Oil and Political Authoritarianism : A Match Made in Heaven?

“Why have oil and political authoritarianism so often gone hand in hand in Middle Eastern states since World War II ?”


The discovery of oil precipitated massively changing times for the Middle East : oil was the resource that transformed the Arabian peninsula from an isolated and impoverished preserve of the British Empire to an area upon which the world economy had come to depend. The oil wealth was used on the one hand to generate huge material and social changes in the producing states of the Middle East (Iran, Iraq, UAE, Kuwait, Saudi Arabia), and on the other hand to prevent changes in the existing political order - thus presenting a seemingly contradictory pattern of modernisation and conservatism, of rapid development coupled with political restrictions and the preservation of monarchical rule. By the latter stages of the 20th Century, as the Cold War drew to its finale and independent democratic states began to spring up - the Middle East, to a large extent, remained a bastion of authoritarianism : based either upon religion, royalty or a compromise of both. Simply put, therefore, oil presented a fantastic opportunity for the leaders of Middle Eastern states to enrich themselves and their nations, whilst also keeping a firm grip on power : popular resistance was often silenced through generous welfare systems and high salaries. However, there remains a further element to the question : that of the political authoritarianism exercised not only by the Middle Eastern states, but by the great powers of Europe, the Soviet Union before its collapse and the United States. To these powers, the interests of oil combined with the pressures and strains of the Cold War to vitally affect foreign policy in the Middle East. Therefore the duality between oil and political authoritarianism is twofold : firstly represented in the entrenched and monarchical regimes within the Middle East, characterised by lack of political opposition and mass enfranchisement, and secondly the actions of other powers in the Middle East to protect their petroleum interests : witness the Suez Crisis in 1956, or the U.S led invasion of Iraq in 1990 and both represent armed intervention to ensure the survival of crucial oil imports.

The period since World War II, with regard to oil and international affairs, can be marked by two general events. Firstly, the Cold War : with its polarising effect upon Europe, spread to the Middle East and involved the producing states of the region in a battle between accepting financial aid, through the Eisenhower Doctrine, from the U.S, going it alone, or even making ties with the Soviets. We can identify instances of all three, Jordan and Kuwait financing their lavish domestic spending from oil revenues and a heavy influx of financial assistance from the U.S, Egypt in the period of Arab-socialism and Nasser defying the great powers by nationalising the Suez Canal and Mossadiq’s failed attempt to nationalise the Iranian oil industry in the 1950’s. Secondly, as important as the geopolitics of the Cold War, was the 1973 oil crisis precipitated by the Arab-Israeli War : which saw the ball shift dramatically to the court of the producer states in setting prices and limitations to the importers. However, the relationship between oil and political authoritarianism can perhaps be traced to the primary discovery of oil in Iran and subsequent development of the Anglo-Iranian Oil Company (AIOC). Reza Shah, after surviving Mossadiq’s nationalisation era, consolidated an authoritarian monarchy in which political activity was severely restricted : and fostered generally good relations with the Western powers. The shah was not without social reformist ambitions, but was totally unwilling to tolerate challenges to his power - establishing a system of government that rested on the narrow base of royal authority supported by the army and secret police. This authoritarianism was supported and financed by oil revenues and the backing of the Western importers. The hatred towards this relationship was no more vociferous in the 1950’s than from the National Front’s leader Mossadiq, who called for the nationalisation of the Iranian oil industry and an end to the British stock-dominated AIOC’s financial hegemony. The popular demands resulted in the nationalisation of the oil industry in 1951, followed by a US and Britain sponsored boycott of Iranian oil which plunged the nation into a financial crisis. Here we see the first example of “economic warfare” being waged by the Western importers in the face of a popular nationalisation movement : a method that was later to be used against them in the Arab boycott of 1973. Thus, economic prosperity in Iran was connected with monarchical authoritarianism and a positive relationship with the oil importers. The lengths to which the importers would go to in order to secure their oil interests were clearly highlighted by the assistance of CIA agents in the coup which successfully overthrew Mossadiq. The NF’s leader had attempted to attack the entrenched institutions of the Shah’s Iran : to replace his personal rule with the rule of constitutional law and to redistribute the wealth and land of the elite. The threat posed by this, not only to the leaders of Iran, but also to those benefiting economically from Iran’s oil were thus considerable enough to assist in a military-backed coup against a popular leader. Thus authoritarianism combined from two angles : the Iranian elite and international powers, both connected in political will by their prosperity from oil revenues.

