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Oil importance to Saudi Arabia
The role of oil in Saudi Arabia's politics
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Zach Augenstein
Mr. Fauver
Modern World History CP
5 May 2014
The Political Effects of Oil on the Saudi Arabian Government
The Kingdom of Saudi Arabia is a petrostate. It is a petrostate in the sense that the oil sector dominates the national economy and international exports. (Colgan 226) This is due to Saudi Arabia’s one crop economy, oil. (Ali 100) Oil accounts for 70-80% of the state revenue as well as roughly 95% of export revenues. Before the discovery of oil in the 1930s, the economy rested on Islamic pilgrims. Containing the Grand Mosque, Al-Masjid al-Haram, Saudi Arabia gets a large influx of believers every year for the Hajj, one of the Five Pillars of Islam. During this time of year, income was made by food and shelter sold to the travelers. This was enough to support the state, but not enough to make it the monetary power it is today. What allowed for Saudi Arabia’s climb in the world economic ladder was oil. Oil has been a valuable industrial resource since the beginning of World War 1. Since then the demand for oil has progressively become higher and higher amongst industrial nations, allowing for oil rich states to receive large amounts of affluence. Among these oil rich states is Saudi Arabia, the region with the highest capacity for oil production out of the entire Middle East. From their remarkably high oil production, Saudi Arabia was able to gain considerable amounts of wealth and political significance. Oil in Saudi Arabia politically affected the Saudi government in both their foreign and domestic policy by providing economic power, the ability to fund wars, the ability to use economic diplomacy.
From their extensive oil reserves, the Saudi Arabian government was able to gain economic power in the form of pur...
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...Arabia is a petrostate. Oil dominates the national economy, international exports, and the nation’s politics. It has greatly shaped what the kingdom is today. Having started out as somewhat of a tourist economy, the kingdom has become a world, monetary power. From their massive amounts of oil and extremely cheap production, the country has been able to gain large amounts of affluence and political power. With its large abundance of oil, the country has been able to profit immensely on sales and spur diplomatic outcomes to their benefit due to the great need of the resource. Without the discovery oil, Saudi Arabia would be of little importance in the modern world, having the Grand Mosque be the extent of its importance. But because of its discovery of oil, Saudi Arabia became of international importance, coming to be one of the greatest assets to world superpowers.
The example of Saudi Arabia is worth mentioning again. The petroleum sector accounts for roughly 80% of budget revenues, 45% of GDP, and 90% of export earnings . The state is the major employer and provides its people with free education however according to Andre Elias Mazawi, these institutions (schools and universities) have little independence in the form of ‘academic policies, staffing and budgeting’ . This is clearly an attempt to exert its influence over institutions famous for breading different ways of thinking and political activism.
Iraq and Kuwait were some of the biggest oil producing countries in percentage. The author claims that before the war they engaged into numerous arguments in regards to their oil business. At this time the author explains that Iraq requested for a reduction in the price of oil, but Kuwait didn’t want and this caused a lot of loss for Iraq. Iraq, as put by the then foreign minister Tariq Aziz, is said to have expressed his concern on the kind of losses that were occurring in the tune of billions on their oil business as prices per barrel dropped. All that Iraq wanted from the lowering of prices on crude oil was to help them clear their debt with Kuwait (Fitzgerald 7).
The Middle Eastern has developed a lot of economic success with the authoritarianism government they’ve established. To some people, if they are economically stable, they’re willing to endure the hardships of being lead under a dictator. Countries like Bahrain and Saudi Arabia are flourishing in the oil business, which keeps them wealthy and involved in international relations. To the citizens of the Middle East, this makes their country look powerful because even with the Western’s opposing ideologies, they’re still working with the Middle East. This is sending the wrong message because even though the western countries have to cooperate and show political support with the Bahrain, Saudi Arabia, and other Middle Eastern countries. Situations like these give the citizens a positive outlook of how their country is being conducted and support their governme...
