Notes from the Panopticon: The Curse of Oil (A really simple explanation of the Middle East Crisis~Part 5)

It is said that power corrupts, but actually it's more true that power attracts the corruptible. The sane are usually attracted by other things than power. ~ David Brin quotes (1950- )

The curse

I'll begin this article with an analogy. Imagine an enormous family (the whole Middle East region). The old patriarch has a huge fortune which he leaves to only some of his many sons. Each son has a family of his own.

To two of his sons with large families, the patriarch leaves large fortunes (Iran and Iraq). To three of his sons with very small families, he also leaves large fortunes (the Gulf States). To one son who has a smallish family, he leaves almost half of his wealth (Saudi Arabia). A few other sons get smaller bequests (e.g. Libya and Algeria).

To the son with the largest family (Pakistan). he leaves nothing. Other sons with big families are also left out of his will (Egypt and Turkey).

Imagine the ill-feeling in that family.

Now imagine this. The son who has been left the largest bequest has an inner circle in his family which is favoured over the rest. Not only that, but he and his inner circle bully members of the outer circle and irritate others by arbitrarily distributing largess.

Imagine the resentment now. Imagine the bad blood, the intrigue and hatred, the cabals forming and breaking up. And when resentful members of the family try to kick back, they are labelled as "black sheep" and go off to lick their wounds and foment resentment among ill-treated members of other families.

Meanwhile, members of the inner circle are making foreign friends and exchanging their wealth for boy's toys and luxury goods. They do little to hide their extravagant lifestyles. They enlist their foreign friends to help defend themselves from their resentful families and to offer advice about how to keep the more troublesome members of the family in check.

Above all, the rich family members – while paying lip-service to the religious and moral strictures and traditions of their fathers – ignore them completely. So it is easy for the "black sheep" to use what they see as the call of family tradition to mobilise resentful young men amongst the poor and deprived members of the extended family. And from this base, they inflict indiscriminate misery on the rest of the family ("if you're not with us you're against us"). The greatest degree of suffering is born, not by the wealthy who protect themselves, but by the poor and unprotected, while some spite is reserved for the foreign friends of the rich – who take attacks particularly hard because they cannot understand how or why it is their fault.

Now you have an idea of what is happening in the Middle East.

The history – the fall of the Ottoman Empire

Much of the Middle East was under the control of the Ottoman Empire after it was captured by the Turks in the 16th century. During the 19th century, the Ottomans effectively bankrupted their empire and it fell under the financial control of European powers, who were quick to annex what the Turks could no longer defend. Local rulers in the Middle East attempted to modernise and import Western models of government, but they largely failed, bankrupting their nascent states which fell into the colonising hands of various Western powers. This also gave rise to a tradition of professional armies – a bane of the region ever since.

These rulers were often encouraged by Western Powers with an eye to the main chance. An attempt at the beginning of the 20th century to re-establish Ottoman rule through a Turkish-German alliance in the First Word War failed. The Arabs allied themselves with the British and French against the Ottomans, in the hope that this help would lead to independence. Instead, Britain and France merely divided the oil-rich region between themselves. And the British agreed to provide the Zionist movement with a homeland in Palestine.

The history – Western colonisation

So the region was carved up between various complicit allies of the (effectively) colonising powers. And in drawing up the borders, little attention was paid to ethnic and religious groupings.

Large-scale oil discoveries began in 1908 in Iran and in 1938 in Saudi Arabia and the Gulf States. Their rulers became immensely rich. They used the wealth to consolidate their power, with the help of Western allies who used them as a bulwark against potentially less compliant regimes. This bred resentment which emerged in a variety of local conflicts, independence movements, and – eventually – the establishment of one of the most frightening terrorist movements that world has ever known.

Free money, corruption and envy

The gush of free money has generated greed, corruption and envy. The fact that the majority of terrorists who carried out the atrocities of 9/11 were Saudi citizens is not an accident. Saudi Arabia has most of the oil. Its rulers are the greediest in the region, and this greed had generated most of the envy and resentment. There have been crueller regimes in the Middle East but Saudi rulers do their best in this area too; their efforts to contain all opposition are ferocious.

