Appendix: Oil Wars and New World Orders in Historical Context

Submitted by Joseph Kay on October 14, 2006


Following the conversion of the Royal Navy from coal in 1911 and the development of petro-chemical industries after WW2, oil became a militarily and economically important resource for the major imperialist powers.

While the transition from coal based accumulation to oil based accumulation allowed capital to escape dependence on the miners in the advanced capitalist nations, it now became dependent on the oil fields in the Middle East; in particular the Gulf region which after the establishment of the oil industry in Iran in 1909, Iraq in 1925 and Saudi Arabia in 1933, came to be seen as the world's most strategic area to control.[2]

Ironically, however, the most strategic area of the world for the West became its most troublesome. By 1991 Iran was governed by an Islamist regime and Iraq by the secular national-socialist Ba'ath party - both of which were virulently anti-Western. Similarly, Saudi Arabia was riddled by social crisis, which would fuel Saudis' dissent against the regime's commitment to the US during the Second Gulf War. This crisis would later lead to the worldwide emergence of small Islamist guerrilla groups, mainly composed of Saudis financed both directly and indirectly by the Saudi State. This problematic state of affairs in the Gulf is not just a co-incidental misfortune, but the result of contradictions created by the subsumption of the Middle East into the world market, the effect of the creation of new nation states and oil interests in the Gulf; kept alive through the direct and indirect support of the Western powers.

The effect of Western industrial capitalism on the social relations of the Middle East

Up until the 19th century, the mode of production in the Middle East was determined by the coexistence of merchant capital in the towns and cities and nomadic pastoralism in the desert areas. The urban centres' economy was mercantile and artisanal, organised around pre-capitalist guild structures where there was no dynamic of capital expansion. The desert regions were populated by nomadic tribes, structured along kinship relations and organised in networks known as tribal confederations. In an area of the world characterised by desert or mountainous areas with limited fertile lands, mobility and military prowess was more important than productivity in raising livestock. Indeed, the tribes that were best fitted for war and raids were the most powerful.

Islam was the dominant religion in the Middle East. It arose in the 7th century in the Arabian Peninsula, as a socio-cultural phenomenon and as a system of power, which served to resolve the contradictions brought about by the development of trade within a nomadic environment. Successful trading relations of the urban centres depended on the security of trading routes and these were under constant threat of raids by the nomads. Islam reconciled the needs of trade with the interests of the nomadic tribes. In fact it provided the base for the creation of religious based empires that, on the one hand, could impose Islamic law and order in their territory and on the other, enrolled nomadic tribes as their military force in the 'holy' wars (jihad) of expansion. By the 19th century, the great Islamic expansions were over. The Ottoman Empire - based on the Sunni sect of Islam - ruled over most of the Middle East, including the area of modern Iraq and the coasts of Saudi Arabia. Iran was ruled by the dynasty of the Qajars which championed the Shi'a sect of Islam. Both the Ottoman Empire and the Qajar dynasty gave the tribes plenty of autonomy and the right to collect revenues from the settled agriculturists. In return the tribal leaders restrained their followers from attacking merchants' caravans. This system was at the root of the creation of hierarchies of tribes, with 'noble' tribes of warriors dominating over weaker pastoral tribes and settled communities.

During the 19th century the Persian Gulf began to feel the impact of Western industrial capitalist mode of production. While the Ottoman Empire was largely hostile to the West, Britain managed to develop good relations with the Qajar Shah of Iran. It obtained favourable trade agreements and concessions in return for the exploitation of Iranian resources and crops. By the late 19th century, after the opening of the Suez Canal, Western interests extended to Iraq. However Saudi Arabia, being mostly a desert and easily avoidable by coastal trade routes, was left unaffected.