Mossadiq’s overthrow thus marked the triumph of the forces to whom he was opposed, the 1953 coup brought about the return of royal dictatorship and an intensification of US interference in the domestic affairs of Iran. The arrangement after 1953 saw Iran take a 50% share of AIOC profits, providing the Shah with ever-increasing revenues and thus consolidating Iran’s positive relationship with the Western powers and to a program of limited economic development on the Western model resulting in substantial infusions of US aid. However, despite the capital available, authoritarianism increased - the Shahs dealt harshly with the groups that had opposed him during the Mossadiq premiership - the National Front was disbanded and its leaders imprisoned, from 1953-79 political freedom simply did not exist. The two-party system adopted by the Shah to provide the appearance of democracy was so tightly restricted that the Iranians referred to the two organisations as the ‘yes’ and ‘yes sir’ parties. Advancements were made, certainly, the ‘White Revolution’ inaugurated in 1963 ushered in major economic and social changes but no change in the traditional system of authoritarianism. Spending from oil revenue was not directed towards improving the infrastructure of the nation, or improving the lives dramatically of the poor citizens - but mostly on defence and the military. Encouraged by the US, the Shah used Iran’s wealth to acquire advanced weaponry, spending more than $10 billion on arms between 1972-76. Here we see the Cold War context at its most obvious : the US was determined to use Iran as its Western-styled bulwark against communist agitation in the Middle East, and did this by providing arms and financial aid : and making a tidy profit in the meantime. All this does not mean that limited attempts at development were not made : it does, however, suggest that Iran under the Shah crafted its priorities out of the politics of oil and finance. The income from payments made by the AIOC played an important role in the life of the country. Attempts at socio-economic development were made, mostly instigated by US field experts, like the 1947 Morrison-Knudson report stressing greater efficiency and productivity in agriculture. However, despite all the post-war planning and some sincere desire by leading government officials to utilise the oil revenues for positive socio-economic development the developments in conjunction with overseas consultants proved a failure. Many Iranian business leaders became impatient with the foreign experts and in efforts to ‘speed up’ the changes, disregarded crucial advice. The oil revenues helped the government with its budget, many of the officials connected with the industry no doubt enriched themselves - yet the majority of the population remained as impoverished as ever. Basic economic ills were not greatly eased from oil revenues. Iran therefore : due to a mixture of bureaucratic inefficiency, selfish self-interest and US directed arms purchases, was not able to utilise the profits gained from oil for necessary social services or economic development. Therefore oil and political authoritarianism went hand in hand within Iran before 1979 : both internally and externally.

The example of Iraq provides a different angle from which to explain the relationship between oil and authoritarianism. Similarly to the AIOC, the Iraq Petroleum Company (IPC) had exploited the wealth of Iraq’s oil reserves for the interests of Western business and development. However, after the 1958 revolution : each of the regimes that ruled attempted to acquire control of the nation’s petroleum resources - in 1972 the Ba’th regime, frustrated with the IPC’s unyielding stance over prices, proclaimed the nationalisation of the company. The magnificent profits gained allowed the regime to embark on a program of industrial development and social reform, on a scale far greater than that of Iran. The Iraq case showcases how an unpopular militant and authoritarian regime could entrench itself by using oil revenues to improve certain aspects of society, thus quietening opposition. The government was able to reduce taxes, subsidise basic foodstuffs, establish free health care and abolish university tuition fees. Though the Ba’th regime may not have been popular, the prosperity that accompanied its power led to its ultimate acceptance. Once more we see oil being used to confirm and entrench political authoritarianism : the educational system was used to propagate Ba’th doctrines and to monitor the nation’s political behaviour. Courses in Bath’ist ideology were mandatory for all university students and the regime ensured that only party members received faculty appointments. Similarly to Iraq, Saudi Arabia used its enormous oil wealth for a similar kind of social welfare system to consolidate the position of the tremendously wealthy royal Sa’ud family. King Sa’ud made no distinction between the state treasury and the royal purse, squandering millions of personal indulgences - his financial irresponsibility almost drove the state to bankruptcy and he was duly replaced in 1964 by Prince Faysal. The Kingdom’s first oil concession was granted by Sa’ud in 1933 to the Standard Oil Company of California with terms immensely favourable to the company. However, the creation of the Organisation of Petroleum Exporting Countries in 1960 and its Arab equivalent (OAPEC) in 1968 helped the producer states have more say in oil production and pricing control. Thus, Saudi Arabia generated huge amounts of wealth from its oil reserves : devoting, similarly to Iran, huge sums to defence, but also to a program of social and economic development designed to keep back political challenges to the monarchical regime. Material developments such as improvements in transportation, communications, stunning universities and secondary industry plants helped create a new indigenous middle class. Yet despite this new classes education and growing responsibility for managing the machinery of government, its members were duly excluded from participation in political life.

