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31. Society in the Persian Gulf: Before and After Oil

Author:
Lawrence G Potter
Publication Date:
01-2017
Content Type:
Working Paper
Institution:
Center for International and Regional Studies: CIRS
Abstract:
This essay takes as its focus society in the Persian Gulf over the long term, both before and after oil. In order to understand the transitions society has gone through, it is necessary to review the region’s historical evolution and how society in the Gulf today differs from that of the pre-oil era. The Gulf is presented as a distinct historical region, where a tradition of free movement helped account for the success of its port cities, themselves linked more to the Indian Ocean basin than the Middle East. In the twentieth century, the historic ties that connected the people of the Gulf littoral were curtailed as nationalism became the dominant ideology, and borders and passports were imposed. After oil was discovered and exports began following World War II, the small Gulf shaikhdoms, most of which were under British protection until 1971, experienced a surge in revenues that ushered in the modern era. Newly independent states sought to impose a new identity, manipulate history, and exploit sectarian cleavages to solidify the power of ruling dynasties. The historic cosmopolitanism of the Gulf was ignored by states that privileged the tribal, Bedouin heritage of their leaders. Arabs and Persians, both Sunni and Shi‘a, as well as many other groups have lived with each other in the region for many centuries, during which mutual differences occasionally led to conflict. But the current mistrust, tension, and sense of vulnerability felt by all sides is a product of the modern age.
Topic:
Nationalism, Oil, Regional Cooperation, Religion, Maritime Commerce, and Independence
Political Geography:
Middle East, Persian Gulf, and Indian Ocean

32. LEBANON IS BECOMING A NEW OIL AND GAS PRODUCER UNDER THE WATCHFUL EYES OF ITS CIVIL SOCIETY

Author:
Laury Haytayan
Publication Date:
06-2017
Content Type:
Journal Article
Journal:
Alternative Politics
Institution:
Department of International Relations, Abant Izzet Baysal University, Turkey
Abstract:
This short article is an overview of the recent oil and gas developments in Lebanon with a focus on the role of civil society in holding the decision makers accountable. From one side, it highlights the governance challenges and political uncertainties facing Lebanon. Corruption, ineffective oversight bodies and political deadlocks are some of the many challenges facing the country. From the other side, it puts emphasis on the role of civil society as the alternative oversight body capable of overseeing the management of the sector. A strong and informed civil society has a role in taking a seat on the Extractive Industries Transparency Initiative (EITI) multi-stakeholder group, in assisting the government in formulating policies and in informing the citizens about the many complex issues related to the oil and gas sector in the country.
Topic:
Civil Society, Oil, Gas, and Economic Development
Political Geography:
Middle East, Lebanon, and Beirut

33. The Currency-Plus-Commodity Basket: A Proposal for Exchange Rates in Oil-Exporting Countries to Accommodate Trade Shocks Automatically

Author:
Jeffrey Frankel
Publication Date:
03-2017
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
The paper proposes an exchange rate regime for oil-exporting countries. The goal is to achieve the best of both flexible and fixed exchange rates. The arrangement is designed to deliver monetary policy that counteracts rather than exacerbates the effects of swings in the oil market, while yet offering the day-to-day transparency and predictability of a currency peg. The proposal is to peg the national currency to a basket, but a basket that includes not only the currencies of major trading partners (in particular, the dollar and the euro), but also the export commodity (oil). The plan is called Currency-plus-Commodity Basket (CCB). The paper begins by fleshing out the need for an innovative arrangement that allows accommodation to trade shocks. The analysis provides evidence from six Gulf countries that periods when their currencies were “undervalued”, in the sense that the actual foreign exchange value lay below what it would have been under the CCB proposal, were periods of overheating as reflected in high inflation and of external imbalance as reflected in high balance of payments surpluses. Conversely, periods when the currencies were “overvalued,” in the sense that their foreign exchange value lay above what it would have been under CCB, featured unusually low inflation and low balance of payments. These results are suggestive of the implication that the economy would have been more stable under CCB. The last section of the paper offers a practical blueprint for detailed implementation of the proposal.
Topic:
Economics, Oil, Exchange Rate Policy, Commodities, and Currency Basket
Political Geography:
Middle East, Saudi Arabia, and Gulf Nations

