Oil Politics


Oil is the most important commodity of the present times. The importance of oil cannot be denied. Oil is the major source of energy. It is a prerequisite for the industrial sector, agro-based industrial development and traditional agriculture. The demand for oil is increasing day by day. The world consumes 76 million barrels of oil a day. According to the IMF, if the price of oil is increased by 5 dollars per barrel, and if it is sustained for a year, the global economic growth rate will decrease by 0.5%. This shows the crucial importance of oil as a source of fuel.

The renaissance movement (rise of the modern world) brought about the industrial revolution. The industrial revolution divided the world into two distinct groups. Industrial countries of the west became the developed countries (DC’s). The second group is the group of the underdeveloped countries (UDC’s). These countries could not enjoy the fruits of industrial revolution.

The development and growth of the developed countries solely depend upon their industrial progress. And industrial progress is always attributed to continuous oil supply. On the other hand, growth and development of underdeveloped countries (UDC’s) depend upon the traditional agriculture sector, natural resources like oil and mainly on foreign aid. DC’s are the major source of foreign aid for UDC’s. Therefore it can be assumed that if there will be any discrepancy in the growth and development of DC’s it will have a direct effect on the economies of UDC’s. Another important fact is that the oil reserves of DC’s are insufficient to meet their domestic oil demand. Most of the oil reserves are situated in the OPEC countries (Algeria, Ecuador, Gabon, Indonesia, Saudi Arabia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, United Arab Emirates and Venezuela). The two countries of the central Asia, Turkmenistan and Kazakhstan, are also oil rich countries and they have the potential to export oil. Both these countries are not the members of OPEC. Russia is also an oil exporting country and 40% of its exports are based on oil products.

All of above mentioned countries of OPEC and central Asia have nothing but oil. The economies of these countries, despite having rich oil reserves, are fragile. Any discrepancy in oil demand results in economic instability. New foreign aid becomes inevitable for the economic growth and development of these countries.

The DC’s look towards these oil rich countries in order to meet their oil demand. On other hand, these oil rich countries seek the foreign assistance from these DC’s in many fields.

In 1973, oil was for the first time used as a political weapon by the Arab oil-producing countries against Israel and the west. Many analysts are of the view that it was the start of oil politics. In my opinion, oil politics started with the advent of the industrial revolution when the countries of the west felt the need and hunger for oil. They came to know that their own oil reserves would not be able to meet their oil demand.

This oil politics has many fatal consequences. As cited above, oil is playing very vital rule in the prosperity of the west. Therefore, DC’s of the west have been doing and will do every thing they can in order to have a hold on oil reserves of these oil rich countries. This race for grabbing oil will result in debacle and turmoil on a global level. This will affect those countries that are neither oil seekers on a large level nor have oil reserves. Most of the third world countries of Asia and countries of Latin America are included in this list. Some of the consequences of oil politics are discussed below.

The Wealth of Middle East countries is lying in the banks of the west. This situation enables the west to hijack, dictate and interfere in the policy making of these oil rich countries and further aggravate economic and social conditions of these countries. The DC’s, because of their pervasive influence, mold the policies of these countries according to their own vested oil interest.

The west, especially the US and UK, is considered as promoters of democracy. But in reality, on one hand, they force different countries to induct political governments and on the other hand, they have been indirectly supporting those monarchies and king ships that suit their own interests (king ships in Saudi Arabia and military and other form of dictatorship in different countries). This shows the dual standards practiced by the developed countries. In all case, one must be clear about one thing; the prime motive of the west is to have an easy access to the oil reserves of the oil rich countries.

Oil lust of the west often results in political and physical wars. Forceful change of regimes under the fake doctrine of pre-emptive measure by the west, especially USA and UK, has exposed the real intentions of these countries. The only aim behind these pre-emptive strikes is to induct new regimes, which can support the oil interests of the western countries. US attack on Afghanistan and the recent US attack on Iraq have showed that USA and UK want to hold a strategic geographical position from where they can control and manipulate world’s oil resources.

The UDC’s regimes and the masses of UDC’s often have to face the severe consequences of wars. They are the first casualties of war. First of all, war no doubt is a human tragedy. Innocent civilians, including children, men and women lose their lives.