Thus, the royal family in Saudi Arabia maintained its control over policy-making and refused to sanction political parties or labour unions, as Sadaam Hussein’s Ba’th party did in Iraq. Both regimes were entrenched by the enormous wealth afforded to them by oil revenues. Both hoped to survive by rewarding the elite with well-paying positions and providing the population with good welfare services. Faysal justified his decision not to issue a charter of rights, proclaiming that, “Saudi Arabia has no need for a constitution because it has the Qu’ran, which is the oldest and most efficient constitution in the world” - as the protector of Islam, the royal family thus justified its power, made possible by the existence of a mutually beneficial relationship between the monarchy and the religious establishment, placing the ulama and imams on the payroll of the state. This pattern can also be seen in the smaller Gulf states : the affluence they have acquired since the 1950s and even more so after the creation of OPEC and the 1973 embargo has helped enable the ruling families to strengthen their political authority - in an age that has largely abandoned the concept of government ruled by hereditary royal families, these Middle Eastern states do stand out as exceptions. Kuwait stands out as the only state to provide a limited forum for political discussion by the creation of an elected national assembly in 1963. However, the franchise was severely restricted, open only to adult males whose ancestors were resident in the country before 1920. However, the national assembly did not restrict the political authority of the ruling royal family. Key governmental posts were held by family members and policy was determined in special family councils. From oil revenues, Kuwait had the ability to provide its citizens with a comprehensive cradle-to-grave welfare system. In the case of Oman, Sultan Qabus ruled as an absolute monarch, the nation had neither a constitution nor a legislature : all power was concentrated in the person of the Sultan and ministries were headed by members of the ruling family. Thus oil developments fuelled a development boom of immense proportions among the Middle Eastern states. Yet amid the material improvements and social changes, political power remained in the hands of hereditary dynasties (with the exception of Iran after 1979). These families attempted to preserve their authority by preventing the emergence of representative assemblies and mass politics, often using oil profits as a buffer against any calls for change.

Thus the link between political authoritarianism and oil has been explicitly shown for the Middle East states themselves. However, this authoritarianism was also compounded by external forces, seeking to either entrench or remove the heads of power in such oil-rich states. The Cold War’s unique geopolitics dictated that neither the US nor the Soviet Union could directly and militarily involve itself in the Middle East for risk of destructive global warfare. Thus, each side carefully manoeuvred and combined economic interests of oil with the political interests of ideology : gaining allies in the region was thus key. Therefore, this helps to explain the US’s support of the Shah’s Iran, Jordan and, of course, Israel. Exacerbating this further was the 1973 Arab-Israeli war, causing the cost of oil to soar as a result of the Arab boycott. After 1973, access to oil, rather than its price, became the driving force behind the West’s policies towards oil-producing states. We may thus witness that, with even more desperation, the oil importing countries sought to shore up ‘friendly’ monarchies that ruled in the oil producing states in order to preserve the political status quo of the Middle East. Iraq’s attempt to alter that status quo by annexing Kuwait in 1990 was thus met with a massive international armed response. Behind the rhetoric about the liberation of Kuwait lay a more practical motive for military action - Kuwait provided the US and Europe with dependable access to reasonably priced oil, thus the stability of the Arab Gulf monarchies and their continued willingness to sell oil to the West were essential to Western economic well-being. Therefore we may explain armed intervention in the post-Cold War climate throughout the Middle East with reference to the crucial need for oil in modern and developed economies. The end of the Cold War thus changed the situation dramatically, primarily by freeing the hand of the US to deploy military power in the Middle East.

Oil thus had a dual effect upon the continuation and expression of two different forms of authoritarianism. Firstly, profits gained in the Middle East ensured the survival of autocratic royal regimes and secondly, the necessity of oil from the importers resulted in intervention, either economically or militarily and a further definition of authoritarianism, only this time imposed from abroad. Whether the first case endures remains to be seen, the Iranian Revolution of 1979 showcased the appeal throughout the Middle East of popular Islamic movements and as revenues declined throughout the 1980’s and 90’s citizens of the Gulf retained the expectations they had adopted during the oil boom. The second, however, appears to be stronger than ever : with US military hegemony in the region undisputed, a heavily armed US-backed Israel present too, demand for oil seems certain to go hand-in-hand with at least some form of political authoritarianism for the foreseeable future.