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What role have natural resources played in the politics and economy of the Middle East?

Like oil and water

The Middle East has always had a rich abundance of natural resources, although which resources are coveted and valued has changed over time. Today, abundant petroleum fields dominate the area's economy. The Middle East is similarly disproportionately rich in natural gas (32 percent of the world's known natural gas reserves are in the region) and phosphate (Morocco alone has more than half of the world's reserves).

Water has always been an important resource in the Middle East -- for its relative scarcity rather than its abundance. Disputes over rights to water (for example, building a dam in one country upstream from another) are a fundamental part of the political relationships in the region. Water for irrigation is necessary for many of the ecosystems to sustain crops.


Early Western control of oil

In the 18th and 19th centuries, major European nations competed to establish and maintain colonies around the world. Superior military power and economic leverage allowed them to create new markets for their manufactured goods, and to exploit the natural resources of the African, American, and Asian continents.

An oil derrick in 1909, in present-day Iran, during the early days of Persian oil-field development [ enlarge ]

Since the early part of the 19th century, Europeans vied to control the Middle East. The Sykes-Picot Agreement of 1916 divided the Ottoman lands between the British and the French, giving those nations control over any natural resources, most importantly oil.

Modern armies were thirsty for oil. The British navy was the first to switch from coal to oil in 1912, and other new technologies, like automobiles and airplanes, quickly and drastically increased the demand for fuel.

The United States was becoming an important player in world affairs during the early 20th century, and soon Americans found they, too, had a vested interest in developing and controlling oil reserves in the Middle East to supply their growing needs.


Struggles over Iranian oil

The Iraq Petroleum Company's oil pipeline, seen being installed in this undated photo, runs for 1,000 miles through the desert. [ enlarge ]

More than 1,000 years ago, Zoroastrians in Iran revered the perpetual flames that burned where natural gas vented from the earth. In the early 20th century, British prospectors discovered oil in Iran and in 1908 began the first large-scale drilling projects there. The government of Iran sold the exclusive right to explore and drill for oil in Iran -- a "concession" -- to the Anglo-Iranian Oil Company (AIOC). The British government bought a controlling stake in AIOC, and by the start of World War I, Iranian oil was Britain's most important strategic resource.

In time, Iranians grew to resent the AIOC. The terms of the concession were so unbalanced that British investors were rewarded handsomely while the government of Iran made very little profit. Foreign businessmen and engineers in Iran led extravagantly wealthy lifestyles that contrasted sharply with the poverty of the local population.

The Shah of Iran, Mohammed Reza Pahlevi, and President Nixon chat in the Oval Office, September 24, 1973. [ enlarge ]

Frustration with foreign exploitation led to nationalization. The Iranian government of Mohammed Mossadeq nationalized the Anglo-Iranian Oil Company in 1953, but in a coup engineered by the American Central Intelligence Agency (CIA), this nationalist government was overthrown, and a government friendly to Western interests was installed under the control of the Shah of Iran.

The continued economic and cultural influence of the West and the repressive nature of the Shah's regime led to the Iranian Revolution of 1979. The Shah was overthrown and exiled, and the new Islamic Republic of Iran was established, led by the Ayatollah Ruhollah Khomeini.


American dependence on Middle Eastern oil

After World War II, Britain and France gave up control over much of the Middle East, as they could no longer afford to continue their imperialist strategies, either politically or economically. But a new world power, the United States, increased its presence in the region as American demands for oil were rapidly growing and outstripping domestic supply.

King ibn Saud of Saudi Arabia (seated) with President Franklin Roosevelt, at Great Bitter Lake in Egypt, February 14, 1945 [ enlarge ]

Standard Oil of California first discovered oil in Saudi Arabia in 1936. The huge deposits there and in the neighboring Persian Gulf countries -- the United Arab Emirates, Kuwait, and Bahrain -- established these countries as some of the richest in the world.

Continuing American military power and domestic lifestyles depend on available access to Middle Eastern oil and reasonably low world petroleum prices. Thus, U.S. foreign policy initiatives work to support the stability of pro-U.S. governments, prevent anti-U.S. powers or blocs from forming, and reduce tension and potential armed conflict in the region.

