A History of the Middle East (46 page)

The other major consequence of Egypt’s defeat was that the Palestinian Arabs no longer looked to the Arab regular armies led by Egypt to liberate Palestine. Neither the Palestine Liberation Organization created by the Arab heads of state nor the Palestine Liberation Army, excluded from Jordan, played any role in the Six-Day War. On the other hand, al-Fatah, the largest of the unofficial Palestinian guerrilla organizations, had since 1965 been carrying out operations against Israel from Jordan and Syria. After the 1967 war it chose one of its leaders, the small and dynamic Yasir Arafat, as its spokesman. Guerrilla operations against Israel faced formidable difficulties and made little military impression, but in the wake of the war they aroused enormous public enthusiasm. In 1969 al-Fatah and its allies succeeded in ousting the discredited Ahmed Shukairy from the leadership and Arafat was elected chairman of a new PLO executive. The PLO could never be wholly independent of the Arab states as it could only operate in their territory, but it was not controlled by any one of them. A genuine new political entity in the Arab world – the embryo of a future Palestinian state – had emerged.

The radical anti-Western trend among the Arabs which followed the Six-Day War ran counter to the increased influence of Saudi Arabia. But the Palestinian guerrillas, and the Baathists who controlled Syria and Iraq, were no more inclined to accept Egyptian leadership than King Feisal. Nasser could still act as a mediator, however. When in Jordan in September 1970 a civil war broke out between the Jordanian armed forces and Palestinian resistance organizations, which had bitterly criticized his acceptance of the US peace plan, he was able to call the Arab heads of state to an emergency summit in Cairo at which he succeeded in bringing Yasir Arafat and King Hussein together. It was his last political act. On 28 September, as his guests departed, he died – exhausted – of a heart attack.

Gamal Abdul Nasser has sometimes been compared to Muhammad Ali. Like the pasha, for a time he dominated much of the Middle East from Cairo and gave Egypt a power and influence in the world beyond its natural strength. He also for a time successfully exploited
the rivalries of stronger powers, but ultimately ended in failure. But the comparison does not go very far. Unlike Muhammad Ali, Nasser was a native Egyptian – the first to rule Egypt for more than 2,000 years – with a passionate love for his country. But he was an Egyptian who developed a genuine belief in the movement to unite the Arabs, of which he saw Egypt as the natural leader. His attempts to modernize and industrialize Egypt and to carry out social and economic reforms were as much intended to create a better educated and fairer society for the mass of Egyptians as to add to the country’s strength. After their long period of humiliation, he gave them a new sense of pride and dignity which by no means entirely disappeared after his downfall.

Yet Nasser was essentially a man of his time – that of the decolonization of the Arab world – who, as he perceived himself in his early tract
The Philosophy of the Revolution
, fulfilled a role that was waiting to be filled. His influence was in decline before his early death at fifty-two, and ‘Nasserism’ – a term he personally disliked – could not long survive his disappearance. In a sense, the way in which he came to personify the Arabs in the eyes of the world gave the Arab East an unnatural and temporary unity following the dismemberment of the Ottoman Empire. After his death, underlying forces came to the surface and soon revealed how fragmented the Middle East had become.

With the ending of the Nasser era, the trends which had been apparent since the Arab disaster of 1967 asserted themselves more strongly. There was a further shift in power and influence towards the oil-producing states of the Middle East. At the same time, Israel, which had suffered a period of economic crisis and self-doubt before the Six-Day War, gained new confidence as the indisputably dominant military power in the region. On the other hand, the Arabs of Palestine, whose suffering and oppression had intensified, began the process of asserting their own national identity.

In the two key states of the Arab East – Syria and Iraq – younger leaders emerged in Hafez al-Assad and Saddam Hussein, who, against powerful opposition, succeeded in dominating their country’s affairs till the end of the century. Neither could hope to don Nasser’s mantle of Arab leadership, if only because of intense rivalry between them, but they were able to make the Syrian and Iraqi nation-states become regional powers of significance. They were helped by the fact that Anwar Sadat, Nasser’s successor, effectively abandoned Egypt’s claim to Arab leadership by setting out on his own course which led to a separate peace with Israel. The tragic victim of the variety of conflicting religious/political and socio-economic forces in the Middle East was the tiny republic of Lebanon, which from 1975 was devastated by a 15-year civil war.