34. Crude Volatility: The History and the Future of Boom-Bust Oil Prices

Author:
Robert McNally
Publication Date:
01-2017
Content Type:
Book
Institution:
Columbia University Press
Abstract:
As OPEC has loosened its grip over the past ten years, the oil market has been rocked by wild price swings, the likes of which haven't been seen for eight decades. Crafting an engrossing journey from the gushing Pennsylvania oil fields of the 1860s to today's fraught and fractious Middle East, Crude Volatility explains how past periods of stability and volatility in oil prices help us understand the new boom-bust era. Oil's notorious volatility has always been considered a scourge afflicting not only the oil industry but also the broader economy and geopolitical landscape; Robert McNally makes sense of how oil became so central to our world and why it is subject to such extreme price fluctuations. Tracing a history marked by conflict, intrigue, and extreme uncertainty, McNally shows how—even from the oil industry's first years—wild and harmful price volatility prompted industry leaders and officials to undertake extraordinary efforts to stabilize oil prices by controlling production. Herculean market interventions—first, by Rockefeller's Standard Oil, then, by U.S. state regulators in partnership with major international oil companies, and, finally, by OPEC—succeeded to varying degrees in taming the beast. McNally, a veteran oil market and policy expert, explains the consequences of the ebbing of OPEC's power, debunking myths and offering recommendations—including mistakes to avoid—as we confront the unwelcome return of boom and bust oil prices.
Topic:
Economics, Oil, and OPEC
Political Geography:
United States and Middle East
Publication Identifier:
9780231543682
Publication Identifier Type:
ISBN

35. China’s Foreign Policy in the Middle East

Author:
Umbreen Javaid and Meer Waheed
Publication Date:
07-2016
Content Type:
Journal Article
Institution:
Department of Political Science, University of the Punjab
Abstract:
The importance of energy rich Middle East region for competing oil dependent economies of China and U.S.A is becoming more intriguing calling for cautious analytical insights for a better understanding. The convergence of interest of U.S and China coupled with the volatile political environment associated with this region questions the notion of „peaceful rise of China‟, the nature of its role in the region, and its commitment to retain neutrality which is analyzed in this paper by drawing inferences from its overall foreign policy behavior in the global affairs China is emerging as an influential actor in international politics owing to its massive economic strength coupled with rapidly developing military might and advancements in science and technology. China‟s journey of development is necessarily hinged upon an uninterrupted supply of energy which is the life line of both its economic and military prowess and in that context the importance of oil rich Middle East region becomes manifold owing to the major chunks of the crude oil china imports from this region. The strategic importance of Middle East region for the U.S.A is also an established fact that presents an interesting case study for analyzing future course of China-U.S strategic relations.
Topic:
Foreign Policy, Energy Policy, Oil, Economy, and Soft Power
Political Geography:
China, Middle East, and United States of America

36. Misperceiving U.S. Foreign Policy in the Gulf: Raising the Hidden Costs of U.S. Dependence on Oil

Author:
Steve A. Yetiv
Publication Date:
01-2016
Content Type:
Journal Article
Journal:
Journal of International Affairs
Institution:
School of International and Public Affairs, Columbia University
Abstract:
United States foreign policy in the Middle East over the last few decades has been controversial and checkered, and Washington has certainly flexed its muscles in the region. However, the question arises as to how aggressive America has been with regard to oil in the region. I distinguish between two perspectives in how America is viewed, which we can simply call the offensive and defensive perspectives, recognizing that there is a continuum of views. From the offensive perspective, America is viewed as having one or more of these goals: steal or own Middle East oil; control Middle East oil in order to undermine Muslims; dominate Middle East oil to advance global hegemony; or exercise “puppet” control over oil producers like Saudi Arabia to coerce them into charging far lower oil prices than markets would warrant.1 By contrast, from the defensive perspective, America chiefly aims to prevent others from threatening oil supplies in a manner that would spike global oil prices and possibly cause a recession or depression. Muslim opinion polls have revealed that oil issues are a broader source of tension in relations between elements of the Muslim world and the West. The U.S. role in oil-related issues feeds into historical, political, and religious perspectives of an imperialist and power-hungry America. In fact, a not uncommon view in the Middle East is that America seeks to exploit, even steal the region’s oil resources, a viewpoint much in line with the offensive perspective described above. I argue that the history of America’s role in the region suggests that this is largely a misconception, and that this misconception is not immaterial. It seriously raises the cost of the use of oil and of American regional intervention. This misconception not only stokes terrorism and anti-Americanism, but also complicates America’s relations with Middle Eastern countries, affects its image among Muslims, and hurts its global leverage insofar as such views become internationally prominent. Indeed, it is almost a maxim in many capitals in the Middle East that close cooperation with Washington carries a domestic political cost. Recall, for example, that the Saudis were initially reluctant to host American forces after Iraq invaded Kuwait on August 2, 1990, even though they felt seriously threatened by Saddam Hussein.
Topic:
Foreign Policy, Energy Policy, Oil, and Military Strategy
Political Geography:
United States, Middle East, North America, and Persian Gulf

