Oil and the Islamists
by George Caffentzis
New Internationalist magazine, December 2001
The hidden civil war within the oil-producing countries from
Algeria to Iran may help to provide a context for the brutal attacks
on the World Trade Center and the Pentagon.
The role of the US has been the crucial factor in the region,
as exemplified by the devastation of Iraq, unstinting US support
for Israel, the US Government's proprietary attitude to oil resources
in the Middle East, and the building of US bases in Saudi Arabia,
Islam's most sacred land.
The result has been deep divisions within the ruling elites
which pit pro-American governments - often consisting of royal
dynasties in the Arabian Peninsula - against dissidents who, in
the name of the Qur'an, accuse them of being corrupt, of squandering
the region's resources, of selling out to the US, of having betrayed
Islam. These dissident fundamentalists have used their wealth
to create a multinational network of groups stretching through
every continent, and offered an alternative 'social contract'
to the poor of North Africa, the Middle East and West Asia.
From Cairo's bread riots of 1976, through the uprisings in
Morocco and Algeria of 1988 - both crushed in bloodbaths - to
the more recent anti-IMF riots in Jordan (and the list is much
longer), it is evident that it has become more and more difficult
for poor sectors of the population to survive. The fundamentalists
have attempted to win over people in urban areas through providing
basic necessities such as schooling and healthcare that have been
suffering as a result of cuts in government subsidies and programs
dictated by the World Bank and IMF. It is the Islamic fundamentalist
networks, for example, that organize healthcare and education
in the Palestinian 'territories', almost functioning as an alternative
government to the PLO at grassroots level.
But Islamic fundamentalism also continues to have an attraction
within the ruling circles of the wealthiest Muslim nations. This
internal contradiction has created a tangled net of consequences
which is now embarrassing many not just in the governments of
the Middle East, but in the US Government too. For they have financed
and trained the very generation of dissidents who are now so violently
turning against them. On the one side, a portion of Middle Eastern
oil revenues has been used to fund assaults on symbols of the
New World Order; on the other, the US Government financed and
trained many members of this dissident branch of the Middle Eastern
ruling classes in its effort to destabilize the Soviet Union in
Many of those who have been brought back into power in George
W Bush's administration were the ones who were responsible, during
his father's presidency, for the training and financing of the
very organizations they now hunt under the banner of 'terrorism'.
The executive dynasties in both the US and Saudi Arabia must both
be worried about family members who have been compromised by their
past connections to the networks they now claim to be responsible
for the events of 11 September - and this includes the US President's
family. For example, The Wall Street Journal of 28 January reported
that George Bush Senior works for the bin Laden family business
in Saudi Arabia through the Carlyle Group, an international consulting
firm - as do other close associates of the President like former
Secretary of State James Baker.
The 11 September attacks were, however, symptoms of desperation,
not of power, resulting in a devastating US military response
with predictable results: the destruction of thousands of Islamic
fundamentalist militants along with tremendous collateral damage
to the people of Afghanistan and probably other countries in North
Africa, the Middle East, and West Asia. Who on the ground can
survive in such a maelstrom? Indeed, the actual perpetrators and
their accomplices, whoever they are, must have been very desperate
to take such a risk with their own network and the lives of millions
of people of the region.
Clearly something so very important was going on that the
perpetrators of 11 September needed to thwart by desperate and
inherently uncertain measures. What was it? My view is that the
source of this desperation involved the oil industry and globalization
in the Arabian Peninsula. Here is my hypothesis.
In 1998 (after the collapse of oil prices due to the Asian
financial crisis), the Saudi monarchy decided, for 'strategic
reasons', to globalize its economy and society, beginning with
the oil sector. The oil industry had been nationalized since 1975,
which means that foreign investors were allowed to participate
only in 'downstream' operations like refining. But in September
1998 Crown Prince Abdullah met senior executives from several
oil companies in Washington DC. According to Gawdat Bahget, writing
in Arab Studies Quarterly: 'The Crown Prince asked the oil companies'
executives to submit directly to him recommendations and suggestions
about the role their companies could play in the exploration and
development of both existing and new oil and gas fields.'