Wars, which become inevitable because of oil politicking of the west, bring economic problems, especially for the poor countries of the world. According to United Nations, the war of Iraq might create 0.6 million refugees. Those refugees will seek refuge in neighboring countries. This will increase pressure on the economies of these neighboring countries. In the US-Iraq war, Iraq has burnt its oil fields, which will result in an environmental disaster and coming generations will suffer from this future environmental pollution. This act of Iraqis will also cause the loss of huge quantity of crude oil, as we all know because of which this war has been fought. The global stock market has already shown a decline and it is expected that it will sink further. The international trade to and from war zone would be suspended or its volume may be declined. War-risk shipping charges will be charged by the effected countries which will increases the cost of production of UDC’s. In the war climate, direct foreign investment becomes doubtful, especially in the war affected and neighboring countries.

Most of the people from UDC’s migrate in order to seek jobs to developed countries like the UK and US. The rivalries among the oil-producing and oil-seeking countries bring the workers back, who are working abroad, to their homeland (recent example of huge worker evacuation from US and UK under the cover of “new registration rules”). This results in a decline of national income, which comes into UDC’s in the form of foreign remittances. As we all know, the foreign remittance provide a breath to the poor economies of the UDC’s. When these people came back home without job, it will further deteriorate the situation and increase unemployment in the domestic market. The inflow of workers who work in foreign countries increases population. Population increase leads to increase in aggregate demand of an economy, which ultimately results in inflation.

Due to oil crisis, the agriculture sector of UDC’s also suffers. The prices of oil-inputs used in agriculture sector increase, which increase the cost of production and therefore, UDC’s cannot compete DC’s because of their cost ineffectiveness.

Forceful invasion of DC’s in the matters of UDC’s under the doctrine of pre-emptive strike increases the sense of insecurity among the poor countries. As a result, huge amount of money is being transferred from the social sector to defense budget in UDC’s. The condition becomes more fearsome when these resources are raised from the public in the form of imposition of new taxes.

UDC’s invest huge amounts of foreign currency on imports of industrial commodities and producer’s goods from DC’s. These imports are inevitable for their economics growth. As prices of oil increase the cost of production of industrial commodities and producer’s goods in DC’s will also increase. This will increase the worries of UDC’s.

Western nations are oil-deprived nations and most of the oil reserves are situated in Muslim countries. Therefore, any aggression by the west against these Muslim countries will increase the gap between the Muslims and the west. This will also increase anti Muslim and anti Islam thoughts among the western nations and ethnic rivalries between these two distinct groups.

After all the points discussed above, a question arises in the mind of reader, that why all the Muslim countries of the world don’t stick together and fight against the aggression of the west. In my opinion, all the countries of world have their own individual interests.

Western countries are the potential buyers of the oil, which is situated in oil rich countries. If oil rich countries go against their potential oil buyer i.e. the western industrial countries, this may result in lose of their potential buyers and enable the industrial countries to find another oil market to fulfill their oil demand. Recent US-Russia oil agreement is an example of US policy change as far as oil buying is concerned.

By supporting the US, the Islamic countries and their regimes want to get rid of extremist elements working at domestic and international level under the guise of War Against Terrorism. The situation of democracy is very fragile in UDC’s. Most of the people in these countries came in to power because of inefficiencies in political system or because of military might. Regimes of these UDC’s also support the west because they want the western countries to extend political and diplomatic support to these regimes. Recent example of Uzbek president Islam Karimov, Pakistani president Pervaz Musharraf and kings hips of Saudi Arabia clearly explains why the governments of these countries are willing to support US policies.

Islamic countries are beset with various problems like terrorism, drugs, weapon proliferation, possibilities of nuclear theft smuggling activities and various multi ethnic conflicts. These countries desperately need foreign assistance in many filed in order to cope with these problems. All above sited factors provide us reasons that why all the Muslim countries don’t get together.

The upshot of the above discussion is that the oil lust of the west may be able to gain some temporary benefits, but it has wiped off human, social and developmental progress of decades. Oil has become a bone of contention between oil seekers – the west and the oil producers. Only that country will win on political and physical ground, which possesses the economic and social power. Only the fittest will survive. As told by Doctor Muhathir Muhammad the current chairman of 116-nation Non-aligned movement, it is the right time for Muslim Ummah to get together and face all the worst conditions adamantly. Oil wealth of Muslim countries should be used for their economics and social prosperity. Muslim countries must forget about individual interest and must think about the collective interests of Muslim Ummah because all the Muslim countries have strong religious and social ties among them. Without unity, brotherhood, self hood and economics development, competing against the west is like asking for the moon.