Like most regions of what was to become known as the undeveloped world, the main relation of Western industrial capitalism to the Gulf was mediated through the dominance of mercantile capital, which would serve as bridge and agent of the West. Its success depended on maintaining traditional stable social and political conditions locally, yet paradoxically it had a destabilising effect by undermining traditional authorities through its monetarisation of their underlying social relations.
The pressure of the Western economy manifested itself in two ways. Firstly the Middle East came to be seen as a potential market for Western industrial products and secondly the western market encouraged their production and export of agricultural goods such as wheat, opium and tobacco, the consequences of which contributed to the destabilisation of the local social system. It did this in two ways. Firstly, the exposure of the urban centres to Western industrial products, whilst benefiting a small élite of long distance merchants, threatened the economy of the small traders and artisans of the urban markets (bazaars), causing discontent and resentment in the urban populations. This resentment was shared by the clergy, who had prospered on the tithes and religious gifts paid by the guilds. Secondly, the West's demand for crop production encouraged many nomadic tribes to settle and transform themselves into cultivators, which meant they lost their traditional power derived from their mobility. The traditional tribal relations were increasingly replaced by new social relations based on economic exploitation. Tribal leaders began to lose their legitimacy in the eyes of their fellow tribesmen when they began to transform themselves into absentee landlords leaving the tribesman to become impoverished tenants. All this led to the disintegration of the tribal confederation, which, having guaranteed social stability for centuries, had far-reaching consequences. A further destabilising factor was introduced by the switch in agriculture from production for subsistence to monoculture production for the market, which made the economy increasingly dependent on international markets and therefore subject to crisis.

The effect on the social relations of the Middle East through the creation of new nation states

In the 20th century the imperialist powers sought to increase their economic influence in the Gulf by military and political intervention. With the final collapse of the Ottoman Empire after WW1, and the Sèvres peace treaty of 1920, Britain and France were given a mandate to establish nation states in the Middle East. This allowed the West to exercise more power in the region.[3] The British military and diplomatic intervention in the Gulf (Iraq, Iran and Saudi Arabia) had important socio-economic consequences. In order to maintain control they generally employed the strategy of supporting traditional élites and authorities of the region, and in doing so they helped revive old powers that were already being undermined by the impact of western industrialism in the economic sphere. Indeed British efforts to sustain and maintain the old social order actually contributed to its destabilisation.

In Iraq, Britain aimed to install a regime that would support them. The population of the urban centres was mostly hostile to the imperialist power, with the exception of few merchants tied to Western markets. In order to consolidate the social base of the new regime, Britain sought to shore up the power of the tribal leaders by creating a conservative élite based on land ownership. The British-supported 'Lazmah' land reforms of 1932 effectively completed the transformation of the tribal leaders from tribute receivers into landowners, thereby increasing their economic power.[4] These reforms, however, also served to accelerate the process of fragmentation of tribal relations, thereby further destabilising the traditional social order. Furthermore the establishment of private property in the rural areas had the effect of dispossessing agriculturists from common land. This lead to discontent which would later encourage widespread migration to the cities, altering the traditional urban social structure.

At the end of WW1 Iran faced popular revolts triggered by economic crisis and inspired by the Russian Revolution. This encouraged Britain and the US to support a coup that would re-impose order with the use of force which led to the establishment of the pro-Western Shah Reza Khan. As in Iraq, the new regime sought to bolster the economic power of the landlords by introducing land reforms, which formalised the landlords' power over the land as private property. On the other hand, in order to regain control of the cities, the new State sought to 'modernise' which mainly involved the creation of white collar state jobs, education for a small minority, the secularisation of legislation and state institutions and the creation of a modern army. 'Modernisation' provided a way for the regime to redefine its social base, by creating a middle class urban élite and marginalising the clergy, who threatened to mobilise anti-Western sentiments. Furthermore the creation of a modern army allowed the State to attack the surviving nomad tribes and force them to settle.

Iran took advantage of the international crisis of 1929 by taking steps towards a state-led industrial 'development'. This project, however, was not aimed at developing the bulk of national production and trade, rather it created a handful of large industries which survived only thanks to both state intervention and the creation of state monopolies. By WW2 the Iranian regime was successfully based on a conservative élite consisting in long distance merchants, a few big industrial capitalists dependent on the state, landowners, and a small middle class of state functionaries. It shared with Britain an interest in maintaining the social and political status quo, the cohesion of which was guaranteed by revenues from oil royalties paid by the British-owned oil industry, established in 1909. However the British economic influence made Iran's economy dependent on international market prices and prone to crisis, as well as undermining the economy of the urban centres through competition with its products. Like everywhere else in the Gulf, the contradictions created by the British presence in Iran would have explosive consequences in the future.

Another consequence of the weakening and collapse of the Ottoman Empire and of the direct British intervention in the Gulf was the emergence of the kingdom of Saudi Arabia. Saudi Arabia was formed as a result of the expansion of the emirate of Ibn Sa'ud from central Arabia outward and the submission of the dominant tribal confederations of the peninsula to Saudi rule.[5] The expansion and subsequent stabilisation of the kingdom was encouraged and supported by Britain.