The post-Nasser era was marked by a sharp decline in the influence of the Soviet Union in the Middle East and some improvement in relations between the United States and most of the Arab regimes, although these relations were always endangered by the virtually unswerving US support for Israel. By the end of the 1960s Britain had withdrawn from the Gulf and southern Arabia, and the quasi-imperial British role in the Middle East had been finally liquidated.

The Rise of the Oil States

Before the Second World War, the Middle East countries – principally Iran and Iraq – produced less than 5 per cent of the world’s output of crude oil. By 1949, as Kuwait and Saudi Arabia joined the ranks of the big producers and western Europe was ravenous for oil to fuel its post-war recovery, the proportion rose to 12 per cent and a decade later to 25 per cent. As Middle East oil was uniquely plentiful and easy to produce and the economies of the rich industrialized states continued to expand, the upward trend seemed inevitable. By 1970 the Middle East was producing half the oil of the non-communist world.

The Middle Eastern oil-producing states began to become relatively wealthy in the post-war period. In 1950 the oil companies’ practice of making modest royalty payments for each tonne of crude oil extracted was abandoned for a new system of a fifty–fifty division of net profits between the oil companies and the ruler or government of the producing state. Since output was also increasing steadily, government revenues rose rapidly. In Iraq they went from £13.9 million in 1951 to £51.3 million in 1953. In Saudi Arabia, where revenues were barely half a million dollars before the Second World War, they reached $56 million in 1950 and over $200 million by 1956.

This new wealth transformed the outlook for these previously impoverished countries and enabled them to embark on the building of schools and hospitals and the creation of an economic infrastructure. But their needs were great and their income was still limited in relation to their population and extensive territories. Iran, which had enjoyed some oil income for two generations, had the largest population – about 20 million in 1960. The exception was Kuwait, whose population of fewer than 200,000 was gathered mainly in Kuwait City at the head of the Gulf. Kuwait’s oil revenues increased astronomically – from £3 million in 1949 to £60 million in 1952 – making it the first of the oil city-states (to be followed a decade later by the emirates of Abu Dhabi and Dubai), and it was
possible for the modest but exceptionally wise Emir Abdullah Salem al-Sabah (1950–65) to envisage Western living standards for his people within a generation.

In the 1950s Kuwait was still tied to Britain by the Anglo-Kuwaiti treaty of 1899. To the outside world, and especially to the other Arab states, it appeared as little more than a British colony. For Kuwait to become fully independent was difficult, because of the lack of educated Kuwaitis who would be capable of running the administration. However, in 1961 the Kuwait government asked for the abrogation of the treaty, and Britain complied. The risks were immediately apparent when the unstable Iraqi dictator Abdul Karim Kassem revived a long-standing claim to Kuwait and threatened to occupy it by force. The emir appealed to Britain, which landed troops – the Macmillan government seeing an opportunity to redeem the shame of the Suez episode – but two months later they were withdrawn and replaced by an Arab League force. Kuwait had skilfully demonstrated that, though the other Arab states might formerly have regarded Kuwait as an artificial entity, they now wanted its independence. This was the best guarantee for the country’s future.

The Kuwaitis wisely adopted a position of resolute neutrality between the conservative and radical camps in the Arab world. They declared their non-alignment in the Cold War by immediately establishing diplomatic relations with the Soviet Union.

Nothing did more to enhance Kuwait’s position than efforts it made to share its new wealth with its less fortunate fellow Arabs. In the year of independence it set up the Kuwait Fund for Arab Economic Development to provide long-term low-interest loans for vital development projects in the other Arab states. The Fund was a pioneer of its kind in the developing Third World.

The rulers of the other Arab Gulf states who were in treaty relationship with Britain – Bahrain, Qatar and the tiny emirates of the Trucial Coast – still saw neither the need nor the possibility of abandoning British protection for full independence. In 1958 oil had been found in vast quantities in Abu Dhabi, which was called a ‘new
Kuwait’, but its population was less than a quarter of Kuwait’s and it seemed too small even to become another oil city-state. When the British Labour government decided in 1966 to abandon South Arabia, including the Aden military base, it was assumed that it would reinforce its military base in Bahrain. The British prime minister Harold Wilson still dreamed of a British quasi-imperial role east of Suez. However, in 1968 a drastic British financial crisis caused a sudden volte-face and Britain informed the ruling Arab emirs that it would be finally withdrawing from the Gulf by 1971. This so concentrated the rulers’ minds that for the first time they discussed subsuming their rivalries in a federation. Bahrain and Qatar, with the bare minimum of income and population to remain unattached, opted for independence, while the seven shaikhdoms of the Trucial Coast formed the federation of the United Arab Emirates with their capital in Abu Dhabi, the largest and richest of the members. Abu Dhabi’s shrewd and able ruler Shaikh Zaid became president of the federation, which has survived into its fourth decade in the face of considerable scepticism.