37. War and the Oil Price Cycle

Author:
Amy Myers and Jaffe Jareer Elass
Publication Date:
01-2016
Content Type:
Journal Article
Journal:
Journal of International Affairs
Institution:
School of International and Public Affairs, Columbia University
Abstract:
Oil has shaped international conflict for decades. According to one estimate, twenty-five to fifty percent of interstate wars between 1973 and 2012 had oil-related linkages. 1 But the cyclical nature of oil’s contribution to global conflict is not well understood. Not only are oil prices cyclical, but the geopolitics of oil are linked inexorably to the same boom and bust price cycle. Military adventurism, proxy wars and regional pathologies in the Middle East expand and contract with the ebb and flow of massive petrodollar accumulations related to the oil price cycle. The massive inflow of petrodollar revenues when oil prices are high creates disposable incomes that can be easily dispensed on regional arms races, especially since oil consuming countries like the United States are incentivized to increase arms sales as a means of solving oil import related trade deficits. Besides transferring wealth from industrialized countries to oil producers in the Middle East and North African (MENA) region and Russia (and stimulating renewed drilling for oil and gas in North America), high global oil and natural gas prices also slow global economic growth and encourage energy conservation. This causes petroleum demand to slow globally, lowering oil prices. Social and political problems in the region reemerge as oil prices recede. Regional governments have fewer resources to spend on restive populations that have become accustomed to generous handouts enabled by high oil prices. Job creation and visible social programs slow, dissatisfaction rises, and the consequences of economic downturns incite support for militants. Ensuing instability forces governments to use newly purchased arms, which ironically begins the cycle yet again, as new conflicts disrupt oil supplies. In this manner, the world experiences perpetuating patterns of military conflict, followed by oil supply crises, and accompanying global financial instability. In effect, the Middle East resource curse has become globalized. The challenges this is presenting on humanitarian, security and economic fronts have become increasingly dangerous. The arms race that has accompanied the rise of oil prices over the 2000s has been no exception and is now all the more complicated due to the violent participation of sub-national radicalized groups that are less susceptible to diplomatic pressures or initiatives. In this emerging geopolitical context, the rise of violent subnational groups like ISIS and Al-Qaeda are increasingly putting oil infrastructure at risk, laying the groundwork for a future oil crisis that may prove harder to solve than in the past. As borders and ruling institutions have become contested, so has control of the region’s major oil and gas facilities. Initially an outgrowth of disunity inside Iraq, the conflict over oil and gas facilities is now accelerating across ungoverned territories, with important long-term consequences for global energy markets. Mideast oil and gas production capacity, along with surface facilities, are increasingly being damaged in ways that will make them hard to repair. Export disruptions, which were once sporadic, are becoming a more permanent feature of the civil war landscape. The level of destroyed capacity is currently estimated at about 2 million b/d and rising.2 The longer Mideast conflicts fester, the more that infrastructure could become at risk. There is an additional element to this oil and war story that links structurally with the oil boom and bust cycle. As oil prices recede, along with a decreased demand for oil and accelerating regional conflict, wealthy oil producers such as Saudi Arabia, the United Arab Emirates, and Kuwait, are often tempted to use large oil production capacity as a strategic asset. They flood the market with increased supplies in order to lower prices, thereby hurting geopolitical rivals. This price war strategy, which was notably present during the prolonged Soviet war in Afghanistan and the eight year Iran-Iraq War, temporarily ameliorates the short run effects of war on surface export facilities through excessive production rates. In addition, it lays the seeds for the future uptick in the oil market, by discouraging investment in future oil productive capacity outside the Middle East when prices are extremely low. In the case of the 2000s, the destruction caused by ISIS on the oil sector in many locations around the Middle East, combined with expected losses in investment in other parts of the world (like Canada’s oil sands and the Arctic due to current low oil prices), may be creating the conditions for a future oil supply crunch. This has major implications on U.S. policy. This article asserts that the United State would be, in light of these circumstances in the Middle East, unwise to dismantle its Strategic Petroleum Reserve (SPR) as has been suggested on Capitol Hill. It would be similarly unwise for the United States to lose focus on the importance of conservation efforts in the transportation sector which has both national security and climate benefits. The United States would benefit strategically from a reevaluation of its ban on oil exports. Finally, the United States should place a greater emphasis on conflict resolution in troubled states. By resolving internal conflicts over the distribution of oil revenues, the United States can better pave the way for long-term solutions whereby those same revenues can be integrated into national budgets in ways that brings economic prosperity to populations instead of rising military expenditure.
Topic:
Energy Policy, Oil, Military Strategy, Gas, and Conflict
Political Geography:
United States, Middle East, North America, and Persian Gulf

