democratize the state that had suffered from oppression and dictatorship, which had adversely affected its international ties with other countries. They note that oil production and trading in Iraq, for instance, were essential for initiating its international interaction, which has not only improved its economic status, but also improved its international political economic image. Even though, the U.S. and the U.N. intervention has led to defeat and execution of Saddam Hussein, the democratization processes in Arab countries, especially in Iraq, is essential in creating effective political economy that will enhance transparency and accountability in oil production and trading in improving their economic status, thereby initiating international interaction (Carother, and Ottaway 189).

The Impact of Oil on Political Economy on the Middle East

According to Henry and Springborg (3), the effect of globalization, which is mainly characterized by the continuous rise of consumption of goods and services have resulted into more energy being used globally. They note that this has not only resulted into production of more oil resources by the Middle East countries, especially by the Arab states, but has rather resulted in foreigners’ intervention in determining the political economy of many Middle East countries. They assert that almost all developed countries, such as the United States of America, primarily depend on oil energy for their industrial processes. Therefore, when being in confrontation with high energy consumptions due to globalization, these countries will use their powers excessively to influence oil producing states, in order to exploit their self interest. This is what has been the case within many Arab countries.

Henry and Springborg (3) point out that the effect of globalization has made most of the western countries use their powerful military force in initiating the war that, in turn, enabled them to dictate the political economy of Middle East countries. This was especially so in the oil producing Arab countries, thereby, getting equal share of oil resources. They note that, as a rule, these western countries take advantage of any political instability in the Arab countries. Such situation of instability usually undermines the economic status of the Arab population, thus, enabling the western countries to initiate war intervention measures that at face value are intended to democratize the countries and establish stable political economy. However, in fact, such interventions are meant to benefit these western countries on oil resources. They point out that the competition for oil resources in the Middle East countries has dictated their political economic policies.

According to Carother and Ottaway (189), the U.S. military intervention in Iraq to disseat Saddam Hussein’s dictatorial reign and fighting terrorism was far vaguer from creating democratized Iraq state with stable political economic situation. They argue that it rather illustrates the America’s footprints establishment on the Iraq’s oil reserve that has enabled it to address the rising energy consumption, in America, for a long time. They point out that, during the reign of Saddam Hussein in Iraq, the rich oil reserve of the country was influenced by political economic instability that was characterized by dictatorial practices and unaccountability that was created by the government authorities. The government failed to address the general population’s demands, which in turn resulted in poverty and more deaths. However, they noted that the mode of political and economic intervention in Iraq in the pretence of enhancing political economy was primarily vested on the American’s interest in the Iraq’s oil. According to them, the America’s interest in Iraq’s oil has led to the overthrow of Saddam Hussein’s regime and creation of democratized Iraqi state, which is under the influence of political economic stability.

Additionally, Henry and Springborg (7) note that, while the foreign countries offer assistance in alleviating most of the technical issues, affecting the Middle East countries, especially the Arab nations; they initiate both cultural and commercial strategies that would enable them to penetrate the political and economic diversity of these Arab countries, thereby, exploiting oil reserves. For instance, the United States deployed most of its technical expertise in Saudi Arabia, so as to assist in building the state infrastructures in enhancing its economy. This enabled the American government to establish economic strategies that enabled it to gain control over Saudi Arabia’s oil manufacturing company, known as “The Aramco” (Henry and Springborg, 7). They note that the U.S. involvement in Saudi Arabia, especially through the Aramco Company, ensured political economic stability in the country. The scholars argue that the American government was convinced, that with political stability in the Arab Country, they would be able to continue benefiting from the oil resources. They observe that the U.S. government, through its established local structures, monitored the Saudi Arabia’s economic rivals, whom they though to constitute a menace to the Arab country’s political stability, which in turn would affect its oil production and trading.

On the other hand, oil organization continues to play an important role in determining the nature of political economy of the Middle East counties. According to Tetreault (10), the Organization of the Petroleum Exporting Countries (OPEC) not only helps in exportation and regulation of oil prices by Middle East oil producing countries, but it has also been used in pursuing political goals in the region. She points out that most of the members of the OPEC have adversely disagreed on oil prices, based on their political and economic interests. For instance, she asserts that the evident conflict with Iran that is characterized by religious, ethnic, and even boundary disputes is primarily castigated by the Iran’s demand for increased oil prices.

Tetreault (10) notes that most of the rich and populated Middle East countries, such as the Republic of Iran, were campaigning for increased oil prices. Their leaders had felt that this would increase their national income, thereby, creating political and economic stability over other less oil exporting nations. She points out that these Arab countries saw the potential of rising oil prices as a political incentive that would enable them to attack western countries, such as the United States, whom they felt to oppress their liberties. For instance, in 1979, the Iranian revolution under Ayatollah Khomeini imposed an increased oil prices that were not only emulated by other OPEC members, but also determined the foreign currency exchange rates of the region, which was against the United States dollar preference.

Tetreault (10) notes that by this, the Iran revolutionary did not only intend to punish the United States economically, it also established a political influence in the Middle East region. This step enabled it to form a solitary governing unit that determined the political economic stability of the Middle East region. In addition, she points out that Iran was using oil price increase as a slogan that would enable it to transfer its revolutionary movements and ideas to other Islamic countries in the Middle East, where it would dictate their political economic status.

Conclusion

The paper, through addressing oil and political economy in Middle East, has noted that these two phenomena operate mutually, and the change of one equally influences the other one. It has pointed out that oil is an essential political and economic determinant for most Middle East countries, especially the Arab countries, and any process that hinders its production and exportation in Arab countries virtually affects the political economic status of these Middle East countries. The paper illustrated the need for political leaders in Arab countries to exercise their powers effectively and avoid any kind of interventions that would undermine the production and trading of the oil resources. This, in turn, would enhance these countries’ political economic stability. Moreover, it has pointed out that there is a need for leaders to engage in effective governing strategies that will not only boost their countries economic status through resource utilization, but also enhance international relation between their countries and other states.

On the other hand, the paper has illustrated the need to restrain economic and political intervention by the developed countries so as to enhance oil production and exportation in the Middle East. It has noted that the rich oil producing and exporting to Middle East countries should not use their oil exportation capacity as a tool to undermine the trading ability of other countries, as it affects these low exporting states economically and politically.