Social failure

Throughout the Middle East, there is poverty, misery and discontent – and its autocratic rulers do little to improve the well-being of their populations. And this is as true of the oil-rich states as of the oil-poor countries. Hossein Askari in his book Middle East Oil Exporters – What happened to Economic Development? compared the social and economic performance of three groups of countries:

MEOE: 6 Middle East oil exporters (Iran, Iraq, Kuwait, Qatar, Saudi Arabia and UAE)
MEnOE: 5 Middle East non-oil-exporters (Egypt, Jordan, Morocco, Syria and Tunisia)
CompC: 4 other countries in the process of development (Chile, Malaysia, Singapore and South Korea) – these were included as a comparison and chosen because they started from a similar point on the development scale.

Using independent research, Askari demonstrates that:

MEOE with small populations have achieved improvements in living standards (measured by mortality, reproductive health, inequality, health provision, education and welfare standards).
However, MEOE with large populations – Iran and Iraq – have done no better than the MEnOE countries.
No Middle Eastern country has performed nearly as well as the CompC.

To give an example. In 2002, infant mortality:

In Iran and Saudi Arabia was about the same as in MEnOE.
In Iraq, it was significantly worse than the average of the low income countries of the world.
In Kuwait, Qatar and the UAE, it is close to the average of the high-income countries of the world (although they did not do as well as the CompC).

Economic failure

MEOE have also failed to achieve success in economic growth. Despite huge inflows of cash from their oil exports, the money has not been re-invested to provide a continuing stable economic future for their populations as the oil is depleted.

The figures are a devastating indictment of policy and governance. Most MEOE achieved less than half the economic growth of the MEnOE, who themselves were unable to match the growth of CompC.

Unemployment

Unemployment rates in the region are very high, reflecting under-investment and poor development in non-oil activities. The spike in oil revenues following the price increases in 1973-4 generated a spike in population growth. This increase in population is now looking for jobs and, without economic growth, unemployment has soared to levels of 10% or more. This affects MEnOE just as much as the other countries, while and unemployment rates throughout the Middle East are significantly higher than in the CompC. The figures would be even worse if women were not discouraged from entering the labour force.

Where has the money gone?

So the big question is: where has the money gone? A very large part of it has been spent on defence. Defence is a euphemism for weapons and soldiers. Weapons and soldiers in the hands of the dictators and potentates of the Middle East are nothing more than boys' toys.

Boys' toys

A look at the numbers is startling. In 1999, Saudi Arabia spent over 50% of its oil revenue on military expenditure. For Iran, the figure was over 40%. And there have been years when almost all the countries spent more than 100% of oil revenues on defence.

The numbers of soldiers per head of population is high compared with the rest of the world.

But it is the huge sums spent on equipment that is truly staggering. Saudi Arabia is the largest spender of all. Over $21 bn per year is spent on the Saudi military (which translates into more than $112,000 per soldier per year).

Figures for 1999 are at the low end of the spending range, while Iraq has been constrained by sanctions. But with the huge accumulations of hardware, it is not surprising that the boys were unable to resist the temptation to take out their toys and play with them.

The cost of these games is devastating. In 1991, after its annexation by Iraq and the war that followed, Kuwait was left with a bill for reparations equivalent to half its oil revenue from 1975 to 2000 – a period of 25 years. This was just one of a succession of conflicts in the region, each of which carried a staggering cost in lives and money. And this is in addition to simmering civil disputes and the corrosive activities of terrorist factions.

Culture of corruption

Finally, the oil has supported a culture of corruption. In addition to many rulers regarding their states as their private property, officials and politicians take commissions to facilitate contracts of all kinds: building, oil investment and exports, the purchase of military hardware, services and so on.

Chickens come home to roost

The West is not an innocent party. First it set up a structure that was prone to conflict. Then it supported leaders, only to condemn them later when their agendas no longer fitted with Western strategies (notably Saddam Hussein and Osama Bin Laden). It remains keen to balance its oil purchases with arms sales. And it is not averse to condoning corruption (e.g. BAE systems).

All this is happening at the highest level. Meanwhile at a lower level, children of the destitute and unemployed are being groomed in extremist madrasas and terrorist camps to fight the corrupt rulers who sully the Muslim faith. Their organisers are anxious for an opportunity to become the new rulers and to grab a slice of the cake. They are using young disillusioned Muslims throughout the world as pawns in their fight for power.

Oil has been a curse for the ordinary people of the Middle East, a curse which is infecting vulnerable Muslims around the world. And so when today's Western politicians complain that the West is an innocent party in the rise of Islamic fundamentalism, they are, at the least, being disingenuous.

The information in the article is based on