Although the United Sates and Saudi Arabia present the United States and Saudi Arabia’s relationship as excellent, there are actually two nations who have bitter disagreements but who allies through oil. The only thing that has held this alliance together is the US dependence on Saudi oil. The United States has felt and still fells that it is a necessity to have bases present in the Middle East to protect oil, and silently to protect Israel. The relationship began in 1933 when Standard Oil of California signed an agreement with the Saudi government. In 1943 FDR affirmed that the defense of Saudi Arabia was a vital interest to the United States and moved troops into the region. Future presidents would emulate this declaration and mobilization of troops to Saudi Arabia. Again in 1945 Abd al Aziz, the Saudi king, and FDR would cement this alliance, on a US warship in the Suez Canal. Soon after, airfields were constructed at Dhahran and other spots over Saudi Arabia; beginning a long tradition of US military facilities in Saudi Arabia. Abd al Aziz was the first of his line of successors to meet with US presidents. The relationship was only strengthened with the onset on the Cold war, as the US used the bases in Saudi Arabia as potential air force launch sites to the USSR and constructed more military facilities. In 1941 Harry S. Truman made another assertion of Americas protection and alliance with Saudi Arabia to Abd Al Aziz. Truman stated that “support for Saudi Arabia’s territorial integrity and political independence was a primary objective of the United States.” (Countrystudies.com) Another stipulation of this pact was that the US established a permanent military training mission in the Saudi Arabia. That mission lasted until 1992. Soon after the pact between Truman and Aziz was agreed upon the US-Saudi relationship would endure its first major disagreement. On May 14th, 1948 Israel was declared an independent state in the former Arab dominated Palestine. Israel’s independence was backed the United States. Saudi Arabia refused to acknowledge the country of Israel and to engage in any relations with them. The Saudis concerns of the Israel-US relationship were reinforced in the 1970’s and 1980’s when the US sold arms to Israel, but refused to sell arms to Saudi Arabia. In some cases congressional leaders refused to sell arms to Saudi Arabia on the grounds that Saudi Arabia might use them against Israel.
They increase the spending on connectivity and human resources (Saudi Arabia Emergence Innovation Kingdom, 2014). Saudi Arabia is the largest economy in the Middle East and the richest Arab country. The economy of Saudi Arabia is entirely based on oil (Smetoolkit.org, 2014). Saudi Arabia is the 19th largest exporter and the 20th largest import market in the world (Saudiembassy.net, 2014). Exports now in the kingdom include all economic sectors.
Iran was the center of oil discovery, drilling, and exportation in the Middle East, providing many countries with a priceless necessity. Surrounded by the chaos of a huge bonanza, the Anglo Iranian Oil Company (AIOC) was able to make billions off of its top competing export ("History of Iran: A Short Account of 1953 Coup"). The beginning of the 1950s proved that this company was a huge success for the country of Iran. It benefited approximately one hundred and seventy million pounds (regional currency) due to the amount of oil it had sold to interacting countries. Close to thirty percent of their revenue was achieved through the taxes that were applied to oil sales ("Overthrow of the Iranian Government"). According to the Cold War Museum, the income was brought in at the cost of Iranians who worked all day and night, to receive very little from the jackpots that the Anglo Iranian ...
Development began in 1941 and production advanced rapidly. The Hejaz has never fully accepted Wahhabi rule, but the oil wealth makes up for that, since all the oil comes from the other side of the country. Abdul-Aziz died in 1953. King Saud succeded the throne after his father's death. Oil wealth provided Saudi Arabia with economic
In fact, occasional protests occurred particularly in the Shiite east of the country. But the regime successfully used its rich resources to keep the country stable. The revenues from the oil sector allowed Saudi Arabia to offer concessions that helped to depoliticize strategic sectors of society, and to finance and increase security and intelligence forces. When protests occurred in other Arab states, the government immediately imposed a nationwide ban on demonstrations. King Abdullah also announced a vast subsidy program. Furthermore, the royal family received a valuable support from the influential Council of Senior Islamic Scholars which said that demonstrations are not compatible with Islam and therefore declared a ban on protests.
Crimes punishable by the death sentence in Saudi Arabia include murder, serious attacks on the Islam religion, adultery, dress codes, and since 1987, drug smuggling. Under Saudi Arabian law, serious crimes merit serious consequences. Repeated theft is punishable by amputation of the right hand, administered under anesthetic. Because most meals in Saudi Arabia are eaten by hand from a communal bowl and only the right hand may touch the food, this punishment effectively bans the convicted thief from society. The severity of this punishment has led to a slight softening of the law in recent years; now if the thief repents and makes restitution before the case is brought before a judge, the punishment can be reduced... furthermore, the victim of the crime may demand payment rather than amputation of the thief’s right hand, and in some cases the victim is even permitted to parden the criminal. In a typical year at least ten hands amputations are carried out for repeated thievery in Saudi Arabia. (Goodwin, 1943) Today in the United States, crimes such as theft are punishable by jail sentence if they have more than one thievery act.
Muslims among the Shia community still believe that only individuals who descended from Ali's family had the right of being Muslim leaders in the present and the future. Instead, the Sunnis focused and believed in the way of their Prophet Mohammad which was known as Sunnah. Currently, the violence and conflicts between the Sunni population in Saudi Arabia and Shia people in Iran are continuously fueled by religion as well as politics (Totten & Michael 7). Both countries are involved in wars and conflicts in an attempt to gain more power to dominate and control the Middle East (Aras, Bülent &Richard 323)."The Arab Spring facilitated a series of norms that challenge existing structures of power and authority, in addition to highlighting trans-boundary patterns of loyalty in the region” (Aras, Bülent &Richard 322).Saudi Arabia and Iran are a home to natural gas and oil in large quantities allowing them to have a huge amount of money to support the military and war activities without directly oppressing the citizens by imposing high taxes (Hashim & Ahmed
Saudi Arabia, the leader of OPEC (Organization of Petroleum Exporting Companies), maintains a powerful position in negotiations with the U.S. and other countries. Its vast supply of oil directly effects per barrel pricing and is a unique bargaining tool in international politics. But Saudi Arabia is no ordinary country in today's world. Its borders are governed by a royal family of nearly 30,000 individuals, all of which share most of the wealth and almost all of the power. Its people, with foreign exceptions, are wholly Islamic and many practice the faith with a frightening sense of devotion. And despite the immense revenue generated by its oil reserves, part of its population still lives in absolute poverty. Although recently it has seen immense change, it is still a country fair behind the progressive world.
