Climate, states and the petrodollar

| 7th October 2021 |

Between the Persian Gulf and the Indian Ocean lies the Strait of Hormuz, a narrow oceanic passageway through which much of the Persian Gulf’s oil production passes. On the north side of the strait are mainland Iran and Qeshm Island. Roughly 100 kilometers long, this arrow-shaped island is the Persian Gulf’s largest.

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If Western states are to adopt the Green New Deal policies needed to ensure our survival, they themselves will need to be radically transformed.

The combined sovereign wealth of Saudi Arabia and the other Gulf Arab monarchies amounts to $2.9tn.

The world’s most powerful states have their own reasons for maintaining the carbon based economy. As do the major oil and gas corporations, airlines and car manufacturers, and perhaps those firms dealing in oil based products such as petrochemicals, plastics and fertiliser.

This means governments represent an obstacle to decarbonisation every bit as formidable as corporations like ExxonMobil or Royal Dutch Shell.

That hydrocarbons are the lifeblood of the world economy means that the huge oil and gas reserves of the Middle East constitute a vital strategic prize. This is why the region has been the site of such sustained and violent inter-state conflict since the end of World War Two (WWII).

This series of articles has been published in partnership with Dalia Gebrial and Harpreet Kaur Paul and the Rosa Luxemburg Stiftung in London. It first appeared in a collection titled Perspectives on a Global Green New Deal.

Wealth

Moreover, with a rising China dependent on oil and gas imports from the Persian Gulf, where US power continues to dominate, Washington derives enormous structural power from current patterns of energy production and consumption.

The profits generated from the sale of oil and gas are also of great interest to states as well as corporations.

The sovereign wealth of the major oil producers is one of the most significant sources of liquid capital in the world.

The combined sovereign wealth of Saudi Arabia and the other Gulf Arab monarchies amounts to $2.9tn, while corporate and private wealth in those states adds up to a further $3tn. These 'petrodollars' can be 'recycled' to the benefit of Western states.

Petrodollars

Petrodollar investment in the US, UK and France is made by the Gulf states as much in the interests of regime security as in the expectation of a favourable economic return.

The links between Western finance and the Gulf Arab monarchies developed in the context of imperialism, where monarchical rule has been able to entrench itself and fend off more progressive social forces thanks to the decisive backing of Western states.

This is even more obviously true in respect of the major arms purchases made by the Gulf monarchs, which in turn equip the Western powers to continue their role as the monarchies’ protectors.

If Western states are to adopt the Green New Deal policies needed to ensure our survival, they themselves will need to be radically transformed.

This Author

Dr David Wearing is a lecturer in department of international relations at University Of Southampton, based in London, UK.

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