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Middle East Petrodollars and the Transformation of the US Empire, 1967-1988

Ryūnosuke Akutagawa

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Published in Oil Money: Middle East Petrodollars And The Transformation Of US Empire 1967 1988 (The United States In The World)

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The Middle East has been a pivotal region for global politics and economics for centuries. Its vast oil reserves have made it a key player in the world energy market, and its strategic location has made it a focal point for regional and international conflicts.

In the post-World War II era, the Middle East became increasingly important to the United States. As the US emerged as the world's dominant superpower, it sought to secure its access to Middle Eastern oil and to prevent the spread of Soviet influence in the region.

Oil Money: Middle East Petrodollars and the Transformation of US Empire, 1967–1988 (The United States in the World)

by David M. Wight

4 out of 5

Language	:	English
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The US's involvement in the Middle East deepened significantly after the 1967 Arab-Israeli War. The war led to a sharp increase in oil prices, which had a profound impact on the global economy. The US, which was heavily dependent on imported oil, was particularly hard hit by the price hikes.

In response to the oil crisis, the US government sought to strengthen its ties with Middle Eastern oil producers. The Nixon administration launched a series of initiatives designed to improve relations with the Arab states, including the sale of advanced weapons to Saudi Arabia and the establishment of a US-Saudi joint economic commission.

The US's relationship with the Middle East continued to evolve throughout the 1970s and 1980s. The Carter administration pursued a more balanced approach to the region, seeking to improve relations with both Israel and the Arab states. The Reagan administration, however, adopted a more pro-Israeli stance and became increasingly involved in the region's conflicts.

The US's involvement in the Middle East has had a profound impact on the region and on the world. The flow of petrodollars into the US has helped to fuel the country's economic growth and has also given the US considerable leverage in the region. However, the US's involvement has also led to increased tensions between the US and the Middle East, and has contributed to the outbreak of several wars.

The Oil Crisis of 1973

The oil crisis of 1973 was a major turning point in the history of the Middle East and its relationship with the United States. The crisis began in October 1973, when the Arab members of the Organization of Petroleum Exporting Countries (OPEC) announced an oil embargo against the United States and other countries that had supported Israel in the Yom Kippur War.

The oil embargo had a devastating impact on the global economy. The price of oil quadrupled, and there were severe shortages of gasoline and other petroleum products. The United States was particularly hard hit by the embargo, as it was heavily dependent on imported oil.

The oil crisis had a profound impact on the US economy. The price increases led to a sharp rise in inflation, and the shortages of gasoline and other petroleum products caused widespread disruptions. The crisis also led to a loss of confidence in the US government, as many Americans felt that the government had not done enough to prevent the crisis or to mitigate its effects.

The oil crisis also had a significant impact on the US's relationship with the Middle East. The Arab oil embargo made the US realize that it was vulnerable to disruptions in the flow of Middle Eastern oil. The US government began to take steps to reduce its dependence on imported oil, and it also sought to strengthen its ties with Middle Eastern oil producers.

The Rise of Petrodollars

The oil crisis of 1973 led to a sharp increase in the flow of petrodollars into the United States. Petrodollars are the US dollars that are earned by oil-exporting countries from the sale of their oil. The increase in oil prices meant that oil-exporting countries were earning more money, and much of this money was invested in the United States.

The flow of petrodollars into the United States had a significant impact on the US economy. The influx of capital helped to fuel the country's economic growth, and it also led to a decline in interest rates. The low interest rates made it easier for businesses to borrow money and invest, and this contributed to the economic boom of the 1980s.

However, the flow of petrodollars also had some negative consequences for the US economy. The influx of capital led to a rise in the value of the US dollar, which made it more expensive for US businesses to export their products. The high value of the dollar also made it more difficult for US manufacturers to compete with foreign competitors.

The US's Response to the Oil Crisis

The US government responded to the oil crisis of 1973 with a series of measures designed to reduce its dependence on imported oil and to strengthen its ties with Middle Eastern oil producers. The Nixon administration launched a series of initiatives designed to improve relations with the Arab states, including the sale of advanced weapons to Saudi Arabia and the establishment of a US-Saudi joint economic commission.

The Carter administration pursued a more balanced approach to the Middle East, seeking to improve relations with both Israel and the Arab states. The Reagan administration, however, adopted a more pro-Israeli stance and became increasingly involved in the region's conflicts.

Oil Money: Middle East Petrodollars and the Transformation of US Empire, 1967–1988 (The United States in the World)

by David M. Wight

4 out of 5