Over the past 200 years, mankind discovered the fossil fuels and they used this source to produce hug energy. This affects the environment in many negative ways and caused many issues worldwide such as urban air pollution and acid rain, oil spills and the high temperature of earth. Saudi Arabia has the biggest oil reserves in the world by 19.66% (the world factbook, 2011) and the second oil producer country in the world with roughly 10.121 million barrels a day – which account for 12% of the total world production of oil in 2010 (Fontinelle,2011). Moreover, the country relies heavily on oil industry. And the most successful companies in the country are thus whose work in oil industry such as ARAMCO Company. The reason behind this success is because most of these companies get financial support and attention from the Saudi government and sometimes the government owes these companies. Because of the massive reserve of oil and the high income that generated from oil, the country has less attention to seek for other sources of clean energy such as solar energy and wind energy which leads to the increase of air pollution in the country. However, oil is expected to last in the next 50 to 100 years (Hubbert, 1956). Furthermore, the International organizations have made many decisions to protect the environment and environmental resource such as Kyoto Protocol which decided to raise the use of solar energy to 50%of the total global energy use by 2020 (UNFCCC ,2005 ). Recently, these issues lead the Saudi government to realize problems, such as air pollutions, and start to invest in clean energy area but not as expected. These days many people in Saudi Arabia argue the uses of clean energy and replace with the fossil fuels. And they d...
The discovery of oil in Middle East in the late nineteenth century added a critical dimension to the region as major outside state powers employed military force to protect their newly acquired interests in the Middle East. The United States efforts to secure the flow of oil have led to their ever-increasing involvement in the Middle East’s political affairs and ongoing power struggles. By the end of the twentieth century, safeguarding the flow of oil from the Persian Gulf had become one of the most important functions of the U.S. military. The close relationship between the United States and the Saudi royal family was formed in the final months of World War II, when U.S. leaders sought to ensure preferential access to Saudi’s petroleum. The U.S. link with Saudi Arabia and other countries in the region has demonstrated to be greatly beneficial to both parties, yet it has also led to ever deepening U.S. involvement in regional politics.
The worst imaginable environmental catastrophe that could occur in Maryland has just become a reality. The lifeblood of Southern Maryland's Watermen has been forever affected. The ecosystems of the Patuxtent River and Chesapeake Bay have been irreversibly contaminated. The Three Mile Island and Chernobyl Nuclear Accidents have affected the world ecosystems; but the Chalk Point oil spill has reached us here in Southern Maryland. The ethical considerations with generating electricity from fossil fuels, specifically oil, has a profound impact on us all. We all use electricity to make our lives easier and more productive. By using this electricity have we given our permission for the oil companies free reign in order to provide us with the service we demand?? Are we just as responsible for the oil spill as the corporate leaders who run the companies? As citizens we are in a position to develop and enforce regulations to protect ourselves. Do we also protect the environment; or is the environment just something for us to use? These and many other moral dilemmas exist for modern man.
The largest world supplier oil company is Saudi Aramco. It is the most profitable company on the earth. Since it is the most powerful oil company, it has a great impact on the world economy. As a result, a strong international relationship was built with the Kingdom of Saudi Arabia. In addition, the strong developing of international relationship with other industrial countries resulted in massive contributions to the politics, economy, and many different aspects. In 1933, Saudi government bestowed oil concession to California Arabian Standard Oil Company (Chevron). The main factor for this grant was to explore the oil in the eastern region of the Kingdom of Saudi Arabia. After discovering a huge amount of oil, part of the grant was sold to other American oil companies in order to cooperate with each other to do more exploration and to deal with such a big job. In 1948, all these American companies were incorporated into Arabian American Oil Company (Aramco) shared 50% of its profits with Saudi government. Furthermore, the company’s shares had been acquiring by Saudi government to gain 100% of its ownership. In 1988, the name changed to Saudi Aramco. The Headquarter of Saudi Aramoc is located in Dhahran, a city in eastern region of Saudi Arabia. Saudi Aramco produces 10 million barrels of oil each day. The history of Saudi Aramco went through three major periods: exploring oil, interconnecting with the USA, and contributing to other many universal events.