The newly formed kingdom of Saudi Arabia was the most extreme case of an anachronistic and unstable system that could only be created and maintained due to British intervention. The Saudi expansion was carried out by tribal forces which, like the pre-capitalist emirates of the past, were rewarded with the spoils of war. The expansionist war was ideologically justified as a jihad to spread Wahhabism - a 200 year old puritan and revivalist version of Islamism

However, since this dynamic developed within new international relations between bourgeois states, this altered its very 'tribal' nature. When Sa'ud's tribal warriors reached the borders of British-controlled territories (such as Kuwait) the contradiction of Sa'ud dominion was exposed. Sa'ud's war depended on the military prowess of the tribes and yet his legitimisation also depended on the West's acceptance and support. Unfortunately, lacking both a modern army and the structure of a modern State, Sa'ud had no means of controlling the tribes he had unleashed, who were now demanding to continue the Wahhabi jihad across the borders. The suppression of the eventual tribal revolt and the stabilisation of Saudi Arabia could only be achieved through British intervention in the form of the Royal Air Force. In the years that followed, Saudi Arabia managed to dismantle its tribe-based army and replace it with a National Guard, and after WWII it would increasingly depend on US military and technical aid for its defence.

The Saudi State was
born as a tribal one that contradictorily had to force its tribes into settling thereby depriving them of the very source of their material reproduction - the raids. The pacification of the tribe had to be supported by State subventions that were financed by borrowing money from abroad and later by the revenues of oil. The subventions had the effect of sustaining tribal structures along patterns of privilege defined by genealogical belonging - a structure that would increasingly cause resentment in large layers of society. In this way the direct political and military influence of Britain, and, later, the revenues from oil production and the military support of the US, created and maintained an unstable social system at odds with its material conditions of existence.

The impact of oil

The capitalist mode of production and the Western imperialist power had caused destabilisation and dissatisfaction in large sections of the population in the Gulf; as well as inspiring anti-Western feelings in the urban populations of Iraq and Iran. These transformations were further exacerbated by the impact of the oil industry in the Gulf.
The discovery of abundant oil reserves in the Gulf transformed it into a region of vital interest to the West. As we have seen, the Western powers sought to maintain social relations in the Gulf after the collapse of the Ottoman Empire, that would not threat their interests. All that the oil industry needed was to secure access to the oil fields, which could be guaranteed by a compliant, stable local power. The stabilisation of the Gulf States into anachronistic structures of power dominated by small conservative élites (in opposition to the dissatisfied masses) acted in the interest of the oil industry. By WW2, and increasingly since, the royalties paid to the monarchs by the oil companies principally served to maintain their power against the threat of social crisis. In fact, the nature of the oil industry, which in itself was a self contained industry with few links to the rest of the national economy, allowed the dominant élites to survive in power and neglect or impede internal industrial development with no counter-effects on their gains and interests.[6]

However, while on the one hand the social stabilisation of the Gulf was a condition for the development of the oil industry, on the other it produced conditions which were to act as a catalyst for the emergence of important social movements that shook Iran in the '50s and Iraq in the '60s. In fact, unlike in America, the oil industry did not develop through the appropriation of land and mineral rights. Rather, a single foreign company (or consortiums of foreign companies) received concessions from the monarch to exploit the whole country.[7] It was this particular arrangement that allowed all the social forces opposing the existing regimes in Iran and Iraq to unite in a common struggle against the West around the issue of oil nationalisation. The economic importance of oil meant that it could be seen as something worth reclaiming as 'national' wealth, against the interests of the imperialist West. Thus, in both Iran and Iraq the issue of oil nationalisation offered a focus for the discontent already felt by different sections of the urban populations. It appealed to the already existing anti-Western sentiments of the petty bourgeoisie of the bazaars, who had fought to defend their traditional economy against the perceived ravages of modernisation. It appealed to sections of the military and middle class intellectuals, who saw the oil revenues as a means of introducing liberal reforms and delivering limited 'social justice' without affecting property relations. And lastly, the issue of oil nationalisation appealed to the emerging and increasingly combative urban proletariat, who demanded more radical social change. Thus sections of society with diverging interests could find themselves allied against one enemy: the West.

