~ zyxwvutsrqponmlkjihg THE POLITICS AND ECONOMICS OF OIL z Mohamed Rabie Dr. Rabie is the president zyxwvu of the Centerfor Educational Development, a nonprofit organization, in Washington, D.C. He is also an author and a former professor z of economics. He taught at several Arab and American universities, including Kuwait University and Georgetown University. He has published numerous articles and several books including The Other Side of the Arab Defeat, zyx 1987; The Politics of Foreign Aid, 1988; The Making of American Foreign Policy and A Vision for the Transformation of the Middle East, 1991 , forthcoming. he story of oil since its discovery outside the United States has been one of excitement, riches T and agony. For some, particu- larly the giant international oil companies, oil has always been a source of wealth and political influence. For others, particularly the poor living closer to oil fields and refin- ing facilities, oil has been a cause of envi- ronmental damage and life hazard. But, in general, oil-producing nations have benefit- ted from oil as it enhanced their interna- tional prestige and vastly increased their income. Nevertheless, the importance of oil as an exhaustible source of energy has increased the vulnerability of the major oil-exporting nations and heightened their sense of insecurity. In addition, Gulf oil has caused or trig- gered during the last 35 years several inter- national and economic crises with far- reaching implications on world trade, eco- nomic growth, Third World indebtedness, regional stability and even armed conflicts. The best-known crisis was the 1973-1974 oil embargo, which was imposed by certain Arab countries against the United States and a few other nations in support of Arab demands for Israeli withdrawal from the Arab territories it occupied in 1967. An- other crisis, in 1979-1980, was precipitated by the triumph off the Islamic revolution in Iran in 1979 and the outbreak of hostilities between Iran-Iraq in 1980. Finally, the Iraqi invasion of Kuwait in 1990 caused a mini world war in 1991, with devastating conse- quences on the Kuwaiti and Iraqi econo- mies and peoples and the Arab regional political order. Thus oil seems to have played the role of an asset for some, the role of a liability for others and a mixture of both for the world community in general. The U.S. involvement in the Gulf crisis of 1990-1991 stemmed from one simple objective, defined by President George Bush as “protecting the American way of life.” In other words, the U.S. objective in the Gulf is to guarantee the continuous supply of its oil to the West and to deny any regional power the opportunity to control such supplies. This, it is argued, has been dictated by the fact that since the 1950s Gulf oil had become indispensable to main- taining the structure of Western economies and the lifestyles they support. 97