President George H.W. Bush (left) talks with King Fahd of Saudi Arabia, through an interpreter, November 21, 1990. [ enlarge ]

Relations between the Saudi and U.S. governments have traditionally remained strong. Some Americans have questioned that relationship since the events of September 11, 2001, when Osama bin Laden and several other Saudis were involved in the attacks on the World Trade Center and the Pentagon. At the same time, many Saudis mistrust their government's close relationship with the U.S. and resent other American policies in the region, such as U.S. support for Israel and the U.S.-led bombing of Iraq. The presence of armed U.S. troops in Saudi Arabia -- the birthplace of Islam -- is particularly galling to many Muslims.

Because the Middle East has the world's largest deposits of oil (55 percent of the world's reserves) in an easily extracted form, Middle Eastern oil continues to be necessary to the United States. American dependence on foreign oil has grown steadily over the years; currently about 55 percent of the oil consumed in the U.S. is imported. This reliance on foreign oil leaves the country vulnerable to unilateral political and economic acts by oil producing countries. For example, although the U.S. advocated economic sanctions against Iraq after the Gulf War, 9 percent of the oil used by Americans after the war still came from Iraq, shipped through other countries.


The positive and negative faces of oil

Oil money has created both opportunities and problems for the region.

An empty filling station, Portland, Oregon, November 1973. The Arab oil embargo caused a huge shortage of gasoline in Western countries. [ enlarge ]

Middle Eastern nations have learned to manipulate their production of oil as an international strategy. After the unsuccessful Yom Kippur War with Israel in 1973, an OPEC oil embargo by Arab nations demonstrated a new way to influence European and American policy. Oil prices quadrupled from $3 a barrel in 1972 to $12 a barrel in 1974. In the U.S., the era of cheap gas came to an end, stimulating research on increasing energy efficiency, conservation, and alternative fuels as well as exploration for alternative sources of oil.

Uneven distribution of petroleum deposits has created a disparity of wealth and power in the Middle East. Gulf countries with relatively small populations have the most oil. When workers from countries with large, poor populations, such as Egypt, come to the Gulf region to work, they are often treated as second-class citizens. Meanwhile, wealthy Saudis and Kuwaitis may vacation in Egypt, openly drinking alcohol and displaying other behaviors that would not be permitted in their home countries. Even within oil-rich nations themselves, there is a large gap between rich and poor.


The future of oil

Members of anti-Taliban forces survey the landscape in Kandahar, Afghanistan, following the overthrow of the ruling Taliban regime, January 17, 2002. [ enlarge ]

Oil will continue to be an important regional and global issue. In fact, some question whether one reason the U.S. seeks to maintain influence in Afghanistan after the overthrow of the Taliban is American interest in Central Asian oil and a possible pipeline through Afghanistan. Some estimates show that by 2050, landlocked Central Asia will provide more than 80 percent of the oil distributed to the U.S. As a result, the control of pipelines through Afghanistan or Turkey to distribution centers will be of increasing importance to the United States.


Water, water, but not everywhere

Another resource of vital importance to the region is water. Egypt, Iran, and Turkey are the only countries in the region with abundant fresh water resources. Roughly two-thirds of the Arab world depend on sources outside their borders for their water supply.


Water wars

The Tigris River on the border between Turkey and Iraq. Scarcity of water is a longstanding source of much tension among many Middle Eastern states. [ enlarge ]

The scarcity of water is a major cause of tension between states in the region. Former U.N. Secretary General Boutros Boutros-Ghali has said that the next war in the Middle East will be fought over water.

The Jordan River provides 75 percent of Jordan's water and 60 percent of Israel's. In the early 1960s, Arab nations worked to divert the headwaters of the Jordan away from Israel and towards Jordan. One of Israel's objectives in the Arab-Israeli Six Day War of 1967, among others, was to control the Golan Heights and prevent this plan from being carried out. Israel is still reluctant to restore control of the Golan Heights to Syria. Though often ignored in Western analyses, water is one of the most contentious issues in the discussion of any peace plan for the Jordan Valley.