The radical impact of oil in the '40s and '50s in Iran and Iraq

The '40s and '50s thus saw massive popular movements, pivoting around the issue of oil nationalisation. In both Iran and Iraq union activity, protests and strikes, (above all in the oil industry) threatened social peace and the economy of the established order. In tandem with these struggles, the pro-Soviet Tudeh Party in Iran and the Iraqi Communist Party in Iraq (ICP) developed their organisations and emerged as leading forces, obtaining mass support from the growing urban proletariat, the clerical workers, and parts of the intelligentsia. However, in the heat of social unrest elements of the middle class, inspired by liberal ideals but uncomfortable with the demands of both the Communist parties and the masses, took power and attempted to recuperate the struggles.

In Iran in 1951, a small liberal party led by Mohammed Mossadeq was able to gain massive electoral support to re-impose social peace on the issue of oil nationalisation. Once in power, he was obliged to carry it out. However his attempts were thwarted by an international blockade organised by the British. The blockade plunged Iran into economic crisis. The crisis served to re-invigorate those proletarian struggles that Mossadeq's power had been supposed to recuperate. Mossadeq responded with open repression, eventually alienating the support of the Tudeh party, which the regime needed to maintain its power against the pressure of the conservative bazaars and the military.

Iraq had been shaken by mass protests and strikes in the '40s and '50s. With the '1958 Revolution' the 'Free Officers' led by liberal officer Abd al-Karim Qassem seized power obtaining the support of the urban masses and the ICP. With 'law 80' in 1961 Qassem reasserted State sovereignty over Iraqi oil. However, his efforts were nullified both by lack of technical know-how and constraint exercised by the monopoly of the Oil Majors over oil processing and distribution.[8]

Although the revolution was welcomed by everybody opposed to the old ruling classes and united by anti-Western feelings, as soon as the old regime was overthrown the popular movement that had arisen in support of the new government began to split. anti-Communist forces, (based on sections of the middle classes, the petty bourgeoisie of the bazaars and the right wing of the army) urged the State to distance itself from the ICP through an invocation of Pan-Arabist ideology. Pan-Arabism had been an ideology shared by intellectuals and military officers in many Arab countries. It invoked the unity of all Arab nations against Western imperialism, and provided an alternative modernising ideology to Stalinism. The Iraqi Pan-Arabist urged Qassem to embrace the ideal of Arab unification and join the unification of Egypt and Syria since it had already proved itself successful in the repression of communist movements in Egypt and Syria. This was an unrealistic ideal (in fact the union between Egypt and Syria did not last long) since the ideology of Pan-Arabism lacked any strong social base being rooted only in the intelligentsia and the army. In contrast the growth of the Communist party was supported by many layers of Iraqi society. As a result Qassem sought to reach a deal with the ICP in order to provide much needed popular support for his regime. He did this by appealing to an 'Iraqi national' identity which opposed the pan-Arabist fusion with, or submission to, Egypt.

That it was impossible for the liberal forces in Iran and Iraq to maintain themselves in power without having to compromise with the Communists, was the result of the underdevelopment in the previous two decades. This variously impeded the formation of a strong local industrial bourgeoisie, a stable middle class interested in building a compliant labour force, and the creation of political institutions that could create a national 'consensus' around liberal issues. In the face of continuing social unrest and the West's fear that the Gulf would turn towards the Soviet Union, the anti-Communist forces regrouped and staged a coup d'état in both countries.[9] In Iran in 1953 Mossadeq was removed by the military and a mob from Teheran's bazaar and the Shah (Mohammed Reza) was restored to power. This coup was financially supported by the US through the CIA, and the US made sure to maintain its control of Iran afterwards, through military and administrative advisors. In Iraq in 1963 Qassem was removed by a coup organised by the right wing of the army and a small unorganised national-socialist party - the Ba'ath. In 1968 the Ba'ath Party took full control of the State.

The new era of oil boom

These new regimes did not reverse the process of oil nationalisation initiated by their predecessors. After the fall of Mossadeq, Iran was able to obtain formal recognition of the nationalisation (with the concession rewritten as a lease) and a 50-50 share of oil, which became 75-25 in its favour in 1958. In Iraq, the Ba'ath championed the ideals of anti-imperialism that were still popular among the masses and sought to nationalise oil. By pursuing a policy of alignment with the Soviet Union, the Ba'ath earned the technical aid necessary for the effective nationalisation of oil in 1969.

