Book Review: “Oil Money” |

“Oil Money: Middle Eastern Petrodollars and the Transformation of the American Empire, 1967-1988” by David M. Wight. Cornell. 347 pages. $ 49.95. Review provided by the Washington Post.

The history of modern international relations is inextricably linked with that of oil, the main post-war energy resource. Oil has been at the center of multiple struggles – for its control, its price, its flows, its profits – and has made a decisive contribution to global integration over the past century. For its part, the United States has gradually taken center stage in this integration, with the contemporary world order being in many ways centered and dominated by the United States. Washington has thus developed a specific role in the treatment of the oil question, mainly by ensuring unhindered access to it, and in relations with producing countries, in particular some of the countries extraordinarily endowed with oil in the Middle East. and North Africa (MENA).

In this beautiful book, “Oil Money: Middle East Petrodollars and the Transformation of US Empire, 1967-1988,” David M. Wight discusses the key breakthrough of the late 1960s and 1970s when, he writes, “The interdependence of petrodollars” replaced the previous very unequal relationship between the United States and the oil-producing countries. While the latter relied on cheap and abundant oil to fuel the economic growth of modern industrial societies, which in return provided aid and protection to oil-producing countries, this new form of interdependence was based on high oil prices, skyrocketing incomes and an immense pool of liquidity – the “petrodollars” – to be injected into increasingly deregulated financial markets.

During this period, Wight shows, the terms of trade between the United States and relevant actors in the MENA region (primarily Iran and Saudi Arabia) have changed dramatically. Instead of supplying cheap oil, oil-producing countries now offered plentiful petrodollars. Washington has had to accept higher oil prices and more unruly partners, willing to use oil as a political and diplomatic weapon, but eager to preserve American protection and obtain high-tech weapons. In return, the United States has preserved its hegemony, seized profitable opportunities to export its goods and services to these immensely wealthy but still underdeveloped partners and, more importantly, found a seemingly limitless source of funding for its banks. , their financial companies and their public debt. In the early 1980s, for example, the Saudi share of US Treasury securities held abroad approached $ 40 billion, or nearly 30% of the total, and Riyadh was instrumental in financing US deficits through to its $ 20 billion petrodollar deposits in the United States.

Iran and Saudi Arabia used their wealth to purchase increasingly sophisticated weapon systems primarily, but not exclusively, from the United States (from fiscal year 1973 to 1979, U.S. military deliveries totaled 10 billion dollars to Iran and 4 billion dollars to Saudi Arabia, 31% and 13%, respectively, of the world total, writes Wight). They have joined the bandwagon of financial globalization, bringing in their petrodollars to promote and accelerate it. They have bought durable goods and services, with many US engineering and construction companies profiting from the windfall of the grandiose – and sometimes unrealistic – development plans of Riyadh and Tehran. Finally, they were charged with a specific geopolitical function that a prostrate post-Vietnamese America was too keen to outsource: to contribute to the containment of the Soviet Union and its allies in North Africa and the Middle East. .

The interdependence of petrodollars was both a driver and a key product of post-1960s US-led global integration: a defining feature of contemporary globalized capitalism. However, many contradictions and short circuits ensued. The United States transferred sophisticated and expensive weapons to countries that were fiercely hostile to Israel, which had become a special, if not unique, ally of Washington. To compensate for this and counter growing criticism from many American supporters of Israel, various American administrations had to significantly expand military aid to Tel Aviv, thus contributing to a regional arms race that was in danger of spiraling out of control. In line with its growing activism on foreign policy issues, Congress has often questioned the very foundations of petrodollar interdependence, denouncing the authoritarian character of partners like Iran and Saudi Arabia, the threat that ‘they stood up for Israel’s security and their violations of basic human rights. .

More importantly, the United States has come to hold accountable countries whose fundamental policies could take a dramatic turn in the event of regime change. Spurred on by the shah’s harsh political repression and a growing anti-Americanism that the interdependence of petrodollars helped to worsen, Iran experienced the most extreme regime change with the 1979 revolution and the birth of an Islamic republic. radically opposed to the United States and its allies. The Iranian revolution shocked the world and shook the very foundations of the interdependence of petrodollars. Despite the predictions, it did not come to an end – on the contrary, it reinforced some of its basic premises, making the relationship between the United States and Saudi Arabia even more fundamental. It has also exacerbated its contradictions, with the United States increasingly involved in supporting, defending and arming authoritarian partners such as Saudi Arabia, and petrodollars funding a range of problematic foreign policies – from l Iran to anti-Soviet Afghan resistance – which would often backfire in the years that followed.

“Oil Money” offers a rich, in-depth and sophisticated description of how the interdependence of petrodollars has shaped and transformed modern international relations, global capitalism and American hegemony. The narrative often overlooks the role and agency of Washington’s European partners, who have played their own important role in the story. But the book admirably blends the many facets of the post-1960s petrodollar universe, from geopolitics to political economy, from diplomacy to culture. In doing so, it provides us with a fundamental introduction to one of the driving forces of today’s world and its many contradictions.

– Review by Mario Del Pero, professor of international history at Sciences Po in Paris.

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