These 'recommendations and suggestions 'were then submitted
to the Supreme Council for Petroleum and Mineral Affairs in early
2000 (after being vetted by the Crown Prince) and in the middle
of 2000 the Saudi Government ratified a new foreign-investment
law. Under the new law, 'tax holidays are abolished in favor of
sweeping reductions in tax on profits payable by foreign entities,
bringing them nearer to levels that apply to local companies.
Wholly owned foreign businesses will have the right to own land,
sponsor their own employees and benefit from concessionary loans
previously available only to Saudi companies.'
Clearly 'the right to own land' would be a red flag for anyone
committed to the sacred character of the Arabian Peninsula. Experts
on the Middle East were literally falling over themselves in their
effort to highlight the new Investment Regulation. 'Keep your
fingers crossed,' said one, 'but it looks as if Saudi Arabia is
abandoning almost 70 years of restrictive, even unfriendly policy
toward foreign investment.' This law constituted, in effect, a
NAFTA-like agreement between the Saudi monarch and the US and
European oil companies.
At the same time as this law was being discussed, a ministerial
committee announced that up to $500 billion of new investments
would be deployed over the next decade to change the form of the
Saudi national economy. Around $100 billion of this investment
was already promised by foreign oil companies.
In May 2001 the first concrete step in this stepped-up globalization
process was concluded when Exxon/Mobil and Royal Dutch/Shell Group
led eight other foreign companies (including Conoco and Enron
from the US) into a $25-billion natural-gas development project
in Saudi Arabia. The financial press noted that the deal would
not be very lucrative in itself, but that 'it's part of a long
term ploy of the oil companies, [which] want ultimately to get
access again to Saudi crude'.
By the summer of 2001 the Saudi monarchy had cast the die
and legally, socially and economically crossed the globalization
Rubicon. It did so not because Saudi Arabian debt was unmanageable
(as was the case with most other countries which bent to the globalizing
dictates of the IMF) but because, faced with a intensifying opposition,
the Royal circle realized that only with the full backing of the
US and European Union could they hope to preserve their rule in
the years to come.
Their strategy was aimed at getting the economy moving again
and thereby reducing three things: its dependence on oil exports;
its large and growing youth unemployment rate; and its huge foreign
labor force (around 6-7 million in a population of about 22-23
million). This required a radical departure from the patronage
the Saudi monarchy had exercised in the past to keep social peace,
made possible until recently by its immense oil wealth. But this
wealth is not infinite and is declining. GNP per capita fell from
approximately $13,000 in 1983 to $8,000 in 1993 and has since
continued to fall.
Inevitably, this strategy was bound to impact on the economic
policies of the other oil-producing governments in the region,
especially Oman, Qatar, United Arab Emirates, Bahrain, and Kuwait.
But if it worked, it would also deal a decisive blow to the Islamicist
opposition, undermining its ability to recruit converts - people
employed in the upper echelons of a 'globalized economy and society'
would be distinctly less likely to respond than those driven to
despair by political powerlessness and long periods of unemployment.
The cat-and-mouse game that the Saudi monarchy had played with
fundamentalist dissidents (in which the King and his dynasty claimed
to be even more fundamentalist than them) would end. But the introduction
of foreign ownership of land and natural resources, backed up
by large investments, and the hiring of more expatriates from
Europe and the US, would also bring major social change in its
Whatever hopes the Islamic opposition in the ruling classes
of the Arabian Peninsula had ever harboured of getting their governments
to send American troops packing and turning their oil revenues
into the economic engine of a resurgent Islam were facing a historic
crisis in the summer of 2001. Without a major turnaround, the
Islamic fundamentalist opposition would have to face the prospect
of total civil war in their own countries or face extinction.
It is possible that elements of this opposition decided that only
a spectacular action like the 11 September attack could turn back
the tide. Perhaps they hoped that the turmoil and uncertainty
generated by the attacks on New York and Washington would generate
a strategic US retreat from the Arabian Peninsula - just as the
bombing in Lebanon in 1983 led the US to pull out from there.
On the basis of this analysis, then, the 11 September attacks
on New York City and Washington DC were linked to a struggle over
the fate of oil politics in its heartland: the Arabian Peninsula.
We should be watchful of developments there, which will undoubtedly
be hidden from sight, and not just the sound and fury directed
towards Afghanistan. And in this context, it is pertinent to ask:
how can the populations of North America and Europe continue to
be blind to the social cost of the oil they put in their cars,
and the economic and social inequities built upon it?