During the '60s the outlook for the oil producing countries seemed to change with the formation of the Organisation of the Petroleum Exporting Countries (OPEC) in 1960. OPEC was set up with the aim of co-ordinating the export policies of its member states in an attempt to regulate oil prices. It also aided the formation of the Organisation of Arab Petroleum Exporting Countries (OAPEC) in 1968. However, the policies of OPEC/OAPEC only brought short term benefits since their efforts to regulate oil price in the international market were disrupted by non-OPEC oil producers. In any case, the oil shortage in the '70s hit America allowing OPEC to successfully raise the price of oil in its favour. This broke the monopoly of the oil giants over production and distribution, which contributed to the effective nationalisation of oil in the Middle Eastern countries.[10]

The oil boom of the '70s and the increasing State control over oil production in the Gulf delayed the inevitable explosion of the contradictions existing in Iran, Iraq and Saudi Arabia. The bolstered state revenues were used to pacify the populations. While all countries boosted white collar jobs in the civil services, in Iraq and Iran this also took the form of investment in economic development, with large scale agricultural modernisation in Iran and the encouragement of small and medium business in Iraq through national development projects.[11] On the other hand Saudi Arabia had been the most unwilling and unable to allow for economic or social reforms. Its social structure still reflected the old tribal system while the redistributive role of the State had the effect of freezing both social and economic development. Unlike Iraq, Saudi Arabia did not patronise development in production to any great extent, rather the new system, with its generous welfare benefits and a profusion of white collar State jobs, was simply a re-definition of the old distributive rentier State in the context of an oil bonanza.[12]

Together with the carrot of state patronage (in the case of Iraq and Saudi Arabia), the regimes of all the three countries in the Gulf used the stick of repression against left-wing, religious and secularist opposition. In particular, Iran and Iraq developed efficient security services, which prevented the re-organisation of mass parties. But while the Ba'thist regime used its patronage of whole sections of the population to divide the opposition, as witnessed by the partial co-option of the ICP and the integration of the urban poor, the Shah carried out a program of systematic repression which united his enemies.

The emergence of the anti-Western Shi'a regime in Iran

Up until 1979, the Iranian regime still relied on US and Western support. Massive state expenditure was invested in the purchase of advanced military equipment from the West. Funds were spent on education and an expanding civil service with the aim of swelling the middle class. However clumsy attempts at industrial development only served to push Iran into deeper crisis.

By 1977 dissatisfaction was widespread among both the rural workers and the landowners, because of land reforms introduced by the State during the past decade. These reforms had been introduced to modernise labour relations in the countryside and distributing a portion of the landlord's property amongst the peasants. They were not only opposed by the landowners but also by the peasants who had to pay for the reappropriation in cash, which could only be raised by producing for the market as opposed to production for subsistence.[13] The urban proletariat was augmented by migrations from the countryside caused by the resulting social upheaval. With a new economic crisis hitting the country in 1977, this generalised popular discontent exploded in the '1979 Revolution'.

The opposition to the Shah was thus composed of both conservative sections of society, such as the urban bazaars and landowners, as well as parts of the urban proletariat, the middle class and the intelligentsia who opposed the Shah by demanding liberal or social reforms. They were united against the US-backed regime of the State in the name of anti-imperialism.

In fact, the Revolution was initially fought by left-wing groups alongside the Shi'ite fundamentalist Islamic Republican Party (IRP), an alliance between the clergy and the bazaari merchants. The IRP's nostalgia for a pre-development bazaar exerted strong appeal to those who saw the regime of the Shah, bowing down to the interests of the US, and its efforts to 'modernise', as a failure. The Shiite fundamentalist cause acquired prestige from a spectacular occupation of the American embassy. At the same time they managed to create a middle class base for their support, by seizing control of newly formed public institutions and rewarding their supporters with key positions. They were also successful in organising urban youths into street gangs (the Hizbollah), and engaged them in imposing Islamic customs on the passer-by. The enthusiasm conveyed by IRP's street actions and the appeal of anti-US rhetoric is not enough to explain the Shiite fundamentalism success with the proletariat. One reason for the IRP's success of was that it filled the void left by the secular and left-wing opposition which had been crushed through decades of repression. While under the shah left-wing organisations were dismantled and forced underground, the mosques had been available to the proletariat for socialising and organising. Once the IRP, led by Ayatollah Khomeini, was in full control of the State it unleashed systematic repression against what remained of the left-wing and secular groups who had participated in the Revolution.

