America has perhaps never been anyone’s friend.

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America has perhaps never been anyone’s friend. It hasn’t been anyone’s enemy too with a true reason. But yes, if the reason was oil, it would do the unfathomable. America’s foreign policy has indeed been dictated by oil. The rule is simple – if you have oil, you are not unknown to America’s friendship or perhaps even enemity.

On October 6, 1973, the holy day of Yom Kippur for Jews, Arab states like Syria, Iraq & Egypt launched a surprise military attack on Israel. Despite being outgunned and outnumbered, Israel decisively won the war and the entire Arab world was in a state of shock. The Arab world was convinced that Israel won the war because of the backing of powerful western nations like US & Israel. The mood in Arab streets was one of seething anger and resentment. On October 18, 1973, the Organization of Oil exporting Countries (OPEC) announced a brutal hike in the price of crude oil to $48 per barrel. In 1979, the most important ally of US, the Shah of Iran was blown out of his Imperial Throne by a radical Islamic Revolution. OPEC also announced yet another crippling hike in oil prices. This time it touched $90 per barrel! The ‘Oil Shock’ administered by the Arab-dominated OPEC turned everything upside down. Economies across the world suffered huge dislocations. For the first time, Americans got a dose of what it means to wait for hours in a queue to fill up petrol. The beginning of the end of Detroit can be traced to the tumultuous events of 1973. The rise & rise of Asian brands in the consumer durables sector can also be traced to that year as can be the beginning of the end of US as the most powerful empire in history.

Declassified documents of that era clearly show that the Richard Nixon administration had seriously considered military action against the Arab world to ensure an uninterrupted supply of oil for the West. Post World War II, the global economy became critically dependent on oil and a sudden disruption could have had apocalyptic effects. The only reason the Arab world escaped the military attention of the West was America’s humiliation in Vietnam and the inglorious exit of Nixon as President. The loss of Iran as an ally and its emergence as a fulcrum of hatred against America has been a blow that US has never recovered from.

The relentless pursuit of energy security (coupled with the Soviet defeat) has provoked US to implement foreign policies that have started haunting the west. It has literally become a no-win situation for US. After losing Iran in 1979, it helped Iraq ruled by Saddam Hussein to wage a vicious war against the then unstable Iran. The bloody war lasted till 8 years with no clear victor. US earned even more hatred from the Iranians for winking while Saddam used poisonous gas & chemical weapons against Iranian troops. Not that supporting Iraq helped. Despite close to 30 years of sanctions and economic embargoes, Iran continues to be a prosperous state thanks to high prices of oil and is also threatening to acquire nuclear weapons.

After losing Iran, US also adopted a policy of allying with the coercive governments of Saudi Arabia & Kuwait. It helped that the Soviet Union invaded Afghanistan in 1979 and Uncle Sam became a close friend and trusted ally of Islamic jehadis. The CIA supplied arms and trained the Mujahiddeen that included a certain fellow from Saudi Arabia called Osama Bin Laden. We all know what Osama Bin Laden and his supporters did to US in September 2001.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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