The Euphrates River, which originates in Turkey, provides most of the water for eastern Syria and almost all of Iraq. Turkey plans to build almost two dozen hydroelectric power dams for its growing population and industries. These dams, joining the completed Atatürk Dam, would drastically reduce the water available to Syria and Iraq. Syria, in turn, has dammed part of the Euphrates under its control, further choking off the water supply to Iraq. International complaints and protests are often challenged on the grounds that the dams are domestic infrastructure projects.


Agricultural resources

While most Americans may think of the Middle East as primarily desert, agriculture has been important for millennia, with farmers adapting to environmental conditions in different locations.

A man working an Egyptian cotton field in the 1930s [ enlarge ]

The history of cotton in Egypt is a good example of how Europeans have exploited the region's agricultural resources. During the American Civil War, American cotton grew scarce, and Egyptian cotton became increasingly important to England. Agreements signed in 1880 with European powers meant that no tariffs were applied to cotton. This meant that more and more farmable land was used to grow cotton instead of food crops. Most of the profits were taken by Egypt's small ruling elite and the Europeans. This system remained in place until the Egyptian Revolution of 1952, when the era of state-sponsored industrialization and a movement toward self-sufficiency began, reducing the amount of cash crops, like cotton, that were exported.

Middle Eastern cotton and textile products, however, are still an important export of the region. More and more garments in American malls, for example, carry a "Made in Turkey" label. Other important agricultural exports found in supermarkets around the world include citrus, dried dates, figs and apricots, and olive products.


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Related sites

Oil Prices on the Rise:
http://www.pbs.org/newshour/bb/middle_east /july-dec99/oil_11-23.html
NewsHour discusses Iraqi leader Saddam Hussein's decision to cut off his country's oil exports to push up prices around the world.

Afghanistan's Agony:
http://www.pbs.org/newshour/bb/asia/jan- june01/afghanistan_3-29.html
NewsHour reports on the devastating drought and political turmoil in Afghanistan. (March 2001)

Oil Price History and Analysis:
http://www.wtrg.com/prices.htm
A discussion of crude oil prices, the relationship between prices and rig count, and the outlook for the future of the petroleum industry.

Is America Stuck in the Middle East?:
http://www.pbs.org/thinktank/show_978.html
Is Middle East oil still crucial to American security?

Global Issues - Middle East:
http://www.globalissues.org/Geopolitics/MiddleEast.asp
Modern Middle Eastern geopolitics have always been about oil. Given the vast energy resources that form the backbone of Western economies, the Middle East has been of paramount importance.

Energy Matters - The Mideast Oil Crisis:
http://library.thinkquest.org/20331/history/mideast.html
A brief history of the Mideast oil crisis in the 1970s and reasons for the embargo

Water Diplomacy in the Middle East:
http://www.netcomuk.co.uk/~jpap/dolat.htm
This site explains how access to water is a key environmental factor in the politics of the Middle East.

People, Land and Water:
http://www.idrc.ca/research/xplaw_e.html
Articles and research dedicated to land and water issues in the Middle East and Africa

Water in the Middle East:
http://www.columbia.edu/cu/lweb/indiv/mideast /cuvlm/water.html
A list of links from Columbia University's Middle East and Jewish Studies Department related to water issues in the Middle East

Commanding Heights Web Site:
http://www.pbs.org/wgbh/commandingheights/
An economist's look at world history and development from 1910 to the present

Middle East: Crossroads of Faith and Conflict (map):

Supplement to National Geographic, October 2002


Related topics

Economics: It's More Than Oil

What have been the role and effects of U.S. foreign policies and actions in the Middle East?


Related maps

Middle East Topographic and Natural Resources

Jump To:


Early Western control of oil

Struggles over Iranian oil

American dependence on Middle Eastern oil

The positive and negative faces of oil

The future of oil

Water, water, but not everywhere

Water wars

Agricultural resources





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