The crisis of the oil monarchs and the rise of Islamism

The high price of oil in the '70s had led to increased investment in developing and expanding oil production. Higher cost non-OPEC oil fields (e.g. those in Alaska and the North Sea) grew, and the increased production began to come on stream at the beginning of the 1980s. Meanwhile, the demand of oil fell after the efforts in the developed countries to implement systems for the conservation of energy . The resulting fall of the oil price in the early 80s hit the State budgets of the three major countries in the Gulf, leading to increasing social discontent.

The first Gulf War from 1981 to 1988 between Iran and Iraq served to deal with the threat of social unrest in both countries. The mass deaths in the war fields and the state of national emergency within the two States allowed the two regimes to crush their internal oppositions and thin out the proletariat.

For Saudi Arabia, the '80s were a period of social and political crisis that the regime could not easily defuse. Despite the generosity of the Saudi welfare provisions in the previous decade, the distribution of wealth amongst the population had remained unequal and continued to reflect old patterns of privilege and hierarchies. With the fall of oil price in the '80s, the State was obliged it to cut back on its welfare provisions, the already existing discontent of the Saudi population deepened.

In the face of the various waves of pan-Arabism and anti-imperialism, it had been important for the Saudi regime to stress its Islamic origins. To do this it enrolled the more moderate part of the clergy, those willing to accept modernisation, into the state apparatus. However, the fervent and coherent anti-US and Islamic stance of the Shi'i Iranian leadership served to expose Saudi Arabia's markedly un-Islamic foreign policy and led to growing criticism.

This criticism would reach its climax during the Gulf war in 1990, when, fearing Iraqi invasion into their the oil reserves in Kuwait, Saudi Arabia had to recur to US military support subsequently allowing its territory to be used for attacking Iraq.

The Iranian Revolution also brought on the scene Shi'ism as an alternative Islamist rhetoric which exerted a strong appeal on the Shi'i communities - one of the most marginalised social groups in Saudi Arabia. Shi'ism emerged as a focus of political opposition, with religious festivals ending in clashes with the police and with the organisation of clandestine groups.[14] Yet Islamic opposition to the regime grew also within the dominant sect of Wahhabism. Islamism was used to criticise the 'Islamic' regime, particularly by intellectuals and young unemployed, often educated in the Saudi religious schools.

The Islamic opposition did not raise purely religious or political issues but economic and social ones as well: in fact, it did not only attack the pro-US and pro-West policies of the Saudi State - but also condemned the oligarchic character of the State and its inequalities; and it demanded more money for welfare, education and health services. Whilst the Saudi opposition was forced abroad by the regime, it managed to obtain increasing sympathy from the institutional clergy.

Islamic fundamentalism was not only a problem for Saudi Arabia. One of the most notorious Islamic fundamentalist organisation, the Muslim Brotherhood had been influential in Egypt at the end of the '40s. The '70s and '80s saw a re-emergence of radical Islam throughout the Middle East as a form of political expression of social dissatisfaction. With radical Islam the concept of jihad had a revival within a modern framework - jihad could simply be the action of guerrilla groups against their own States or the West, based on individual's fervour and small groups organisations. It was not a war for the extension of a territory but an individual action having predominantly a symbolic political meaning.

The Afghan War, which opposed the local Muslim population to the occupying Soviet force in 1979, offered to many States of the Middle East the opportunity to try and get rid of their indigenous Islamist trouble makers.[15] Arab States, including Saudi Arabia, encouraged ardent Muslim youth to leave their country and go and martyr themselves in a jihad against the Communist 'infidel' in Afghanistan. The US played an important role in training and sponsoring this newly formed Islamist militant forces. But Saudi Arabia had an important role also, by sponsoring and encouraging Islamists. It was the Saudi government, for example, that sent Osama Bin Laden to Afghanistan, and funded his operations.[16]

With the withdrawal of the Russians from Afghanistan in 1992 and a change in American public opinion and policy, the US stopped its support to the Islamist militant groups. The States of the Middle East, afraid that the Islamist extremism they helped create could be directed against them, closed their borders to the Mujahadeen. This left groups of exiled fundamentalist jihadi, with a growing resentment of the US who had 'used' them for their own ends, to find new wars to fight in other countries on behalf of fellow Muslims ( e.g. Bosnia, Algeria and Egypt). With the attack on Iraq in the '90s, these Muslim groups directed their efforts against the US, turning the jihad into guerrilla actions. Islamist jihadi created international links, one of which was Al Qaida. And it was a 'homeless' worldwide network of ex-fighters in Afghanistan that was responsible for the WTO bombing in 1993, while a group tied to Al Qaida was responsible of the final destruction of the Twin Towers in 2001.