The wealth of the Arab Gulf states and their role in the international oil industry has given them a significance in the affairs of the Middle East and the rest of the world out of all proportion to the size of their populations. However, this does not mean that the oil-producing states of the Middle East – including those like Iran or Iraq with much larger populations – acquired any significant role in world affairs in the 1950s and 1960s as a consequence of their increasing revenues. They had only a minor share of control over the export and marketing of their crude oil and gas – their largest, and in some cases their only, national resource. Control remained in the hands of the major international oil companies, and the example of the failure of Mohammed Mossadegh’s attempt to acquire full control of Iran’s oil industry through the act of nationalization served as a potent warning. In 1956 and 1967, attempts by the Arab oil-producing states to use oil as a bargaining counter against Western support for Israel were half-hearted and ineffective and were speedily abandoned. However, this did not mean that
these countries abandoned all hope of acquiring more power over their major national resource by means other than nationalization – they all felt a strong sense of grievance. In the 1950s and 1960s, the great flow of cheaply produced oil from the Middle East actually caused the price of oil to fall in absolute terms and even more in real terms. In 1959 the major oil companies twice cut crude oil prices in Venezuela and the Middle East without consulting their host governments. The exasperated reaction of the governments of Iraq, Iran, Kuwait, Saudi Arabia and Venezuela was to form the Organization of Petroleum Exporting Countries (OPEC), which was pledged to restore prices and to force the oil companies to consult OPEC members before any future price changes.

As all the major producing countries joined OPEC, its members accounted for 90 per cent of oil exports outside the communist world. But OPEC was in no way an effective cartel, as its members lacked both the means and the determination to impose pro-rationing – that is, the limiting of production on a quota system – which would have been the only way to raise prices. This still did not mean that they had abandoned their objective of gaining sovereignty over the development of their natural resources. They soon realized that the key was the acquisition of knowledge and experience in the oil industry by their own nationals. Despite the failure of Mossadegh’s adventure, Iran, with much the oldest oil industry in the Middle East, had the advantage of a surviving National Iranian Oil Company which from 1957 onwards gained valuable experience in partnership with the Italian state oil company AGIP outside the principal oil-producing areas controlled by the consortium of major American, British and French companies. Iraq, Kuwait and Saudi Arabia all followed Iran’s example by establishing their own national oil companies in the 1960s. In 1961 Kassem of Iraq made an ill-advised attempt to make a short cut to control of the country’s oil resources by issuing Law 80 expropriating without compensation all the Iraq Petroleum Company’s concession area except for the 0.5 per cent of this area in which it was already operating. The company refused to accept the unilateral decision and drastically cut back production
and exports so that Iraq, like Iran in 1952, lost its position among the major Middle East oil producers.

However, the oil companies were not to remain triumphant and contemptuous of OPEC for long. In the late 1960s there was the first complete reversal in the international oil market in favour of the oil-producing countries. The closure of the Suez Canal (from 1967 to 1975) and the intermittent closure by the Syrians of the pipeline across their territory caused a shortage of some 25 million tonnes of oil for Europe. This placed a premium on the oil of Libya, where the young anti-Western Colonel Qadaffy replaced the elderly and conservative King Idris in 1969. Libya could exploit the fact that it was dealing with small ‘independent’ US oil companies outside the magic circle of the major companies. Libya secured an increase in price; it was modest, but a new trend had been set. As the oil companies feared most, what they called a ‘leap-frog’ effect took place as the three biggest Middle East producers – Iran, Saudi Arabia and Iraq – negotiated through their experienced and Western-trained oil ministers the Tehran agreement of 1971, which secured a further small increase. The agreement was supposed to run until 1976, but in 1973 the fourth Arab–Israeli war broke out (see below,
page 331
), the Arab states declared an oil boycott of countries supporting Israel – the first remotely effective use of the ‘oil weapon’ – and in the ensuing sellers’ market caused by a panic fear of shortages among the industrialized nations the price of oil increased at a pace that previously would have seemed unimaginable. By the end of 1974 the price had quadrupled – from about $3.5 a barrel to $15.