The rise of OPEC has been an abiding curse for the world
One abiding fantasy in the Arab world since 1948 has been the destruction of the state of Israel, many legitimately angry at the treatment meted out to Palestinians and some nursing deep religious and ehtnic hatreds. In 1973, an America supported Israel fought yet another war with neighbouring Arab countries and won a convincing victory. After the 1967 disaster, this repeat pulverised the Arab world and even the autocratic rulers of these oil rich kingdoms and sheikhdoms realised that their thrones were in danger if something was not done to mollify the Arab street. One direct result was the Organisation of Oil and Pteroluem Exporting Countries (OPEC) imposing an embargo on shipments of crude as well as refined oil.
The next step was a multi hundred percent hike in the price of oil. The global economy was literally shaken to its very foundations as a result and complacent American consumers realised that they had to wait for hours to get their cars refilled with ‘gas.’ But the global economy did adjust to higher oil prices while all -almost all-oil exporting countries have started failing as modern functional societies as a result of massive dollar revenues coming from oil exports. Iran, Saudi Arabia, Russia, Iraq, Sudan and Nigeria are just some examples of what happens to societies when easy dollars are used by autocratic regimes to buy peace and promote fundamentalism of one kind or other. Can you imagine a born rich Mohhamed Atta of Saudi Arabia flying aircraft onto the World Trade centre without oil money lurking in the background?
One abiding fantasy in the Arab world since 1948 has been the destruction of the state of Israel, many legitimately angry at the treatment meted out to Palestinians and some nursing deep religious and ehtnic hatreds. In 1973, an America supported Israel fought yet another war with neighbouring Arab countries and won a convincing victory. After the 1967 disaster, this repeat pulverised the Arab world and even the autocratic rulers of these oil rich kingdoms and sheikhdoms realised that their thrones were in danger if something was not done to mollify the Arab street. One direct result was the Organisation of Oil and Pteroluem Exporting Countries (OPEC) imposing an embargo on shipments of crude as well as refined oil.
The next step was a multi hundred percent hike in the price of oil. The global economy was literally shaken to its very foundations as a result and complacent American consumers realised that they had to wait for hours to get their cars refilled with ‘gas.’ But the global economy did adjust to higher oil prices while all -almost all-oil exporting countries have started failing as modern functional societies as a result of massive dollar revenues coming from oil exports. Iran, Saudi Arabia, Russia, Iraq, Sudan and Nigeria are just some examples of what happens to societies when easy dollars are used by autocratic regimes to buy peace and promote fundamentalism of one kind or other. Can you imagine a born rich Mohhamed Atta of Saudi Arabia flying aircraft onto the World Trade centre without oil money lurking in the background?
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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