Much of the finance for Islamic fundamentalists throughout the world came from Saudi Arabia. Whether this money comes from individual wealthy elements of Saudi society; or from the Saudi State budget itself through religious 'donations' paid by the clergy; in either case this fact casts a deep shadow on the trustworthiness of Saudi Arabia for the US.

A social crisis in Saudi Arabia is thus at the roots of an Islamic fundamentalist movement that is currently targeting the US and the West with 'dramatic' guerrilla actions. We have seen that this crisis has been the outcome of the creation and stabilisation in Saudi Arabia of an archaic social system, which had no other material conditions for its existence and reproduction except for the oil rent and the support of Western countries. This dependence has made the Saudi system dramatically dependent on both the oil price in the international markets and the skilled and technical input from West. The contradictions of such a system have emerged in their full extent with the fall of the oil prices in the '80s, which has created increasing unemployment and hardship and have destabilised the social status quo. In the case of Iran and Iraq, the effects of the Western influence in Iran and Iraq have triggered a chain of social events that has led to the establishment of two anti-US States. In the case of Saudi Arabia, the impact of the West and of the interests of the oil industry has led to a country that is currently incubating big troubles for the West and in particular for the US.


On the one hand, it was in the interest of the Western powers and of the oil industry to create and support a social system based on the political and economic dominion of a small conservative élite, which would share with the West the concern to maintain the social status quo in their territory. To this end they supported traditional local authorities. The oil royalties paid to the monarchs by the oil companies constituted an increasingly important factor for the stability of the oligarchic systems.

On the other hand, the same influence of the Western powers and the Western economy in the Gulf were factors of destabilisation that undermined the existing social relations on which the traditional powers were based. The penetration of the Western market in Iran and Iraq undermined the traditional urban economy of the bazaar, and slowly disintegrated traditional relations in the rural areas. In all three of the major countries the critical dependence on oil for the stability of the social system made the system dependent on the expertise of foreign oil companies and fluctuations of the international markets. This increased dependence made the economies increasingly vulnerable at the same time as holding back the only possible defence against this condition: the development of a national bourgeoisie. The social unrest produced by these factors led initially to the menace to Western interests presented by oil nationalisation. However nationalisation did not alter the fundamental block to capitalist development presented by an economy based on rent. The fate of these regimes, founded on the internal circulation of the oil rent, was only to become even more the victims of the international markets; and when the boom was over it was clear they ultimately could no longer afford the price they had paid to buy off their own population.

Anti-Western sentiment has always been the natural expression of discontent in the Middle East, a direct product of a century of Western intervention in the region. In the past this led to the setting up of regimes explicitly opposed to Western, particularly US, interests and the Middle East Question haunted the foreign policy of US governments. Today Saudi Arabia, the US's number one ally in the Middle East, strains to contain an incendiary mix of the most virulently anti-Western sentiment of all. Yet in contrast to previous ideologies such as Pan-Arabism, Islamism offers no alternative future of national development for the Middle East. In the case of the disillusioned Saudi dissidents it represents a purely negative reaction to the tenacious oligarchy with its dependency on the US. In the case of the Afghani, Iraqi and Palestinian masses relegated to a sub-proletarian existence, it is nothing but the hope of the hopeless and the reversion to pre-capitalist modes of social reproduction. The jihadis as 'homeless militants' are (with the exception of the special case of Palestine) detached from any mass social movement and as such their spectacular actions can be seen as the deterioration of Islamism in its very moment of glory. If the US manages to pick off the terrorists with precision there will not be the generalised repression required to build universal solidarity among Muslims.

Yet the terrorism enacted in the name of Islam makes it difficult for the West to identify possible alliances with reformist, non-threatening Muslims, a difficulty exacerbated by the absence of any convincing plan for the stable development of the Middle East on the part of the West. On the contrary it looks like a destructive reversion to a heavily policed pre-nationalised Middle East is on the cards, with Islamism on hand to pick up the pieces, but no-one to save the West from its immersion in the mess of a permanent crisis zone.