38. How to Bring Stability to Bahrain

Author:
Brian Dooley
Publication Date:
02-2015
Content Type:
Working Paper
Institution:
Human Rights First
Abstract:
Washington needs a new strategy to help bring stability and reform to Bahrain. Although the smallest country in the Middle East, Bahrain exemplifies several of the major challenges for U.S. policy in the region: Sectarian tensions exploited by ISIS and other Sunni extremists and by Shi’adominated Iran to fuel conflict Economic troubles linked to public corruption and an over-reliance on oil revenues, exacerbated by sharply falling oil prices Stalled political reform leaving the root grievances of large scale public protests unresolved De facto U.S. support for an authoritarian status quo through a government that fails to deliver good governance and continues to deny basic rights and freedoms to its people, while courting support from Russia and other U.S. rivals Falling public support for the United States Major military assets, in Bahrain’s case the basing of the U.S. Fifth Naval Fleet, threatened by protracted instability
Topic:
Imperialism, Oil, Religion, Military Strategy, Authoritarianism, and Political stability
Political Geography:
Russia, United States, Europe, Middle East, and Bahrain

39. Iran’s Economic Reintegration: Sanctions Relief, Energy, and Economic Growth Under a Nuclear Agreement with Iran

Author:
Elizabeth Rosenberg and Sara Vakhshouri
Publication Date:
06-2015
Content Type:
Working Paper
Institution:
Center for a New American Security
Abstract:
The international community is poised to sign a deal with Iran on its nuclear program, under which Iran would make concessions on its enrichment activities and the United States and others would offer substantial relief from punishing economic sanctions. The removal of the most complex, extensive, and multilateral regime of coercive economic measures promises a windfall to Iran. However, this will be neither immediate nor easy, given the difficulty of reestablishing severed commercial and legal ties between Iran and the global financial system. Removing sanctions will require careful international cooperation and substantial outreach to the private sector.
Topic:
Arms Control and Proliferation, Economics, International Trade and Finance, Oil, Treaties and Agreements, and Sanctions
Political Geography:
Iran and Middle East

40. 2015 Symposium Sheds Light on Complexities of Shale Oil

Author:
Tareq Radi
Publication Date:
04-2015
Content Type:
Special Report
Institution:
Center for Contemporary Arab Studies
Abstract:
This year’s symposium, entitled “An Energy Revolution? Political Ecologies of Shale Oil in the Middle East, US, and China,” set out to assess the political, economic, human, and environmental impacts of shale oil and its technologies of extractiong lobally, and particularly on the societies and economies of the MENA region.
Topic:
Energy Policy, Environment, Oil, Natural Resources, and Academia
Political Geography:
China, Middle East, and United States of America