[1] The main texts used for this appendix are: Nikki Keddie, Roots of Revolution (New Haven: Yale University Press, 1981); Marion Farouk-Sluglett and Peter Sluglett, Iraq Since 1958 (London: I.B.Tauris, 2001); Madawi Al-Rasheed, A History of Saudi Arabia (Cambridge University Press, 2002); Chris Harman, The Prophet and the Proletariat (London: Socialist Worker Party, 1999).

[2] Besides the oil fields in the former Soviet Union, which had been so far outside the control of the US and Europe, the twelve world's mega-fields (those with reserves over 1000 million barrels) are all in the Middle East: five in Iran, two in Iraq, one in Kuwait, three in Saudi Arabia and one in Libya.

[3] Specifically, Mesopotamia (Iraq), Palestine and Trans-Jordan were given under the British mandate, whilst Syria and Lebanon were given to the French.

[4] The Lazmah completed the process began by the Ottoman Empire with the tanzimat reforms.

[5] Ibn Sa'ud was the descendant of Mohammed ibn Sa'ud who expanded his territory in the 18th century (see Box).

[6] As an example, by 1958 in Iraq manufacture constituted only the 10% of the GNP.

[7] The concession for the exploration of the whole Iran was given by the Qajars to the British William Knox d'Arcy in 1901; this was followed by the discovery of oil (1908) and by the constitution of the Anglo Persian Oil Company (APOC, 1909), which became almost fully owned by the British government in 1914. A concession for the exploitation of the North of Iran was given by Shah Reza Khan to the Standard Oil Company of New Jersey in 1921. The concession of Iraq was given in 1925 by the monarch of Iraq Faysal to the Turkish Petroleum Company (later renamed Iraq Petroleum Company, IPC), owned by Britain and other European countries. And the concession of Saudi Arabia was given in 1933 by Sa'ud to the US Standard Oil of California (SOCAL) (oil was extracted from 1938).

[8] The law 80 of 1961 withdrew the concessions held by the IPC in all Iraq, with the exception of the limited areas that were already being exploited by then (the 0.5% of the national territory), laying the basis for the creation of a national company which could exploit the rest of the country. In 1964 the Iraqi National Oil Company was in fact created, but it was ineffective for lack of technical know-how.

[9] Qassem's liaison with the Soviet Union had worried the US, so much that in 1959 the CIA's director Allen Dulles declared that the situation in Iraq under Qassem was 'the most dangerous in the world'!

[10] Indeed it was only in the '70s that Iraq achieved oil nationalisation. Similar, in 1973 Saudi Arabia acquired 25% of ARAMCO, which became 60% the following year; and in 1980 Saudi Arabia took over the whole company.

[11] This modernisation followed on from the process of land reform started in the '60s.

[12] While white collar jobs were offered to Saudi educated citizens as a form of State support, Saudi Arabia depended on foreign labour force - on Western workers for skilled jobs and on Arab migrants for menial jobs.

[13] A similar law was passed by Qassem in Iraq, which similarly failed in its aims.

[14] Shi'i opposition emerged also in Iraq, where the Shi'i had been marginalised since the Ottoman times.

[15] Saudi Arabia was also worried about the Afghani refugees falling under the influence of their big competitor, and the enemy of the US, the Shi'ite Iran. The Saudi's for this reason spent a lot of money on Wahhabi schools in Afghanistan to counteract the influence of Shi'a, and it was these schools that eventually produced the Taliban.

[16] Osama Bin Laden was one of these 'homeless' militants. Born into a rich family that had made its fortune in the construction industry, the Saudi born billionaire, whose activities in Afghanistan were supported by the Saudi State during the '80s began to turn on his sponsors. In the months preceding Iraq's invasion of Kuwait in 1990, Bin Laden adamantly opposed the Saudi decision to call in' infidel' troops led by the US, to defend the Saudi frontier from the posturing of Saddam Hussein. As a result he was expelled from Saudi Arabia. Bin Laden's rhetoric was not only directed against the US 'infidels' but also against the Saudi ruling dynasty whom he accuses of being 'indebted' to both the devout middle classes and the higher social strata of the kingdom - his own class, whom he refers to as the 'great merchants'. Despite not claiming responsibility for a number of 'terrorist' attacks against 'infidels' Bin Laden has come to represent and be seen as accountable for the actions of the jihadists.